Exhibit 2.08
PURCHASE AND SALE AGREEMENT
WESTERN NEUROLOGIC RESIDENTIAL CENTERS
This Agreement is made and entered into this 19th day of November, 1996
by and between Western Neurologic Residential Centers, a California corporation
("Seller") and Regency Rehab Hospitals, Inc., a California corporation
("Purchaser").
ARTICLE I
PURCHASE AND SALE
1.01. 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 the
following:
(a) The real property situated in the State of California and more
particularly described in Exhibit 1.01(a) (the "Real Property") and the
improvements thereon and the furniture, fixtures and equipment therein that
comprise the following congregate living facilities (collectively, the
"Facilities").
(1) The 6 bed congregate living facility commonly known as Meridian
Neuro Care-Fresno and located at 0000 Xxxxx Xxxxx, Xxxxxx, XX 00000;
(2) The 9 bed congregate living facility commonly known as Meridian
Neuro Care-La Habra Heights and located at 000 Xxxxxxx Xxxx, Xx Xxxxx Xxxxxxx,
XX 00000;
(3) The 6 bed congregate living facility commonly known as Meridian
Neuro Care-Oxnard and located at 0000 Xxxx Xxxx Xxxx, Xxxxxx, XX 00000, which is
in the process of adding 3 additional beds;
(4) The 8 bed congregate living facility commonly known as Meridian
Neuro Care-Sacramento County and located at 0000 Xxxxxxx Xxxx, Xxx Xxxxx, XX
00000, which is in the process of adding 4 additional beds (the "Sacramento
Addition")
(5) The 8 bed congregate living facility commonly known as Meridian
Neuro Care - Xxxxx Heights, 00000 Xxxxx Xxxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx
00000 (the "Xxxxx Heights Facility"); and
(6) The 9 bed congregate living facility commonly known as
Meridian Neuro Care - Escondido, 0000
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Escondido Facility")
(b) All equipment, furniture and fixtures located on or used in
connection with the operation of the Facilities leased by Seller under those
contracts and commitments described in Exhibit 1.01(f) (the "Leased Facility
Personal Property"), which Leased Personal Property is more fully described in
Exhibit 1.01(b).
(c) That Lease dated August 15, 1995 between The Integrity Fund, as
lessor, and Seller, as lessee and that Lease dated July 10, 1996 between The
Integrity Fund, as lessor, and Seller, as lessee (the "Dove Street Lease" or
simply the "Lease"), including, but not limited to, Seller's leasehold right,
title and interest in and to:
(1) The real property leased by Seller on under the terms of the Dove
Street Lease and situated in the State of California and more particularly
described in Exhibit 1.01(c)(1) (the "Leased Real Property") and the
improvements thereon that comprise an aggregate of 1,942 square feet of office
space at 0000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx (the "Dove Street Office");
(2) All equipment, furniture and fixtures located on or used in
connection with the operation of the Leased Real Property leased by Seller under
the terms of the Dove Street Lease or under those contracts and commitments
described in Exhibit 1.01(f) (the "Leased Dove Street Personal Property" and
together with the Leased Facility Personal Property "Leased Personal Property"),
which Leased Dove Street Personal Property is more fully described in Exhibit
1.01(c)(2); and
(3) All rights of first refusal, extension rights, and purchase options
set forth in the Dove Street Lease.
(d) The inventory, including linens, dietary supplies and housekeeping
supplies, food and other consumable inventories located at, or usable in the
operation of, the Facilities (the "Consumables").
(e) The furniture, fixtures, equipment and vehicles owned by Seller and
located on the Real Property or in the Facilities which is not the property of
the lessor under any lease described in Exhibit 1.01(f), (the "Owned Personal
Property") and which Owned Personal Property is more fully described in Exhibit
1.01(e).
(f) All patient medical records, employment records, medical staff
rosters and files and other intangible personal property owned by Seller
relating to the Facilities and all rights of Seller in and to (i) those
contracts and commitments relating to the Facilities as listed on Exhibit
1.01(f), true and correct copies of which contracts have been provided to
Purchaser by Seller as of the date hereof; (ii) the permits and licenses used or
held for use by Seller in the operation of the Facilities and (iii) any and all
warranties issued to Seller in connection with the construction of the
Sacramento Addition (the "Records and Rights").
(g) All of the Seller's right, title and interest in and to the trade
names "Meridian Neuro Care-Xxxxx Heights," "Meridian Neuro Care-Escondido,"
"Meridian Neuro Care-Fresno," "Meridian Neuro Care-La Habra Heights." "Meridian
Neuro Care-Oxnard," and Meridian Neuro Care-Sacramento County" and all other
trade names used exclusively at the Facilities and not used generally by
Continental Medical Systems, Inc., a Delaware corporation ("CMS") at its
facilities (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 Facilities or any pre-printed materials, such as admitting forms or
patient information materials, on which the CMS name or logo may appear.
Hereinafter Seller's rights, title and interest in and to the Real
Property, the Dove Street Lease, the Facilities, the Leased Personal Property,
the Owned Personal Property, the Consumables, the Records and Rights and the
Trade Names will sometimes be collectively referred to as the "Seller's Assets."
1.02. Notwithstanding anything in this Agreement to the contrary, the
Seller's Assets shall not include, and Seller shall retain as its property, the
following assets (the "Excluded Assets"):
(a) Seller's stock record books, tax returns and minute books;
(b) The items owned by Seller and listed on Exhibit 1.02(b);
(c) All of Seller's rights under this Agreement, including,
without limitation, the right of
Seller to receive the Purchase Price (as hereinafter defined);
(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,
including any amounts due or which may, after the Closing, become due to the
Facilities from their participation in any third party payor programs for any
period prior to the Closing Date, and all of Seller's prepaid assets and
deposits;
(g) All computer hardware and software relating to the wide area
network of Horizon/CMS Healthcare Corporation ("Horizon") used for the operation
of the general ledger and accounts payable software applications, which computer
hardware and software is more fully described in Exhibit 1.02(g) (the "GL/AP
Hardware and Software");
(h) Seller's interest in the Straddle Patient Payments (as defined
below) for the services rendered and medicine, drugs and supplies provided prior
to the Closing Date, all in accordance with Paragraph 16.14 hereof;
(i) Seller's claims, if any, against third parties relating to or
arising from the acts or omissions of third parties prior to the Closing;
provided that Seller shall give notice to Purchaser before pursuing any claims
against a third party who continues to have any business relationship with the
Facilities after the Closing; and
(j) Seller's rights and interests in and to proprietary materials,
programs, manuals, promotional materials and other intangibles not included in
Paragraph 1.01; provided, however, that Seller hereby agrees to permit Purchaser
to continue to use, for a period of one hundred eighty (180) days after the
Closing, any of such proprietary assets as are reasonably necessary to the
continued licensure, certification and/or accreditation of the Facilities after
Closing.
1.03. Subject to the terms and conditions set forth in this Agreement,
Purchaser shall assume and agree to pay, perform and discharge the following
liabilities and obligations (the "Assumed Liabilities"):
(a) The liability to make the lease and other payments and to perform
any other obligations under the Dove Street Lease 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 1.01(f) (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 1.01(f) (other than those contracts indicated on Exhibit 1.01(f) as to
be terminated by Seller prior to Closing) which relate to periods from and after
the Closing Date;
(d) The liability to make the payment due under purchase orders placed
by Seller 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;
(e) The liability to pay when due the Accrued Benefits (as defined
below); and
(f) The liability of CMS under that Employment Agreement dated February
24, 1995 with Xxxxxx Xxxxxxx (the "Xxxxxxx Employment Agreement").
1.04. Except for the Assumed Liabilities, no obligation or liability of
Seller relating to or arising from the operation of the business of Seller or
the Seller's Assets prior to the Closing Date is to be assumed by Purchaser.
1.05. At Purchaser's request, Seller will use its best efforts to
obtain prior to Closing, at Purchaser's sole cost, software licenses in favor of
Purchaser to enable Purchaser to use all of the software presently being used by
Seller at the Facilities other than the software listed in Exhibit 1.05 and the
GL/AP Software described in Exhibit 1.02(g). At the Closing and subject to
Seller obtaining any necessary consents or approvals, Seller will assign to
Purchaser, and Purchaser will assume from Seller, all existing leases and
maintenance agreements listed on Exhibit 1.01(f) relating to any computer or
systems hardware which is a part of the Leased Personal Property and to all
computer software with respect to which Seller is able to secure a license in
favor of Purchaser pursuant to the immediately preceding sentence.
1.06. Seller will provide to Purchaser data processing services with
respect to the Hospital and the hospitals which are the subject of the Other
Agreements (as hereinafter defined) on the terms and for the cost specified in
Exhibit 1.06.
ARTICLE II
PURCHASE PRICE
2.01. The purchase price for the Seller's Assets shall be Two Million
and no/100 Dollars ($2,000,000) and shall be payable in cash at Closing, which
cash shall be subject to adjustment to reflect the costs, expenses and
prorations for which Seller and Purchaser are responsible under Paragraph 4
hereof.
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 Seller's Assets 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 am 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 fee title to the Real Property
and the Facilities, leasehold title to the Leased Real Property and the Leased
Personal Property and title to the Consumables, the Owned Personal Property, the
Records and Rights and the Trade Names free and clear of all liens and
encumbrances other than the following (collectively, the "Permitted
Exceptions"):
(a) Liens for real and personal property taxes which are not yet
due and payable;
(b) Liens and encumbrances affecting the fee simple title to
the Dover Street Real Property
created by the owner thereof;
(c) The Permitted Exceptions listed in Exhibit 3.02(c); and
(d) Such liens as may be approved or deemed approved by Purchaser
pursuant to Paragraph 10.01.
3.03. Title to the Seller's Assets shall be conveyed to Purchaser
at Closing by Seller's delivery
of the following documents:
(a) Seller shall deliver an Assignment of Lease 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 Dove Street Lease (the "Lease Assignment Agreement").
(b) Seller shall deliver a Xxxx of Sale in form and substance
substantially the same as that attached hereto as Exhibit 3.03(b) with respect
to the Consumables, the Owned Personal Property, if any, the Records and Rights
and the Trade Names (the "Xxxx of Sale").
(c) Seller shall deliver a separate Grant Deed in form and substance
substantially the same as that attached hereto as Exhibit 3.03(c) pursuant to
which Seller shall convey to Purchaser Seller's right, title and interest in and
to each of the Real Property and the Facilities (the "Grant Deeds").
(d) Such other documents or instruments as may be necessary to convey
title to the Seller's Assets 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 Seller's Assets 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 Real Property, the
Facilities and Seller's leasehold interest in and to the Leased Real Property
and the Dove Street Office Lease to Purchaser.
4.02. Purchaser shall pay any sales tax due on the transfer of either
Seller's leasehold interest in and to the Leased Personal Property or title to
the Owned Personal Property to Purchaser.
4.03. Seller shall pay the base premium for standard ALTA owner's title
insurance policies, in the aggregate amount of $2,000,000, insuring Purchaser's
title to the Facilities as of Closing and Purchaser shall pay the cost of any
premiums for extended coverage which Purchaser may elect to secure, including
the cost of the ALTA survey required to obtain the same, any lender's coverage
which it elects or is required to secure in connection with its acquisition of
the Seller's Assets or financing thereof and any title endorsements which it
elects to obtain or is required to obtain to satisfy the requirements of its
lender.
4.04. Purchaser shall pay the cost of any environmental Phase I
assessment of the Facilities which Purchaser elects to secure prior to Closing.
4.05. 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.
4.06. Seller shall pay the cost of obtaining and recording any releases
necessary to deliver title to the Seller's Assets in accordance with the terms
of this Agreement.
4.07. Seller shall pay any reasonable attorneys fees, processing fees
and other fees and expenses contemplated by the terms of the Dove Street Lease
as a condition to securing consent to an assignment thereof which are necessary
to secure the consent of the lessor thereunder.
4.08. 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 4.08 (the "Other Agreements") under the
Antitrust Improvements Act of 1976, as amended (the "HSR Act").
4.09. Seller shall pay the cost of any repairs or renovations or other
work to the physical plant of the Facilities required to be undertaken by the
State of California in connection with any change of ownership survey which it
may elect to conduct as a condition to its review and, if applicable, approval
of the transaction which is the subject of this Agreement; provided, however,
that in the event the cost thereof, along with the cost of any repairs or
renovations or other work to the physical plant of the facilities which are the
subject of the Other Agreements, exceeds $250,000 (the "Licensure Cost Cap")
Seller shall have the right to terminate this Agreement in lieu of incurring
such costs in excess of the Licensure Cost Cap; and provided, further, that
Purchaser shall have the right to pay such costs in excess of the Licensure Cost
Cap in lieu of permitting Seller to terminate this Agreement.
4.10. Purchaser shall pay any filing or licensure fees due in
connection with the submission of any licensure applications which it is
required to file in order to secure the approval of the State of California of
the transaction which is the subject of this Agreement under applicable
licensure laws governing the operation of the Facilities, as well as the fees
and expenses of Xxxxx Xxxxxx Xxxxxxxx or any other legal counsel retained or
utilized by Purchaser to assist it with such matters.
4.11. 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 Seller's Assets and Purchaser shall pay any
reasonable attorneys' fees, processing fees and other fees and expenses
contemplated by the terms of the Credit Agreement dated December 28, 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
Seller's Assets, subject only to the rights of the lessor under the Dove Street
Lease and the rights of the residents of the Facilities.
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. Seller is a duly organized, validly
existing California corporation and is
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.
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 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 is now a
party or by which Seller or any of the Seller's Assets may be bound or affected
or any agreement, option, understanding or commitment or any or privilege
granted by Seller to any other party to purchase or otherwise acquire the
Seller's Assets or result in the acceleration of or an increase in the interest
rate payable under any indebtedness to which Seller is a party other than
indebtedness of Seller which does not relate to the Facilities 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 and/or lease the Seller's Assets 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 Seller with respect to the operation of the
Facilities as of the close of Seller's fiscal year ended May 31, 1996, and for
the four month period ended September 30, 1996 (collectively, the "Seller's
Financials") are attached hereto as Exhibit 6.04. All such financial statements
fairly represent the financial condition, and accurately set forth in all
material respects the results of the operations of, Seller at the Facilities for
the periods covered thereby subject to customary year end adjustments. Any
financial statements prepared by Seller subsequent to the date of the Seller
Financials or the date hereof will be prepared in a manner consistent with the
manner in which the Seller's Financials were prepared, will fairly represent the
financial condition, and will accurately set forth in all material respects the
results of the operations of Seller at the Facilities 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 Facilities.
6.06. The Licenses. Seller has all material licenses, permits and
authorizations necessary for the lawful ownership and operation of the
Facilities as congregate living facilities (the "Seller Licenses"). True and
correct copies of all of the Seller Licenses are attached hereto as Exhibit
6.06. Seller has not received written or verbal notice of (A) any action or
proceeding which has been initiated or is proposed to be initiated by the
appropriate state or federal agency having jurisdiction thereof to revoke,
withdraw or suspend any of the Seller Licenses, (B) any judicial or
administrative agency judgement or decision not to renew any of the Seller
Licenses, (C) any action to limit or ban admissions to the Facilities or (D) any
licensure or certification action of any other type, which would have a material
adverse effect on the business, assets or financial condition of the Facilities.
The Facilities do not participate in Medicare or Medi-Cal and are not accredited
by the Joint Commission on Accreditation of Health Care Organizations or any
other accreditation body.
6.07. Compliance with Law.
(a) The Facilities and their current operation and use are 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 Facilities 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 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) Set forth in Exhibit 6.07(b) is a list of the most recent licensure
survey and the results of any complaint investigations conducted within the last
six months for the Facilities, copies of which have been made available to
Purchaser as of the date hereof. Seller has no knowledge, based on the results
of Facilities surveys or complaint investigations provided verbally or in
writing to the Facilities by the applicable supervising agency or authority and
after due inquiry of the Chief Executive Officer of the Facilities, that the
Facilities are not in substantial compliance with applicable licensure laws nor
has Seller received written or, to the best of Seller's knowledge, verbal notice
from any licensing or certifying agency requiring any or all of them to be
physically reworked or redesigned or to add furniture, fixtures, equipment or
inventory so as to conform to or comply with any existing licensure law, code or
standard except where the requirement either (i) has been fully satisfied prior
to the date hereof, (ii) will be satisfied by Seller prior to the Closing Date,
(iii) will be in the process of being satisfied in the ordinary course of
Seller's business pursuant to the terms of a Plan of Correction or other
documentation submitted to and approved by the appropriate authority or (iv)
will be the subject of a valid written waiver issued by the applicable licensing
or certifying agency;
(c) There are no pending or, to the best of Seller's knowledge after
due inquiry of the Chief Executive Officer of the Facilities, threatened
investigations of or claims by any governmental agency or instrumentality
against (i) the Facilities, (ii) any of the members of the medical staff, the
Board of Directors or employees of the Facilities.
6.08. Patients. There are no agreements not terminable at will with
patients or prospective patients of the Facilities which provide for the
provision of the care routinely provided at the Facilities for no consideration
nor will Seller enter into any such agreements between the date hereof and the
Closing Date.
6.09. Books and Records. To the best of Seller's knowledge after due
inquiry of the Chief Executive Officer and Medical Director of the Facilities,
all of the books and records of the Facilities, including patient records, are
true and correct in all material respects.
6.10. Title. Seller has, or in the case of the Xxxxx Heights and
Escondido Facilities will have, as of the Closing Date, title to all of the
Seller's Assets free and clear of all liens, charges and encumbrances other than
the Permitted Exceptions. Seller has not received notice of any pending or
threatened condemnation proceedings with respect to the Real Property. Seller
has good and marketable title to the Seller's Assets free and clear of all
liens, charges and encumbrances, other than the Permitted Exceptions.
6.11. Unions. There are no union contracts in effect between Seller, on
the one hand, and the employees of the Facilities, on the other hand. To the
best of Seller's knowledge, none of Seller's employees who are not currently
members of a labor union in connection with their work at the Facilities are
actively seeking the formation of a labor union at the Facilities. Seller is not
a party to any labor dispute, it being agreed that a claim for wrongful
termination shall not, for purposes of this Paragraph 6.11 be deemed to be a
labor dispute. Seller is not a party to any union contracts with respect to the
Facilities.
6.12. 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 Seller's Assets or
with respect to its operations at the Facilities 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 Seller's Assets and with
respect to the Seller's operations at the Facilities 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.
6.13. 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 any of
the Facilities and the Dove Street Office other than to the extent the same will
not have a material adverse affect on the condition, financial or otherwise, of
any of the Facilities or the Dove Street Office, (ii) not installed any
underground storage tanks and (iii) at all times operated the Facilities or the
Dove Street Office 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 any of the Facilities or the Dove Street Office.
(b) With respect to the Facilities and the Dove Street Office 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 each of the
Facilities, (i) except to the extent permitted by applicable Environmental Laws,
no hazardous materials, substances or wastes were located on or at any of the
Facilities or the Dove Street Office or were released into the environment or
discharged, placed or disposed of in, on or under any of the Facilities or the
Dove Street Office, (ii) except to the extent permitted by applicable
Environmental Laws, no underground storage tanks are or were located at any of
the Facilities or the Dove Street Office, (iii) none of the Facilities or the
Dove Street Office are located on property which was used as a dump for waste
material, and (iv) the Facilities and the Dove Street Office have 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 Facilities. 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 any of the Facilities or the Dove Street Office
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 Facilities or the Dove Street Office which are currently
in the possession of Seller.
6.14. 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 4.09.
6.15. Litigation. Except as set forth in Exhibit 6.15, there is no, nor
has Seller 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 or the Facilities 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 Seller's
Assets or the Seller's right or ability to consummate the transaction provided
for herein. Seller is not a party to nor is Seller or the Facilities 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 Facilities. 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.
6.16. Sensitive Payments. Seller 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. Seller has not filed any reports with any
governmental agency which disclose that it has participated in any of the
foregoing practices or acts giving rise to such practices.
6.17. The Facilities. Seller is duly licensed to operate the Facilities
under California law as congregate living facilities, with the number of beds
set forth opposite each Facility's name in Section 1.01. Each of the Facilities
is in good operating condition and repair and substantially all of the Personal
Property and all of the major mechanical systems located at or used in
connection with the operation of the Facilities are in good working order,
condition and repair. The roofs of the Facilities do not leak. The Personal
Property is all of the property necessary for the lawful operation of the
Facilities at their current occupancy levels.
6.18 Inventories. At Closing, each of the Facilities shall have an
inventory of non-perishable food, central supplies, linens, housekeeping
supplies, kitchen supplies, nursing supplies and other supplies, which will be
sufficient in condition and quantity to operate each of the Facilities at its
normal capacity and an inventory of perishable food at the levels normally
maintained by Seller at the Facilities.
6.19. Trade Names. Set forth in Exhibit 6.19 is a true and complete
list of the trade names under which Seller is doing business at the Facilities.
Seller has not sought protection for such names under state or federal trademark
or trade name laws except to the extent reflected in Exhibit 6.19. Seller has
not received any notice from any person challenging or questioning the right of
Seller to use any such trade names.
6.20. Employees/ERISA.
(a) Set forth in Exhibit 6.20 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 Facilities or to any current or former employees at or of
the Facilities (the "Plan" or "Plans"). Except as set forth in Exhibit 6.20 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
Facilities to establish any additional Plan, arrangement or practice or to
modify or change any existing Plan, arrangement or practice. Exhibit 6.20 also
lists by Facility all employees of the Facilities 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) Set forth in Exhibit 6.20 is a true and correct copy of all
employment contracts between Seller and any employee of the Facilities. Except
as otherwise set forth in Exhibit 6.20 all such contracts are terminable by
Seller prior to the Closing Date and, in the case of those contracts listed in
Exhibit 6.20A, will be terminated by Seller prior to the Closing Date if so
requested by Purchaser.
6.21. Operating Contracts. Set forth in Exhibit 1.01(f) is a true and
correct list of all supply, licensing and operating contracts, equipment leases,
contracts with affiliates of Seller, 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 is a party in connection with
the Seller's operations at the Facilities (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 1.01(f). Seller is not 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 6.21 in the event Exhibit 1.01(f) fails to list
or Seller fails to provide to Purchaser any Operating Contracts where the
payments remaining due thereunder are less than $25,000.
6.22. The Dove Street Lease. A true and correct copy of the Dove Street
Lease has been provided by Seller to Purchaser. The Dove Street Lease remains in
full force and effect and has not been amended or modified except as set forth
in Paragraph 1.01. Seller has not received from the landlord under the Dove
Street Lease any written notice that it is in default of its obligations under
the Dove Street Lease or that any guarantor thereof is in default of its
obligations under any Guaranty delivered in conjunction therewith nor does
Seller have knowledge after inquiry of the Chief Executive Officer of the
Facilities of any events which, with the passage of time or the giving of
notice, would constitute a material default thereunder. Except with respect to
any common area included in the Dove Street Lease, Seller enjoys exclusive,
peaceful and undisturbed possession under all real and personal property leases
to which it is a party in connection with the Facilities, including, but not
limited to, under the Dove Street Lease. Except as set forth in Exhibit 6.22,
there are no security deposits posted with respect to the Dove Street Lease.
6.23. Physician Contracts. Exhibit 1.01(f) lists each contract between
the Seller and the physicians providing services to the patients of the
Facilities, including contracts with any entity owned or controlled by any such
physicians, true and correct copies of which have been provided to Purchaser.
Seller represents and warrants that Seller has not received any notice that any
state or federal agency or any other party believes or is attempting to
determine whether any violation exists under any such physician contracts
relating to the requirements of State and federal law governing physician self
referral and "kickbacks" including but not limited to the provisions of "Xxxxx
II" and the federal fraud and abuse laws.
6.24. Medical Staff. Attached hereto as Exhibit 6.24 is a true and
correct copy of the medical staff roster for the Facilities. Seller has made
available to Purchaser a copy of the medical staff bylaws currently in effect
with respect to the Facilities, including any and all current amendments and
modifications thereto.
6.25. Insurance. Set forth in Exhibit 6.25 is a list of all insurance
policies held by Seller or the Corporation with respect to the Facilities and
the other Corporation 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 Facilities. 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.
6.26. 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 Seller's Assets and (ii) to conduct its business
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. 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:
(a) Will operate the Facilities 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 occupancy levels of the Facilities, it being understood and agreed that
they shall not be required to undertake any action to preserve occupancy levels
other than continuing to engage in the routine marketing activities in which
they are currently engaged at the Facilities;
(c) Will not make any material change in the operation of the
Facilities nor, except in the ordinary course of business, sell or agree to sell
any items of machinery, equipment or other fixed assets of the Facilities,
including but not limited to assets and equipment used in connection with the
operation of the Facilities nor otherwise enter into any agreements materially
affecting the Facilities;
(d) Will use its reasonable efforts to retain the goodwill of the
employees of, medical staff of or physicians under contract with, Seller located
at or connected with the operation of the Facilities 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 Facilities, including
employees located at the Seller's corporate or regional offices who work
exclusively on matters related to the Facilities, 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 Facilities 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 Seller'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 Seller
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;
(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 or the Facilities provided they do not interfere with the
operation thereof;
(i) Will operate each of the Facilities 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 each
of the Facilities 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 Seller'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 Seller's monthly
financial statements prepared in
the ordinary course of business;
(m) Will provide Purchaser with copies of all licensure or
certification surveys received by
Seller and the related Plans of Correction prepared by Seller, as applicable;
(n) 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 and such contest does not materially affect Seller or
any of the Facilities;
(o) Will maintain in force the existing insurance coverage
with respect to the Facilities
described in Exhibit 6.25;
(p) 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, including, but not limited to, state and federal tax returns with
respect to the Facilities 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 or any of the Facilities;
(q) 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 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;
(r) Will not amend or permit the amendment of any of the
Medical Staff Bylaws described in
Paragraph 6.24;
(s) 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;
(t) 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 Seller'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 Seller's Assets;
provided, however, that public announcements of the transaction contemplated by
this Agreement shall not be prohibited hereby;
(u) 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;
(v) Seller will cooperate with Purchaser, at Purchaser's cost and
expense, in any audits of the results of operations at the Facilities which
Purchaser elects to conduct in order to comply with any requirements applicable
to it under the federal securities laws; and
(w) Within ten (10) days after Seller's receipt of Purchaser's title,
UCC search and survey 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 California
Secretary of State within no more than thirty (30) days prior to Closing;
(c) The duly executed Lease Assignment Agreement;
(d) Written Escrow Instructions;
(e) Evidence that Seller has secured all of the Regulatory Consents and
Third Party Approvals, including, but not limited to, the consent of the
landlord under the Dove Street Lease, which Seller is required to secure under
the terms of this Agreement;
(f) The duly executed Xxxx of Sale;
(g) An opinion of the General Counsel of Horizon in the form and
substance reasonably acceptable
to Purchaser;
(h) The duly executed Grant Deeds;
(i) An Assignment and Assumption Agreement with respect to the Xxxxxxx
Employment Agreement in substantially the form attached hereto as Exhibit
9.02(i) (the "Xxxxxxx Assumption Agreement"); and
(j) The original titles to any motor vehicles included within the
Owned Personal Property.
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 Facilities any and all plans and specifications
with respect to the Facilities which may be in Seller'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 Facilities
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 Seller's Assets.
(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) File any final cost reports for which it may be responsible under
applicable state and federal law within the time periods proscribed thereunder,
it being understood and agreed that the purpose of this provision is to ensure
that there is no adverse affect on the reimbursement paid to Purchaser with
respect to the operations at the Facilities after Closing.
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, title commitment and/or survey of
the Real Property and the Facilities which Purchaser may elect to obtain;
provided, however, that Purchaser shall not have the right to object to any
items reflected on the title commitment which are reflected in Exhibit 3.02(c).
If Seller refuses to correct some or all of the title, survey or lien defects
objected to by Purchaser within the time period reflected in Paragraph 9.01(w)
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 title, survey or 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) The executed Xxxxxxx Assignment Agreement;
(c) The cash due at Closing pursuant to Paragraph 2.01;
(d) Duly executed Escrow Closing Instructions;
(e) An opinion of the General Counsel of Regency in form and
substance reasonably acceptable to
Seller; and
(f) The duly executed Lease Assignment Agreement.
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 Hospital.
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 Hospital, 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 and the staff physicians of
the Facilities employed by Seller prior to the Closing Date (but in the case of
such staff physicians only as necessary for the further care of their patients
and the defense of litigation) shall be entitled, after the Closing Date, during
normal business hours of the Facilities 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 Facilities 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 Facilities 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
Facilities. Any record or chart so removed by Seller from the Facilities 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 Facilities, 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 Seller 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 Facilities 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, the consent of the lessor under the Dove Street Lease (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, 1995 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 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, including, but not limited to, if applicable, change of
ownership approval from the California Department of Health Services (the "CHOW
Approval").
(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, Seller shall not be
in default, where said default cannot be cured by the Closing Date, under any
mortgage, contract, lease or other agreement to which Seller is a party or by
which Seller is bound and which will affect or relate to the Real Property, the
Personal Property or the Facilities after the Closing Date.
(e) Subject to Purchaser ordering the same, a title insurance policy
providing for owners coverage shall have been issued to Purchaser with respect
to the Facilities subject only to the Permitted Encumbrances (the "Title
Insurance Policy").
(f) 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 Surveys.
(g) 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.
(h) If applicable, the filing and waiting period requirements under the
HSR Act shall have been complied with and shall have expired or terminated.
(i) The closing of the transactions which are the subject of
the Other Agreements shall have
occurred.
(j) The Sacramento Addition shall have been completed and shall have
been constructed in a good and workmanlike and lien free manner and Seller shall
have delivered to the Purchaser duly executed lien releases with respect
thereto.
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 landlord under the Dove Street
Lease 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; provided, however, that in the event all of the conditions to Closing
provided for in Paragraph 12 have been satisfied or waived by the Outside
Closing Date other than the Purchaser's receipt of the CHOW Approval pursuant to
Paragraph 12.01(c), provided Purchaser is diligently pursuing the issuance of
the CHOW Approval by the California Department of Health, the Outside Closing
Date shall automatically be extended for such additional period of time as may
be necessary to permit Purchaser to secure the CHOW Approval; provided, further
that in the event Purchaser has not secured the same within thirty (30) days
after the Outside Closing Date, this Agreement shall thereafter terminate in
accordance with the terms hereof and the parties shall have no further rights or
obligations hereunder.
(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 Facilities 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
either (A) to seek damages from Purchaser as a result of said breach or (B)
without the need to prove damages, to collect from Purchaser on written demand
the sum of Two Million Five Hundred Thousand and no/100 Dollars ($2,500,000) as
liquidated damages in full and complete settlement of any and all claims which
Seller may have against Purchaser hereunder and under the Other Agreements as a
result of said breach by Purchaser, it being understood and agreed that the
amount provided for in this clause (B) is intended to compensate Seller for the
damages suffered by it as a result of said breach without resort to the courts
and is not intended to be a limitation on the damages which Seller would be able
to seek to recover in the event it elects to proceed under clause (A).
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 Facilities 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
Facilities and the Dove Street Office 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 Facilities and the Dove Street Office
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
Facilities and the Dove Street Office any wages due to them as of the Closing
Date. Any benefits due to the employees of the Facilities and the Dove Street
Office 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 Facilities and the Dove Street Office
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 continued 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 prior to Closing. 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. The Retained Employees who elect to accept continued employment
with Seller shall hereinafter be referred to as the "Hired Employees") and as to
each of the Hired Employees, Purchaser shall recognize each such Hired Employees
original hire date and shall cause Seller to 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 Facilities 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 Facilities 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 Facilities, 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 Facilities 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 remain employees of Seller
after 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 under Purchaser's group
health plan 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 retained
after Closing 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 of the Facilities will be important to the viability of Purchaser's
operations at the Facilities. 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. Seller shall indemnify and hold Purchaser harmless from and
against any and all damages, liabilities, losses, costs or expenses which
Purchaser may incur as a result of:
(a) Except as otherwise provided in this Agreement, the leasing or
ownership of the Seller's Assets and the operation of the Facilities prior to
the Closing Date, whether or not the same are covered by Seller's insurance,
including, but not limited to any obligations under the Dove Street Lease, the
Operating Contracts and the Assumed Liabilities;
(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, Purchaser, the Facilities, or the other
Seller's Assets under any applicable third party payor program (i) with respect
to the operation of the Facilities by Seller prior to the Closing Date, or (ii)
for repayment of any overpayments made to Seller under any applicable third
party payor program for services rendered at the Facilities prior to the Closing
Date, including, but not limited to, claims against Purchaser in the form of
offsets by such 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 Seller's Assets and the
operation of the Facilities from and after the Closing Date, including, but not
limited to, any obligations under the Dove Street Lease, the Operating Contracts
and the Assumed 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 Fifty Thousand and no/100 Dollars
($50,000) (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; provided, however, that Purchaser may assign its rights and obligations
hereunder with respect to any Real Property and Personal Property included in
the Seller's Assets effective at Closing to a real estate investment trust (the
"REIT") in connection with its financing of the transaction provided for herein
provided Seller first confirms to Purchaser that, in its reasonable
determination, such assignment will not have adverse reimbursement consequences
for Seller; and provided, further, that no such assignment shall relieve
Purchaser of its obligations hereunder. 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. In the event of
an assignment of this Purchase Agreement to a REIT, Purchaser shall advise
Seller as to those documents and deliveries contemplated by this Agreement which
are to run in favor of the REIT rather than Purchaser and those documents and
deliveries contemplated by this Agreement which will be delivered by the REIT
rather than Purchaser, if any, it being understood and agreed that in the event
of such an assignment, the only right which the REIT will assume is Purchaser's
right to take title to any Real or Personal Property included in the Seller's
Assets and the only obligation which the REIT will assume is Purchaser's
obligation to pay the purchase price in accordance with the terms hereof .
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. Remittances and Receivables.
(a) All remittances, mail and other communications relating to the
Excluded Assets or liabilities other than the Assumed Liabilities received by
Purchaser at any time after the Closing shall be promptly remitted by Purchaser
to Seller and, pending such delivery, Purchaser shall have no interest in the
same and shall hold such remittances, mail and other communications in trust for
the benefit of Seller. All remittances, mail and other communications relating
to the Seller's Assets or the Assumed Liabilities received by Seller at any time
after the Closing shall be promptly remitted by Seller to Purchaser and, pending
such delivery, Seller shall have no interest in the same and shall hold such
remittances, mail and other communications in trust for the benefit of
Purchaser.
(b) Any payments received by Purchaser (or its successors in interest
or assigns) which relate solely to accounts receivable for services rendered and
medicines, drugs and supplies provided by Seller to patients of the Facilities
who are discharged prior to the Closing Date or otherwise not receiving such
goods or services as of the Closing Date (the "Receivables") whether from
patients, payors, clients, customer or others (collectively, the "Account
Parties") shall be paid by Purchaser to Seller weekly commencing on the first
Monday following the Closing and covering the seven day period ending on the
immediately preceding Saturday (or, in the case of the first such payment, the
period beginning on the Closing Date and ending on the next succeeding
Saturday). Within no more than ten (10) days after Closing, Seller shall deliver
to Purchaser a schedule of all such Receivables which are outstanding as of the
Closing Date, which schedule shall show (i) the amount due from each Account
Party and (ii) if possible, the portion thereof, if any, due from a third party
payor on behalf of an Account Party who is a patient. Any payments received by
Seller with respect to balances owing to Purchaser for services rendered or
medicines, drugs or supplies provided after the Closing Date shall be remitted
to Purchaser within five (5) business days after the receipt thereof. All
payments which are remitted by Purchaser to Seller shall be applied to the
oldest receivable reflected on the schedule provided by Seller to Purchaser
unless Purchaser in good faith determines that the same should be applied to a
more recent Receivable and so advises Seller at the time of the remittance
thereof to Seller.
(c) To compensate Seller for services rendered and medicines, drugs and
supplies provided to the Closing Date to patients who were admitted to the
Facilities before the Closing Date and discharged by the Facilities after the
Closing Date (the "Straddle Patients"), Seller shall prepare cut-off xxxxxxxx
for all Straddle Patients, as of the close of business on the day prior to the
Closing Date. All payments which are received by Purchaser (or its successors in
interest or assigns) after the Closing Date with respect to such Straddle
Patients to whom cut-off xxxxxxxx were provided shall constitute Excluded Assets
and shall be remitted to Seller within two (2) weeks after Purchaser's receipt
of such payments.
(d) Any payments in excess of One Hundred Thousand and no/100 Dollars
($100,000) owing from either party to the other under this Section 16.14 shall
be paid in immediately available funds. All other payments shall be paid by
check made payable to the party entitled to such payment in accordance with the
terms hereof. Any payment not paid when due hereunder or within thirty (30) days
thereafter (the "Overdue Date"), shall bear interest at the rate of 10% per
annum from the Overdue Date to the date paid in full.
(e) Seller acknowledges and agrees that Purchaser's obligations under
this Paragraph 16.14 shall be limited to remitting to Seller any payments
received by Purchaser which belong to Purchaser in accordance with the terms
hereof and that Purchaser shall not be obligated to attempt to xxxx for or to
collect Seller's Receivables, other than Seller's pro rata portion of any
payments owing from the Straddle Patients which are not the subject of cut off
xxxxxxxx or final cost reports. Accordingly, in order to facilitate Seller's
collection efforts, Purchaser agrees to cooperate with Seller and, to the extent
permitted by law, to provide access to records (both medical and financial)
during normal business hours and to a reasonable number of Seller's personnel
and representatives, to assist Seller in the collection, rebilling and auditing
(by Seller or its representatives, including its independent certified public
accountants) of the Receivables included in the Excluded Assets (including but
not limited to, any and all Receivables from Account Parties or amounts due to
Seller from any other payor). Without limiting the generality of the foregoing,
Purchaser agrees that (A) for a period of six months following the Closing Date,
(i) Seller may, at its sole cost and expense, locate an employee or
representative at the Hospital, without charge, in order to facilitate such
collection, rebilling and auditing efforts, (ii) Purchaser shall provide such
employee or representative, without charge, adequate space to facilitate the
performance of such duties and (iii) Purchaser shall provide reasonable
assistance of the employees of Purchaser, without charge; provided, however, in
each instance that Purchaser's obligations hereunder are subject to such
presence of Seller's employee or representative and such assistance of
Purchaser's employee not interfering with Purchaser's day to day operations at
the Facilities and (B) with respect to any Receivables for which collection has
not been received within one hundred and twenty (120) days following its due
date, to the extent Purchaser has not already provided the same to Seller's
employees or representatives under clause (A) hereof, Purchaser shall upon the
request of Seller promptly turn over to Seller all evidences of any such
Receivables and documents pertaining to the same that are in the possession of
Purchaser (or its successors in interest or assigns) and, to the extent it has
not already done so pursuant to clause (A), Seller shall be free to institute
such collection efforts, including without limitation, initiating such legal
proceedings, with respect thereto as Seller shall, in its sole discretion,
determine to be necessary or appropriate for the collection thereof.
(f) In the event any collection efforts are necessary with respect to
the Straddle Patient Payments, Seller and Purchaser shall cooperate in
determining the nature and extent of such collection efforts and shall share the
cost thereof on the same pro rata basis as the Straddle Patient Payments are
allocated between Seller and Purchaser in accordance with clause (c)(iii)
hereof.
16.15. 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.
16.16. 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.
WESTERN NEUROLOGIC RESIDENTIAL CENTERS
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 Western Neurologic Residential
Centers, 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 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 Western Neurologic Residential Centers ("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
