RHEEM VALLEY ASSET PURCHASE AGREEMENT
This Rheem Valley Asset Purchase Agreement (the "Agreement"), dated as
of March 15, 1999 (the "Signing Date"), is entered into by and among PARACELSUS
CONVALESCENT HOSPITALS, INC., a California corporation ("PCHI"), PARACELSUS REAL
ESTATE CORPORATION, a California corporation ("PREC") (PCHI and PREC are also
sometimes referred to herein individually as, a "Seller" and, collectively as,
the "Sellers"), and SUNLAND ASSOCIATES, INC., a Tennessee corporation (the
"Buyer")or its assigns as herein permitted.
WITNESSETH:
WHEREAS, PREC leases, pursuant to that certain Indenture, dated August
1, 1964, as amended by that certain Modification of Lease, dated April 8, 1985,
and Second Modification of Lease, dated October 7, 1997 (the "Rheem Valley
Lease"), with Karl J. Niederer and Gertrude E. Niederer (the "Rheem Valley
Lessor"), and PCHI operates a skilled nursing facility named Rheem Valley
Convalescent Hospital, located at 348 Rheem Boulevard, Moraga, California 94556
("Rheem Valley") ( Rheem Valley is also sometimes referred to herein as, a
"Facility");
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to
purchase, all or substantially all of the assets and properties used by PCHI in
the skilled nursing and subacute care business conducted at the Facility (the
"Business"), and Buyer further desires to assume from Sellers the Rheem Valley
Lease and certain other liabilities and obligations from conducting the
Business, all upon the terms and subject to the conditions set forth herein;
WHEREAS, Buyer and Sellers have simultaneous with the execution of this
Agreement executed an asset purchase agreement (the "ULO Purchase Agreement")
providing, according to the terms therein stated, for Sellers to sell and Buyer
to purchase the following three skilled nursing facilities :
1. University Convalescent Hospital, located at 2122 Santa Cruz
Avenue, Menlo Park, California 94025 ("University");
2. Lafayette Convalescent Hospital, located at 1010 First Street,
Lafayette, California 94549 ("Lafayette"); and
3. Oak Park Convalescent Hospital, located at 1625 Oak Park
Boulevard, Pleasant Hill, California 94523 ("Oak Park"); and
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants stated in this Agreement, 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
1.1. 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):
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"Affiliate" means any Person that, directly or indirectly, controls, is
controlled by, or under common control with, another Person. For purposes of
this definition, the terms "control" and "controlled by" and "under common
control with", as used with respect to any Person, mean the power to direct or
cause the direction of the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by Contract, or
otherwise.
"Business Day" means any day other than a Saturday, a Sunday, or a
holiday on which national banking associations in the State of California are
closed.
"Closing Period" means the period between the Signing Date and the
Closing Date.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contract" means any contract, agreement, obligation, promise, purchase
order, sales order, license, lease, commitment, arrangement, or undertaking
(whether written or oral, and whether express or implied) that is legally
binding.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and any corresponding provisions of succeeding law, and the regulations
promulgated thereunder.
"Governmental Authorization" means any approval, consent, license,
certificate of need, franchise, provider number, 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.
"Indemnitee" means a party seeking indemnification.
"Indemnitor" means a party against whom a claim for indemnification is
made.
"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 the preceding clause (i) hereof) of
such fact or other matter.
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"IRC" means the Internal Revenue Code of 1986, as amended and any
corresponding provisions of succeeding law, and the regulations promulgated
thereunder.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multi-national, or other administrative order,
constitution, law, ordinance, code, principle of common law, regulation,
statute, or treaty.
"Lender" means any Person that has loaned money or extended credit to
another Person.
"Liens" means all mortgages, deeds of trust, claims, liens, judgments,
security interests, pledges, leases, conditional sale contracts, rights of first
refusal, options, charges, liabilities, 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.
"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 corporation, 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.
"Person" includes any individual, partnership, joint venture, limited
partnership, limited liability company, trust, estate, corporation, association,
custodian, trustee, executor, administrator, or other entity or Governmental
Body.
"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.
"Representatives" means the directors, trustees, officers, employees,
agents, financial advisers, accountants, legal counsel, and other
representatives of a Person.
"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.
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"Tax" 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.
"Transaction" means the sale and purchase of the Acquired Assets,
assumption of the Assumed Liabilities, and performance of the other agreements
and covenants as described herein or required hereby.
"Transaction Documents" means this Agreement, the Bill of Sale, the
Assignment and Assumption Agreement; the Rheem Valley Lease Assumption
Agreement, the Consents and the exhibits, schedules, certificates, and lists
related to each of the foregoing, as applicable to each of Seller and Buyer.
1.2. OTHER DEFINITIONS. Other terms may be defined elsewhere herein and have the
meanings so given to them.
SECTION 2.
SALE AND PURCHASE
2.1. ACQUIRED ASSETS. Upon the terms and subject to the conditions set forth
herein, at the Closing (as defined in Section 5.1. hereof), Sellers will sell,
transfer, convey, assign, and deliver to Buyer, and Buyer thereupon will
purchase, acquire, and assume from Sellers, all of the following assets and
properties of Sellers, other than the Excluded Assets (as defined in Section
2.4. hereof), owned, held, or used by PCHI in the operation of the Facility and
conduct of the Business, as such exist on the Signing Date, less all such assets
and properties used, consumed, or disposed of, plus all such assets and
properties acquired by, Sellers in the Ordinary Course of Business during the
Closing Period (collectively, the "Acquired Assets"), which such Acquired Assets
comprise, with the exception of the Excluded Assets, all or substantially all of
the assets and properties owned, held, or used by PCHI in operating the Facility
and conducting the Business:
a. REAL PROPERTY. The real property and real property interests
described in SCHEDULE 2.1.a. hereto, together with all leaseholds therein, all
buildings, improvements, construction-in-progress, fixtures, and fittings
located thereon, and all easements, rights-of-way, and other appurtenances
thereto (collectively, the "Real Property");
b. PERSONAL PROPERTY. All tangible personal property and interests
therein, including machinery, equipment, furniture, office equipment and
supplies, communications equipment, furnishings, vehicles, and similar tangible
personal property (collectively, the "Personal Property"), and including, not
limited to, the personal property listed in SCHEDULE 2.1.b. hereto, which shall
be completed by mutual agreement of the parties, initialed, and attached prior
to Closing (the "Scheduled Personal Property");
c. INTELLECTUAL PROPERTY. (i) All copyrights in both published works
and unpublished works (collectively, the "Copyrights"), (ii) all registered and
unregistered trademarks, trade names, service marks, and fictional business
names, including, but not limited to, the exclusive rights of PCHI, if any, in
and to the
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name " Rheem Valley Convalescent Hospital", (collectively, the "Marks"), and
(iii) all know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans, drawings, and
blue prints owned, used, or intended to be used, or licensed by the PCHI,
whether as licensee or licensor (collectively, the "Trade Secrets"), including
all applications for and all Contracts granted to PCHI with respect to any of
the foregoing, to the extent transfer or assignment is permitted by the terms
thereof, and including, but not limited to, the items listed in SCHEDULE 2.1.c.
hereto, which shall be completed by mutual agreement of the parties, initialed,
and attached prior to Closing, but specifically excluding (x) all proprietary
information contained in the employee or operation manuals of any Seller that
does not directly pertain to the ongoing operation of the Facility and conduct
of the Business in the Ordinary Course of Business after Closing; (y) all rights
in and to all owned and licensed computer hardware and software utilized,
maintained, and located at the data center of Paracelsus Healthcare Corporation
("Paracelsus"), the parent corporation of Sellers, in Houston, Texas; and (z)
all rights in and to the PrideTM and ServiceAdvantage programs (collectively,
the "Intellectual Property");
d. ASSIGNED CONTRACTS. To the extent transfer or assignment is
permitted by the terms thereof, all of the right, title, and interest of PCHI
under all Contracts, including the Union Contract, relating to PCHI's operating
the Facility and conducting the Business listed in SCHEDULE 2.1.d. hereto
(collectively, the "Assigned Contracts");
e. ASSIGNED LICENSES AND PERMITS. To the extent transfer or assignment
is permitted by applicable Legal Requirements, all right, title, and interest of
PCHI in all Governmental Authorizations of any Governmental Body held by PCHI
for operating the Facility and conducting the Business and listed in SCHEDULE
2.1.f. hereto (collectively, the "Assigned Licenses and Permits");
f. WARRANTY RIGHTS. To the extent transfer or assignment is permitted
by the terms thereof, the benefit of and right to enforce the covenants and
warranties that PCHI is entitled to enforce on the Closing Date relating to any
of the other Acquired Assets;
g. BUSINESS RECORDS. All documents, records, operating manuals and
files, and computer software of PCHI, including, without limitation, all
employment records, patient records, medical records, equipment records,
construction plans and specifications, and medical and administrative libraries,
but specifically excluding (x) all proprietary information contained in the
employee or operation manuals of any Seller that does not directly pertain to
the ongoing operation of the Facility and conduct of the Business in the
Ordinary Course of Business after Closing; (y) all rights in and to all owned
and licensed computer hardware and software utilized, maintained, and located at
the data center of Paracelsus in Houston, Texas; and (z) all rights in and to
the PrideTM and ServiceAdvantage programs; and
h. GOODWILL. All the goodwill and going concern value of the other
Acquired Assets and the Business.
2.2. TRANSFER WITHOUT LIENS. Each of PCHI and PREC, as their interests appear,
will convey good, valuable, and marketable title to the Acquired Assets (other
than the Real Property) to Buyer free and clear of all Liens, and good and
indefeasible title to the Real Property to Buyer free and clear of all Liens,
except for as to both, (i) the Permitted Liens (as defined in Section 7.6.b.
hereof), (ii) the Liens expressly assumed by Buyer as part of the Assumed
Liabilities (as defined in Section 3.1. hereof, and (iii) the Liens otherwise
disclosed under Section 7.6. hereof.
2.3. EFFECT OF PROHIBITED ASSIGNMENT. Nothing in this Agreement shall be
construed as an attempt or
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agreement to transfer or assign (i) any Contract, Governmental Authorization,
franchise, approval, variance, certification, or authority which cannot be
transferred or assigned without Consent, unless such Consent shall have been
given, or (ii) any Contract or claim as to which all the rights and remedies for
enforcement would not fully pass to Buyer incident to the transfers or
assignments required by this Agreement. However, in order for Buyer to realize
the full value of the items described in the foregoing clauses (i) and (ii),
Sellers shall, at the request of and under the direction of Buyer, and in the
name of Buyer or as Buyer may otherwise specify and as permitted by applicable
Legal Requirements, take all actions and do, or cause to be done, all such
things as shall in the opinion of Buyer reasonably be necessary or proper (x)
for the rights and obligations of any Seller thereunder to be preserved, and (y)
for, and to facilitate, the collection of any monies due and payable thereunder,
which Sellers shall hold for the benefit of and pay and deliver promptly to
Buyer.
2.4. ASSETS EXCLUDED. Buyer will not purchase from Sellers under this Agreement,
and the Acquired Assets shall not include, any of the following assets or
properties of Sellers, regardless of whether owned, held, or used in the
operation of the Facility or conduct of the Business (collectively, the
"Excluded Assets"):
a. CURRENT ASSETS. All cash on hand or in banks (or similar
depositories) or in investments, and all account, trade, intercompany, and other
receivables, and all prepaid expenses, deposits, and other current assets,
provided however, Buyer shall receive a credit against the Purchase Price for
the prepaid amounts received by Sellers for patient care to be delivered by
Buyer after Closing;
b. ORDINARY COURSE OF BUSINESS. All assets and properties used,
consumed, or disposed of in the Ordinary Course of Business during the Closing
Period;
c. CORPORATE DOCUMENTS; CERTAIN BUSINESS RECORDS. The corporate minute
books, minutes, Tax records, and other documents and records either required to
be maintained by Sellers' applicable Legal Requirements (but not including
patient medical records at the Facility) or not directly related to and
necessary for Buyer's operation of the Facility and conduct of the Business
after the Closing;
d. EXCLUDED CONTRACTS. All rights and privileges under Contracts not
included in the Assigned Contracts, including, but not limited to, all Contracts
between any Seller and any of its Affiliates;
e. NAME RIGHTS. The names "Paracelsus", "Paracelsus Healthcare", and
"Paracelsus Convalescent" (and all derivatives and variations thereof);
f. PROPRIETARY INFORMATION. (i) All proprietary information contained
in the employee or operation manuals of any Seller that does not directly
pertain to the ongoing operation of the Facility and conduct of the Business in
the Ordinary Course of Business after Closing; (ii) all rights in and to all
owned and licensed computer hardware and software utilized, maintained, and
located at the data center of Paracelsus in Houston, Texas; and (iii) all rights
in and to the PrideTM and ServiceAdvantage programs;
g. THIRD PARTY CLAIMS. Any claims or rights against third parties on
liabilities or obligations not included in the Assumed Liabilities;
h. TAX REFUNDS. All claims for refunds of Taxes for periods ending on
or prior to the Closing Date;
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i. INSURANCE REFUNDS. All rights under insurance policies, including
rights to any cancellation value on the Closing Date or such earlier date;
j. INSURANCE PROCEEDS. Except as otherwise provided herein, all
insurance proceeds and claims relating to any of the Acquired Assets or the
Business;
k. INTERCOMPANY ACCOUNTS. All intercompany accounts of any Seller and
any of its Affiliates;
l. OTHER ASSETS OF PREC. All assets and properties of PREC, other than
the Real Property;
m. ASSETS OF PARACELSUS. All assets and properties of Paracelsus; and
n. SCHEDULED EXCLUDED ASSETS. The property and assets listed in
SCHEDULE 2.4.n. hereto, which shall be completed by mutual agreement of the
parties, initialed, and attached prior to Closing.
SECTION 3.
ASSUMPTION OF LIABILITIES
3.1. ASSUMED LIABILITIES. At the Closing, Buyer will assume, become responsible
for, and obligated to pay, perform, and discharge, only the following
liabilities or obligations of Sellers and Paracelsus from operating the Facility
and conducting the Business (collectively, the "Assumed Liabilities"):
a. ASSIGNED CONTRACTS. The liabilities or obligations of Sellers and
Paracelsus under the Assigned Contracts to the extent such Assigned Contracts
have not been terminated and are not in default on the Closing Date;
b. ASSIGNED LICENSES AND PERMITS. The liabilities or obligations of
Sellers and Paracelsus under the Assigned Licenses and Permits (as listed in
SCHEDULE 2.1.e.), to the extent such Assigned Licenses and Permits have not been
terminated and are not in default on the Closing Date;
c. OTHER TRANSACTION DOCUMENTS. Any and all liabilities or obligations
specifically undertaken by Buyer under this Agreement or any of the other
Transaction Documents; and
d. OTHER ASSUMED LIABILITIES. The liabilities or obligations of Sellers
and Paracelsus, other than as listed on Schedule 2.1.d., as specifically listed
in SCHEDULE 3.1.d. hereto.
3.2. EXCLUDED LIABILITIES. Buyer shall not assume, become responsible for, or
otherwise obligated to pay, perform, or discharge, and the Assumed Liabilities
shall not include, any other liabilities or obligations of Sellers or
Paracelsus, whether accrued, absolute, contingent, or otherwise (collectively,
the "Excluded Liabilities").
SECTION 4.
EARNEST MONEY DEPOSIT; PURCHASE PRICE
4.1. PURCHASE PRICE. The aggregate purchase price to be paid by Buyer to Sellers
for the Acquired Assets (the "Purchase Price") shall be FIVE HUNDRED THOUSAND
DOLLARS ($500,000.00).
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4.2. METHOD OF PAYMENT. The Purchase Price, less any credits against such sum
required by the provisions hereof, shall be paid by Buyer to Sellers, at the
Closing, by wire transfer or delivery of other immediately available funds to
the account or accounts designated by Sellers prior to Closing.
4.3. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among
the Acquired Assets as set forth on SCHEDULE 4.4. hereto, which shall be
completed by mutual agreement of the parties, initialed, and attached prior to
Closing. The parties agree not to take any position on any Tax Return, upon
examination or audit of any Tax Return, in any claim for a Tax refund, or
otherwise that is inconsistent with such allocation of the Purchase Price, and
the parties further agree to duly prepare and timely file such federal income
Tax Returns necessary for reporting such allocation.
4.4. PRORATION AND PAYMENT OF TAXES. Each of Sellers and Buyer shall pay its pro
rata portion of 1998 real property and ad valorem or similar personal property
Taxes on any of the Acquired Assets. At the Closing, Sellers shall pay to Buyer
(in the form of a credit against the Purchase Price) estimated 1999 real
property and ad valorem or similar personal property Taxes pro rated through the
Closing Date based on the 1998 Taxes due. Sellers shall make available to Buyer
the statements and assessments reflecting the 1998 real property and ad valorem
or similar personal property Taxes. Buyer shall pay (or reasonably contest) such
sum to the appropriate Governmental Body when due, prior to becoming delinquent.
Buyer further shall promptly forward to Sellers, after receipt thereof, copies
of all 1999 Tax statements and assessments on any of the Acquired Assets. If the
1999 Taxes due are adjusted such that the Taxes due and payable are greater than
the 1998 Taxes, Sellers shall pay their pro rata portion of any deficiency
promptly after receiving notice that Buyer paid such Taxes. However, if the 1999
Taxes due shall be adjusted such that the Taxes due and payable are less than
the 1998 Taxes, Buyer shall refund to Sellers their pro rata portion of such
reduction upon receiving a copy of the 1999 Tax assessment. Promptly after the
Closing, Buyer shall notify the appropriate Governmental Bodies of the change in
the ownership of the Acquired Assets and its address for receiving any future
Tax notices. Except as specifically provided in this section, Sellers shall have
no other liability for Taxes payable by Buyer (including federal or state income
Taxes) relating to the ownership of the Acquired Assets, operation of the
Facility, conduct of the Business, the Transaction, or otherwise.
SECTION 5.
CLOSING
5.1. CLOSING DATE. Subject to the provisions for termination of this Agreement
in Section 13. hereof, and the provisions for Buyer to extend the date for the
closing in Section 5.3. hereof, the closing for the consummation of the
Transaction contemplated by this Agreement (the "Closing") shall take place at
the offices of Chicago Title Company, 388 Market Street, Suite 1300, San
Francisco, California 94111 at 10:00 a.m., California time, on May 14, 1999 or
on such other date mutually agreed upon in writing by the parties (the
"Scheduled Closing Date"). The date and time on which the Closing actually
occurs, whether on the Scheduled Closing Date or as such may be extended as
permitted hereby, is referred to herein as the "Closing Date". Subject to the
provisions of Section 13. hereof, failure to consummate the Transaction on the
date determined pursuant to this section will not result in the termination of
this Agreement and will not relieve any party of any obligation hereunder.
5.2. EFFECTIVE TIME. The Transaction shall be effective for Tax, accounting, and
all other 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
the parties.
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5.3. EXTENSION DATE. Buyer may, upon extending the date for Closing under the
ULO Purchase Agreement, extend the date for the Closing hereunder to a date or
dates coincident with the closing date or dates established by Buyer under the
ULO Purchase Agreement. Each new Closing Date set by Buyer pursuant to this
section may also be referred to herein as an "Extension Date".
SECTION 6.
ADDITIONAL COVENANTS AND AGREEMENTS
Buyer and Sellers covenant and agree as follows:
6.1. DISCLAIMER OF WARRANTIES. SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES,
EITHER EXPRESS OR IMPLIED, CONCERNING THE ACQUIRED ASSETS, EXCEPT AS
SPECIFICALLY SET FORTH IN SECTION 7. HEREOF. THE ACQUIRED ASSETS SHALL BE SOLD
BY SELLERS AND PURCHASED BY BUYER IN THEIR CONDITION AT CLOSING "AS IS" AND
"WHERE IS", WITH NO WARRANTY OF MERCHANTABILITY OR HABITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE, AND ALL SUCH WARRANTIES, WHETHER EXPRESS OR IMPLIED,
ARE HEREBY DISCLAIMED BY SELLERS.
SECTION 7.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer that, as applicable to it,
and 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 7. (the "Sellers' Disclosure Schedule"), and which such Sellers'
Disclosure Schedule shall be completed by mutual agreement of the parties,
initialed, and attached prior to Closing, each of the following statements is
true and accurate on the Signing Date and will be true and accurate in all
respects on and as of the Closing Date:
7.1. CORPORATE CAPACITY. Each Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the state of its respective
incorporation, with all requisite corporate power and authority to own, operate,
and lease its respective properties and to carry on its respective business as
now being conducted by it. Each Seller has delivered or made available to Buyer
complete and accurate copies of their respective Articles of Incorporation and
Bylaws, as amended and in effect on the Closing Date.
7.2. CORPORATE POWERS; ABSENCE OF CONFLICTS WITH OTHER AGREEMENTS, ETC.
a. The execution and delivery by each Seller of this Agreement and the
other Transaction Documents to which it is a party:
i. Is within the respective corporate power of each Seller and
is not in contravention of the terms of their respective Articles of
Incorporation or Bylaws; and
ii. Will not: (A) result in any breach or acceleration of
maturity of any indenture or Contract to which any Seller is a party or by which
any Seller or any of the Acquired Assets is bound, (B) constitute a violation of
any judgment, decree, or order of any court of competent jurisdiction applicable
to any Seller, and (C) violate any Legal Requirement applicable to any Seller,
the Facility, the Business, or any of the Acquired Assets.
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b. This Agreement has been duly and validly executed and delivered by
each Seller and, as of the Closing, the other Transaction Documents to be
executed and delivered by each Seller will have been duly and validly executed
and delivered by them. Upon approval of this Agreement by the Board of Directors
of each Seller and by Paracelsus, as the shareholder of each Seller, this
Agreement will constitute, and upon such approval and their execution and
delivery of the other Transaction Documents to be executed and delivered by each
Seller, the other Transaction Documents will constitute, the valid, legal, and
binding obligation of each Seller, as the case may be, enforceable against each
such party in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, reorganization, insolvency, or
other Legal Requirements affecting the enforcement of creditors' rights
generally or the availability of equitable remedies.
7.3. GOVERNMENTAL AUTHORIZATIONS. PCHI has all Governmental Authorizations
relating to the ownership of the Acquired Assets and operation of the Business
as are necessary and required for such ownership and operation, except where the
failure to obtain such Governmental Authorizations would not have a material
adverse effect on the ownership of the Acquired Assets or the operation of the
Business. Upon its completion, SCHEDULE 2.1.f. will contain a complete
description of all material Governmental Authorizations of any Governmental Body
and their respective dates of termination or renewal, held by PCHI relating to
the operation of the Facility and conduct of the Business, together with any
formal and specific notices or directives received by Sellers from the
Governmental Body responsible for such items, for which noncompliance with such
notice or directive would likely cause the revocation, suspension or diminution
in term for such item, all of which are, to the best of Sellers' Knowledge, in
good standing.
7.4. SCHEDULED CONTRACTS. SCHEDULE 2.1.d. lists all Contracts to which PCHI is a
party involving obligations relating to the Business (the "Scheduled
Contracts"). Sellers have delivered or made available to Buyer true and correct
copies of all Scheduled Contracts. All of the Scheduled Contracts which Buyer
has agreed to assume pursuant to this Agreement are valid and binding
obligations of the parties thereto, are in full force and effect, and are
enforceable against the parties thereto in accordance with their respective
terms. To the best of Seller's Knowledge, neither PCHI nor any of the other
parties to those Scheduled Contracts which Buyer has agreed to assume pursuant
to the this Agreement (i) are in default under the terms of such Scheduled
Contracts, or (ii) consider PCHI to be in default thereunder. To the best of
Seller's Knowledge, no party to any of the Scheduled Contracts which Buyer has
agreed to assume pursuant to this Agreement intends to terminate or adversely
modify its agreement with respect thereto, or adversely change the volume of
business done thereunder.
7.5. SCHEDULED LEASES. SCHEDULE 2.1.d. lists all personal property leases to
which PCHI is a party relating to the Business and SCHEDULE 2.1.a. lists all
leases to which PCHI is a party relating to the Business involving rental of
real property by PCHI as lessor, lessee, sublessor, or sublessee (the leases
disclosed in SCHEDULE 2.1.d. AND SCHEDULE 2.1.a. collectively the "Scheduled
Leases"). Sellers have delivered or made available to Buyer true and correct
copies of all Scheduled Leases. All of the Scheduled Leases which Buyer has
agreed to assume pursuant to this Agreement are valid and binding obligations of
the parties thereto, are in full force and effect, and are enforceable against
the parties thereto in accordance with their terms. To the best of Seller's
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Knowledge, no event has occurred including, but not limited to, the execution,
delivery and performance of this Agreement and the consummation of the
Transaction which (whether with or without notice, lapse of time or both) would
constitute a default thereunder. To the best of Seller's Knowledge, neither PCHI
nor any of the other parties to any of those Scheduled Leases which Buyer has
agreed to assume pursuant to this Agreement (i) are in default under the terms
of any such Scheduled Lease, or (ii) considers PCHI to be in default thereunder.
PCHI has not, as lessor under any such Scheduled Lease, accepted prepaid rent
more than one month in advance or waived any material rights or obligations
thereunder. No consents or approvals are required for PCHI to assign to Buyer as
contemplated by this Agreement the Scheduled Leases to which it is a party,
except as disclosed in Section 7.5. of Sellers' Disclosure Schedule.
7.6. TITLE TO ACQUIRED ASSETS AND RELATED MATTERS.
a. On the Closing Date, each Seller, as their interests appear, will
hold and convey to Buyer good, valid, and marketable title to the Acquired
Assets (other than the Real Property), a good and valid leasehold estate and
right of possession in the Real Property, free and clear of all Liens, except as
otherwise provided in Section 2.2. or this Section 7.6. hereof.
b. On the Closing Date, no Real Property designated in SCHEDULE 2.1.a.
as a Real Property interest for which a Title Policy (as defined in Section
9.9.a. hereof) shall be obtained, will be subject to any recorded leases,
mortgages, deeds of trust, liens, encumbrances, easements, rights of way,
claims, charges, equities, covenants, conditions, restrictions, reservations,
limitations or other matters affecting such Real Property or Real Property
interest, except for: (i) those matters set forth in SECTION 7.6.b. OF SELLERS'
DISCLOSURE SCHEDULE; (ii) unrecorded leases as set forth in SCHEDULE 2.1.d.;
(iii) Liens for current Taxes; (iv) zoning and building laws, ordinances,
resolutions, and regulations;(v) those matters set forth in the standard
Schedule B, Part 1, Exceptions from Coverage shown on the Title Commitments (as
defined in Section 9.9.a. hereof), as the same may be revised following receipt
of the Survey (as defined in Section 9.10.a. hereof), but only to the extent
that Seller has not created or caused any such matters, or has no Knowledge of
any such matters, or have otherwise disclosed them in this Agreement; (vi)
rights-of-way, building or use restrictions, exceptions, variances, reservations
or other limitations or matters affecting title to or use of the Real Property
(excluding any variance or nonconforming use known to Seller but not disclosed
in this Agreement) which do not materially impair the value of the Real Property
or materially interfere with or impair the current use of the Real Property or
any portion thereof or for which title insurance coverage is being provided to
Buyer; (vii) such easements, rights-of-way, covenants, conditions, restrictions,
reservations, limitations and other encumbrances as do not materially interfere
with or impair the current use of the Real Property or any portion thereof or
materially impair the value of the Real Property, but only to the extent that
Seller has not created or caused any such matters, or has no Knowledge of any
such matters, or have disclosed them in this Agreement, or to the extent they
are disclosed as special exceptions in the Title Commitments provided to Buyer;
and (viii) such minor defects, irregularities, encumbrances, easements,
rights-of-way, encroachments, and clouds on title as typically exist with
respect to properties similar in character to the Real Property, are not caused
by Seller after the date of this Agreement, and as do not: (A) materially
interfere with or impair the current use and operation or any reasonably
foreseeable future development or operation of the Real Property or any part
thereof; (B) materially impair Seller's interest therein; or (C) materially
limit the scope or coverage of the Title Policies to be issued to Buyer
(collectively, the "Permitted Liens").
c. SCHEDULE 2.1.a. and SCHEDULE 2.1.d. include true and accurate
descriptions of all Real Property owned or leased by any Seller and all tangible
personal property (excluding cash, property with an aggregate value in a
non-material amount, and the other Excluded Assets) leased by Seller, in either
case relating to the Acquired Assets. No Seller is aware of or has received any
notice from any Governmental
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Body of any violation of any Legal Requirements in respect of such property or
structures or their use by such Seller. The Acquired Assets consisting of owned
personal property are subject to no Liens, except the security interests of
record set forth in SECTION 7.6.c. OF SELLERS' DISCLOSURE SCHEDULE, which
schedule is a copy of Uniform Commercial Code ("UCC") search reports duly
obtained by Sellers in the last thirty (30) days and which search reports show
security interests of record relating to such Acquired Assets in the State of
California.
d. SECTION 7.6.d. OF SELLERS' DISCLOSURE SCHEDULE describes all
construction work, if any, which any Seller or its predecessors has contracted
for and which is presently in progress relating to the Facility, and also
contains a good faith estimate, as of the date of this Agreement, of the cost to
complete each such project.
7.7. EMPLOYEE BENEFIT PLANS. SECTION 7.7. OF SELLERS' DISCLOSURE SCHEDULE lists
any "employee benefit plans" that are described in ERISA that cover one or more
employees of PCHI employed at the Facility and that are sponsored or contributed
to by PCHI (other than any defined contribution "employee pension benefit plan"
as defined in ERISA, that does not require any contribution by PCHI, any paid
time-off policy or vacation/holiday/sick leave policy, and any "employee welfare
benefit plan" as defined in ERISA, that is sponsored by PCHI).
7.8. LITIGATION AND RELATED MATTERS. There is no Proceeding before any
Governmental Body or before any private arbitration tribunal pending, or to the
best of Seller's Knowledge, threatened against any Seller which materially
affects the Acquired Assets or the Business. No Seller is subject to any
currently existing Proceeding by any Governmental Body which materially affects
the Acquired Assets or the Business.
7.9. PCHI EMPLOYEES.
a. SECTION 7.9.a. OF SELLERS' DISCLOSURE SCHEDULE contains a list of
all of PCHI employees at the Facility as of February 28, 1998, which list
includes the then current estimated annualized salaries based on then current
hourly wage rates and scheduled hours worked, department and job title or other
summary of the responsibilities of such employees, any severance arrangements
with such employees. Since February 28, 1998 there has not been any increase in
the compensation payable or to become payable by PCHI to any such employees, or
any bonus payment or arrangement made to or with any such person, nor has there
been any change in PCHI's personnel policies, except (in either case) in the
Ordinary Course of Business by PCHI in accordance with established personnel
policies.
b. None of PCHI's employees at the Facility are employed by PCHI
pursuant to an employment agreement. SECTION 7.9.b. OF SELLERS' DISCLOSURE
SCHEDULE includes a list of all employees of PCHI at the Facility (other than
"part-time employees" as such term is defined in the Worker Adjustment and
Retraining Notification Act, hereinafter referred to as the "WARN Act") who have
been terminated or laid-off or whose employment with PCHI at the Facility
otherwise has ceased since December 31, 1998.
7.10. LABOR MATTERS. With respect to the Facility, PCHI does not have any
collective bargaining agreements with any labor union and there are no current
negotiations with a labor union. With respect to the Facility, PCHI is in
compliance with all applicable Legal Requirements respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice, except where such
non-compliance would not have a material adverse effect on the Business or the
Acquired Assets. With respect to the Facility PCHI has not received any notice
of an unfair
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labor practice complaint against PCHI pending before the National Labor
Relations Board. With respect to the Facility, there are no labor strikes,
disputes, arbitrations, slowdowns or stoppages actually pending against or
affecting PCHI, nor has PCHI received notice of any threatened labor strike,
dispute, arbitration, slowdown, or stoppage. With respect to the Facility, no
grievances which might have an adverse effect on PCHI or any such arbitration
proceeding arising out of or under collective bargaining agreements is pending
and PCHI has no Knowledge that any claim therefor exists. With respect to the
Facility, PCHI has not experienced any employee strikes since the date it
acquired the Business. PCHI will advise Buyer of any such labor dispute which
shall arise before the Closing.
7.11. NO CONSENTS. No Consent, filing, or registration with or from any
Governmental Body or any other Person is or will be required in connection with
either Seller's execution, delivery, and performance under this Agreement or the
other Transaction Documents to which each is a party.
7.12. TAXES. Each Seller has filed all Tax Returns required by applicable Legal
Requirements to be filed by it and has paid all Taxes shown thereon as due and
payable, other than those presently payable without penalty or interest or those
being contested in good faith by appropriate procedures. There are no Liens with
respect to Taxes (except for liens with respect to Taxes not yet due) upon any
of the Acquired Assets.
7.13. BROKERAGE. Except as set forth in SECTION 7.13. OF SELLERS' DISCLOSURE
SCHEDULE, Sellers have not engaged any financial advisor, broker or similar
entity in respect of the Transaction which may be entitled to a fee or
commission in connection with such Transaction.
7.14. ENVIRONMENTAL. Except as disclosed in SECTION 7.14 OF SELLERS' DISCLOSURE
SCHEDULE, or the Environmental Study:
a. Sellers are currently, and at all times have been, in compliance
with all Environmental Laws (as hereinafter defined) except where failure to
comply with such Environmental Laws would not have a material adverse effect on
the Facility;
b. Sellers have all permits, authorizations or other approvals required
under environmental laws to operate the Assets and the Real Property, and are in
compliance with all such permits, authorizations and approvals except where
failure to comply with such permits, authorizations or approvals, individually
or in the aggregate, would not have a material adverse effect on the Facility;
c. Sellers have not generated, handled, stored, disposed of or released
any Hazardous Substance (as hereinafter defined) on any of the Real Property,
except in compliance with applicable Environmental Laws except where failure to
comply with such Environmental Laws, individually or in the aggregate, would not
have a material adverse effect on the Facility;
d. There are no polychlorinated biphenyls (PCBs) or transformers,
capacitors, ballasts or other equipment that contains dielectric fluid
containing PCBs at levels in excess of fifty parts per million (50 ppm) present,
constructed, placed, deposited, stored, disposed of or located on the Real
Property;
e. There are currently no aboveground or underground storage tanks for
the storage of Hazardous Substances located on the Real Property, and, to the
best knowledge of Sellers, there have never been any such aboveground or
underground storage tanks located on the Real Property;
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f. Sellers have not received any communication (written or oral),
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that Sellers are not in full compliance with Environmental Laws.
There is no Environmental Claim (as defined below) pending or threatened against
any of the Sellers or with respect to the Facility.
g. There are no present or, to the best of Sellers' knowledge, past
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the generation, storage, release, emission, discharge,
presence or disposal of any Hazardous Substance, that could form the basis of
any Environmental Claim against Sellers under any Environmental Law in effect at
any time at or prior to the Closing.
h. The inclusion of any item disclosed in SECTION 7.17.OF SELLERS'
DISCLOSURE SCHEDULE and the inclusion of the reference to the Environmental
Study hereinabove do not constitute admissions by Sellers or Buyer that any
matters disclosed in such Schedule or Environmental Study constitutes a
violation of any Environmental Law.
The following terms shall have the following meanings as used herein:
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or release into the
environment, of any Hazardous Substances at any location, whether or not owned
or operated by the Sellers or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means the federal, state (including specifically,
but not by way of limitation, the State of California), and local environmental,
health or safety laws, regulations, ordinances, rules and policies and common
law in effect on the date hereof and the Closing Date relating to the
generation, use, refinement, handling, treatment, removal, storage, production,
manufacture, transportation, disposal, arranging for disposal, emissions,
discharges, releases or threatened releases of Hazardous Substances, or
otherwise relating to protection of human health, worker safety or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), as the same may be amended or
modified to the date hereof and the Closing Date, including, without limitation,
the statutes and regulations listed below:
Federal Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901, et seq.
Federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. Section 9601, et seq.
Federal Clean Air Act, 42 U.S.C. Section 7401, et seq.
Federal Water Pollution Control Act, Federal Clean Water Act of 1977,
33 U.S.C. Section 1251, et seq. Federal Insecticide, Fungicide, and Rodenticide
Act, Federal Pesticide Act of 1978, 7 U.S.C. Section 136, et seq.
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61
Federal Hazardous Materials Transportation Act, 49 U.S.C. Section 1801,
et seq.
Federal Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq.
Federal Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq.
Federal Occupational Safety & Health Act of 1970, 29 U.S.C. Section
651, et seq.
Medical Waste Tracking Act of 1988, 42 U.S.C. Section 6992, et seq.
Marine Protection Research & Sanctuaries Act of 1972, 33 U.S.C. Section
1401, et seq.
The Act to Prevent Pollution from Ships, 33 U.S.C. Section 1901, et
seq.
California Environmental Quality Act of 1970, (CEQA), California
Government Code, Section 65914.
California Hazardous Waste Control Law, California Health & Safety
Code, Section 25100 et seq.
Nuclear Regulatory Commission Regulations, 10 C.F.R. Part 20 and 10
C.F.R. Part 61.
Public Health Service Regulations, 42 C.F.R. Part 72.
Food & Drug Administration Regulations, 21 C.F.R. Parts 58 and 211.
U.S. Department of Transportation Regulations, 49 C.F.R. Parts 171-179.
U.S. Department of Agricultural Regulations, 9 C.F.R. Parts 50-56.
U.S. Postal Service Regulations, 39 Part III.
"Hazardous Substances" means any toxic or hazardous waste, pollutants
or substances, explosives, radioactive materials, or Medical Waste (as defined
below), including, without limitation, friable asbestos, asbestos-containing
material, PCBs, petroleum products and byproducts, substances defined or listed
as "hazardous substance", "toxic substance", "toxic pollutant", or similarly
identified substance or mixture, in or pursuant to any Environmental Law.
"Medical Waste" means any substance, pollutant, material, or
contaminant listed or regulated under the Medical Waste Tracking Act of 1988, 42
U.S.C. Section 6992, et seq., 49 C.F.R. Section 173, 186, and/or the California
Waste Management Act California Health & Safety Code, Section 117600 et seq.
7.15. FINANCIAL STATEMENTS. Attached as SECTION 7.15. OF SELLERS' DISCLOSURE
SCHEDULE is a true, correct, and complete copy of the unaudited income statement
of the Facility for the twelve months ended December 31, 1998 (the "Income
Statement"), and the unaudited balance sheet of the Facility (the "Balance
Sheet") (the Income Statement and the Balance Sheet are referred to herein
collectively as the "Financial Statements"). To the best of Sellers' knowledge
the Financial Statements have been prepared from and are in substantial
accordance with the books and records of PCHI, and fairly present in all
material respects the operations of the Facility for the period indicated,
except (a) as indicated by the notes thereto, and (b) with respect to any
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changes which would result from year-end audit adjustments which in the
aggregate are not materially adverse to the business or financial condition of
the Facility.
7.16. CENSUS REPORT. Attached as SECTION 7.16. OF SELLERS' DISCLOSURE
SCHEDULE is a true copy of the patient census report for the Facility as of
January 31, 1999.
SECTION 8.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers 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 8. (the
"Buyer's Disclosure Schedule"), and which such Buyer's Disclosure Schedule shall
be completed by mutual agreement of the parties, initialed, and attached prior
to Closing, 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:
8.1. CORPORATE CAPACITY. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation, with all
requisite corporate power and authority to own, operate, and lease its
properties and to carry on its business as now being conducted by it. Buyer has
delivered or made available to Sellers a complete and correct copy of its
Articles of Incorporation and Bylaws, as amended and in effect on the Closing
Date.
8.2. CORPORATE POWERS; ABSENCE OF CONFLICTS WITH OTHER AGREEMENTS, ETC.
a. The execution and delivery by Buyer of this Agreement and the other
Transaction Documents to which it is a party:
i. Is within the corporate power of Buyer and is not in
contravention of the terms of its Articles of Incorporation or Bylaws; and
ii. Will not: (A) result in any breach or acceleration of
maturity of any Contract or indenture to which Buyer is a party, (B) constitute
a violation of any judgment, decree, or order of any court of competent
jurisdiction applicable to Buyer, and (C) violate any Legal Requirement
applicable to Buyer.
b. This Agreement has been duly and validly executed and delivered by
Buyer and, as of the Closing, the other Transaction Documents to be executed and
delivered by Buyer will have been duly and validly executed and delivered by it.
Upon approval of this Agreement by the Board of Directors of Buyer, this
Agreement will constitute, and upon such approval and their execution and
delivery, of the other Transaction Documents to be executed and delivered by
Buyer the other Transaction Documents will constitute, the valid, legal, and
binding obligation of Buyer, enforceable against such party in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, or other laws affecting the enforcement
of creditors' rights generally or the availability of equitable remedies.
8.3. NO CONSENTS. No Consent, filing, or registration with or from any
Governmental Body or any other Person is or will be required in connection with
Buyer's execution, delivery, and performance under this Agreement or the other
Transaction Documents to which it is a party.
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8.4. LITIGATION AND RELATED MATTERS. There is no Proceeding before any
Governmental Body or before any private arbitration tribunal pending, or to the
best of Buyer's Knowledge, threatened against Buyer which materially affects its
assets or properties. Buyer is not subject to any currently existing Proceeding
by any Governmental Body which materially affects its assets or properties.
8.5. NO SALES TAX DUE. At Closing Buyer will possesses all sales tax permits
required for the resale of the inventory purchased hereunder. The inventory
purchased hereunder, if any, is not acquired for consumption or use and will be
resold in the Ordinary Course of Business of Buyer.
8.6. BROKERAGE. Buyer has not engaged any financial advisor, broker or similar
entity in respect of the Transaction which may be entitled to a fee or
commission in connection with such Transaction.
8.7. NO MISLEADING STATEMENTS. No representation or warranty by Buyer contained
in this Agreement, and no statement contained in any schedule (including any
supplement or amendment thereto) and the Transaction Documents to be delivered
at the Closing by or on behalf of Buyer to Sellers or any of its Representatives
in connection with the Transaction, contains or will contain any untrue
statement of a material fact, or, to the best Knowledge of Buyer, omit or will
omit to state any material fact necessary, in light of the circumstances under
which it was or will be made, in order to make the statements herein or therein
not misleading. Copies of all documents described on any schedule hereto which
have been furnished, provided or made available to Sellers or, are hereafter
furnished, provided or made available to Sellers, are or shall be, to the best
of Buyer's Knowledge, true, correct, and complete.
SECTION 9.
RIGHTS AND OBLIGATIONS PENDING CLOSING
9.1. CONFIDENTIAL INFORMATION.
a. Prior to consummation of the Transaction or termination of this
Agreement, the parties to will be providing one another with or have access to
information about each other and the Facility, Acquired Assets, and the Business
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, except on a "need-to-know" basis to its Representatives,
all Confidential Information provided to it by another party to this Agreement;
provided, however, that for 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
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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.
9.2. ACCESS AND INVESTIGATION. During the Closing Period, Seller will afford
Buyer and its Representatives, at mutually agreeable times upon at least
forty-eight (48) hours notice, access to Seller's personnel, properties,
Contracts, books and records, and other documents and data relating to the
Facility, Acquired Assets, and the Business, (ii) furnish Buyer and its
Representatives with copies of all such Contracts, books and records, and other
existing documents and data as Buyer may reasonably request, and (iii) furnish
Buyer and its Representatives with such additional related financial, operating,
and other data and information as Buyer or its Representatives may reasonably
request.
9.3. OPERATION OF FACILITY; CONDUCT OF BUSINESS. During the Closing Period, PCHI
will, subject to the exercise of its reasonable business judgment:
a. Operate the Facility and conduct the Business only in the Ordinary
Course of Business;
b. Use commercially reasonable efforts to preserve intact the current
business organization, keep available the services of the current employees, and
maintain the relations and goodwill with suppliers, customers, landlords,
creditors, employees, agents, and others currently having business relationships
relating to the Business with PCHI;
c. Perform in all material respects its obligations under the Assigned
Contracts and, except in the Ordinary Course of Business, not amend or cancel
any Assigned Contracts;
d. Keep in full force and effect current insurance policies or other
comparable insurance coverage; and
e. Within a reasonable period of time prior to Closing, permit Buyer to
make offers to any of the personnel who work at the Facility or otherwise in the
Business for employment by Buyer subsequent to Closing, which personnel shall be
allowed by PCHI to accept or reject such offers without penalty (for the purpose
of this subsection, the term "penalty" shall not be interpreted to refer to the
availability, or lack of availability, of any severance benefit).
9.4. NEGATIVE COVENANT. Except as otherwise expressly permitted by this
Agreement, during the Closing Period, PCHI will not, without the prior Consent
of Buyer, take any affirmative action, or fail to take any commercially
reasonable action within its control, as a result of which any of the changes or
events listed in Section 9.3. hereof is likely to occur or fail to occur, as the
case may be.
9.5. REQUIRED APPROVALS; GOVERNMENTAL AUTHORIZATIONS. Seller shall assist and
cooperate with Buyer and its Representatives in (i) making all filings that
Buyer elects to make or is required by Legal Requirements to be make in order to
consummate the Transaction, 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. Buyer acknowledges that, except as provided in this
section, Sellers shall have no responsibility for obtaining any
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Governmental Authorizations to or of the transfer of any of the Assigned
Licenses and Permits or for obtaining any necessary Consents to the assignment
of the Assigned Contracts. Notwithstanding, Buyer agrees to use its reasonable
best efforts to secure such Governmental Authorizations and Consents as soon as
practicable and prior to the Closing.
9.6. BEST EFFORTS. During the Closing Period, each of Sellers and Buyer will use
their respective best efforts to cause the conditions in Section 10. and Section
11. hereof to be satisfied.
9.7. ENVIRONMENTAL STUDY.
a. OBLIGATION TO DELIVER. Seller has delivered a Phase I Environmental
Site Assessment of Rheem Valley Convalescent Hospital 348 Rheem Boulevard,
Moraga, California 94556, prepared Environmental Management Group, Inc. ("EMG"),
EMG Corporate Center, 11011 McCormick Road, Baltimore, Maryland 21031 (the
"Environmental Study") to Buyer.
b. OBJECTION; RIGHT TO CURE. Buyer shall have until the earlier of (i)
the Closing Date, and (ii) ten (10) days after the Signing Date to either
approve or reject the environmental condition of the Facility, Acquired Assets,
and the Business. Buyer shall not reject the environmental condition of any
portion of the Facility, Acquired Assets, or the Business, unless the cost to
cure any objections shall reasonably exceed in the aggregate $50,000.00. Buyer
shall give Sellers notice thereof within ten (10) days after receiving the
Environmental Study (the "Approval Period") and, if within fifteen (15) days
after receiving such notice ("Cure Period"), Sellers do not cure, or commence to
cure for items reasonably requiring more than 15 days to cure, the objection to
the environmental conditions that exceed in the aggregate $50,000.00, then Buyer
may, in its sole discretion, terminate this Agreement under Section 13.1.a.
hereof by giving notice thereof to Sellers within two (2) Business Days after
the end of the Cure Period. In the event the timing of the cure procedure set
forth in this subsection conflicts with the Closing Date, in that Sellers cannot
reasonably cure the objection to the environmental condition within the Cure
Period provided, but are making diligent efforts toward that end, the Closing
Date shall be automatically extended by a reasonable number of days to permit
Sellers to complete their cure of Buyer's objection to the environmental
condition. Any item relating to the environmental condition of the Facility,
Acquired Assets, or the Business to which Buyer does not object in writing
within the Approval Period provided herein for making such objections is deemed
to be approved.
9.8. TITLE COMMITMENT; TITLE POLICY.
a. OBLIGATION TO DELIVER.
i. TITLE COMMITMENT. Sellers, at their sole cost and expense,
shall order and deliver to Buyer at least ten (10) Business Days prior to the
Closing Date, (i) for each parcel of Real Property that is designated in
SCHEDULE 2.1.A. as leased by a Seller and for which a title policy will be
delivered (the "Leased Real Property"), one or more binding commitments
(collectively, the "Title Commitment") for the issuance of one or more ALTA
Leasehold Owners Policy of Title Insurance (10-17-92) Form B with extended
coverage, in an aggregate amount equal to $500,000 (collectively, the "Title
Policy"), showing in either PREC or PCHI, as the case may be, good leasehold
title to the Leased Real Property, subject only to the Permitted Liens (as
defined in Section 7.6.b. hereof).
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ii. TITLE POLICY. The Title Policy shall be issued by Chicago
Title Company, 388 Market Street, Suite 1300, San Francisco, California 94111
(the "Title Company"), and shall insure good leasehold title to the Real
Property covered by the Title Commitment in Buyer, subject only to the Permitted
Liens. The Title Policy for the Real Property for which an "as built" survey is
required pursuant to Section 9.10.a.i. hereof shall contain an endorsement
insuring over all printed or typed general exceptions for which insurance may be
obtained by the delivery of such surveys. The Title Policy shall contain a
zoning endorsement and such other endorsements as required hereby. Any
additional endorsements to the Title Policy, and any Mortgagee's Policy of Title
Insurance for any Lender of Buyer, shall be at Buyer's sole cost and expense.
b. OBJECTION; RIGHT TO CURE. Buyer shall have until the earlier of (i)
the Closing Date, and (ii) ten (10) days after receiving the Title Commitment to
either approve or reject the title to the Real Property. If Buyer rejects title
to any portion of the Real Property, it shall give Sellers notice thereof within
ten (10) days after receiving the Title Commitment and, if within fifteen (15)
days after receiving such notice, Sellers do not cure, or commence to cure for
items reasonably requiring more than 15 days to cure, the title objection, then
Buyer may, in its sole discretion, terminate this Agreement under Section
13.1.a. hereof by giving notice thereof to Sellers within two (2) Business Days
after the end of such cure period. In the event the timing of the cure procedure
set forth in this subsection conflicts with the Closing Date, in that Sellers
cannot reasonably cure the title objection within the period provided, but are
making diligent efforts toward that end, the Closing Date shall be automatically
extended by a reasonable number of days to permit Sellers to complete their cure
of Buyer's title objection. Any title item set forth on the Title Commitment
which Buyer does not object to in writing within the period provided herein for
making such objections is deemed to be approved.
9.9. SURVEY.
a. OBLIGATION TO DELIVER.
i. AS-BUILT SURVEY. Sellers, at their sole cost and expense,
shall order and deliver to Buyer at least ten (10) Business Days prior to the
Closing Date, an "as-built" survey for each parcel of Real Property that is
designated in Schedule 2.1.a. as Real Property for which an as-built survey
shall be obtained (the "As-Built Survey"). The As-Built Survey shall be prepared
by a surveyor licensed in the State of California and in accordance with
ALTA-ASCM standards for Class A urban-commercial surveys, and dated as of a date
within two hundred and forty (240) days prior to the Closing, and shall be
certified in favor of Buyer and the Title Company, and shall contain sufficient
detail to provide the Title Company the basis for issuing the Title Policy
without survey exceptions.
ii. BOUNDARY SURVEY. Sellers, at their sole cost and expense,
shall order and deliver to Buyer at least ten (10) Business Days prior to the
Closing Date, a "boundary" survey for each parcel of Real Property that is
designated in Schedule 2.1.a. as Real Property for which a boundary survey shall
be obtained (the "Boundary Survey"). The Boundary Survey shall be prepared by a
surveyor licensed in the State of California, and dated as of a date within two
hundred and forty (240) days prior to the Closing, and shall be certified in
favor of Buyer and the Title Company, and shall contain sufficient detail to
provide the Title Company the basis for issuing the Title Policy without survey
exceptions. The As-Built Survey and Boundary Survey are also sometimes referred
to herein collectively as, the "Survey".
b. OBJECTION; RIGHT TO CURE. Buyer shall have until the earlier of (i)
the Closing Date, and (ii) ten (10) days after receiving the Survey to approve
or reject the matters set forth thereon. If Buyer
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rejects the Survey, it shall give Sellers notice thereof within ten (10) days
after receiving the Survey, and if within fifteen (15) days after receiving such
notice, Sellers do not cure to Buyer's reasonable satisfaction, or commence to
cure for items reasonably requiring more than 15 days to cure, the objection to
the Survey, then Buyer may, in its sole discretion, terminate this Agreement
under Section 13.1.a. hereof by giving notice thereof to Sellers within two (2)
Business Days after the end of such cure period. In the event the timing of the
cure procedure set forth in this subsection conflicts with the Closing Date, in
that Sellers cannot reasonably cure the objection to the Survey within the
period provided, but are making diligent efforts toward that end, the Closing
Date shall be automatically extended by a reasonable number of days to permit
Sellers to complete their cure of Buyer's objection to the Survey. Buyer shall
be deemed to have accepted the matters set forth on the Survey to the extent
Buyer does not object thereto within the period provided herein for making such
objections.
9.10. CASUALTY. If, prior to the Closing, the Facility or any other Acquired
Assets sustain damage or destruction by fire or other casualty that Sellers do
not repair prior to Closing, the following provisions shall apply:
a. If (i) such damage or destruction results in any of the Owned
Facility being unusable for their current purpose, or (ii) the cost to repair
such damage or destruction, or to replace such damaged or destroyed Facility or
other Acquired Assets (collectively, the "Cost to Repair"), is greater than
$250,000 and Seller does not have insurance coverage therefor, Buyer may elect
either to (1) terminate this Agreement by notice thereof to Sellers and all
obligations of the parties hereunder, or (2) consummate the Transaction and
receive as a credit against the Purchase Price the amount of such Cost to
Repair, and thereafter Seller shall have no obligation to repair such damage or
destruction.
b. If the preceding Section 9.10.a. does not apply, then:
(i) If Sellers have insurance coverage for the Cost to Repair
any such damage or destruction, Buyer may elect either to (1) receive from
Sellers all of the proceeds of such insurance paid or payable and pay to Sellers
the full amount of the Purchase Price, or (2) allow Sellers to retain all such
insurance proceeds subject to a reduction of the Purchase Price in the amount
thereof; and
(ii) If, and to the extent that, the Cost to Repair any such
damage or destruction is not covered by insurance, including, without limitation
costs that are subject to a deductible or self-insured retention, the Purchase
Price shall be reduced by an amount equal to that portion of the Cost to Repair
such damage or destruction that is not covered by insurance.
9.11. CONDEMNATION. If, prior to Closing, any part of the Acquired Assets are
condemned, or become subject to any pending or threatened condemnation by any
Governmental Body, Buyer, at its option, may:
a. Close the Transaction, in which event all of the condemnation
proceeds shall be payable to Buyer, and Sellers shall assign all claims therefor
and all right, title and interest therein to Buyer; or
b. Elect to terminate this Agreement under Section 13.1.a. hereof by
giving notice thereof to Sellers within three (3) Business Days after Buyer
receives notification of such condemnation.
9.12. BULK SALES COMPLIANCE. Buyer hereby waives compliance by Sellers with the
provisions of Bulk Sales, Bulk Transfer, Fraudulent Transfer or Conveyance, or
similar Legal Requirements, if any, applicable
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to this Transaction, and Sellers agree to pay and discharge when due all claims
of creditors which could be asserted against Buyer by reason of such
non-compliance to the extent any such liabilities are not specifically assumed
by Buyer hereunder. Notwithstanding the preceding sentence, in its sole
discretion, Sellers may elect to satisfy any such Legal Requirements, in which
case the satisfaction thereof shall be added as a condition to Sellers'
obligations to close under Section 10. hereof.
9.13. NOTIFICATION. During the Closing Period, Seller, on the one hand, and
Buyer, on the other hand, will promptly notify the other party in writing if
Seller, on the one hand, and Buyer, on the other hand, becomes aware of any fact
or condition that causes or constitutes a breach, (i) on the one hand, of any of
the Seller's representations and warranties as of the date of this Agreement, or
if the Seller 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, or (ii) on the other hand, of any of the
Buyer's representations and warranties as of the date of this Agreement, or if
Buyer 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 Sellers' Disclosure Schedule or the Buyer's Disclosure
Schedule, as the case may be, if such disclosure schedule were dated the date of
the occurrence or discovery of any such fact or condition, Seller, on the one
hand, and Buyer, on the other hand, will promptly deliver to the other party a
supplement to the applicable disclosure schedule specifying such change, any of
which such supplement is subject to the approval of Seller in its sole
discretion, on the one hand, or Buyer, in its sole discretion, on the other
hand. During the same period, (i) Seller will promptly notify Buyer of the
occurrence of any breach of any covenant of Seller in this Section 9. or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 11. hereof impossible or unlikely, and (ii) Buyer will promptly notify
Seller of the occurrence of any breach of any covenant of Buyer in this Section
9. or of the occurrence of any event that may make the satisfaction of the
conditions in Section 10. hereof impossible or unlikely.
9.14. EMPLOYMENT OF PCHI'S EMPLOYEES; ADDITIONAL EMPLOYEE MATTERS.
a. (i) Prior to Closing, Buyer shall offer, effective as of the
Closing Date, employment to all employees of PCHI employed at the Facility
(including for this purpose, any such employee who elects to be treated as a
retiree of PCHI as of the Closing Date for the purpose of qualifying for certain
employee benefits). Each offer of employment shall be for no less than the
position, wage or salary as such employee currently has. All employees who
accept Buyer's offer of employment shall be referred herein to collectively as,
the "Hired Employees".
(ii) Any individuals offered employment by Buyer shall be
considered "newly hired", and Buyer shall have no liability whatsoever with
respect to any matter relating to the employment of such persons by PCHI prior
to the Closing Date. The provisions of this section shall inure solely to the
benefit of the parties hereto and no third party (including, without limitation,
any employee of PCHI) shall be permitted to rely hereon as a third party
beneficiary or otherwise.
(iii) As to each Hired Employee, Buyer shall also provide
employee welfare benefits and paid time-off that are commensurate with those of
other employees of Buyer having similar positions. Buyer agrees that, for the
purpose of determining welfare benefits coverage and other related matters
(including
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eligibility and participation, but not vesting or benefit accrual, under any
Buyer pension benefit plan), each Hired Employee will be considered to have
commenced employment with Buyer on the date such Hired Employee commenced
uninterrupted employment with PCHI. Notwithstanding the preceding sentence,
Buyer shall not be obligated to provide Hired Employees any accrued sick or
vacation days upon hiring them (except as provided otherwise in Section 9.14.d.
below). For the purpose of determining vesting and benefit accrual under all
Buyer pension benefit plans, each Hired Employee will be considered to have
commenced employment with Buyer on the Employment Commencement Date (as
hereinafter defined). Health benefits coverage provided by Buyer for Hired
Employees (and any dependents thereof) shall apply to covered expenses incurred
on and after the Employment Commencement Date, and Buyer agrees to waive any
limitations for pre-existing conditions with respect to any conditions affecting
any Hired Employees (and any dependents thereof); subject, however, to the
following limitations: (x) the pre-existing condition provisions of PCHI's
health benefit plans shall apply in lieu of the pre-existing condition
provisions of Buyer's plans to all Hired Employees (and their dependents) who
are eligible for benefits under PCHI's health benefits plans as of the Closing
Date but who are subject to pre-existing condition limitations as of the Closing
Date, and (y) the pre-existing conditions limitations under Buyer's medical
benefits plans shall apply to any Hired Employee (and his or her dependents) who
is not eligible for benefits under PCHI's health benefits plans as of the
Closing Date, and any such Hired Employee shall be treated as having been hired
by Buyer on the date such employee commenced employment with PCHI for purposes
of applying such pre-existing condition limitations to such Hired Employee (and
his or her dependents).
(iii) As used herein, the term "Employee Commencement Date"
shall mean the day immediately following the Closing Date; provided, however,
that with respect to any employee who is in paid or unpaid inactive status as of
the Closing Date and to whom Buyer offers employment pursuant to this Section
9.14.a., the term "Employee Commencement Date" shall mean such employee's first
day of employment with Buyer.
b. Subject to the accuracy of Seller's representations and warranties
in Section 7.9., (i) on and after the Closing Date, Buyer shall be responsible
for any and all notices required with respect to Buyer's termination of
employees, and (ii) any liabilities or obligations arising under the WARN Act on
or after the Closing Date shall be those of Buyer and not Seller.
c. After the Closing, Buyer will, upon reasonable request, give
assistance to human resources personnel of PCHI and Paracelsus in the
post-closing administration of the employee benefit plans of PCHI or Paracelsus
as they apply to Hired Employees. For this purpose, "assistance" includes
reasonable access to the pre-Closing personnel records of Hired Employees.
d. Seller agrees that it shall pay the accrued liability of PCHI for
accrued vacation, holiday, and sick day benefits and related taxes that relate
to the Hired Employees prior to the Employee Commencement Date.
9.15. 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 Sellers determine, in their sole discretion. Unless
consented to by Sellers in advance, required by applicable Legal Requirements
prior to the Closing, or required under the terms of a subpoena or order issued
by a Governmental Body, Buyer shall keep this Agreement strictly confidential
and may not make any disclosure of this Agreement or the Transaction to any
Person. Sellers and Buyer will consult with each other concerning the means by
which PCHI's employees, customers, and suppliers and others having dealings with
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PCHI will be informed, if at all, of the Transaction, and Sellers will have the
right to have a Representative present for any such communication.
9.16. CONSENTS TO ASSUMPTION OF LEASES.
a. Seller shall assist and cooperate with Buyer and its representatives
in obtaining, within thirty (30) days from the Signing Date, the consents by the
lessor under the Rheem Valley Lease to the assumption of such lease by Buyer.
Any extension of the Closing Date as provided in Section 5.3 shall extend the
period within which Buyer shall obtain such consents to the extended Closing
Date.
b. If Buyer is unable after using all commercially reasonable means, to
obtain the consents required in Section 9.16.a. within the initial thirty (30)
period, or such extended period as therein provided, then Buyer may in its sole
discretion terminate this Agreement under Section 13.1.a.
9.17. DELIVERY AND APPROVAL OF SCHEDULES.
a. Seller shall deliver the Schedules called for herein upon, or as
soon as reasonably possible after, execution of this Agreement. Except as
otherwise provided for herein, Buyer shall have five (5) days following receipt
of any Schedule, or any designated portion of Sellers' Disclosure Schedule, to
object to any disclosure thereon. Buyer shall notify Sellers in writing within
seven (7) days of receipt of any Schedule or any portion of Sellers' Disclosure
Schedule, if Buyer objects to any disclosure thereon and shall describe in
detail any such objection. Buyer shall not object to any Assigned Contract that
has commercially reasonable terms and is reasonably necessary to the operations
of the Facility.
b. Seller shall have ten (10) days following receipt of Buyers
objection to any such disclosure, to cure such objection and resubmit such
Schedule or portion thereof. If such amended Schedule or portion thereof is not
reasonably acceptable to Buyer, then Buyer may within three(3) days following
receipt of any such amended Schedule or portion thereof, in its sole discretion
terminate this Agreement under Section 13.1.a.
SECTION 10.
CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS TO CLOSE
The obligation of each Seller to close on the Closing Date under this
Agreement is subject to each of the following conditions (any of which may, in
Seller's discretion, be waived, in whole or part) existing on the Closing Date
or such other applicable date:
10.1. REPRESENTATIONS AND WARRANTIES OF BUYER. The representations and
warranties made by Buyer in or pursuant to this Agreement or the other
Transaction Documents shall be 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.
10.2. OBLIGATIONS OF BUYER. Buyer shall have 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.
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10.3. CLOSING CERTIFICATE. The President (or other authorized corporate officer)
of Buyer shall have executed and delivered to Sellers a certificate dated as of
the Closing Date, upon which Sellers and Parcels us may rely, certifying that
the conditions set forth in Section 10.1. and Section 10.2. hereof have been
satisfied as to it.
10.4. SECRETARY'S CERTIFICATE. Sellers shall have received a certificate of the
Secretary (or other authorized corporate officer) of Buyer certifying as true,
accurate, and complete, as of the Closing Date: (a) a copy of the resolutions of
Buyer'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 Buyer of the Transaction; (b) a copy of the resolutions of
Buyer's shareholders authorizing the execution, delivery, and performance of
this Agreement and the other Transaction Documents to which it is a party and
the consummation by Buyer of the Transaction; (c) a certified copy of the
Articles of Incorporation of Buyer issued by the Tennessee Secretary of State;
(d) a copy of the Bylaws of Buyer; and (e) the incumbency of the officer or
officers authorized to execute on behalf of Buyer the Agreement and the other
Transaction Documents to which it is a party.
10.5. LEGAL MATTERS. There must not have been commenced or threatened against
any of Sellers or Buyer, or any 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.
10.6. 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 Sellers 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.
10.7. 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:
a. The Board of Directors of Sellers;
b. Paracelsus, as the shareholder of each Seller;
c. The consent of the lessor to the assignment of the Rheem Valley
Lease to Buyer required by Section 9.16;
d. Any Lender of Seller; and
e. Those Persons listed or referred to in Section 10.7.c of Sellers'
Disclosure Schedule.
10.8. COMPLETION OF SCHEDULES. The schedules to this Agreement identified as to
be completed by mutual agreement of the parties, initialed, and attached prior
to Closing shall have been completed, initialed, and attached.
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10.9. DELIVERY OF TRANSACTION DOCUMENTS. Buyer shall have delivered, or caused
to be delivered, all Purchase Price consideration, documents, instruments,
exhibits, schedules, certificates, and lists required by Section 12.3. hereof to
be delivered at or prior to Closing.
10.10. CLOSING OF THE ULO PURCHASE AGREEMENT. Buyer and Sellers shall have
closed, or close simultaneous with the Closing under this Agreement, the
transactions contemplated by the ULO Purchase Agreement dated the date of this
Agreement and among Sellers and Buyer.
SECTION 11.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligation of Buyer to close on the Closing Date under this
Agreement is subject to each of the following conditions (any of which may, in
the Buyer's discretion, be waived, in whole or part) existing on the Closing
Date or such other applicable date:
11.1. REPRESENTATIONS AND WARRANTIES OF SELLERS. The representations and
warranties made by Sellers in or pursuant to this Agreement or the other
Transaction Documents shall be 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.
11.2. OBLIGATIONS OF SELLERS. Sellers shall have performed and complied in all
material respects with all of their obligations under this Agreement and the
other Transaction Documents which are to be performed or complied with by them
prior to or on the Closing Date.
11.3. CLOSING CERTIFICATE. The President (or other authorized corporate officer)
of each Seller shall have executed and delivered to Buyer a certificate dated as
of the Closing Date, upon which Buyer may rely, certifying that the conditions
set forth in Section 11.1. and Section 11.2. hereof have been satisfied.
11.4. SECRETARY'S CERTIFICATE OF SELLERS. Buyer shall have received a
certificate of the Secretary (or other authorized corporate officer) of each
Seller certifying as true, accurate, and complete, as of the Closing Date: (a) a
copy of the resolutions of Seller'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 Seller of the
Transaction; (b) a copy of the resolutions of Seller's shareholder authorizing
the execution, delivery, and performance of this Agreement and the other
Transaction Documents to which it is a party and the consummation by Seller of
the Transaction; (c) a certified copy of the Articles of Incorporation of Seller
issued by the California Secretary of State; (d) a copy of the Bylaws of Seller;
and (e) the incumbency of the officer or officers authorized to execute on
behalf of Seller the Agreement and the other Transaction Documents to which it
is a party.
11.5. SELLERS' INVENTORY. Sellers' shall have at the Facility an inventory of
food products, medical and drug supplies in a quantity and of a quality as may
be required by the California Department of Health for the continued operation
of the Facility.
11.6. LEGAL MATTERS. There must not have been commenced or threatened against
any of Sellers or Buyer, or any their respective Affiliates, any Proceeding (a)
involving any material challenge to, or seeking material
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damages in connection with, the Transaction, or (b) that may have the effect of
preventing or making illegal the Transaction.
11.7. 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 Buyer, 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.
11.8. 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:
a. The (i) Board of Directors of Sellers and, (ii) the shareholder of
each Seller, as to the approval of this Agreement, no later than five (5)
Business Days after the Signing Date;
b. The consent of the lessor to the assignment of the Rheem Valley
Lease to Buyer required by Section 9.16; and
11.9. TITLE COMMITMENT. Buyer shall have received, and be satisfied, in good
faith, with the Title Commitment, as contemplated by, and within the scope of,
Section 9.8. hereof.
11.10. SURVEY. Buyer shall have received, and be satisfied, in good faith, with
the Survey, as contemplated by, and within the scope of, Section 9.9. hereof.
11.11. TITLE POLICY. Buyer shall have received, and be satisfied, in good faith,
with the Title Policy, as contemplated by, and within the scope of, Section 9.8.
hereof; provided however the actual Title Policy may be delivered post Closing
directly to Buyer by the Title Company according to the preparation and issuance
requirements of the Title Company
11.12. COMPLETION OF SCHEDULES. The schedules shall have been completed.
11.13. DELIVERY OF TRANSACTION DOCUMENTS. Seller shall have delivered, or caused
to be delivered, all documents, instruments, exhibits, schedules, certificates,
and lists required by Section 12.1. hereof to be delivered at or prior to
Closing.
SECTION 12.
DELIVERIES AT CLOSING; POST-CLOSING FURTHER ASSURANCES
12.1. DELIVERIES BY SELLERS. Sellers shall deliver, or cause to be delivered, to
Buyer or such other Person as required hereby, at the Closing:
a. GOVERNMENTAL CERTIFICATES. A Certificate of Good Standing and/or
Certificate of Existence for Sellers issued by the appropriate Governmental Body
of the State of California, dated within thirty (30) days prior to the Closing
Date;
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b. UCC, JUDGMENT, AND TAX LIEN SEARCH REPORT. A Uniform Commercial
Code, judgment, and tax lien search report for PCHI for the California Secretary
of State and Contra Costa County, California, dated within thirty (30) days
prior to the Closing Date;
c. CLOSING CERTIFICATE. The Closing Certificates of Sellers, as
required by Section 11.3. hereof;
d. SECRETARY'S CERTIFICATE. The Secretary's Certificates of Sellers, as
required by Section 11.4. and Section 11.5. hereof;
e. BILL OF SALE. A bill of sale conveying good, valuable, and
marketable title to the Acquired Assets (other than the Real Property) (the
"Bill of Sale") in the substantially the form of APPENDIX 12.1.e.
f. ASSIGNMENT AND ASSUMPTION AGREEMENT. An assignment and assumption
agreement evidencing Sellers' assignment and transfer of the Assigned Contracts,
and Buyer's assumption of the Assumed Liabilities (the "Assignment and
Assumption Agreement") in substantially the form of APPENDIX 12.1.f.
g. RHEEM VALLEY LEASE ASSUMPTION AGREEMENT. A lease assumption
agreement assigning to Buyer the Rheem Valley Lease (the "Rheem Valley Lease
Assumption Agreement") substantially in the form of APPENDIX 12.1.g.;
h. CONSENTS. Copies or other satisfactory evidence of any required
Consents to the Transaction;
i. TITLE COMPANY DOCUMENTS. Any instruments or documents required by
the Title Company to be delivered in order for the Title Company to issue and
deliver the Title Policy;
j. TITLE POLICY. The Title Policy, as required by Section 9.8 hereof,
provided however the actual Title Policy may be delivered post Closing directly
to Buyer by the Title Company according to the preparation and issuance
requirements of the Title Company;
k. POSSESSION. Possession, or constructive possession, of the Acquired
Assets, as required by Section 2.1. hereof; and
l. OTHER DOCUMENTS. Such other documents necessary for the consummation
of the Transaction as Buyer may reasonably request.
12.2. FURTHER ASSURANCES BY SELLERS. From time to time after the Closing, upon
Buyer's request, Sellers agree 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 Buyer of the Acquired Assets.
12.3. DELIVERIES BY BUYER. Buyer shall deliver, or cause to be delivered, to
Sellers or such other Person as required hereby, at the Closing:
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a. GOVERNMENTAL CERTIFICATES. A Certificate of Good Standing and/or
Certificate of Existence for Buyer issued by the appropriate Governmental Body
of the State of California, dated within thirty (30) days prior to the Closing
Date;
b. CLOSING CERTIFICATE. The Closing Certificate of Buyer, as required
by Section 10.3. hereof;
c. SECRETARY'S CERTIFICATE. The Secretary's Certificate of Seller, as
required by Section 10.4. hereof;
d. ASSIGNMENT AND ASSUMPTION AGREEMENT. The Assignment and Assumption
Agreement.
e. NON-FOREIGN CERTIFICATION. A Non-Foreign Certification for Buyer
setting forth the matters required to comply with applicable Legal Requirements
(the "Non-Foreign Certification");
f. RHEEM VALLEY LEASE ASSUMPTION AGREEMENT. The Rheem Valley Lease
Assumption Agreement;
g. CONSENTS. Copies or other satisfactory evidence of any required
Consents to the Transaction.
h. PURCHASE PRICE. (i)The portion of the Purchase Price to be paid in
cash at the Closing, as required by Section 2.3. hereof and (ii) the Note;;
i. OTHER DOCUMENTS. Such other documents necessary for the consummation
of the Transaction as Buyer may reasonably request.
12.4. FURTHER ASSURANCES BY BUYER. From time to time after the Closing, upon any
Seller's request, Buyer agrees to execute and deliver such additional
instruments of assumption and take such further actions as may be required in
conformity with this Agreement and the other Transaction Documents for the
complete assumption by Buyer of the Assumed Liabilities.
SECTION 13.
TERMINATION
13.1. TERMINATION EVENTS. This Agreement may, by notice given prior to or at the
Closing, be terminated:
a. By Buyer for any or all of the reasons specified in, and as
permitted by, Section 9.7.b. for an uncured objection to the environmental
condition, Section 9.8.b. for an uncured objection to title, Section 9.9.b. for
an uncured objection to the Survey, Section 9.10. for a condemnation by a
Governmental Body, Section 9.16.b. for the failure to obtain the required
consents to the assumption of the Rheem Valley Lease, or Section 9.17.b. based
upon an objection to a Schedule.
b. By Sellers, acting together, on the one hand, or Buyer, on the other
hand, if a material breach of any provision of this Agreement has been committed
by the other party and such breach has not been waived;
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c. (i) By Sellers, acting together, if any of the conditions in
Section 10. 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 Sellers to comply with any of their respective obligations hereunder)
and Sellers have not waived such conditions on or before the Closing Date; or
(ii) By Buyer if any of the conditions in Section 11. 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 Buyer to
comply with its obligations hereunder) and Buyer has not waived such conditions
on or before the Closing Date;
d. By the consent of Sellers, acting together, on the one hand, and
Buyer, on the other hand;
e. By Sellers, acting together, if the Closing has not occurred (other
than through the failure of Sellers to comply fully with their respective
obligations under this Agreement) at any time after the Scheduled Closing Date
or any extension of the Closing as permitted by Section 5.1; or
f. By Sellers, acting together, on the one hand, or Buyer, on the other
hand, if the Closing has not occurred (other than through the failure of any
party seeking to terminate to comply fully with its respective obligations under
this Agreement) within sixty (60) days after the Scheduled Closing Date, or such
later date as the parties may in writing agree upon.
13.2. EFFECT OF TERMINATION. Except as otherwise provided herein, each party's
right of termination under Section 13.1. hereof is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 13.1. hereof, all further obligations of the
parties will terminate, except that the obligations in Section 9.1., Section
16.2., and Section 13.3.b. hereof will survive; provided, however, that if this
Agreement is terminated by a party because of the breach of the Agreement by
another party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination.
13.3. CONSEQUENCES OF TERMINATION.
a. IN GENERAL. In the event of the termination of this Agreement, this
Agreement shall become null and void, and there shall be no liability or
restrictions on the future activities on the part of any party hereto, except in
the event of termination by a party caused by the willful acts or omissions of
the other party, and except as provided in Section 9.1. and Section 16.2.
hereof.
13.4. BUYERS RIGHTS. Nothing herein shall prevent Buyer from specifically
enforcing its rights hereunder or seeking damages for any breach of this
Agreement by Sellers, except as may be governed by Section 15.
SECTION 14.
POST-CLOSING COVENANTS AND AGREEMENTS
14.1. CHANGE OF NAME. Buyer agrees that it will cause all signs, if any,
incorporating the names "Paracelsus", "Paracelsus Healthcare", or "Paracelsus
Convalescent" (and all derivatives and variations thereof) which are located at
any of the Real Property to be removed or modified as soon as reasonably
practicable after the Closing Date and in any event within thirty (30) days
after the Closing Date, so that such names are no longer used at such Real
Property.
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14.2. PRESERVATION AND ACCESS TO BOOKS AND RECORDS AFTER THE CLOSING.
a. After the Closing, Buyer shall keep and preserve all medical records
and medical charts existing as of the Closing of patients of the Business for so
long as Buyer is required by applicable Legal Requirements to maintain such
records (but in no event less that seven (7) years, beginning on the Closing
Date). Buyer acknowledges that as a result of entering into this Agreement and
operating the Business, it will gain access to patient and other information
which is subject to Legal Requirements concerning confidentiality. Buyer agrees
to abide by any such Legal Requirements relating to the confidential information
it acquires. Buyer agrees after Closing to maintain the patient records at the
Business in accordance with applicable Legal Requirements (including, if
applicable, Section 1861(v)(i)(I) of the Social Security Act (42 U.S.C. Section
1395x(v)(1)(I)) and requirements of relevant insurance carriers. In addition,
Seller shall be entitled to remove from the Facility any such patient records,
but only for purposes of pending litigation involving a patient to whom such
records refer, as certified in writing prior to removal by counsel retained by
Seller in connection with such litigation; provided, however, Seller shall if
reasonably possible use copies of patient records, where appropriate. Any
original patient records so removed from the Facility shall be promptly returned
to Buyer following its use by Seller. Notwithstanding the foregoing provisions,
Seller shall not be entitled to review, have access to, have copies of or remove
from the Facility any medical records or patient charts relating to any period
after the expiration of the applicable statute of limitations expires for the
bringing of any action against Seller for its operation of the Facility of
conduct of the Business prior to the Closing Date.
b. After the Closing, Buyer shall keep and preserve all other records
of the Business existing as of the Closing which are delivered to Buyer by
Sellers for a period of seven (7) years or such longer period (if any) as such
records are required to be kept and preserved by any Legal Requirements. After
the Closing, upon reasonable written notice by Seller to Buyer, Seller shall be
entitled, during regular business hours, to have access to and make copies of
all records pertaining to the operation of the Business (other than medical
records which shall be governed by the provisions of Section 14.2.a. hereof)
prior to the Closing for any lawful corporate purpose.
c. Should Buyer decide to dispose of any books or records which they
have been obligated to maintain pursuant to this Section 14.2., Buyer shall
advise Seller in writing of such intention and Seller shall have not less than
sixty (60) days after receipt of such notice to elect in writing to have Buyer
deliver such records to Seller.
14.3. COVENANT NOT TO COMPETE. During the period beginning on the Closing Date
and continuing for a period of three (3) years thereafter (the "Restricted
Period"), Sellers each agree that it will not, directly or indirectly, for
itself, its subsidiaries, partnerships or joint ventures or on behalf of any
other person, either as an employee, employer, independent contractor,
consultant, agent, principal, owner, partner, shareholder, investor, corporate
officer, director, or in any other individual or representative capacity, engage
or participate in any manner whatsoever in any nursing home, retirement home or
assisted living facility (the "Restricted Activity") in the geographic area that
is within a fifty (50) mile radius of the Facility as it exists on the Closing
Date (the "Restricted Territory"), without obtaining the prior written consent
of Buyer; provided, however, that Seller (a) may invest in the securities of any
entity (without otherwise participating in the activities of such entity) if (i)
such securities are listed on any national or regional securities exchange or
have been
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registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended, and (ii) Seller does not beneficially own (as defined by Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) in excess of
five percent (5%) of the outstanding equity securities of such entity, and (b)
may, upon notice to Buyer, provide in the Restricted Territory health care
services not offered by Sellers on the Closing Date. Notwithstanding any other
provision hereof, this section shall not apply to restrict any successor or
assign of Seller, whether through a merger, sale of substantially all of its
assets, or other similar transaction. Upon the consummation of any such
transaction, this section shall automatically terminate without any further
notice or action by any party.
14.4. OBLIGATION TO REMIT FUNDS. Each party hereto agrees to remit to the other
party any funds that it receives which under the terms of this Agreement belongs
to the other party within three (3) business days of receipt of such funds.
SECTION 15.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
15.1. SURVIVAL OF REPRESENTATIONS. Notwithstanding any investigation made by or
on behalf of any party, all representations and warranties made by the parties
in this Agreement or pursuant hereto shall survive the Closing and remain
effective for a period of twelve (12) months thereafter, except that the
representations and warranties made by Seller in Section 7.6. hereof shall
survive the Closing and remain effective for the period of the applicable
statute of limitations or similar Legal Requirement. Each party is entitled to
and is hereby deemed to have reasonably relied upon the representations and
warranties of the other party.
15.2. INDEMNIFICATION OF SELLERS. Subject to the provisions of this Section 15.
and only in the event the Closing occurs (Seller otherwise being entitled only
to payment of the Earnest Money Deposit as liquidated damages if the Closing
does not occur), Buyer agrees to indemnify, defend, and hold harmless Sellers,
and their respective predecessors, successors, assigns, officers, directors,
stockholders, employees, Subsidiaries, parents, Affiliates, partners, agents,
attorneys, accountants, financial advisers, Representatives, and insurers
(collectively, the "Seller 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:
a. Any misrepresentation or other breach of any representation or
warranty made by Buyer in this Agreement or in any of the other Transaction
Documents;
b. Any failure to perform or other breach of any covenant, agreement,
or obligation of Buyer in this Agreement or in any of the other Transaction
Documents;
c. Any of the Assumed Liabilities; or
d. Any and all liabilities or obligations of the Business incurred, and
any and all liabilities or obligations relating to the Acquired Assets incurred,
after the Closing Date.
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The foregoing matters giving rise to the rights of the Seller
Indemnified Parties to indemnification hereunder are referred to as the "Seller
Claims".
15.3. INDEMNIFICATION OF BUYER. Subject to the provisions of this Section 15.
and only in the event the Closing occurs (Buyer otherwise being entitled only to
payment of the Earnest Money Deposit if the Closing does not occur), Sellers
agree to indemnify, defend, and hold harmless Buyer, and its predecessors,
successors, assigns, officers, directors, stockholders, employees, Subsidiaries,
parents, Affiliates, partners, agents, attorneys, accountants, financial
advisers, Representatives, and insurers (collectively, the "Buyer Indemnified
Parties"), against and in respect of any Losses, arising or resulting, directly
or indirectly, from or in connection with:
a. Any misrepresentation or other breach of any representation or
warranty made by Sellers in this Agreement or in any of the other Transaction
Documents;
b. Any failure to perform or other breach by Sellers of any covenant,
agreement, or obligation in this Agreement or in any of the other Transaction
Documents; or
c. All liabilities or obligations of PCHI in conducting the Business
prior to the Closing, even if the claim therefor is not made until after the
Closing, other than the Assumed Liabilities.
The foregoing matters giving rise to the rights of the Buyer
Indemnified Parties to indemnification hereunder are referred to as the "Buyer
Claims".
15.4. LIMITATIONS ON SELLERS' LIABILITY. Notwithstanding any other provision
hereof, Sellers shall not be liable for any Losses under this Section 15. in
excess of the aggregate amount of the Purchase Price received by Sellers at the
time the claim for indemnification is made. Further, the indemnification
provided for against Sellers in favor of the Buyer Indemnified Parties shall be,
notwithstanding any other provision hereof, the exclusive remedy of the Buyer
Indemnified Parties for claims against Sellers under or arising from this
Agreement.
15.5. THRESHOLDS. The Seller Indemnified Parties shall have the right to
indemnification under this Section 15. only after and to the extent the Seller
Claims exceed, in the aggregate, the sum of $5,000, provided that this section
shall not apply to payment of any other portion of the Purchase Price. The Buyer
Indemnified Parties shall have the right to indemnification under this Section
15. only after and to the extent the Buyer Claims exceed, in the aggregate, the
sum of $5,000. Once the thresholds in the preceding sentences are satisfied, as
applicable to each party, Buyer shall be liable for any Losses of the Seller
Indemnified Parties in excess thereof, and the Sellers shall be liable for any
Losses of the Buyer Indemnified Parties in excess thereof.
15.6. EFFECT OF TAXES AND INSURANCE. The liability of an Indemnitor under this
Section 15. 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.
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15.7. PROCEDURE FOR INDEMNIFICATION; THIRD PARTY CLAIMS.
a. After receipt by an Indemnitee under this Section 15. 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 15. 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 15.; (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, 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).
15.8. PROCEDURE FOR INDEMNIFICATION; OTHER CLAIMS. A claim for indemnification
for any matter not involving a third-party claim covered by Section 15.7. hereof
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
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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, the parties may pursue any legal
or equitable remedy available to them to resolve the same. If it is determined
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.
SECTION 16.
MISCELLANEOUS
16.1. NOTICES. Any notice or Consent from any party 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 Sellers
Paracelsus Healthcare Corporation
Attn: President
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, Esq.
3500 City Center Tower II
301 Commerce Street
Fort Worth, Texas 76102
Telephone: (817) 878-0530
Telecopier: (817) 335-6935
To Buyer: Sunland Associates, Inc.
Attn: Byron DeFoor
5706 Main Street
Ooltewah, Tennessee, 37363
Telephone: (423) 238-4237
Telecopier: (423) 238-4575
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With a copy (which
shall not constitute
notice) to: Baker, Donelson, Bearman & Caldwell, P.C.
Attn: John Mooney
1800 Republic Centre
Chattanooga, Tennessee 37450-1800
Telephone: (423) 209-4107
Telecopier: (423) 756-3447
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 sent
and confirmation of delivery received, as applicable for the notice procedure
used.
16.2. TRANSACTION COSTS AND EXPENSES. Except as otherwise provided herein, each
party hereunder shall be responsible for and pay its, his, or her, as the case
may be, own costs and expenses, including fees of accountants, attorneys, and
other advisors, incurred by it, him, or her, as the case may be, in connection
with the Transaction; provided, however, that if the transactions contemplated
by this Agreement are 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 parties, together with all reasonable expenses and costs (including
attorneys' fees) incurred by the other parties in connection with enforcing
their rights under this Agreement of this Agreement. Buyer shall pay all
recording fees for recording any deeds, assignments, or other instruments in
connection with the Transaction. Seller shall pay all documentary stamp Taxes,
discretionary surtaxes and intangible Taxes for recording any deeds,
assignments, or other instruments in connection with the Transaction.
16.3. 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 (i) that Sellers
may assign and delegate any of their 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 and (ii) Buyer may assign its rights to any wholly
owned subsidiary of Buyer or an entity the majority of whose equity interest is
owned by Byron DeFoor, provided Buyer shall guarantee obligations of any
assignee or transferee under this Agreement. 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.
16.4. 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.
16.5. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by a court of final jurisdiction, it is the parties' intent that
all other provisions of this Agreement shall remain fully valid, enforceable,
and binding on the parties.
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16.6. 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.
16.7. ENTIRE AGREEMENT; HEADINGS; INCORPORATION BY REFERENCE. This Agreement,
together with the other Transaction Documents, exhibits, schedules, documents,
and instruments referred to herein, constitutes the entire agreement between the
parties relating to the subject matter hereof, and supersedes all previous
agreements, written or oral. Except as provided otherwise in this Agreement,
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
exhibits, schedules, documents, and instruments referred to in this Agreement
are incorporated by reference for all purposes.
16.8. 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 California
applicable to contracts between residents of California that are to be wholly
performed within such state.
b. The parties agree that the courts within Contra Costa County,
California shall have exclusive venue and jurisdiction of same.
c. The prevailing party in any litigation shall be entitled to recover
from the other party reasonable attorney's fees and court costs incurred in the
same, in addition to any other relief that may be awarded.
16.9. TIME OF ESSENCE. Time shall be of the essence in interpreting this
Agreement.
16.10. 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 shall be deemed
an original.
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.
[signatures on following page]
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Buyer: Sellers:
SUNLAND ASSOCIATES, INC. PARACELSUS CONVALESCENT
HOSPITALS, INC.
By: By:
------------------------------- ----------------------------------
Name: Name:
----------------------------- --------------------------------
Title: Title:
---------------------------- -------------------------------
PARACELSUS REAL ESTATE
CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------