Exhibit 2.03
STOCK PURCHASE AND SALE AGREEMENT
REHABWORKS OF CALIFORNIA, INC.
This Agreement is made and entered into this 19th day of November, 1996
by and between CMS Therapies, Inc., a North Carolina corporation ("Seller") and
Regency Rehab Hospitals, Inc., a California corporation ("Purchaser").
ARTICLE I
PURCHASE AND SALE
1.01. In consideration of One Dollar and other good and valuable
consideration, on the terms and subject to the conditions set forth herein,
Seller does hereby agree to sell to Purchaser and Purchaser does hereby agree to
acquire from Seller all of Seller's right, title and interest in and to all of
the issued and outstanding stock (the "Stock") of RehabWorks of California,
Inc., a California corporation (the "Corporation").
ARTICLE II
[INTENTIONALLY OMITTED]
ARTICLE III
CLOSING
3.01. Provided that all of the conditions to closing set forth in
Paragraphs 12.01 and 12.02 have been satisfied or waived, the purchase and sale
of the Stock shall be effective as of 12:01 a.m. on January 1, 1997 unless
extended by mutual agreement of the parties (the "Outside Closing Date").
Closing shall occur at offices of Lawyers Title Insurance Company at 10:00 a.m.
or at such other time and place as may be agreed upon by the parties in order to
ensure closing of the transactions provided for herein by the Outside Closing
Date.
The actual date of Closing is referred to herein as the "Closing Date."
3.02. At Closing, Seller shall deliver title to the Stock
free and clear of all liens and encumbrances.
3.03. Title to the Stock shall be conveyed to Purchaser at
Closing by Seller's delivery of the following documents:
(a) Seller shall deliver an Assignment Separate From Certificate in the
form and substance substantially the same as that attached hereto as Exhibit
3.03(a) pursuant to which Seller shall convey to Purchaser Seller's right, title
and interest in and to the Stock (the "Stock Assignment Agreement").
(b) Such other documents or instruments as may be necessary to convey
title to the Stock to Purchaser in accordance with the terms hereof.
ARTICLE IV
COSTS AND PRORATIONS
The costs of the transaction and the expenses related to the ownership
of the Stock shall be allocated between Seller and Purchaser as follows:
4.01. Seller and Purchaser shall share on a 50-50 basis any State and
County transfer or excise taxes due on the transfer of the Stock to Purchaser.
4.02. Purchaser shall pay any sales tax due on the transfer of the
Stock to Purchaser.
4.03. Seller and Purchaser shall each pay their own attorneys fees
incurred in connection with the preparation and negotiation of this Agreement
and the consummation of the transaction provided for herein.
4.04. Seller shall pay the cost of obtaining and recording any releases
necessary to deliver title to the Stock and to the Corporation's Assets (as
defined below) in accordance with the terms of this Agreement.
4.05. Seller shall pay any reasonable attorneys fees, processing fees
and other fees and expenses contemplated by the terms of the Clinic Agreement
(as defined below) as a condition to securing consent to an assignment thereof
from the lessor thereunder.
4.06. Purchaser shall pay any filing fees due with respect to the
transaction evidenced by this Agreement and those other Purchase and Sale
Agreements set forth in Exhibit 4.06 (the "Other Agreements") under the
Antitrust Improvements Act of 1976, as amended (the "HSR Act").
4.07. Seller shall pay any reasonable attorneys fees, processing fees
and other fees and expenses contemplated by the terms of that Amended and
Restated Credit Agreement dated September 26, 1995 between Seller and
NationsBank of Texas, N.A. (the "Seller's Credit Agreement"), as a condition to
securing consent to the sale of the Stock and Purchaser shall pay any reasonable
attorneys' fees, processing fees and other fees and expenses contemplated by the
terms of the Credit Agreement dated September 26, 1995 between Regency Health
Services, Inc. and NationsBank of Texas, N.A.
ARTICLE V
POSSESSION
On the Closing Date, Purchaser shall be entitled to possession of the
Stock and the Corporation will continue to have possession of the Real Property
(as defined below).
ARTICLE VI
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby warrants and represents to Purchaser that, except as
otherwise specifically set forth in the disclosure letter addressed to Purchaser
and dated the date hereof (the "Seller Disclosure Letter"):
6.01. Status of Seller/Status of Corporation. Seller is a duly
organized, validly existing North Carolina corporation and is in good standing
under the laws thereof. Seller is the sole shareholder of the Corporation. The
Corporation is a duly organized, validly existing California corporation in good
standing under the laws thereof. Horizon is a duly organized, validly existing
Delaware corporation and is in good standing under the laws thereof. The
Corporation has 100,0000 shares of its common stock no par value authorized and
200 shares of its common stock no par value issued and outstanding. The
Corporation has not authorized the issuance of or issued any preferred stock,
stock options, warrants or other rights to acquire its common stock or any
interest therein. All of the Stock is fully paid and non-assessable. True and
correct copies of the Articles of Incorporation and Bylaws of the Corporation
have been provided by Seller to Purchaser.
6.02. Validity and Conflicts. This Agreement is valid, binding and
enforceable against Seller in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). Subject to Seller obtaining
those Third Party Consents and Regulatory Approvals (as defined below) for which
it is responsible under the terms hereof, the execution of this Agreement and
the consummation of the transactions contemplated herein in accordance with the
terms hereof will not result in a breach of the terms and conditions of nor
constitute a default under or violation of Seller's or the Corporation's
Articles of Incorporation or Bylaws or any law, regulation, court order,
mortgage, note, bond, indenture, agreement, license or other instrument or
obligation to which Seller or the Corporation is now a party or by which any of
the Stock, the Clinic or the Corporation may be bound or affected or any
agreement, option, understanding or commitment or any or privilege granted by
Seller or the Corporation to any other party to purchase or otherwise acquire
the Stock or the Corporation's Assets or result in the acceleration of or an
increase in the interest rate payable under any indebtedness to which Seller or
the Corporation is a party other than indebtedness of Seller which does not
relate to the Stock, the Corporation or the Clinic or which is to be discharged
by Seller as of the Closing Date.
6.03. Authority. Subject to Seller obtaining those Third Party Consents
and Regulatory Approvals for which it is responsible under the terms hereof,
Seller has full corporate power and authority to execute and to deliver this
Agreement and all related documents, and to carry out the transactions
contemplated herein and therein. Seller further has full power and authority (i)
to own the Stock and (ii) to conduct its business as the same is now being
conducted and the Corporation has full power and authority (i) to occupy and/or
to operate the Clinic and (ii) to conduct its business as the same is now being
conducted.
6.04. The Financials. True and correct copies of an unaudited balance
sheet and statement of operations of the Corporation with respect to the
operation of the Clinic as of the close of the Corporation's fiscal year ended
May 31, 1996 and for the four month period ended September 30, 1996 (the
"Financials") are attached hereto as Exhibit 6.04. Except as otherwise noted
therein, all such financial statements fairly represent the financial condition,
and accurately set forth in all material respects as and to the extent required
by GAAP the results of the operations of the Corporation at the Clinic for the
periods covered thereby subject to customary year end adjustments. Any financial
statements prepared by the Corporation subsequent to the date of the Financials
or the date hereof will be prepared in a manner consistent with the manner in
which the Financials were prepared, will fairly represent the financial
condition, and will accurately set forth in all material respects the results of
the operations of the Corporation at the Clinic and of Seller's interest therein
for the periods covered thereby and will be provided to Purchaser within ten
(10) days after the completion thereof.
6.05. Absence of Adverse Change. Since the date of the most recent
Financials there has not been any material adverse change in the financial
condition, business, assets, liabilities or results of operations of the
Clinic.
6.06. The Assets of the Corporation. The assets of the
Corporation consist of the following (collectively, the "Corporation's
Assets"):
(a) That certain Service and Staffing Agreement dated
February 1, 1995 between Coastal Healthcare Group, Inc. and the Corporation
(the "Clinic Agreement"), including, but not limited to the Corporation's
right, title and interest in and to:
(i) The real property occupied by the Corporation under the
terms of the Clinic Agreement and situated in the State of California
and more particularly described in Exhibit 6.06(a)(i) (the "Clinic Real
Property") and the improvements thereon that comprise the outpatient
rehabilitation clinic located at 00 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (the "Clinic");
(ii) All equipment, furniture and fixtures located on or used
in connection with the operation of the Clinic Real Property used by
the Corporation either under the terms of the Clinic Agreement or under
those contracts and commitments described in Exhibit 6.06(d) (the
"Leased Clinic Personal Property"), which Leased Clinic Personal
Property is more fully described in Exhibit 6.06(a)(ii).
(iii) All rights of first refusal, extension rights, and
purchase options set forth in the Clinic Agreement, if any.
(b) The inventory, including linens, housekeeping supplies, and other
consumable inventories located at, or usable in the operation of, the
Clinic (the "Consumables").
(c) The furniture, fixtures, equipment and vehicles owned by the
Corporation and located on the Clinic Real Property or in the Clinic
which is not the property of the lessor under the terms of the Clinic
Agreement or any lease described in Exhibit 6.06(d), as applicable (the
"Owned Personal Property") and which Owned Personal Property is more
fully described in Exhibit 6.06(c).
(d) All patient medical records, employment records, and files and
other intangible personal property owned by the Corporation relating to
the Clinic and all rights of the Corporation in and to (i) those
contracts and commitments relating to the Clinic as listed on Exhibit
6.06(d), true and correct copies of which contracts have been provided
to Purchaser by Seller as of the date hereof and (ii) the permits and
licenses used or held for use by the Corporation in the operation of
the Clinic (the "Records and Rights").
(e) The Corporation's books, tax returns and records (the
"Corporation Records").
6.07. The Excluded Assets. The Corporation's Assets shall not
include the following which shall be and remain the property of the Seller and
shall not be transferred or conveyed to Purchaser at Closing (the
"Excluded Assets"):
(a) Seller's stock record books, tax returns and minute books;
(b) The items owned by Seller and listed on Exhibit 6.07(b);
(c) All of Seller's rights under this Agreement;
(d) All refunds, whenever paid, relating to payments by or on behalf of
Seller prior to the Closing including, without limitation, any federal,
state, local or foreign taxes paid by Seller prior to the Closing Date;
(e) All bank accounts of Seller;
(f) All cash, cash equivalents and accounts receivable of Seller;
(g) All computer hardware and software relating to the wide area
network of Horizon used by Seller or the Corporation for the operation
of the general ledger and accounts payable software applications, which
computer hardware and software is more fully described in Exhibit
6.07(g) (the "GL/AP Hardware and Software");
(h) Seller's rights and interests in and to proprietary materials,
programs, manuals, promotional materials and other intangibles owned or
developed by Seller and used by the Corporation in connection with its
operations at the Clinic; provided, however, that Seller hereby agrees
to permit Purchaser and/or the Corporation to continue to use, for a
period of one hundred eighty (180) days after the Closing. (i) The
Corporation's cash, cash equivalents and accounts receivable (the "Cash
and Cash Equivalents"), which the Corporation accrues or receives prior
to the Closing.
(j) Any claims which the Corporation may have against third parties
relating to or arising from the acts or omissions of third parties
prior to the Closing (the "Third Party Claims").
(k) Any refunds to which the Corporation may now or hereafter be
entitled relating to payments by or on behalf of the Corporation prior
to the Closing including, without limitation, any federal, state, local
or foreign taxes paid by the Corporation prior to the Closing Date (the
"Refunds").
(l) The bank accounts of the Corporation (the "Bank Accounts").
(m) All of the Corporation's right, title and interest in and to the
trade names "RehabWorks" and all other trade names used generally by
Continental Medical Systems, Inc., a Delaware corporation ("CMS") (the
"Trade Names"); provided, however, that Purchaser shall have the right
to continue to use for a period of 60 days after Closing any signs
located at the Clinic or any pre-printed materials, such as admitting
forms or patient information materials, on which the Rehabworks or CMS
name or logo may appear.
6.08. Corporation Liabilities. The Liabilities of the Corporation
include, or as of Closing will include, only the following (the "Corporation
Liabilities"), it being understood and agreed that notwithstanding Purchaser's
acquisition of the Stock, Purchaser shall not assume any of the liabilities of
the Corporation which relate to the period prior to the Closing Date other than
those set forth below:
(a) The liability to make the payments due under the Clinic Agreement
and other payments due with respect to the contracts and commitments
described in Exhibit 6.06(d) and to perform any other obligations under
the Clinic Agreement or such other contracts and commitments which
relate to periods from and after the Closing Date;
(b) The liability to make the equipment lease payments under the
equipment leases listed on Exhibit 6.06(d) (the "Equipment Leases")
which relate to periods from and after the Closing Date;
(c) The liability to make the payments and to perform any other
obligations under the contracts other than the Equipment Leases listed
on Exhibit 6.06(d) which relate to periods from and after the Closing
Date;
(d) The liability to make the payment due under purchase orders placed
by the Corporation in the ordinary course of business prior to the
Closing Date but which are open as of the Closing Date for inventory
and supplies to be delivered after the Closing Date; and
(e) The liability to pay when due the Accrued Benefits (as defined
below).
6.09. The Licenses. The Clinic is not licensed by the California
Department of Health nor is such a license required for the lawful operation
thereof. The Clinic is not certified to participate in Medicare or Medi-Cal. Any
and all other business licenses and permits issued with respect to the operation
of the Clinic to Seller, the Corporation or the Clinic are described in Exhibit
6.09 (the "Corporation Permits").
6.10. Compliance with Law.
(a) The Clinic and its current operation and use is in substantial
compliance with all applicable health and safety laws, regulations, ordinances,
standards and orders issued by any municipal, county, state or federal agency
having authority over the Clinic and with all municipal health, building and
zoning laws and regulations (including, without limitation, the building, zoning
and life safety codes) where the failure to comply therewith would have a
material adverse effect on the business, property, condition (financial or
otherwise) or operation thereof and there are no outstanding cited deficiencies
or work orders issued to Seller or the Corporation under any of the foregoing
which have not been corrected as of the date hereof or which will not be
corrected as of the Closing Date;
(b) There are no pending or, to the best of Seller's knowledge after
due inquiry of the Chief Executive Officer of the Clinic, threatened
investigations of or claims by any governmental agency or instrumentality
against (i) the Clinic or (ii) any of the members of the Board of Directors or
employees of the Clinic.
6.11. Patients. There are no agreements not terminable at will with
patients or prospective patients of the Clinic which provide for the provision
of the care routinely provided at the Clinic for no consideration nor will
Seller or the Corporation enter into any such agreements between the date hereof
and the Closing Date.
6.12. Books and Records. To the best of Seller's knowledge
after due inquiry of the Chief Executive Officer of the Clinic, all of the
books and records of the Clinic, including patient records, are true and
correct in all material respects.
6.13. Title. The Corporation has title to all of the Corporation's
Assets free and clear of all liens, charges and encumbrances other than the
liens described in Exhibit 6.13 (the "Permitted Encumbrances"). Seller has good
and marketable title to the Stock free and clear of all liens, charges and
encumbrances, other than the lien granted to NationsBank under the Credit
Agreement which lien shall be released at Closing.
6.14. Unions. There are no union contracts in effect between the
Corporation, on the one hand, and the employees of the Clinic, on the other
hand. To the best of Seller's knowledge, none of the Corporation's employees who
are not currently members of a labor union in connection with their work at the
Clinic are actively seeking the formation of a labor union at the Clinic.
Neither Seller nor the Corporation is a party to any labor dispute, it being
agreed that a claim for wrongful termination shall not, for purposes of this
Paragraph 6.14 be deemed to be a labor dispute. Neither Seller nor the
Corporation is a party to any union contracts with respect to the Clinic.
6.15. Taxes and Tax Returns. All tax and other related returns, reports
and filings of any kind or nature, required to be filed prior to date of
execution of this Agreement by Seller with respect to the Stock or by the
Corporation with respect to its operations at the Clinic have been properly
completed and timely filed, or extensions for the filing thereof have been
timely secured, with all such filings being in material compliance with all
applicable requirements and all taxes due with respect to the Stock and with
respect to the Corporation's operations at the Clinic have been timely paid,
except to the extent that the same are being duly contested in good faith in
accordance with applicable law and adequate reserves therefor are reflected on
the Financials or will be reflected in any subsequent financials prepared in
accordance with the representations and warranties contained in this Agreement.
6.16. Environmental Issues.
(a) Except in accordance, and in compliance, with any and all
applicable local, state and federal governmental laws, regulations and
requirements (collectively, the "Environmental Laws") relating to environmental
and occupational health and safety matters, and hazardous materials, substances
or wastes (as defined under any applicable Environmental Laws), Seller has (i)
not released into the environment or discharged, placed or disposed of any such
hazardous materials, substances or wastes or caused the same to be so released
into the environment or discharged, placed or disposed of at, on or under the
Clinic other than to the extent the same will not have a material adverse affect
on the condition, financial or otherwise, of the Clinic, (ii) not installed any
underground storage tanks and (iii) at all times operated the Clinic in
compliance with all Environmental Laws, except where the failure to so comply
would not have a material adverse affect on the condition, financial or
otherwise, of the Clinic.
(b) With respect to the Clinic prior to the date of the Seller's
ownership or leasing thereof, to the best of Seller's knowledge after due
inquiry of the Director of Plant Operations at the Clinic, (i) except to the
extent permitted by applicable Environmental Laws, no hazardous materials,
substances or wastes were located on or at the Clinic or were released into the
environment or discharged, placed or disposed of in, on or under the Clinic,
(ii) except to the extent permitted by applicable Environmental Laws, no
underground storage tanks are or were located at the Clinic, (iii) the Clinic is
not located on property which was used as a dump for waste material, and (iv)
the Clinic has at all times complied with, all Environmental Laws, except to the
extent in each of the foregoing clauses (i) through (iv) that any such
non-compliance would not have a material adverse effect on the Clinic. Seller
has not received any written notice from any governmental authority or any
written complaint from any third party with respect to its alleged noncompliance
with, or potential liability under, any Environmental Laws at the Clinic which
remains unresolved as of the date hereof.
(c) Seller will use its reasonable efforts to provide to Purchaser any
written assessments prepared by or on behalf of Seller concerning the hazardous
waste conditions at the Clinic which are currently in the possession of Seller.
6.17. Necessary Action. Seller has duly and properly taken or obtained
or caused to be taken or obtained, or prior to Closing will have duly and
properly taken or obtained or caused to be taken or obtained, all action
necessary for Seller (i) to enter into and to deliver this Agreement and any and
all documents and agreements executed by Seller in connection herewith or in
furtherance hereof and (ii) to carry out the terms hereof and thereof and the
transaction contemplated herein and therein, which action shall include, but not
be limited to, obtaining the Third Party Consents and Regulatory Approvals for
which Seller is responsible hereunder. No other action by or on behalf of Seller
is or will be necessary to authorize the execution, delivery and performance of
this Agreement and any documents and agreements executed by Seller in connection
herewith or consummation of the transactions contemplated herein, other than
securing those Third Party Consents and Regulatory Approvals for which Seller is
responsible under the terms hereof. Seller represents and warrants that as of
the date of execution of this Agreement, it has secured the consent of its Board
of Directors and of the Board of Directors of Horizon to the execution of this
Agreement and of any documents and agreements necessary to carry out the terms
hereof and for the consummation of the transactions contemplated by this
Agreement. Nothing herein shall be construed as a guarantee by Seller that it
will be able to secure the Third Party Consents or Regulatory Approvals for
which it is responsible, but rather this paragraph shall be limited to Seller's
representation and warranty that it will use its best efforts to secure such
Third Party Consents and Regulatory Approvals, subject to the limitation on the
costs which Seller must incur in obtaining such consents being limited in the
manner set forth in Paragraph 4.08.
6.18. Litigation. Except as set forth in Exhibit 6.18, there is no, nor
has Seller or the Corporation received written or verbal notice of any,
litigation, administrative investigation or other proceeding pending or, to the
best of Seller's knowledge based on written notice with respect thereto,
threatened by any governmental authority having jurisdiction over Seller (with
respect to the Clinic only), the Corporation, the Clinic or by any other party
where the amount claimed exceeds $50,000 in any single action or $100,000 in the
aggregate or which seeks to challenge Seller's title to the Stock, the
Corporation's title to the Corporation's Assets or Seller's right or ability to
consummate the transaction provided for herein. Neither Seller nor the
Corporation is a party to nor is Seller or the Corporation or the Clinic bound
by any orders, judgments, injunctions, decrees or settlement agreements under
which it may have continuing obligations as of the date hereof or as of the
Closing Date and which are likely to materially restrict or affect the present
business operations of the Clinic. The right or ability of Seller to consummate
the transaction contemplated herein has not been challenged by any governmental
agency or any other person and Seller has no knowledge of the occurrence of any
event which would provide a reasonable basis for any such litigation,
investigation or other proceeding.
6.19. Sensitive Payments. Seller has no reason to believe that it or
the Corporation has (i) made any contributions, payments or gifts to or for the
private use of any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift is illegal under
the laws of the United States or the jurisdiction in which made, (ii)
established or maintained any unrecorded fund or asset for any purpose or made
any false or artificial entries on its books, (iii) given or received any
payments or other forms of remuneration in connection with the referral of
patients which would violate the Medicare/Medicaid Anti-kickback Law, Section
1128(b) of the Social Security Act, 42 USC Section 1320a-7b(b) or any analogous
state statute or (iv) made any payments to any person with the intention or
understanding that any part of such payment was to be used for any purpose other
than that described in the documents supporting the payment. Seller has not
filed any reports on behalf of itself or in the name of the Corporation with any
governmental agency which disclose that it has participated in any of the
foregoing practices or acts giving rise to such practices.
6.20. The Clinic. The Corporation is duly authorized to operate the
Clinic under California law as an outpatient rehabilitation clinic. The
Personal Property is all of the property necessary for the lawful operation of
the Clinic at its current level of business.
6.21 Inventories. At Closing, the Clinic shall have an inventory of
central supplies, nursing supplies and other supplies, which will be sufficient
in condition and quantity to operate the Clinic in the ordinary course of
business.
6.22. Trade Names. Set forth in Exhibit 6.22 is a true and complete
list of the trade names under which the Corporation is doing business at the
Clinic. Seller has not sought on its own behalf or on behalf of the Corporation
protection for such names under state or federal trademark or trade name laws
except to the extent reflected in Exhibit 6.22. Neither the Seller nor the
Corporation has received any notice from any person challenging or questioning
the right of the Corporation to use any such trade names.
6.23. Employees/ERISA.
(a) Set forth in Exhibit 6.23 is an accurate and complete list of all
bonus, deferred compensation, hospitalization or other medical, pension, life or
other insurance, profit sharing, sick leave, vacation, post retirement health or
life benefit, and any other employee benefit plans (as such term is defined in
Section 3 of the Employee Retirement Insurance Security Act ("ERISA"),
arrangement or practice, whether formal or informal, written or not, of Seller
which relate to the Clinic or to any current or former employees at or of the
Clinic (the "Plan" or "Plans"). Except as set forth in Exhibit 6.23 and except
for stock purchase and stock options programs administered by Horizon and for
which Purchaser shall have no liability after Closing, Seller has not made any
commitment or representation to the current or former employees of the Clinic to
establish any additional Plan, arrangement or practice or to modify or change
any existing Plan, arrangement or practice. Exhibit 6.23 also lists all
employees of the Clinic as of the date of this Agreement together with their
positions and rates of pay and earned and accrued vacation time, sick leave and
holiday pay as the date specified therein, which date shall be the most recent
date to which such information is available to Seller.
(b) There are no employment contracts between Seller or the
Corporation and any employee of the Clinic.
6.24. Operating Contracts. Set forth in Exhibit 6.06(d) is a true and
correct list of all supply, licensing and operating contracts, equipment leases,
contracts with affiliates of Seller or the Corporation, transfer agreements,
contracts for or other evidences of indebtedness (other than indebtedness to be
discharged or released at Closing), security agreements and other contracts and
agreements, including without limitation, all provider agreements with any third
party payors and consulting and service contracts to which Seller or the
Corporation is a party in connection with the Corporation's operations at the
Clinic (the "Operating Contracts"). Seller has provided Purchaser with a true
and correct copy of each of the Operating Contracts. Each of the Operating
Contracts is in full force and effect and none of the Operating Contracts has
been modified or amended except as set forth in Exhibit 6.06(d). Neither the
Seller nor the Corporation is in default of any of its obligations under the
Operating Contracts nor is Seller aware of any default or any action or omission
which, with the passage of time or the giving of notice or both, would
constitute a default under the Operating Contracts by any other party thereto.
Purchaser acknowledges and agrees that Seller shall not be in default of its
obligations under this Paragraph 6.24 in the event Exhibit 6.06(d) fails to list
or Seller fails to provide to Purchaser any Operating Contracts where the
payments remaining due thereunder are less than $7,500.
6.25. The Clinic Agreement. A true and correct copy of the Clinic
Agreement has been provided by Seller to Purchaser. The Clinic Agreement remains
in full force and effect and has not been amended or modified except as set
forth in Paragraph 6.06. Neither Seller nor the Corporation has received any
written notice under the Clinic Agreement that it is in default of its
obligations under the Clinic Agreement nor does Seller have knowledge after
inquiry of the Chief Executive Officer of the Clinic of any events which, with
the passage of time or the giving of notice, would constitute a material default
thereunder. The Corporation does not have exclusive possession of the real and
personal property which is the subject of the Clinic Agreement. Except as set
forth in Exhibit 6.25, there are no security deposits posted with respect to the
Clinic Agreement.
6.26. Physician Contracts. There are no contracts between the
Seller or the Corporation and the physicians providing services to the
patients of the Clinic.
6.27. Intentionally Omitted.
6.28. Intentionally Omitted.
6.29. Reimbursement. Neither the Seller nor the Corporation has
received any written or verbal notice from any third party payor with respect to
any proposed recoupment claim or any other proposed investigation, audit or
reimbursement dispute with respect to the Clinic or which could adversely affect
the Corporation's operations at the Clinic.
6.30. Intentionally Omitted.
6.31. Insurance. Set forth in Exhibit 6.31 is a list of all insurance
policies held by Seller or the Corporation with respect to the Clinic and the
other Corporation's Assets and in effect as of the date of this Agreement,
including the types of coverage and amounts thereof and the amount of
deductibles thereunder. Seller has provided to Purchaser true and correct
certificates evidencing such insurance as well as copies of the current
property, professional liability and workers compensation insurance policies in
effect with respect to the Clinic. All monthly premium installments due with
respect to all of such insurance policies have been paid in full through the
date of this Agreement and will continue to be paid as and when due between the
date of this Agreement and the Closing Date.
6.32. Disclosure. No representation or warranty by or on behalf of
Seller contained in this Agreement, as those representations have been modified
by the terms of Seller's Disclosure Letter, if applicable, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material facts which are necessary in order to make the statements contained
herein in light of the circumstances under which they were made, not misleading.
ARTICLE VII
PURCHASER REPRESENTATIONS AND WARRANTIES
Purchaser hereby warrants and represents to Seller that, except as
otherwise specifically set forth in the letter from Purchaser to Seller dated
the date hereof (the "Purchaser Disclosure Letter"):
7.01. Status of Purchaser. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of California. Regency Health Services, Inc. ("Regency") is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.
7.02. Validity and Conflicts. This Agreement is valid, binding and
enforceable against Purchaser in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The execution of this
Agreement and the consummation of the transactions contemplated herein have been
approved by the Board of Directors of Purchaser and do not and will not result
in a breach of the terms and conditions of nor constitute a default under or
violation of the Articles of Incorporation or Bylaws of Purchaser, or any law,
regulation, court order, mortgage, note, bond, indenture, agreement, license or
other instrument or obligation to which Purchaser is now a party or by which any
of its assets may be bound or affected, subject, however, to Purchaser obtaining
those Third Party Consents and Regulatory Approvals for which it is responsible
under the terms hereof.
7.03. Authority. Subject to obtaining the Third Party Consents and
Regulatory Approvals which it and/or Seller are required to use their best
efforts to secure, Purchaser has full corporate power and authority to execute
and to deliver this Agreement and all related documents, and to carry out the
transactions contemplated herein and therein. Purchaser further has full power
and authority (i) to own the Stock and (ii) to conduct the business of the
Corporation from and after the Closing Date as the same is now being conducted.
7.04. Necessary Action. Purchaser has duly and properly taken or
obtained or caused to be taken or obtained, or prior to Closing will have duly
and properly taken or obtained or caused to be taken or obtained, all action
necessary for Purchaser (i) to enter into and to deliver this Agreement and any
and all documents and agreements executed by Purchaser in connection herewith or
in furtherance hereof and (ii) to carry out the terms hereof and thereof and the
transactions contemplated herein and therein, which action shall include, but
not be limited to, obtaining the Third Party Consents and Regulatory Approvals
for which Purchaser is responsible hereunder. No other action by or on behalf of
Purchaser is or will be necessary to authorize the execution, delivery and
performance of this Agreement and any documents and agreements executed by
Purchaser in connection herewith or consummation of the transactions
contemplated herein, other than securing those Third Party Consents and
Regulatory Approvals for which Purchaser is responsible under the terms hereof.
Purchaser represents and warrants that as of the date of execution of this
Agreement, it has secured the consent of its Board of Directors and of the Board
of Directors of Regency to the execution of this Agreement and of any documents
and agreements necessary to carry out the terms hereof and for the consummation
of the transactions contemplated by this Agreement. Nothing herein shall be
construed as a guarantee by Purchaser that it will be able to secure the Third
Party Consents or Regulatory Approvals for which it is responsible, but rather
this paragraph shall be limited to Purchaser's representation and warranty that
it will use its best efforts to secure such Third Party Consents and Regulatory
Approvals.
7.05. Litigation. There is no, nor has Purchaser received written or
verbal notice of any, litigation, administrative investigation or other
proceeding pending or, to the best of Seller's knowledge based on written notice
with respect thereto, threatened by any governmental authority having
jurisdiction over Purchaser or by any other party or which challenges
Purchaser's ability to consummate the transaction provided for herein. Purchaser
is not a party to or bound by any orders, judgments, injunctions, decrees or
settlement agreements under which it may have continuing obligations as of the
date hereof or as of the Closing Date and which are likely to materially
restrict or affect the business operations of Purchaser either before or after
the Closing. The right or ability of Purchaser to consummate the transaction
contemplated herein has not been challenged by any governmental agency or any
other person and Purchaser has no knowledge of the occurrence of any event which
would provide a reasonable basis for any such litigation, investigation or other
proceeding.
7.06. Sensitive Payments. Purchaser has no reason to believe that it
has (i) made any contributions, payments or gifts to or for the private use of
any governmental official, employee or agent where either the payment or the
purpose of such contribution, payment or gift is illegal under the laws of the
United States or the jurisdiction in which made, (ii) established or maintained
any unrecorded fund or asset for any purpose or made any false or artificial
entries on its books, (iii) given or received any payments or other forms of
remuneration in connection with the referral of patients which would violate the
Medicare/Medicaid Anti-kickback Law, Section 1128(b) of the Social Security Act,
42 USC Section 1320a-7b(b) or any analogous state statute or (iv) made any
payments to any person with the intention or understanding that any part of such
payment was to be used for any purpose other than that described in the
documents supporting the payment.
7.07. Taxes and Tax Returns. All tax and other related returns, reports
and filings of any kind or nature, required to be filed by Purchaser prior to
date of execution of this Agreement with respect to its operations have been
properly completed and timely filed, or extensions for the filing thereof have
been timely secured, with all such filings being in material compliance with all
applicable requirements and all taxes due with respect to Purchaser's operations
have been timely paid, except to the extent that the same are being duly
contested in good faith in accordance with applicable law and adequate reserves
therefor are reflected on Purchaser's financial statements or will be reflected
in any subsequent financials prepared by Purchaser.
7.08. Investment Representations. Purchaser is acquiring the Stock for
investment purposes only and not with a view to the re-sale or distribution
thereof. Purchaser acknowledges and agrees that Seller has represented to
Purchaser that the Stock is not registered under any state or federal securities
law. Purchaser is knowledgeable with respect to the purchase of health care
companies such as the Corporation and accordingly has conducted such
investigations and undertaken such inquiries as it deemed necessary to enter
into this Agreement and to agree to purchase the Stock.
7.09. Disclosure. No representation or warranty by or on behalf of
Purchaser contained in this Agreement, as those representations have been
modified by the terms of Purchaser's Disclosure Letter, if applicable, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material facts which are necessary in order to make the statements
contained herein in light of the circumstances under which they were made, not
misleading.
ARTICLE VIII
BROKER
Each party hereby represents, covenants, and warrants to the other that
it has employed no broker or finder in connection with the transaction
contemplated herein. Each party agrees to pay any commission or finder's fee
which may be due on account of the transaction contemplated herein to any other
broker or finder employed by it, and to indemnify the other party hereto against
any claim for any commission or finder's fee made by any other broker allegedly
employed by it and from and against any and all costs and expenses incurred in
connection therewith, including, but not limited to, reasonable attorneys fees
and costs.
ARTICLE IX
SELLER COVENANTS
9.01. Pre-Closing Date. Seller covenants that between the date
hereof and the Closing Date, except as contemplated by this Agreement or with
the consent of Purchaser, which consent shall not be unreasonably
withheld, conditioned or delayed, Seller and the Corporation:
(a) Will operate the Clinic only in the ordinary course and with due
regard to the proper maintenance and repair of any real property or personal
property associated therewith, ordinary wear and tear excepted;
(b) Will take all reasonable action to preserve the goodwill and the
present business operations of the Clinic, it being understood and agreed that
they shall not be required to undertake any action to preserve the business of
the Clinic other than continuing to engage in the routine marketing activities
in which they are currently engaged at the Clinic;
(c) Will not make any material change in the operation of the Clinic
nor, except in the ordinary course of business, sell or agree to sell any items
of machinery, equipment or other fixed assets of the Clinic, including but not
limited to assets and equipment used in connection with the operation of the
Clinic nor otherwise enter into any agreements materially affecting the Clinic;
(d) Will use its reasonable efforts to retain the goodwill of the
employees of Seller or the Corporation located at or connected with the
operation of the Clinic and will provide Purchaser with notice in the event of
any union organizing activities or contract negotiations are commenced after the
date hereof;
(e) Will not, except in the ordinary course of business, increase the
compensation or bonuses payable or to become payable to any of the employees
located at or connected with the operation of the Clinic, including employees
located at the Seller's corporate or regional offices who work exclusively on
matters related to the Clinic, or grant any severance benefits to any such
employees other than to the extent such bonuses or severance payments impose no
obligation on Purchaser after the Closing Date;
(f) Will not enter into any written employment agreements in connection
with the operation of the Clinic other than with physicians in the ordinary
course of business; provided, however, that Seller shall provide Purchaser with
copies of any such physician contracts;
(g) Will not, except in the ordinary course of business, enter into any
contract or commitment affecting any of the Stock and the Corporation's Assets
or incur any additional indebtedness or amend, extend or renew any current debt
instruments, whether in the ordinary course of business or otherwise, nor will
Seller declare or pay any dividend or other distribution with respect to any of
the Stock or the Corporation's Assets nor pledge the accounts receivable of
Seller as security for any indebtedness or lease agreements executed, amended or
extended by Seller after the date hereof; provided, however, that nothing herein
shall be construed as prohibiting (i) Seller from incurring inter-company
indebtedness to Horizon and/or CMS and loaning the proceeds thereof to Seller or
Seller from incurring such indebtedness, (ii) Horizon and/or CMS from incurring
debt, the proceeds of which may be made available to Seller or (iii) Seller from
executing any and all documents necessary to amend any debt instruments under
which Horizon and/or CMS may be the borrower and Seller a guarantor; provided,
however, that nothing herein shall be construed as prohibiting Seller from
dividending Excluded Assets from the Corporation prior to Closing.
(h) Will, during normal business hours, provide Purchaser and its
agents and employees with access on twenty-four (24) hours notice to the books
and records of Seller, the Corporation, the Clinic provided they do not
interfere with the operation thereof;
(i) Will operate the Clinic in substantial compliance with all
applicable municipal, county, state and federal laws, regulations, ordinances,
standards and orders as now in effect (including, without limitation, the
building, zoning and life safety codes as currently applied with respect
thereto) where the failure to comply therewith could have a material adverse
effect on the business, property, condition (financial or otherwise) or
operation thereof;
(j) Will take all reasonable action to achieve substantial compliance
with any laws, regulations, ordinances, standards and orders applicable to the
Clinic which are enacted or issued after execution of this Agreement and become
effective or require compliance prior to the Closing where the failure to comply
therewith could have a material adverse effect on the business, property,
condition (financial or otherwise) or operation thereof;
(k) Will maintain the Corporation's Assets in substantially the same
condition as they were in at the date hereof, ordinary wear and tear, casualty
loss and taking by eminent domain excepted;
(l) Will provide Purchaser with copies of the Corporation's
monthly financial statements prepared in the ordinary course of business;
(m) Will pay as and when due the accounts payable which arise in the
ordinary course of business, except to the extent that the amount owing is being
duly contested by Seller or the Corporation and such contest does not materially
affect Seller, the Corporation or the Clinic;
(n) Will maintain in force the existing insurance coverage with
respect to the Clinic described in Exhibit 6.31;
(o) Will file all returns, reports and filings of any kind or nature,
or to secure timely extensions for the filing thereof, required to be filed by
Seller or the Corporation, including, but not limited to, state and federal tax
returns and Medicare and Medi-Cal cost reports with respect to the Clinic and
will timely pay all taxes or other obligations which are due and payable with
respect thereto, except to the extent that the same are being duly contested in
good faith in accordance with applicable law and such contest does not
materially affect Seller, the Corporation or the Clinic;
(p) Will provide to Purchaser copies of all material documents which
relate to, and, upon request, with verbal or written updates concerning the
status of, any litigation filed as of the date hereof or filed from and after
the date hereof by or against Seller or the Corporation after the date of this
Agreement but prior to the Closing Date where the amount claimed or assessed by
management of Seller as likely to be claimed exceeds $500,000; and
(r) Will not amend or permit the amendment of the Corporation's
Articles of Incorporation or Bylaws.
In addition, Seller covenants and agrees that:
(a) Unless specifically prohibited by law, Seller will use its best
efforts to cause all of the conditions to Closing set forth in Paragraphs 12.01
and 12.02 which are within Seller's control to be satisfied prior to the Outside
Closing Date and Seller will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the consummation
of the transactions contemplated by this Agreement or which is intended to cause
any representation, warranty or covenant made by Seller in this Agreement;
(b) Neither Seller nor any of its officers, directors, advisors or
others authorized to act on its behalf shall directly initiate or solicit
discussions relating to any alternative acquisition proposal or similar
transaction including, without limitation, a merger or other business
combination involving Seller, any of the Stock, the Corporation or the
Corporation's Assets, or offer to acquire or convey in any manner, directly or
indirectly, all or substantially all of the equity interests in, the voting
securities of Seller, the Stock, the Corporation or the Corporation's Assets;
provided, however, that public announcements of the transaction contemplated by
this Agreement shall not be prohibited hereby;
(c) Seller will proceed with all due diligence to secure the
Regulatory Approvals and Third Party Consents for which it is responsible under
the terms hereof;
(d) Seller will cooperate with Purchaser, at Purchaser's cost and
expense, in any audits of the results of operations at the Clinic which
Purchaser elects to conduct in order to comply with any requirements applicable
to it under the federal securities laws; and
(e) Within ten (10) days after Seller's receipt of Purchaser's UCC
search objections pursuant to Paragraph 10.01, Seller shall advise Purchaser
whether it intends to correct the defects to which Purchaser has objected.
9.02. Closing Date. On the Closing Date, Seller will deliver the
following to Purchaser or to a designated escrow agent in accordance with any
written escrow instructions executed by Seller and Purchaser:
(a) The Benefits Schedule (as defined in Paragraph 14.01);
(b) A certificate of Seller dated as of the Closing Date, certifying on
behalf of Seller in such detail as Purchaser may reasonably specify the
fulfillment of the conditions set forth in Paragraphs 12.02 (a) and (b) and
setting forth the incumbency of the officers executing documents on behalf of
Seller, a copy of the resolutions adopted by Seller's Board of Directors
authorizing the transaction provided for herein and the execution of this
Purchase Agreement and the other documents contemplated herein and attaching a
certificate of good standing with respect to Seller issued by the North Carolina
Secretary of State and with respect to the Corporation issued by the California
Secretary of State within no more than thirty (30) days prior to Closing;
(c) The duly executed Stock Assignment Agreement;
(d) Evidence that Seller has secured all of the Regulatory Consents and
Third Party Approvals, including, but not limited to, consent under the Clinic
Agreement for which Seller is responsible under the terms of this Agreement;
(e) The Articles of Incorporation of the Corporation certified by the
California Secretary of State, the Bylaws of the Corporation certified by the
Secretary or Assistant Secretary of the Corporation and the Minute Books and
Stock records of the Corporation, including the corporate seal if the same
exists;
(f) An opinion of the General Counsel of Horizon in form and
substance reasonably acceptable to Purchaser.
In addition, on the Closing Date, the Seller shall pay the closing
costs for which it is responsible under Article IV and shall cause to be made
available to Purchaser at the Clinic any and all plans and specifications with
respect to the Clinic which may be in Seller's or the Corporation's possession.
9.03. Post-Closing. Seller covenants and agrees that after the
Closing Date it will:
(a) Cooperate with Purchaser in the event its parent corporation is
required to include audited financial statements with respect to the Clinic in
its filings with the United States Securities and Exchange Commission.
(b) Take such actions and properly execute and deliver to Purchaser
such further instruments of assignment, conveyance and transfer as, in the
reasonable opinion of counsel for Purchaser and Seller, may be reasonably
necessary to assure, complete and evidence the full and effective transfer and
conveyance of the Stock.
(c) Fulfill any obligations which it may have under this Agreement
which survive Closing in accordance with the terms hereof or which, by agreement
of the parties, have not been fully performed as of the Closing Date and the
performance of which, by written agreement of the parties, has been extended
until after the Closing Date.
(d) Seller will provide to Purchaser data processing services with
respect to the Clinic and the facilities which are the subject of the Other
Agreements (as hereinafter defined) on the terms set forth in Exhibit 9.03 but
at no additional cost to Purchaser other than the cost specified therein for the
other facilities listed therein.
ARTICLE X
PURCHASER COVENANTS
10.01. Pre-Closing Date. Purchaser covenants that between the
date hereof and the Closing Date, except as contemplated by this Agreement
or with the consent of Seller, which consent shall not be
unreasonably withheld, conditioned or delayed:
(a) Within ten (10) days after the date of this Agreement advise Seller
of its objections to any UCC Search Reports, which Purchaser may elect to
obtain. If Seller refuses to correct some or all of the lien defects objected to
by Purchaser within the time period reflected in Paragraph 9.01(o) or to give
Purchaser reasonable assurances that the same will be corrected as of the
Closing Date, Purchaser shall have ten (10) days to advise Seller of its
decision to close, notwithstanding the defects, or of its election to terminate
this Agreement, in which case neither party shall have any further rights or
obligations hereunder. If Purchaser does not give notice of termination within
this ten (10) day period, it will be deemed to have waived its objections and to
have accepted such lien defects.
(b) Purchaser will proceed with all due diligence to obtain
the Third Party Consents and Regulatory Approvals for which it is
responsible under the terms hereof; and
(c) Unless specifically prohibited by law, Purchaser will use its best
efforts to cause all of the conditions to Closing set forth in Paragraphs 12.01
and 12.02 which are within its control to be satisfied prior to the Outside
Closing Date and Purchaser will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the consummation
of the transactions contemplated by this Agreement.
10.02. Closing Date. On the Closing Date, Purchaser will deliver to
the Escrow Agent (unless Seller and Purchaser agree in writing in the Escrow
Instructions to handle the same outside of escrow) the following:
(a) A certificate of a responsible officer of Purchaser dated as of the
Closing Date certifying on behalf of Purchaser in such detail as Seller may
reasonably specify the fulfillment of the conditions set forth in Paragraphs
12.01 (a) and (b) and setting forth the incumbency of the officers executing
documents on behalf of Purchaser, a copy of the resolutions adopted by
Purchaser's Board of Directors authorizing the transaction provided for herein
and the execution of this Purchase Agreement and the other documents
contemplated herein and attaching a certificate of good standing issued by the
California Secretary of State within no more than thirty (30) days prior to
Closing;
(b) An opinion of the General Counsel of Regency in form and
substance reasonably acceptable to Seller.
10.03. Post-Closing. After the Closing Date, Purchaser will:
(a) Provide Seller with access during normal business hours to any
books or records which Seller may need to file or to defend tax returns or other
filings filed prior to or subsequent to the Closing Date which relate to the
period prior to the Closing Date or which Seller may require for any other
lawful purpose other than litigation commenced by Seller against Purchaser under
the terms of this Agreement and maintain all such books and records for a period
of one year after the Closing Date, at which time Purchaser shall give Seller
notice of Seller's right to remove such books and records from the Clinic.
Seller shall have a period of thirty (30) days after receipt of such notice to
advise Purchaser whether it intends to exercise its removal right and, in the
event Seller elects to do so, Seller shall have a period of thirty (30) days
thereafter in which to arrange, at its sole cost and expense, for the removal of
any or of such books and records from the Clinic, subject to Purchaser's right
to retain copies of any or all of such removed books and records.
(b) Take such actions and properly execute and deliver such further
instruments as Seller may reasonably request to assure, complete and evidence
the transaction provided for in this Agreement.
(c) Fulfill any obligations which it may have under this Agreement
which survive Closing in accordance with the terms thereof or which, by
agreement of the parties, have not been fully performed as of the Closing Date
and the performance of which, by written agreement of the parties, has been
extended until after the Closing Date.
(d) To the extent permitted by law, Seller shall be entitled, after the
Closing Date, during normal business hours of the Clinic and on advance notice
to Purchaser to have access to and to make copies, at their sole cost and
expense, of the patient records, including the medical records and medical
charts of any patient admitted to the Clinic on or before the Closing Date. In
addition, to the extent permitted by law and to the extent required by law,
Seller shall be entitled to remove from the Clinic any such record or chart, but
only for the purposes of pending litigation involving a patient to whom such
record or chart refers, as certified in writing prior to removal by an officer
of Seller or counsel retained by Seller in connection with such litigation, and
only prior to making a copy thereof, at Seller's cost and expense, for retention
at the Clinic. Any record or chart so removed by Seller from the Clinic shall be
promptly returned to Purchaser following its use by Seller in accordance with
the terms hereof.
(e) Provide such notice as may be required after Closing to each
regulatory authority having jurisdiction over the Clinic, the consent of which
was not required as a condition to Closing but notice to which is required or
recommended after Closing.
ARTICLE XI
MUTUAL COVENANTS
11.01. General Covenants. Following the execution of this Agreement,
Seller and Purchaser agree:
(a) If any event should occur, either within or without the knowledge
or control of any party, which would prevent fulfillment of the conditions to
the obligations of any party hereto to consummate the transactions contemplated
by this Agreement, to use its or their reasonable efforts to cure the same as
expeditiously as possible;
(b) To cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions which are or may be reasonable and
necessary to obtain the consent of any governmental instrumentality or any third
party, to accomplish the transactions contemplated by this Agreement;
(c) To deliver such other instruments of title, certificates, consents,
endorsements, assignments, assumptions and other documents or instruments, in
form reasonably acceptable to the party requesting the same and its counsel, as
may be reasonably necessary to carry out and/or to comply with the terms of this
Agreement and the transactions contemplated herein;
(d) To confer on a regular basis with the other, report on material
operational matters and promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen could
have, a material adverse effect on such party or which would cause or constitute
a material breach of any of the representations, warranties or covenants of such
party contained herein; and
(e) To promptly provide the other (or its counsel) with copies of all
other filings made by such party with any state or federal governmental entity
in connection with this Agreement or the transactions contemplated hereby.
11.02. Xxxx-Xxxxx-Xxxxxx Filing. If and to the extent applicable:
(a) Purchaser and Seller agree to file, and to cause any other person
obligated to do so as a result of its shareholdings in Seller, with the
Antitrust Division of the United States Department of Justice and the Federal
Trade Commission a Notification and Report Form in accordance with the
notification requirements of the HSR Act and to use its and their best efforts
to achieve the prompt termination or expiration of the waiting period or any
extension thereof provided for under the HSR Act as a prerequisite to the
consummation of the transactions provided for herein.
(b) Nothing herein shall be construed as requiring Seller to (i) sell
or otherwise dispose of any of the Stock or the Corporation's Assets which are
the subject of this Agreement or the Other Agreements which either alone or in
the aggregate, with all such other sales or dispositions, would constitute the
sale or disposition of a "significant subsidiary" (as defined in Rule 1-02 of
Regulation S-X of the rules and regulations of the Commission), (ii) take any
action, the consummation of which cannot be conditioned on the consummation of
the transactions contemplated by this Agreement, where such action would have a
material adverse effect on Seller or (iii) take any action which either would
have a material adverse effect on the operations, business or financial
condition of Seller or would materially impair the value of the transaction
contemplated herein to Seller or Purchaser.
(c) Nothing herein shall be construed as requiring Purchaser to (i)
sell or otherwise dispose of any of its assets which either alone or in the
aggregate, with all such other sales or dispositions, would constitute the sale
or disposition of a "significant subsidiary," (ii) take any action, the
consummation of which cannot be conditioned on the consummation of the
transactions contemplated by this Agreement, where such action would have a
material adverse effect on Purchase or (iii) take any action which either would
have a material adverse effect on the operations, business or financial
condition of Purchaser or would materially impair the value of the transaction
contemplated herein to Seller or Purchaser.
11.03. Third Party Consents/Regulatory Approval. Each of Purchaser and
Seller will use its best efforts to obtain prior to the Closing Date all
consents, approvals and licenses necessary to permit the consummation of the
transactions contemplated by this Agreement and the Other Agreements, including,
but not limited to, such licensure and certification approval in the State of
California as may be necessary to enable Purchaser to lawfully own and/or
operate the Clinic from and after the Closing Date (the "Regulatory Approvals"),
and the consent of its lenders, lessors and other third parties to the extent
required under any loan documents, lease agreements, management agreements or
other instruments to which it is a party, including, but not limited to, consent
under the Clinic Agreement (the "Third Party Consents"), provided, however, that
the consent of the holders of the bonds issued by Purchaser's parent corporation
under that Indenture dated as of June 28, 1996 in the original principal amount
of $50,000,000 and that Indenture dated as of October 12, 196 in the original
principal amount of $110,000,000 shall not be deemed to be a required Third
Party Consent, it being understood and agreed that Purchaser has represented
that the transaction as contemplated herein after will not require the consent
of such bondholders.
11.04. Public Announcements. The parties shall consult with each
other prior to the issuance by either party of any press release or any written
statement with respect to this Agreement or the transactions
contemplated hereby.
11.05. Costs. Except as otherwise specifically provided herein, each
party shall bear its own costs and expenses with respect to securing the Third
Party Consents and Regulatory Approvals, including complying with the
requirements of the HSR Act, for which it is responsible hereunder.
ARTICLE XII
CONDITIONS
12.01. Purchaser Conditions. All obligations of Purchaser under
this Agreement are subject to the fulfillment, prior to or as of the Outside
Closing Date (as defined below), of each of the following
conditions any one or more of which may be waived in writing by Purchaser:
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct at and as of the Closing Date as though such
representations and warranties were then again made, other than any
representations or warranties which specifically relate to an earlier period,
which shall have been true as of the date thereof.
(b) Seller shall have performed all of its obligations under this
Agreement that are to be performed by it prior to or as of the Closing Date.
(c) Purchaser and Seller shall have received the Third Party Consents
and Regulatory Approvals and shall have satisfied any and all conditions to the
effectiveness thereof.
(d) Other than with respect to a default identified in the Seller
Disclosure Letter as of the date of this Agreement or any defaults identified
after the date of this Agreement in any amendments to the Seller Disclosure
Letter, which amendments are not objected to by Purchaser, neither Seller nor
the Corporation shall be in default, where said default cannot be cured by the
Closing Date, under any mortgage, contract, lease or other agreement to which
Seller or the Corporation is a party or by which Seller or the Corporation is
bound and which will affect or relate to the Real Property, the Personal
Property or the Clinic after the Closing Date.
(e) Subject to Purchaser ordering the same, Purchaser shall be
satisfied, or pursuant to Paragraph 10.01(a) shall be deemed to be satisfied,
with the results of the UCC Searches.
(f) If applicable, the filing and waiting period requirements under the
HSR Act shall have been complied with and shall have expired or terminated.
(g) The closing of the transactions which are the subject of
the Other Agreements shall have occurred.
12.02. Seller Conditions. All obligations of Seller under this
Agreement are subject to the fulfillment, prior to or as of the Outside
Closing Date, of each of the following conditions any one or more of which may
be waived by Seller in writing:
(a) The representations and warranties of Purchaser contained in this
Agreement shall be true and correct at and as of the Closing Date as though such
representations and warranties were then again made, other than any
representations or warranties which specifically relate to an earlier period,
which shall have been true as of the date thereof.
(b) Purchaser shall have performed all of its obligations under this
Agreement that are to be performed by it prior to or as of the Closing Date.
(c) Purchaser and Seller shall have received the Third Party Consents
and Regulatory Approvals and shall have satisfied any and all conditions to the
effectiveness thereof; provided, however, that it shall not be a condition to
Seller's obligation to close hereunder that the other party to the Clinic
Agreement has refused to release Seller from its guarantee thereof or from
primary liability thereunder.
(d) The closing of the transaction which are the subject of
the Other Agreements shall have occurred.
ARTICLE XIII
TERMINATION
13.01. Termination. This Agreement may be terminated by
Purchaser or Seller upon the following conditions:
(a) By mutual consent of the parties;
(b) By Purchaser if the conditions to Closing set forth in Paragraph
12.01 have not been satisfied through no fault of Purchaser or waived by
Purchaser by the Outside Closing Date;
(c) By Seller if the conditions to Closing set forth in Paragraph 12.02
have not been satisfied through no fault of Seller or waived by Seller by the
Outside Closing Date;
(d) By either party if the Closing has not occurred by the Outside
Closing Date or such later date as may be agreed upon in writing by Seller and
Purchaser.
(e) By either party if the United States Department of Justice
or the Federal Trade Commission requires any of the actions described in
Paragraph 11.02;
(f) By either party in the event of a material adverse change in the
information contained in the other party's Disclosure Letter as a result of the
updating thereof by such other party.
(g) By Purchaser in event that prior to the Closing Date a material
portion of the Real Property or the Clinic is damaged or destroyed by fire or
other casualty or has been taken or condemned by any public or quasi-public
authority under the power or eminent domain; provided, however, that in the
event Purchaser fails to exercise its termination rights hereunder, then it
shall be conclusively deemed to have waived said right and Seller shall assign
to Purchaser all of its rights to any insurance proceeds or condemnation award
and all claims in connection therewith.
13.02. Neither party to this Agreement may claim termination or pursue
any other remedy referred to in Paragraph 13.01 on account of a breach of a
condition, covenant or warranty by the other, without first given such other
party written notice of such breach and not less than ten (10) days within which
to cure such breach. The Closing Date shall be postponed if necessary to afford
such opportunity to cure.
13.03. In the event of the termination of this Agreement by Seller
under either Paragraph 13.01(c) or Paragraph 13.01(d) where, in either case the
Closing has failed to occur as a result of a material breach by Purchaser of its
obligations hereunder or under the Other Agreements, Seller shall be entitled to
seek damages from Purchaser as a result of said breach.
13.04. In the event of the termination of this Agreement by Purchaser
under either Paragraph 13.01(b) or Paragraph 13.01(d) where, in either case the
Closing has failed to occur as a result of a material breach by Seller of its
obligations hereunder or under the Other Agreements, Purchaser shall have the
right either (A) to seek specific performance of Seller's obligations hereunder
or (B) to seek damages suffered by it as a result of said breach.
13.05. In the event of the termination of this Agreement pursuant to
Paragraphs 13.01(a), (e), (f) or (g), neither party shall have any further
rights or obligations hereunder.
ARTICLE XIV
EMPLOYEE BENEFITS
14.01. On the Closing Date, Seller shall deliver to Purchaser a
schedule (the "Employee Schedule") which reflects among other things the
following: (i) the name of all employee of the Clinic as of the Closing Date,
(ii) their positions and rates of pay, (iii) a reasonable estimate as of the
Closing Date of all earned and accrued vacation, holiday and sick pay and earned
or accrued "EVA" bonuses due to and/or coming due to the employees of the Clinic
as of the Closing Date (the "Estimated Accrued Benefits"). On the Closing Date,
Seller shall deliver to Purchaser an amount equal to the Estimated Accrued
Benefits reflected on the Employee Schedule and Purchaser shall agree from and
after the Closing Date, to pay the Accrued Benefits, to the employees of the
Clinic as and when due in accordance with Purchaser's personnel policies from
and after the Closing Date, it being agreed for the benefit of Seller that such
policies shall not result in a reduction of benefits accrued in favor of any
employee as of the Closing Date. In addition, on the Closing Date or as soon
thereafter as is required by California law, Seller shall pay to the employees
of the Clinic any wages due to them as of the Closing Date. Any benefits due to
the employees of the Clinic for the period prior to the Closing Date and not
included within the Accrued Benefits paid to Purchaser at Closing shall be and
remain the responsibility of Seller after Closing. Within a reasonable period of
time following the Closing Date, which shall in no event be more than thirty
(30) days, Seller shall provide Purchaser with a schedule of the Accrued
Benefits which were earned or accrued as of the Closing Date (the "Actual
Accrued Benefits"). To the extent the Estimated Accrued Benefits exceeded the
Actual Accrued Benefits, Purchaser shall remit said difference to Seller within
ten (10) days after Purchaser's receipt of the Actual Accrued Benefits schedule.
To the extent the Estimated Accrued Benefits were less than the Actual Accrued
Benefits, Seller shall remit said difference to Purchaser along with the
schedule of Actual Accrued Benefits.
14.02. Purchaser shall offer to hire at Closing all of the employees of
Seller who, as of the Closing, work at the Clinic and have been employed on
average for 20 hours or more per week. Such employees who are offered employment
by Purchaser shall be referred to as the "Retained Employees." Any such offer of
employment to a Retained Employee by Purchaser shall be to perform comparable
services, in a comparable position and at substantially the same base salary as
such Retained Employee enjoyed with Seller. Seller or any of its affiliates
shall have the right to employ or offer to employ any Retained Employee who
declines Purchaser's offer of employment. Purchaser shall hire at Closing each
Retained Employee who elects to accept employment with Purchaser (the "Hired
Employees"), shall recognize each such Hired Employees original hire date and
shall continue to employ each such Hired Employee for a period of no less than
ninety (90) days following the Closing Date unless the employment of such Hired
Employee is terminated in accordance with Purchaser's personnel policies or as a
result of such Hired Employee's resignation.
14.03. Purchaser and Seller acknowledge and agree that the provisions
of Section 14.02 are designed solely to ensure that Seller is not required to
give notice to the employees of the Clinic of the "closure" thereof under the
Worker Adjustment and Retraining Notification Act (the "WARN Act") or under any
comparable California state law. Accordingly, Purchaser agrees to indemnify,
defend and hold harmless Seller from any liability which it may incur under the
WARN Act or under any comparable California State law in the event of a
violation by Purchaser of its obligations thereunder, including a violation
which results from allegations that Purchaser constructively terminated the
employees of the Clinic as a result of the terms and conditions of employment
offered by Purchaser. Nothing in Section 14.02 shall, however, create any rights
in favor of any person not a party hereto, including the employees of the
Clinic, or constitute an employment agreement or condition of employment for any
employee of Seller or any affiliate of Seller who is a Retained Employee or a
Hired Employee.
14.04. Seller shall offer and provide, as appropriate, group health
plan continuation coverage pursuant to the requirements of Section 601, et seq.
of ERISA and Section 498B of the Internal Revenue Code ("COBRA") to all of the
employees of the Clinic to whom it is required to offer the same under
applicable law. Seller acknowledges and agrees that Purchaser is not assuming
any of Seller's obligations to its employees under COBRA or otherwise, except as
specifically provided in this Article XIV. As of the Closing Date, all active
employees of Seller: (i) who participate as of the Closing Date in group health
insurance coverage sponsored by Seller and (ii) who become employees of
Purchaser on the Closing Date, shall be eligible for participation in a group
health plan (as defined for purposes of Internal Revenue Code Section 4980B)
established and maintained by Purchaser for the general benefit of its employees
and their dependents and all such employees shall be covered without a waiting
period and without regard to any pre-existing condition unless (A) they are
under a waiting period with Seller at the time of Closing, in which case they
shall be required to complete their waiting period while in Purchaser's employ
or (B) they were subject to a pre-existing condition exclusion while in Seller's
employ, in which case they shall be subject to the same exclusion while in
Purchaser's employ, which exclusion shall, if applicable, be subject to the same
time limitation while in Purchaser's employ as was applicable thereto while said
employees were in Seller's employ, with the time limit calculated from the date
the same commenced while in Seller's employ. Seller and Purchaser acknowledge
and agree that it is the intent of this provision that Seller shall not be
required to provide continued health coverage under ERISA or Section 4980 of the
Internal Revenue Code to any of such employees of Seller who are hired by
Purchaser or to any qualified beneficiary (as defined for purposes of Section
4980B of the Internal Revenue Code) with respect to any such employees.
14.05. Seller agrees that the continued employment of the Hired
Employees will be important to the viability of Purchaser's operations at the
Clinic. Accordingly, Seller agrees that for a period of one year after the
Closing Date it will not directly or indirectly solicit the employment of any of
such Hired Employees nor shall it take any action to directly or indirectly
interfere with their employment relationship with Purchaser or to induce them in
any manner to terminate their employment relationship with Purchaser. Seller
acknowledges and agrees that Purchaser would not be fully compensated by damages
in the event of a breach or threatened breach by Seller of this provision and
accordingly agrees that Purchaser shall be entitled, without the need to post a
bond, to seek an injunction to restrain such violation or threatened violation
of this Paragraph 14.05.
ARTICLE XV
INDEMNIFICATION
15.01. Notwithstanding Purchaser's acquisition of the Stock, Seller and
Purchaser acknowledge and agree that it is the intent of the parties that Seller
remain liable for the obligations of the Corporation which relate to the period
prior to the Closing Date. Accordingly, Seller shall indemnify and hold
Purchaser harmless from and against any and all damages, liabilities, losses,
costs or expenses which the Corporation may incur as a result of:
(a) Except as otherwise provided in this Agreement, the leasing or
ownership of the Corporation's Assets and the operation of the Clinic prior to
the Closing Date, whether or not the same are covered by the Corporation's
insurance, including, but not limited to (i) any obligations under the Clinic
Agreement, the Operating Contracts and the Corporation Liabilities, (ii) any
violations of the Medicare or Medicaid fraud and abuse laws, the Xxxxx II law
governing relationships with physicians or any other state or federal law
governing the operation of the Clinic (whether or not such violations would
constitute a breach by Seller of a representation or warranty set forth herein);
and (iii) any failure of any cost report filed by Seller or the Corporation for
the cost reporting periods prior to the Closing Date, including the final cost
reports filed after the Closing Date, to comply with applicable state or federal
law (whether or not such violation would constitute a breach by Seller of a
representation or warranty set forth herein);
(b) Any misrepresentation or breach of warranty of Seller
set forth in this Agreement or nonfulfillment of any agreement on the part
of Seller under this Agreement;
(c) Any failure in connection with the transaction
contemplated herein to comply with the requirements of any laws or
regulations relating to bulk sales or transfers;
(d) Any claims against Seller, the Corporation, Purchaser, the Clinic,
or the other Corporation's Assets under any third party payor programs (i) with
respect to the operation of the Clinic by the Corporation prior to the Closing
Date, (ii) for recapture of depreciation generated by the transaction
contemplated hereby or (iii) for repayment of any overpayments made to the
Corporation or Seller under any third party payor program for services rendered
at the Clinic prior to the Closing Date, including, but not limited to, claims
against Purchaser in the form of offsets by any third party payor against their
payments due to Purchaser on and after the Closing Date;
(e) The Excluded Assets; and
(f) Any and all actions, suits, proceedings, demands, assessments,
judgements, reasonable costs and other reasonable expenses, including, but not
limited to, reasonable attorney's fees, incident to the foregoing.
15.02. Purchaser shall indemnify and hold Seller harmless from and
against any and all damages, liabilities, losses, costs or expenses which it may
incur as a result of:
(a) Except as otherwise provided in this Agreement, any and all
obligations relating to the leasing or ownership of the Corporation's Assets and
the operation of the Clinic from and after the Closing Date, including, but not
limited to, any obligations under the Clinic Agreement, the Operating Contracts
and the Corporation Liabilities (if and to the extent they relate solely to the
period from and after the Closing Date);
(b) Any misrepresentation or breach of warranty of Purchaser
set forth in this Agreement or nonfulfillment of any agreement on the part of
Purchaser under this Agreement; and
(c) Any and all actions, suits, proceedings, demands, assessments,
judgements, reasonable costs and other reasonable expenses, including, but not
limited to, reasonable attorney's fees, incident to the foregoing.
15.03. Notwithstanding the foregoing, neither Purchaser nor Seller (the
"Non-Breaching Party") shall be entitled to seek damages from the other party
(the "Breaching Party") under Paragraphs 15.01(b) and 15.02(b), respectively,
for the breach of a representation or warranty set forth in this Agreement
unless the amount of the damages, liabilities, losses, costs or expenses
incurred by the Non-Breaching Party individually or in the aggregate with any
and all prior breaches equals or exceeds Twenty Five Thousand and no/100 Dollars
($25,000) (the "Representation and Warranty Liability Threshold"). In the event
the Representation and Warranty Threshold is met, then the Non-Breaching Party
shall be entitled to seek to collect from the Breaching Party any and all
damages, liabilities, losses, costs or expenses suffered or incurred as a result
of all such breaches of the representations and warranties set forth herein on a
first dollar basis and not merely to recover damages in excess of the
Representation and Warranty Liability Threshold.
ARTICLE XVI
MISCELLANEOUS
16.01. Notices. Any notice, request or other communication to be
given by any party hereunder shall be in writing and shall be sent by registered
or certified mail, postage prepaid, by overnight delivery, hand delivery or
facsimile transmission to the following address:
To Seller: c/o Horizon/CMS Healthcare Corporation
0000 Xxxxxx Xxxxxx Xxxx, X.X.
Xxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 505-881-6100
With copy to: Xxxx Xxxxxx, Esq.
c/o Horizon/CMS Healthcare Corporation
0000 Xxxxxx Xxxxxx Xxxx, X.X.
Xxxxxxxxxxx, XX 00000
Telephone No.: 000-000-0000
Facsimile No.: 505-881-6100
To Purchaser: Regency Rehab Hospitals, Inc.
0000 Xxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
with copy to: Regency Rehab Hospitals, Inc.
0000 Xxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
and with copy to: Xxxxx X. Xxxxxxxxx, Esq.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telephone No.: 000-000-0000
Facsimile No.: 206-623-1738
Notices shall be deemed given three (3) business days after deposit in
the mail as provided herein or upon actual receipt if sent by overnight
delivery, facsimile transmission or hand delivery.
16.02. Assignment. No party may assign, directly or indirectly, its
rights or obligations hereunder without the prior written consent of the other
party. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns,
including successors by operation of law pursuant to any merger, consolidation
or sale of assets involving either party.
16.03 Sole Agreement. This Agreement may not be amended or modified in
any respect whatsoever except by instrument in writing signed by the parties
hereto. This Agreement, the Disclosure Letter of each of Seller and Purchaser
and the documents executed and delivered pursuant hereto constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior negotiations, discussions, writings and agreements
between them.
16.04. Captions. The captions of this Agreement are for convenience
of reference only and shall not define or limit any of the terms or provisions
hereof.
16.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
16.06. Severability. Should any one or more of the provisions of
this Agreement be determined to be invalid, unlawful or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired thereby.
16.07. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
16.08 Knowledge Defined. To the extent that any of the representations
and warranties contained in this Agreement are limited by the phrases "to the
knowledge of" or "Purchaser has no knowledge of" or "Seller has no knowledge of"
or words or phrases of similar import, the same shall mean to the actual
knowledge of any of the corporate officers or directors of the party or its
subsidiaries making said representation or warranty after due and diligent
inquiry with respect thereto. To the extent that any of the representations and
warranties contained in this Agreement refer to verbal notice to a party such
notice shall be deemed to have been received if delivered to any officer of such
party or to an officer of one of its subsidiaries.
16.09. Expenses. Each party shall bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
16.10. Third Party Beneficiary. Nothing in this Agreement express or
implied is intended to and shall not be construed to confer upon or create in
any person (other than the parties hereto and their successors and permitted
assigns) any rights or remedies under or by reason of this Agreement, including
without limitation, any right to enforce this Agreement.
16.11. Attorneys' Fees. In the event of a dispute between the parties
hereto with respect to the interpretation or enforcement of the terms hereof,
the prevailing party in any action resulting therefrom shall be entitled to
collect from the other its reasonable costs and attorneys' fees, including its
costs and fees on appeal.
16.12. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean "including without limitation." The period covered by the
phrase "from and after the Closing Date" shall include the Closing Date.
16.13. Survival. The representations, warranties, covenants or
conditions set forth herein shall survive the Closing for a period of two years
after the Closing, other than the representation set forth in Paragraphs 6.12
and 6.13, which shall survive for the applicable statute of limitations;
provided, however, that in the event that, at anytime during that two year
period, any claim is made for a breach thereof, the same shall survive until a
final non-appealable resolution thereof. Nothing in this Paragraph 16.13 shall
be construed to limit the indemnity obligations of Seller and Purchaser under
Paragraph 15.01 which shall survive for as long as the matters to which they
relate survive by the terms of this Agreement or, if no such limitation is
provided for herein, which shall survive until the expiration of the applicable
statute of limitations with respect to the matters to which they relate.
16.14. Effectiveness of Agreement. This Agreement shall be of no
effect unless and until each of the Other Agreements has been executed and
delivered by the parties hereto or thereto.
16.15. Identification of Documents Provided. Any and all documents
provided by Seller to Purchaser which are listed on the exhibits hereto shall be
numbered using a Xxxxx sequential numbering system in order to ensure that there
are no disputes concerning what documents were so provided.
IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
day and year first set forth therein.
CMS THERAPIES, INC.
By: ___________________________
Its: ____________________________
REGENCY REHAB HOSPITALS, INC.
By: ____________________________
Its: ____________________________
HORIZON GUARANTY
Horizon/CMS Healthcare Corporation, a Delaware corporation ("Horizon")
as a material inducement to Regency Rehab Hospitals, Inc. ("Purchaser") to enter
into the Purchase and Sale Agreement between CMS Therapies, Inc., as Seller, and
Purchaser dated November 19, 1996 (the "Agreement"), hereby unconditionally,
irrevocably and jointly and severally with Seller, guarantees and promises to
and for the benefit of Purchaser that (i) the representations and warranties of
Seller are true and correct as of the date of execution of the Agreement and
shall be true and correct as of the Closing Date (as modified by any supplements
to the Seller Disclosure Letter to reflect events after the date hereof) and
(ii) Seller shall perform all of its obligations, covenants and agreements,
including, but not limited to, its indemnity obligations under Paragraph 15, to
be performed on its part under the Agreement. If Seller defaults under the
Agreement, Purchaser may proceed immediately against Horizon or Seller or both
to enforce any rights it has under the Agreement or this Guaranty.
Notwithstanding the foregoing, the representations and warranties of Seller will
not survive beyond the periods applicable thereto set forth in Paragraph 16.13
hereof and this Guaranty shall not be construed to give Purchaser a claim or
cause of action against Horizon after the expiration of the applicable survival
period for a breach by Seller of any representation or warranty.
The liability of Horizon hereunder shall not be affected by:
(a) The renewal, extension, modification or termination of the
Agreement by lapse of time or otherwise (all of which are hereby
authorized by Horizon) or a release of the Agreement or limitation of
the liability of Seller or its estate in any bankruptcy or insolvency
proceeding;
(b) Any extension in the time for making any payment
due under the Agreement or acceptance of partial payment from Seller;
(c) The acceptance or release by Purchaser of any
additional security for the performance of Seller's obligations under the
Agreement;
(d) The failure during any period of time whatsoever of
Purchaser to attempt to collect any amount due under the Agreement or
to exercise any remedy available thereunder or any other security
instrument given as security for performance of the same, in the event
of a default in the performance by Seller in its obligations
thereunder;
(e) Any assignment or successive assignments of
Purchaser's interest under the Agreement (whether absolute or as
collateral);
(f) The assertion by Purchaser against Seller of any rights or
remedies reserved or granted to Purchaser under the Agreement,
including the commencement by Purchaser of any proceedings against
Seller upon the occurrence of a default thereunder; or
(g) Any dealings, transactions or other matter occurring
between Purchaser and Seller;
whether or not Horizon shall have knowledge or have been notified of or agreed
to any of the foregoing.
Horizon hereby expressly waives:
(a) Notice of acceptance of this Guaranty;
(b) Presentment, demand, notice of dishonor, protest and
notice of protest, and all other notices whatsoever, including, without
limitation, notice of any event or matter described in the first
paragraph hereof; provided, however, that nothing herein shall be
construed as a waiver by Horizon on its own behalf or on behalf of
Seller with respect to any notice required to be provided by Purchaser
under the terms of the Agreement;
(c) Any and all claims or defenses based upon lack of
diligence in:
(i) collection of any amount, the payment of which is
guaranteed hereby;
(ii) protection of any collateral or other security for
the obligations which are the subject of this Guaranty;
(iii) realization upon any other security given for the
obligations which are the subject of this Guaranty; or
(iv) the discharge, liquidation or reorganization of
Seller in bankruptcy or the rejection of the Agreement by Seller or by a
trustee in bankruptcy;
(d) Any and all defenses of suretyship; and
(e) Any defense based on the lack of consideration for
this Guaranty.
Nothing herein shall be construed, however, as a waiver by Horizon of
any of the defenses available to the Seller under the Purchase Agreement to the
extent Horizon is lawfully entitled to raise the same as a defense to its
obligations hereunder.
No delay or omission on the part of Purchaser in the exercise of any
right or remedy hereunder shall operate as a waiver thereof. All remedies of
Purchaser hereunder shall be in addition to, and exercisable consecutively or
concurrently in any combination with, any and all remedies available to
Purchaser by operation of law or under the Agreement, and Purchaser may exercise
its remedies hereunder without the necessity of any notice to Seller or Horizon
of nonpayment, nonobservance, nonperformance or other default by Seller under
the Agreement other than such notice as may be specifically required by the
terms of the Agreement prior to the exercising of such right or remedy.
Notwithstanding any provision of this Guaranty to the contrary, in the
event of the enforcement of this Guaranty by Purchaser, Purchaser shall be
entitled to collect from Horizon, Purchaser's costs of collection, including,
without limitation, reasonable attorneys' fees.
Horizon shall not be subrogated to any of the rights of Purchaser by
reason of any of the provisions of this Guaranty or by reason of the performance
by Guarantor of any of its obligations hereunder and Horizon shall look solely
to Seller for recoupment of any costs or expenses incurred by Horizon in
performing its obligations hereunder.
For so long as any of the obligations which are the subject of this
Guaranty remain outstanding Horizon shall, upon request, provide Purchaser with
its quarterly and annual financial statements as soon as the same are available
and with any other financial statements as may be reasonably requested by
Purchaser.
This Guaranty shall not be assignable by Horizon but shall be binding
upon the successors of Horizon. This Guaranty shall be assignable by Purchaser
in connection with a permitted assignment of the Agreement and shall inure to
the benefit of its successors and assigns.
If any term, restriction or covenant of this Guaranty is deemed illegal
or unenforceable, all other terms, restrictions and circumstances subject hereto
shall remain unaffected to the extent permitted by law; and if any application
of any term, restriction or covenant to any person or circumstances is deemed
illegal, the application of such term, restriction or covenant to other persons
and circumstances shall remain unaffected to the extent permitted by law.
Seller's Parent:
HORIZON/CMS HEALTHCARE CORPORATION,
a Delaware corporation
By: ______________________________
Xxxx X. Xxxxxxx
President
REGENCY GUARANTY
Regency Health Services, Inc., a Delaware corporation ("Regency") as a
material inducement to CMS Therapies, Inc. ("Seller") to enter into the Purchase
and Sale Agreement between Seller and Regency Rehab Hospitals, Inc.
("Purchaser") dated November 19, 1996 (the "Agreement"), hereby unconditionally,
irrevocably and jointly and severally with Purchaser, guarantees and promises to
and for the benefit of Seller that (i) the representations and warranties of
Purchaser are true and correct as of the date of execution of the Agreement and
shall be true and correct as of the Closing Date (as modified by any supplements
to the Purchaser Disclosure Letter to reflect events after the date hereof) and
(ii) Purchaser shall perform all of its obligations, covenants and agreements,
including, but not limited to, its indemnity obligations under Paragraph 15, to
be performed on its part under the Agreement. If Purchaser defaults under the
Agreement, Seller may proceed immediately against Regency or Purchaser or both
to enforce any rights it has under the Agreement or this Guaranty.
Notwithstanding the foregoing, the representations and warranties of Purchaser
will not survive beyond the periods applicable thereto set forth in Paragraph
16.13 hereof and this Guaranty shall not be construed to give Seller a claim or
cause of action against Regency after the expiration of the applicable survival
period for a breach by Purchaser of any representation or warranty.
The liability of Regency hereunder shall not be affected by:
(a) The renewal, extension, modification or termination of the
Agreement by lapse of time or otherwise (all of which are hereby
authorized by Regency) or a release or limitation of the liability of
Purchaser or its estate in any bankruptcy or insolvency proceeding;
(b) Any extension in the time for making any payment
due under the Agreement or acceptance of partial payment from Purchaser;
(c) The acceptance or release by Seller of any
additional security for the performance of Purchaser's obligations under the
Agreement;
(d) The failure during any period of time whatsoever of Seller
to attempt to collect any amount due under the Agreement or to exercise
any remedy available thereunder or any other security instrument given
as security for performance of the same, in the event of a default in
the performance by Purchaser in its obligations thereunder;
(e) Any assignment or successive assignments of
Seller's interest under the Agreement (whether absolute or as collateral);
(f) The assertion by Seller against Purchaser of any rights or
remedies reserved or granted to Seller under the Agreement, including
the commencement by Seller of any proceedings against Purchaser upon
the occurrence of a default thereunder; or
(g) Any dealings, transactions or other matter occurring
between Seller and Purchaser;
whether or not Regency shall have knowledge or have been notified of or agreed
to any of the foregoing.
Regency hereby expressly waives:
(a) Notice of acceptance of this Guaranty;
(b) Presentment, demand, notice of dishonor, protest and
notice of protest, and all other notices whatsoever, including, without
limitation, notice of any event or matter described in the first
paragraph hereof; provided, however, that nothing herein shall be
construed as a waiver by Regency on its own behalf or on behalf of
Purchaser with respect to any notice required to be provided by Seller
under the terms of the Agreement;
(c) Any and all claims or defenses based upon lack of
diligence in:
(i) collection of any amount, the payment of which is
guaranteed hereby;
(ii) protection of any collateral or other security for
the obligations which are the subject of this Guaranty;
(iii) realization upon any other security given for the
obligations which are the subject of this Guaranty; or
(iv) the discharge, liquidation or reorganization of
Purchaser in bankruptcy or the rejection of the Agreement by Purchaser or by a
trustee in bankruptcy;
(d) Any and all defenses of suretyship; and
(e) Any defense based on the lack of consideration for
this Guaranty.
Nothing herein shall be construed, however, as a waiver by Regency of
any of the defenses available to the Purchaser under the Purchase Agreement to
the extent Regency is lawfully entitled to raise the same as a defense to its
obligations hereunder.
No delay or omission on the part of Seller in the exercise of any right
or remedy hereunder shall operate as a waiver thereof. All remedies of Seller
hereunder shall be in addition to, and exercisable consecutively or concurrently
in any combination with, any and all remedies available to Seller by operation
of law or under the Agreement, and Seller may exercise its remedies hereunder
without the necessity of any notice to Purchaser or Regency of nonpayment,
nonobservance, nonperformance or other default by Purchaser under the Agreement
other than such notice as may be specifically required by the terms of the
Agreement prior to the exercising of such right or remedy.
Notwithstanding any provision of this Guaranty to the contrary, in the
event of the enforcement of this Guaranty by Seller, Seller shall be entitled to
collect from Regency, Seller's costs of collection, including, without
limitation, reasonable attorneys' fees.
Regency shall not be subrogated to any of the rights of Seller by
reason of any of the provisions of this Guaranty or by reason of the performance
by Regency of any of its obligations hereunder and Regency shall look solely to
Purchaser for recoupment of any costs or expenses incurred by Regency in
performing its obligations hereunder.
For so long as any of the obligations which are the subject of this
Guaranty remain outstanding Regency shall, upon request, provide Seller with its
quarterly and annual financial statements as soon as the same are available and
with any other financial statements as may be reasonably requested by Seller.
This Guaranty shall not be assignable by Regency or by Seller but shall
be binding upon the successors of Regency and Seller.
If any term, restriction or covenant of this Guaranty is deemed illegal
or unenforceable, all other terms, restrictions and circumstances subject hereto
shall remain unaffected to the extent permitted by law; and if any application
of any term, restriction or covenant to any person or circumstances is deemed
illegal, the application of such term, restriction or covenant to other persons
and circumstances shall remain unaffected to the extent permitted by law.
Purchaser's Parent:
REGENCY HEALTH SERVICES, INC.
a Delaware corporation
By: ______________________________
Xxxxxxx Xxxxxx
President
