AGREEMENT FOR PURCHASE AND
SALE OF PARTNERSHIP INTERESTS
by and between
DAKOTA MEDICAL FOUNDATION
AND
PARACELSUS HEALTHCARE CORPORATION OF NORTH DAKOTA, INC.
DATED AS OF
JUNE 1, 1998
TABLE OF CONTENTS
PAGE
Section 1.
Definitions 1
1.01. Definitions 1
1.02. Other Definitions 8
Section 2.Sale and Purchase 8
2.01. Sale and Purchase 8
2.02. Purchase Price 8
2.03. Method of Payment 8
2.04. Escrow 8
2.05. Full Payment 8
Section 3.Additional Covenants and Agreements 8
3.01. Effect on Prior Agreements 9
a. Prior Agreements 9
b. Survival of Representations 9
c. Rights Not Affected By Knowledge 9
3.02. Specific Actions on Prior Agreements 10
a. Partnership Agreement 10
b. Contribution Agreement 10
c. Operating Agreement 10
3.03 Exercise of Put Right 10
3.04 Effect on Partnership 10
a. Dissolution 10
b. Winding Up 11
c. Termination 12
3.05. Tax Matters 12
3.06. Disclaimer of Fiduciary Obligations 12
3.07. Resignation of Positions with Partnership 12
3.08. Maintain Existence & Preserve Proceeds 12
3.09. Mutual Releases 13
3.10. No Disparagement 13
3.11. Information for Tax Returns 14
3.12. Noncompetition & Nonsolicitation Covenants 14
a. Statement of Enforceability 14
b. Noncompetition Covenant 14
c. Nonsolicitation Covenant 15
d. Injunctive Remedy 15
e. Other Relief 16
f. Information 17
3.13. Maintenance of Insurance 17
3.14. Confidentiality of Records 17
Section 4.Representations and Warranties of Dakota about Dakota 18
4.01. Authorization of Transaction 18
4.02. Organization; Good Standing 18
4.03. Membership 19
4.04 No Subsidiaries or Affiliates 19
4.05. Litigation and Related Matters 19
4.06. Insurance Coverages 19
4.07. Financial Statements 19
4.08. No Undisclosed Liabilities 20
4.09. No Joint Partner Liabilities 20
4.10. Compliance with Prior Agreements 20
4.11. Compliance with Legal Requirements 20
4.12. Good Title to Dakota Partnership Interest 20
4.13. No Conflict; Effect of Agreement 20
4.14. Taxes 22
4.15. Solvency 22
4.16. No Other Agreements 22
4.17. No Broker's Fee 23
4.18. No Consents Required 23
4.19. Statements True and Correct 23
Section 5.Mutual Representations and Warranties about Partnership 23
5.01. Organization; Good Standing 23
5.02. Capitalization 23
5.03. Full and Complete Information 23
5.04. Compliance with Prior Agreements 23
Section 6.Representations and Warranties of Paracelsus ND 24
6.01. Authorization of Transaction 24
6.02. Organization; Good Standing 24
6.03. Insurance Coverages 25
6.04. Financial Statements 25
6.05. No Undisclosed Liabilities 25
6.06. No Joint Partner Liabilities 26
6.07. Compliance With Prior Agreements 26
6.08. Compliance With Legal Requirements 26
6.09. No Conflict, Effect of Agreement 26
6.10. Taxes 27
6.11. Solvency 28
6.12. No Other Agreements, No Liens 28
6.13. No Broker's Fee 28
6.14. No Consents Required 28
6.15. Statements True and Correct 29
6.16. Operation of Partnership 29
Section 7.Rights and Obligations Pending Closing 29
7.01. Confidential Information 29
7.02. Public Announcements 30
7.03. Access and Investigation 30
7.04. Maintenance of the Business of Partnership 31
7.05. Negative Covenant Paracelsus ND 31
7.06. Required Approvals; Governmental Authorizations 31
7.07. Best Efforts 31
7.08. Notification 31
7.09. No Negotiation 32
Section 8.Conditions Precedent to Paracelsus ND's Obligation to Close 32
8.01. Closing Certificate 32
a. Representations and Warranties of Dakota 32
b. Obligations of Dakota 32
8.02. Secretary's Certificate 33
8.03. Legal Matters 33
8.04. No Prohibition 33
8.05. Necessary Consents 33
8.06. No Claim Regarding Ownership or Sale Proceeds 33
8.07. Delivery of Documents 33
8.08. Legal Opinion 34
Section 9.Conditions Precedent to Dakota's Obligation to Close 34
9.01 Closing Certificate 34
. a. Representations and Warranties of Paracelsus ND 34
b. Obligations of Paracelsus ND 34
9.02. Secretary's Certificate 34
9.03. Payment of Purchaser Price 35
9.04. Delivery of Documents 35
9.05. Legal Opinions 35
Section 10.Deliveries at Closing; Post-Closing Further Assurances 35
10.01. Deliveries by Dakota 35
a. Corporate Documents and Certificates 35
b. Closing Certificate 35
c. Secretary's Certificate 35
d. Written Resignation 35
e. Escrow Agreement 35
f. Partnership Interest Assignment 35
g. Legal Opinion 36
h. Other Documents 36
10.02. Further Assurances by Dakota 36
10.03. Deliveries by Paracelsus ND 36
a. Corporate Documents and Certificates 36
b. Closing Certificate 36
c. Secretary's Certificate 36
d. Purchase Price 36
e. Escrow Agreement 36
f. PHC Guaranty Agreement 36
g. Legal Opinion 36
Section 11. Closing 37
11.01. Closing; Effective Time 37
a. Closing 37
b. Effective Time 37
Section 12. Termination 27
12.01. Grounds For Termination 28
12.02. Effect of Termination 28
Section 13. Tolling 38
13.01. Exercise of Tolling Right 38
13.02. Duration of Tolling Period 38
a. Litigation Intervention 38
b. Failure of Dakota to Close 39
13.03. Distributions During Tolling 39
13.04. Paracelsus ND's Rights Upon Tolling 39
13.05. Effect of Tolling 39
Section 14.Survival of Representations; Indemnification 39
14.01. Survival of Representations 39
a. Survival Period 39
b. Rights Not Affected by Knowledge 40
14.02 Survival of Indemnification Provisions in Prior Agreements 40
a. Contribution Agreement 40
b. Operating Agreement 40
14.03. Indemnification of Paracelsus ND 40
14.04. Indemnification of Dakota 41
14.05. Limitations on Liability 42
14.06. Thresholds 42
14.07. Effect of Taxes and Insurance 42
14.08. Escrow Fund Setoff Right; Notice 43
14.09. Procedure for Indemnification; Third Party Claims 43
14.10. Procedure for Indemnification; Other Claims 44
Section 15.Notice 45
15.01. Notices 45
Section 16.Miscellaneous 46
16.01. Transaction Costs and Expenses 46
16.02. Assignability; Binding Effect; Third Parties 46
16.03. Waiver 47
16.04. Severability 47
16.05. Further Assurances 47
16.06. Entire Agreement; Headings; Incorporation by Reference 47
16.07. Governing Law; Venue; Attorney's Fees 47
16.08. Multiple Counterparts 48
Signatures 49
SCHEDULES
Schedule 3.12.b - Restricted Territory
Dakota Disclosure Schedule
Paracelsus ND Disclosure Schedule
EXHIBITS
Exhibit "A " - Form of Escrow Agreement
Exhibit "B " - Form of PHC Guaranty Agreement
Exhibit "C " - Form of Partnership Interest Assignment
AGREEMENT FOR PURCHASE AND
SALE OF PARTNERSHIP INTERESTS
This Agreement for Purchase and Sale of Partnership Interests, dated
as of June 1, 1998 (the "AGREEMENT"), is entered into by and between DAKOTA
MEDICAL FOUNDATION, a North Dakota non-profit corporation (f/k/a Dakota
Hospital) ("DAKOTA"), and PARACELSUS HEALTHCARE CORPORATION OF NORTH
DAKOTA, INC., a North Dakota corporation (f/k/a Champion Healthcare
Corporation of North Dakota, Inc.) ("PARACELSUS ND").
RECITALS
WHEREAS, Dakota and Paracelsus ND previously entered into a
partnership agreement forming a North Dakota general partnership on
November 18, 1994 and thereafter entered into as of December 31,1994 the
Partnership Agreement and the Partnership began doing business as Dakota
Heartland Health System ("DHHS"); and
WHEREAS, under the provisions of the Partnership Agreement, Dakota
and Paracelsus ND each own fifty percent (50%) of the Partnership
Interests; and
WHEREAS, under Section 3.03(g) of the Partnership Agreement, Dakota
has the right to require Paracelsus ND to purchase the Dakota Partnership
Interest (the "PUT"), and by letter dated August 20, 1997 (the "PUT
EXERCISE DATE"), Dakota gave Paracelsus ND notice that it was exercising
the Put; and
WHEREAS, in accordance with the Put, Paracelsus ND desires to
purchase from Dakota, and Dakota desires to sell to Paracelsus ND, the
Dakota Partnership Interest, upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants stated herein, and the other
good and valuable consideration exchanged between the parties, the receipt
and sufficiency of which is hereby acknowledged, the parties intending to
be legally bound agree as follows:
SECTION 1.
DEFINITIONS
1.01. DEFINITIONS. As used herein, the following terms have the
meanings specified or referred to in this section (unless specifically
defined or the context clearly requires otherwise):
"ACT" means the North Dakota Uniform Partnership Act, as amended and
any corresponding provisions of succeeding law, and the regulations
promulgated thereunder.
"AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with that first Person.
For purposes of this definition, the terms "control" and "controlled by"
and "under common control with" mean, (i) with respect to any corporation
or other entity having voting shares or the equivalent and elected or
appointed directors, managers, or other Persons performing similar
functions, the ownership or power to vote more than 50% of shares or the
equivalent having the power to vote in the election or appointment of
directors, managers, or other Persons performing similar functions or the
ability to direct its business affairs through Contract or otherwise, and
(ii) with respect to any other Person, the ability to direct its business
and affairs through Contract or otherwise.
"AGREEMENT" has the meaning given that term in the opening paragraph
hereof, as such may be amended from time to time.
"AVAILABLE CASH" has the meaning given that term in Section 1.01 of
the Partnership Agreement.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a
holiday on which national banking associations in the State of North Dakota
are closed.
"CLOSING" has the meaning given that term in SECTION 11.01.A hereof.
"CLOSING DATE" has the meaning given that term in SECTION 11.01.A
hereof.
"CONFIDENTIAL INFORMATION" has the meaning given that term in SECTION
7.01.A hereof.
"CONSENT" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTRACT" means any contract, agreement, obligation, promise,
commitment, arrangement, document, instrument, or undertaking (whether
written or oral, and whether express or implied) that is legally binding.
"CONTRIBUTION AGREEMENT" means that certain Contribution Agreement,
dated as of November 18, 1994, as amended, between Dakota, DHE II,
Paracelsus ND, PHC/CHC, and the Partnership.
"DAKOTA" has the meaning given that term in the opening paragraph
hereof.
"DAKOTA CLAIMS" has the meaning given that term in SECTION 14.03
hereof.
"DAKOTA DISCLOSURE SCHEDULE" has the meaning given that term in the
opening paragraph of SECTION 4 hereof.
"DAKOTA FINANCIAL STATEMENTS" has the meaning given that term in
SECTION 4.07 hereof.
"DAKOTA INDEMNIFIED PARTIES" has the meaning given that term in
SECTION 14.03 hereof.
"DAKOTA INTERIM FINANCIAL STATEMENTS" has the meaning given that term
in SECTION 4.07 hereof.
"DAKOTA PARTNERSHIP INTEREST" means the entire Partnership Interest of
Dakota.
"DAKOTA PERMITTED CLAIM" has the meaning given that term in SECTION
14.05.
"DAKOTA THRESHOLD" has the meaning given that term in SECTION 14.05.
"DEFAULT CLOSING DATE" has the meaning given that term in SECTION
13.02.
"DHE II" means Dakota Health Enterprises II, Inc., a North Dakota
corporation.
"DHHS" has the meaning given that term in the first recital paragraph
hereof.
"EFFECTIVE TIME" has the meaning given that term in SECTION 11.01.B
hereof.
"ESCROW AGENT" means Norwest Investment Services, Inc., and its
successors and permitted assigns.
"ESCROW AGREEMENT" means that certain Escrow Agreement, dated as of
the Closing Date, between Paracelsus ND, Dakota, and the Escrow Agent, in
substantially the form attached hereto as EXHIBIT "A ".
"ESCROW FUND" has the meaning given that term in SECTION 2.03 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
and any corresponding provisions of succeeding law, and the regulations
promulgated thereunder.
"GAAP" means the generally accepted accounting principles in the
United States, in effect from time to time.
"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" means any (i) nation, state, county, city, town,
village, district, or other jurisdiction of any nature, (ii) federal,
state, local, municipal, foreign, or other government, (iii) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal), (iv) multi-national organization or body, or (v) body
exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of
any nature.
"GUARANTY AGREEMENT" means that certain Guaranty Agreement, dated
December 21, 1994, as amended, between PHC/CHC, the Partnership, and
Dakota.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended and any corresponding provisions of succeeding law, and
the regulations promulgated thereunder.
"INDEMNITEE" means a party seeking indemnification.
"INDEMNITOR" means a party against whom a claim for indemnification is
made.
"IRC" means the Internal Revenue Code of 1986, as amended and any
corresponding provisions of succeeding law, and the regulations promulgated
thereunder.
"KNOWLEDGE" with respect to:
(i) an individual, is deemed to exist of a particular fact or other
matter if, such individual is, or has at any time been, (y) actually
aware of such fact or other matter, or (z) a prudent individual could
be expected to discover or otherwise become aware of such fact or
other matter in the course of conducting a reasonable inquiry about
the existence of such fact or other matter; and
(ii) any Person (other than an individual), is deemed to exist of a
particular fact or other matter if, any individual who is serving, or
who at any time has served, as a director, officer, partner, executor,
or trustee of such Person (or in any similar capacity) has, or at any
time had, knowledge (as defined in "(i)" above) of such fact or other
matter.
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multi-national, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute,
or treaty.
"LIENS" means all mortgages, deeds of trust, claims, liens, judgments,
security interests, pledges, leases, conditional sale contracts, rights of
first refusal, options, charges, liabilities, debts, obligations,
agreements, powers of attorney, limitations, reservations, restrictions,
and other encumbrances or adverse claims of every kind and nature,
including any restriction on use, voting, transfer, receipt of income, or
exercise of any attribute of ownership.
"LOSSES" has the meaning given that term in SECTION 14.02 hereof.
"OPERATING AGREEMENT" means that certain Operating Agreement, dated
December 21, 1994, as amended, between PHC/CHC, the Partnership, Dakota,
and Paracelsus ND.
"NEW CLOSING DATE" has the meaning given that term in SECTION 13.02.
"ORDINARY COURSE OF BUSINESS" means an action taken by a Person that
is:
(i) consistent with the past practices of such Person and is taken in
the ordinary course of the normal day-to-day operations of such
Person;
(ii) not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar
authority), and is not required to be specifically authorized by the
parent company, if any, of such Person; and
(iii) similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (of by any Person
or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are
in the same line of business as such Person.
"PARACELSUS ND" has the meaning given that term in the opening
paragraph hereof.
"PARACELSUS ND CLAIMS" has the meaning given that term in the last
sentence of SECTION 14.02 hereof.
"PARACELSUS ND DISCLOSURE SCHEDULE" has the meaning given that term in
the opening paragraph of SECTION 6 hereof.
"PARACELSUS ND INDEMNIFIED PARTIES" has the meaning given that term in
SECTION 14.02 hereof.
"PARACELSUS ND PERMITTED CLAIM" has the meaning given that term in
SECTION 14.05.
"PARACELSUS ND THRESHOLD" shall have the meaning given that term in
SECTION 14.05.
"PARTNERSHIP" means the North Dakota general partnership named
Dakota/Champion Partnership formed pursuant to the Partnership Agreement
and doing business as Dakota Heartland Health System.
"PARTNERSHIP AGREEMENT" means that certain Amended and Restated
Partnership Agreement of Dakota/Champion Partnership, dated as of December
21, 1994, as amended, between Dakota and Paracelsus ND.
"PARTNERSHIP INTEREST" means the entire ownership interest of a
partner in the Partnership, including, without limitation, rights to
distributions (liquidating or otherwise), allocations, information, and to
consent or approve.
"PARTNERSHIP INTEREST ASSIGNMENT" means that certain Partnership
Interest Assignment, dated as of the Closing Date, given by Dakota in favor
of Paracelsus ND, in substantially the form attached hereto as EXHIBIT "C".
"PERSON" includes any individual, partnership, joint venture, limited
partnership, limited liability company, trust, estate, corporation
(including a non-profit corporation), association, custodian, trustee,
executor, administrator, or other entity or Governmental Body.
"PHC" means Paracelsus Healthcare Corporation, a California
corporation.
"PHC/CHC" means PHC/CHC Holdings, Inc., a Delaware corporation (f/k/a
Champion Healthcare Corporation).
"PHC GUARANTY AGREEMENT" means that certain Guaranty Agreement, dated
as of the Closing Date, between PHC and Dakota, in substantially the form
attached hereto as EXHIBIT "B".
"PRIME RATE" has the meaning given that term in SECTION 14.07 hereof.
"PRIOR AGREEMENTS" has the meaning given that term in SECTION 3.01.A
hereof.
"PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted,
or heard by or before, or otherwise involving, any Governmental Body or
arbitrator.
"PROPOSED CLOSING DATE" has the meaning given that term in SECTION
13.02.
"PURCHASE PRICE" has the meaning given that term in SECTION 2.02
hereof.
"PUT" has the meaning given that term in the third recital paragraph
hereof.
"PUT CLOSING PERIOD" has the meaning given that term in SECTION 13.01
hereof.
"PUT EXERCISE DATE" has the meaning given that term in the third
recital paragraph hereof.
"REPRESENTATIVES" means the members, directors, trustees, officers,
employees, agents, financial advisers, accountants, and attorneys of a
Person in such capacity.
"RESTRICTED ACTIVITY" has the meaning given that term in SECTION
3.12.B hereof.
"RESTRICTED CAPACITY" has the meaning given that term in SECTION
3.12.B hereof.
"RESTRICTED PERIOD" has the meaning given that term in SECTION 3.12.B
hereof.
"RESTRICTED TERRITORY" has the meaning given that term in SECTION
3.12.B hereof.
"RESTRICTIONS" has the meaning given that term in SECTION 3.12.E
hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended and any
corresponding provisions of succeeding law, and the regulations promulgated
thereunder.
"SUBSIDIARY" means, with respect to any Person (the "OWNER"), any
corporation or other Person of which securities or other interests having
the power to elect a majority of that corporation's or other Person's board
of directors or similar governing body, or otherwise having the power to
direct the business and policies of that corporation or other Person (other
than securities or other interests having such power only upon the
happening of a contingency that has not occurred) are held by the Owner or
one or more of its Subsidiaries.
"TAX" or "TAXES" means any Governmental Body tax assessment, penalty,
interest, fee, or other charge.
"TAX RETURN" means any return (including an information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to,
any Governmental Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
"TOLLING DATE" has the meaning given that term in SECTION 13.01
hereof.
"TOLLING NOTICE" has the meaning given that term in SECTION 13.01
hereof.
"TOLLING NOTICE RESPONSE" has the meaning given that term in SECTION
13.02 hereof.
"TOLLING PERIOD" has the meaning given that term in SECTION 13.02
hereof.
"TOLLING PERIOD NOTICE" has the meaning given that term in SECTION
13.02 hereof.
"TRANSACTION" means the sale and purchase of the Dakota Partnership
Interest and performance of the other covenants and agreements described
herein.
"TRANSACTION DOCUMENTS" means this Agreement, the Escrow Agreement,
the PHC Guaranty Agreement, the Partnership Interest Assignment, and the
documents, instruments, exhibits, schedules, certificates, and lists
referred to herein relating to each of the foregoing, as applicable to each
of Paracelsus ND and Dakota.
1.02. OTHER DEFINITIONS. Other terms may be defined elsewhere herein
and have the meanings so given to them.
SECTION 2.
SALE AND PURCHASE
2.01. SALE AND PURCHASE. Upon the terms and subject to the conditions
set forth herein, at the Closing, Dakota agrees to sell, transfer, convey,
assign and deliver to Paracelsus ND, free and clear of all Liens, and
Paracelsus ND thereupon agrees to purchase and acquire from Dakota, the
Dakota Partnership Interest.
2.02. PURCHASE PRICE. The total purchase price to be paid by
Paracelsus ND for the Dakota Partnership Interest shall be SIXTY-FOUR
MILLION FIVE HUNDRED TWENTY-EIGHT THOUSAND FOUR HUNDRED AND SIXTEEN DOLLARS
($64,528,416) (the "PURCHASE PRICE").
2.03. METHOD OF PAYMENT. At the Closing, Paracelsus ND shall pay to
Dakota the Purchase Price by wire transfer or delivery of other immediately
available funds to the account or accounts designated by Dakota, less
$6,450,000 (the "ESCROW FUND") which shall be wire transferred by
Paracelsus ND to the Escrow Agent to be held, invested, and disbursed
pursuant to the Escrow Agreement.
2.04. ESCROW. Dakota shall not be entitled to receive any portion of
the Escrow Fund, except pursuant to the terms of the Escrow Agreement, and
after deducting and offsetting all amounts permitted hereunder or
thereunder.
2.05. FULL PAYMENT. The payment of the Purchase Price under SECTION
2.03 hereof shall be payment in full for the Dakota Partnership Interest
and the other rights and privileges granted to Paracelsus ND hereunder.
SECTION 3.
ADDITIONAL COVENANTS AND AGREEMENTS
Paracelsus ND and Dakota covenant and agree as follows:
3.01. EFFECT ON PRIOR AGREEMENTS.
A. PRIOR AGREEMENTS. Paracelsus ND and Dakota acknowledge
having previously entered into the Partnership Agreement, Contribution
Agreement, and Operating Agreement (collectively, the "PRIOR AGREEMENTS"),
and agree that the provisions of the Prior Agreements which specifically
survive termination according to the provisions thereof shall continue in
full force and effect both after the date hereof and the Closing Date in
accordance with their respective provisions, except as specifically
amended, modified, or terminated by this Agreement. Except as specifically
set forth herein, neither this Agreement nor the amendment, modification,
or termination of the Prior Agreements, or any provisions thereof, shall
relieve or otherwise release any of the parties thereto from any failure to
perform or other breach thereunder during the period such Prior Agreements
were in effect. To the extent there is a conflict between the provisions
of any of the Prior Agreements and the Transaction Documents, the
provisions of the Transaction Documents shall govern.
B. SURVIVAL OF REPRESENTATIONS.
I. Paracelsus ND and Dakota each ratify and confirm that
they have complied in all material respects with their respective
covenants and agreements in the Prior Agreements.
II. Notwithstanding the provisions of the Contribution
Agreement, (i) Dakota agrees that its representations, warranties,
covenants, and agreements in the following sections of the
Contribution Agreement are extended and shall survive the Closing for
a period of ten (10) years thereafter: Section 5.1 (Corporate
Capacity), Section 5.3 (Corporate Powers, Etc.), Section 5.6
(Extraordinary Liabilities), Section 5.10 (Medicare
Participation/Accreditation), Section 5.11 (Compliance with Law),
Section 5.12 (Agreements and Commitments), Section 5.22 (Third Party
Payor Cost Reports), and Section 5.27 (Full Disclosure); and (ii)
Paracelsus ND agrees that its representations, warranties, covenants,
and agreements in the following sections of the Contribution Agreement
are extended and shall survive the Closing for a period of ten (10)
years thereafter: Section 6.1 (Corporate Capacity), Section 6.2
(Corporate Powers, Etc.), Section 6.4 (Extraordinary Liabilities),
Section 6.8 (Medicare Participation/Accreditation), Section 6.9
(Compliance with Law), Section 6.10 (Agreements and Commitments),
Section 6.19 (Third Party Payor Cost Reports), and Section 6.24 (Full
Disclosure). Neither party shall be deemed as making, as of the
effective date hereof or as of the Closing Date, the representations,
warranties, covenants, and agreements in the sections of the
Contribution Agreement referenced in this SECTION 3.01.B.II.
C. RIGHTS NOT AFFECTED BY KNOWLEDGE. Each party is entitled
to and is deemed to have reasonably relied upon the representations,
warranties, covenants, and agreements of the other party in the Prior
Agreements. The right to indemnification and other remedies based upon
such representations, warranties, covenants, and agreements will not be
lost, waived, reduced, or otherwise affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired)
at any time, whether before or after the execution and delivery of any of
the Prior Agreements or any of the Transaction Documents on the Closing
Date, with respect to the accuracy or inaccuracy of or compliance or
failure to comply with, any such representation, warranty, covenant, or
agreement. Further, no such right to indemnification and other remedies
shall be affected by Paracelsus ND's belief that any such representation or
warranty is or has been false or inaccurate, or that any such covenant or
agreement is or has been breached. Further, the waiver of any condition
based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or agreement, will not
affect the right to indemnification or any other remedy based on such
representations, warranties, covenants, or agreements.
3.02. SPECIFIC ACTIONS ON PRIOR AGREEMENTS.
A. PARTNERSHIP AGREEMENT. Subject to SECTION 3.04 hereof, the
Partnership Agreement shall continue in full force and effect until such
time as the Partnership has terminated, at which time the Partnership
Agreement shall also terminate.
B. CONTRIBUTION AGREEMENT. Effective upon the Closing, Section
11.2 of the Contribution Agreement shall terminate, Section 11.1 of the
Contribution Agreement shall be superseded in its entirety by SECTION 3.12
hereof, and, except as expressly amended by this Agreement, all other
provisions of the Contribution Agreement shall remain in full force and
effect.
C. OPERATING AGREEMENT. Effective upon the Closing, the
Operating Agreement shall terminate.
3.03. EXERCISE OF PUT RIGHT. Dakota acknowledges that it exercised
the Put on the Put Exercise Date.
3.04. EFFECT ON PARTNERSHIP.
A. DISSOLUTION.
I. Paracelsus ND and Dakota agree that, effective upon the
Closing, Dakota shall be deemed to have voluntarily withdrawn from the
Partnership without any further action and the Partnership shall be
dissolved by mutual agreement. Dakota agrees that, after the
Closing, it (i) will not be a partner in the Partnership, (ii) shall
have no power or authority with respect to the Partnership, and (iii)
shall not hold itself out as, and shall affirmatively give notice to
any Person who reasonably should be so informed, that it is no longer
a partner in the Partnership. Paracelsus ND shall have the right to
review and approve, in advance of being filed or given, any Statement
of Disassociation under the Act or other filings or notices filed or
given by Dakota.
II. Dakota agrees that it shall have no right after the
Closing to participate in or receive any portion of the Partnership's
business, profits, losses, assets, capital, or distributions, or any
other element of a Partnership Interest, but shall only have the right
to receive payment of the Purchase Price and any other amounts
specifically set forth herein. Dakota agrees that the Purchase Price
is payment in complete liquidation and satisfaction of all rights and
interests it has in the Partnership, including, but not limited to,
the Dakota Partnership Interest.
III. Except as may be limited by SECTION 13.05, Paracelsus
shall within sixty (60) days after Closing determine whether as of
Closing, there is Available Cash, and if there is Available Cash,
distribute to Dakota its share thereof within five (5) days of such
determination in accordance with the Partnership Agreement and provide
Dakota with the accounting and financial statements upon which it
relied when calculating the amount of the Available Cash.
B. WINDING UP.
I. Dakota agrees that Paracelsus ND shall have the sole
power and authority over winding up the Partnership's business after
Closing. Except as required in Paracelsus ND's discretion for
winding up the Partnership's business, no further business shall be
conducted by Paracelsus ND or Dakota in the name of or on behalf of
the Partnership after the Closing.
II. As the sole event of winding up the Partnership's
business, Paracelsus ND shall promptly after the Closing assume and be
assigned, delegated, and distributed all of the assets, capital,
rights, liabilities, obligations, and business of the Partnership as
it exists on the Closing Date. This provision shall not in any way
limit the rights and obligations specifically set forth herein.
III. Dakota agrees that, in the absence of fraud, it shall
have no right to, and hereby waives, any right to an accounting or
settlement of or right to compel liquidation of the Partnership
following dissolution of the Partnership.
IV. From and after the Closing, the parties shall not owe
any duties or have any obligations or liabilities to each other with
respect to the Partnership, in the process of winding up or otherwise,
except as specifically set forth herein.
V. Dakota agrees not to take any action that is inconsistent
with, or not necessary to or appropriate for, winding up the
Partnership's business in Paracelsus ND's discretion, and further
agrees to take such actions and execute and deliver such documents as
Paracelsus ND may reasonably request for winding up the Partnership's
business and terminating the Partnership.
C. TERMINATION. The Partnership shall terminate for all
purposes when the winding up of its business has been completed by
Paracelsus ND.
3.05. TAX MATTERS. The Partnership's items of income, gain, loss,
and deduction shall be allocated to Paracelsus ND and Dakota for the Tax
year that includes the Closing Date in accordance with Article V of the
Partnership Agreement. Dakota shall not be allocated a share of any such
Partnership items of income, gain, loss, or deduction for any subsequent
year. The parties shall each timely file all required Tax Returns and
reports relating to their Partnership Interests and the Transaction.
3.06. DISCLAIMER OF FIDUCIARY OBLIGATIONS. Dakota and Paracelsus ND
agree that, with respect to this Transaction, each is an independent party.
Each is an experienced and sophisticated business entity, and is relying on
its own Representatives in determining to enter into and consummate the
Transaction. The relationship between Dakota and Paracelsus ND as partners
in the Partnership shall not create fiduciary obligations with respect to
each other for the purposes of the Transaction.
3.07. RESIGNATION OF POSITIONS WITH PARTNERSHIP. At the Closing,
Dakota shall tender to the Secretary of the Governing Board of the
Partnership the written resignations of all its nominees or appointees to
the Governing Board or other offices or positions with the Partnership,
effective as of the Closing Date, from all offices and positions with the
Partnership.
3.08. MAINTAIN EXISTENCE AND PRESERVE PROCEEDS.
A. Dakota agrees to maintain and preserve:
I. The corporate existence and good standing of Dakota under
the applicable Legal Requirements of the State of North Dakota for a
period of at least ten (10) years after the Closing Date; and
II. The Escrow Fund (in the amounts as required from
time-to-time under the Escrow Agreement), subject to the rights of
Paracelsus ND under this Agreement and the Escrow Agreement; and
III. The principal amount of the Purchase Price, less the
Escrow Fund (in the amounts as required from time-to-time under the
Escrow Agreement), for a period of at least nine (9) years after the
Closing Date, subject only to distributions thereof required by North
Dakota or Federal statute or regulation for it to maintain its tax
exempt status as a private foundation described in <section>501(c)(3)
and <section>509(a) of the IRC.
B. Dakota further agrees not to intentionally, at any time,
dissolve, liquidate, or take any other action, or fail to take any action,
which would diminish the principal amount of the Purchase Price or the
Escrow Fund as required to be maintained and preserved in accordance with
SECTION 3.08.A hereof or otherwise adversely affect the rights of
Paracelsus ND or any of the other Paracelsus Indemnified Parties under any
of the Transaction Documents or Prior Agreements.
3.09. MUTUAL RELEASES. Except for those matters for which
indemnification is specifically provided for herein, upon the Closing (i)
Dakota irrevocably and unconditionally forever releases, discharges, and
covenants not to sue Paracelsus ND, PHC/CHC, PHC, or the Partnership, or
any of their respective successors, assigns, Affiliates, Subsidiaries,
insurers, or Representatives, and (ii) Paracelsus ND irrevocably and
unconditionally forever releases, discharges, and covenants not to sue
Dakota, or any of it's successors, assigns, Affiliates (such term in this
SECTION 3.09 shall not include the Dakota Clinic, Ltd., its owners or
employees), Subsidiaries, insurers, or current or past Representatives,
from and against any and all complaints, grievances, demands, obligations,
promises, agreements, claims, damages, actions, causes of action, and costs
and expenses (including, but not limited to, attorney and expert witness
fees), of whatsoever kind or nature, whether known or unknown, asserted or
not asserted, accruing or arising prior to or existing on the Closing Date
which such party may have or claim to have against any of the foregoing
released Persons regarding any and all matters between any of them;
PROVIDED, HOWEVER, this section shall not release or otherwise apply to any
of the liabilities or obligations set forth in, provided for, or created by
this Agreement or any of the other Transaction Documents. In addition,
except as otherwise permitted by this Agreement or required by applicable
Legal Requirement, Paracelsus ND and Dakota each hereby covenant and agree
that it shall not, with the intent of a claim or action being brought
against the other, take any action to solicit, promote, facilitate,
encourage, or assist any third party or any Governmental Body in bringing
such a claim or action.
3.10. NO DISPARAGEMENT. During the Restricted Period:
A. Dakota agrees, on behalf of itself and its Representatives
while acting in such Person's capacity as a Representative, that any future
statement or comment, whether written or oral, that any such Person may
make about Dakota's relationship and dealings with Paracelsus ND, PHC/CHC,
or PHC prior to the Closing Date, or the operations of the Partnership
prior to the Closing Date, will not be of a derogatory nature and will not
disparage, question, or impugn the reputation, business ability or acumen,
or standing in the business community or in the community as a whole, of
Paracelsus ND, PHC/CHC, PHC, or the Partnership, or any of the respective
Representatives thereof, in such Person's capacity as a Representative; and
B. Paracelsus ND agrees, on behalf of itself and its
Representatives while acting in such Person's capacity as a Representative,
that any future statement or comment, whether written or oral, that any
such Person may make about Paracelsus ND's relationship and dealings with
Dakota prior to the Closing Date, or the operations of the Partnership
prior to the Closing Date, will not be of a derogatory nature and will not
disparage, question, or impugn the reputation, business ability or acumen,
or standing in the business community or in the community as a whole, of
Dakota or any of the respective Representatives thereof, in such Person's
capacity as a Representative; PROVIDED HOWEVER
C. The restrictions in this SECTION 3.10 shall not place a
limitation on either party or their Representatives in filing a court
action, filing a response to any court action, filing court documents in
furtherance of any court action or providing sworn statements or testimony
directly related to a court action.
3.11. INFORMATION FOR TAX RETURNS. Dakota shall cooperate with
Paracelsus ND and the Partnership after the Closing, by providing either or
both of them, without any additional consideration, promptly upon request,
such records and other information regarding the Partnership, as may
reasonably be requested from time to time by either or both of them, in
connection with the preparation or audit of federal, state and local income
and other Tax returns, and audits, disputes, refund claims or litigation
relating thereto. In such connection, and strictly for such purpose,
Dakota will afford Representatives of Paracelsus ND and the Partnership
access to books and records relating to the Partnership which are not
acquired by Paracelsus ND hereunder or retained by the Partnership.
3.12. NONCOMPETITION AND NONSOLICITATION COVENANTS. For purposes of
this SECTION 3.12 the term "Affiliate(s)" shall not include members of
Dakota who are physicians, the Dakota Clinic, Ltd. or the employees of the
Dakota Clinic, Ltd. The exclusion of physicians from the definition of
Affiliate(s) in this SECTION 3.12 is not intended to allow Dakota to engage
in any Restricted Activity with any such physician(s).
A. STATEMENT OF ENFORCEABILITY. Dakota acknowledges that this
SECTION 3.12 is entered into in conjunction with the sale of a partnership
interest and upon or in anticipation of a dissolution of a partnership and,
therefore, is fully enforceable as written under N.D.C.C <section>
9-08-06(2) and other applicable Legal Requirements. Dakota further
acknowledges that the provisions in this section are conditions precedent
and material inducements to Paracelsus ND entering into this Agreement and
consummating the Transaction.
B. NONCOMPETITION COVENANT. Dakota agrees, for itself and its
Affiliates, that during the period beginning on the Closing Date and
continuing for a period of five (5) years thereafter (the "RESTRICTED
PERIOD"), neither Dakota nor any of its Affiliates will, directly or
indirectly, either as an employee, employer, independent contractor,
consultant, agent, principal, owner, partner, shareholder, member, officer,
director, or in any other individual or representative capacity
(collectively, the "RESTRICTED CAPACITY"), own, manage, operate, consult
with, control, engage in, loan money to, finance, guaranty the performance,
obligation or indebtedness of, or otherwise fund or participate in any
manner whatsoever in, (i) any healthcare facility (which shall include,
without limitation, general acute care hospitals, speciality hospitals,
comprehensive rehabilitation facilities, rehabilitation agencies,
diagnostic imaging centers, ambulatory or other types of surgery centers
and home health agencies, but shall exclude inpatient or outpatient
psychiatric or substance abuse facilities), or (ii) any Person which
directly or indirectly owns any healthcare facility, which provides either
inpatient or outpatient acute care medical services that are on the date of
this Agreement provided by the Partnership (collectively, the "RESTRICTED
ACTIVITY"), that is located within the geographic area described in
SCHEDULE 3.12.B hereto (the "RESTRICTED TERRITORY"), which is the primary
and secondary service areas of the Partnership's hospitals; PROVIDED,
HOWEVER, that Dakota or any of its Affiliates may invest in the securities
of any enterprise (without otherwise participating in the activities of
such enterprise) if (x) such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of
the Exchange Act and are actively traded by the public, and (y) none of
them beneficially owns (as defined by Rule 13d-3 promulgated under the
Exchange Act) in excess of five percent (5%) of the outstanding equity or
debt securities of such enterprise. This restriction does not prevent
Dakota from carrying out during the Restricted Period its charitable
mission in the healthcare industry by providing grants to worthy medical
causes on an evenhanded basis provided that such grants are (i) not made to
any Person, which if such Person were subject to this SECTION 3.12.B, would
be in breach of the terms hereof by engaging in a Restricted Activity
within the Restricted Territory, and (ii) based on an unmet community need
and the result of such grant(s) would not negatively impact the business of
Paracelsus ND in a disparate way from any other similar health care
provider in the Restricted Territory.
C. NONSOLICITATION COVENANT. Dakota agrees, for itself and its
Affiliates, that it will not, at any time during the Restricted Period,
directly or indirectly, (i) solicit any employee, independent contractor,
or consultant of Paracelsus ND or the Partnership for the purpose of
causing that employee, independent contractor, or consultant to terminate
his employment or contractual relationship with Paracelsus ND or the
Partnership, or (ii) take any deliberate action or engage in any course of
conduct to divert or attempt to divert from Paracelsus ND or the
Partnership any business, through any means, including, but not limited to,
taking any deliberate action or engaging in any course of conduct to
influence or attempt to influence any of the customers, patients, or
physicians with which Paracelsus ND or the Partnership has done business
during the term of the Partnership Agreement or this Agreement.
D. INJUNCTIVE REMEDY. Dakota acknowledges that the foregoing
restrictions in this SECTION 3.12 (collectively, the "RESTRICTIONS"), in
view of the nature of the business in which each of Paracelsus ND and the
Partnership is and has been engaged, are reasonable and necessary in order
to protect their legitimate business interests, and that any violation
thereof would result in immediate and irreparable injury to them, and
Dakota therefore further acknowledges that, in the event it violates, or
threatens to violate, any of such Restrictions, Paracelsus ND and the
Partnership, or either of them, shall be entitled to obtain from any court
of competent jurisdiction, without the posting of any bond or other
security, preliminary and permanent injunctive relief as well as damages
and an equitable accounting of all earnings, profits, and other benefits
arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies in law or equity to which they may
be entitled. If Paracelsus ND notifies Dakota in writing that it believes
Dakota has violated a Restriction and Dakota does not cure such violation
within the time period specified in SECTION 3.12.E below, the Restricted
Period shall be tolled from the date of notice until such alleged violation
is cured to the reasonable satisfaction of Paracelsus ND. If any
Restrictions, or any part thereof, are determined in any Proceeding to be
invalid or unenforceable, the remainder of the Restrictions shall not
thereby be affected and shall be given full effect without regard to the
invalid provisions. If the Restrictions should be adjudged unreasonable in
any Proceeding, then the reviewing Governmental Body or other Person shall
have the power to reform the Restrictions to the extent reasonably
necessary to make the Restrictions valid and enforceable and, in the
modified form, such provisions shall then be enforceable and shall be
enforced.
E. OTHER RELIEF. In the event Paracelsus ND believes Dakota
has breached or threatened to breach the provisions of this SECTION 3.12,
before Paracelsus ND pursues any remedy or relief other than injunctive
relief, Dakota shall have twenty (20) Business Days to cure such breach or
threatened breach after the date on which it receives notice from
Paracelsus ND of the alleged violation hereof. If Dakota cures the breach
or threatened breach within such period, there shall be no breach or
default of this section relating to that incident of prohibited conduct by
Dakota.
F. INFORMATION. If Paracelsus ND believes at any time during
the Restricted Period that Dakota has breached or threatened to breach the
provisions of this SECTION 3.12, Paracelsus ND may request that Dakota
supply it with such information as Paracelsus ND reasonably determines is
necessary to ascertain compliance with or breach of the provisions of this
section. Paracelsus ND shall specifically request in writing the requested
information. Dakota agrees to furnish the requested information to
Paracelsus ND within a reasonable period of time under the circumstances
(but, in any event, not to exceed ten (10) Business Days) after receiving
the request; PROVIDED, HOWEVER, that Dakota shall not be required to
furnish any requested information which is privileged, confidential, or
proprietary, as determined in reasonable, good faith by Dakota.
3.13. MAINTENANCE OF INSURANCE. For a period of ten (10) years after
the Closing Date, Paracelsus shall maintain insurance customary for the
operation of a general acute care hospital with continuous coverage
beginning on December 21, 1994, in amounts customary within the industry
for hospitals similarly situated, with financially sound carriers, and
consistent with its past practices.
3.14. CONFIDENTIALITY OF RECORDS. The parties acknowledge that
Paracelsus ND will after the Closing be the custodian for all books,
records, data, materials, policies, agreements and all other information in
any medium whatsoever of the Dakota Assets, as defined in Section 2.1 of
the Contribution Agreement (collectively, the "Records") to the extent the
Records exist on the Closing Date. Except as permitted or required by this
SECTION 3.14, Paracelsus ND hereby covenants and agrees that, for a period
of ten (10) years after the Closing Date, Paracelsus ND shall maintain in
full confidence and not disclose or allow disclosure of any Record or any
other information it has acquired (whether written, visually, orally,
electronically or otherwise) regarding the Dakota Assets during its
operation of the Partnership (together with Records, the "Confidential
Data"). Notwithstanding the preceding sentence, Confidential Data shall
not include any documents, data or other information (i) received by
Paracelsus ND from sources other than Dakota; (ii) made public or disclosed
by any Person other than Paracelsus ND; (iii) currently existing in the
public domain as of the date of the Closing; (iv) entered into the public
domain after the Closing otherwise than through Paracelsus ND;
(v) disclosed in any public document, report or filing; or (vi) created by
Paracelsus ND or the Partnership during the term of the Partnership.
Nothing in this SECTION 3.14 shall prevent Paracelsus ND from:
(1) disclosing and using Confidential Data upon receipt of legal
process, which shall without limitation include, civil,
administrative or criminal subpoena, and requests for production
or inspection of documents in any civil, administrative or
criminal proceeding;
(2) disclosing and using Confidential Data necessary to defend or
pursue a claim by or against any third party in any Proceeding;
(3) disclosing and using Confidential Data to refute or correct any
statement or publication by a third party that is reasonably
necessary to maintain the reputation, standing and goodwill of
Paracelsus ND in the community;
(4) using Confidential Data or disclosing Confidential Data to
Representatives or medical staff of Paracelsus ND as necessary
to the operation of Paracelsus ND in the normal and ordinary
course of business or as required by any Legal Requirement.
Paracelsus ND shall give Dakota prompt notice of its receipt of legal
process requiring disclosure and use of Confidential Data or its need to
disclose and use Confidential Data to defend or pursue a claim by or
against any third party in any Proceeding, so that Dakota may seek an
appropriate protective order, agreement of confidentiality, or other remedy
to ensure the continued confidentiality of the Confidential Data.
Notwithstanding the obligation in the preceding sentence, Paracelsus ND
shall not be required to give such notice with respect to any legal process
or claim which is normal and customary for a general acute care hospital
and for which insurance coverage is generally applicable. In the event
that such protective order, agreement of confidentiality or other remedy is
not obtained, or Dakota waives compliance with this SECTION 3.14,
Paracelsus ND or its Representative will furnish or use only the
Confidential Data that is required or reasonably necessary. Except for
(i) those matters for which indemnification is specifically provided for
herein; and (ii) the exception provided for in "(1)" immediately above, in
no event shall disclosure of any Record by Paracelsus ND in accordance with
this SECTION 3.14 be used by Paracelsus ND separately or in concert or
cooperation with a third party to pursue a claim against Dakota.
Paracelsus ND acknowledges that the requirements regarding
confidentiality of Confidential Data described in this SECTION 3.14, are
reasonable and necessary in order to protect the legitimate business
interests of Dakota, and that any violation thereof would result in
immediate and irreparable injury to Dakota, and Paracelsus ND therefore
further acknowledges that, in the event it violates, or threatens to
violate, any of the requirements regarding confidentiality of Confidential
Data described in this SECTION 3.14, Dakota shall be entitled to obtain
from any court of competent jurisdiction, without the posting of any bond
or other security, preliminary and permanent injunctive relief as well as
damages and an equitable accounting of all earnings, profits, and other
benefits arising from such violation, which rights shall be cumulative and
in addition to any other rights or remedies in law or equity to which it
may be entitled.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF DAKOTA ABOUT DAKOTA
Dakota represents and warrants to Paracelsus ND that, except as
disclosed on the disclosure schedule attached hereto, which shall be
arranged in paragraphs corresponding to the numbered and lettered sections
of this SECTION 4 and initialed by the parties (the "DAKOTA DISCLOSURE
SCHEDULE"), each of the following statements is true and accurate on the
date hereof and will be true and accurate in all respects on and as of the
Closing Date:
4.01. AUTHORIZATION OF TRANSACTION. Dakota has the absolute and
unrestricted full right, power, and authority to execute and deliver this
Agreement and the other Transaction Documents to which it is a party and to
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party. Each of this Agreement and the other
Transaction Documents to which Dakota is a party constitutes the legal,
valid, and binding obligation of Dakota, enforceable against Dakota in
accordance with the respective terms thereof. The execution and delivery
of this Agreement and the other Transaction Documents to which Dakota is a
party, and the consummation of the Transaction, has been duly authorized
and no other proceeding by Dakota is necessary with respect thereto.
Dakota will take, or cause to be taken, all action necessary to consummate
the Transaction.
4.02. ORGANIZATION; GOOD STANDING. Dakota is a non-profit corporation
duly incorporated, validly existing, and in good standing under the
applicable Legal Requirements of the State of North Dakota. Dakota has the
full power and authority (corporate and otherwise) to own, lease, and
operate all of the assets and properties it presently owns, leases, and
operates, and to conduct business as it is presently being conducted by it.
Dakota is duly qualified as a foreign corporation in all jurisdictions
where the nature of its business requires it to be so qualified. Dakota
has delivered to Paracelsus ND complete and accurate copies of its Articles
of Incorporation and Bylaws, as amended and in effect on the Closing Date.
Each officer and director of Dakota in office has been duly elected or
appointed in full compliance with the Articles of Incorporation and Bylaws
of Dakota and any applicable Legal Requirements.
4.03. MEMBERSHIP. All the members of Dakota are listed by name and
address in Section 4.03 of the Dakota Disclosure Schedule.
4.04. NO SUBSIDIARIES OR AFFILIATES. Dakota has no Subsidiaries,
except for the "Family House." Except for the Partnership, Dakota has no
Affiliates (such term in this SECTION 4.04 shall not include the Dakota
Clinic, Ltd.).
4.05. LITIGATION AND RELATED MATTERS. Dakota is not subject to any
currently existing Proceeding by any Governmental Body, and there is no
Proceeding against Dakota pending before any Governmental Body or before
any private arbitration tribunal or, to its Knowledge, threatened against
Dakota, either (a) involving any challenge to, or seeking damages or other
relief in connection with, the Transaction, or (b) that may have the effect
of preventing, delaying, making illegal, or otherwise interfering with the
Transaction. Except as described in Section 4.05 of the Dakota Disclosure
Schedule, Dakota has no Knowledge of the assertion of any Proceeding
involving it by any Governmental Body or any Person or entity regarding
any violation of any Legal Requirement.
4.06. INSURANCE COVERAGES.
A. All insurance policies or other Contracts for the transfer
or sharing of any risk under which Dakota has been covered at any time
since January 1, 1995 are listed and briefly described in Section 4.06 of
the Dakota Disclosure Schedule. All such insurance policies or other
Contracts that are in full force and effect are so noted in Section 4.06 of
the Dakota Disclosure Schedule, and Dakota is not in default under any of
them. Dakota has delivered to Paracelsus ND true and accurate copies of
all such insurance policies or other Contracts. Dakota has not been
refused any insurance coverage which it has applied for or sought.
B. All such insurance policies of Dakota are issued by an
insurer that is financially sound. In the aggregate, such insurance
policies and other Contracts provide adequate coverage for all the risks to
which the assets and operations, including, but not limited to, the
ownership of the Dakota Partnership Interest, are exposed. All such
insurance policies and other Contracts will continue in full force and
effect following the Closing. Dakota has given notice to its insurers of
all claims that may be insured thereby.
4.07. FINANCIAL STATEMENTS. The audited financial statements,
including an income statement, balance sheet, and statement of cash flows
as of and for Dakota's fiscal year ending December 31, 1997, and an
unaudited income statement and balance sheet (the "DAKOTA INTERIM FINANCIAL
STATEMENTS") as of and for the three (3) months ended March 31, 1998
(collectively, the "DAKOTA FINANCIAL STATEMENTS"), and all other financial
records, data, and information about Dakota furnished by, or at the
direction of, Dakota to Paracelsus ND since January 1, 1995, fully and
fairly present the financial condition of Dakota as of the dates and for
the periods indicated, are complete and accurate in all material respects,
and have been prepared in accordance with GAAP consistently applied
throughout the periods involved, except for the absence of notes as to the
Dakota Interim Financial Statements. Dakota has delivered to Paracelsus ND
complete and accurate copies of the Dakota Financial Statements.
4.08. NO UNDISCLOSED LIABILITIES. Dakota has no actual Knowledge of
any fact or circumstance regarding the business of the Partnership that
occurred since December 21, 1994 that is not within the actual Knowledge
of Paracelsus ND that could reasonably be expected to create a liability of
the Partnership or itself.
4.09. NO JOINT PARTNER LIABILITIES. Since December 21, 1994 Dakota
has neither taken nor failed to take any action which has resulted, or
reasonably could be foreseen to result in, any liability or obligation to
Paracelsus ND by virtue of Paracelsus ND having been a partner of Dakota in
the Partnership on or prior to the Closing Date, that is not within the
actual Knowledge of Paracelsus ND.
4.10. COMPLIANCE WITH PRIOR AGREEMENTS. Dakota has neither taken any
action nor failed to take any action prohibited or required, as the case
may be, under any of the Prior Agreements with respect to the business,
assets, operations, or management of the Partnership. Each of the Prior
Agreements (except for the provisions thereof which are amended, modified,
or terminated by any of the Transaction Documents) are legal, valid, and
binding obligations of Dakota or DHE II, as the case may be, enforceable
against Dakota or DHE II, as the case may be, in accordance with the
respective terms thereof.
4.11. COMPLIANCE WITH LEGAL REQUIREMENTS.
A. To its Knowledge, Dakota has at all times since December 21,
1994, been in full compliance with each Legal Requirement that is or was
applicable to it, the violation of which would have a material adverse
effect on its financial condition.
B. Since December 21, 1994, no event has occurred that (with
or without the giving of notice or the lapse of time or both)(i) may
constitute or result in a violation by Dakota of, or a failure on the part
of Dakota to comply with, any Legal Requirement, or (ii) may give rise to
any obligation on the part of Dakota to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature, that in either
(i) or (ii) the result of which would have a material adverse effect on
its financial condition.
4.12. GOOD TITLE TO DAKOTA PARTNERSHIP INTEREST. Dakota is the sole
legal and beneficial owner and holder of the Dakota Partnership Interest
and has good, marketable, and valuable title to such Dakota Partnership
Interest free and clear of all Liens, and to its Knowledge has taken no
action that has created a Lien on the Dakota Partnership Interest.
4.13. NO CONFLICT; EFFECT OF AGREEMENT. The execution, delivery, and
performance of this Agreement and the other Transaction Documents and the
consummation by Dakota of the Transaction and the compliance by Dakota with
the applicable provisions of this Agreement and the other Transaction
Documents to which it is a party does not and will not (with or without the
giving of notice or the lapse of time or both):
A. Except as specifically provided under the provisions of this
Agreement or the other Transaction Documents, cause or result in a default
under, or result in the modification or termination of, any Contract to
which Dakota or the Partnership is a party or by which any of their
respective assets are bound or subject;
B. Result in the creation or imposition of any Lien upon the
Dakota Partnership Interest or any asset of Dakota or the Partnership;
C. Contravene, conflict with, or result in the violation of any
provision of the Articles of Incorporation or Bylaws of Dakota or any
resolution or written consent adopted by the directors or members of
Dakota;
D. Contravene, conflict with, or result in the violation of any
provision of the Prior Agreements or any resolution or written consent
adopted by the partners or Board of Governors of the Partnership;
E. Except as specifically provided under the provisions of this
Agreement or the other Transaction Documents, contravene, conflict with, or
result in a violation of, or give any Governmental Body or other Person the
right to challenge the Transaction or to exercise any remedy or obtain any
relief under, any judgment, order, writ, injunction, decree, or Legal
Requirement to which Dakota, the Dakota Partnership Interest, or the
Partnership may be bound or subject;
F. Contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Dakota or that otherwise relates to the
business of, or any of the assets owned or used by, Dakota or the
Partnership;
G. Contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Contract to which
Dakota is a party, or Dakota, the Dakota Partnership Interest, or the
Partnership may be bound or subject;
H. Result in the imposition or creation of any Lien upon or
with respect to any of the assets owned or used by Dakota or the
Partnership; or
I. violate any judgment, order, writ, injunction, or decree
outstanding against Dakota or the Partnership.
4.14. TAXES.
A. Dakota has filed, or caused to be filed, on a timely basis
since becoming a partner in the Partnership, all Tax Returns that are or
were required to be filed by or with respect to the Dakota Partnership
Interest pursuant to any applicable Legal Requirement. Dakota has
delivered, or made available, to Paracelsus ND copies of all such Tax
Returns.
B. Dakota is not delinquent in the payment of any Tax, and
there is no Tax deficiency asserted against Dakota, and there is no unpaid
assessment, proposal for additional Tax, deficiency, or delinquency in the
payment of any Tax. There are no Tax Liens upon any property or assets of
Dakota, nor does Dakota have notice of any event which could result in such
a Lien.
C. The Tax Returns of Dakota for calendar years after 1994 have
not been audited by the Internal Revenue Service or any other Taxing
authority, and there is no audit, investigation, or other proceeding
relating to Tax pending or threatened against Dakota. Dakota has no
Knowledge, and has not received any notice, of any circumstance that will
likely result in an audit of the Tax Returns. All Tax Returns that have
been filed by Dakota are true, correct, and complete.
D. Dakota was granted federal Tax exempt status under Section
501(c)(3) of the IRC in May of 1962. Since that date, Dakota has complied
with all Legal Requirements for obtaining and maintaining such federal Tax
exempt status.
4.15. SOLVENCY. Dakota is neither now insolvent nor will it be
rendered insolvent by the consummation of the Transaction. Furthermore,
immediately after the Closing, (a) Dakota will be able to pay its current
liabilities as they become due, (b) Dakota will not have unreasonably small
capital and will not have insufficient capital with which to conduct its
present or proposed business, and (c) taking into account pending and
threatened litigation, final judgments against Dakota in actions for money
damages are not reasonably anticipated to be rendered at a time when, or in
amounts such that, Dakota will be unable to satisfy any such judgments
promptly in accordance with their terms (taking into account the maximum
probable amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered). The cash
available to Dakota, after taking into account all other anticipated uses
of such cash, will be sufficient to pay any such judgments promptly in
accordance with their terms. As used in this section, (x) "INSOLVENT"
means, for any Person, that the sum of the present fair saleable value of
its assets does not and/or will not exceed its debts and other probable
liabilities, and (y) the term "DEBTS" includes any legal liability, whether
matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent, disputed or undisputed or secured or unsecured.
4.16. NO OTHER AGREEMENTS. Other than this Agreement, the other
Transaction Documents, and the Prior Agreements, neither Dakota nor any of
its Affiliates (such term in this SECTION 4.16 shall not include the Dakota
Clinic, Ltd.) has any Contract with any of Paracelsus ND, CHC/PHC, or the
Partnership, and there are no other liabilities or obligations owing by any
of Paracelsus ND, PHC/CHC, or the Partnership, on the one hand, to Dakota
or any of its Affiliates, on the other hand. To the extent there are any
Contracts between Dakota or any of its Affiliates, on the one hand, and any
of Paracelsus ND, CHC/PHC, or the Partnership, on the other hand (other
than as pursuant to this Agreement or the other Transaction Documents or
the Prior Agreements), each such Contract is listed and briefly described
in Section 4.16 of the Dakota Disclosure Schedule. None of Paracelsus ND,
PHC/CHC, or the Partnership is in breach or default of any of their
respective obligations under any such listed Contract. Dakota has no Liens
against any of Paracelsus ND, PHC/CHC, or the Partnership, or any of their
respective assets.
4.17. NO BROKER'S FEE. Dakota has not incurred any obligation or
liability for broker's or finder's fees or similar payments with respect to
the Transaction.
4.18. NO CONSENTS REQUIRED. Except for any Consent required under the
HSR Act, Dakota neither is nor will be required to give any notice to or
obtain any Consent from any Governmental Body or other Person in connection
with the execution and delivery of this Agreement or the consummation or
performance of the Transaction.
4.19. STATEMENTS TRUE AND CORRECT. No representation or warranty of
Dakota in this Agreement or the other Transaction Documents, and no
statement or information in any certificates, lists, documents, schedules,
or exhibits furnished by Dakota in connection with the Transaction,
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements herein or therein, in the light of
the circumstances in which they were made, not false or misleading (with
the foregoing being to the best of the Knowledge of Dakota with respect to
underlying statements and information which are expressly so qualified).
SECTION 5.
MUTUAL REPRESENTATIONS AND WARRANTIES ABOUT PARTNERSHIP
Each party represents and warrants to the other that each of the
following statements is true and accurate on the date hereof and will be
true and accurate in all respects on and as of the Closing Date:
5.01. ORGANIZATION; GOOD STANDING. The Partnership is a general
partnership duly organized, validly existing, and in good standing under
the laws of the State of North Dakota. The Partnership has the full power
and authority (partnership and otherwise) to own, lease, and operate all of
the assets and properties it presently owns, leases, and operates, and to
conduct business as it is presently being conducted by it. The Partnership
is duly qualified as a foreign general partnership in all jurisdictions
where the nature of its business requires it to be so qualified.
5.02. CAPITALIZATION. The aggregate of one hundred percent (100%) of
the Partnership Interests in the Partnership are legally and beneficially
owned and held by Dakota and Paracelsus ND. The Dakota Partnership
Interest equals fifty percent (50%) of the Partnership Interests. There
are no other partners of the Partnership or other Persons with any
ownership interest in the Partnership. There are no Contracts relating to
the issuance, sale, or transfer of any ownership interests of the
Partnership. None of the Partnership Interests was issued in violation of
the Securities Act or any other Legal Requirement. Except as set forth in
is audited balance sheet dated December 31, 1997, the Partnership does not
own, or have any Contract to acquire, any equity securities or interests or
other interests in any other Person.
5.03. FULL AND COMPLETE INFORMATION. Each party has full and complete
access to all records and information about the Partnership. Each party
has Knowledge of the past and present operations and financial condition of
the Partnership. Each party has, since the formation of the Partnership
been a partner and had representatives as officers and on the Governing
Board of the Partnership.
5.04. COMPLIANCE WITH PRIOR AGREEMENTS. To each party's Knowledge,
the Partnership and its business have been managed and operated in
compliance with the Prior Agreements.
SECTION 6.
REPRESENTATIONS AND WARRANTIES OF PARACELSUS ND
Paracelsus ND represents and warrants to Dakota that, except as
disclosed on the disclosure schedule attached hereto, which shall be
arranged in paragraphs corresponding to the numbered and lettered sections
of this SECTION 6 and initialed by the parties (the "PARACELSUS ND
DISCLOSURE SCHEDULE"), each of the following statements is true and
accurate on the date of this Agreement and will be true and accurate in all
respects on and as of the Closing Date:
6.01. AUTHORIZATION OF TRANSACTION. Paracelsus ND has the absolute and
unrestricted full right, power, and authority to execute and deliver this
Agreement and the other Transaction Documents to which it is a party and to
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party. Each of this Agreement and the other
Transaction Documents to which Paracelsus ND is a party constitutes the
legal, valid, and binding obligation of Paracelsus ND, enforceable against
Paracelsus ND in accordance with the respective terms thereof. The
execution and delivery of this Agreement and the other Transaction
Documents to which Paracelsus ND is a party, and the consummation of the
Transaction, has been duly authorized and no other proceedings (corporate
or otherwise) by Paracelsus ND is necessary with respect thereto.
Paracelsus ND will take, or cause to be taken, all action (corporate or
otherwise) necessary to consummate the Transaction.
6.02. ORGANIZATION; GOOD STANDING. Paracelsus ND is a corporation
duly incorporated, validly existing, and in good standing under the laws
of the State of North Dakota. Paracelsus ND has the full power and
authority (corporate and otherwise) to own, lease, and operate all of the
assets and properties it presently owns, leases, and operates, and to
conduct business as it is presently being conducted by it. Paracelsus ND
is duly qualified as a foreign corporation in all jurisdictions where the
nature of its business requires it to be so qualified. Paracelsus ND has
delivered to Dakota complete and accurate copies of its Articles of
Incorporation and Bylaws, as amended and in effect on the Closing Date.
Each officer and director of Paracelsus ND in office was duly elected or
appointed in full compliance with the Articles of Incorporation and Bylaws
of Paracelsus ND and any applicable Legal Requirements.
6.03. INSURANCE COVERAGES.
A. All insurance policies or other Contracts for the transfer
or sharing of any risk under which Paracelsus ND has been covered at any
time since January 1, 1995 are listed and briefly described in Section 6.03
of the Paracelsus ND Disclosure Schedule. All such insurance policies or
other Contracts that are in full force and effect are so noted in Section
6.03 of the Paracelsus ND Disclosure Schedule, and Paracelsus ND is not in
default under any of them. Paracelsus ND has delivered to Dakota true and
accurate copies of all such insurance policies or other Contracts.
Paracelsus ND has not been refused any insurance coverage which it has
applied for or sought.
B. All such insurance policies of Paracelsus ND are issued by
an insurer that is financially sound. In the aggregate, such insurance
policies and other Contracts provide adequate coverage for all the risks to
which its assets and operations are exposed. All such insurance policies
and other Contracts will continue in full force and effect following the
Closing. Paracelsus ND has given notice to its insurers of all claims that
may be insured thereby.
6.04. FINANCIAL STATEMENTS. The audited financial statements,
including an income statement, balance sheet, and statement of cash flows
as of and for PHC's fiscal year ending December 31, 1997, and an unaudited
income statement and balance sheet (the "PHC INTERIM FINANCIAL STATEMENTS")
as of and for the three (3) months ended March 31, 1998 (collectively, the
"PHC FINANCIAL STATEMENTS"), fully and fairly present the financial
condition of PHC as of the dates and for the periods indicated, are
complete and accurate in all material respects, and have been prepared in
accordance with GAAP consistently applied throughout the periods involved,
except for the PHC Interim Financial Statements, which meet the
requirements of Regulation S-X under the Federal Securities Laws for
interim financial statements. Paracelsus ND has delivered to Dakota
complete and accurate copies of the PHC Financial Statements.
6.05. NO UNDISCLOSED LIABILITIES. Paracelsus ND has no actual
Knowledge of any fact or circumstance regarding the business of the
Partnership that occurred since December 21,1994 that is not within the
actual Knowledge of Dakota that could reasonably be expected to create a
liability of the Partnership or itself.
6.06. NO JOINT PARTNER LIABILITIES. Since December 21, 1994
Paracelsus ND has neither taken nor failed to take any action which has
resulted, or reasonably could be foreseen to result in, any liability or
obligation to Dakota by virtue of Dakota having been a partner of
Paracelsus ND in the Partnership on or prior to the Closing Date, that is
not within the actual Knowledge of Dakota.
6.07. COMPLIANCE WITH PRIOR AGREEMENTS. Paracelsus ND has neither
taken any action nor failed to take any action prohibited or required, as
the case may be, under any of the Prior Agreements with respect to the
business, assets, operations, or management of the Partnership. Each of
the Prior Agreements (except for the provisions thereof which are amended,
modified, or terminated by any of the Transaction Documents) are legal,
valid, and binding obligations of Paracelsus ND, enforceable against
Paracelsus ND in accordance with the respective terms thereof.
6.08. COMPLIANCE WITH LEGAL REQUIREMENTS.
A. To its Knowledge, Paracelsus ND has at all times since
December 21, 1994 been in full compliance with each Legal Requirement that
is or was applicable to it, the violation of which would have a material
adverse effect on its financial condition.
B. Since December 21,1994, no event has occurred that (with or
without the giving of notice or the lapse of time or both) (i) may
constitute or result in a violation by Paracelsus ND of, or a failure on
the part of Paracelsus ND to comply with, any Legal Requirement, or (ii)
may give rise to any obligation on the part of Paracelsus ND to undertake,
or to bear all or any portion of the cost of, any remedial action of any
nature, that in either (i) or (ii) the result of which would have a
material adverse effect on its financial condition
6.09. NO CONFLICT; EFFECT OF AGREEMENT. The execution, delivery, and
performance of this Agreement and the other Transaction Documents and the
consummation by Paracelsus ND of the Transaction and the compliance by
Paracelsus ND with the applicable provisions of this Agreement and the
other Transaction Documents to which it is a party does not and will not
(with or without the giving of notice or the lapse of time or both):
A. Except as specifically provided under the provisions of this
Agreement or the other Transaction Documents, cause or result in a default
under, or result in the modification or termination of, any Contract to
which Paracelsus ND or the Partnership is a party or by which any of their
respective assets are bound or subject;
B. Contravene, conflict with, or result in the violation of any
provision of the Articles of Incorporation or Bylaws of Paracelsus ND or
any resolution or written consent adopted by the board of directors of
Paracelsus ND;
C. Contravene, conflict with, or result in the violation of any
provision of the Prior Agreements or any resolution or written consent
adopted by the partners or Board of Governors of the Partnership;
D. Except as specifically provided under the provisions of this
Agreement or the other Transaction Documents, contravene, conflict with, or
result in a violation of, or give any Governmental Body or other Person the
right to challenge the Transaction or to exercise any remedy or obtain any
relief under, any judgment, order, writ, injunction, decree, or Legal
Requirement to which Paracelsus ND or the Partnership may be bound or
subject;
E. Contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Paracelsus ND or that otherwise relates to
the business of, or any of the assets owned or used by, Paracelsus ND or
the Partnership;
F. Contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Contract to which
Paracelsus ND is a party, or Paracelsus ND or the Partnership may be bound
or subject;
G. Except for Liens resulting from the senior bank loan
agreement of PHC, result in the imposition or creation of any Lien upon or
with respect to any of the assets owned or used by Paracelsus ND or the
Partnership; or
H. Violate any judgment, order, writ, injunction, or decree
outstanding against Paracelsus ND or the Partnership.
6.10. TAXES.
A. Paracelsus ND has filed, or caused to be filed, on a timely
basis since becoming a partner in the Partnership, all Tax Returns that are
or were required to be filed by or with respect to its interest in the
Partnership pursuant to any applicable Legal Requirement.
B. Paracelsus ND is not delinquent in the payment of any Tax,
and there is no Tax deficiency asserted against Paracelsus ND, and there is
no unpaid assessment, proposal for additional Tax, deficiency, or
delinquency in the payment of any Tax. There are no Tax Liens upon any
property or assets of Paracelsus ND, nor does Paracelsus ND have notice of
any event which could result in such a Lien.
C. The Tax Returns filed by or with respect to the interest of
Paracelsus ND in the Partnership for calendar years after 1994 have not
been audited by the Internal Revenue Service or any other Taxing authority,
and there is no audit, investigation, or other proceeding relating to Taxes
pending or threatened against Paracelsus ND. Paracelsus ND has no
Knowledge, and has not received any notice, of any circumstance that will
likely result in an audit of the Tax Returns filed by or with respect to
the interest of Paracelsus ND in the Partnership. All such Tax Returns
that have been filed are true, correct, and complete.
6.11. SOLVENCY. Paracelsus ND is neither now insolvent nor will it be
rendered insolvent by the consummation of the Transaction. Furthermore,
immediately after the Closing, (a) Paracelsus ND will be able to pay its
current liabilities as they become due, (b) Paracelsus ND will not have
unreasonably small capital and will not have insufficient capital with
which to conduct its present or proposed business, and (c) taking into
account pending and threatened litigation, final judgments against
Paracelsus ND in actions for money damages are not reasonably anticipated
to be rendered at a time when, or in amounts such that, Paracelsus ND will
be unable to satisfy any such judgments promptly in accordance with their
terms (taking into account the maximum probable amount of such judgments in
any such actions and the earliest reasonable time at which such judgments
might be rendered). The cash available to Paracelsus ND, after taking into
account all other anticipated uses of such cash, will be sufficient to pay
any such judgments promptly in accordance with their terms. As used in this
section, (x) "INSOLVENT" means, for any Person, that the sum of the present
fair saleable value of its assets does not and/or will not exceed its debts
and other probable liabilities, and (y) the term "DEBTS" includes any legal
liability, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent, disputed or undisputed or secured or
unsecured.
6.12. NO OTHER AGREEMENTS, NO LIENS. Other than this Agreement, the
other Transaction Documents, and the Prior Agreements, neither Paracelsus
ND nor any of its Affiliates has any Contract with Dakota or the
Partnership, and there are no other liabilities or obligations owing by
Paracelsus ND or the Partnership (other than as distributions from the
Partnership may be required), on the one hand, to Dakota or any of its
Affiliates (such term in this SECTION 6.12 shall not include the Dakota
Clinic, Ltd.), on the other hand. To the extent there are any Contracts
between Dakota or any of its Affiliates, on the one hand, and any of
Paracelsus ND, CHC/PHC, or the Partnership, on the other hand (other than
as pursuant to this Agreement or the other Transaction Documents or the
Prior Agreements), each such Contract is listed and briefly described in
SECTION 6.12 of the Paracelsus ND Disclosure Schedule. Neither Dakota, nor
the Partnership is in breach or default of any of their respective
obligations under any such listed Contract. Paracelsus ND has no Liens
against Dakota or the Partnership, or any of their respective assets.
6.13. NO BROKER'S FEE. Paracelsus ND has not incurred any obligation
or liability for broker's or finder's fees or similar payments with respect
to the Transaction.
6.14. NO CONSENTS REQUIRED. Except for any Consent required under the
HSR Act and change of control filings and other routine filings resulting
from the Transaction, Paracelsus ND neither is nor will be required to give
any notice to or obtain any Consent from any Governmental Body or other
Person in connection with the execution and delivery of this Agreement or
the consummation or performance of the Transaction.
6.15. STATEMENTS TRUE AND CORRECT. No representation or warranty of
Paracelsus ND in this Agreement or the other Transaction Documents, and no
statement or information in any certificates, lists, documents, schedules,
or exhibits furnished by Paracelsus ND in connection with the Transaction,
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements herein or therein, in the light of
the circumstances in which they were made, not false or misleading (with
the foregoing being to the best of the Knowledge of Paracelsus ND with
respect to underlying statements and information which are expressly so
qualified).
6.16. OPERATION OF PARTNERSHIP. The Partnership has been operated
in accordance with the Operating Agreement; the annual financial statements
of the Partnership fully and fairly present the financial condition of the
Partnership as of the dates and for the periods indicated and are complete,
accurate in all material respects, and have been prepared in accordance
with GAAP consistently applied throughout the periods involved; full,
complete and accurate operational and financial information of the
Partnership that was material to the Governing Board has been provided to
the Governing Board of the Partnership; except as to any actual Knowledge
of Dakota, the Partnership has been operated in compliance with each Legal
Requirement that is or was applicable to it; and the Partnership has
maintained policies of insurance customary for the operation of a general
acute care hospital, in amounts customary within the industry for hospitals
similarly situated, and with financially sound carriers.
SECTION 7.
RIGHTS AND OBLIGATIONS PENDING CLOSING
7.01. CONFIDENTIAL INFORMATION.
A. Prior to consummation of the Transaction or termination of
this Agreement, the parties to this Agreement will be providing one another
with or have access to information about each other and the Partnership
which is protected, secret, non-public, or proprietary in nature (the
"CONFIDENTIAL INFORMATION"). Each party agrees to hold confidential, to
protect, and not to disclose the Confidential Information, except on a
"need-to-know" basis to its Representatives, and that the Confidential
Information will not, without the prior written consent of the other party,
be disclosed to any other Person by such party or it Representatives. Each
party shall be fully liable for any breach of this Agreement by its
Representatives. Notwithstanding the foregoing, for the purposes of this
section, Confidential Information shall not include information that,
without violating this Agreement, (i) was known to such party prior to the
disclosure by another party, (ii) is or becomes generally available to the
public other than by violating this Agreement, or (iii) otherwise becomes
lawfully available to a party to this Agreement on a nonconfidential basis
from a third party who is not, to the best of the Knowledge of such party
to this Agreement, under an obligation of confidence to the other party to
this Agreement. If this Agreement is terminated prior to consummation of
the Transaction, then each party shall return all documents and other
material, whether or not confidential, provided to it pursuant to this
Agreement by or on behalf of the other party to this Agreement. The
foregoing obligations of confidentiality and nondisclosure shall be in
effect for a period of three (3) years beyond such termination. During
such period, no party shall use any of the Confidential Information
received from a party to the detriment of any other party.
B. In the event that a party, or anyone to whom it supplies the
Confidential Information, receives a request to disclose all or any part of
the Confidential Information under the terms of a subpoena or order issued
by a Governmental Body, the party agrees (i) to notify the other party
immediately of the existence, terms, and circumstances surrounding such
request, (ii) to consult with the other party on the advisability of taking
legally available steps to resist or narrow such request, and (iii) if
disclosure of such Confidential Information is required to prevent a party
from being held in contempt or subject to other penalty, to furnish only
such portion of the Confidential Information as the disclosing party is
legally compelled to disclose and to exercise its best efforts to obtain an
order or other reliable assurance that confidential treatment will be
accorded to the disclosed Confidential Information.
7.02. PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Transaction will be issued,
if at all, at such time and in such manner as Paracelsus ND and Dakota
mutually agree, or at such time as PHC may be required to disclose pursuant
to law or stock exchange rules. Dakota and Paracelsus ND will consult with
each other concerning the means by which the Partnership's employees,
customers, patients, and suppliers and others having dealings with the
Partnership will be informed, if at all, of the Transaction, and Paracelsus
ND will have the right to review in advance any such written communication
and to be present for any such oral communication.
7.03. ACCESS AND INVESTIGATION. Between the date hereof and the
Closing Date, each of Dakota and Paracelsus ND will, to the fullest extent
of its power and authority (i) afford the other party and its
Representatives full and free access to their personnel, properties,
Contracts, books and records, and other documents and data relating to the
Partnership or their Partnership Interest, (ii) furnish the other party and
its Representatives with copies of all such Contracts, books and records,
and other existing documents and data as may reasonably be requested, and
(iii) furnish the other party and its Representatives with such additional
related financial, operating, and other data and information as may
reasonably be requested.
7.04. MAINTENANCE OF THE BUSINESS OF PARTNERSHIP. Between the date
hereof and the Closing Date, Dakota will, to the fullest extent of its
power and authority:
A. Comply with the Prior Agreements; and
B. Use its best efforts to preserve intact the current business
organization of the Partnership, keep available the services of the current
officers, employees, and agents of the Partnership, and maintain the
relations and goodwill with suppliers, customers, patients, landlords,
creditors, employees, agents, and others having business relationships with
the Partnership.
7.05. NEGATIVE COVENANT PARACELSUS ND. Except as otherwise expressly
permitted by this Agreement, between the date hereof and the Closing Date,
Paracelsus ND will not to the fullest extent of its power and authority,
without the prior consent of Dakota, take any affirmative action, or fail
to take any reasonable action within its control, as a result of which:
A. it fails to comply with the Prior Agreements; or
B. subject to its business judgement, fails to use its best
efforts to preserve intact the current business organization of the
Partnership, keep available the services of the current officers,
employees, and agents of the Partnership, and maintain the relations and
goodwill with suppliers, customers, patients, landlords, creditors,
employees, agents, and others having business relationships with the
Partnership.
7.06. REQUIRED APPROVALS; GOVERNMENTAL AUTHORIZATIONS. Dakota shall
assist and cooperate with Paracelsus ND and its Representatives in (i)
making all filings that Paracelsus ND elects to make or is required by
Legal Requirements to be make in order to consummate the Transaction
(including all filings under the HSR Act), and (ii) obtaining all
Governmental Authorizations and Consents from any other Persons which are
conditions precedent to the consummation of the Transaction or otherwise
necessary or appropriate with respect to this Transaction (including taking
all actions requested by Paracelsus ND to cause early termination of any
applicable waiting period under the HSR Act).
7.07. BEST EFFORTS. Between the date hereof and the Closing Date,
Dakota and Paracelsus ND will each use its best efforts to cause the
conditions in SECTION 8 and SECTION 9 hereof to be satisfied.
7.08. NOTIFICATION. Between the date of this Agreement and the
Closing Date, each party will promptly notify the other party if it
becomes aware of any fact or condition that causes or constitutes a breach
of the other party's representations and warranties as of the date of this
Agreement, or if either party becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a breach of
any such representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Dakota Disclosure Schedule or Paracelsus ND Disclosure Schedule, if such
disclosure schedules were dated the date of the occurrence or discovery of
any such fact or condition, the party required to make such disclosure
will promptly deliver to the other party a supplement to the applicable
Disclosure Schedule, specifying such change, any of which such supplements
is subject to the approval of the non-supplementing party in its sole
discretion. During the same period, each party will promptly notify the
other party of the occurrence of any breach of any covenant or agreement of
such party in this SECTION 7 or of the occurrence of any event that may
make the satisfaction of the conditions in SECTION 8 and SECTION 9 hereof
impossible or unlikely.
7.09. NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated, Dakota will not, directly or indirectly, solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with,
provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Paracelsus
ND) relating to any transaction involving the sale of the Dakota
Partnership Interest or the business or assets (other than in the Ordinary
Course of Business) of the Partnership, or any of the Partnership
Interests, or any merger, consolidation, business combination, or similar
transaction involving the Partnership.
SECTION 8.
CONDITIONS PRECEDENT TO PARACELSUS ND'S OBLIGATION TO CLOSE
The obligation of Paracelsus ND to close under this Agreement is
subject to each of the following conditions (any of which may, in
Paracelsus ND's discretion, be waived, in whole or in part) existing on the
Closing Date or such other applicable date:
8.01. CLOSING CERTIFICATE. The President (or other authorized
corporate officer) of Dakota shall have executed and delivered to
Paracelsus ND a certificate dated as of the Closing Date certifying that:
A. REPRESENTATIONS AND WARRANTIES OF DAKOTA. The
representations and warranties made by Dakota in or pursuant to this
Agreement or the other Transaction Documents are true and accurate in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and as
of such date. In determining whether there has been a material
misrepresentation or material adverse event, all occurrences and adverse
events shall be aggregated to determine the applicability or breach of the
provisions of this Agreement.
B. OBLIGATIONS OF DAKOTA. Dakota has performed and complied in
all material respects with all of its obligations under this Agreement and
the other Transaction Documents which are to be performed or complied with
by it prior to or on the Closing Date.
8.02. SECRETARY'S CERTIFICATE. Paracelsus ND shall have received a
certificate of the Secretary (or other authorized corporate officer) of
Dakota certifying as true, accurate, and complete, as of the Closing Date:
(a) a copy of the resolutions of Dakota's board of directors authorizing
the execution, delivery, and performance of this Agreement and the other
Transaction Documents to which it is a party and the consummation by Dakota
of the Transaction; (b) a copy of the resolutions of Dakota's members
authorizing the exercise and consummation of the Put; (c) a certified copy
of the Articles of Incorporation of Dakota issued by the Secretary of State
of North Dakota; (d) a copy of the Bylaws of Dakota; and (e) the
incumbency of the officer or officers authorized to execute on behalf of
Dakota the Agreement and the other Transaction Documents to which it is a
party.
8.03. LEGAL MATTERS. There must not have been commenced or threatened
against Paracelsus ND, Dakota, the Partnership, or any of their respective
Affiliates, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, the Transaction, or (b) that
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with the Transaction.
8.04. NO PROHIBITION. Neither the consummation nor the performance of
the Transaction will, directly or indirectly (with or without the giving of
notice or the lapse of time or both), materially contravene, or conflict
with, or result in a material violation of, or cause Paracelsus ND or any
of its Affiliates to suffer any material adverse consequence under, (a) any
applicable Legal Requirement or judgment, order, writ, injunction, or
decree, or (b) any Legal Requirement or judgment, order, writ, injunction,
or decree that has been published, introduced, or otherwise proposed by or
before any Governmental Body.
8.05. NECESSARY CONSENTS. The Consent of all Persons necessary for
the consummation of the Transaction shall have been granted and be in full
force and effect, including, without limitation, the Consent of or required
by or pursuant to, as the case may be the HSR Act.
8.06. NO CLAIM REGARDING OWNERSHIP OR SALE PROCEEDS. There must not
have been made or threatened by any Person any claim asserting that such
Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, the Dakota Partnership
Interest or any Partnership Interests of, or any other voting, equity, or
ownership interest in, the Partnership, or (b) is entitled to all or any
portion of the Purchase Price payable for the Dakota Partnership Interest.
8.07. DELIVERY OF DOCUMENTS. Dakota shall have executed and
delivered, or caused the execution and delivery, to Paracelsus ND the:
documents required to be executed by Dakota and Dakota's legal counsel
under SECTION 10.01.
8.08. LEGAL OPINION. Dakota shall have delivered to Paracelsus ND a
legal opinion from Dakota's legal counsel, Dorsey & Whitney LLP, dated the
Closing Date and in form and substance satisfactory to Paracelsus ND's
legal counsel, to the effect that (a) Dakota is a nonprofit corporation
duly incorporated, validly existing and in good standing with the laws of
the State of North Dakota; (b) such counsel has no knowledge of the
existence of any facts indicating that Dakota does not have full power and
authority to convey, assign, transfer and deliver the Dakota Partnership
Interest to Paracelsus ND as provided in this Agreement; (c) all corporate
and other proceedings required to be taken by Dakota to authorize it to
carry out this Agreement have been duly and properly taken; (d) this
Agreement has been duly executed by Dakota and, except as may be limited by
bankruptcy, insolvency or other similar laws affecting creditors generally,
is a legal, valid and binding obligation of Dakota, enforceable in
accordance with its terms; (e) the instruments delivered by Dakota at the
closing are legal, valid and binding in accordance with their terms; and
(f) Dakota is not a party to any action or proceeding before any
Governmental Body that would have a material adverse impact on the Dakota
Partnership Interest or the operation of the Partnership. In issuing such
opinion, such counsel may refrain from opining about (i) the legality of
the transaction contemplated by this Agreement under state or federal
antitrust laws or (ii) whether this Agreement is equitably enforceable.
8.09. DELIVERY OF OTHER DOCUMENTS. Dakota shall have delivered, or
caused to be delivered, all documents, instruments, exhibits, schedules,
certificates, and lists required by this Agreement and the other
Transaction Documents to be delivered or as requested by Paracelsus ND's
legal counsel.
SECTION 9.
CONDITIONS PRECEDENT TO DAKOTA'S OBLIGATION TO CLOSE
The obligation of Dakota to close on the Closing Date under this
Agreement is subject to each of the following conditions (any of which may,
in Dakota's discretion, be waived in writing) existing on the Closing Date
or such other applicable date:
9.01. CLOSING CERTIFICATE. The President (or other authorized
corporate officer) of Paracelsus ND shall have executed and delivered to
Dakota a certificate dated as of the Closing Date certifying that:
A. REPRESENTATIONS AND WARRANTIES OF PARACELSUS ND. The
representations and warranties made by Paracelsus ND in or pursuant to this
Agreement or the other Transaction Documents are true and accurate in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and as
of such date. In determining whether there has been a material
misrepresentation or material adverse event, all occurrences and adverse
events shall be aggregated to determine the applicability or breach of the
provisions of this Agreement.
B. OBLIGATIONS OF PARACELSUS ND. Paracelsus ND has performed
and complied in all material respects with all of its obligations under
this Agreement and the other Transaction Documents which are to be
performed or complied with by it prior to or on the Closing Date.
9.02. SECRETARY'S CERTIFICATE. Dakota shall have received a
certificate of the Secretary (or other authorized corporate officer) of
Paracelsus ND certifying as true, accurate, and complete, as of the Closing
Date: (a) a copy of the resolutions of Paracelsus ND's board of directors
authorizing the execution, delivery, and performance of this Agreement and
the other Transaction Documents to which it is a party and the consummation
by Paracelsus ND of the Transaction; (b) a certified copy of the Articles
of Incorporation of Paracelsus ND issued by the Secretary of State of North
Dakota; (c) a copy of the Bylaws of Paracelsus ND; and (d) the incumbency
of the officer or officers authorized to execute on behalf of Paracelsus ND
the Agreement and the other Transaction Documents to which it is a party.
9.03. PAYMENT OF PURCHASE PRICE. Paracelsus ND shall have delivered
to Escrow Agent, on behalf of Dakota, the total sum of the Purchase Price.
9.04. DELIVERY OF DOCUMENTS. Paracelsus ND shall have executed and
delivered, or caused the execution and delivery, to Dakota the documents
required to be executed Paracelsus ND, PHC and Paracelsus ND's legal
counsel under SECTION 10.03.
9.05. LEGAL OPINION. Paracelsus ND shall have delivered to Dakota a
legal opinion from Paracelsus ND's legal counsel, Michener, Larimore,
Swindle, Whitaker, Flowers, Sawyer, Reynolds & Chalk, L.L.P. ( which firm
may rely to the extent it deems necessary on the opinions of Paracelsus
ND's local North Dakota legal counsel, Gunhus, Grinnell, Klinger, Swenson &
Guy, Ltd.), dated the Closing Date and in form and substance satisfactory
to Dakota's legal counsel, to the effect that (a) Paracelsus ND is a
business corporation duly incorporated, validly existing and in good
standing with the laws of the State of North Dakota; (b) PHC is a business
corporation duly incorporated, validly existing and in good standing with
the laws of the State of California; (c) all corporate and other
proceedings required to be taken by Paracelsus ND and PHC to authorize it
to carry out this Agreement have been duly and properly taken, (d) this
Agreement has been duly executed by Paracelsus ND and, except as may be
limited by bankruptcy, insolvency or other similar laws affecting creditors
generally, is a legal, valid and binding obligation of Paracelsus ND,
enforceable in accordance with its terms; (e) the instruments delivered by
Paracelsus ND at the closing are legal, valid and binding in accordance
with their terms; and (f) Paracelsus ND is not a party to any action or
proceeding before any Governmental Body that would have a material adverse
impact on the operation of the Partnership. In issuing such opinion, such
counsel may refrain from opining about (i) the legality of the transaction
contemplated by this Agreement under state or federal antitrust laws or
(ii) whether this Agreement is equitably enforceable.
SECTION 10.
DELIVERIES AT CLOSING; POST-CLOSING FURTHER ASSURANCES
10.01. DELIVERIES BY DAKOTA. Dakota shall deliver, or cause to be
delivered, to Paracelsus ND or such other Person as required hereby, at the
Closing:
A. CORPORATE DOCUMENTS AND CERTIFICATES.
I. A Certificate of Good Standing for Dakota issued by the
Comptroller of the State of North Dakota dated within twenty
(20) days prior to the Closing Date; and
II. A Certificate of Existence for Dakota issued by the
Secretary of the State of North Dakota dated within twenty (20)
days prior to the Closing Date.
B. CLOSING CERTIFICATE. The Closing Certificate of Dakota, as
required by SECTION 8.01 hereof.
C. SECRETARY'S CERTIFICATE. The Secretary's Certificate of
Dakota, as required by SECTION 8.02 hereof.
D. WRITTEN RESIGNATIONS. The written resignations of all
Dakota's nominees or appointees to the Governing Board or other offices or
positions with the Partnership, as required by SECTION 3.07 hereof.
E. ESCROW AGREEMENT. The Escrow Agreement, as required by
SECTION 2.03 hereof.
F. PARTNERSHIP INTEREST ASSIGNMENT. The Partnership Interest
Assignment.
G. LEGAL OPINION. The legal opinion of Dakota's legal counsel,
as required by SECTION 8.08 hereof.
H. OTHER DOCUMENTS. Such other documents as Paracelsus ND may
reasonably request.
10.02. FURTHER ASSURANCES BY DAKOTA. From time to time after the
Closing, upon Paracelsus ND's request, Dakota agrees to execute and deliver
such additional instruments of conveyance and transfer and take such
further actions as may be required in conformity with this Agreement and
the other Transaction Documents for the complete sale and transfer to
Paracelsus ND of the Dakota Partnership Interest.
10.03. DELIVERIES BY PARACELSUS ND. Paracelsus ND shall deliver, or
cause to be delivered, to Dakota, or such other Person as required hereby,
at the Closing:
A. CORPORATE DOCUMENTS AND CERTIFICATES.
I. A Certificate of Good Standing for Paracelsus ND issued
by the Comptroller of the State of North Dakota dated within
twenty (20) days prior to the Closing Date; and
II. A Certificate of Existence for Paracelsus ND issued by
the Secretary of the State of North Dakota dated within twenty
(20) days prior to the Closing Date.
B. CLOSING CERTIFICATE. The Closing Certificate of Paracelsus
ND, as required by SECTION 9.01 hereof.
C. SECRETARY'S CERTIFICATE. The Secretary's Certificate of
Paracelsus ND, as required by SECTION 9.02 hereof.
D. PURCHASE PRICE. The Purchase Price, as required by SECTION
2.03 hereof.
E. ESCROW AGREEMENT. The Escrow Agreement, as required by
SECTION 2.03 hereof.
F. PHC GUARANTY AGREEMENT. The PHC Guaranty Agreement.
G. LEGAL OPINION. The legal opinion of Paracelsus ND's legal
counsel, as required by SECTION 9.05 hereof.
SECTION 11.
CLOSING
11.01. CLOSING; EFFECTIVE TIME.
A. CLOSING. Subject to the provisions for termination of this
Agreement in SECTION 12 hereof, the closing for the consummation of the
Transaction (the "CLOSING") shall take place at the offices of Dorsey &
Whitney LLP, Dakota Center, Suite 402, 51 North Broadway, Fargo, North
Dakota 58107, at 10:00 a.m., local time, on the later of (i) June 1, 1998,
or (ii) the third Business Day after the termination of the applicable
waiting period under the HSR Act, or on such other date mutually agreed
upon in writing by Paracelsus ND and Dakota. The date on which the Closing
actually occurs, whether on a date set forth in the preceding sentence or
as such may be extended as permitted hereby, is referred to herein as the
"CLOSING DATE". Subject to the provisions of SECTION 12 hereof, failure to
consummate the Transaction on the date determined pursuant to this SECTION
11.01 will not result in the termination of this Agreement and will not
relieve any party of any obligation hereunder.
B. EFFECTIVE TIME. The Transaction shall be effective for Tax
and accounting purposes as of 12:01 a.m. on the day immediately following
the Closing Date (the "EFFECTIVE TIME"), unless otherwise mutually agreed
upon in writing by Paracelsus ND and Dakota.
SECTION 12.
TERMINATION
12.01. GROUNDS FOR TERMINATION. This Agreement may, by notice given
prior to or at the Closing, be terminated only:
A. By Paracelsus ND if any of the conditions in SECTION 8
hereof have not been satisfied as of the Closing Date or if satisfaction of
such conditions is or becomes impossible (other than through the failure of
Paracelsus ND to comply with its obligations hereunder) and Paracelsus ND
has not waived such conditions on or before the Closing Date;
B. By Dakota with the consent of Paracelsus ND, or
C. By Dakota if the condition in either SECTION 9.03 or SECTION
9.04 hereof is not satisfied on the Closing Date and all other conditions
to Closing in SECTION 8 (to the extent any condition therein is not waived
by Paracelsus ND) and SECTION 9 have been met on or before the Closing
Date.
12.02. EFFECT OF TERMINATION. The right of termination under this
SECTION 12 is in addition to any other rights a party may have under this
Agreement or otherwise, and the exercise of a right of termination is not
an election of remedies. If this Agreement is terminated pursuant to this
section, all further obligations of the parties under this Agreement will
terminate, except that the obligations in SECTION 3.04, SECTION 7.01,
SECTION 13.04, and SECTION 16.01 hereof will survive; PROVIDED, HOWEVER,
that if this Agreement is terminated by a party because of the breach of
this Agreement by the other party, the terminating party's right to pursue
all its legal rights and remedies will survive such termination unimpaired.
SECTION 13.
TOLLING
13.01. EXERCISE OF TOLLING RIGHT. If the Closing does not occur by
August 7, 1998 (the "TOLLING DATE") for any of the following reasons: (a)
there is in effect an order by a court of competent jurisdiction enjoining
or otherwise prohibiting or materially limiting the consummation of the
Put, or there exists pending, or there is overtly threatened (by any
federal or state agency or department) litigation that seeks to prohibit or
materially limit the consummation of the Put; (b) the applicable waiting
period under the HSR Act has not expired or been terminated; or (c) at the
date set for Closing or if no such date is set, the Tolling Date,
Paracelsus ND is prepared to deliver those items specified in SECTION 10.03
hereof and at such time Dakota fails to deliver the items specified in
SECTION 10.01 hereof, Paracelsus ND may, in its sole discretion, toll and
suspend the running of the twelve (12) month period under SECTION 3.03(G)
of the Partnership Agreement which commenced on the Put Exercise Date and
during which it is required to complete its purchase of the Dakota
Partnership Interest (the "PUT CLOSING PERIOD"). Paracelsus ND shall
exercise such tolling right by giving written notice thereof to Dakota,
including a statement of the ground or grounds relied upon for exercising
its tolling right, within three (3) Business Days after the Tolling Date
(the "TOLLING NOTICE").
13.02. DURATION OF TOLLING PERIOD.
A. LITIGATION INTERVENTION. If Paracelsus ND delivers a Tolling
Notice to Dakota exercising the tolling right for the reasons described in
either Section 13.01 (a) or (b), the Tolling Notice shall specify a certain
Business Day in the future on which the Closing will occur (the "NEW
CLOSING DATE") which New Closing Date shall in no event be later than one
(1) year after the date of the Tolling Notice. The period of time from the
date of Tolling Notice to the New Closing Date as provided for in this
SECTION 13.02.A is referred to as the "TOLLING PERIOD". If the Closing
does not occur on or before the New Closing Date, the Tolling Period
expires, unless (i) the parties mutually agree in writing to extend the
Tolling Period or (ii) the parties agree to submit to binding arbitration
the issue of whether Paracelsus ND has a reasonable likelihood of being
able to consummate the Closing within a reasonable period of time as
determined by the arbitrator. If the matter is submitted to arbitration,
the arbitrator's order shall specify the date upon which the Tolling Period
will expire. Upon expiration of the Tolling Period (whether extended by
arbitration or not), the Put Closing Period shall automatically expire and
each party shall be free to exercise all of its rights under the
Partnership Agreement.
B. FAILURE OF DAKOTA TO CLOSE. If Paracelsus ND delivers a
Tolling Notice to Dakota exercising the tolling right for the reasons
described in SECTION 13.01 (C), within three (3) Business Days after
receiving the Tolling Notice from Paracelsus ND, Dakota shall deliver to
Paracelsus ND a written statement (the "TOLLING NOTICE RESPONSE")
identifying in detail, (i) the specific cause of the Closing not occurring
by the Tolling Date, and (ii) the next earliest Business Day after which
such condition, obligation, or other matter, as the case may be, will be
satisfied or performed and the Closing can occur (the "PROPOSED CLOSING
DATE"). If Dakota fails to deliver the Tolling Notice Response, or in the
Tolling Notice Response fails to specify the cause of delay in Closing or a
Proposed Closing Date, Paracelsus ND shall, within three (3) Business Days
after the date by which Dakota was to have provided the Tolling Notice
Response, deliver to Dakota a written statement (the "TOLLING PERIOD
NOTICE") identifying a Business Day in the future on which the Closing will
occur (the "DEFAULT CLOSING DATE"). The Default Closing Date shall be set
by Paracelsus ND, in its sole discretion, provided that such date is no
earlier than the Proposed Closing Date ( if such a date is set) and no
later than thirty (30) calendar days thereafter. The period of time from
the date of Tolling Notice to either the Proposed Closing Date or the
Default Closing Date, as provided for in this SECTION 13.02.B, is referred
to as the "TOLLING PERIOD". If the Closing does not occur on the Proposed
Closing Date or, on or prior to the Default Closing Date as determined
above, Paracelsus may, at its discretion, extend the Tolling Period until
such time as the Closing is consummated or a court of competent
jurisdiction orders otherwise.
13.03. DISTRIBUTIONS DURING TOLLING. At all times during any Tolling
Period, Paracelsus ND shall distribute Available Cash to Dakota in
accordance with the terms of the Partnership Agreement.
13.04. PARACELSUS ND'S RIGHTS UPON TOLLING. If the grounds for the
tolling under this SECTION 13 is SECTION 13.01(C), Paracelsus ND may, in
its sole discretion, at any time thereafter, pursue any and all other
rights and remedies it may have under this Agreement or otherwise.
13.05. EFFECT OF TOLLING. Except as otherwise specifically provided
herein, Paracelsus ND's exercise of its tolling right under this SECTION 13
shall not affect the enforceability of any other provisions of the Prior
Agreements. In the event the Tolling Period expires and the Transaction
was not consummated during the Tolling Period, each party shall have all
rights provided it under the Partnership Agreement.
SECTION 14.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
14.01. SURVIVAL OF REPRESENTATIONS.
A. SURVIVAL PERIOD. Notwithstanding any investigation made by
or on behalf of any party, all representations and warranties made by the
parties in this Agreement shall survive the Closing and remain effective
for a period of ten (10) years thereafter.
B. RIGHTS NOT AFFECTED BY KNOWLEDGE. Each party is entitled to
and is deemed to have reasonably relied upon the representations,
warranties, covenants, and agreements of the other party in this Agreement.
The right to indemnification and other remedies based upon such
representations, warranties, covenants, and agreements will not be lost,
waived, reduced, or otherwise affected by any investigation conducted with
respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of any of the
Prior Agreements or any of the Transaction Documents or the Closing Date,
with respect to the accuracy or inaccuracy of or compliance or failure to
comply with, any such representation, warranty, covenant, or agreement.
Further, no such right to indemnification and other remedies shall be
affected by either party's belief that any such representation or warranty
of the other party is or has been false or inaccurate, or that any such
covenant or agreement is or has been breached. Further, the waiver of any
condition based on the accuracy of any representation or warranty, or on
the performance of or compliance with any covenant or agreement, will not
affect the right to indemnification or any other remedy based on such
representations, warranties, covenants, or agreements.
14.02. SURVIVAL OF INDEMNIFICATION PROVISIONS IN PRIOR AGREEMENTS.
A. CONTRIBUTION AGREEMENT. Notwithstanding the provisions of
this Section 14, the parties hereby agree that the indemnification
provisions in Article XIII of the Contribution Agreement shall survive the
Closing and shall govern the indemnification of losses described therein
for a period of ten (10) years after the Closing, at which time such
provisions shall expire; provided however, that Section 13.3 of the
Contribution Agreement regarding thresholds for indemnification is hereby
amended and shall be superceded in its entirety by SECTION 14.06 of this
Agreement.
B. OPERATING AGREEMENT. Notwithstanding the provisions of
this Section 14, the parties hereby agree that the indemnification
provisions in Section 8.2 of the Operating Agreement shall survive the
Closing and shall govern the indemnification of losses described therein
for a period of ten (10) years after the Closing, at which time such
provisions shall expire.
14.03. INDEMNIFICATION OF PARACELSUS ND.
A. Subject to the provisions of this SECTION 14, Dakota agrees
to indemnify, defend, and hold harmless Paracelsus ND, the Partnership and
(but excluding Dakota, as applicable) their respective predecessors,
successors, assigns, officers, directors, stockholders, employees,
Subsidiaries, parents, Affiliates, partners, agents, attorneys,
accountants, financial advisers and representatives (collectively, the
"PARACELSUS ND INDEMNIFIED PARTIES"), against and in respect of any losses,
damages (including incidental and consequential damages), deficiencies,
diminutions in value, liabilities, actions, suits, proceedings, demands,
assessments, judgments, fines, and reasonable costs and expenses
(including, but not limited to, attorney and expert witness fees)
(collectively, the "LOSSES"), arising or resulting, directly or indirectly,
from or in connection with:
i. Any material misrepresentation or other breach of any
representation or warranty made by Dakota in this Agreement or in any
of the other Transaction Documents (regardless of whether such has
been waived by Paracelsus ND);
ii. Any material failure to perform or other breach of any
covenant, agreement, or obligation of Dakota in this Agreement or in
any of the other Transaction Documents (regardless of whether such has
been waived by Paracelsus ND);
iii. Any grossly negligent act or omission or any act or
omission in bad faith of any of the nominees or appointees of Dakota
to the Governing Board of the Partnership or other offices or
positions of the Partnership, or of any of the other Dakota
Indemnified Parties (regardless of whether such has been waived by
Paracelsus ND); or
iv. Any matter disclosed in Section 4.05 of the Dakota
Disclosure Schedule (regardless of whether such has been waived by
Paracelsus ND);
B. Subject to the provisions of this SECTION 14 and
specifically the indemnification rights provided in SECTION 14.02 and
SECTION 14.03.A, Dakota agrees to indemnify, defend, and hold harmless the
Paracelsus ND Indemnified Parties against one-half ( 1/2 ) of any Losses to
any of the Paracelsus ND Indemnified Parties arising or resulting, directly
or indirectly, from the operation of the Partnership since December 21,
1994 and on or prior to the Closing Date; provided that such Loss was:
i. Not caused by or within the Knowledge of PHC/CHC,
Paracelsus ND, its Affiliates, employees, agents, or independent
contractors under the Operating Agreement; or
ii. Disclosed to the Governing Board of the Partnership
during such period, and not caused as a result of Paracelsus ND's
gross negligence or bad faith.
The foregoing matters in this SECTION 14.03 giving rise to the rights
of the Paracelsus ND Indemnified Parties to indemnification hereunder are
referred to as the "PARACELSUS ND CLAIMS".
14.04. INDEMNIFICATION OF DAKOTA. Subject to the provisions of this
SECTION 14, Paracelsus ND agrees to indemnify, defend, and hold harmless
Dakota and (but excluding the Partnership) its predecessors, successors,
assigns, officers, directors, stockholders, employees, Subsidiaries,
parents, Affiliates (such term in this SECTION 14.04 shall exclude Dakota
Clinic Ltd., its owners and employees), partners, agents, attorneys,
accountants, financial advisers, and representatives (collectively, the
"DAKOTA INDEMNIFIED PARTIES"), against and in respect of any Losses,
arising or resulting, directly or indirectly, from or in connection with:
A. Any material misrepresentation or other breach of any
representation or
warranty made by Paracelsus ND in this Agreement or in any of the other
Transaction Documents (regardless of whether such has been waived by
Dakota);
B. Any material failure to perform or other breach by
Paracelsus ND of any covenant, agreement, or obligation in this Agreement
or in any of the other Transaction Documents (regardless of whether such
has been waived by Dakota);
C. Any action, inaction, or liability incurred after Closing
(including any action, inaction, or liability related to winding up the
Partnership by Paracelsus ND, regardless of whether such has been waived by
Dakota); or
D. Any grossly negligent act or omission or any act or omission
in bad faith of any of the nominees or appointees of Paracelsus ND to the
Governing Board of the Partnership or other offices or positions of the
Partnership or of any of the other Paracelsus ND Indemnified Parties,
excluding the Partnership (regardless of whether such has been waived by
Dakota).
The foregoing matters giving rise to the rights of the Dakota
Indemnified Parties to indemnification hereunder are referred to as the
"DAKOTA CLAIMS".
14.05. LIMITATIONS ON LIABILITY. Notwithstanding any other
provision hereof, neither party shall be liable for any Losses under this
SECTION 14 in excess of the Purchase Price. The obligations of both
parties under this SECTION 14 shall terminate, except as to claims
previously asserted, ten (10) years after the Closing.
14.06. THRESHOLDS. Neither the Paracelsus ND Indemnified Parties
nor the Dakota Indemnified Parties shall have the right to indemnification
under this SECTION 14 until their respective claims (without regard to the
De minimis Threshold) in the aggregate exceed the sum of $650,000 (the
"Indemnity Threshold"). Once the Indemnity Threshold has been reached as
to a party such party shall have the right to indemnification, PROVIDED
HOWEVER, neither the Paracelsus ND Indemnified Parties nor the Dakota
Indemnified Parties shall have the right to indemnification under this
SECTION 14 for any claim that does not exceed $25,000 (the "De minimis
Threshold"). Notwithstanding the foregoing, the De minimis Threshold shall
not apply to any claim resulting from a claim or other legal action brought
by any Governmental Body or the appropriate fiscal intermediary of the
Health Care Financing Administration either (i) alleging violations of the
Medicare or Medicaid programs or (ii) relating to a false, inaccurate, or
incomplete claim for reimbursement submitted to either such program.
14.07. EFFECT OF TAXES AND INSURANCE. The liability of an Indemnitor
under this SECTION 14 shall be reduced by the Tax benefit actually realized
and any insurance proceeds received by the Indemnitee as a result of any
Losses upon which the claim for indemnification is based, and shall include
any Tax detriment actually incurred by the Indemnitee as a result of such
Losses. The amount of any such Tax benefit or detriment shall be
determined by taking into account the effect, if any and to the extent then
determinable, of timing differences resulting from the acceleration or
deferral of items of gain or loss resulting from such Losses and shall
otherwise be determined so that payment by the Indemnitor, as so adjusted,
will make the Indemnitee as economically whole as reasonably possible.
14.08. ESCROW FUND SETOFF RIGHT; NOTICE. Upon notice to Dakota
stating the basis therefor, any of the Paracelsus ND Indemnified Parties
may, in their sole discretion, deduct, set off, and make a claim only for
amounts resulting from a claim brought by any Governmental Body or the
appropriate fiscal intermediary of the Health Care Financing Administration
either (i) alleging violations of the Medicare or Medicaid programs, or
(ii) relating to a false, inaccurate, or incomplete claim for reimbursement
submitted to either such program to which they may be entitled under this
SECTION 14 against and from the Escrow Fund or any other amounts owed to
Dakota under this or any of the other Transaction Documents. Paracelsus ND
shall give notice to Dakota (a) as promptly as reasonably possible of
Paracelsus ND's becoming aware of the likelihood of its incurring Losses
for which indemnification is provided for under this SECTION 14, and (b)
within ten (10) business days following receipt by Paracelsus ND of any
written notice from any governmental regulatory or examining body of the
commencing of, or existence of, an investigation, audit or examination, the
result of which could reasonably result in Paracelsus ND incurring Losses
for which indemnification is provided for under this SECTION 14; provided
however the failure to give such notice shall not restrict, diminish or
limit Paracelsus ND's rights hereunder. The exercise of such right by any
of the Paracelsus ND Indemnified Parties in good faith, whether or not
ultimately determined to be justified, will not constitute a breach or
default hereunder or thereunder, as the case may be. In the event the
exercise of such right is ultimately determined not to be justified, then
Paracelsus ND shall pay interest on such amount at the "Prime Rate" (as
published in THE WALL STREET JOURNAL, as such Prime Rate may change from
time to time) plus two percent (2%), during the period Paracelsus ND
retained such amount. Neither the exercise of nor the failure to exercise
such right will constitute an election of remedies or limit any of the
Paracelsus ND Indemnified Parties in any manner in the enforcement of any
other remedies that may be available to them.
14.09. PROCEDURE FOR INDEMNIFICATION; THIRD PARTY CLAIMS.
A. After receipt by an Indemnitee under this SECTION 14 of
notice of the commencement of any Proceeding against it, such Indemnitee
shall, if a claim is to be made against an Indemnitor hereunder, promptly
give notice to the Indemnitor of the commencement of such claim (including
all documents and other information which the Indemnitee has with respect
thereto), but the failure to notify the Indemnitor shall not relieve the
Indemnitor of any liability that it may have to any Indemnitee, except to
the extent that the Indemnitor demonstrates that the defense of such action
is prejudiced by the Indemnitee's failure to give such notice.
B. If any Proceeding referred to in the preceding subsection is
brought against an Indemnitee and it gives notice to the Indemnitor of the
commencement of such Proceeding, the Indemnitor will, be entitled to
participate in such Proceeding and, to the extent that it wants (unless (i)
the Indemnitor is also a party to such Proceeding and the Indemnitee
determines in good faith that joint representation would be inappropriate,
or (ii) the Indemnitor fails to provide reasonable assurance to the
Indemnitee of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding) to assume the defense of
such Proceeding with counsel satisfactory to the Indemnitee and, after
notice from the Indemnitor to the Indemnitee of its election to assume the
defense of such Proceeding, the Indemnitor will not, as long as it
diligently conducts such defense, be liable to the Indemnitee under this
SECTION 14 for any fees of other counsel or any other expenses with respect
to the defense of such Proceeding, in each case subsequently incurred by
the Indemnitee in connection with the defense of such Proceeding, other
than reasonable and necessary costs of investigation. If the Indemnitor
assumes the defense of a Proceeding, (i) it will be conclusively
established for purposes of this Agreement that the claims made in that
Proceeding are within the scope of and subject to indemnification under
this SECTION 14; (ii) no compromise or settlement of such claims may be
effected by the Indemnitor without the Indemnitee's consent unless (y)
there is no finding or admission of any violation of Legal Requirements or
any violation of the rights of any Person and no effect on any other claims
that may be made against the Indemnitee, and (z) the sole relief provided
is monetary damages that are paid in full by the Indemnitor, and (iii) the
Indemnitee will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given
to an Indemnitor of the commencement of any Proceeding and the Indemnitor
does not, within ten (10) calendar days after the Indemnitee's notice is
given, give notice to the Indemnitee of its election to assume the defense
of such Proceeding, the Indemnitor will be bound by any determination made
in such Proceeding or any compromise or settlement effected by the
Indemnitee.
C. Notwithstanding the foregoing, if an Indemnitee determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its Affiliates (such term in this SECTION 14.09.C
shall exclude Dakota Clinic Ltd, its owners and employees) , other than as
a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnitee may, by notice to the
Indemnitor, assume the exclusive right to defend, compromise, or settle
such Proceeding, but the Indemnitor will not be bound by any determination
of a Proceeding so defended or any compromise or settlement effected
without its consent (which may not be unreasonably withheld).
14.10. PROCEDURE FOR INDEMNIFICATION; OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim covered by
SECTION 14.09 may be asserted by the Indemnitee promptly giving notice to
the Indemnitor requesting indemnification and stating in reasonable detail
the nature of such matter and the amount of Losses claimed therefor. The
Indemnitor shall have fifteen (15) calendar days after receiving such
notice to respond. If the Indemnitor accepts responsibility or does not
respond within such 15 day period, the Indemnitor shall pay the Indemnitee
the full amount of the claim within ten (10) Business Days after
responsibility therefor is so determined. If the Indemnitor rejects the
claim for indemnification, and the dispute is not resolved by the
Indemnitor and Indemnitee within fifteen (15) calendar days, either party
may pursue any available remedy, in law or equity. If it is determined
after any such Proceeding that the Indemnitor is liable for the claim, it
shall pay the Indemnitee the full amount of the claim within ten (10)
Business Days after responsibility therefor is so determined or as
otherwise ruled in any such Proceeding.
SECTION 15.
NOTICE
15.01. NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be sufficiently given if personally
delivered, mailed by certified or registered mail, return receipt
requested, sent by Federal Express (or other guaranteed and receipted
delivery service), or sent by facsimile transmission to the following
addresses (or such other addresses as specified by written notice timely
given to the other parties).
TO PARACELSUS ND: Paracelsus Healthcare Corporation
Attn: James G. VanDevender
515 West Greens Road, Suite 800
Houston, Texas 77067
Telephone: (281) 774-5115
Facsimile: (281) 774-5110
WITH A COPY (WHICH
SHALL NOT CONSTITUTE
NOTICE) TO: Michener, Larimore, Swindle, Whitaker,
Flowers, Sawyer, Reynolds & Chalk, L.L.P.
Attn: Wayne M. Whitaker
3500 City Center Tower II
301 Commerce Street
Fort Worth, Texas 76102
Telephone: (817) 335-4417
Facsimile: (817) 335-6935
TO DAKOTA: Dakota Medical Foundation
Attn: John L. Hicks, D.D.S.
1711 South University Drive
Fargo, North Dakota 58109-7067
Telephone: (701) 280-4150
Facsimile: (701) 280-4552
WITH A COPY (WHICH
SHALL NOT CONSTITUTE
NOTICE) TO: Dorsey & Whitney LLP
Attn: Forrest G. Burke
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402-1498
Telephone: (612) 340-6321
Facsimile: (612) 340-8827
Any notice given in accordance with this section is effective three
(3) Business Days after the date on which the same was delivered,
deposited, or confirmed, as applicable for the notice procedure used.
SECTION 16.
MISCELLANEOUS
16.01. TRANSACTION COSTS AND EXPENSES. Except as specifically
provided otherwise herein, each party hereunder shall be responsible for
and pay its own costs and expenses, including fees of accountants,
attorneys, and other advisors, incurred by it in connection with the
Transaction; PROVIDED, HOWEVER, that if the Transaction is not consummated
as a result of a breach of this Agreement by any party, such party shall be
liable for expenses and costs incurred by the other party, together with
all reasonable expenses and costs (including, but not limited to, attorney
and expert witness fees) incurred by the other party in connection with
enforcing its rights under this Agreement, notwithstanding the provisions
of SECTION 12 hereof. Paracelsus ND shall pay all recording fees,
documentary stamp Taxes, discretionary surtaxes and intangible Taxes for
recording any deeds, assignments, or other instruments in connection with
the Transaction. Each of Dakota and Paracelsus ND shall pay one-half
( 1/2 ) of the HSR Act filing fee, provided however in no event shall
Dakota be required to pay more than $22,500 of the HSR Act filing fee.
16.02. ASSIGNABILITY; BINDING EFFECT; THIRD PARTIES.
A. The rights and obligations of any party under this Agreement
may not be assigned or delegated by any party without the prior written
consent of the other party, which shall not be unreasonably withheld,
except that Paracelsus ND may assign and delegate any of its rights and
obligations to any Subsidiary or Affiliate or any successor in a merger,
sale of substantially all of its assets, or other similar transaction.
Subject to the preceding sentence, this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns.
B. Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies arising from this Agreement on
any Person other than the parties and their respective successors or
assigns, nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third party to a party, nor shall any
provision of this Agreement give any third party a right of subrogation or
action against any party, except as otherwise set forth in this Agreement.
16.03. WAIVER. There can be no waiver of any term, provision, or
condition of this Agreement which is not in writing signed by the party
against whom the waiver is sought to be enforced. Waiver by any party of
the default or breach of any provision of this Agreement by another shall
not operate or be construed as a waiver of any subsequent default or
breach.
16.04. SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable in any Proceeding, it is the parties' intent that
all other provisions of this Agreement shall remain fully valid,
enforceable, and binding on the parties.
16.05. FURTHER ASSURANCES. The parties agree to take such further
actions, including the execution and delivery of any documents, as may be
required, necessary, or desirable for the performance of this Agreement.
16.06. ENTIRE AGREEMENT; HEADINGS; INCORPORATION BY REFERENCE. Except
as otherwise provided herein with respect to the Prior Agreements, this
Agreement together with the other Transaction Documents constitutes the
entire agreement between the parties relating to the subject matter hereof,
and supersedes all previous agreements, written or oral. This Agreement
shall not be amended or modified except by an instrument in writing signed
by all parties. Headings are for convenience of reference only and shall
not affect the interpretation or construction of this Agreement. All
documents, instruments, exhibits, and schedules referred to in this
Agreement are incorporated by reference for all purposes.
16.07. GOVERNING LAW; VENUE; ATTORNEY'S FEES.
A. Any dispute between the parties relating to this Agreement
shall be construed under and in accordance with the laws of the State of
North Dakota applicable to contracts between residents of North Dakota that
are to be wholly performed within such state.
B. The parties agree that the United States District Court for
the District of North Dakota, Southeastern Division, and the state courts
within Cass County, North Dakota shall have exclusive venue and
jurisdiction of the same.
C. The prevailing party in any litigation shall be entitled to
recover from the other party reasonable attorney and expert witness fees,
and court costs incurred in the same, in addition to any other relief that
may be awarded.
16.08. MULTIPLE COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall constitute an original and all
of which shall constitute one document; and furthermore, a facsimile
signature hereon shall be deemed an original.
[signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused same to be duly delivered on their behalf on the day and year first
written above.
Paracelsus ND: Dakota:
PARACELSUS HEALTHCARE DAKOTA MEDICAL FOUNDATION
CORPORATION OF NORTH DAKOTA,
INC.
By:
By: Name:
Name: Title:
Title:
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Schedule 3.12.b
RESTRICTED TERRITORY
[to come]
- 3 -
DAKOTA DISCLOSURE SCHEDULE
4.01. AUTHORIZATION OF TRANSACTION.
4.02. ORGANIZATION; GOOD STANDING.
4.03. CAPITALIZATION.
4.04. NO SUBSIDIARIES OR AFFILIATES.
4.05. LITIGATION AND RELATED MATTERS.
4.06. INSURANCE COVERAGES.
4.07. FINANCIAL STATEMENTS.
4.08. NO UNDISCLOSED LIABILITIES.
4.09. JOINT PARTNER LIABILITIES.
4.10. COMPLIANCE WITH PRIOR AGREEMENTS.
4.11. COMPLIANCE WITH LEGAL REQUIREMENTS.
4.12. GOOD TITLE TO DAKOTA PARTNERSHIP INTEREST.
4.13. NO CONFLICT; EFFECT OF AGREEMENT.
4.14. TAXES.
4.15. SOLVENCY.
4.16. NO OTHER AGREEMENTS.
4.17. NO BROKER'S FEE.
4.18 NO CONSENTS REQUIRED.
4.19. STATEMENTS TRUE AND CORRECT.
Initials:
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Partnership Disclosure Schedule
5.01. ORGANIZATION; GOOD STANDING.
5.02. CAPITALIZATION.
5.03. FULL AND COMPLETE INFORMATION.
5.04. COMPLIANCE WITH PRIOR AGREEMENTS.
5.05. STATEMENTS TRUE AND CORRECT.
Initials:
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Paracelsus ND Disclosure Schedule
6.01. AUTHORIZATION OF TRANSACTION.
6.02. ORGANIZATION; GOOD STANDING.
6.03. NO CONSENTS REQUIRED.
6.04. STATEMENTS TRUE AND CORRECT.
Initials:
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