EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
THE XXXXX SCHOOLS, INC.
AND
PSYCHIATRIC SOLUTIONS, INC.
FEBRUARY 13, 2003
TABLE OF CONTENTS
PAGE
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ARTICLE 1. PURCHASE OF ASSETS............................................................................................1
1.1 Assets........................................................................................................1
1.2 Excluded Assets...............................................................................................3
1.3 Assumed Liabilities...........................................................................................4
1.4 Excluded Liabilities..........................................................................................5
1.5 Purchase Price................................................................................................6
ARTICLE 2. CLOSING.......................................................................................................7
2.1 Closing.......................................................................................................7
2.2 Actions of Seller at Closing..................................................................................7
2.3 Actions of Buyer at Closing...................................................................................8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER......................................................................9
3.1 Existence and Capacity........................................................................................9
3.2 Powers; Governmental Consents; Absence of Conflicts With Other Agreements, Etc................................9
3.3 Binding Agreement............................................................................................10
3.4 Financial Statements.........................................................................................10
3.5 Certain Post-Balance Sheet Results...........................................................................10
3.6 Licenses.....................................................................................................11
3.7 Certificates of Need.........................................................................................12
3.8 Medicare Participation; Accreditation........................................................................12
3.9 Regulatory Compliance........................................................................................13
3.10 Equipment....................................................................................................13
3.11 Real Property................................................................................................13
3.12 Title........................................................................................................15
3.13 Employee Benefit Plans.......................................................................................15
3.14 Litigation or Proceedings....................................................................................16
3.15 Environmental Laws...........................................................................................16
3.16 Xxxx-Xxxxxx and Other Liens..................................................................................17
3.17 Taxes........................................................................................................18
3.18 Employee Relations...........................................................................................18
3.19 Agreements and Commitments...................................................................................19
3.20 Contracts....................................................................................................20
3.21 Supplies.....................................................................................................20
3.22 Insurance....................................................................................................21
3.23 Third Party Payor Cost Reports...............................................................................21
3.24 Medical Staff Matters........................................................................................21
3.25 Condition of Assets..........................................................................................21
3.26 Intellectual Property; Computer Software.....................................................................22
3.27 Accounts Receivable..........................................................................................22
3.28 Compliance Program...........................................................................................22
3.29 Subsidiaries.................................................................................................22
3.30 Full Disclosure..............................................................................................23
3.31 HIPAA Compliance.............................................................................................23
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER......................................................................23
4.1 Existence and Capacity.......................................................................................23
4.2 Powers; Governmental Consents; Absence of Conflicts With Other Agreements, Etc...............................23
4.3 Binding Agreement............................................................................................24
ARTICLE 5. COVENANTS OF SELLER PRIOR TO CLOSING.........................................................................24
5.1 Information..................................................................................................24
5.2 Operations...................................................................................................24
5.3 Negative Covenants...........................................................................................25
5.4 Governmental Approvals.......................................................................................26
5.5 FTC Notification.............................................................................................26
5.6 Additional Financial Information.............................................................................26
5.7 No-Shop Clause...............................................................................................27
5.8 Title Commitment and Survey; UCC Searches; Defects and Cure..................................................27
5.9 Insurance Ratings............................................................................................29
5.10 Medical Staff Disclosure.....................................................................................29
ARTICLE 6. COVENANTS OF BUYER PRIOR TO CLOSING..........................................................................29
6.1 Governmental Approvals.......................................................................................29
6.2 FTC Notification.............................................................................................29
6.3 Actions of Buyer.............................................................................................29
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.................................................................30
7.1 Representations/Warranties...................................................................................30
7.2 Pre-Closing Confirmations....................................................................................30
7.3 Title Policy.................................................................................................30
7.4 Actions/Proceedings..........................................................................................31
7.5 Adverse Change...............................................................................................31
7.6 Insolvency...................................................................................................31
7.7 Opinion of Counsel to Seller.................................................................................31
7.8 Vesting/Recordation..........................................................................................31
7.9 Delivery of Certain Documents................................................................................31
7.10 Right of Offset..............................................................................................31
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER................................................................31
8.1 Representations/Warranties...................................................................................32
8.2 Buyer's Governmental Approvals...............................................................................32
8.3 Actions/Proceedings..........................................................................................32
8.4 Insolvency...................................................................................................32
8.5 Opinion of Counsel to Buyer..................................................................................32
8.6 Delivery of Certain Documents................................................................................32
ARTICLE 9. SELLER'S POST CLOSING COVENANTS..............................................................................32
9.1 Covenant Not to Compete......................................................................................32
9.2 Net Worth Covenant...........................................................................................33
9.3 Certification of Closing Date Accounts Payable...............................................................33
ARTICLE 10. ADDITIONAL AGREEMENTS........................................................................................34
10.1 Allocation of Purchase Price.................................................................................34
10.2 Termination Prior to Closing.................................................................................34
10.3 Post Closing Access to Information...........................................................................34
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10.4 Preservation and Access to Records After the Closing.........................................................34
10.5 CON Disclaimer...............................................................................................35
10.6 Tax and Medicare Effect......................................................................................35
10.7 Reproduction of Documents....................................................................................35
10.8 Cooperation on Tax Matters...................................................................................36
10.9 Cost Reports.................................................................................................36
10.10 Misdirected Payments, Etc....................................................................................36
10.11 Employee Matters.............................................................................................36
10.12 Use of Controlled Substance Permits..........................................................................37
10.13 Transition Services Agreement................................................................................37
10.14 Loss Experience..............................................................................................37
10.15 Insurance....................................................................................................38
ARTICLE 11. INDEMNIFICATION..............................................................................................38
11.1 Indemnification by Buyer.....................................................................................38
11.2 Indemnification by Seller....................................................................................38
11.3 Limitations..................................................................................................38
11.4 Notice and Control of Litigation.............................................................................39
11.5 Notice of Claim..............................................................................................40
ARTICLE 12. MISCELLANEOUS................................................................................................40
12.1 Schedules and Other Instruments..............................................................................40
12.2 Additional Assurances........................................................................................41
12.3 Consented Assignment.........................................................................................41
12.4 Consents, Approvals and Discretion...........................................................................41
12.5 Legal Fees and Costs.........................................................................................41
12.6 Choice of Law................................................................................................42
12.7 Benefit/Assignment...........................................................................................42
12.8 No Brokerage.................................................................................................42
12.9 Cost of Transaction..........................................................................................42
12.10 Confidentiality..............................................................................................42
12.11 Public Announcements.........................................................................................43
12.12 Waiver of Breach.............................................................................................43
12.13 Notice.......................................................................................................43
12.14 Severability.................................................................................................44
12.15 Gender and Number............................................................................................44
12.16 Divisions and Headings.......................................................................................44
12.17 Survival.....................................................................................................44
12.18 Affiliates...................................................................................................44
12.19 Knowledge....................................................................................................44
12.20 Waiver of Jury Trial.........................................................................................45
12.21 Accounting Date..............................................................................................45
12.22 No Inferences................................................................................................45
12.23 No Third Party Beneficiaries.................................................................................45
12.24 Enforcement of Agreement.....................................................................................45
12.25 Entire Agreement; Amendment..................................................................................45
12.26 Risk of Loss.................................................................................................46
12.27 Other Owners of Assets.......................................................................................46
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12.28 Transfer or Sales Taxes......................................................................................46
12.29 Prorations...................................................................................................46
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EXHIBITS
DESCRIPTION EXHIBIT
----------- -------
Seller Entities..........................................................................................................A
Residential Treatment Centers............................................................................................B
Buyer Entities...........................................................................................................C
Opinion of Counsel to Seller.............................................................................................D
Opinion of Counsel to Buyer..............................................................................................E
Limited Power of Attorney................................................................................................F
Transition Services Agreement............................................................................................G
SCHEDULES
DESCRIPTION SCHEDULE
----------- --------
Real Property.......................................................................................................1.1(a)
Tangible Personal Property..........................................................................................1.1(b)
Contracts...........................................................................................................1.1(i)
Excluded Assets........................................................................................................1.2
Long Term Debt/Capital Lease Obligations...............................................................................1.3
Excluded Liabilities...................................................................................................1.4
Powers; Governmental Consents; Absence of Conflicts with Other Agreements, Etc.........................................3.2
Financial Statements...................................................................................................3.4
Certain Post-Balance Sheet Results.....................................................................................3.5
Licenses...............................................................................................................3.6
Certificates of Need...................................................................................................3.7
Medicare Participation; Accreditation..................................................................................3.8
Regulatory Compliance..................................................................................................3.9
Equipment.............................................................................................................3.10
Real Property ........................................................................................................3.11
Employee Benefit Plans................................................................................................3.13
Litigation or Proceedings.............................................................................................3.14
Environmental Laws....................................................................................................3.15
Employee Relations....................................................................................................3.18
Agreements and Commitments............................................................................................3.19
Contracts.............................................................................................................3.20
Insurance.............................................................................................................3.22
Third Party Payor Cost Reports........................................................................................3.23
Medical Staff Matters.................................................................................................3.24
Condition of Assets...................................................................................................3.25
Intellectual Property; Computer Software..............................................................................3.26
Compliance Program....................................................................................................3.28
Subsidiaries..........................................................................................................3.29
Buyer Absence of Conflicts with Other Agreements, Etc..................................................................4.2(c)
Material Consents......................................................................................................7.2
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GLOSSARY OF DEFINED TERMS
DEFINED TERM SECTION
------------ -------
Accessibility Laws.................................................................................................3.11(d)
Accrued PTO.........................................................................................................1.3(d)
Affiliate............................................................................................................12.18
Agreement.....................................................................................................Introduction
Applications...........................................................................................................3.7
Assets.................................................................................................................1.1
Assignment and Assumption Agreement.................................................................................2.2(c)
Assumed Liabilities....................................................................................................1.3
Balance Sheet Date..................................................................................................3.4(a)
Benefit Plans.........................................................................................................3.13
Buyer.........................................................................................................Introduction
Buyer Entities...................................................................................................Recital D
Buyer Indemnified Parties.............................................................................................11.2
CERCLA................................................................................................................3.15
Certificate of Need....................................................................................................3.7
Closing................................................................................................................2.1
Closing Date...........................................................................................................2.1
Closing Documents.....................................................................................................3.30
Code..................................................................................................................3.13
Competing Business.....................................................................................................9.1
Compliance Program....................................................................................................3.28
Contracts...........................................................................................................1.1(i)
Control..............................................................................................................12.18
Defects.............................................................................................................5.8(d)
Environmental Laws....................................................................................................3.15
ERISA.................................................................................................................3.13
Excluded Assets........................................................................................................1.2
Excluded Liabilities...................................................................................................1.4
Excluded Marks......................................................................................................1.2(f)
Exemption Certificate..................................................................................................3.7
Facilities.......................................................................................................Recital C
Financial Statements...................................................................................................3.4
FTC....................................................................................................................5.5
GAAP...................................................................................................................3.4
Government Entity......................................................................................................3.9
Government Patient Receivables......................................................................................1.2(i)
Government Patient Receivables Amount...............................................................................1.1(f)
HIPAA.................................................................................................................3.31
HSR Act................................................................................................................5.5
Immaterial Contracts..................................................................................................3.19
Indemnified Party.....................................................................................................11.4
Indemnifying Party....................................................................................................11.4
Intellectual Property.................................................................................................3.26
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Interim Statements.....................................................................................................5.6
JCAHO..................................................................................................................3.8
Justice Department.....................................................................................................5.5
Knowledge............................................................................................................12.19
Permitted Encumbrances................................................................................................3.11
Replacement Note....................................................................................................2.3(b)
Purchase Price.........................................................................................................1.5
RCRA..................................................................................................................3.15
RTCs.............................................................................................................Recital B
Real Estate Taxes....................................................................................................12.29
Real Property.......................................................................................................1.1(a)
Real Property Leases...............................................................................................3.11(k)
Promissory Note........................................................................................................1.5
Restricted Area........................................................................................................9.1
Seller........................................................................................................Introduction
Seller Cost Reports...................................................................................................10.9
Seller Entities..................................................................................................Recital A
Seller Indemnified Parties............................................................................................11.1
State Health Agency....................................................................................................3.6
Surveys.............................................................................................................5.8(b)
Tax Excess...........................................................................................................12.29
Tax Refund...........................................................................................................12.29
Threshold Amount......................................................................................................11.3
Title Commitment....................................................................................................5.8(a)
Title Company.......................................................................................................5.8(a)
Title Evidence......................................................................................................5.8(d)
Title Policy........................................................................................................5.8(a)
U.C.C. Searches.....................................................................................................5.8(c)
WARN Act.............................................................................................................10.11
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is made and entered
into as of February 13, 2003, by and between The Xxxxx Schools, Inc., a Delaware
corporation ("SELLER"), and Psychiatric Solutions, Inc., a Delaware corporation
("BUYER").
RECITALS
A. Seller owns or controls, directly or indirectly, the
organizations listed on Exhibit A attached hereto (collectively, the "SELLER
ENTITIES").
B. The Seller Entities directly or indirectly own and operate
each of the residential treatment centers set forth on Exhibit B attached hereto
(collectively, the "RTCs").
C. Seller desires to sell to Buyer and Buyer desires to purchase
substantially all of the assets of Seller and its subsidiaries and affiliates
which are directly related to and used in connection with the operation of the
RTCs, related outpatient care facilities and ancillary services, licensed
hospitals and other licensed healthcare facilities (collectively with the RTCs,
the "FACILITIES"), on the terms and conditions set forth in this Agreement.
D. Buyer intends to organize the six wholly owned, direct or
indirect subsidiaries listed on Exhibit C attached hereto (collectively, the
"BUYER ENTITIES") to purchase the Facilities from the Seller Entities.
AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and the
agreements, covenants, representations, and warranties hereinafter set forth and
other good and valuable consideration, the receipt and adequacy of which are
forever acknowledged and confessed, the parties hereto agree as follows:
ARTICLE 1.
PURCHASE OF ASSETS
1.1 ASSETS. Subject to the terms and conditions of this Agreement,
as of the Closing (as defined in Section 2.1 hereof), Seller agrees to cause the
Seller Entities to sell, convey, transfer and deliver to the Buyer Entities
designated by Buyer, and Buyer agrees to cause the Buyer Entities to purchase,
all of the assets owned or used by the Seller Entities in connection with the
operation of the Facilities, other than the Excluded Assets (hereinafter
defined), which included assets shall include, without limitation, the following
(the "ASSETS"):
(a) fee simple and/or leasehold title to all real
property described and designated as such on Schedule 1.1(a) hereto,
together with all improvements, any construction in progress, any other
buildings and fixtures thereon, and all rights, privileges,
hereditaments and easements appurtenant thereto, including without
limitation, all sewer and water discharge capacity, if any, allocated
or reserved thereto and all development rights with respect thereto
(collectively, the "REAL PROPERTY");
(b) all tangible personal property owned by the Seller
Entities and used in connection with the operation of the Facilities,
including, without limitation, all major, minor or other equipment,
vehicles, furniture and furnishings, the current list and general
location of which are set forth on Schedule 1.1(b) hereto;
(c) all supplies and inventory used in respect of the
Facilities;
(d) assumable deposits, prepaid expenses and claims for
refunds;
(e) all accounts receivable (other than receivables from
governmental third-party payors which by law may not be assigned)
arising from the rendering of services to patients at the Facilities,
billed and unbilled, recorded or unrecorded, with collection agencies
or otherwise, accrued and existing in respect of services prior to the
Closing;
(f) the right to receive an amount equal to the value of
all patient receivables collected related to Medicare, Medicaid and
other third-party patient claims of the Seller Entities due from
governmental third-party payors arising from the rendering of services
to patients at the Facilities, billed and unbilled, recorded or
unrecorded, with collection agencies or otherwise, accrued and existing
in respect of services prior to the Closing which by law may not be
assigned (excluding settlement accounts relating to Sections 1.2(c) and
1.4(e)), less any applicable overpayments, refunds, offsets, credit
balances or other proper adjustments (the "GOVERNMENT PATIENT
RECEIVABLES AMOUNT");
(g) all claims, causes of action, and judgments in favor
of the Seller Entities relating to the Assets and, to the extent
assignable by the Seller Entities, all warranties (express or implied)
and rights and claims assertable by (but not against) the Seller
Entities related to the Assets;
(h) all financial, patient, medical staff records and
personnel records (as required for accreditation purposes) relating to
the Facilities (including, without limitation, all equipment records,
medical administrative libraries, medical records, documents, catalogs,
books, records, files, operating manuals and current personnel
records);
(i) all rights and interests of the Seller Entities in
the contracts, commitments, leases and agreements listed on Schedule
1.1(i) hereto and all Immaterial Contracts (hereinafter defined)
(collectively, the "CONTRACTS");
(j) all licenses, certificates of need, franchises,
accreditations, registrations, and other permits, to the extent
assignable, held by the Seller Entities relating to the Facilities
(including, without limitation, any pending or approved governmental
approvals);
(k) except for the Excluded Marks (hereinafter defined),
all names, trade names, trademarks and service marks (or variations
thereof) associated with the Facilities, all goodwill associated
therewith, and all applications and registrations associated therewith;
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(l) all assets reflected on the Financial Statements (as
defined in Section 3.4), and any additions thereto up through Closing
less deletions therefrom of assets sold or consumed in the ordinary
course of business;
(m) all goodwill associated with the Facilities and the
Assets;
(n) to the extent assignable, all provider contracts (and
numbers) between the Facilities and Medicare, Medicaid, CHAMPUS/TRICARE
or other third party payors;
(o) all insurance proceeds arising in connection with
property damage to the Assets occurring prior to the Closing Date, to
the extent not expended on the repair or restoration of the Assets;
(p) all computers, data processing equipment and
software, to the extent transferable, held or used directly in the
business or operation of the Facilities;
(q) the assets owned by Affiliates of Seller which are
used directly in connection with the operation of the Facilities;
(r) all other property, other than the Excluded Assets,
of every kind, character or description owned by Seller or its
Affiliates and used or held for use directly in the business of the
Facilities or the Assets, whether or not reflected on the Financial
Statements, wherever located and whether or not similar to the items
specifically set forth above, and all other businesses and ventures
owned by the Seller Entities in connection with the operations of the
Facilities or the Assets; and
(s) the interest of the Seller Entities in all property
of the foregoing types, arising or acquired in the ordinary course of
the business of the Seller Entities in respect of the Facilities
between the date hereof and the Closing Date.
The Seller Entities shall convey good and marketable, or transferable, title to
the Assets and all parts thereof to Buyer free and clear of all claims,
assessments, security interests, liens, restrictions and encumbrances, other
than the Permitted Encumbrances (hereinafter defined) and the Assumed
Liabilities (hereinafter defined).
1.2 EXCLUDED ASSETS. Those assets of the Seller Entities described
below, together with any assets described on Schedule 1.2 hereto, shall be
retained by the Seller Entities (collectively, the "EXCLUDED ASSETS") and shall
not be conveyed to Buyer:
(a) cash and cash equivalents;
(b) board-designated, restricted and trustee-held or
escrowed funds (such as funded depreciation, debt service reserves,
working capital trust assets, and assets and investments restricted as
to use) and accrued earnings thereon;
(c) all amounts payable to the Seller Entities in respect
of third party payors pursuant to retrospective settlements (including,
without limitation, pursuant to Medicare, Medicaid and CHAMPUS/TRICARE
cost reports filed or to be filed by the
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Seller Entities for periods prior to Closing) and any tax refunds,
rebates or payments payable to the Seller Entities;
(d) all records relating to the Excluded Assets and
Excluded Liabilities (as defined below) to the extent that Buyer does
not need the same post-Closing in connection with the ongoing
activities of the Facilities, the Assets, or the Assumed Liabilities
(as defined below), as well as all records which by law the Seller
Entities are required to maintain in their possession;
(e) any prepaid expenses related to the Excluded Assets
and Excluded Liabilities (such as prepaid legal expenses or insurance
premiums);
(f) any and all names, trade names, trademarks, service
marks, logos or other symbols used in connection with the Facilities
and the Assets which include the name "Xxxxx" or any variants thereof
or any other names which are proprietary to Seller or its Affiliates
(the "EXCLUDED MARKS");
(g) receivables from or obligations with Seller or its
Affiliates;
(h) any computer software and programs which are
proprietary to Seller;
(i) all patient receivables related to Medicare, Medicaid
and other third party patient claims of the Seller Entities due from
governmental third party payors arising from the rendering of services
to patients at the Facilities, billed and unbilled, recorded or
unrecorded, accrued and existing in respect of services prior to the
Closing which by law may not be assigned ("GOVERNMENT PATIENT
RECEIVABLES"); and
(j) all supplies, drugs, food and other disposables and
consumables disposed of by the Seller Entities in the ordinary course
of business prior to Closing consistent with past practices of Seller
Entities.
1.3 ASSUMED LIABILITIES. In connection with the conveyance of the
Assets to Buyer, Buyer agrees to assume, as of the Closing, the future payment
and performance of the following liabilities (the "ASSUMED LIABILITIES") of the
Seller Entities:
(a) All current liabilities and obligations of Seller or
Seller Entities in respect of the business of the Facilities existing
as of the Balance Sheet Date (hereinafter defined) but only if and to
the extent that the same are accrued or reserved for on the Balance
Sheet Date and remain unpaid and undischarged on the Closing Date, and
all current liabilities and obligations of Seller or Seller Entities
arising in the regular and ordinary course of the business of the
Facilities between the Balance Sheet Date and the Closing Date, to the
extent and that the same remain unpaid and undischarged on the Closing
Date and are accrued or reserved for on the balance sheet as of the
Closing Date;
(b) all obligations accruing after, and with respect to
the period after, the Closing with respect to the Contracts, including
the provider contracts (and numbers) between the Facilities and
Medicare, Medicaid, CHAMPUS/TRICARE or other third party payors;
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(c) the long term debt and capital lease obligations (if
any) set forth on Schedule 1.3 hereto;
(d) obligations and liabilities as of the Closing Date in
respect of accrued but unused paid time off (the "ACCRUED PTO") of
employees of the Seller Entities who are hired by Buyer as of the
Closing Date; and
(e) non-accrued sick pay obligations for employees of the
Seller Entities who are hired by Buyer as of the Closing Date.
1.4 EXCLUDED LIABILITIES. Except for the Assumed Liabilities,
Buyer and Buyer Entities shall not assume and under no circumstances shall Buyer
or Buyer Entities be obligated to pay or assume, and none of the assets of Buyer
or Buyer Entities shall be or become liable for or subject to any liability,
indebtedness, commitment, or obligation of Seller, Seller Entities or their
respective Affiliates, whether known or unknown, fixed or contingent, recorded
or unrecorded, currently existing or hereafter arising or otherwise
(collectively, the "EXCLUDED LIABILITIES"), including, without limitation, the
following Excluded Liabilities:
(a) any debt, obligation, expense or liability that is
not an Assumed Liability;
(b) claims or potential claims for medical malpractice or
general liability relating to events asserted to have occurred prior to
the Closing;
(c) those claims and obligations (if any) specified in
Schedule 1.4 hereto;
(d) any liabilities or obligations associated with or
arising out of any of the Excluded Assets;
(e) liabilities and obligations of Seller, Seller
Entities or their respective Affiliates, regardless of when imposed, in
respect of periods prior to the Closing Date arising under the terms of
the Medicare, Medicaid, CHAMPUS/TRICARE, Blue Cross, or other third
party payor programs (provided, however, that this clause (e) shall not
apply to any and all Assumed Liabilities under Section 1.3(a) hereof);
(f) federal, state or local tax liabilities or
obligations of Seller, Seller Entities or their respective Affiliates
in respect of periods prior to the Closing including, without
limitation, any income tax, any franchise tax, any tax recapture, any
state and local recording fees and taxes (excluding those contemplated
in Sections 12.28 and 12.29) which may arise upon the consummation of
the transactions contemplated herein (exclusive of any financing
transactions engaged in by Buyer or its Affiliates, which shall be the
obligation of Buyer), and any FICA, FUTA, workers' compensation, and
any and all other taxes or amounts due and payable as a result of the
exercise by the employees at the Facilities of any such employee's
right to vacation, sick leave, and holiday benefits accrued while in
the employ of the Seller Entities (provided, however, that this clause
(f) shall not apply to any and all taxes payable with respect to any
employee benefits constituting Assumed Liabilities under Section 1.3(d)
hereof);
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(g) liability for any and all claims by or on behalf of
employees of Seller, Seller Entities or their respective Affiliates
relating to periods prior to the Closing including, without limitation,
liability for any pension, profit sharing, deferred compensation, or
any other employee health and welfare benefit plans, liability for any
EEOC claim, ADA claim, FMLA claim, wage and hour claim, unemployment
compensation claim, or workers' compensation claim, and any liabilities
or obligations to former employees of Seller, Seller Entities or their
respective Affiliates under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (provided, however, that this
clause (g) shall not apply to any and all employee benefits
constituting Assumed Liabilities under Section 1.3(d) hereof);
(h) any obligation or liability accruing, arising out of,
or relating to any federal, state or local investigations of, or claims
or actions against, Seller, Seller Entities or their respective
Affiliates or any of their employees with respect to acts or omissions
prior to the Closing;
(i) any civil or criminal obligation or liability
accruing, arising out of, or relating to any acts or omissions of
Seller, any of the Seller Entities, any of their respective Affiliates
or their directors, officers, employees and agents claimed to violate
any constitutional provision, statute, ordinance or other law, rule,
regulation, interpretation or order of any governmental entity;
(j) liabilities or obligations arising as a result of any
breach by Seller, any of the Seller Entities or their respective
Affiliates at any time of any contract or commitment that is not
assumed by Buyer or Buyer Entities;
(k) liabilities or obligations arising out of any breach
by Seller, any of the Seller Entities or their respective Affiliates of
any Contract, or amounts due and payable, accruing or occurring prior
to, or with respect to the period before, the Closing;
(l) any obligation or liability asserted under the
federal Xxxx-Xxxxxx program or other restricted grant and loan programs
with respect to the ownership or operation of the Facilities or the
Assets prior to the Closing; and
(m) any debt, obligation, expense, or liability of
Seller, Seller Entities and their respective Affiliates arising out of
or incurred solely as a result of any transaction of Seller, Seller
Entities or their respective Affiliates occurring after the Closing, or
for any violation by Seller, Seller Entities or their respective
Affiliates of any law, regulation, or ordinance at any time (including,
without limitation, those pertaining to fraud, environmental,
healthcare regulatory and ERISA matters).
1.5 PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for
the Assets shall be Sixty-Three Million Dollars ($63,000,000). In addition, at
Closing, Buyer shall cause to be paid One Million Dollars ($1,000,000) of the
Two Million Dollar ($2,000,000) promissory note, dated August 31, 2001, owed by
Buyer to Seller in connection with the purchase by Buyer of the assets of
Cypress Creek Hospital, Inc. and West Oaks Hospital, Inc. from Seller (the
"Promissory
6
Note"). Buyer shall pay the Purchase Price and note prepayment to Seller at the
Closing by wire transfer of immediately available funds to an account designated
by Seller.
ARTICLE 2.
CLOSING
2.1 CLOSING. Subject to the satisfaction or waiver by the
appropriate party of all of the conditions precedent to Closing specified in
Sections 7 and 8 hereof, the consummation of the transactions contemplated by
and described in this Agreement (the "CLOSING") shall take place at the offices
of Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx,
Xxxxxxxxx, at 10:00 a.m. local time, on or before March 31, 2003, or on such
other date or at such other location as the parties may mutually designate in
writing (the date of consummation is referred to herein as the "CLOSING DATE").
Closing shall be effective as set forth in Section 12.21.
2.2 ACTIONS OF SELLER AT CLOSING. At the Closing and unless
otherwise waived in writing by Buyer, Seller shall deliver to Buyer the
following:
(a) Deeds containing special warranty of title, fully
executed by Seller or one of its Affiliates in recordable form,
conveying to Buyer good and marketable fee title to the Real Property
described in Schedule 1.1(a), and/or Assignments, fully executed by
Seller or one of its Affiliates in recordable form, assigning to Buyer
good and valid leasehold title to any Real Property which is a
leasehold estate, subject in each instance only to the Permitted
Encumbrances;
(b) A General Assignment, Conveyance and Xxxx of Sale,
fully executed by each Seller Entity, conveying to Buyer good and
marketable title to all tangible assets which are a part of the Assets
and valid title to all intangible assets which are a part of the
Assets, free and clear of all liabilities, claims, liens, security
interests and restrictions other than the Assumed Liabilities;
(c) An Assignment and Assumption Agreement (the
"ASSIGNMENT AND ASSUMPTION AGREEMENT"), fully executed by each Seller
Entity, conveying to Buyer such Seller Entity's interest in the
Contracts;
(d) An Owner's Title Policy, pro forma policy or marked
title commitment (with lien affidavits and other affidavits needed to
clear title exceptions other than Permitted Encumbrances) covering the
Real Property as described in and provided by Section 7.3 hereof;
(e) Copies of resolutions duly adopted by the Board of
Directors and shareholder(s) of Seller and each Seller Entity,
authorizing and approving its performance of the transactions
contemplated hereby and the execution and delivery of this Agreement
and the documents described herein, certified as true and of full force
as of the Closing, by the appropriate officers of Seller and each
Seller Entity;
(f) Certificates of the President or a Vice President of
Seller, certifying that each covenant and agreement of Seller to be
performed prior to or as of the Closing pursuant to this Agreement has
been performed in all material respects and each
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representation and warranty of Seller is true and correct in all
material respects on the Closing Date (other than representations and
warranties that are by their terms expressly qualified by concepts of
materiality, which shall be true and correct in all respects), as if
made on and as of the Closing;
(g) Certificates of incumbency for the respective
officers of Seller and each Seller Entity executing this Agreement and
any other agreements or instruments contemplated herein or making
certifications for the Closing dated as of the Closing Date;
(h) Certificates of existence and good standing of Seller
and each Seller Entity from the state in which it is incorporated,
dated the most recent practical date prior to the Closing;
(i) The opinion of counsel to Seller as provided by
Section 7.7 hereof;
(j) All Certificates of Title and other documents
evidencing an ownership interest conveyed as part of the Assets;
(k) The Promissory Note for cancellation; and
(l) Such other instruments and documents as Buyer
reasonably deems necessary to effect the transactions contemplated
hereby.
2.3 ACTIONS OF BUYER AT CLOSING. At the Closing and unless
otherwise waived in writing by Seller, Buyer shall deliver to Seller the
following:
(a) An amount equal to the Purchase Price and note
prepayment in immediately available funds;
(b) The Assignment and Assumption Agreement, fully
executed by Buyer or Buyer Entities, pursuant to which Buyer or one or
more Buyer Entities shall assume the future performance of the
Contracts as to the period after Closing, as herein provided;
(c) Copies of resolutions duly adopted by the Board of
Directors of Buyer authorizing and approving its performance of the
transactions contemplated hereby and the execution and delivery of this
Agreement and the documents described herein, certified as true and in
full force as of the Closing, by the appropriate officers of Buyer;
(d) Certificates of the President or a Vice President of
Buyer, certifying that each covenant and agreement of Buyer to be
performed prior to or as of the Closing pursuant to this Agreement has
been performed in all material respects and each representation and
warranty of Buyer is true and correct in all material respects on the
Closing Date (other than representations and warranties that are by
their terms expressly qualified by concepts of materiality, which shall
be true and correct in all respects), as if made on and as of the
Closing;
8
(e) Certificates of incumbency for the respective
officers of Buyer executing this Agreement or making certifications for
the Closing dated as of the Closing Date;
(f) Certificates of existence and good standing of Buyer
from the state in which it is incorporated, dated the most recent
practical date prior to Closing;
(g) The opinion of counsel to Buyer as provided by
Section 8.5 hereof;
(h) The replacement promissory note in lieu of the
Promissory Note on the same terms and conditions to reflect the
prepayment by Buyer to Seller of One Million Dollars ($1,000,000) of
the Promissory Note (the "Replacement Note"); and
(i) Such other instruments and documents as Seller
reasonably deems necessary to effect the transactions contemplated
hereby.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date hereof, and, when read in light of any Schedules which
have been updated in accordance with the provisions of Section 12.1 hereof, as
of the Closing Date, Seller represents and warrants to Buyer the following:
3.1 EXISTENCE AND CAPACITY. Seller and each Seller Entity is a
corporation, duly organized and validly existing in good standing under the laws
of its state of incorporation. Seller has the requisite corporate power and
corporate authority to enter into this Agreement and to perform its obligations
hereunder. Seller and each Seller Entity has the requisite corporate power and
corporate authority to conduct its business as it is now being conducted.
3.2 POWERS; GOVERNMENTAL CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery, and performance of this Agreement by
Seller and all other agreements referenced herein, or ancillary hereto, to which
Seller is a party, and the consummation by Seller and the Seller Entities of the
transactions contemplated by this Agreement and the documents described herein,
as applicable:
(a) are within its corporate powers, subject to
compliance with Sections 5.4 and 5.5 are not in contravention of law or
of the terms of its organizational documents, and have been duly
authorized by all appropriate corporate action;
(b) except as provided in Sections 5.4 and 5.5 below or
as set forth on Schedule 3.2, do not require any approval or consent
of, or filing with, any governmental agency or authority bearing on the
validity of this Agreement which is required by law or the regulations
of any such agency or authority;
(c) except as set forth on Schedule 3.2, will neither
violate, nor result in any breach of, or the creation of any material
lien, charge, or encumbrance under, any indenture, agreement, lease,
instrument or understanding to which it is a party or by which it is
bound;
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(d) subject to compliance with Sections 5.4 and 5.5 will
not violate any statute, law, rule, or regulation of any governmental
authority to which it or the Assets may be subject; and
(e) will not violate any judgment, decree, writ or
injunction of any court or governmental authority to which it or the
Assets may be subject.
3.3 BINDING AGREEMENT. This Agreement and all agreements to which
Seller or any of its Affiliates will become a party pursuant hereto are and will
constitute the valid and legally binding obligations of Seller and/or such
Affiliates and are and will be enforceable against it in accordance with the
respective terms hereof or thereof, except insofar as such enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors rights generally and general principles of equity.
3.4 FINANCIAL STATEMENTS. Seller has delivered to Buyer copies of
the following financial statements of or pertaining to the Facilities
("FINANCIAL STATEMENTS"), which Financial Statements are maintained on an
accrual basis, and copies of which are attached hereto as Schedule 3.4:
(a) Unaudited Balance Sheet dated as of November 30, 2002
(the "BALANCE SHEET DATE");
(b) Unaudited Income Statement for the 11-month period
ended on the Balance Sheet Date; and
(c) Unaudited Balance Sheets and Income Statements for
the fiscal years ended December 31, 2001 and 2000.
Such Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated ("GAAP"), except as set forth in Schedule 3.4 and the absence
of footnotes. Such Balance Sheets present fairly in all material respects the
financial condition of the Facilities as of the dates indicated thereon, and
such Income Statements present fairly in all material respects the results of
operations of the Facilities for the periods indicated thereon. Except for (i)
liabilities that are disclosed in this Agreement, agreements entered into in
connection herewith and Schedules and Exhibits hereto and thereto, and (ii)
liabilities that were incurred after the Balance Sheet Date in the ordinary
course of business, as of the date hereof, there are no liabilities of the
Seller Entities relating to the Facilities or the other Assets and Assumed
Liabilities required in accordance with GAAP to be disclosed on the Financial
Statements of the Seller Entities, except as set forth in the Financial
Statements, as otherwise specified on Schedule 3.4, or which would not
reasonably be expected to, individually or in the aggregate, have a material
adverse effect on the Seller Entities.
3.5 CERTAIN POST-BALANCE SHEET RESULTS. Except as set forth in
Schedule 3.5 hereto, since the Balance Sheet Date there has not been any:
(a) material damage, destruction, or loss (whether or not
covered by insurance) affecting any of the Facilities or the Assets;
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(b) material adverse changes in the condition, financial
or otherwise, of the Assets, the business of, or in the results of
operations of, any of the Facilities;
(c) threatened employee strike, work stoppage, or labor
dispute pertaining to any of the Facilities;
(d) sale, assignment, transfer, or disposition of any
item of property, plant or equipment included in the Assets having a
book value in excess of Five Thousand Dollars ($5,000) (other than
supplies), except in the ordinary course of business consistent with
past practices of Seller Entities;
(e) material increases in the compensation payable to any
employees of the Facilities or any material increase in, or institution
of, any bonus, insurance, pension, profit-sharing or other employee
benefit plan, remuneration or arrangements made to, for or with such
employees (other than in the ordinary course of business consistent
with Seller's past practices);
(f) dividends, distributions or extraordinary payments in
excess of $5,000 by any Seller Entity;
(g) changes in the composition of the medical staff of
any of the RTCs, other than normal turnover occurring in the ordinary
course of business consistent with Seller's past practices;
(h) changes in the rates charged by the Facilities for
their services, other than those made in the ordinary course of
business consistent with Seller's past practices;
(i) material adjustments or write-offs of accounts
receivable or reductions in reserves for accounts receivable outside
the ordinary course of business consistent with Seller's past
practices;
(j) material changes in the accounting methods or
practices employed by Seller, or any Seller Entity or changes in
depreciation or amortization policies; or
(k) transaction pertaining to the Facilities by any
Seller Entity outside the ordinary course of business consistent with
Seller's past practices;
provided, however, that Seller and each Seller Entity shall be allowed to
negotiate and complete any real property sales as currently contemplated and
made known to Buyer.
3.6 LICENSES. Each Facility is duly licensed as required pursuant
to the applicable laws of the state in which it is located as set forth on
Schedule 3.6. The ancillary departments located at each RTC or operated for the
benefit of each Facility which are required to be specially licensed are duly
licensed by the appropriate state agency (the "STATE HEALTH AGENCY"). Except as
set forth on Schedule 3.6 hereto, the Seller Entities have all other material
licenses, registrations, permits, and approvals which are needed or required by
law to operate the business related to or affecting the Facilities or any
ancillary services related thereto. Seller has delivered to Buyer an accurate
list and summary description (Schedule 3.6) of all such material licenses,
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registrations and permits held by the Seller Entities relating to the ownership,
development, or operation of the Facilities or the Assets, all of which are now
and as of the Closing shall be in good standing.
3.7 CERTIFICATES OF NEED. Except as set forth on Schedule 3.7
hereto, no application for any Certificate of Need, Exemption Certificate (each
as defined below) or declaratory ruling has been made by any Seller Entity with
the State Health Agency or other applicable agency which is currently pending or
open before such agency, and no such application (collectively, the
"APPLICATIONS") filed by any Seller Entity within the past three (3) years has
been ultimately denied by any commission, board or agency or withdrawn by any
Seller Entity. Except as set forth on Schedule 3.7 hereto, no Seller Entity has
prepared, filed, supported or presented opposition to any Applications filed by
another hospital or health agency within the past three (3) years. Except as set
forth on Schedule 3.7 hereto, no Seller Entity has any Applications pending or
any approved Applications which relate to projects not yet completed. Each
Seller Entity has properly filed all required Applications which are complete
and correct in all material respects with respect to any and all material
improvements, projects, changes in services, zoning requirements, construction
and equipment purchases, and other changes for which approval is required under
any applicable federal or state law, rule or regulation. As used herein,
"CERTIFICATE OF NEED" means a written statement issued by the State Health
Agency evidencing community need for a new, converted, expanded or otherwise
significantly modified health care facility, health service or hospice, and
"EXEMPTION CERTIFICATE" means a written statement from the State Health Agency
stating that a health care project is not subject to the Certificate of Need
requirements under applicable state law.
3.8 MEDICARE PARTICIPATION; ACCREDITATION. Each Facility
participating in the Medicare Program, one or more Medicaid programs or the
CHAMPUS/TRICARE program is set forth on Schedule 3.8. Each such Facility has a
current and valid provider contract with the programs as set forth on Schedule
3.8, and is in compliance in all material respects with the conditions of
participation in such programs, if applicable. Each Facility is duly accredited,
with no contingencies (except as set forth on Schedule 3.8), by the Joint
Commission on Accreditation of Healthcare Organizations ("JCAHO") for the three
(3) year period set forth on Schedule 3.8. A copy of the most recent
accreditation letter from the JCAHO pertaining to each RTC has been made
available to Buyer. Except as set forth on Schedule 3.8, to the knowledge of
Seller, all billing practices of the Seller Entities with respect to the
Facilities to all third party payors, including the Medicare, Medicaid and
CHAMPUS/TRICARE programs and private insurance companies, have been in
compliance in all material respects with all applicable laws, regulations and
policies of such third party payors and the Medicare, Medicaid and
CHAMPUS/TRICARE programs and, to the knowledge of Seller, neither the Seller
Entities nor the Facilities have knowingly billed or received any payment or
reimbursement in excess of amounts allowed by law. Neither the Seller Entities
nor any of their officers, directors, managing employees, or controlling
shareholders are excluded from participation in the Medicare, Medicaid or
CHAMPUS/TRICARE programs, nor, to the knowledge of Seller, is any such exclusion
threatened. Except as set forth on Schedule 3.8, the Seller Entities have not
received any written notice from any of the Medicare, Medicaid or
CHAMPUS/TRICARE programs, or any other third party payor programs of any pending
or threatened investigations or surveys.
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3.9 REGULATORY COMPLIANCE. Except as set forth on Schedule 3.9
hereto, the Facilities are in compliance in all material respects with all
applicable statutes, rules, regulations, and requirements of the Government
Entities having jurisdiction over the Facilities and the operations of the
Facilities or their related ancillary services. As used herein, "GOVERNMENT
ENTITY" means any government or any agency, bureau, board, directorate,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local. Except
as set forth on Schedule 3.9, the Seller Entities have timely filed all material
reports, data, and other information required to be filed with the Government
Entities. To the knowledge of Seller, neither the Seller Entities nor any of
their officers, directors, agents or employees, has committed a violation of
federal or state laws regulating health care fraud, including but not limited to
the federal Xxxx-Xxxxxxxx Xxx, 00 X.X.X. 0000x-0x; the Xxxxx I and II Laws, 42
U.S.C. 1395nn, as amended, and their associated regulations; and the False
Claims Act, 31 U.S.C. 3729, et seq.
3.10 EQUIPMENT. Seller has delivered to Buyer an accurate and
complete depreciation schedule as of the Balance Sheet Date (Schedule 3.10)
which takes into consideration all the material equipment associated with, or
constituting any part of, the Facilities and the Assets.
3.11 REAL PROPERTY. The Seller Entities own, or as of the Closing
Date will own, good, marketable, and insurable fee simple and/or leasehold
title, as the case may be, to the Real Property, together with all buildings,
improvements, and component parts thereon and all appurtenances and rights
thereto. The Real Property will be conveyed to Buyer free and clear of any and
all liens, encumbrances or other restrictions except those more particularly
described in Schedule 3.11 hereto and such other matters as may be approved by
Buyer (the "PERMITTED ENCUMBRANCES"). With respect to the Real Property:
(a) No Seller Entity has received written notice from any
Governmental Entity of a violation of any applicable ordinance or other
law, order or regulation, and no Seller Entity has received written
notice of any lien, assessment, or the like relating to any part of the
Real Property or the operation thereof;
(b) Except as set forth on Schedule 3.11, to the
knowledge of Seller, the Real Property and its operation are in
compliance in all material respects with all applicable zoning, land
use, public health, fire safety, building code or other similar laws,
ordinances and regulations applicable thereto or to the ownership or
operation thereof. To the knowledge of Seller, the consummation of the
transactions contemplated herein will not result in a violation of any
applicable zoning ordinance or the termination of any applicable zoning
variance, conditional use permit or waiver now existing, and except as
set forth on Schedule 3.11, the buildings and improvements constituting
the Real Property comply in all material respects with all public
health, fire safety or building codes and regulations;
(c) To the knowledge of Seller, the Real Property is
subject to no easements, restrictions, ordinances, or such other
limitations on title so as to make such property unusable for its
current use or the title uninsurable or unmarketable or which
materially restrict or impair the use, marketability or insurability of
the Real Property;
13
(d) To the knowledge of Seller, all of the Real Property
is in compliance in all material respects with the applicable
provisions of the Rehabilitation Act of 1973, Title III of the
Americans with Disabilities Act, and the provisions of any comparable
state statute relative to accessibility (these laws are referred to,
collectively, as the "ACCESSIBILITY LAWS"), and there is no pending or
noticed, or to the knowledge of Seller, threatened litigation,
administrative action or complaint (whether from state, federal or
local government or from any other person, group or entity) relating to
compliance of any of the Real Property with the Accessibility Laws;
(e) Except for patients, there are no tenants or other
persons or entities occupying any space in the Real Property, other
than pursuant to tenant leases described in Schedule 3.11, or, to the
knowledge of Seller, claiming any possession, adverse or not, to or
other interest in any portion of the Real Property;
(f) The Seller Entities have not received, during the
past five (5) years, any written notice from any Governmental Entity
of, and, to the knowledge of Seller, no part of the Real Property is
subject to, any existing, proposed or contemplated plans to modify or
realign any street or highway or any existing, proposed or contemplated
eminent domain proceeding that would result in the taking of all or any
part of the Real Property or that would adversely affect the current
use of any part of the Real Property. To Seller's knowledge, there are
no existing or contemplated public improvements which may result in
special assessments against the Real Property;
(g) To Seller's knowledge, final permanent and
unconditional certificates of occupancy and/or use have been duly
issued by the applicable governmental authority having jurisdiction for
all buildings located on the Real Property;
(h) To Seller's knowledge, all utilities serving the Real
Property are installed and operating, and shall at Closing be adequate
to operate the Real Property in the manner it is currently operated. To
Seller's knowledge, any tap fees, hook-up fees or other associated
charges accrued to date have been fully paid with respect to all
potable and industrial water and all gas, electrical, steam, compressed
air, telecommunication, sanitary and storm sewage lines and systems and
other similar systems serving the Facilities and the Assets;
(i) To Seller's knowledge, no portion of the Real
Property constitutes wetlands, no portion lies within any designated
flood plain area, and no portion of the Seller Owned Real Property has
been or is used as a cemetery, burial ground or other site for the
interment, burial or location of the remains of any deceased person or
persons;
(j) Except as listed on Schedule 3.11, there are no
outstanding options to purchase, rights of first offer, rights of first
refusal or any similar rights to purchase any parcel of the Real
Property, or any portion thereof or interest therein that have been
granted or created by Seller;
(k) Schedule 3.11 sets forth an accurate and complete
list of all of the leases of the Real Property pursuant to which a
Seller Entity is lessee (the "REAL PROPERTY
14
LEASES"). Seller has provided the Buyer accurate and complete copies of
all Real Property Leases. Except as set forth in Schedule 3.11, Seller
is not a lessee of any real property used in, or necessary or intended
for the operation of the Facilities or the Assets to be transferred to
Buyer; and
(l) Any division of the Real Property by Seller has been
done in full compliance with all subdivision and zoning or other land
use laws, regulations, ordinances or requirements. To Seller's
Knowledge, (i) consummation of the Closing, and the sale of the Real
Property, does not require the filing of any subdivision plats and (ii)
the transactions contemplated by this Agreement will not cause any
portion of the Real Property to be in violation of any applicable
subdivision, zoning, historic district, fire safety and other land use
laws, regulations, ordinances and requirements. If the conveyances of
the Real Property contemplated by this transaction require the approval
and filing of any subdivision plats or taking of any other actions
under any such land use laws, ordinances, regulations or requirements,
Seller will obtain all such approvals, make such filings or take all
such actions as may be necessary or required thereunder in order to
permit or allow the conveyance of the Real Property contemplated by
this transaction to be accomplished; and
(m) Except as set forth in Schedule 3.11: (1) Seller has
not received any notice of any default, offset, counterclaim or defense
under any of the Real Property Leases; (2) to the knowledge of the
Seller, the lessors named in the respective Real Property Lease are the
fee owners of the Real Property leased thereunder; (3) except as set
forth in each Real Property Lease, none of the Real Property Leases
under which Seller is the lessor is subject to any option to renew,
options to purchase, rights of first refusal, rights of first offer or
any similar rights; (4) as to any of the Real Property Leases under
which Seller is the lessor, no tenant is entitled to any rebate,
concession or free rent, other than as set forth in the lease or
contract with such tenant; no commitments have been made to any tenant
for repairs or improvements other than for normal repairs and
maintenance in the future; and no rents due under any leases with
tenants have been assigned or hypothecated to, or encumbered by, any
person; and (5) Seller is not in material breach or default under any
Real Property Lease.
3.12 TITLE. As of the Closing, the Seller Entities shall own and
hold good, valid and marketable, or transferable, title to all of the Assets,
and at the Closing the Seller Entities will assign and convey to Buyer good,
valid and marketable, or transferable, title to all of the Assets, or any part
thereof, subject to no mortgage, lien, pledge, security interest, conditional
sales agreement, right of first refusal, option, restriction, liability,
encumbrance, or charge other than the Permitted Encumbrances or the Assumed
Liabilities.
3.13 EMPLOYEE BENEFIT PLANS. Except as set forth on Schedule 3.13
hereto, the Seller Entities do not presently maintain or contribute to, nor have
the Seller Entities maintained or contributed to within the last three (3)
years, any pension, profit sharing, deferred compensation, bonus, fringe
benefit, stock option, severance, layoff, life insurance, disability, vacation,
holiday, or other employee pension or health or welfare benefit plan or
arrangement. All employee pension benefit plans and employee health or welfare
benefits plans maintained or contributed to by the Seller Entities (collectively
"BENEFIT PLANS") have been administered in compliance in all
15
material respects with all applicable laws including, without limitation, the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"CODE"), and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). There are no "accumulated funding deficiencies" within the meaning of
the Code. No reportable events (within the meaning of ERISA) or, to the
knowledge of Seller, prohibited transactions (within the meaning of the Code and
ERISA) have occurred. There are no pending or, to the knowledge of Seller,
threatened claims by or on behalf of the Benefit Plans or by any employee of the
Seller Entities alleging a breach or breaches of fiduciary duties or violations
of other applicable state or federal law which could result in material
liability on the part of either the Seller Entities or the Benefit Plans under
any law. Except as set forth on Schedule 3.13 hereto, during the past three (3)
years all material returns, reports, disclosure statements, and premium payments
required to be made under the Code or ERISA with respect to the Benefit Plans
have been timely filed or delivered. Except as described in Schedule 3.13
hereto, the Benefit Plans have not been audited or, to the knowledge of Seller,
investigated by the Internal Revenue Service, the Department of Labor or the
Pension Benefit Guaranty Corporation within the last three (3) years, and, to
the knowledge of Seller, there are no outstanding issues with reference to the
Benefit Plans pending before any governmental agency.
3.14 LITIGATION OR PROCEEDINGS. Seller has delivered to Buyer an
accurate list and summary description (Schedule 3.14) of all current litigation
or proceedings with respect to the Facilities and the Assets. Except as set
forth on Schedule 3.14 hereto, the Seller Entities are not in default under any
law or regulation material to the operation of the Facilities or the Assets, or
under any order of any court or federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality wherever
located. Except to the extent set forth on Schedule 3.14, there are no claims,
actions, suits, proceedings, or investigations pending, or to the knowledge of
Seller, threatened against or related to the Seller Entities, the Facilities or
the Assets, at law or in equity, or before or by any federal, state, municipal,
or other governmental department, commission, board, bureau, agency, or
instrumentality wherever located.
3.15 ENVIRONMENTAL LAWS. Except as set forth on Schedule 3.15
hereto, (i) the Seller Entities have not received any written notice of any
claim or potential claim relating the presence of any Hazardous Materials (as
defined below) or pursuant to any Environmental Laws (as defined below), and
(ii) to the knowledge of Seller, none of the Seller Entities is in violation of
any federal, state or local statutes, regulations, laws or orders pertaining to
environmental matters ("ENVIRONMENTAL LAWS"), including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"),
the Resource Conservation and Recovery Act ("RCRA") and any federal, state or
local law, ordinance or regulation pertaining to the handling of hazardous,
toxic or infectious medical waste. Seller is in possession of all material
permits and other governmental authorizations required under applicable
Environmental Laws, and all such permits are in good standing. Seller is in
compliance in all material respects with all terms and conditions thereof to
operate the business as currently operated. No Hazardous Materials (which for
purposes of this Section 3.15 shall mean and include polychlorinated biphenyls,
asbestos, petroleum and any substances, materials, constituents, wastes, or
other elements which are included under or regulated by any Environmental Laws)
have been, and through the Closing Date will be, manufactured, stored, generated
or disposed of on, or released or discharged from or onto, the Real Property or
the groundwater under the Real Property by the
16
Seller Entities, or to Seller's knowledge, any third party, in violation of any
applicable Environmental Law. Neither the Seller Entities, nor to Seller's
knowledge, any prior owners, operators or occupants of the Real Property, have
allowed any Hazardous Materials to be manufactured, stored, generated,
discharged, possessed, managed, processed, released, or otherwise handled on the
Real Property in a manner which is in material violation of applicable law, and
the Seller Entities and to the knowledge of Seller, any prior owners, operators
or occupants have complied in all material respects with all applicable
Environmental Laws. Except as set forth on Schedule 3.15 hereto, (i) neither
Seller nor its Affiliates has received any written, or to Seller's knowledge,
other notice that alleges that Seller, the Facilities or any other Asset
transferred to Buyer, is not or was not in material compliance with all
applicable Environmental Laws; (ii) none of the Real Property, nor Seller, its
Affiliates, nor, to Seller's knowledge, any present owner or operator of the
Real Property is subject to any pending or threatened investigation or inquiry
by any governmental authority, or any remedial or removal obligations under any
applicable Environmental Laws nor, to Seller's knowledge, is there any basis for
any such investigation, inquiry or obligation; and (iii) to Seller's knowledge,
no material amount of work, repairs, remedy, construction or capital
expenditures are required by any Environmental Laws with respect to the Real
Property in order for the continued lawful use of the Real Property as it is
currently being used. Seller shall immediately notify Buyer should Seller become
aware prior to Closing of any lien, notice, litigation, or threat of litigation
relating to any alleged unauthorized release of any Hazardous Materials with
respect to any part of the Real Property. Except as set forth on Schedule 3.15
hereto, to the knowledge of Seller, the improvements on the Real Property do not
contain friable asbestos in any form. Without in any way limiting the generality
of the foregoing and, except as set forth on Schedule 3.15 hereto, (i) all
current or former underground storage tanks of which Seller has knowledge and
the capacity, uses, dates of installation and contents of such tanks (if known
to Seller) located on the Real Property are identified in Schedule 3.15; (ii)
the Seller Entities have not placed, and to Seller's knowledge, no other person
has placed, collection dumps, pits, and disposal facilities or surface
impoundments for the disposal of hazardous substances as defined under CERCLA on
the Real Property except as identified in Schedule 3.15; (iii) all underground
storage tanks currently operated by the Seller Entities are in compliance in all
material respects with the Environmental Laws; have passed tightness tests in
accordance with law within the last twelve (12) months; (iv) Seller is in
material compliance with all OSHA requirements respecting friable asbestos; and
(v) to Seller's knowledge, (A) no petroleum hydrocarbons have migrated on or
below the surface of any of the Real Property, (B) the Real Property is free of
dangerous levels of naturally-emitted radon, and (C) no portion of the Real
Property has ever been used as a landfill, garbage or refuse dump site, waste
disposal facility, transfer station or other type of facility for the
processing, treatment or disposal of waste materials.
3.16 XXXX-XXXXXX AND OTHER LIENS. To the knowledge of Seller, the
transactions contemplated hereby and the sale of the Facilities and the Assets
to Buyer and Buyer Entities will not result in any obligation of Buyer, Buyer
Entities or any of their respective Affiliates to repay any loans, grants or
loan guarantees pursuant to the Xxxx-Xxxxxx Act program, the Health Professions
Educational Assistance Act, the Nurse Training Act, the National Health Planning
and Resources Development Act, and the Community Mental Health Centers Act, as
amended, or similar laws or acts relating to healthcare facilities, nor subject
Buyer, Buyer Entities or any of their respective Affiliates or the Assets to any
lien, restriction or obligation, including any requirement to provide
uncompensated care.
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3.17 TAXES. The Seller Entities and their Affiliates have filed all
federal, state and local tax returns required to be filed by them (all of which
are true and correct in all material respects) or have obtained valid extensions
of the time for filing same and have duly paid or made provision for the payment
of all taxes (including any interest or penalties and amounts due state
unemployment authorities) which are due and payable to the appropriate tax
authorities, except for amounts for which the Seller Entities in good faith have
a dispute and for which adequate reserves are reflected on the Balance Sheet.
The Seller Entities and their Affiliates have withheld proper and accurate
amounts from their employees' compensation in compliance with all withholding
and similar provisions of the Code, including employee withholding and social
security taxes, and any and all other applicable laws. No deficiencies for any
of such taxes have been asserted or to Seller's knowledge threatened, and no
audit on any such returns is currently under way or to Seller's knowledge
threatened. There are no outstanding agreements by the Seller Entities for the
extension of time for the assessment of any such taxes. The Seller Entities and
their Affiliates have not taken and will not take any action in respect of any
federal, state or local taxes (including, without limitation, any withholdings
required to be made in respect of employees) which, to their knowledge, would
have a material adverse effect upon the Facilities or the Assets as of or
subsequent to Closing. There are no tax liens on any of the Assets and, to the
knowledge of Seller, no basis exists for the imposition of any such liens. The
Seller Entities have not assumed the tax liability of any person under contract.
3.18 EMPLOYEE RELATIONS. Schedule 3.18 contains a list of all of
the employees of the Seller Entities at the Facilities, their current salary or
wage rates, bonus and other compensation for 2001, Accrued PTO and sick days,
period of service, and whether such employees are part-time or full-time. Except
as set forth on Schedule 3.18, all employees of the Facilities are employees of
the Seller Entities. To the knowledge of Seller, there is no threatened employee
strike, work stoppage, or labor dispute pertaining to the Facilities. To the
knowledge of Seller, no union representation question exists respecting any
employees of the Seller Entities. No collective bargaining agreement exists or
is currently being negotiated by the Seller Entities, no written demand has been
made for recognition by a labor organization by or with respect to any employees
of the Seller Entities, no union organizing activities by or with respect to any
employees of the Seller Entities are, to the knowledge of Seller, taking place,
and to the knowledge of Seller none of the employees of the Seller Entities is
represented by any labor union or organization. There is no unfair labor
practice claim against the Seller Entities pending before the National Labor
Relations Board, nor any strike, dispute, slowdown, or stoppage pending or, to
the knowledge of Seller, threatened against or involving the Facilities, and
none has occurred within the last five (5) years. The Seller Entities are in
compliance in all material respects with all federal and state laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours. The Seller Entities are not engaged in any unfair labor
practices which could have a material adverse effect on any Seller Entity. The
Seller Entities have, to the knowledge of Seller, complied in all material
respects with all requirements of the Immigration and Reform and Control Act of
1986. Except as set forth on Schedule 3.18, there are no pending or, to the
knowledge of Seller, threatened EEOC claims, OSHA complaints, union grievances,
wage and hour claims, unemployment compensation claims, workers' compensation
claims or the like involving present employees of Seller Entities or Seller
regarding services at any of the Facilities.
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3.19 AGREEMENTS AND COMMITMENTS. Except for the Contracts
(including the Immaterial Contracts), contracts included in the Excluded Assets,
or as set forth on Schedule 3.19, there are no commitments, contracts, leases,
and agreements (whether written or oral) which materially affect the Facilities,
the Assets, or the operation of any thereof, to which the Seller Entities are a
party or by which the Seller Entities, the Facilities, the Assets, or any
portion thereof is bound, including, without limitation:
(a) physician agreements,
(b) agreements with health maintenance organizations,
preferred provider organizations, or other alternative delivery
systems,
(c) joint venture or partnership agreements,
(d) employment contracts or any other contracts,
agreements, or commitments to or with individual employees or agents,
(e) contracts or commitments materially affecting
ownership of, title to, use of or any interest in real estate including
any tenant leases,
(f) equipment leases,
(g) equipment maintenance agreements,
(h) agreements with municipalities,
(i) collective bargaining agreements or other contracts
or commitments to or with any labor unions, labor organizations, or
other employee representatives or groups of employees,
(j) loan agreements, bonds, mortgages, liens, or other
security agreements,
(k) patent licensing agreements or any other agreements,
licenses, or commitments with respect to patents, patent applications,
trademarks, trade names, service marks, technical assistance,
copyrights, or other like terms affecting the Facilities or the Assets,
(l) contracts or commitments providing for payments based
in any manner on the revenues or profits of the Facilities or the
Assets,
(m) agreements, licenses, or commitments relating to data
processing programs, software, or source codes utilized in connection
with the Facilities or the Assets, and
(n) contracts or commitments, whether in the ordinary
course of business or not, which involve future payments, performance
of services or delivery of goods or material, to or by Seller or any of
the Seller Entities of any amount or value in excess of Fifty Thousand
Dollars ($50,000) on an annual basis.
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"IMMATERIAL CONTRACTS" means all commitments, contracts, leases and agreements,
whether written or oral, which relate to the Facilities or the Assets, (a) which
(i) may be terminated by the Seller or any Seller Entity within ninety (90) days
without cause and without penalty, and which will have a remaining obligation
during their term (as of the Closing Date, and not on an annual basis) of Fifty
Thousand Dollars ($50,000) or less, to which the Seller or any Seller Entity is
a party or by which the Seller or any Seller Entity or any of the Assets is
bound and (ii) are not with any physician or referral source, family member of a
physician or referral source, or entity or entities owned by a physician or
referral source or physicians or referral source and/or their family members
(regardless of the amounts thereof or termination rights with respect thereto),
or (b) which exist as of the Closing but are not listed on Schedule 1.1(i) and,
following the Closing, the Buyer and/or the Buyer Entities elect to assume the
rights and obligations thereunder.
3.20 CONTRACTS. Seller has delivered to Buyer an accurate list
(Schedule 1.1(i)) of the Contracts. Seller has made available to Buyer true and
correct copies of the Contracts, and has given, and will give, the agents,
employees and representatives of Buyer access to the originals of the Contracts.
Seller represents and warrants with respect to the Contracts that:
(a) The Contracts constitute valid and legally binding
obligations of the Seller Entities and are enforceable against the
Seller Entities in accordance with their terms;
(b) Except as set forth on Schedule 3.20, each Contract
constitutes the entire agreement by and between the respective parties
thereto with respect to the subject matter thereof;
(c) Except as set forth on Schedule 3.20, no act or
omission by Seller or any of the Seller Entities has occurred or failed
to occur which, with the giving of notice, the lapse of time or both
would constitute a default under the Contracts, and each of such
Contracts is now and will be upon and after the Closing Date in full
force and effect without default on the part of Seller or any of the
Seller Entities;
(d) Except as expressly set forth on Schedule 3.20, none
of the Contracts requires consent to the assignment and assumption of
such Contracts by Buyer, and Seller will use its reasonable commercial
efforts to obtain any required consents prior to the Closing; and
(e) Except as expressly set forth on Schedule 3.20, the
assignment of the Contracts to and assumption of post-Closing
obligations (and any obligations contemplated by Section 1.3) under
such Contracts by Buyer will not result in any penalty or premium, or
variation of the rights, remedies, benefits or obligations of any party
thereunder.
3.21 SUPPLIES. All the inventory and supplies constituting any part
of the Assets are substantially of a quality and quantity usable and salable in
the ordinary course of business of the Facilities. Inventory and supplies are
carried at the lower of cost or market, on a first-in, first-out basis and are
properly stated in the Financial Statements. The inventory levels are based on
past practices of the Seller Entities at the Facilities.
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3.22 INSURANCE. Seller has delivered to Buyer an accurate schedule
(Schedule 3.22) disclosing the insurance policies covering the ownership and
operations of the Facilities and the Assets, which Schedule reflects the
policies' numbers, terms, identity of insurers, amounts, and coverage. All of
such policies are in full force and effect with no premium arrearage. Except as
expressly set forth on Schedule 3.22, the Seller Entities have given in a timely
manner to their insurers all notices required to be given under its insurance
policies with respect to all material claims and actions covered by insurance,
and no insurer has denied coverage of any such claims or actions. Seller has not
(a) received any notice or other communication from any such insurance company
canceling or materially amending any of such insurance policies, and, to the
knowledge of Seller, no such cancellation or amendment is threatened or (b)
failed to give any required notice or present any claim which is still
outstanding under any of such policies with respect to the Facilities or any of
the Assets.
3.23 THIRD PARTY PAYOR COST REPORTS. The Seller Entities have duly
filed all required cost reports for all the fiscal years through and including
the fiscal year ended December 31, 2000. Except as set forth on Schedule 3.23,
all of such cost reports accurately reflect the information required to be
included thereon and to the knowledge of Seller such cost reports do not claim
and neither the Facilities nor the Seller Entities have received reimbursement
in any amount in excess of the amounts provided by law or any applicable
agreement. Schedule 3.23 indicates which of such cost reports have not been
audited and finally settled and a brief description of any and all notices of
program reimbursement, proposed or pending audit adjustments, disallowances,
appeals of disallowances, and any and all other unresolved claims or disputes in
respect of such cost reports. Except as set forth on Schedule 3.23, the Seller
Entities have established adequate reserves to cover any potential reimbursement
obligations that the Seller Entities may have in respect of any such third party
cost reports, and such reserves are set forth in the Financial Statements.
3.24 MEDICAL STAFF MATTERS. Seller has provided to Buyer true,
correct, and complete copies of the bylaws and rules and regulations of the
medical staff of each RTC, if applicable, as well as a list of all current
members of the medical staff. Except as set forth on Schedule 3.24 hereto, to
the knowledge of Seller there are no adverse actions with respect to any medical
staff members of the Facilities or any applicant thereto for which a medical
staff member or applicant has requested a judicial review hearing which has not
been scheduled or has been scheduled but has not been completed, and there are
no pending or, to the knowledge of Seller, threatened disputes with applicants,
staff members, or health professional affiliates, and all appeal periods in
respect of any medical staff member or applicant against whom an adverse action
has been taken have expired.
3.25 CONDITION OF ASSETS. The Assets and the Excluded Assets
constitute all assets which are held or used by the Seller Entities and
necessary for the conduct of the business and operation of the Facilities in the
manner conducted as of the date of this Agreement. Except as set forth on
Schedule 3.25, all buildings, structures, facilities, major equipment and other
material items of tangible property and assets included in the Assets are free
from patent defects and in good operating condition and repair, subject to
ordinary wear and maintenance, and are usable in the regular and ordinary course
of business, and to Seller's knowledge, conform in all material respects to all
applicable laws, ordinances, codes, rules and regulations relating to their use
and operation by the Seller Entities.
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3.26 INTELLECTUAL PROPERTY; COMPUTER SOFTWARE. All trademarks,
service marks, trade names, patents, copyrights, inventions, processes and
applications therefor (whether registered or common law) currently owned or used
by the Seller Entities are listed and described in Schedule 3.26 (collectively,
the "INTELLECTUAL PROPERTY"). No proceedings have been instituted or are pending
or, to the knowledge of Seller, threatened which challenge the validity of the
ownership by the Seller Entities of such Intellectual Property, and Seller knows
of no basis therefore. The Seller Entities have not licensed anyone to use such
Intellectual Property and Seller has no knowledge of the use or the infringement
of any such Intellectual Property by any other person. The Seller Entities own
(or possess adequate and enforceable licenses or other rights to use) all
Intellectual Property, and all material computer software programs and similar
systems used in the conduct of their business.
3.27 ACCOUNTS RECEIVABLE. All accounts receivable constituting a
part of the Assets represent and constitute bona fide indebtedness owing to the
Seller Entities for services actually performed or for goods or supplies
actually provided in the amounts indicated on the Financial Statements with no
known set-offs, deductions, compromises, or reductions (other than reasonable
allowances for uncollectibles and contractual allowances based upon an
evaluation of historical collections to gross revenues). Seller has made
available to Buyer a complete and accurate aging report of all such accounts
receivable and a schedule of all accounts receivable, whether recorded or
unrecorded, which have been assigned to collection agencies or are otherwise
held or assigned for collection.
3.28 COMPLIANCE PROGRAM. Seller has provided to Buyer a copy of
its current compliance program materials. Except as set forth on Schedule 3.28,
the Seller Entities (a) are not a party to a Corporate Integrity Agreement with
the Office of Inspector General of the Department of Health and Human Services,
(b) have no reporting obligations pursuant to any Settlement Agreement entered
into with any governmental entity, (c) to Seller's knowledge, have not been the
subject of any government payor program investigation conducted by any federal
or state enforcement agency, (d) have not been a defendant in any qui tam/False
Claims Act litigation, (e) have not been served with or received any search
warrant, subpoena, civil investigative demand, contact letter, or, to the
knowledge of Seller, telephone or personal contact by or from any federal or
state enforcement agency (except in connection with medical services provided to
third-parties who may be defendants or the subject of investigation into conduct
unrelated to the operation of the healthcare businesses conducted by the Seller
Entities), and (f) have not received any written complaints or complaints
through their telephonic hotlines from employees, independent contractors,
vendors, physicians, or any other person that would indicate that the Seller
Entities have in the past violated, or are currently in violation of, any law or
regulation. Buyer has been provided with a description of each audit and
investigation conducted by Seller pursuant to its compliance program with
respect to the Facilities during the last three (3) years. For purposes of this
Agreement, the term "COMPLIANCE PROGRAM" refers to provider programs of the type
described in the Compliance Program Guidance published by the Office of
Inspector General of the Department of Health and Human Services.
3.29 SUBSIDIARIES. Except as set forth on Schedule 3.29, none of
the Seller Entities owns, directly or indirectly, any capital stock or other
equity interest in any corporation, partnership, limited partnership, limited
liability company or other entity or association, nor do
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any of the Seller Entities own or hold any right of first refusal or other
rights with respect thereto.
3.30 FULL DISCLOSURE. The Schedules hereto, all Closing Documents
(as defined below) furnished and to be furnished to Buyer and its
representatives by Seller pursuant hereto and the representations and warranties
of Seller herein do not and will not include any untrue statement of a material
fact or omit to state any material fact required therein to make the statements
made, in light of the circumstances under which they were made and are to be
made, not misleading. Copies of all documents referred to in any Schedule hereto
have been delivered or made available to Buyer and constitute true, correct and
complete copies thereof and include all amendments, exhibits, schedules,
appendices, supplements or modifications thereto or waivers thereunder. The term
"CLOSING DOCUMENTS" means those documents executed and delivered at the Closing
pursuant to Section 2 above.
3.31 HIPAA COMPLIANCE. Seller has provided to Buyer a description
of the steps Seller and each of the Seller Entities have taken to prepare for
compliance with the requirements of the Administrative Simplification provisions
of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA").
Seller has designed and is in the process of implementing a program which Seller
reasonably believes will enable each of the Facilities to meet all requirements
of the Standards for Privacy of Individually Identifiable Health Information (45
CFR Part 164) and the Transactions and Code Sets Standards (45 CFR Part 162) by
their respective compliance dates. Seller has filed, or caused to be filed, with
the Centers for Medicare and Medicaid Services on behalf of each Facility, an
Electronic Health Care Transactions and Code Sets Standards Model Compliance
Plan to extend the required compliance date for these standards to October 16,
2003.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof, and, when read in light of any Schedules which
have been updated in accordance with the provisions of Section 12.1 hereof, as
of the Closing Date, Buyer represents and warrants to Seller the following:
4.1 EXISTENCE AND CAPACITY. Buyer is a corporation, duly organized
and validly existing in good standing under the laws of the State of Delaware.
Buyer has the requisite power, authority and legal right to enter into this
Agreement, to perform its obligations hereunder, and to conduct its business as
now being conducted.
4.2 POWERS; GOVERNMENTAL CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery, and performance of this Agreement by
Buyer and all other agreements referenced herein, or ancillary hereto, to which
Buyer is a party, and the consummation of the transactions contemplated herein
by Buyer:
(a) are within its corporate powers; subject to
compliance with Sections 6.1 and 6.2, are not in contravention of law,
or of the terms of its organizational documents; and have been duly
authorized by all appropriate corporate action;
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(b) except as provided in Sections 6.1 and 6.2 below, do
not require any approval or consent of, or filing with, any
governmental agency or authority bearing on the validity of this
Agreement which is required by law or the regulations of any such
agency or authority;
(c) except as set forth on Schedule 4.2(c), will neither
conflict with, nor result in any breach or contravention of, or the
creation of any lien, charge or encumbrance under, any indenture,
agreement, lease, instrument or understanding to which it is a party or
by which it is bound;
(d) subject to compliance with Sections 6.1 and 6.2, will
not violate any statute, law, rule, or regulation of any governmental
authority to which it may be subject; and
(e) will not violate any judgment, decree, writ, or
injunction of any court or governmental authority to which it may be
subject.
4.3 BINDING AGREEMENT. This Agreement and all agreements to which
Buyer will become a party pursuant hereto are and will constitute the valid and
legally binding obligations of Buyer, and are and will be enforceable against
Buyer in accordance with the respective terms hereof and thereof, except insofar
as such enforceability may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors rights generally and general
principles of equity.
ARTICLE 5.
COVENANTS OF SELLER PRIOR TO CLOSING
Between the date of this Agreement and the Closing:
5.1 INFORMATION. Seller shall afford to the officers and
authorized representatives and agents (which shall include accountants,
attorneys, bankers, and other consultants) of Buyer full and complete access to
and the right to inspect the plants, properties, books, and records of the
Facilities, and will furnish Buyer with such additional financial and operating
data and other information as to the business and properties of Seller
pertaining to the Facilities as Buyer may from time to time reasonably request
without regard to where such information may be located. Buyer's right of access
and inspection shall be exercised in such a manner as not to interfere
unreasonably with the operations of the Facilities. Buyer agrees that no
inspections shall take place and no employees or other personnel of the
Facilities shall be contacted by Buyer without Buyer first providing reasonable
notice to Seller and coordinating such inspection or contact with Seller.
5.2 OPERATIONS. From the date hereof until the Closing, Seller
shall, and shall cause each of the Seller Entities to:
(a) carry on its business pertaining to the Facilities in
substantially the same manner as presently conducted and not make any
material change in personnel, operations, finance, accounting policies,
or real or personal property pertaining to the Facilities;
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(b) maintain the Facilities and all parts thereof in good
operating condition, ordinary wear and tear excepted;
(c) perform all of its obligations under agreements
relating to or affecting the Facilities or the Assets;
(d) keep in full force and effect present insurance
policies or other comparable insurance pertaining to the Facilities;
(e) use its commercially reasonable efforts to maintain
and preserve its business organizations intact, retain its present
employees at the Facilities and maintain its relationships with
physicians, referral sources, suppliers, customers, and others having
business relations with the Facilities; and
(f) pay all accounts payable on behalf of the RTCs in a
timely manner consistent with past practices, and have accounts payable
(referred to on the balance sheet as of the Balance Sheet Date as
"total payables") on behalf of the RTCs not in excess of Seven Million
Six Hundred Thousand Dollars ($7,600,000) at Closing.
5.3 NEGATIVE COVENANTS. From the date hereof until the Closing,
Seller shall not, and shall cause the other Seller Entities not to, with respect
to the business or operation of the Facilities or otherwise regarding the
Assets, without the prior written consent of Buyer:
(a) amend or terminate any of its Contracts, enter into
any contract or commitment, or incur or agree to incur any liability,
except as provided herein or in the ordinary course of business and in
no event greater than Fifty Thousand Dollars ($50,000) per item;
(b) enter into any contract or commitment with physicians
or other referral sources;
(c) increase compensation payable or to become payable or
make any bonus payment to or otherwise enter into one or more bonus
agreements with any employee at the Facilities, except in the ordinary
course of business in accordance with existing personnel policies;
(d) create, assume, or permit to exist any new debt,
mortgage, pledge, or other lien or encumbrance upon any of the Assets,
whether now owned or hereafter acquired;
(e) acquire (whether by purchase or lease) or sell,
assign, lease, or otherwise transfer or dispose of any property, plant,
or equipment except in the normal course of business with comparable
replacement thereof, or as currently contemplated and made known to
Buyer;
(f) purchase capital assets or incur costs in respect of
construction-in-progress in excess of Fifty Thousand Dollars ($50,000)
per Facility;
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(g) take any significant action outside the ordinary
course of business of the Facilities or their related ancillary
services;
(h) reduce inventory of the Facilities except in the
ordinary course of business consistent with Seller's past practices;
(i) enter into any agreement which could have a material
adverse effect on the value or operations of any of the Facilities or
any of the Assets; or
(j) alter its collections efforts with respect to
accounts receivable such that collections efforts are not consistent
with past practices.
5.4 GOVERNMENTAL APPROVALS. Seller shall (i) promptly request, and
use its commercially reasonable efforts to obtain, all governmental approvals
(or exemptions therefrom) necessary or required to allow Seller to perform its
obligations under this Agreement; and (ii) assist and cooperate with Buyer and
its representatives and counsel in obtaining all governmental consents,
approvals, and licenses which Buyer deems necessary or appropriate and in the
preparation of any document or other material which may be required by any
governmental agency as a predicate to or as a result of the transactions
contemplated herein.
5.5 FTC NOTIFICATION. Between the date of this Agreement and the
Closing Date, Seller shall, if and to the extent required by law, file all
reports or other documents required or requested by the Federal Trade Commission
("FTC") or the United States Department of Justice ("JUSTICE DEPARTMENT") under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR ACT"), and all
regulations promulgated thereunder, concerning the transactions contemplated
hereby, and comply promptly with any requests by the FTC or Justice Department
for additional information concerning such transactions, so that the waiting
period specified in the HSR Act will expire as soon as reasonably possible after
the execution and delivery of this Agreement. Seller agrees to furnish to Buyer
such information concerning Seller as Buyer needs to perform its obligations
under Section 6.2 of this Agreement.
5.6 ADDITIONAL FINANCIAL INFORMATION. Within two (2) business days
after they are finalized (but in any event no later than twenty-five (25) days
following the end of each calendar month prior to Closing, except for the
January statements which will be provided as soon as they are available), Seller
shall deliver to Buyer true and complete copies of the unaudited balance sheets
and the related unaudited statements of income (collectively, the "INTERIM
STATEMENTS") of, or relating to, the Facilities for each month then ended,
together with a year-to-date compilation and the notes, if any, related thereto,
which presentation shall be true, correct and complete in all material respects,
shall have been prepared from and in accordance with the books and records of
the Seller Entities, and shall fairly present the financial position and results
of operations of the Facilities as of the date and for the period indicated, all
in accordance with GAAP consistently applied, except that such financial
statements need not include required footnote disclosures. Seller shall notify
Buyer in writing of any materially adverse unanticipated change in the business
of any Facility and of any governmental complaints, investigations or
adjudicatory proceedings (or communications indicating that the same may be
contemplated) or of any other such matter and shall keep Buyer fully informed of
such events.
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5.7 NO-SHOP CLAUSE. Except for the sale of inventory and other
assets in the ordinary course, Seller agrees that, from and after the date of
the execution and delivery of this Agreement by Seller until the termination of
this Agreement, Seller will not, without the prior written consent of Buyer or
except as otherwise permitted by this Agreement: (i) offer for sale or lease all
or any material portion of the Assets or any ownership interest in any entity
owning any of the Assets, (ii) solicit offers to buy all or any material portion
of the Assets or any ownership interest in any entity owning any of the Assets,
(iii) initiate, encourage or provide any material documents or information to
any third party in connection with, negotiate with any person regarding any
inquires, proposals or offers relating to any disposition of all or any material
portion of the Assets or a merger or consolidation of any entity owning any of
the Assets, or (iv) enter into any agreement or discussions with any party
(other than Buyer) with respect to the sale, assignment, or other disposition of
all or any material portion of the Assets or any ownership interest in any
entity owning any of the Assets or with respect to a merger or consolidation of
any entity owning any of the Assets. Seller will promptly communicate to Buyer
the substance of any proposal concerning any such transaction.
5.8 TITLE COMMITMENT AND SURVEY; UCC SEARCHES; DEFECTS AND CURE.
(a) TITLE COMMITMENT. Within seven (7) days of the date
of this Agreement, Seller shall cause to be furnished to Buyer a
current title commitment (the "TITLE COMMITMENT") issued by a
nationally recognized title insurance company reasonably acceptable to
Buyer (the "TITLE COMPANY"), together with legible copies of all
exceptions to title referenced therein. The Title Commitment shall set
forth the state of title to the Real Property, together with all
exceptions or conditions to such title, including, without limitation,
all easements, restrictions, rights-of-way, covenants, reservations,
and all other encumbrances affecting the Real Property which would
appear in an owner's title policy, if issued. The Title Commitment
shall contain the express commitment of the Title Company to issue the
form Owner's Title Policy described in Section 7.3 hereof (the "TITLE
POLICY") to Buyer in an amount equal to the portion of the Purchase
Price being allocated to the Real Property insuring good and marketable
fee simple or leasehold (as applicable) title to the Real Property with
the standard printed exceptions endorsed or deleted in accordance with
Section 7.3 hereof.
(b) SURVEY. Seller shall deliver to Buyer copies of all
existing surveys of the Real Property in Seller's possession. As soon
as practicable after the date hereof, Buyer, at its sole expense, shall
obtain current as-built surveys of the Real Property (the "SURVEYS").
The Surveys shall meet the requirements of an ALTA/ACSM survey as
adopted in 1999 by the American Land Title Association and the American
Congress on Surveying and Mapping, including Table A optional items 1,
2, 3, 4, 6, 7, 8, 9, 10, 11, 13, 14, 15 and 16, and otherwise be in
form and detail satisfactory to Buyer. Unless otherwise agreed by
Buyer, the Surveys shall (i) be currently dated; (ii) show the location
on the Real Property of all improvements, fences, evidences of
abandoned fences, lakes, ponds, creeks, streams, rivers, easements,
roads, and right-of-way; (iii) identify all easements and rights-of-way
by reference to the recording information applicable to the documents
creating such easements or rights-of-way; (iv) show any encroachments
onto the Real Property from any adjacent property, any encroachments
from the Real Property onto adjacent property, and any encroachments
into any
27
easement or restricted area within the Real Property; (v) locate all
existing improvements (such as buildings, power lines, fences, and the
like); (vi) locate all dedicated public streets or other roadways
providing access to the Real Property, including all curb cuts and all
alleys; (vii) locate all set-back lines and similar restrictions
covering the Real Property or any part thereof and any violations of
such restrictions; and (viii) show thereon a legal description of the
boundaries of the Real Property by metes and bounds or other
appropriate legal description. Each Survey shall contain the surveyor's
certification to Buyer, Seller, and the Title Company that (i) the
Survey was made on the ground; (ii) there are no visible or recorded
easements, discrepancies, conflicts, encroachments, or overlapping of
improvements except as shown on the Survey; (iii) the Survey correctly
shows all visible or recorded easements or rights of way across the
Real Property or any other easements or rights of way of which the
surveyor has been advised, including, without limitation, those matters
affecting title reflected in the Title Commitment; (iv) the Survey
correctly shows the location of all buildings, structures, and other
improvements situated on the Real Property; (v) the Survey conforms to
all applicable minimum guidelines for ALTA/ACSM land title surveys of
comparable property as adopted in 1999 by the American Land Title
Association and the American Congress on Surveying and Mapping,
including Table A optional items 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 13,
14, 15 and 16; (vi) all streets abutting the Real Property and all
means of ingress to and egress from the Real Property have been
completed, dedicated, and accepted for public maintenance by the
relevant municipal body; (vii) except as shown thereon, the Real
Property is not located within the 100 year flood plain or other flood
hazard area; (viii) the Survey is a true, correct, and accurate
representation of the Real Property; and (ix) such other matters as may
be required by the Title Company to allow it to issue the Title Policy.
(c) U.C.C. SEARCHES. U.C.C. Financing Statement searches,
local and central, including fixtures and including copies of all such
financing statements and exhibits and attachments thereto, and federal
and state tax lien and judgment searches, with respect to Seller, its
Affiliates and predecessors, including all "DBA's," trade names and
fictitious names of Seller and the Facilities, from each of the
jurisdictions in which such entity does business or has done business
within the preceding five (5) years (the "U.C.C. SEARCHES"), shall be
obtained by Buyer, at Buyer's cost, at least fifteen (15) days prior to
Closing.
(d) DEFECTS AND CURE. The Commitment and the Survey and
U.C.C. Searches described in this Article are collectively referred to
as "TITLE EVIDENCE." Buyer shall notify Seller in writing within (i)
fifteen (15) days after its receipt of the last of the Commitments and
Surveys, and (ii) within five (5) days after its receipt of the U.C.C.
Searches of any liens, claims, encroachments, exceptions or defects
disclosed in the Title Evidence which do not constitute Permitted
Encumbrances (collectively, "DEFECTS"). Seller, at its sole cost and
expense, shall cure any such Defects on or before Closing or Seller may
elect to not cure the objections and shall give written notice to Buyer
within ten (10) days of its receipt of Buyer's notice of Defects of its
decision, whereupon Buyer may waive such Defects and close or may
terminate this Agreement if such Defects have a material adverse effect
on the Assets (taken as a whole). If Seller fails to timely give such
notice, Seller shall be deemed to have elected not to cure the Defects,
whereupon
28
Buyer may waive such Defects and close or may terminate this Agreement
if such Defects have a material adverse effect on the Assets (taken as
a whole).
5.9 INSURANCE RATINGS. Seller will take all action reasonably
requested by Buyer to enable Buyer to succeed to the Workers' Compensation and
Unemployment Insurance ratings, and other ratings for insurance or other
purposes established by the Seller Entities for the Facilities. Buyer shall not
be obligated to succeed to any such ratings, except as it may elect to do so.
5.10 MEDICAL STAFF DISCLOSURE. Seller shall deliver to Buyer a
written disclosure containing a brief description of all material adverse
actions taken against medical staff members or applicants by each Seller
Entity's medical staff between the date of this Agreement and the Closing, which
could result in claims or actions against the Seller Entities and which are not
disclosed in the minutes of the meetings of the Medical Executive Committee of
the Medical Staff of each Facility which have been provided to Buyer.
Information contained in such disclosure shall be reasonably satisfactory to
Buyer.
ARTICLE 6.
COVENANTS OF BUYER PRIOR TO CLOSING
Between the date of this Agreement and the Closing:
6.1 GOVERNMENTAL APPROVALS. Buyer shall (i) promptly request, and
use its commercially reasonable best efforts to obtain, all governmental
approvals (or exemptions therefrom) necessary or required to allow Buyer to
perform its obligations under this Agreement; and (ii) assist and cooperate with
Seller and its representatives and counsel in obtaining all governmental
consents, approvals, and licenses which Seller deems necessary or appropriate
and in the preparation of any document or other material which may be required
by any governmental agency as a predicate to or as a result of the transactions
contemplated herein.
6.2 FTC NOTIFICATION. Between the date of this Agreement and the
Closing Date, Buyer shall, if and to the extent required by law, file all
reports or other documents required or requested by the FTC or the Justice
Department under the HSR Act, and all regulations promulgated thereunder,
concerning the transactions contemplated hereby, and comply promptly with any
requests by the FTC or Justice Department for additional information concerning
such transactions, so that the waiting period specified in the HSR Act will
expire as soon as reasonably possible after the execution and delivery of this
Agreement. Buyer agrees to furnish to Seller such information concerning Buyer
as Seller needs to perform its obligations under Section 5.5 of this Agreement.
6.3 ACTIONS OF BUYER. Buyer will not knowingly take any action
which will result in a breach of any of its representations and warranties
hereunder. Furthermore, Buyer shall cooperate with Seller and use its
commercially reasonable efforts to cause all the conditions to the obligations
of Buyer and Seller under this Agreement to be satisfied on or prior to the
Closing Date.
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ARTICLE 7.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Notwithstanding anything herein to the contrary, the obligations of
Buyer to consummate the transactions described herein are subject to the
fulfillment, on or prior to the Closing Date, of the following conditions
precedent unless (but only to the extent) waived in writing by Buyer at the
Closing:
7.1 REPRESENTATIONS/WARRANTIES. The representations and warranties
of Seller contained in this Agreement shall be true and accurate in all material
respects (except to the extent such representations and warranties contain a
materiality qualification, in which case they shall be true and accurate in all
respects) when made and, when read in light of any Schedules which have been
updated in accordance with the provisions of Section 12.1 hereof, as of the
Closing Date as though such representations and warranties had been made on and
as of such Closing Date. Each and all of the terms, covenants, and conditions of
this Agreement to be complied with or performed by Seller on or before the
Closing Date pursuant to the terms hereof shall have been in all material
respects duly complied with and performed.
7.2 PRE-CLOSING CONFIRMATIONS. Buyer shall have obtained
documentation or other evidence satisfactory to Buyer in its reasonable
discretion that Buyer has:
(a) Received approval from all Government Entities whose
approval is required to complete the transactions herein contemplated;
(b) Received confirmation from all applicable licensure
agencies that upon the Closing all licenses required by law to operate
the Facilities as currently operated will be transferred to, or issued
or reissued in the name of, Buyer;
(c) Obtained reasonable assurances that Medicare and
Medicaid certification of the Facilities for their operation by Buyer
will be effective as of the Closing and that Buyer may participate in
and receive reimbursement from such programs effective as of the
Closing; and
(d) Obtained the consents and approvals set forth on
Schedule 7.2 required for the consummation of the transactions
described herein.
7.3 TITLE POLICY. At the Closing, Seller shall, at its sole cost
and expense, cause a pro forma of the Title Policy (or marked Title Commitment
containing no additional exceptions to title to the Real Property) to be
furnished to Buyer by the Title Company. The Title Policy shall be issued on an
ALTA Form 1992 Owner's Title Policy (or, in the State of Texas, a Form T-1
Owner's Title Policy with certain standard exceptions deleted) in an amount
equal to the portion of the Purchase Price being allocated to the Real Property
and shall insure to Buyer good and marketable title to the owned Real Property
subject only to (i) the Permitted Encumbrances, and (ii) taxes for the current
and subsequent years "not yet due and payable." The Title Policy shall have all
standard and general exceptions deleted (except as provided above with respect
to Texas) so as to afford full "extended form coverage" and shall contain such
endorsements thereto as Buyer may reasonably require in connection with its
review of the Title Commitment and the Surveys. The Title Policy shall permit a
simultaneous issue rate if requested by Buyer for its
30
lender for a lender's mortgage title policy. Seller shall execute such
certificates and affidavits as may be reasonably necessary in connection with
the issuance of the Title Policy as provided in this Section 7.3.
7.4 ACTIONS/PROCEEDINGS. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions herein contemplated.
7.5 ADVERSE CHANGE. No material adverse change in the results of
operations, financial condition, or business of the Facilities (taken as a
whole) shall have occurred since the date of this Agreement, and Seller shall
not have suffered any material change, loss or damage to the Assets (taken as a
whole), whether or not covered by insurance.
7.6 INSOLVENCY. Seller, and each of the Seller Entities, shall not
(i) be in receivership or dissolution, (ii) have made any assignment for the
benefit of creditors, (iii) have admitted in writing its inability to pay its
debts as they mature, (iv) have been adjudicated a bankrupt, or (v) have filed a
petition in voluntary bankruptcy, a petition or answer seeking reorganization,
or an arrangement with creditors under the federal bankruptcy law or any other
similar law or statute of the United States or any state, nor shall any such
petition have been filed against Seller or the Seller Entities.
7.7 OPINION OF COUNSEL TO SELLER. Buyer shall have received an
opinion from counsel to Seller dated as of the Closing Date and addressed to
Buyer, in form and substance satisfactory to counsel for Buyer, covering the
matters set forth in Exhibit D hereto.
7.8 VESTING/RECORDATION. Seller shall have furnished to Buyer, in
form and substance satisfactory to Buyer, assignments or other instruments of
transfer and consents and waivers by others, necessary or appropriate to
transfer to and effectively vest in Buyer all right, title, and interest in and
to the Assets, in proper statutory form for recording if such recording is
necessary or appropriate.
7.9 DELIVERY OF CERTAIN DOCUMENTS. At the Closing, Seller shall
have delivered to Buyer the Closing Documents contemplated by Section 2.2.
7.10 RIGHT OF OFFSET. Seller shall have created a right of offset
for the benefit of Buyer solely in connection with Buyer's claims for
indemnification pursuant to Article 11 hereof against the Replacement Note
ARTICLE 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Notwithstanding anything herein to the contrary, the obligations of
Seller to consummate the transactions described herein are subject to the
fulfillment, on or prior to the Closing Date, of the following conditions
precedent unless (but only to the extent) waived in writing by Seller at the
Closing:
31
8.1 REPRESENTATIONS/WARRANTIES. The representations and warranties
of Buyer contained in this Agreement shall be true and accurate in all material
respects (except to the extent such representations and warranties contain a
materiality qualification, in which case they shall be true and accurate in all
respects) when made and, when read in light of any Schedules which have been
updated in accordance with the provisions of Section 12.1 hereof, as of the
Closing Date as though such representations and warranties had been made on and
as of such Closing Date. Each and all of the terms, covenants, and conditions of
this Agreement to be complied with or performed by Buyer on or before the
Closing Date pursuant to the terms hereof shall have been in all material
respects duly complied with and performed.
8.2 BUYER'S GOVERNMENTAL APPROVALS. All material consents,
authorizations, orders and approvals of (or filings or registrations with) any
Government Entity or other party required to be obtained by Buyer in connection
with the execution, delivery and performance of this Agreement shall have been
obtained or made by Buyer when so required, except for any documents required to
be filed, or consents, authorizations, orders or approvals required to be
issued, after the Closing Date.
8.3 ACTIONS/PROCEEDINGS. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions herein contemplated.
8.4 INSOLVENCY. Buyer shall not (i) be in receivership or
dissolution, (ii) have made any assignment for the benefit of creditors, (iii)
have admitted in writing its inability to pay its debts as they mature, (iv)
have been adjudicated a bankrupt, or (v) have filed a petition in voluntary
bankruptcy, a petition or answer seeking reorganization, or an arrangement with
creditors under the federal bankruptcy law or any other similar law or statute
of the United States or any state, nor shall any such petition have been filed
against Buyer.
8.5 OPINION OF COUNSEL TO BUYER. Seller shall have received an
opinion from counsel to Buyer dated as of the Closing Date and addressed to
Seller, in form and substance satisfactory to counsel for Seller, covering the
matters set forth in Exhibit E hereto.
8.6 DELIVERY OF CERTAIN DOCUMENTS. At the Closing, Buyer shall
have delivered to Seller the Closing Documents contemplated by Section 2.3.
ARTICLE 9.
SELLER'S POST CLOSING COVENANTS
9.1 COVENANT NOT TO COMPETE. Seller hereby covenants that at all
times from the Closing Date until the third (3rd) anniversary of the Closing
Date, Seller, Seller Entities and their respective Affiliates shall not,
directly or indirectly (except (i) as a consultant or contractor to or of Buyer
(or any Affiliate of Buyer), or their successors, (ii) consistent with its (or
its' subsidiaries) continuing operations in Florida and Puerto Rico following
completion of this transaction or (iii) consistent with its (or its'
subsidiaries) continuing operation of its (or their) private or public education
businesses following completion of this transaction) own, lease, manage,
operate, control, or participate in any manner with the ownership, leasing,
management, operation or control of any business which is in competition with
the services of the Facilities as
32
of the Closing Date (any of such uses being referred to herein as a "COMPETING
BUSINESS"), within a twenty-five (25) mile radius of any of the Facilities (the
"RESTRICTED AREA"), without Buyer's prior written consent (which Buyer may
withhold in its sole and absolute discretion). In the event of a breach of this
Section 9, Seller recognizes that monetary damages shall be inadequate to
compensate Buyer and Buyer shall be entitled, without the posting of a bond or
similar security, to an injunction restraining such breach, with the costs
(including attorneys' fees) of securing such injunction to be borne by Seller.
Nothing contained herein shall be construed as prohibiting Buyer from pursuing
any other remedy available to it for such breach or threatened breach. All
parties hereto hereby acknowledge the necessity of protection against the
competition of Seller and its Affiliates and that the nature and scope of such
protection has been carefully considered by the parties. Seller further
acknowledges and agrees that the covenants and provisions of this Section 9 form
part of the consideration under this Agreement and are among the inducements for
Buyer entering into and consummating the transactions contemplated herein. The
period provided and the area covered are expressly represented and agreed to be
fair, reasonable and necessary. The consideration provided for herein is deemed
to be sufficient and adequate to compensate for agreeing to the restrictions
contained in this Article 9 and no part of the consideration is intended to be
inducement or remuneration for the referral of patients. If, however, any court
determines that the foregoing restrictions are not reasonable, such restrictions
shall be modified, rewritten or interpreted to include as much of their nature
and scope as will render them enforceable. Notwithstanding anything herein to
the contrary, (i) ownership by XxXxxx De Leeuw & Co. of equity in a Competing
Business, (ii) service as a director with respect to such investment by
representatives of XxXxxx De Leeuw & Co., and (iii) existing operations of a
successor in interest to Seller in the event of a change of control of ownership
of Seller by merger, sale of capital stock, reorganization or other similar
means, shall not be deemed a breach of this covenant.
9.2 NET WORTH COVENANT. For a period of not less than two years
following the Closing, Seller or its successor covenants that (i) it shall
maintain a business operation with a minimum net worth of not less than $10.0
million or, in the alternative, (ii) if it ceases operations for any reason and
the indemnity obligations set forth in Article XI are not otherwise assumed by a
solvent third party, Seller shall (a) continue its existence and maintain a
minimum net worth for the remainder of such two year period of not less than
$6.0 million or (b) establish a liquidating trust (or similar vehicle) with
assets of not less than $6.0 million for the remainder of such two year period.
9.3 CERTIFICATION OF CLOSING DATE ACCOUNTS PAYABLE. Consistent
with the covenant made by seller in Section 5.2(f) hereof, Seller agrees that
the Seller Entities shall not have aggregate accounts payable in excess of Seven
Million Six Hundred Thousand Dollars ($7,600,000) at Closing. Since the accounts
payable analysis on the Closing Date will be an estimate, Seller covenants that
it will prepare a certification of the outstanding accounts payable amount as of
the Closing Date within thirty (30) days of Closing and deliver such
certification to Buyer. Buyer shall have the right to review Seller's
certification and to affirm such certification within fifteen (15) days of its
receipt of such certification. In the event the Buyer disagrees with Seller's
certification, the parties shall work together to determine a mutually agreeable
accounts payable amount as of the Closing Date. To the extent the certified
accounts payable amount as of the Closing Date is determined to exceed Seven
Million Six Hundred Thousand Dollars
33
($7,600,000), Seller shall pay to Buyer, dollar for dollar, the amount of such
excess within five (5) business days of Buyer's affirmation of the certified
accounts payable amount.
ARTICLE 10.
ADDITIONAL AGREEMENTS
10.1 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the various classes of Assets in accordance with and as provided
by Section 1060 of the Code. Within ninety (90) days of the Closing, Buyer shall
provide Seller with a preliminary allocation of the Purchase Price for Seller's
review and approval. If Buyer and Seller cannot agree, initially, on an
allocation, then the matter shall be submitted to such independent accounting
firm as Seller and Buyer may then mutually agree upon in writing for final
resolution of all allocation matters. The parties agree that any tax returns or
other tax information they may file or cause to be filed with any governmental
agency shall be prepared and filed consistently with such agreed upon
allocation. In this regard, the parties agree that, to the extent required, they
will each properly prepare and timely file Form 8594 in accordance with Section
1060 of the Code.
10.2 TERMINATION PRIOR TO CLOSING. Notwithstanding anything herein
to the contrary, this Agreement may be terminated at any time: (i) on or prior
to the Closing Date by mutual written consent of Seller and Buyer; (ii) on or
prior to the Closing Date by Buyer, if any of the conditions specified in
Section 7 of this Agreement have not been satisfied and cannot be satisfied
prior to or on the Closing Date (unless the failure results primarily from Buyer
breaching any representation, warranty, or covenant herein) and shall not have
been waived by Buyer; (iii) on or prior to the Closing Date by Seller if any of
the conditions specified in Section 8 of this Agreement have not been satisfied
and cannot be satisfied prior to or on the Closing Date (unless the failure
results primarily from Seller's breaching any representation, warranty, or
covenant herein) and shall not have been waived by Seller; or (iv) by Buyer or
Seller if the Closing Date shall not have taken place on or before May 31, 2003
(which date may be extended by mutual written agreement of Buyer and Seller).
10.3 POST CLOSING ACCESS TO INFORMATION. Seller and Buyer
acknowledge that subsequent to Closing each party may need access to information
or documents in the control or possession of the other party for the purposes of
concluding the transactions herein contemplated, audits, compliance with
governmental requirements and regulations, and the prosecution or defense of
third party claims. Accordingly, Seller and Buyer agree that for a period of six
(6) years after Closing each will make reasonably available to the other's
agents, independent auditors, counsel, and/or governmental agencies upon written
request and at the expense of the requesting party such documents and
information as may be available relating to the Assets for periods prior and
subsequent to Closing to the extent necessary to facilitate concluding the
transactions herein contemplated, audits, compliance with governmental
requirements and regulations, and the prosecution or defense of claims.
10.4 PRESERVATION AND ACCESS TO RECORDS AFTER THE CLOSING. After
the Closing, Buyer shall, in the ordinary course of business and as required by
law, keep and preserve in their original form all medical and other records of
the Facilities existing as of the Closing, and which
34
constitute a part of the Assets delivered to Buyer at the Closing. For purposes
of this Agreement, the term "RECORDS" includes all documents, electronic data
and other compilations of information in any form. Buyer acknowledges that as a
result of entering into this Agreement and operating the Facilities it will gain
access to patient and other information which is subject to rules and
regulations regarding confidentiality. Buyer agrees to abide by any such rules
and regulations relating to the confidential information it acquires. Buyer
agrees to maintain the patient records delivered to Buyer at the Closing at the
Facilities after Closing in accordance with applicable law (including, if
applicable, Section 1861(v)(i)(I) of the Social Security Act (42 U.S.C.
1395(v)(l)(i)), and requirements of relevant insurance carriers, all in a manner
consistent with the maintenance of patient records generated at the Facilities
after Closing. Upon reasonable notice, during normal business hours, at the sole
cost and expense of Seller, Buyer will afford to the representatives of Seller,
including its counsel and accountants, full and complete access to, and copies
of, the records transferred to Buyer at the Closing (including, without
limitation, access to patient records in respect of patients treated by Seller
at the Facilities). Upon reasonable notice, during normal business hours, Buyer
shall also make its officers and employees available to Seller at reasonable
times and places after the Closing. In addition, Seller shall be entitled, at
Seller's sole risk, to remove from the Facilities copies of any such patient
records, but only for purposes of pending litigation involving a patient to whom
such records refer, as certified in writing prior to removal by counsel retained
by Seller in connection with such litigation. Any patient record so removed from
a Facility shall be promptly returned to the Facility following its use by
Seller. Any access to the Facilities, their records or Buyer's personnel granted
to Seller in this Agreement shall be upon the condition that any such access not
materially interfere with the business operations of Buyer.
10.5 CON DISCLAIMER. This Agreement shall not be deemed to be an
acquisition or an obligation to make a capital investment or to expend funds
within the meaning of the certificate of need statute of any state, until the
appropriate governmental agencies shall have granted a certificate of need or
the appropriate approval or ruled that no certificate of need or other approval
is required.
10.6 TAX AND MEDICARE EFFECT. None of the parties (nor such
parties' counsel or accountants) has made or is making any representations to
any other party (nor such party's counsel or accountants) concerning any of the
tax or Medicare reimbursement effects of the transactions provided for in this
Agreement as each party hereto represents that each has obtained, or may obtain,
independent tax and Medicare advice with respect thereto and upon which it, if
so obtained, has solely relied.
10.7 REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) the documents delivered at
the Closing, and (c) financial statements, certificates and other information
previously or hereafter furnished to Seller or to Buyer, may, subject to the
provisions of Section 12.10 hereof, be reproduced by Seller and by Buyer by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and Seller and Buyer may destroy, in accordance with
applicable law, any original documents so reproduced. Seller and Buyer agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial, arbitral or administrative proceeding (whether
or not the original is in existence and whether or not such reproduction was
35
made by the Seller or Buyer in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
10.8 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, all
information, records or documents relating to tax liabilities or potential tax
liabilities of Seller for all periods on or prior to the Closing and any
information which may be relevant to determining the amount payable under this
Agreement, and shall preserve all such information, records and documents (to
the extent a part of the Assets delivered to Buyer at Closing) at least until
the expiration of any applicable statute of limitations or extensions thereof.
10.9 COST REPORTS. Seller, at its expense, shall prepare and timely
file all terminating and other cost reports required or permitted by law to be
filed under the Medicare and Medicaid or other third party payor programs and
the State Health Agency for periods ending on or prior to the Closing Date, or
as a result of the consummation of the transactions described herein ("SELLER
COST REPORTS"). Buyer shall forward to Seller any and all correspondence
relating to the Seller Cost Reports within five (5) business days after receipt
by Buyer. Buyer shall remit any receipts of funds relating to the Seller Cost
Reports promptly after receipt by Buyer and shall forward to Seller any demand
for payments within three (3) business days after receipt by Buyer. Seller shall
retain all rights to the Seller Cost Reports including any amounts receivable or
payable in respect of such reports or reserves relating to such reports. Such
rights shall include the right to appeal any Medicare or Medicaid determinations
relating to the Seller Cost Reports. Seller shall retain the originals of the
Seller Cost Reports, correspondence, work papers and other documents relating to
the Seller Cost Reports. Seller will furnish copies of such cost reports to
Buyer upon request.
10.10 MISDIRECTED PAYMENTS, ETC. Seller and Buyer covenant and agree
to remit, with reasonable promptness, to the other any payments received, which
payments are on or in respect of accounts or notes receivable owned by (or are
otherwise payable to) the other. In addition, and without limitation, in the
event of a determination by any governmental or third-party payor that payments
to the Seller Entities or the Facilities resulted in an overpayment or other
determination that funds previously paid by any program or plan to the Seller
Entities or the Facilities must be repaid, Seller shall be responsible for
repayment of said monies (or defense of such actions) if such overpayment or
other repayment determination was for services rendered prior to the Closing
Date and Buyer shall be responsible for repayment of said monies (or defense of
such actions) if such overpayment or other repayment determination was for
services rendered on or after the Closing Date. In the event that, following
Closing, Buyer suffers any offsets against reimbursement under any third-party
payor or reimbursement programs due to Buyer, relating to amounts owing under
any such programs by Seller or any of its Affiliates for services rendered prior
to the Closing Date, Seller shall immediately upon demand from Buyer pay to
Buyer the amounts so billed or offset.
10.11 EMPLOYEE MATTERS. As of the Closing Date, the Seller Entities
shall terminate all of their employees at the Facilities, and Buyer shall hire
substantially all such employees commencing as of the Closing Date in positions
and at compensation levels consistent with those being provided by the Seller
Entities immediately prior to the Closing Date. Buyer shall provide
36
a list to Seller at least two (2) weeks prior to Closing of all employees of the
Seller Entities that Buyer does not intend to hire, if any. The offers of
employment will be subject to reasonable and satisfactory job performance by
each individual, and no such offer will alter the status of any "at will"
employee. Nothing herein shall be deemed to affect or limit in any way normal
management prerogatives of Buyer with respect to employees or to create or grant
to any such employees third party beneficiary rights or claims of any kind or
nature. To the extent reasonably possible, within the period of ninety (90) days
before the Closing, the Seller Entities shall not, and within the ninety (90)
days following the Closing, Buyer shall not: (1) permanently or temporarily shut
down a single site of employment, or one or more facilities or operating units
within a single site of employment, if the shutdown results in an employment
loss during any thirty (30) day period at the single site of employment for
fifty (50) or more employees, excluding any part-time employees; or (2) have a
mass layoff at a single site of employment of at least thirty-three percent
(33%) of the active employees and at least fifty (50) employees, excluding
part-time employees. The terms "single site of employment," "operating unit,"
"employment loss" and "mass layoff" shall be defined as in the Workers
Adjustment Retraining and Notification Act (the "WARN ACT"). With respect to
terminations of employees following the Closing, Buyer shall be responsible for
any notification required under the WARN Act. In respect of the employees
employed by Buyer, it shall provide such employees with employee benefits
consistent with the benefits generally offered to employees of Affiliates of
Buyer in the same geographic area as the Facilities and, to the extent the
Seller Entities have qualified retirement programs for such employees, Buyer
shall recognize the existing seniority of all such employees for benefits
purposes and shall provide credit under such plans for purposes of determining
eligibility and vesting and the rate of benefit accrual (but not actual benefit
accrual); provided, however, that no such credit need be given in respect of any
new plan commenced or participated in by Buyer in which no prior service credit
is given or recognized to or for other plan beneficiaries. In extending such
benefits, Buyer shall waive pre-existing conditions limitations in Buyer's
welfare benefit plans which might otherwise apply to such employees except to
the extent employees have not satisfied such limitations under the current
welfare benefit plans of the Seller Entities. Buyer shall assume any and all
liabilities under Section 4980B of the Code and Sections 601 through 608 of
ERISA with respect to all employees of the Seller Entities hired by Buyer in
connection with the transactions contemplated by this Agreement, and shall
indemnify Seller for any and all losses incurred by Seller as a result of any
violation of this provision.
10.12 USE OF CONTROLLED SUBSTANCE PERMITS. To the extent permitted
by applicable law, Buyer shall have the right, for a period not to exceed one
hundred twenty (120) days following the Closing Date, to operate under the
licenses and registrations of the Seller Entities relating to controlled
substances and the operations of pharmacies and laboratories, until Buyer is
able to obtain such licenses and registrations for itself. In furtherance
thereof, the Seller Entities shall execute and deliver to Buyer at or prior to
the Closing limited powers of attorney substantially in the form of Exhibit F
hereto.
10.13 TRANSITION SERVICES AGREEMENT. At the Closing, an Affiliate of
Seller and Buyer shall enter into a Transition Services Agreement substantially
in the form of Exhibit G hereto.
10.14 LOSS EXPERIENCE. For a period of six (6) years following the
Closing Date, Seller shall provide Buyer with annual reports concerning the
professional liability and general liability
37
loss experience of the Facilities related to events occurring prior to the
Closing Date. In addition, for a period of five (5) years following the Closing
Date, Seller shall provide Buyer with annual reports concerning the workers'
compensation loss experience of the Facilities related to events occurring prior
to the Closing Date.
10.15 INSURANCE. For a period of three (3) years following the
Closing Date, Seller shall keep in full force and effect the same or
substantially similar professional liability/general liability insurance
coverage, subject to a limitation that such covenant shall be modified (as set
forth in the subsequent sentence) in the event annual premiums for such coverage
exceed 200% of the premiums paid for the most recent policy year (ending June
30, 2003). In the event of an increase in premiums in excess of 200%,
notwithstanding the foregoing, Seller agrees to maintain such similar coverage
as premiums not exceeding 200% will provide and to provide Buyer with a
certificate of an officer of Seller by July 15th of each of 2003, 2004 and 2005
stating that such coverage has been renewed for the succeeding policy year (or
portion thereof, as applicable). In all events, such policies will be issued by
carriers maintaining a rating issued by A.M. Best & Co. of "A-" or better, and
shall provide that Buyer receive written notice at least thirty (30) days prior
to lapse or non-renewal thereof.
ARTICLE 11.
INDEMNIFICATION
11.1 INDEMNIFICATION BY BUYER. Subject to the limitations set forth
in Section 11.3 hereof, Buyer and its Affiliates and successors shall defend,
indemnify and hold harmless Seller and its Affiliates, and its and their
respective officers, employees, agents or independent contractors (collectively,
"SELLER INDEMNIFIED PARTIES"), from and against any and all losses, liabilities,
damages, costs (including, without limitation, court costs and costs of appeal)
and expenses (including, without limitation, reasonable attorneys' fees and fees
of expert consultants and witnesses) that such Seller Indemnified Party incurs
as a result of, or with respect to (i) any misrepresentation or breach of
warranty by Buyer under this Agreement, (ii) any breach by Buyer of, or any
failure by Buyer to perform, any covenant or agreement of, or required to be
performed by, Buyer under this Agreement, (iii) any of the Assumed Liabilities,
or (iv) any claim made by a third party with respect to the operation of the
Facilities following the Closing Date.
11.2 INDEMNIFICATION BY SELLER. Subject to the limitations set
forth in Section 11.3 hereof, Seller shall defend, indemnify and hold harmless
Buyer and its Affiliates, and its and their respective officers, employees,
agents, or independent contractors (collectively, "BUYER INDEMNIFIED PARTIES"),
from and against any and all losses, liabilities, damages, costs (including,
without limitation, court costs and costs of appeal) and expenses (including,
without limitation, reasonable attorneys' fees and fees of expert consultants
and witnesses) that such Buyer Indemnified Party incurs as a result of, or with
respect to (i) any misrepresentation or breach of warranty by Seller under this
Agreement, (ii) any breach by Seller of, or any failure by Seller to perform,
any covenant or agreement of, or required to be performed by, Seller under this
Agreement, (iii) any of the Excluded Liabilities, or (iv) any claim made by a
third party with respect to the operation of the Facilities prior to the Closing
Date.
11.3 LIMITATIONS. Buyer and Seller shall be liable under Section
11.1(i) or Section 11.2(i) (i.e., for misrepresentations and breaches of
warranties), as applicable, only when
38
total indemnification claims exceed (i) the following amounts ("Threshold
Amount") with respect to each Facility:
Facility Threshold Amount
-------- ----------------
The Xxxxx Schools of Virginia, Inc. $ 50,000
The Oaks Psychiatric Hospital, Inc. $ 50,000
Cedar Springs Hospital, Inc. $100,000
Healthcare San Antonio, Inc. $100,000
The Xxxxx Schools of San Marcos, Inc. $100,000
The Xxxxx Schools of Oklahoma, Inc. $100,000
and then only for the amount by which such claims exceed the Threshold Amount
for the particular Facility; or (ii) an aggregate of Two Hundred Fifty Thousand
Dollars ($250,000) for non-Facility specific breaches and then only for the
amount by which such claims exceed $250,000. No party shall be liable for any
indemnification pursuant to Section 11.1 (i), or Section 11.2(i), as applicable,
for any claims for misrepresentations and breaches of warranty which are the
basis upon which any other party shall have failed to consummate the
transactions described herein pursuant to Section 7.1 or Section 8.1, as
applicable, or which are based upon misrepresentations and breaches of warranty
which have been waived in writing by the party seeking indemnification therefor.
The liability of Buyer and Seller for indemnification under Section 11.1(i) or
(ii) or Section 11.2(i) or (ii), respectively, shall be limited to an amount
equal to (i) the Purchase Price with respect to the representations and
warranties contained in Sections 3.1, 3.2, 3.3, 4.1, 4.2 and 4.3, (ii) Ten
Million Five Hundred Thousand Dollars ($10,500,000) with respect to the
representations and warranties contained in Sections 3.8, 3.9 and 3.23, and
(iii) Six Million Five Hundred Sixty-Five Thousand Dollars ($6,565,000) with
respect to all other representations and warranties. Notwithstanding anything to
the contrary, the limitations contained in this Section 11.3 shall not apply to
any indemnification claims arising under Section 11.1(i) or Section 11.2(i) as a
result of the intentional misrepresentation or fraud of Buyer or Seller,
respectively. Except in the case of intentional misrepresentation or fraud, the
sole and exclusive remedy for any breach or inaccuracy, or alleged breach or
inaccuracy, of any representation or warranty made by Seller or Buyer shall be
the remedies provided by this Section 11. The losses of any Indemnified Party
(as defined below) shall be reduced by the amount of any insurance proceeds
received by such Indemnified Party in respect of the claim to which such losses
relate.
11.4 NOTICE AND CONTROL OF LITIGATION. If any claim or liability is
asserted in writing by a third party against a party entitled to indemnification
under this Section 11 (the "INDEMNIFIED PARTY") which would give rise to a claim
under this Section 11, the Indemnified Party shall promptly notify the person
giving the indemnity (the "INDEMNIFYING PARTY") in writing of the same within
ten (10) days of receipt of such written assertion of a claim or
39
liability. The failure to give such notice shall not relieve the Indemnifying
Party of its indemnification obligations under this Agreement, unless and to the
extent that the failure to give such notice to the Indemnifying Party prevents
the Indemnifying Party from raising a defense to such legal proceeding, claim or
demand or otherwise materially and adversely affects the Indemnifying Party's
ability to defend against such legal proceeding, claim or demand. The
Indemnifying Party shall have the right to defend a claim and control the
defense, settlement, and prosecution of any litigation. The Indemnifying Party
shall have ten (10) days from the date of delivery of notice to notify the
Indemnified Party (i) whether the Indemnifying Party disputes liability to the
Indemnified Party hereunder with respect to the third party claim, and, if so,
the basis for such a dispute, and (ii) if such party does not dispute liability,
whether or not the Indemnifying Party desires, to defend against the third party
claim. If the Indemnifying Party fails to defend such claim, the Indemnified
Party shall (upon further notice to the Indemnifying Party) have the right to
undertake the defense, compromise, or settlement of such claim on behalf of and
for the account and at the risk of the Indemnifying Party, subject to the right
of the Indemnifying Party to assume the defense of such claim at any time prior
to settlement, compromise, or final determination thereof. Anything in this
Section 11.4 notwithstanding, (i) if there is a reasonable probability that a
claim may materially and adversely affect the Indemnified Party other than as a
result of money damages or other money payments, the Indemnified Party shall
have the right, at its own cost and expense, to defend, compromise, and settle
such claim, and (ii) the Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any claim or consent to
the entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant to the Indemnified Party of a release from
all liability in respect of such claim. The foregoing rights and agreements
shall be limited to the extent of any requirement of any third-party insurer or
indemnitor. All parties agree to cooperate fully as necessary in the defense of
such matters.
11.5 NOTICE OF CLAIM. If an Indemnified Party becomes aware of any
breach of the representations or warranties of the Indemnifying Party hereunder
or any other basis for indemnification under this Section 11, the Indemnified
Party shall notify the Indemnifying Party in writing of the same within thirty
(30) days after becoming aware of such breach or claim, specifying in detail the
circumstances and facts which give rise to a claim under this Section 11. Should
the Indemnified Party fail to notify the Indemnifying Party within the time
frame required above, the indemnity with respect to the subject matter of the
required notice shall be limited to the damages that would have nonetheless
resulted absent the Indemnified Party's failure to notify the Indemnifying Party
in the time required above after taking into account such actions as could have
been taken by the Indemnifying Party had it received timely notice from the
Indemnified Party.
ARTICLE 12.
MISCELLANEOUS
12.1 SCHEDULES AND OTHER INSTRUMENTS. Each Schedule and Exhibit to
this Agreement shall be considered a part hereof as if set forth herein in full.
At any time prior to the Closing, Seller or Buyer may update a Schedule required
to be provided by it hereunder. Submission of an updated Schedule or Exhibit by
one party shall not, in and of itself, be deemed to constitute acceptance
thereof by the other party. If any party receiving an updated Schedule or
Exhibit does not object in writing to the updated Schedule or Exhibit within
five (5) days of its
40
receipt of the updated Schedule or Exhibit, or if such party notifies the other
party of its acceptance of such updated Schedule or Exhibit, the updated
Schedule or Exhibit shall be deemed accepted, and such party shall not be able
to assert a claim for indemnification because of such updated Schedule or
Exhibit.
12.2 ADDITIONAL ASSURANCES. The provisions of this Agreement shall
be self-operative and shall not require further agreement by the parties except
as may be herein specifically provided to the contrary; provided, however, at
the request of a party, the other party or parties shall execute such additional
instruments and take such additional actions as are reasonable to effectuate
this Agreement. In addition and from time to time after Closing, Seller shall
execute and deliver such other instruments of conveyance and transfer, and take
such other actions as Buyer reasonably may request, more effectively to convey
and transfer full right, title, and interest to, vest in, and place Buyer in
legal and actual possession of, any and all of the Facilities and the Assets.
Seller shall also furnish Buyer with such information and documents in its
possession or under its control, or which Seller can execute or cause to be
executed, as will enable Buyer to prosecute any and all petitions, applications,
claims, and demands relating to or constituting a part of the Facilities or the
Assets. Additionally, the parties hereto shall cooperate and use their
commercially reasonable efforts to have its present directors, officers, and
employees cooperate with such other party on and after Closing in furnishing
information, evidence, testimony, and other assistance in connection with any
action, proceeding, arrangement, or dispute of any nature with respect to
matters pertaining to all periods prior to (or post) Closing in respect of the
items subject to this Agreement, including, but not limited to, all records and
personnel with regard to any pending litigation or litigation arising after the
Closing.
12.3 CONSENTED ASSIGNMENT. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any claim, right, contract, license, lease, commitment, sales order, or
purchase order if an attempted assignment thereof without the consent of the
other party thereto would constitute a breach thereof or in any material way
affect the rights of Seller thereunder, unless such consent is obtained. Each of
Seller and Buyer, respectively, shall use its reasonable efforts to obtain any
third party consents to the transactions contemplated by this Agreement from
parties with which each, respectively, has a contractual relationship. If such
consent is not obtained, or if an attempted assignment would be ineffective or
would materially affect the rights thereunder of Seller so that Buyer would not
in fact receive all such rights, Seller and Buyer shall cooperate in good faith
in any reasonable arrangement designed to provide for Buyer the benefits under
any such claim, right, contract, license, lease, commitment, sales order, or
purchase order, including, without limitation, enforcement of any and all rights
of Seller against the other party or parties thereto arising out of the breach
or cancellation by such other party or otherwise.
12.4 CONSENTS, APPROVALS AND DISCRETION. Except as herein expressly
provided to the contrary, whenever this Agreement requires any consent or
approval to be given by a party, or whenever a party must or may exercise
discretion, the parties agree that such consent or approval shall not be
unreasonably withheld or delayed and such discretion shall be reasonably
exercised.
12.5 LEGAL FEES AND COSTS. In the event a party elects to incur
legal expenses to enforce or interpret any provision of this Agreement by
judicial proceedings, the prevailing party
41
will be entitled to recover such legal expenses, including, without limitation,
reasonable attorneys' fees, costs, and necessary disbursements at all court
levels, in addition to any other relief to which such party shall be entitled.
12.6 CHOICE OF LAW. The parties agree that this Agreement shall be
governed by and construed in accordance with the laws of the State of Tennessee
without regard to conflict of laws principles.
12.7 BENEFIT/ASSIGNMENT. Subject to provisions herein to the
contrary, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, successors, and
assigns. No party may assign this Agreement without the prior written consent of
the other parties, which consent shall not be unreasonably withheld; provided,
however, that any party may, without the prior written consent of the other
parties, assign its rights and delegate its duties hereunder to one or more
Affiliates (as defined in Section 12.18), but in such event, the assignor shall
be required to remain obligated hereunder in the same manner as if such
assignment had not been effected. Seller hereby agrees to cause the Seller
Entities to transfer the Assets and Assumed Liabilities to the Buyer Entities
specified on Exhibit C at the Closing. The transfer of the Assets and Assumed
Liabilities to the Buyer Entities shall not relieve Buyer of any of its
obligations under this Agreement.
12.8 NO BROKERAGE. Each party agrees to be solely liable for and
obligated to satisfy and discharge all loss, cost, damage, or expense arising
out of claims for fees or commissions of brokers, investment bankers and
financial advisors employed or alleged to have been employed by such party.
12.9 COST OF TRANSACTION. Whether or not the transactions
contemplated hereby shall be consummated and except as expressly set forth in
Sections 12.28 and 12.29, the parties agree as follows: (i) Seller shall pay the
fees, expenses, and disbursements of Seller and its agents, representatives,
accountants, and legal counsel incurred in connection with the subject matter
hereof and any amendments hereto; and (ii) Buyer shall pay the fees, expenses,
and disbursements of Buyer and its agents, representatives, accountants and
legal counsel incurred in connection with the subject matter hereof and any
amendments hereto.
12.10 CONFIDENTIALITY. It is understood by the parties hereto that
the information, documents, and instruments delivered to Buyer by Seller and its
agents and the information, documents, and instruments delivered to Seller by
Buyer and its agents are of a confidential and proprietary nature. Each of the
parties hereto agrees that both prior and subsequent to the Closing it will
maintain the confidentiality of all such confidential information, documents, or
instruments delivered to it by each of the other parties hereto or their agents
in connection with the negotiation of this Agreement or in compliance with the
terms, conditions, and covenants hereof and will only disclose such information,
documents, and instruments to its duly authorized officers, members, directors,
representatives, and agents (including consultants, attorneys, and accountants
of each party) and applicable governmental authorities in connection with any
required notification or application for approval or exemption therefrom. Each
of the parties hereto further agrees that if the transactions contemplated
hereby are not consummated, it will return (or destroy and certify the
destruction thereof) all such documents and instruments and all copies thereof
in its possession to the other parties to this Agreement. Each of the parties
42
hereto recognizes that any breach of this Section 12.10 would result in
irreparable harm to the other party to this Agreement and its Affiliates (as
defined in Section 12.18 below) and that therefore either Seller or Buyer shall
be entitled to an injunction to prohibit any such breach or anticipated breach,
without the necessity of posting a bond, cash, or otherwise, in addition to all
of its other legal and equitable remedies. Nothing in this Section 12.10,
however, shall prohibit the use of such confidential information, documents, or
information for such governmental filings as in the opinion of Seller's counsel
or Buyer's counsel are required by law or governmental regulations or are
otherwise required to be disclosed pursuant to applicable law.
12.11 PUBLIC ANNOUNCEMENTS. Seller and Buyer mutually agree that no
party hereto shall release, publish, or otherwise make available to the public
in any manner whatsoever any information or announcement regarding the
transactions herein contemplated without the prior written consent of Seller and
Buyer, except for information and filings reasonably necessary to be directed to
governmental agencies to fully and lawfully effect the transactions herein
contemplated or required in connection with securities and other laws. Nothing
herein shall prohibit either party from responding to questions presented by the
press or media without first obtaining prior consent of the other party hereto.
12.12 WAIVER OF BREACH. The waiver by any party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or any
other provision hereof.
12.13 NOTICE. Any notice, demand, or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
when personally delivered, when received by receipted overnight delivery, or
five (5) days after being deposited in the United States mail, with postage
prepaid thereon, certified or registered mail, return receipt requested,
addressed as follows:
Seller: The Xxxxx Schools, Inc.
0000 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to: Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx III
Buyer: Psychiatric Solutions, Inc.
000 Xxxxxxxx Xxxx, Xxxxx X-000
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to: Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxx
43
or to such other address, and to the attention of such other person or officer
as any party may designate, with copies thereof to the respective counsel
thereof as notified by such party.
12.14 SEVERABILITY. In the event any provision of this Agreement is
held to be invalid, illegal or unenforceable for any reason and in any respect,
such invalidity, illegality, or unenforceability shall in no event affect,
prejudice, or disturb the validity of the remainder of this Agreement, which
shall be and remain in full force and effect, enforceable in accordance with its
terms.
12.15 GENDER AND NUMBER. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine,
and neuter, and the number of all words herein shall include the singular and
plural.
12.16 DIVISIONS AND HEADINGS. The divisions of this Agreement into
sections and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall have no legal effect in
construing the provisions of this Agreement.
12.17 SURVIVAL. All of the representations, warranties, covenants,
and agreements made by the parties in this Agreement or pursuant hereto in any
certificate, instrument, or document shall survive the consummation of the
transactions described herein, and may be fully and completely relied upon by
Seller and Buyer, as the case may be, notwithstanding any investigation
heretofore or hereafter made by any of them or on behalf of any of them, and
shall not be deemed merged into any instruments or agreements delivered at the
Closing or thereafter. Notwithstanding anything in this Section 12.17 which may
be to the contrary, any claim, demand, or cause of action with respect to a
breach of any representation or warranty made in this Agreement (other than
representations or warranties contained in Sections 3.1, 3.2, 3.3, 3.12, 4.1,
4.2 and 4.3, which shall survive indefinitely, and the representations or
warranties contained in Sections 3.8, 3.9, 3.15, 3.17 and 3.23, which shall
survive for three (3) years after the Closing Date), must be made or brought, if
at all, within one (1) year after the Closing Date. For the avoidance of doubt,
this Section 12.17 shall not affect any rights to bring claims after one (1)
year based on (x) any covenant or agreement of the parties which contemplates
performance after the Closing, (y) the obligations of Buyer under Sections
11.1(ii), 11.1(iii) or 11.1(iv) or (z) the obligations of Seller under Section
11.2(ii), 11.2(iii) or 11.2(iv).
12.18 AFFILIATES. As used in this Agreement, the term "AFFILIATE"
means, as to the entity in question, any person or entity that directly or
indirectly controls, is controlled by or is under common control with, the
entity in question and the term "CONTROL" means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of an entity whether through ownership of voting securities, by
contract or otherwise.
12.19 KNOWLEDGE. "KNOWLEDGE" or similar phrases shall mean (1) in
the case of an entity, the particular fact was actually known or not known, as
the context requires, by Xxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxxxx, Xxx Xxxxx, Xxxxx
Xxxxxx, Xxxxx Xxxxxxx or the facility Chief Executive Officer of such entity,
and (2) in the case of an individual, the particular fact was actually known or
not known, as the context requires, or in the event of either (1) or (2) with
44
respect to the actions or omissions of Seller, could reasonably be expected to
have been known by such individual given his or her office and responsibilities.
12.20 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE
RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY
AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE INCLUDING, BUT
NOT LIMITED TO, THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN,
COMMON LAW OR ANY APPLICABLE STATUTE OR REGULATIONS. EACH PARTY HERETO
ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND
TRIAL BY JURY.
12.21 ACCOUNTING DATE. The transactions contemplated hereby shall be
effective for accounting purposes as of 12:01 a.m. Central Time on the Closing
Date, unless otherwise agreed in writing by Seller and Buyer.
12.22 NO INFERENCES. Inasmuch as this Agreement is the result of
negotiations between sophisticated parties of equal bargaining power represented
by counsel, no inference in favor of, or against, either party shall be drawn
from the fact that any portion of this Agreement has been drafted by or on
behalf of such party.
12.23 NO THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of Buyer and Seller and their
respective permitted successors or assigns, and it is not the intention of the
parties to confer, and this Agreement shall not confer, third-party beneficiary
rights upon any other person.
12.24 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
12.25 ENTIRE AGREEMENT; AMENDMENT. This Agreement supersedes all
previous contracts or understandings, including any offers, letters of intent,
proposals or letters of understanding, and constitutes the entire agreement of
whatsoever kind or nature existing between or among the parties respecting the
within subject matter, and no party shall be entitled to benefits other than
those specified herein. As between or among the parties, no oral statements or
prior written material not specifically incorporated herein shall be of any
force and effect. The parties specifically acknowledge that in entering into and
executing this Agreement, the parties rely solely upon the representations and
agreements contained in this Agreement and no others. All prior representations
or agreements, whether written or verbal, not expressly incorporated herein are
superseded, and no changes in or additions to this Agreement shall be recognized
unless and until (i) they are made in writing and signed by all parties hereto,
or (ii) they are deemed accepted pursuant to Section 12.1. This Agreement may be
executed in two or more
45
counterparts, each and all of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
12.26 RISK OF LOSS. Notwithstanding any other provision hereof to
the contrary, the risk of loss in respect of casualty to the Assets shall be
borne by Seller prior to the time of Closing and by Buyer thereafter.
12.27 OTHER OWNERS OF ASSETS. The parties acknowledge that certain
Assets may be owned by Affiliates of Seller and not Seller. Notwithstanding the
foregoing, and for purposes of all representations, warranties, covenants and
agreements contained herein, Seller agrees that (i) its obligations with respect
to any Assets shall be joint and several with any Affiliate which owns or
controls such Assets, (ii) the representations and warranties herein, to the
extent applicable, shall be deemed to have been made by, on behalf of and with
respect to, such Affiliates in their ownership capacity, and (iii) it has the
legal capacity to cause, and it shall cause, any Affiliate which owns or
controls any Assets to meet all of Seller's obligations under this Agreement
with respect to such Assets. Seller hereby waives any defense to a claim made by
Buyer under this Agreement based on the failure of any person who owns or
controls the Assets to be a party to this Agreement.
12.28 TRANSFER OR SALES TAXES. Any transfer, use or sales taxes due
as a result of the purchase, sale, use or transfer of the Assets arising out of
this transaction, if any, will be paid equally by Buyer and Seller.
12.29 PRORATIONS. All of the costs that are directly attributable to
the conduct of the business and operations of the Facilities and the Assets
transferred to Buyer shall be prorated between Seller and Buyer as of the
Closing Date. These costs shall include, but not be limited to, all personal
property taxes, real estate taxes and assessments and other taxes imposed upon
or assessed against the Real Property ("REAL ESTATE TAXES"). Seller shall pay
all Real Estate Taxes for the years prior to the year in which Closing occurs.
In the event Real Estate Taxes for the year in which Closing occurs are not
payable or determinable at the time of Closing, Real Estate Taxes shall be
prorated on the basis of the most currently available information. In the event
that after Closing it is determined that the actual Real Estate Taxes for the
year in which Closing occurs exceed such estimated amount ("TAX EXCESS") or are
less than such estimated amount ("TAX REFUND") on which such proration is based,
then (i) Seller shall pay its pro rata share of any Tax Excess promptly upon
receipt from Buyer of Notice of such Tax Excess after its receipt of the tax
bills for Real Estate Taxes for the year in which Closing occurs or (ii) Buyer
shall refund and pay to Seller its pro rata share of any Tax Refund promptly
after its receipt of such tax bills.
[Signature Page Follows]
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in multiple originals by their authorized officers, all as of the date
first above written.
THE XXXXX SCHOOLS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------
Title: Chief Financial Officer
-----------------------------------
PSYCHIATRIC SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Title: Vice President
-----------------------------------
47
AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this "AMENDMENT NO.
1") is made and entered into as of March 31, 2003 by and between The Xxxxx
Schools, Inc., a Delaware corporation ("SELLER"), and Psychiatric Solutions,
Inc., a Delaware corporation ("BUYER"). Buyer and Seller are referred to
collectively herein as the "PARTIES."
RECITALS
A. On February 13, 2003, the Parties entered into that certain
Asset Purchase Agreement (the "ORIGINAL AGREEMENT") pursuant to which, inter
alia, Buyer agreed to purchase, and the Seller agreed to sell, substantially all
of the assets and properties and assume certain of the liabilities which are
directly related to and used in connection with the operation of the Facilities,
on the terms and conditions set forth in the Original Agreement. Capitalized
terms used in this Amendment No. 1 and not otherwise defined in this Amendment
No. 1 shall have the meanings ascribed to them in the Original Agreement.
B. Due to developments subsequent to the date of the Original
Agreement and as a result of the anticipated timing for issuance of the
Certificate of Need by the Oklahoma State Department of Health, the parties have
agreed to amend the Original Agreement to provide for a second closing, solely
for the transfer of Assets and Assumption of Liabilities of The Xxxxx Schools of
Oklahoma, Inc., a wholly owned subsidiary of Seller, and Therapeutic School
Services, L.L.C., a wholly owned subsidiary of The Xxxxx Schools of Oklahoma,
Inc., each such entity one of the Seller Entities (and collectively herein
referred to as "TBS-OKLAHOMA"). The parties desire to set forth the terms and
conditions relating to the amendments as more particularly described in this
Amendment No. 1.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties agree
as follows:
ARTICLE I
AMENDMENTS TO ORIGINAL AGREEMENT
1.1 PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES. The Assets
and Assumed Liabilities related to TBS-Oklahoma shall be sold, conveyed,
transferred, delivered, assigned and assumed (as applicable) to the Buyer and
Psychiatric Solutions of Oklahoma, Inc., a wholly owned subsidiary of Buyer
("PSI-OKLAHOMA"), on the Second Closing Date (defined hereinafter), subject to
fulfillment of the terms and conditions set forth herein.
1.2 PURCHASE PRICE. As a result of this Second Closing (defined
hereinafter), Buyer shall pay $48,000,000 of the Purchase Price at the first
closing (referred to herein as the "FIRST CLOSING" and which hereby amends the
term "Closing" as set forth in the Original Agreement).
In addition, as contemplated in the Original Agreement, Buyer hereby affirms it
will pay One Million Dollars ($1,000,000) of the obligation under the Promissory
Note as of the First Closing. Both payments at the First Closing and the payment
at the Second Closing shall be made by wire transfer of immediately available
funds to an account designated by Seller. The consummation of the transactions
contemplated hereby, including the payment of the balance of the Purchase Price
($15,000,000), shall take place, subject to the satisfaction or waiver by the
appropriate party of all the conditions precedent (as specified in Articles 7
and 8, subject to the modifications in this Amendment No. 1), at the second
closing (the "SECOND CLOSING") which shall be at the offices of Bass, Xxxxx &
Xxxx PLC as promptly as reasonably possible on either of (i) the date of
issuance of the Certificate of Need (anticipated to be on or before April __,
2003) or (ii) the date thereafter if timing of receipt of the Certificate of
Need does not allow the parties to reasonably affect the transaction on the
issuance date, or on such other date or at such other location as the Parties
may mutually designate in writing (the "SECOND CLOSING DATE").
1.3 ACTIONS AT SECOND CLOSING DATE. All actions set forth in
Sections 2.2 and 2.3 of the Original Agreement of Seller and Buyer,
respectively, with respect to the Assets and Assumed Liabilities of TBS-Oklahoma
(the "OKLAHOMA ACTIONS") are hereby modified and amended to exclude such actions
as of the First Closing Date and all such Oklahoma Actions shall, unless waived,
be delivered and taken by Seller and Buyer, respectively, as of the Second
Closing Date. Specifically, with respect to the Purchase Price, it will be
allocated and delivered as set forth in Section 1.2 above.
1.4 COVENANTS OF BUYER AND SELLER. The covenants set forth in
Article 5 applicable to TBS-Oklahoma and Seller (as it relates to its
obligations regarding TBS-Oklahoma, not otherwise satisfied or waived at the
First Closing and as applicable to affect the Second Closing) shall continue in
effect to the Second Closing. The covenants of Buyer set forth in Article 6, not
otherwise satisfied or waived at the First Closing and as applicable to affect
the Second Closing, shall continue in effect to the Second Closing.
1.5 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The conditions
precedent to obligations of the Buyer set forth in Article 7 shall continue in
full force and effect to the Second Closing, but only as applicable to
TBS-Oklahoma and the Seller's obligations to affect the Second Closing and not
previously satisfied or waived at the First Closing.
1.6 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The conditions
precedent to obligations of Seller set forth in Article 8 shall continue in full
force and effect to the Second Closing, but only as applicable to Buyer's
obligations to affect the Second Closing and not previously satisfied or waived
at the First Closing. Notwithstanding the foregoing, the Parties hereto
acknowledge and affirm that the conditions set forth in Section 7.5 (Adverse
Change) continue to be measured on an aggregate basis, so that following the
First Closing any adverse change at TBS-Oklahoma would have to be material to
the Facilities (taken as a whole).
1.7 ACCOUNTING DATE. The transactions contemplated hereby shall be
effective for accounting purposes as of 12.01 a.m. Central Time on April 1, 2003
for the First Closing and as of 12:01 a.m. Central Time on the Second Closing
Date for the Second Closing, unless otherwise agreed in writing by Seller and
Buyer.
2
ARTICLE II
MISCELLANEOUS
2.1 NO THIRD-PARTY BENEFICIARIES. Except as expressly provided in
this Amendment No. 1, this Amendment No. 1 shall not confer any rights or
remedies upon any person or entity other than the Parties and their respective
successors and permitted assigns.
2.2 ENTIRE AGREEMENT. This Amendment No. 1 and the Original
Agreement (including the Schedules and Exhibits thereto and other documents
referred to therein) constitute the entire agreement on an integrated basis
between the Parties with respect to the subject matter hereof and supersedes any
prior understandings, agreements or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof. Except as expressly modified by this Amendment No. 1, the terms,
covenants and conditions of the Original Agreement continue in full force and
effect.
2.3 SUCCESSION AND ASSIGNMENT. This Amendment No. 1 shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Amendment No. 1 or any of its rights, interests, or obligations hereunder by
operation of law or otherwise except as contemplated in the Original Agreement.
2.4 COUNTERPARTS. This Amendment No. 1 may be executed, including
by facsimile signature, in one or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
2.5 GOVERNING LAW. This Amendment No. 1 shall be governed by, and
construed and enforced in accordance with, the laws of the State of Tennessee,
without regard to conflict of laws principals.
2.6 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Amendment No. 1 shall be valid unless the same shall be in writing and signed by
the Parties. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any such prior or subsequent occurrence.
2.7 SEVERABILITY. In the event that any provision of this
Amendment No. 1 or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Amendment No. 1 will continue in full force and effect and the application
of such provision to other persons/entities or circumstances will be interpreted
so as to effect the intent of the parties hereto.
3
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment No.
1 as of the date first above written.
THE XXXXX SCHOOLS, INC.
BY: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------
NAME: Xxxxxxx X. Xxxxxxxxxx
------------------------------------
TITLE: Chief Financial Officer
-----------------------------------
PSYCHIATRIC SOLUTIONS, INC.
BY: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
NAME: Xxxxxx X. Xxxxxxxx
------------------------------------
TITLE: Vice President
-----------------------------------
[Signature Page to Amendment No. 1]
4
