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EXHIBIT 2.5
ASSET SALE AGREEMENT
between
ODESSA HOSPITAL LTD.,
a Texas limited partnership
and
JLL HOSPITAL, LLC,
a Delaware limited liability company
Dated as of: August 15, 1999
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LIST OF SCHEDULES
SCHEDULE DESCRIPTION
A-1 Subsidiaries
A-2 Hospital
A-3 MOBs
A-4 Other Businesses
1.2(c) Interim Balance Sheet
1.9(a) Owned Real Property
1.9(b) Leased Real Property
1.9(c) Personal Property
1.9(d) Licenses
1.9(e) Leases
1.9(f) Contracts
1.9(g) Prepaids
1.9(m) Names of Hospital
1.9(p) Equity Interests
1.10(d) Excluded Proprietary Assets
1.10(o) Other Excluded Assets
1.11(c) Capital Leases
1.11(i) Other Assumed Obligations
2.3(b) Governmental Notices and/or Approvals
2.4(a) Material Contracts
2.4(b) Incomplete Contracts
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SCHEDULE DESCRIPTION
2.5 Required Consents
2.6(a) Compliance with Law
2.6(b) Compliance with Environmental Laws
2.7(a) Title to Real Property
2.7(b) Title; Sufficiency
2.8(a) Licenses Exceptions
2.8(b) JCAHO Accreditation Periods
2.8(c) Medicare and Medicaid Certification
2.8(d) Audit Periods
2.8(g) Medical Staff Matters
2.10 Financial Statements
2.11 Legal Proceedings
2.12 Employee Benefits
2.13 Taxes
2.13(c) Tax Liens
2.14 Personnel List
2.14 Insurance
2.18 Undisclosed Liabilities
2.19 Y2K Compliance
3.4 Third Party Consents - Purchaser
3.5 Brokers - Purchaser
3.7 Legal Proceedings - Purchaser
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SCHEDULE DESCRIPTION
7.10 Permitted Title Exceptions
11.1(b) Allocation of Purchase Price
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LIST OF EXHIBITS
EXHIBIT DESCRIPTION
1.6.1 Bill of Sale
1.6.2 Real Estate Assignments
1.6.3 Limited Warranty Deeds
1.6.9 Transitional Services Agreements
-Information Technology Transition
Services Agreement
-License Agreement for Policy and
Procedure Manuals
-Management Services Agreement
1.6.10 Business Services Agreement
1.6.11 Employee Leasing Agreement
1.6.13 Landlord Estoppel Certificate
4.13 Environmental Survey
5.9 Group Purchasing Contract
6.5 Opinion of Purchaser's Counsel
7.8 Opinion of Seller's In-House Counsel
7.11 Financing Letter
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TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS; SALE AND TRANSFER OF ASSETS;
CONSIDERATION; CLOSING...........................................................................8
1.1 Definitions.....................................................................................8
1.2 Purchase and Sale of Assets; Purchase Price....................................................10
1.3 Inventory......................................................................................11
1.4 Post-Closing Adjustment to Purchase Price......................................................11
1.5 Closing Date...................................................................................12
1.6 Items to be Delivered by Seller at Closing.....................................................12
1.7 Items to be Delivered by Purchaser at Closing..................................................14
1.8 Prorations and Utilities.......................................................................15
1.9 Transfer of Seller Assets......................................................................15
1.10 Excluded Assets................................................................................17
1.11 Assumed Obligations............................................................................18
1.12 Excluded Liabilities...........................................................................19
1.13 [Intentionally Omitted]........................................................................21
1.14 Disclaimer of Warranties.......................................................................21
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER........................................................21
2.1 Authorization..................................................................................21
2.2 Binding Agreement..............................................................................22
2.3 Organization and Good Standing; No Violation...................................................22
2.4 Contracts and Leases...........................................................................22
2.5 Required Consents..............................................................................23
2.6 Compliance With Laws and Contracts.............................................................23
2.7 Title; Sufficiency.............................................................................25
2.8 Certain Representations With Respect to the Hospital...........................................25
2.9 Brokers and Finders............................................................................27
2.10 Financial Statements...........................................................................27
2.11 Legal Proceedings..............................................................................27
2.12 Employee Benefits..............................................................................27
2.13 Taxes and Tax Returns..........................................................................28
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TABLE OF CONTENTS
(CONTINUED)
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2.14 Personnel......................................................................................29
2.15 Insurance......................................................................................29
2.16 Solvency.......................................................................................30
2.17 No Untrue or Inaccurate Representations or Warranties..........................................30
2.18 Absence of Undisclosed Liabilities.............................................................30
2.19 Y2K............................................................................................30
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................................................31
3.1 Authorization..................................................................................31
3.2 Binding Agreement..............................................................................31
3.3 Organization and Good Standing.................................................................31
3.4 No Violation...................................................................................31
3.5 Brokers and Finders............................................................................31
3.6 Legal Proceedings..............................................................................32
3.7 Solvency.......................................................................................32
3.8 Intentionally Omitted..........................................................................32
3.9 Intentionally Omitted..........................................................................32
3.10 No Other Business or Operations................................................................32
ARTICLE 4 COVENANTS OF SELLER.............................................................................32
4.1 Access and Information; Inspections............................................................32
4.2 Preserve Accuracy of Representations and Warranties............................................33
4.3 Conduct of Business............................................................................33
4.4 Negative Covenants.............................................................................33
4.5 Required Approvals.............................................................................34
4.6 Additional Financial Information...............................................................34
4.7 No-Shop........................................................................................34
4.8 Seller's Efforts to Close; Audited Financial Statements........................................35
4.9 Title Matters..................................................................................36
4.10 Termination of Hospital's Employees............................................................36
4.11 Termination Cost Reports.......................................................................36
4.12 Hart-Scott-Rodino Act Filings..................................................................36
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TABLE OF CONTENTS
(CONTINUED)
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4.13 Environmental Survey...........................................................................37
4.14 Noncompetition.................................................................................37
4.15 Enforceability.................................................................................37
4.16 [Intentionally Omitted]........................................................................38
4.17 Y2K Compliance Program.........................................................................38
4.18 Supplements to Disclosure Schedule.............................................................38
ARTICLE 5 COVENANTS OF PURCHASER..........................................................................38
5.1 Purchaser's Efforts to Close...................................................................38
5.2 Required Approvals.............................................................................38
5.3 Certain Employee Matters.......................................................................39
5.4 Use of Business Names..........................................................................41
5.5 Excluded Assets................................................................................41
5.6 Confidentiality................................................................................41
5.7 Enforceability.................................................................................41
5.8 Hart-Scott-Rodino Act Filings..................................................................42
5.9 Group Purchasing Contract......................................................................42
5.10 Acknowledgement Regarding Year 2000 Compliance.................................................42
5.11 Waiver of Bulk Sales Law Compliance............................................................42
5.12 Preserve Accuracy of Representations and Warranties............................................43
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...................................................43
6.1 Closing of Related Asset Sale Transaction......................................................43
6.2 Failure to Exercise Right of First Refusal.....................................................43
6.3 Warranties True and Correct....................................................................43
6.4 Signing and Delivery of Instruments............................................................43
6.5 Unfavorable Action or Proceeding...............................................................43
6.6 Performance of Covenants.......................................................................43
6.7 Opinion of Counsel for Purchaser...............................................................43
6.8 Hart-Scott-Rodino Filings......................................................................44
6.9 Consents, Approvals and Authorizations.........................................................44
6.10 Exhibits and Schedules.........................................................................44
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER................................................44
7.1 Closing of Related Asset Sale Transaction......................................................44
7.2 Failure to Exercise Right of First Refusal.....................................................44
7.3 Warranties True................................................................................44
7.4 Consents, Approvals and Authorizations.........................................................45
7.5 Signing and Delivery of Instruments............................................................45
7.6 Performance of Covenants.......................................................................45
7.7 Unfavorable Action or Proceeding...............................................................45
7.8 Hart-Scott-Rodino Filings......................................................................45
7.9 Governmental Concurrences......................................................................45
7.10 Opinion of Counsel.............................................................................45
7.11 Exhibits and Schedules.........................................................................45
7.12 Title Insurance Policy.........................................................................46
7.13 Financing......................................................................................46
7.14 Material Adverse Change........................................................................46
7.15 Audit..........................................................................................46
ARTICLE 8 TERMINATION.....................................................................................46
8.1 Termination....................................................................................46
8.2 Termination Consequences.......................................................................47
8.3 Costs..........................................................................................47
ARTICLE 9 POST-CLOSING MATTERS............................................................................47
9.1 Excluded Assets and Excluded Liabilities.......................................................47
9.2 Preservation and Access to Records After the Closing...........................................48
ARTICLE 10 SURVIVAL AND INDEMNIFICATION....................................................................49
10.1 Survival.......................................................................................49
10.2 Indemnification of Purchaser by Seller.........................................................50
10.2.1 Indemnification.......................................................................50
10.2.2 Indemnification Limitations...........................................................50
10.3 Indemnification of Seller by Purchaser.........................................................52
10.3.1 Indemnification.......................................................................52
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(CONTINUED)
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10.3.2 Indemnification Limitations...........................................................52
10.4 Method of Asserting Claims.....................................................................53
10.5 Exclusive......................................................................................56
10.6 Reduction of the Purchase Price................................................................56
ARTICLE 11 TAX AND COST REPORT MATTERS.....................................................................56
11.1 Tax Matters; Allocation of Purchase Price......................................................56
11.2 Cost Report Matters............................................................................57
11.3 Transition Services............................................................................57
ARTICLE 12 MISCELLANEOUS PROVISIONS........................................................................59
12.1 Further Assurances and Cooperation.............................................................59
12.2 Successors and Assigns.........................................................................59
12.3 Governing Law..................................................................................59
12.4 Amendments.....................................................................................59
12.5 Exhibits, Schedules and Disclosure Schedule....................................................59
12.6 Notices........................................................................................59
12.7 Headings.......................................................................................61
12.8 Confidentiality and Publicity..................................................................61
12.9 Fair Meaning...................................................................................61
12.10 Gender and Number; Construction................................................................61
12.11 Third Party Beneficiary........................................................................61
12.12 Expenses and Attorneys' Fees...................................................................61
12.13 Counterparts...................................................................................62
12.14 Entire Agreement...............................................................................62
12.15 No Waiver......................................................................................62
12.16 Severability...................................................................................62
12.17 Arbitration....................................................................................63
12.17.1 Forum.................................................................................63
12.17.2 Law...................................................................................63
12.17.3 Selection.............................................................................63
12.17.4 Administration........................................................................63
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(CONTINUED)
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12.17.5 Rules.................................................................................63
12.17.6 Award.................................................................................63
12.18 Time is of the Essence.........................................................................63
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ASSET SALE AGREEMENT
[Odessa Hospital Assets]
This Asset Sale Agreement (the "Agreement") is made and entered into as
of the (15th) day of August, 1999 (the "Effective Date") by and between Odessa
Hospital Ltd., a Texas limited partnership ("Seller"), and JLL Hospital, LLC, a
Delaware limited liability company ("Purchaser").
R E C I T A L S:
A. Seller (I) engages in the business of delivering acute care
services to the public through the acute care hospital known as Odessa Regional
Hospital (the "Hospital"), (II) owns and operates certain medical office
buildings incident to the operation of the Hospital as specifically identified
on Schedule A-3 (the "MOBs"), and (III) owns and operates other healthcare
businesses incident to the operation of the Hospital as specifically identified
on Schedule A-4 (the "Other Businesses") (the Hospital, MOBs and the Other
Businesses are referred to herein collectively as the "Hospital").
B. Purchaser desires to purchase from Seller, and Seller desires to
sell to Purchaser, substantially all of the assets with respect to the operation
of the Hospital, for the consideration and upon the terms and conditions
contained in this Agreement.
C. Purchaser has entered into an agreement with Tenet Healthcare
Corporation, a Nevada corporation ("Tenet") pursuant to which Purchaser intends
to purchase and wholly-owned subsidiary corporations and majority-owned
partnerships of Tenet intends to sell, substantially all of the assets with
respect to the operation of various Tenet hospitals in the States of Florida,
Texas and Arizona.
D. The parties acknowledge that the sale of the Assets is subject
to a right of first refusal held by the limited partners of Seller.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants contained in this Agreement, and for their mutual
reliance, the parties hereto agree as follows:
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ARTICLE 1
DEFINITIONS; SALE AND TRANSFER OF ASSETS;
CONSIDERATION; CLOSING
1.1 Definitions. The terms listed below are defined elsewhere in
this Agreement and, for ease of reference, the section containing the definition
of each such term is set forth opposite such term.
TERM SECTION
---- -------
Accounts Receivable..................................................................Section 1.10(l)
Hospital.............................................................................Recitals
Agency Settlement....................................................................Section 11.2(a)
Aggregate Amount.....................................................................Section 10.2.2(ix)
Agreement............................................................................Preamble
Assets...............................................................................Section 1.9
Assumed Capital Lease Obligations ...................................................Section 1.2(a)
Assumed Obligations..................................................................Section 1.11
Audit Periods........................................................................Section 2.8(d)
Bill of Sale.........................................................................Section 1.6.1
Breaching Party......................................................................Section 8.1(b)
Cash Purchase Price..................................................................Section 1.2
CEO..................................................................................Section 2.10
Claim Notice.........................................................................Section 10.4(a)
Closing Date.........................................................................Section 1.5
Closing..............................................................................Section 1.5
Code.................................................................................Section 2.12(b)
Confidential Information ............................................................Section 5.6
Confidentiality Agreement............................................................Section 5.6
Consultants..........................................................................Section 4.13
Contracts............................................................................Section 1.9(f)
COO..................................................................................Section 2.10
Damages..............................................................................Section 10.2.1
Disclosure Schedule..................................................................Section 2
Document Retention Period............................................................Section 9.2(a)
DOJ..................................................................................Section 4.12
DON..................................................................................Section 2.10
Effective Date.......................................................................Preamble
Effective Time.......................................................................Section 1.5
Environmental Permits................................................................Section 2.6(b)
Environmental Survey.................................................................Section 4.13
Excluded Assets......................................................................Section 1.10
Excluded Liabilities.................................................................Section 1.12
Final Balance Sheet..................................................................Section 1.4
Financial Statements.................................................................Section 2.10
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Fraction.............................................................................Section 11.3(a)
FTC..................................................................................Section 4.12
GAAP.................................................................................Section 1.2
Group Purchasing Contract............................................................Section 1.6.8
Hired Employees......................................................................Section 5.3(a)
Hospital.............................................................................Recitals
Hospital's Employees.................................................................Section 5.3(a)
HSR Act..............................................................................Section 2.3(b)
Indemnified Party....................................................................Section 10.4
Indemnifying Party...................................................................Section 10.4(a)
Indemnity Notice.....................................................................Section 10.4(a)
Independent Auditor..................................................................Section 1.4
Interim Balance Sheet................................................................Section 1.2
Inventory............................................................................Section 1.9(h)
Leased Real Property.................................................................Section 1.9(b)
Leases...............................................................................Section 1.9(e)
Licenses.............................................................................Section 1.9(d)
Liens................................................................................Section 1.2(a)
Meditrust Lease .....................................................................Section 5.14
MOBs.................................................................................Recitals
Nondefaulting Party..................................................................Section 8.1(b)
Notice Period........................................................................Section 10.4(a)
Other Businesses.....................................................................Recitals
Owned Real Property..................................................................Section 1.9(a)
Permitted Exceptions.................................................................Section 7.10
Permitted Liens .....................................................................Section 2.7(b)
Personal Property....................................................................Section 1.9(c)
Post Closing Adjustment Date.........................................................Section 1.4
Prepaids.............................................................................Section 1.9(g)
Purchase Price.......................................................................Section 1.2
Purchaser............................................................................Preamble
Purchaser's Plan.....................................................................Section 5.3(d)
Real Estate Assignments..............................................................Section 1.6.2
Real Property........................................................................Section 1.9(b)
Receivable Records...................................................................Section 1.10(m)
Reconciliation.......................................................................Section 11.3(a)
Related Asset Sale Agreement.........................................................Section 6.1
Relevant Claim.......................................................................Section 10.2.2(ix)
Retained Management Employees........................................................Section 5.3(a)
Seller...............................................................................Preamble
Sick Pay Amount......................................................................Section 1.2
Seller's Cost Reports................................................................Section 11.2(a)
Surveys..............................................................................Section 4.9
Third Party Claim....................................................................Section 10.4(a)
Title Commitment.....................................................................Section 4.9
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Title Company........................................................................Section 4.9
Title Instruments....................................................................Section 4.9
Title Policy.........................................................................Section 4.9
Transition Date......................................................................Section 5.3(a)
Transition Services..................................................................Section 11.3
Transitional Services Agreement......................................................Section 1.6.9
1.2 Purchase and Sale of Assets; Purchase Price.
(a) Subject to the terms and conditions of this Agreement,
Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, the
Assets, free and clear of all liens, pledges, claims, charges, security
interests or other encumbrances ("Liens") other than Permitted Liens. Subject to
the terms and conditions of this Agreement, the aggregate purchase price to be
paid by Purchaser to Seller for the purchase of the Assets shall be (i) Forty
Two Million Dollars ($42,000,000) (a) (the "Purchase Price"), plus or minus (ii)
the amount of Net Working Capital (as defined below) on the Closing Date, minus
(iii) the amount of Seller's capital lease obligations with respect to the
Hospital, if any, that are assumed by Purchaser pursuant to Section 1.11 of this
Agreement (the "Assumed Capital Lease Obligations"), minus (iv) 16.17 percent
(16.17%) of the Sick Pay Amount (the sum of (i), (ii), (iii), and (iv) being
referred to for purposes of this Agreement as the "Cash Purchase Price").
(b) For purposes of this Section 1.2, "Net Working
Capital," as of any date, shall be defined as an amount equal to the difference
between the (i) current assets of Seller with respect to the operation of the
Hospital, which for purposes of this calculation shall include only (a) the
value of the Prepaids, (b) the value of the Inventory, (c) other current assets
associated with the Hospital to the extent they have value and are reflected on
the Financial Statements, and (d) notes receivable held by Seller as to which
the borrower thereunder is a physician providing professional medical services
at the Hospital, which notes are not otherwise included in Net Working Capital
as current assets under (a), (b) or (c) immediately above (the "Physician
Notes"), and (ii) the current liabilities of Seller with respect to the
operation of the Hospital, which for purposes of this calculation shall only
include, to the extent assumed, (a) Accounts Payable, (b) Accrued Expenses, (c)
Accrued Payroll, (d) Accrued Paid Time Off, and (e) Other Current Liabilities
(as such terms are utilized on the Interim Balance Sheet). For purposes of this
Section 1.2, "Sick Pay Amount" shall be defined as the amount of accumulated
sick pay and extended sick pay obligations of Seller to the Hired Employees.
(c) At least three (3) calendar days but no more than ten
(10) calendar days prior to the Closing Date, Seller shall prepare and deliver
to Purchaser the latest available unaudited balance sheet of Seller with respect
to the operation of the Hospital (the "Interim Balance Sheet"). The Interim
Balance Sheet shall (i) be prepared in conformity with generally acceptable
accounting principles consistently applied ("GAAP") to the extent described in
Section 2.10 of this Agreement, (ii) include a calculation of Net Working
Capital, Assumed Capital Lease Obligations and the Sick Pay Amount, and (iii)
shall be attached hereto as Schedule 1.2(c). The amounts set forth in the
Interim Balance Sheet shall be subject to adjustment as provided in Sections 1.3
and 1.4 below. The Cash Purchase Price shall be payable
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by wire transfer of immediately available funds to Seller to the account(s)
specified by Seller to Purchaser in writing, subject to the terms of Section
1.7.1 below.
1.3 Inventory. Seller shall cause an inventory to be taken of the
Inventory by employees or representatives of Seller or its affiliates, with said
inventory to be taken in accordance with Seller's policies and procedures and
the policies and procedures used in connection with determining inventory for
purposes of the preparation of the Financial Statements dated as of May 31,
1999, as near in time as possible to the Closing Date and with the results
extended and adjusted through the Closing Date. Seller shall permit
representatives or employees of Purchaser to observe such inventory process. The
cost of conducting the inventory shall be borne by Seller. All inventory items
shall be valued at the lesser of cost or current market value. The parties
acknowledge that the inventory to be taken pursuant to this Section 1.3 will not
be conducted until immediately prior to the Closing Date and, as such, the
results of such inventory will not be available until some time after the
Closing Date. Accordingly, the parties agree that for purposes of the Interim
Balance Sheet, Net Working Capital shall include the value of the Inventory with
respect to the operation of the Hospital as reflected by the latest available
unaudited balance sheet of Seller. For purposes of the Final Balance Sheet, the
portion of Net Working Capital attributable to the Inventory shall be the value
of the Inventory as determined pursuant to this Section 1.3.
1.4 Post-Closing Adjustment to Purchase Price. Within ninety (90)
calendar days after the Closing Date, the final unaudited balance sheet of the
Hospital as of the Closing Date (the "Final Balance Sheet"), which shall include
a calculation of Net Working Capital, Assumed Capital Lease Obligations and the
Sick Pay Amount as of the Closing Date, shall be prepared by Seller and
delivered to Purchaser. Purchaser, in connection with its review of the Final
Balance Sheet, shall be permitted to review workpapers of Seller or its
accountants with respect to the preparation of the Final Balance Sheet and the
books and records of Seller reasonably related thereto. The Interim Balance
Sheet and the Final Balance Sheet shall be prepared in a manner consistent with
the terms of Section 2.10. If Purchaser disputes any entry on the Final Balance
Sheet that affects the calculation of Net Working Capital, Purchaser shall
notify Seller in writing (which writing shall contain Purchaser's determination
of the amount of the disputed entry) within thirty (30) business days after
Purchaser's receipt of the Final Balance Sheet from Seller. If the difference
between Seller's and Purchaser's respective calculations of Net Working Capital
is equal to or less than five percent (5%) of the amount of Seller's
calculation, Seller's calculation shall be conclusive and binding as between
Purchaser and Seller. If the difference between Seller's and Purchaser's
respective calculations is greater than five percent (5%) of Seller's
calculation, and Purchaser and Seller cannot resolve such dispute within thirty
(30) business days after Purchaser notifies Seller in writing of such dispute,
then the parties shall mutually select a "Big Six" financial accounting firm
other than the two firms then being used by the parties (the "Independent
Auditor"). The Independent Auditor shall review the matter in dispute and,
acting as experts and not as arbitrators, shall promptly decide the proper
amounts of such disputed entries (which decision shall also include a final
recalculation of the Purchase Price). Such decision of the Independent Auditor
shall be conclusive and binding as between Purchaser and Seller, and the costs
of such review shall be borne by both Seller and Purchaser in proportion to the
relevant amount each party's determination has been modified. In the event that
Purchaser
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disputes the Sick Pay Amount and/or the Assumed Capital Lease Obligation, the
parties shall resolve such dispute in substantially the same manner as set forth
in this Section 1.4.
Within thirty-five (35) business days after Purchaser's receipt of the
Final Balance Sheet from Seller or, if disputed by Purchaser, within five (5)
business days after the earlier of (a) the date Purchaser and Seller finally
resolve such dispute and recalculate the Purchase Price accordingly, or (b) the
date of receipt of a decision from the Independent Auditor (the "Post-Closing
Adjustment Date"), either (i) Seller shall pay Purchaser in cash or in other
immediately available funds the amount of any decrease in the Purchase Price, or
(ii) Purchaser shall pay Seller in cash or in other immediately available funds
the amount of any increase in the Purchase Price. If Purchaser or Seller, as the
case may be, shall fail to make such payment to the other on the Post-Closing
Adjustment Date, then the party failing to receive such amount due to it shall
be entitled to receive interest on such unpaid amount at a per annum rate equal
to the prime rate reported by the Wall Street Journal under "Money Rates" on the
Post-Closing Adjustment Date plus two percent (2%) (or the maximum rate allowed
by law, whichever is less) from such defaulting party, such interest accruing on
each calendar day after the Post-Closing Adjustment Date until payment of such
amount and all interest thereon is made.
1.5 Closing Date. The consummation of the transactions contemplated
by this Agreement ("Closing") shall take place at 9:00 a.m. on the later to
occur of (i) the twenty eighth (28th) calendar day following the delivery of the
audited financial statements by Seller pursuant to Section 4.8(b) of this
Agreement and (ii) the forty fifth (45th) calendar day following the Effective
Date, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York 10022 or such other date, time and place as the parties shall mutually
agree (the "Closing Date"), provided that all conditions precedent and other
matters required to be completed as of the Closing Date have been or will be
completed on such date. In the event all conditions precedent and other matters
required to be completed as of the Closing Date have not been completed on such
date, the Closing Date shall occur on the third (3rd) business day following the
last to occur of such conditions or matters. The Closing with respect to the
Hospital shall be deemed to have occurred and to be effective as between the
parties as of 12:01 a.m. (determined by reference to the local time zone in
which the Hospital is located) on the next day after the Closing Date (the
"Effective Time").
1.6 Items to be Delivered by Seller at Closing.
At or before the Closing, Seller shall deliver to Purchaser the
following, duly executed by Seller where appropriate:
1.6.1 General Assignment, Bill of Sale and Assumption of
Liabilities in the form of Exhibit 1.6.1 attached hereto (the "Bill of Sale");
1.6.2 Assignment and Assumption of Real Estate Leases in the
form of Exhibit 1.6.2 attached hereto (the "Real Estate Assignment") with
respect to each Leased Real Property;
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1.6.3 Limited Warranty Deed(s) (or such other deed comparable
to limited warranty deed(s) as is applicable to the jurisdiction at issue) in
the form of Exhibit 1.6.3 attached hereto;
1.6.4 favorable original certificates of good standing, or
comparable status, of Seller, issued by the State of Texas with respect to
Seller, dated no earlier than a date which is seven (7) calendar days prior to
the Closing Date;
1.6.5 an opinion of Seller's general partner's in-house
counsel in substantially the form attached hereto as Exhibit 7.8;
1.6.6 a certificate of the general partner of Seller
certifying to Purchaser (i) the accuracy in all material respects of the
representations and warranties set forth in Article 2 hereof and compliance with
Seller's covenants set forth in this Agreement, (ii) that all material consents
and approvals that are required from any person, entity, governmental body or
regulatory agency in connection with the consummation of the transactions
contemplated by this Agreement by Seller have been obtained, and (iii) that all
of the conditions contained in Article 6 have been satisfied or waived;
1.6.7 a certificate of the corporate Secretary of the general
partner of Seller certifying to Purchaser (i) the incumbency of the officers of
the general partner of Seller on the Effective Date and on the Closing Date and
bearing the authentic signatures of all such officers who shall execute this
Agreement and any additional documents contemplated by this Agreement and (ii)
the due adoption and text of the resolutions of the partners of Seller,
authorizing (a) the transfer of the Assets and Assumed Obligations by Seller to
Purchaser and (b) the execution, delivery and performance of this Agreement and
all ancillary documents and instruments by Seller, and that such resolutions
have not been amended or rescinded and remain in full force and effect on the
Closing Date;
1.6.8 the Group Purchasing Contract which, except as noted in
Section 5.9, shall be substantially in the form of Exhibit 5.9 attached hereto
(the "Group Purchasing Contract");
1.6.9 if requested by Purchaser, the Transitional Services
Agreements, which shall be substantially in the form of Exhibit 1.6.9 (the
"Transitional Services Agreements");
1.6.10 the Business Services Agreement, which shall be
substantially in the form of Exhibit 1.6.10 attached hereto (the "Business
Services Agreement"), pursuant to which Purchaser will bill Seller's accounts
receivable for sixty (60) days following the Closing Date;
1.6.11 the Employee Leasing Agreement, which shall be
substantially in the form of Exhibit 1.6.11 attached hereto (the "Employee Lease
Agreement") pursuant to which Seller shall lease the Hospital Employees to
Purchaser, as contemplated by Section 5.3(a) of this Agreement;
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1.6.12 UCC termination statements for any and all financing
statements (which do not correspond to an Assumed Obligation) filed with respect
to the Assets; and such other instruments, certificates, consents or other
documents as may be reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
1.6.13 an estoppel certificate from the landlord with respect
to each Real Property Lease of the Hospital or an entire MOB (as opposed to an
office or unit of a MOB), or a Real Property Lease that constitutes a material
ground lease, as to which Seller is lessee in the form of Exhibit 1.6.13 hereto;
1.6.14 a certificate of Seller to the extent required under
the Foreign Investment and Real Property Tax Act (FIRPTA); and
1.6.15 such other instruments, certificates, consents or other
documents as may be reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
1.7 Items to be Delivered by Purchaser at Closing.
At or before the Closing, Purchaser shall execute and deliver
or cause to be delivered to Seller the following, duly executed by Purchaser
where appropriate:
1.7.1 payment of the Cash Purchase Price based upon the
Interim Balance Sheet (subject to adjustment as described in Section 1.4), as
adjusted to reflect the prorations provided in Section 1.8 of this Agreement.
1.7.2 a certificate of the President or any Vice President of
Purchaser certifying to Seller (i) the accuracy in all material respects of the
representations and warranties set forth in Article 3 hereof and compliance with
Purchaser's covenants set forth in this Agreement, (ii) that all material
consents and approvals that are required from any person, entity, governmental
body or regulatory agency in connection with the consummation of the
transactions contemplated by this Agreement by Purchaser have been obtained, and
(iii) that all of the conditions contained in Article 7 have been satisfied or
waived;
1.7.3 a certificate of the Secretary of Purchaser certifying
to Seller (i) the incumbency of the officers of Purchaser on the Effective Date
and on the Closing Date and bearing the authentic signatures of all such
officers who shall execute this Agreement and any additional documents
contemplated by this Agreement and (ii) the due adoption and text of the
resolutions of the governing board of Purchaser authorizing the execution,
delivery and performance of this Agreement and all ancillary documents and
instruments by Purchaser, and that such resolutions have not been amended or
rescinded and remain in full force and effect on the Closing Date;
1.7.4 an opinion of Purchaser's counsel in substantially the
form attached hereto as Exhibit 6.5;
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1.7.5 favorable original certificate of good standing, or
comparable status, of Purchaser, issued by the Delaware Secretary of State dated
no earlier than a date which is seven (7) calendar days prior to the Closing
Date;
1.7.6 the Group Purchasing Contract;
1.7.7 if requested by Purchaser, the Transitional Services
Agreements;
1.7.8 the Business Services Agreement;
1.7.9 the Employee Lease Agreement; and
1.7.10 such other instruments, certificates, consents or other
documents as may be reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
1.8 Prorations and Utilities. To the extent not otherwise prorated
pursuant to this Agreement, or as reflected in Net Working Capital on the
Interim Balance Sheet or the Final Balance Sheet (provided that any category of
proration reflected on the Interim Balance Sheet shall also be reflected on the
Final Balance Sheet), Purchaser and Seller shall prorate (as of the Effective
Time), if applicable, real estate and personal property lease payments, real
estate and personal property taxes, assessments and other similar charges
against real estate, plus all other income and expenses which are normally
prorated upon the sale of assets of a going concern. As to power and utility
charges, "final readings" as of the Closing Date shall be ordered from the
utilities; the cost of obtaining such "final readings," if any, to be paid for
equally by Seller and Purchaser.
1.9 Transfer of Seller Assets. On the Closing Date, Seller shall
assign, transfer, convey and deliver to Purchaser, and Purchaser shall acquire,
all of Seller's right, title and interest in and to only the following assets
and properties, free and clear of all Liens (other than Permitted Liens) as such
assets shall exist on the Closing Date with respect to the operation of the
Hospital, such transfer being deemed to be effective at the Effective Time
(collectively, the "Assets"):
(a) all of the real property that is owned by Seller and
used with respect to the operation of the Hospital that is described in Schedule
1.9(a) (such description to include a legal description and address), and
appurtenances belonging thereto (collectively, the "Owned Real Property");
(b) all of the real property that is leased by Seller and
used with respect to the operation of the Hospital that is described in Schedule
1.9(b) together with all buildings, improvements and fixtures located thereupon
and all construction in progress (collectively, the "Leased Real Property") (the
Owned Real Property and the Leased Real Property are collectively referred to
herein as the "Real Property");
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(c) all of the tangible personal property owned by Seller
with respect to the operation of the Hospital, including all equipment,
furniture, fixtures, machinery, vehicles, office furnishings, and leasehold
improvements (the "Personal Property"), including, without limitation, the
Personal Property described in Schedule 1.9(c);
(d) all of Seller's rights, to the extent assignable or
transferable, to all licenses, permits, approvals, certificates of need,
certificates of exemption, franchises, accreditations and registrations and
other governmental licenses, permits or approvals issued to Seller with respect
to the operation of the Hospital (the "Licenses"), including, without
limitation, the Licenses described in Schedule 1.9(d);
(e) all of Seller's interest, to the extent assignable or
transferable, in and to all real property and personal property leases with
respect to the operation of the Hospital (the "Leases"), including, without
limitation, those leases described in Schedule 1.9(e);
(f) all of Seller's interest in and to all contracts and
agreements (including, but not limited to, purchase orders) with respect to the
operation of the Hospital (the "Contracts") including, without limitation, those
Contracts described in Schedule 1.9(f);
(g) all of those advance payments, prepayments, prepaid
expenses, deposits and the like which exist as of the Closing Date, subject to
the prorations provided in Section 1.8 of this Agreement, which were made with
respect to the operation of the Hospital and with respect to which Purchaser
will receive the benefit after the Closing Date (the "Prepaids"), the current
categories and amounts of which are set forth on Schedule 1.9(g);
(h) except as excluded by Section 1.10(j), all inventories
of supplies, drugs, food, janitorial and office supplies and other disposables
and consumables located at the Hospital, or used with respect to the operation
of the Hospital (the "Inventory");
(i) all documents, records, operating manuals, files and
computer software with respect to the operation of the Hospital, including,
without limitation, all patient records, medical records, employee records,
financial records with respect to the operation of the Hospital, equipment
records, construction plans and specifications, and medical and administrative
libraries;
(j) to the extent assignable, all rights in all warranties
of any manufacturer or vendor in connection with the Personal Property;
(k) all goodwill of the businesses evidenced by the Assets;
(l) all insurance proceeds arising in connection with
property damage to the Assets occurring after the Effective Date and on or prior
to the Closing Date, to the extent not expended on the repair or restoration of
the Assets;
(m) the names, symbols and telephone numbers used with
respect to the operation of the Hospital, including, without limitation, the
name of the Hospital set forth on Schedule 1.9(m) and all variants thereof;
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(n) any current assets of Seller with respect to the
operation of the Hospital (which are not otherwise specifically described above
in this Section 1.9) which are included in Net Working Capital, as determined
pursuant to Sections 1.2 and 1.4;
(o) all claims of Seller against third parties with respect
to the Assets (whether known or unknown, contingent or otherwise) arising after
the Effective Date and on or prior to the Closing Date, other than those claims
as to which Seller has a right to money damages based on a prior expenditure of
money with respect to such Assets; and
(p) all equity interests held by Seller that are described
on Schedule 1.9(p);
PROVIDED, HOWEVER, that the Assets shall not include the Excluded Assets as
defined in Section 1.10 below.
1.10 Excluded Assets. Notwithstanding anything to the contrary in
Section 1.9, Seller shall retain all assets owned directly or indirectly by it
(or any of its affiliates) which are not among the Assets, including without
limitation the following assets of Seller (collectively, the "Excluded Assets"):
(a) cash and short-term investments;
(b) all intercompany receivables of Seller or any
affiliates of Seller;
(c) any current assets of Seller with respect to the
operation of the Hospital which are not included in Net Working Capital, as
determined pursuant to Sections 1.2 and 1.4;
(d) computer software, programs and hardware which is
proprietary to Seller or any affiliates of Seller, data processing system
manuals and licensed software materials, as more particularly described in
Schedule 1.10(d);
(e) all of Seller's or any affiliate of Seller's
proprietary manuals, marketing materials, policy and procedure manuals, standard
operating procedures and marketing brochures, data and studies or analyses;
(f) any asset which would revert to the employer upon the
termination of any Seller Plan, including assets representing a surplus or
overfunding of any Seller Plan, including, without limitation, any asset under
the AMI defined benefit plan;
(g) all national or regional contracts of Seller, or any
affiliate of Seller which are made available to the Hospital by virtue of the
Hospital being an affiliate of Tenet;
(h) the names "Tenet Healthcare Corporation," "Tenet,"
"Tenet HealthSystem," "OrNda HealthCorp," and any other names or symbols not
used primarily at the Hospital, all abbreviations and variations thereof and
service marks, symbols and logos related thereto, together with any promotional
material, stationery, supplies or other items of inventory bearing such names or
symbols or abbreviations or variations thereof;
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(i) all current contracts between Seller and any affiliate
of Seller with respect to the operation of the Hospital, except those approved
in writing by Seller and Purchaser to be assigned to Purchaser after the Closing
Date;
(j) the portions of Inventory, Prepaids and other Assets
disposed of, expended or canceled, as the case may be, by Seller after the
Effective Date and on or prior to the Closing Date in the ordinary course of
business;
(k) assets owned and provided by vendors of services or
goods to any of the Hospital;
(l) all accounts, notes, interest and other receivables of
Seller (other than the Physician Notes), and all claims, rights, interests and
proceeds related thereto, including all accounts and other receivables, and cost
report settlements related thereto, arising from the rendering of services to
inpatients and outpatients at the Hospital, billed and unbilled, recorded and
unrecorded, for services provided by Seller while owner of the Assets whether
payable by private pay patients, private insurance, third party payors,
Medicare, Medicaid, CHAMPUS, Blue Cross, or by any other source ("Accounts
Receivable");
(m) all documents, records, correspondence, workpapers and
other documents relating to the Accounts Receivable, the Seller's Cost Reports
or Seller's Agency Settlements (the "Receivable Records");
(n) all claims, rights, interests and proceeds with respect
to state or local tax refunds (including but not limited to property tax)
resulting from periods ending on or before the Closing Date, and the right to
pursue appeals of same;
(o) any assets identified in Schedule 1.10(o); and
(p) any Contract identified by Purchaser as likely to
present a significant risk of noncompliance with applicable federal or state
healthcare laws, provided, however, that Seller shall be afforded reasonable
notice of, and an opportunity to cure, any such legal issues prior to Closing.
1.11 Assumed Obligations. On the Closing Date, Seller shall assign,
and Purchaser shall assume and agree to discharge after the Closing, the
following liabilities and obligations of Seller and only the following
liabilities and obligations (collectively, the "Assumed Obligations"):
(a) all current liabilities of Seller with respect to the
operation of the Hospital on or prior to the Closing Date to the extent included
in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4;
(b) the Contracts, but only to the extent of the
obligations arising thereunder with respect to events or periods after the
Closing Date;
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(c) the Leases, including the capital lease obligations of
Seller with respect to the Hospital listed on Schedule 1.11(c), but only to the
extent of the obligations arising thereunder with respect to events or periods
after the Closing Date;
(d) any and all obligations of Seller under the Worker
Adjustment and Retraining Notification Act ("WARN") with respect to the
operation of the Hospital as a result of (i) the acts of Purchaser or any
affiliate(s) of Purchaser after the Closing Date or (ii) Purchaser's breach of
its covenant with respect to the Hired Employees as set forth in Section 5.3;
(e) the Sick Pay Amount, and all accrued vacation and
holiday pay liabilities of Seller (and any affiliates of Seller) with respect to
the Hired Employees (the "Accrued Paid Time Off"); provided, however, that with
respect to the Accrued Paid Time Off, only to the extent accrued in Net Working
Capital;
(f) all utilities being furnished to the Assets, subject to
the prorations provided in Section 1.8;
(g) [INTENTIONALLY OMITTED]
(h) [INTENTIONALLY OMITTED]; and
(i) any other obligations and liabilities identified in
Schedule 1.11(i).
1.12 Excluded Liabilities. Notwithstanding anything to the contrary
in this Agreement, Purchaser shall not assume or become responsible for any of
Seller's duties, obligations or liabilities that are not assumed by Purchaser
pursuant to the terms of this Agreement, the Bill of Sale or the Real Estate
Assignment(s), regardless of whether such obligation or liability is known or
unknown, fixed or contingent, and regardless of whether such liability arises
from contract, tort or otherwise (the "Excluded Liabilities"), and Seller shall
remain fully and solely responsible for, and indemnify Purchaser from and
against in accordance with Section 10.2 of this Agreement, all debts,
liabilities, contract obligations, expenses, obligations and claims of any
nature whatsoever related to the Assets or the Hospital unless assumed by
Purchaser under this Agreement, in the Bill of Sale or in the Real Estate
Assignment(s). The Excluded Liabilities shall include, without limitation:
(a) any current liabilities of Seller with respect to the
operation of the Hospital on or prior to the Closing Date (i) which are not
included in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4
and (ii) which are not otherwise specifically included in the Assumed
Obligations;
(b) all liabilities arising out of or relating to any act,
omission, event or occurrence connected with the use, ownership or operation of
the Hospital or any of the Assets on or prior to the Closing Date (including,
without limitation, any liabilities arising from pre-Closing violations of
Environmental Laws or release of Hazardous Substances), other than as
specifically included in the Assumed Obligations;
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(c) other than as specifically included in the Assumed
Obligations, all liabilities arising out of or relating to any act, omission,
event or occurrence connected with Seller, or the operations or activities of
Seller (including all liabilities arising out of or relating to any claim,
proceeding or investigation, collectively, "Litigation") arising out of or
relating to any such act, omission, event or occurrence including without
limitation the Litigation set forth on Schedule 2.11);
(d) all liabilities of Seller in connection with claims of
professional malpractice to the extent arising out of or relating to acts,
omissions, events or occurrences on or prior to the Closing Date;
(e) subject to reimbursement by Purchaser to the extent
contemplated by the Employee Leasing Agreement, all liabilities of Seller for
its matching contributions for eligible beneficiaries' 401(k) plans, Section 125
plans and other Seller Plans and all administrative costs associated with such
welfare benefit plans arising on or prior to the Closing Date;
(f) all liabilities of Seller relating to the Seller's Cost
Reports with respect to periods ending on or prior to the Closing Date;
(g) all liabilities of Seller for violations of any law,
regulation or rule to the extent arising from acts or omissions on or prior to
the Closing Date, including, without limitation, those pertaining to Medicare
and Medicaid fraud or abuse;
(h) all liabilities of Seller for commissions or fees owed
to any finder or broker in connection with the transactions contemplated
hereunder, or for any other expenses incurred hereunder, except to the extent
expressly provided in this Agreement to the contrary (including but not limited
to Section 12.12 of this Agreement);
(i) all liabilities due to third party payors, including
without limitation, private insurers, private pay parties, governmental payors,
including Medicare, Medicaid, CHAMPUS, FEHBA, RRRB or other third party payors
("Third Party Payors"), including cost report reimbursements and settlements,
repayments, fines or other liabilities or obligations, to the extent they relate
to the periods ending on or prior to and including the Closing Date, and any
liability arising pursuant to a Third Party Payor program as a result of the
consummation of the transactions contemplated herein, including, without
limitation, recapture of previously reimbursed expenses;
(j) subject to Sections 1.8 and 12.12 of this Agreement,
all federal, state, foreign or local tax liabilities or obligations of Seller or
attributable to any capital Asset, in respect of periods ending on or prior to
Closing, including, without limitation, any income tax, any franchise tax, any
tax recapture, any sales and/or use tax, any state and local recording fees and
taxes which may arise upon the consummation of the transaction contemplated
herein and any FICA, FUTA, workers' compensation and any and all other taxes or
amounts due and payable as a result of the exercise by any of Seller's employees
of such employees' right to vacation, sick leave and holiday benefits accrued
while in the employ of Seller (to the extent not included in the Net Working
Capital adjustment);
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(k) subject to reimbursement by Purchaser to the extent
contemplated by the Employee Leasing Agreement, all liability for any and all
claims by or on behalf of Seller to the extent such liability relates to the
period ending on or prior to the Closing Date, including, without limitation,
liability for any pension, profit sharing, deferred compensation or any other
employee health and welfare benefit plans, liability for any EEOC claim, wage
and hour claim, unemployment compensation claim or workers' compensation claim,
and liability for all employee wages and benefits, including, without
limitation, accrued vacation, sick leave and holiday pay and taxes or other
liability related thereto in respect of Seller's employees (to the extent not
included in the Net Working Capital adjustment);
(l) all liabilities or obligations arising at any time
under any contract or commitment that is not assumed by Buyer;
(m) all liabilities or obligations arising out of Seller's
breach of any Contract prior to Closing; and
(n) any obligation or liability asserted under the federal
Hill-Burton program or other restricted grant and loan programs with respect to
the ownership or operation of the Hospital.
1.13 [INTENTIONALLY OMITTED]
1.14 Disclaimer of Warranties. Except as expressly set forth in
Article 2 hereof, the Assets transferred to Purchaser will be sold by Seller and
purchased by Purchaser in their physical condition on the Closing Date, "AS IS,"
WITH NO WARRANTY OF HABITABILITY OR FITNESS FOR HABITATION, with respect to the
Real Property, land, buildings and improvements, and WITH NO WARRANTIES,
INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, with respect to the physical condition of the Personal
Property and Inventory, any and all of which warranties (both express and
implied) Seller hereby disclaims. All of the foregoing real and personal
property shall be further subject to normal wear and tear on the land,
buildings, improvements and equipment and normal and customary use of the
inventory and supplies in the ordinary course of business up to the Closing.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Seller hereby
represents, warrants and covenants to Purchaser as to the following matters,
except as disclosed in the disclosure schedule as of the Effective Date, as
amended pursuant to the terms of this Agreement (the "Disclosure Schedule")
hereby delivered by Seller to Purchaser. Except as otherwise provided herein,
Seller shall be deemed to remake all of the following representations,
warranties and covenants as of the Closing:
2.1 Authorization. Seller has full power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby.
2.2 Binding Agreement. All actions required to be taken by Seller to
authorize the execution, delivery and performance of this Agreement, all
documents executed by Seller which are necessary to give effect to this
Agreement, and all transactions contemplated hereby, have been duly and properly
taken or obtained by Seller. No other action on the part of the Seller is
necessary to authorize the execution, delivery and performance of this
Agreement, all documents necessary to give effect to this Agreement and all
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and, assuming due and valid execution by
Purchaser, this Agreement constitutes a valid and binding obligation of Seller
enforceable in accordance with its terms subject to (a) applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and (b) limitations on the
enforcement of equitable remedies.
2.3 Organization and Good Standing; No Violation.
(a) Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Texas. Seller has
full power and authority to own, operate and lease its properties and to carry
on its businesses as now conducted.
(b) Neither the execution and delivery by Seller of this
Agreement nor the consummation of the transactions contemplated hereby by Seller
nor compliance with any of the material provisions hereof by Seller, will (i)
violate, conflict with or result in a breach of any material provision of
Seller's organizational documents, (ii) violate any order, writ, injunction,
ruling or material law of any court or governmental authority, United States or
foreign, or cause the suspension or revocation of any governmental license or
authorization applicable to or binding upon or affecting Seller, any of the
Assets or the operation of the business of the Hospital or (iii) except for the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the rules and regulations promulgated thereunder (the "HSR Act"), and
as otherwise described in Section 2.3(b) of the Disclosure Schedule, require any
material consent, approval or authorization of, or notice to, or declaration,
filing or registration with, any governmental or regulatory authority.
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2.4 Contracts and Leases.
(a) Schedule 2.4(a) sets forth each Contract to which
Seller with respect to the operation of the Hospital) is a party or is bound or
by which any of the Assets is bound or subject, other than (i) such Contracts as
may be terminated by Purchaser at any time after the Closing without liability,
penalty or premium upon notice of thirty (30) days or less and (ii) such
Contracts which will not result in future annual expenditures or receipts by the
Hospital at any time of $10,000 or more (the Contracts set forth on Schedule
2.4(a) are referred to herein as "Material Contracts"). Notwithstanding the
foregoing, each of the following Contracts is set forth on Schedule 2.4(a):
(i) employment agreements and severance
agreements with individuals that are not
physicians;
(ii) all agreements with physicians;
(iii) collective bargaining agreements and other
Contracts with any labor union;
(iv) covenants not to compete or restrictive
covenants;
(v) equipment leases treated as capital leases
for financial accounting purposes;
(vi) leases relating to real property or
interests in real property as to which
Seller is lessee; or
(vii) joint ventures in the form of partnerships,
limited liability companies, corporations in
which Seller has at least a 20% equity
interest.
(b) Each Material Contract is in full force and effect and
is the valid and binding obligation of Seller and, to the knowledge of Seller,
of each other party thereto, except where a failure of the Material Contracts to
be in full force and effect is not material, individually or in the aggregate,
to the operation of the Hospital.
2.5 Required Consents. Seller is not a party to or bound by, nor are
any of the Assets subject to, any mortgage, material Lien, deed of trust, or any
material lease, agreement or instrument, or any material order, judgment or
decree which (a) requires the consent of another to the execution of this
Agreement, (b) requires the consent of another to consummate the transactions
contemplated by this Agreement, or (c) makes unduly burdensome the consummation
of the transactions contemplated by this Agreement. For purposes of clause (b)
immediately above, "material" leases as to which Seller is lessee shall include
only those leases as to which Seller will deliver landlord estoppels as
contemplated by Section 1.6.13 of this Agreement. The consummation of the
transactions contemplated by this Agreement will not result in a breach of any
term or provision of, or constitute (with or without notice or lapse of time or
both) a default under, any material agreement or instrument to which Seller is a
party, or
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which is binding on Seller, or to which the Assets are subject. The consummation
of the transactions contemplated by this Agreement will not give any other party
to any such material agreement or instrument a right to cancel or terminate the
same, a right to modify or amend the terms thereof, or result in an acceleration
of the maturity or performance of any obligation under any such material
agreement or instrument. No such breach, default, cancellation, termination,
modification or amendment or acceleration described in this Section 2.5 would
prevent Seller from consummating the transactions contemplated by this
Agreement, or would result in the creation of any lien, security interest,
encumbrance, charge, loss or liability on any material assets of Seller,
including without limitation the Assets.
2.6 Compliance With Laws and Contracts.
(a) Except as set forth in Schedule 2.6(a), with respect to
the operation of the Hospital, Seller has the lawful authority and all material
state, federal, special or local governmental authorizations, licenses or
permits in good standing required to conduct its business, and such business
presently is being conducted in compliance with all applicable laws, statutes,
ordinances, orders, rules, regulations, policies, guidelines, licenses,
certificates, certificates of need, judgments or decrees of all judicial or
governmental authorities (federal, state, local, foreign or otherwise), except
where the failure to be in such compliance would not be material to the
operation of the Hospital. Seller has not, with respect to the operation of the
Hospital, been charged with or given notice of, and to the best knowledge of
Seller, Seller with respect to the operation of the Hospital, is not under
investigation with respect to, any violation of, or any obligation to take
remedial action under, any applicable (i) material law, statute, ordinance,
rule, regulation, policy or guideline promulgated, (ii) material license,
certificate or certificate of need issued, or (iii) order, judgment or decree
entered, by any federal, state, local or foreign court or governmental authority
relating to the Hospital or the business of the Hospital.
(b) Seller's ownership and operation of the Hospital and
the Assets are and have been in compliance with all Environmental Laws (as
defined in Section 2.6(c) below), except where the failure to be in such
compliance would not be material to the operation of the Hospital. Seller has
obtained all licenses, permits and approvals necessary or required under all
applicable Environmental Laws (the "Environmental Permits") for the ownership
and operation of the Hospital and the Assets. All such Environmental Permits are
in effect and, to Seller's knowledge, no action to revoke or modify any of such
Environmental Permits is pending. There is not now pending or, to Seller's
knowledge, threatened, any claim, investigation or enforcement action by any
governmental authority (whether judicial, executive or administrative)
concerning Seller's potential liability under Environmental Laws in connection
with the ownership or operation of the Hospital or the Assets. To Seller's
knowledge, there has not been a release or threatened release of any Hazardous
Substance at, upon, in, under or from the Hospital or the Assets at any time. At
no time during Seller's ownership of the Real Property, and to Seller's
knowledge at no time during others' ownership of the Real Property, have any
Hazardous Substances been present on the Real Property except as may be utilized
as a matter of course in hospital operations and in accordance with applicable
Environmental Laws.
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(c) For the purposes of this Agreement, the term
"Environmental Laws" shall mean all state, federal or local laws, ordinances,
codes or regulations relating to Hazardous Substances or to the protection of
the environment, including, without limitation, laws and regulations relating to
the storage, treatment and disposal of medical and biological waste. For
purposes of this Agreement, the term "Hazardous Substances" shall mean (i) any
hazardous or toxic waste, substance, or material defined as such in (or for the
purposes of) any Environmental Laws, (ii) asbestos-containing material, (iii)
medical and biological waste, (iv) polychlorinated biphenyls, (v) petroleum
products, including gasoline, fuel oil, crude oil and other various constituents
of such products, and (vi) any other chemicals, materials or substances,
exposure to which is prohibited, limited or regulated by any Environmental Laws.
(d) Seller has performed all material obligations relating
to the Assets and the business of the Hospital (including under all Material
Contracts), and is not in breach or default, nor do any circumstances exist
which with or without notice or lapse of time, or both, would result in breach
or default, nor to Seller's knowledge, is there any claim of such breach or
default with respect to any obligation to be performed, under any contract,
lease, guaranty, indenture, loan agreement, document or other agreement or
arrangement relating to the Assets or the business of the Hospital, including
the Leases and Contracts, which breach or default or its consequences might be
material to the operation of the Hospital.
2.7 Title; Sufficiency.
(a) Seller has good and marketable fee simple or leasehold
title, as the case may be, to the Real Property. Seller has good and valid title
to the Personal Property, which individually or in the aggregate is material to
the condition (financial or otherwise), operations or the business of the
Hospital.
(b) The Real Property and the Personal Property is held by
Seller free and clear of all Liens, and is not, in the case of the Real
Property, subject to any rights-of-way, building or use restrictions,
exceptions, variances, reservations or limitations of any nature whatsoever
except, with respect to such properties, (i) liens for current real property
taxes and assessments not yet due and payable, (ii) mechanics', carriers',
workmen's, repairmen's and other statutory liens, rights of way, building or use
restrictions, exceptions, easements, covenants, variances, reservations and
other limitations of any kind, if any, which do not materially impair the
ordinary business operations of the Hospital or for which, in respect of matters
affecting title to the Real Property, title insurance coverage has been
obtained, and (iii) other such encumbrances as are set forth in Schedule 2.7(b)
(collectively, "Permitted Liens"). None of the Real Property is subject to a
pending, or to Seller's knowledge threatened, condemnation or similar
proceeding. None of the Real Property is subject to any option, right of first
refusal or other contractual right to sell, dispose of or lease such Real
Property, except as set forth in Schedule 2.7(b).
(c) The Inventory with respect to the Hospital is, and at
the Closing will be, maintained in such quality and quantities as is consistent
with the Hospital's historical practices.
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(d) The Assets and the Excluded Assets comprise
substantially all of the property, assets, licenses, rights and agreements used
in the conduct of the businesses and operation of the Hospital.
2.8 Certain Representations With Respect to the Hospital.
(a) [INTENTIONALLY OMITTED]
(b) The Hospital is duly accredited by the Joint Commission
on Accreditation of Healthcare Organizations ("JCAHO") for the periods set forth
in Schedule 2.8(b). With respect to the Hospital, Seller has previously
delivered to Purchaser or will promptly deliver after the Effective Date, a true
and complete copy of the most recent JCAHO accreditation survey report and
deficiency list, if any; the most recent Statement and Deficiencies and Plan of
Correction on Form HCFA-2567; the most recent state licensing report and list of
deficiencies, if any; the most recent fire marshall's survey and deficiency
list, if any, and the corresponding plans of correction or other responses.
(c) The Hospital is certified for participation in the
Medicare, Medicaid and CHAMPUS programs, has current and valid provider
contracts with each of such programs, is in substantial compliance with the
conditions of participation of each of such programs and has received all
approvals or qualifications necessary for capital reimbursement of the Assets.
Seller has not received notices from the regulatory authorities which enforce
the statutory or regulatory provisions in respect of any of the Medicare,
Medicaid or CHAMPUS programs of any pending or threatened investigations with
respect to the operation of the Hospital. Seller has not been excluded from the
Medicare, Medicaid or CHAMPUS programs or any state health care program, and
there is no pending or, to Seller's knowledge, threatened exclusion action
against Seller.
(d) Seller has delivered or will promptly deliver to
Purchaser true and exact copies of (i) all cost reports which Seller filed with
Medicare and Medicaid for the last three (3) years, as well as all material
correspondence and other material documents relating to any disputes and/or
settlements with Medicare or Medicaid within the last three (3) years. Notices
of Program Reimbursement have been issued by the applicable fiscal intermediary
with respect to the cost reports of the Hospital for Medicare, Medicaid (if
required) and Blue Cross (if required) through the periods set forth in Schedule
2.8(d) (the "Audit Periods"). Each of such reports was timely filed. Seller has
not received notice of any material dispute between the Hospital and the
applicable governmental agency or private entity, or their intermediaries or
representatives, regarding such cost reports for periods subsequent to the
periods specified in Schedule 2.8(d) and, to the knowledge of Seller, there are
no pending or threatened material claims by any of such programs against the
Hospital with respect to the Audit Periods or any period thereafter. To Seller's
knowledge, Seller is not subject to any pending but unassessed Medicare or
Medicaid claim payment adjustments, except to the extent Seller has established
adequate reserves for such adjustments.
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(e) With respect to the operation of the Hospital, Seller
does not have any outstanding loan, grant or loan guarantee pursuant to the
Hill-Burton Act (42 USC Section 291a, et seq.) and the transaction contemplated
hereby will not result in any obligation on the part of the Purchaser or the
Hospital to repay any such loans, grants, or loan guarantee or provide
uncompensated care in consideration thereof.
(f) Seller has previously delivered to Purchaser, with
respect to the Hospital, a copy of the blank forms generally used with respect
to medical staff privilege and membership application or delineation or
privilege; all current medical staff bylaws, rules and regulations and
amendments thereto; and all written contracts with physicians, physicians
groups, or other members of the medical staff of the Hospital.
(g) Except as set forth in a writing delivered by Seller to
Purchaser which specifically makes reference to this Section, there are no
material pending or threatened disciplinary or corrective actions or appeals
with respect to the medical or other staff members of the Hospital. Schedule
2.8(g) sets forth a complete and accurate list of (a) the name of each member of
the medical staff of the Hospital as of the Effective Date, and (b) the
specialty, if any, of each medical staff member. Notwithstanding the foregoing
provisions of this Section 2.8(g), Seller shall not be required to disclose any
information pursuant to this Section 2.8(g) where such disclosure is prohibited
by state law.
2.9 Brokers and Finders. Other than Merrill Lynch, neither Seller,
nor any affiliate of Seller, nor any officer or director thereof, has engaged
any finder or broker in connection with the transactions contemplated hereunder.
2.10 Financial Statements. The unaudited financial statements of
Seller with respect to the operation of the Hospital for the three years ended
May 31, 1999 attached as Schedule 2.10, the Interim Balance Sheet and the Final
Balance Sheet (collectively, the "Financial Statements") have been or will be
prepared from the books and records of Seller. The balance sheets included in
the Financial Statements fairly present, or will fairly present, the financial
position of Seller with respect to the operation of the Hospital as of the
respective dates thereof and the other financial statements included therein
present or will present fairly the results of operations for the periods
indicated, in each case in conformity with generally accepted accounting
principles consistently applied during such periods, except that the Financial
Statements may not fully reflect federal, state and local income or franchise
taxes.
2.11 Legal Proceedings. There are no material claims, proceedings or
investigations ("Litigation") pending or, to the best knowledge of Seller,
threatened relating to or affecting Seller with respect to the operation of the
Hospital or any of the Assets before any court or governmental body (whether
judicial, executive or administrative). Seller with respect to the operation of
the Hospital is not subject to any judgment, order, decree or other governmental
restriction specifically (as distinct from generically) applicable to it or its
assets, including the Assets, which would be material to the operation of the
Hospital. There is no claim, proceeding or investigation pending, or to the
knowledge of Seller threatened, which challenges the validity of this Agreement
or which, if adversely determined, could reasonably be expected to (i) adversely
affect the ability of Seller to consummate the transactions contemplated by this
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Agreement, (ii) result in a material adverse effect on the Hospital, or (iii)
impair the ability of Purchaser to operate the Hospital or the Assets after the
Closing in substantially the same manner as they are presently conducted.
2.12 Employee Benefits.
(a) Schedule 2.12 contains a list of (i) each pension,
profit sharing, bonus, deferred compensation, or other retirement plan or
arrangement of Seller with respect to the operation of the Hospital, whether
oral or written, which constitutes an "employee pension benefit plan" as defined
in Section 3(2) of ERISA, (ii) each medical, health, disability, insurance or
other plan or arrangement of Seller with respect to the operation of the
Hospital, whether oral or written, which constitutes an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, and (iii) each other employee
benefit or perquisite provided by Seller (with respect to the operation of the
Hospital), in which any employee of Seller participates in his capacity as such
(collectively, the "Seller Plans"). Copies of the summary plan descriptions and
brochures with respect to the Seller Plans have previously been furnished to
Purchaser.
(b) Seller (with respect to the operation of the Hospital)
is not a participant in any multiemployer plan within the meaning of Section
4001(a)(3) of ERISA in which employees of Seller participate and no withdrawal
liability has been incurred by or asserted against Seller or an ERISA Affiliate
with respect to a multiemployer plan.
(c) With respect to each Seller Plan, to Seller's
knowledge, Seller does not have any direct or indirect, actual or contingent
liability, other than to make payments for contributions, premiums or benefits
when due in the ordinary course, all of which payments that are due having been
made. Neither the Hospital nor any of the Assets are subject to any lien under
ERISA or the Internal Revenue Code of 1986, as amended (the "Code").
(d) No amounts payable under any contract, agreement or
arrangement will fail to be deductible for federal income tax purposes by virtue
of Section 280G of the Code. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, alone or
in connection with a related event, will (i) result in any material payment
(including, without limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any employee of Seller from the Seller
under any Seller Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Seller Plan or otherwise or (iii) result in any
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(e) All of the Seller Plans have been administered in material
compliance with ERISA and the applicable provisions of the Code. There are no
"accumulated funding deficiencies" within the meaning of ERISA or the Code or
any federal excise tax or other liability on account of any deficient fundings
in respect of the Seller Plans. No reportable event(s) (within the meaning of
ERISA) or prohibited transaction(s) (within the meaning of the Code), has
occurred in respect of any of the Seller Plans that would result in any material
liability to Seller. Other than claims for benefits, there are not pending or,
to Seller's knowledge, threatened any claims relating to the Seller Plans by any
employee of Seller with respect to the
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operation of the Hospital, alleging a breach or breaches of fiduciary duties or
violations of other applicable state or federal law which could result in
liability on the part of Seller or any of the Seller Plans under ERISA or any
other law that would have a material adverse effect on Seller. To Seller's
knowledge, none of the Seller Plans discriminates in operation in favor of
employees who are officers or who are highly compensated, except as permitted
under the Code and ERISA. To Seller's knowledge, all material returns, reports,
disclosure statements and premium payments required to be made under ERISA and
the Code with respect to any of the Seller Plans have been timely filed or
delivered. Except for routine random audits or submissions by Seller to the
Voluntary Compliance Resolution Program, none of the Seller Plans have been
audited or investigated by either the Internal Revenue Service, the Department
of Labor or the Pension Benefit Guaranty Corporation within the last five (5)
years, and there are no outstanding issues with reference to any of the Seller
Plans pending before such governmental agencies.
2.13 Taxes and Tax Returns.
(a) To Seller's knowledge, Seller has duly filed all
federal, state, foreign and local tax returns required to be filed by it (all of
which are true and correct in all material respects) and has duly paid or made
provision for the payment of all taxes (including any interest or penalties)
which are due and payable, whether or not in connection with such returns.
Seller (with respect to the operation of the Hospital) has withheld proper and
accurate amounts from its employees' compensation, and made deposits of all such
withholdings, in material compliance with all withholding and similar provisions
of the Code and any and all other applicable laws.
(b) Seller (with respect to the operation of the Hospital)
has complied in all material respects with all Applicable Laws relating to
withholding Taxes and has paid over to the proper governmental entities all
amounts required to be so withheld and paid over under all Applicable Laws.
(c) There are no Liens for Taxes upon the Assets, except for
statutory Liens for current Taxes not yet due and payable or which may hereafter
be paid without penalty or which are being contested in good faith by
appropriate proceedings.
(d) For purposes of this Agreement, "Tax" or "Taxes" shall mean
(i) any tax of any kind, including, without limitation, all income, property,
sales, use, occupation, payroll, transfer, estimated, franchise, excise, value
added, employees' income withholding and social security taxes, and related to
such taxes, charges, fees, levies, penalties or other assessments of any kind,
together with any interest and penalties, addition to tax or additional amounts
imposed by any taxing authority, whether disputed or not, imposed by the United
States or by any foreign country, or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or by any other
taxing authority, and (ii) any interest thereon. For purposes of this Agreement,
"Tax Return" shall mean any return, report, information return or amendment or
other document (including any related or supporting information) with respect to
Taxes.
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2.14 Personnel.
(a) Schedule 2.14 sets forth a complete list (as of the
date set forth therein) of names, positions and current annual salaries or wage
rates, bonus and other compensation and/or benefit arrangements, accrued sick
and vacation days, and period of service credited for vesting as of the date
thereof of all full-time and part-time employees of Seller with respect to the
operation of the Hospital and indicating whether such employee is a part-time or
full-time employee.
(b) Since May 31, 1998, there have been, and there are now,
no labor union or collective bargaining agreements in effect with respect to the
employees of Seller with respect to the operation of the Hospital. There is no
unfair labor practice complaint against Seller pending, or to the best knowledge
of Seller threatened, before the National Labor Relations Board with respect to
the operation of the Hospital. Since May 31, 1998, there has been, and there is
now, no labor strike, arbitration, dispute, slowdown or stoppage, and no union
organizing campaign, pending, or to the best knowledge of Seller threatened by
or involving the employees of Seller with respect to the operation of the
Hospital.
(c) There is no charge or complaint pending or, to the
knowledge of Seller, threatened against Seller relating to the Hospital before
the Equal Employment Opportunity Commission or any state, local or foreign
agency responsible for the prevention of unlawful employment practices.
2.15 Insurance. Seller maintains, and has maintained, without
interruption, at all times during its ownership of the Hospital, self-insurance
or policies or binders of insurance covering such risks and events, including
personal injury, property damage, malpractice and general liability, to provide
adequate and sufficient insurance coverage for all the assets and operations of
the Hospital. Such insurance meets all requirements of Applicable Law and the
Contracts. Schedule 2.15 contains a list of all such insurance maintained by
Seller with respect to the operation of the Hospital as of the Effective Date.
2.16 Solvency. Seller is not insolvent and Seller will not be
rendered insolvent as a result of any of the transactions contemplated by this
Agreement. For purposes hereof, the term "solvency" means that: (i) the fair
salable value of Seller's tangible assets is in excess of the total amount of
its liabilities (including for purposes of this definition all liabilities,
whether or not reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, and whether direct or indirect, fixed
or contingent, secured or unsecured, and disputed or undisputed); (ii) Seller is
able to pay its debts or obligations in the ordinary course as they mature; and
(iii) Seller has capital sufficient to carry on its business and all businesses
which it is about to engage.
2.17 No Untrue or Inaccurate Representations or Warranties. The
representations and warranties of Seller contained in this Agreement, and each
exhibit, schedule, certificate or other written statement delivered pursuant to
this Agreement or in connection with the transactions contemplated hereby, are
accurate, correct and complete, and in the aggregate do not contain any untrue
statement of material fact or omit to state a material fact necessary in order
to make the
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statements and information contained therein not misleading. References in this
Agreement to "knowledge of Seller", the "best knowledge of Seller", "known to
Seller" or "upon Seller knowing" mean the actual knowledge of the CEO, CFO, COO
and DON of each the Hospital and of Seller, without independent investigation.
2.18 Absence of Undisclosed Liabilities. Except for liabilities and
obligations (i) set forth in Schedule 2.18 attached hereto, (ii) reflected on
the audited balance sheet for the year ended May 31, 1999 included in the
Financial Statements (the "1999 Balance Sheet") or (iii) incurred in the
ordinary course of business since the date of the 1999 Balance Sheet, Seller
with respect to the operation of the Hospital does not have any material
liabilities or obligations of whatsoever nature, direct or indirect, whether
accrued, fixed, contingent or otherwise.
2.19 Y2K. Seller has delivered to Purchaser as Schedule 2.19 a list
as of the Effective Date of compliance procedures (a) taken, (b) being taken and
(c) to be taken by Seller to attempt to make or assure that the Assets are Y2K
compliant. The procedures described on Schedule 2.19 are consistent with
procedures applicable to all other hospitals operated by Tenet. Seller shall
update periodically and deliver to Purchaser updates to Schedule 2.19; provided
that such updates shall not for any purpose be or be deemed to be a basis for
indemnification of Purchaser by Seller. Seller's Y2K compliance process includes
taking out of service Assets which Seller believes are not Y2K compliant by
September 30, 1999. Seller does not represent that its Y2K compliance process
will make any Asset used in its operations Y2K compliant.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Purchaser hereby
represents, warrants and covenants to Seller as to the following matters as of
the Effective Date and, except as otherwise provided herein, shall be deemed to
remake all of the following representations, warranties and covenants as of the
Closing:
3.1 Authorization. Purchaser has full power and authority to enter
into this Agreement and has full power and authority to carry out the
transactions contemplated hereby.
3.2 Binding Agreement. All actions required to be taken by Purchaser
to authorize the execution, delivery and performance of this Agreement, all
documents executed by Purchaser which are necessary to give effect to this
Agreement, and all transactions contemplated hereby, have been duly and properly
taken or obtained by Purchaser prior to the Closing Date. No other action on the
part of Purchaser is necessary to authorize the execution, delivery and
performance of this Agreement, all documents necessary to give effect to this
Agreement and all transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser and, assuming due and valid
execution by Seller, this Agreement constitutes, or will constitute prior to
Closing, a valid and binding obligation of Purchaser enforceable in accordance
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with its terms subject to (a) applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from time to
time in effect and (b) limitations on the enforcement of equitable remedies.
3.3 Organization and Good Standing. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has full power and authority to own, operate and
lease its properties and to carry on its business as now conducted.
3.4 No Violation. Neither the execution and delivery by Purchaser of
this Agreement nor the consummation of the transactions contemplated hereby nor
compliance with any of the material provisions hereof by Purchaser will (i)
violate, conflict with or result in a breach of any material provision of the
Articles of Organization, Operating Agreement or other organizational documents
of Purchaser, (ii) violate any order, writ, injunction, ruling or material law
of any court or governmental authority, United States or foreign, applicable to
Purchaser, or cause the suspension or revocation of any governmental license or
authorization applicable to or binding upon or affecting Purchaser, or (iii)
except for the applicable requirements of the HSR Act, and as otherwise
described on Schedule 3.4 attached hereto, require any material consent,
approval or authorization of, or notice to, or declaration, filing or
registration with, any governmental or regulatory authority.
3.5 Brokers and Finders. Except as described on Schedule 3.5,
neither Purchaser nor any controlled affiliate thereof nor any officer or
director thereof has engaged any finder or broker in connection with the
transactions contemplated hereunder.
3.6 Legal Proceedings. Except as described on Schedule 3.6, there
are no claims, proceedings or investigations pending or, to the best knowledge
of Purchaser, threatened relating to or affecting Purchaser or any controlled
affiliate of Purchaser before any court or governmental body (whether judicial,
executive or administrative) in which an adverse determination would materially
adversely affect the properties, business condition (financial or otherwise) of
Purchaser or any controlled affiliate of Purchaser. Neither Purchaser nor any
controlled affiliate of Purchaser is subject to any judgment, order, decree or
other governmental restriction specifically (as distinct from generically)
applicable to Purchaser or any controlled affiliate of Purchaser which
materially adversely affects the condition (financial or otherwise), operations
or business of Purchaser or any controlled affiliate of Purchaser.
3.7 Solvency. Purchaser is not insolvent and will not be rendered
insolvent as a result of any of the transactions contemplated by this Agreement.
For purposes hereof, the term "solvency" means that: (i) the fair salable value
of Purchaser's tangible assets is in excess of the total amount of its
liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with generally
accepted accounting principles, and whether direct or indirect, fixed or
contingent, secured or unsecured, and disputed or undisputed); (ii) Purchaser is
able to pay its debts or obligations in the ordinary course as they mature; and
(iii) Purchaser has capital sufficient to carry on its businesses and all
businesses which it is about to engage.
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3.8 INTENTIONALLY OMITTED.
3.9 INTENTIONALLY OMITTED.
3.10 No Other Business or Operations. Purchaser is engaged in no
business or operations at the time of execution of this Agreement, and
immediately following the Closing will be engaged in no business or operations
other than as is contemplated to be acquired pursuant to this Agreement, the
Related Asset Sale Agreement or as disclosed to Seller prior to the Effective
Date.
ARTICLE 4
COVENANTS OF SELLER
4.1 Access and Information; Inspections. From the Effective Date
until Closing, Seller shall afford to the officers and agents of Purchaser
(which shall include accountants, attorneys, bankers and other consultants and
agents of Purchaser) full and complete access during normal business hours to
and the right to inspect the plants, properties, books, accounts, records and
all other relevant documents and information with respect to the assets,
liabilities and business of the Hospital. From the Effective Date until Closing,
Seller shall furnish to Purchaser with such additional financial and operating
data and other information in Seller's possession as to businesses and
properties of the Hospital as Purchaser or its representatives may from time to
time reasonably request, without regard to where such information may be
located. Purchaser's right of access and inspection shall be exercised in such a
manner as not to interfere unreasonably with the operations of the Hospital.
Such access may include consultations with the personnel of Seller. Further,
Purchaser may, at its sole cost and expense (except as otherwise provided in
Section 12.12), undertake environmental, mechanical and structural surveys of
the Hospital. Purchaser acknowledges that it shall coordinate its inspection
activities contemplated by this Section 4.1 through David R. Mayeux or his
designee.
4.2 Preserve Accuracy of Representations and Warranties. Seller
shall refrain from any action or inaction that would render any representation
or warranty contained in Article 2 of this Agreement inaccurate as of the
Closing Date.
4.3 Conduct of Business. On and after the Effective Date and prior
to the Closing, and except to the extent the prior written consent of Purchaser
is obtained in accordance with the procedures set forth in Section 4.4 below or
required by this Agreement, Seller shall, with respect to the operation of the
Hospital:
(a) carry on its business with respect to the operation of
the Hospital in substantially the same manner as presently conducted and not
make any material change in personnel, operations, finance, accounting policies,
or real or personal property;
(b) maintain the Hospital and all parts thereof and all
other Assets in operating condition in a manner consistent with past practices,
ordinary wear and tear excepted;
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(c) perform all of its material obligations under
agreements relating to or affecting the Hospital, its operations or the Assets;
(d) keep in full force and effect present insurance
policies or other comparable self-insurance; and
(e) use its reasonable efforts to maintain and preserve its
business organization intact, retain its present employees at the Hospital and
maintain its relationships with physicians, suppliers, customers and others
having business relationships with the Hospital and take such actions as are
necessary and use its reasonable efforts to cause the smooth, efficient and
successful transition of business operations and employee and other relations to
the Purchaser as of Closing.
4.4 Negative Covenants. From the Effective Date until Closing, with
respect to the operation of the Hospital, Seller shall not, without the prior
written consent of Purchaser in accordance with the procedures set forth below
or except as may be required by law:
(a) amend or terminate any of the Contracts, enter into any
new contract or commitment, or incur or agree to incur any liability, except in
the ordinary course of business (which ordinary course of business shall include
renewals of any Contract), and in no event with respect to any such contract,
commitment or liability as to which the total to be paid in the future under the
contract, commitment or liability exceeds $50,000;
(b) increase compensation payable or to become payable or
make any bonus payment to or otherwise enter into one or more bonus agreements
with any employee, except in the ordinary course of business in accordance with
Seller's customary personnel policies;
(c) create, assume or permit to exist any new debt,
mortgage, deed of trust, pledge or other lien or encumbrance upon any of the
Assets;
(d) acquire (whether by purchase or lease) or sell, assign,
lease, or otherwise transfer or dispose of any property, plant or equipment,
except in the ordinary course of business with comparable replacement thereof;
(e) except with respect to previously budgeted
expenditures, purchase capital assets or incur costs in respect of construction
in progress;
(f) take any action outside the ordinary course of
business; or
(g) reduce Inventory except in the ordinary course of
business.
For purposes of obtaining Purchaser's prior written consent under Sections 4.3
and 4.4 of this Agreement, Seller shall forward requests for such consent to
Frank Coyle at Purchaser. Such requests shall be deemed approved by Purchaser if
not specifically approved or denied by Purchaser with ten (10) business days of
delivery.
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4.5 Required Approvals. Seller shall reasonably cooperate with
Purchaser and its representatives and attorneys: (i) in obtaining all consents,
approvals, authorizations, clearances, certificates of need and licenses
required to carry out the transactions contemplated by this Agreement
(including, without limitation, those of governmental and regulatory
authorities) or which Purchaser reasonably deems necessary or appropriate, and
(ii) in the preparation of any document or other material which may be required
by any governmental agency as a predicate to or result of the transactions
contemplated herein; provided, however, that it shall be Purchaser's
responsibility to obtain the certificates of need and licenses required to carry
out the transactions contemplated by this Agreement. As soon as practicable
after the Effective Date, Seller will make all governmental filings required to
be made by it in order to consummate the transactions contemplated herein
(including all filings under the Hart-Scott-Rodino Act, as more particularly
described below).
4.6 Additional Financial Information. Within thirty (30) calendar
days following the end of each calendar month prior to Closing, Seller shall
deliver to Purchaser complete copies of the unaudited balance sheet and related
unaudited statements of income with respect to the operation of the Hospital for
each month then ended, together with a year-to-date compilation and the notes,
if any, related thereto, which presentation shall be consistent with the
provisions of Section 2.10 which are applicable to the Financial Statements.
4.7 No-Shop.
(a) Subject to compliance with its right of first refusal
obligations described in Section 6.2 below, from and after the Effective Date
until the earlier of the Closing or the termination of this Agreement, Seller
and its general partner shall not, without the prior written consent of
Purchaser: (i) offer for sale or lease the assets of the Hospital or the Assets
(or any material portion thereof) or of any stock or other securities or other
interest owned by Seller; (ii) solicit offers to buy all or any material portion
of the Hospital or the Assets, or any stock or other securities or other
interest owned by Seller; (iii) hold discussions with any party (other than
Purchaser) looking toward such an offer or solicitation or looking toward a
merger or consolidation of Seller; or (iv) enter into any agreement with any
party (other than Purchaser) with respect to the sale or other disposition of
any of the Hospital or the Assets or of any stock or other securities or other
interest owned by Seller, or with respect to any merger, consolidation, or
similar transaction involving Seller. Seller and its general partner shall
promptly advise Purchaser of any inquiry, proposal, solicitation or
communication of any kind relating to, or contemplating any of the foregoing.
Notwithstanding the foregoing, this Section 4.7 shall not be construed to
prohibit Seller from engaging in discussions regarding transactions involving
its or its affiliates' partnership interests, stock or other securities,
including macro-level mergers, reorganizations or other transactions, so long as
the terms thereof do not contemplate the sale or lease or other disposition of
the Hospital or the Assets or otherwise impair the ability of Seller to
consummate the transactions contemplated herein.
(b) Any reference in this Agreement to an "affiliate" shall
mean any Person directly or indirectly controlling, controlled by or under
common control with a second Person; provided, however, an "affiliate" shall not
include any officer or director of any Person. The term "control" (including the
terms "controlled by" and "under common control with") means the
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possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
interests, by contract or otherwise. A "Person" shall mean any natural person,
partnership, corporation, limited liability company, association, trust or other
legal entity.
4.8 Seller's Efforts to Close; Audited Financial Statements.
(a) Seller shall use its reasonable commercial efforts to
promptly satisfy all of the conditions precedent set forth in Articles 6 and 7
to its or Purchaser's obligations under this Agreement to the extent that
Seller's action or inaction can control or influence the satisfaction of such
conditions.
(b) As soon as reasonably practicable after the Effective
Date, Seller shall provide Purchaser with audited financial statements of the
Hospital, which financial statements will include balance sheets for the years
ended May 31, 1999 and 1998, and combined statements of operations and cash
flows for each of the years in the three year period ended [May 31, 1999]. The
balance sheets included in such financial statements will fairly present the
financial position of Seller with respect to the operation of the Hospital as of
the respective dates thereof and the other financial statements included therein
will present fairly the results of operations for the periods indicated, in each
case in conformity with GAAP consistently applied. Such financial statements
shall meet the requirements of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended, and shall be accompanied by the unqualified
opinion of KPMG Peat Marwick.
(c) Seller shall reasonably cooperate in Purchaser's
efforts to obtain financing and fund the Cash Purchase Price, and otherwise to
consummate the transaction contemplated by this Agreement. Notwithstanding the
foregoing, Purchaser shall indemnify, defend, and hold Seller harmless from all
costs, damages, expenses or losses incurred by Seller as a result of being named
in any securities litigation involving Purchaser and the financing contemplated
by this Agreement, other than to the extent arising out of any gross negligence,
willful misconduct of Seller or its employees, or false or intentionally
misleading statements of Seller or its employees.
4.9 Title Matters. No less than twenty (20) days prior to the
Closing Date, Seller shall deliver to Purchaser (a) a preliminary binder or
title commitment(s) (the "Title Commitment") sufficient for the issuance of an
A.L.T.A. Extended Coverage Owner's Title Insurance Policy with respect to the
Owned Real Property and an A.L.T.A. Extended Coverage Leasehold Title Policy
with respect to that Leased Real Property as to which a ground lease is at issue
(the "Title Policy"), issued by Chicago Title Insurance Company (the "Title
Company"), together with true, correct and legible copies of all instruments
referred to therein as conditions or exceptions to title (the "Title
Instruments") and (b) A.L.T.A. surveys of the Owned Real Property complying with
the Minimum Standard Detail Requirements for ALTA/ASCM Land Title Surveys for
the Owned Real Property (the "Surveys"). Section 12.12 shall govern which party
or parties hereto shall bear the costs and expenses of the Title Commitment, the
Title Policy and the Surveys.
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4.10 Termination of Hospital's Employees. Effective on the Transition
Date, the Hospital's Employees (other than the Retained Management Employees)
shall cease to be employees of Seller and Seller's affiliates, and shall be
removed from such entities' respective payrolls. Seller shall terminate
effective as of the Transition Date the active participation of all of the
Hospital's Employees (other than the Retained Management Employees) in all of
the Seller Plans, and shall cause each Seller Plan to comply with all applicable
laws. After the Transition Date, Seller shall timely make or cause to be made
appropriate distributions to, or for the benefit of, all of the Hospital's
Employees (other than the Retained Management Employees) prior to the Transition
Date in respect of the Seller Plans which are in force and effect with respect
to the Hospital's Employees (other than the Retained Management Employees) at
the Hospital immediately prior to the Transition Date in accordance with ERISA,
the Code and the terms and conditions of the Seller Plans; provided, however, no
such distribution shall be required to the extent it is among the Assumed
Obligations.
4.11 Termination Cost Reports. Seller shall file all Medicare,
Medicaid, CHAMPUS, Blue Cross and any other termination cost reports required to
be filed as a result of the consummation of (a) the transfer of the Assets to
Purchaser and (b) the transactions contemplated by this Agreement. All such
termination cost reports shall be filed by Seller in a manner that is consistent
with current laws, rules and regulations.
4.12 Hart-Scott-Rodino Act Filings. Seller will (a) take promptly all
actions necessary to make the filings required of Seller or its affiliates under
the HSR Act, (b) comply at the earliest practicable date with any request for
additional information received by Seller or its affiliates from the Federal
Trade Commission (the "FTC") or Antitrust Division of the Department of Justice
(the "DOJ") pursuant to the HSR Act, and (c) cooperate with Purchaser in
connection with Purchaser's filings under the HSR Act and in connection with
resolving any investigation or other regulatory inquiry concerning the
transactions contemplated by this Agreement commenced by either the FTC or the
DOJ. Except as provided by Section 12.12, all fees and expenses of Seller
incurred in connection with Seller's filing under the HSR Act shall be borne by
Seller.
4.13 Environmental Survey. Seller shall promptly obtain from an
environmental consulting firm (the "Consultant") a written environmental survey
of the Owned Real Property (the "Environmental Survey") and shall deliver the
Environmental Survey to Purchaser, which survey shall be identified on Exhibit
4.13 hereto. Section 12.12 shall govern which party or parties hereto shall bear
the costs and expenses of the Environmental Survey.
4.14 Noncompetition. As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, neither
Seller, nor Seller's general partner, nor the affiliates of such general
partner, nor any of their successors, shall, for a period of three (3) years
following the Closing Date, without the prior written consent of Purchaser,
directly or indirectly, invest in, own, manage, operate, control or participate
in the ownership, management, operation or control of, or serve as a consultant
or lender to, any Competing Business within the Seller Business Service Area.
For purposes of this Agreement, the term "Competing Business" means the business
of owning and operating general acute care hospitals, and the term "Seller
Business Service Area" means the area within a twenty-five (25) mile radius of
the Hospital.
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Notwithstanding the foregoing, the following shall be excluded from the
foregoing provisions of this Section 4.14: (a) the general acute care hospital
activities of Seller and its affiliates as of the Closing Date (other than the
activities of the Hospital) and (b) Seller's or any affiliate of Seller's
acquisition and operation of a general acute care hospital within the Seller
Business Service Area after the Closing Date so long as such hospital was
acquired in a transaction in which the amount of consideration allocated to such
hospital is less than twenty percent (20%) of the total consideration necessary
to consummate such transaction. Seller, Seller's general partner and such
general partner's affiliates shall not actively solicit any individual Purchaser
employee to remain or become an employee of Seller between the Closing Date and
the one year anniversary of the Closing Date; provided, however, that at any
time Seller may make a general solicitation not directed specifically at
Purchaser employees to recruit employees through any means and shall have the
right to hire Purchaser employees who respond to such permitted solicitation
efforts or seek such employment unsolicited by Seller. For a period of one year
after the Closing Date, Purchaser shall not actively solicit any individual
employee of Seller or affiliates thereof who had been a member of the senior
management (i.e., the "A Team") at the Hospital prior to the Effective Date, but
was not employed by Tenet at the Hospital as of the Effective Date. Seller,
Seller's general partner and such general partner's affiliates shall not, and
shall use its reasonable commercial efforts to cause its directors, officers,
employees and agents to not, use for any purpose any confidential information
which specifically relates to the Hospital. Seller shall cause its general
partner, affiliates of its general partner and any successors to its general
partner, to comply with the obligations imposed by this Section 4.14. In the
event that the provisions contained in this Section 4.14 shall ever be deemed to
exceed the time or geographic limits or any other limitations permitted by
applicable law in any jurisdiction, then such provisions shall be deemed
reformed in such jurisdiction to the maximum extent permitted by applicable law.
4.15 Enforceability. Seller hereby acknowledges that the covenant
contained in Section 4.14 above is a condition precedent to Purchaser's entering
into this Agreement, and that such restrictions are reasonable and necessary to
protect the legitimate interests of Purchaser following the Closing. Seller also
hereby acknowledges that any violation of Section 4.14 would result in
irreparable injury to Purchaser and the remedy at law for any breach of Section
4.14 would be inadequate. Seller specifically acknowledges and agrees that
Purchaser shall be entitled to an equitable accounting of all earnings, profits
and other benefits arising from such breach and further agrees to pay the
reasonable fees and expenses, including attorneys' fees, incurred by Purchaser
in enforcing the restrictions contained in Section 4.14.
4.16 [INTENTIONALLY OMITTED]
4.17 Y2K Compliance Program. Seller shall and shall use its best
efforts to cause Tenet to continue to implement its Y2K compliance program with
respect to the Hospital through January 1, 2000, and beyond that date,
consistent with implementation of such program for all of Tenet's (and its
subsidiaries') hospitals. As part of Seller's continuing implementation of such
program, Seller shall:
(a) provide Purchaser reasonable access to and copies of
all data regarding Tenet's Y2K compliance program being implemented at the
Hospital;
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(b) continue to provide a corporate level coordinator and
help desk assistance in the same manner as is provided to all of Tenet's (and
its subsidiaries') hospitals; and
(c) shall provide all such services without charge to
Purchaser, except for out of pocket costs for site visits.
4.18 Supplements to Disclosure Schedule. Seller shall have the
continuing obligation to promptly supplement or amend the Disclosure Schedule
with respect to any matter hereafter arising or discovered which, if existing or
known at the Effective Date, would have been required to have been set forth or
described in the Disclosure Schedule. No supplement or amendment of the
Disclosure Schedule after the Effective Date with respect to the events or
circumstances existing before the Effective Date or resulting from the
transactions contemplated hereby shall be deemed to have been disclosed as of
the date of this Agreement unless Purchaser specifically agrees thereto in
writing. Supplements or amendments of the Disclosure Schedule with respect to
events or circumstances occurring after the Effective Date shall, for purposes
of this Agreement and the agreements contemplated (other than for the purpose of
determining whether the conditions set forth in Article 7 are satisfied), be
deemed to have been disclosed as of the date of this Agreement.
ARTICLE 5
COVENANTS OF PURCHASER
5.1 Purchaser's Efforts to Close. Purchaser shall use its reasonable
commercial efforts to satisfy all of the conditions precedent set forth in
Articles 6 and 7 to Purchaser's or Seller's obligations under this Agreement to
the extent that Purchaser's action or inaction can control or influence the
satisfaction of such conditions.
5.2 Required Approvals. Purchaser (a) shall use its reasonable best
efforts to secure, as promptly as practicable, before the Closing Date, all
consents, approvals, authorizations, clearances, certificates of need and
licenses required to carry out the transactions contemplated by this Agreement
(including, without limitation, those of governmental and regulatory
authorities) and to cause all of its covenants and agreements to be performed,
satisfied and fulfilled; and (b) will provide such other information and
communications to governmental and regulatory authorities as Seller or such
authorities may reasonably request.
5.3 Certain Employee Matters.
(a) During the period (the "Transition Period") commencing
at the Effective Time and ending immediately prior to January 1, 2000 or such
earlier date as determined by Purchaser (such date being the "Transition Date"),
each Hospital Employee (as defined in paragraph (b) of this Section 5.3) shall
remain an employee of its employer as of the Effective Time (whether such
employer is Seller or an affiliate of Seller), subject to normal personnel
actions occurring in the ordinary course of business. During the Transition
Period, or until such earlier time as any such Hospital Employee ceases to be an
employee of such employer, each such Hospital Employee shall be leased by
Purchaser from Seller or the employing affiliate, on
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substantially the terms and conditions as are set forth in the form of Employee
Leasing Agreement attached as Exhibit 1.6.11 hereto. During the Transition
Period, each leased Hospital Employee shall continue to participate in all
Seller Plans on the same basis as in effect immediately prior to the Effective
Time, subject to the terms of the Employee Leasing Agreement.
(b) Purchaser covenants and agrees that it shall make
offers of employment effective as of the Transition Date (in substantially
equivalent positions) to all of the persons who are employees of (i) Seller with
respect to the operation of the Hospital or (ii) any affiliate of Seller which
employs individuals at the Hospital (whether such employees are full time
employees, part-time employees, on short-term or long-term disability or on
leave of absence pursuant to Seller's policies, or the Family and Medical Leave
Act of 1993 or other similar local law (such laws being collectively referred to
herein as the "FMLA") immediately prior to the Transition Date (the "Hospital's
Employees"), provided, however, that no Hospital Employee who is on any
disability or leave of absence on the Transition Date other than Hospital
Employees on leave of absence to the extent required pursuant to the FMLA shall
become a Hired Employee unless and until such Hospital Employee reports back to
work in accordance with Seller's practices at such time. Notwithstanding the
foregoing, Purchaser acknowledges that Seller has the right, but is not
required, to retain any management-level Hospital Employee who does not accept
Purchaser's employment offer made under this Section 5.3(a), which individuals
will remain employed by Seller or its applicable affiliate as of Transition Date
(the "Retained Management Employees"); provided, however, that beginning on the
Effective Date, Seller shall not solicit management level Hospital Employees or
otherwise interfere with Purchaser's attempt to employ same until the fifteenth
(15th) day following the Transition Date. Any of the Hospital's Employees who
accept an offer of employment with Purchaser as of or after the Transition Date
shall be referred to herein as the "Hired Employees." Purchaser covenants and
agrees that it shall continue to employ in comparable positions the Hired
Employees for a period of no less than ninety (90) calendar days following the
Closing Date, unless Purchaser sooner terminates the employment of any Hired
Employee for cause or any Hired Employee voluntarily resigns or retires.
Purchaser shall ensure that the terms and conditions of employment (including
level of compensation and benefits, including without limitation health
insurance plans containing a waiver of pre-existing conditions clause) for a
period of one year following the Closing Date for each of the Hired Employees
are no less favorable in the aggregate than those provided the Hospital's
Employees as of the Effective Date.
(c) Purchaser shall give all Hired Employees full credit for
accumulated sick pay and for all of the accrued vacation and holiday pay of such
employees, either by (i) crediting such employees the accrued time off reflected
in the employment records of Seller as of day immediately prior to the
Transition Date or (ii) by making full payments to such employees of the amounts
which such employees would have received had they taken their accrued or
accumulated holiday or vacation time, provided, however, that no payment to such
employees shall be required with respect to accumulated sick time except to the
extent required by Seller's policies with respect to accumulated sick time.
Immediately following the Transition Date and as a result of the transactions
completed by this agreement, Purchaser shall assume liability and obligation to
make COBRA benefits available to former employees (and their dependants) who
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are employed by Purchaser. Subject to reimbursement by Purchaser pursuant to the
Employee Leasing Agreement, Seller shall be responsible for any claims incurred
(whether or not reported) prior to the Transition Date by any Hospital Employee
under medical and health plans of Seller, or any of Seller's affiliates.
(d) On the Transition Date, Purchaser shall sponsor an
employee health benefit plan for the benefit of all Hired Employees with terms
and conditions that are no less favorable in the aggregate than the benefit
plans enjoyed by the Hired Employees immediately prior to Closing, and shall
allow all Hired Employees to participate therein immediately upon its adoption,
with no waiting period and no limitation on coverage for preexisting conditions.
On and after the Transition Date, Purchaser shall provide COBRA coverage under
its own group health plan referenced above to all Hospital Employees or
dependents whose qualifying event occurred after Closing and shall indemnify and
hold Seller harmless from any cost or liabilities with respect to same.
(e) Within two (2) years after Closing, Purchaser's Plan
shall (i) be amended to provide for a plan-to-plan transfer from Seller's (or
its affiliate's) plan with respect to the Hired Employees (other than the
Retained Management Employees) that is qualified under Section 401(a) and 401(k)
of the Code, (ii) accept a transfer of assets (both vested and unvested) from
the above plan, (iii) file any required returns relating to the transfer with
the Internal Revenue Service, and (iv) be amended to provide protected
withdrawal and distribution rights relating to the transferred assets in
accordance with Section 411(d)(6) of the Code. For purposes of this Agreement,
"Purchaser's Plan" shall mean a retirement plan qualified under Section 401(a)
of the Code that is sponsored by Purchaser or one of its controlled group or
affiliated service group members, as defined in Section 414 of the Code.
(f) Any applicable employee of Seller with respect to the
operation of the Hospital who is identified as a current or former participant
(and any eligible dependent thereof) of the Seller Plans who is eligible to
receive continuation coverage (within the meaning of Section 4980B of the Code
and Part 6 of Subtitle B of Title 1 of ERISA) will remain covered through
Seller's and its affiliates' COBRA provider. Immediately following the
Transition Date and as a result of the transactions contemplated by this
Agreement, Seller, and its affiliates shall not offer COBRA benefits with
respect to any of the Seller Plans to Hired Employees (and their dependents) as
of the date such Hired Employees become eligible for Purchaser's medical and
dental plans. Seller and its affiliates will thereby be released of COBRA
responsibility and liability for such employees.
(g) After the Transition Date, Purchaser or Purchaser's
representative will give reasonable assistance to Seller's (and its affiliates')
human resources department with respect to Seller's, and Seller's affiliates'
post-Closing administration of Seller's and Seller's affiliates' pre-Closing
employee pension benefit plans and employee health or welfare benefit plans for
the Hospital's Employees (other than the Retained Management Employees).
5.4 Use of Business Names. Purchaser covenants that it and its
affiliates shall not use in their respective trades or businesses the names
"Tenet Healthcare Corporation", "Tenet", "Tenet HealthSystem", "OrNda
HealthCorp", and any other names or symbols not used primarily
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at the Hospital on or prior to Closing, any abbreviations or variations thereof
or service marks, symbols or logos related thereto, nor any promotional
material, stationery, supplies or other items of inventory bearing either such
names, symbols or abbreviations or variations thereof.
5.5 Excluded Assets. As soon as practicable after the Closing,
Purchaser shall deliver to Seller or Seller's designee any Excluded Assets found
at the Hospital after the Closing Date, without imposing any charge on Seller
for Purchaser's storage or holding of same after the Closing Date.
5.6 Confidentiality. From the Effective Date until the Closing Date,
Purchaser shall, and shall cause its employees, representatives and agents to,
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of Purchaser's counsel, by other
requirements of law, all Confidential Information (as hereinafter defined), and
Purchaser shall not disclose the Confidential Information to any person, except
as otherwise may be reasonably necessary to carry out the transactions
contemplated by this Agreement, including any business or diligence review by or
on behalf of Purchaser. For the purposes hereof, "Confidential Information"
shall mean all information of any kind concerning Seller or the business of the
Hospital, in connection with the transactions contemplated by this Agreement
except information (i) ascertainable or obtained from public or published
information, (ii) received from a third party not known by Purchaser to be under
an obligation to Seller to keep such information confidential, (iii) which is or
becomes known to the public (other than through a breach of this Agreement), or
(iv) which was in Purchaser's possession prior to disclosure thereof to
Purchaser in connection herewith. The rights of Seller under this Section 5.6
shall be in addition and not in substitution for the rights of Seller under that
certain Confidentiality Agreement between Seller and Purchaser, dated February
18, 1999 (the "Confidentiality Agreement"), which Confidentiality Agreement
shall survive Closing.
5.7 Enforceability. Purchaser hereby acknowledges that the covenant
contained in Section 5.6 above is a condition precedent to Seller's entering
into this Agreement, and that such restrictions are reasonable and necessary to
protect the legitimate interests of Seller following the Closing. Purchaser also
hereby acknowledges that any violation of Section 5.6 would result in
irreparable injury to Seller and the remedy at law for any breach of Section 5.6
would be inadequate. Purchaser specifically acknowledges and agrees that Seller
shall be entitled to an equitable accounting of all earnings, profits and other
benefits arising from such breach and further agrees to pay the reasonable fees
and expenses, including attorneys' fees, incurred by Seller in enforcing the
restrictions contained in Section 5.6.
5.8 Hart-Scott-Rodino Act Filings. Purchaser shall (a) take promptly
all actions necessary to make the filings required of Purchaser or its
affiliates under the HSR Act, (b) comply at the earliest practicable date with
any request for additional information received by Purchaser or its affiliates
from the FTC or the DOJ pursuant to the HSR Act, and (c) cooperate with Seller
in connection with Seller's or its affiliates' filings under the HSR Act and in
connection with resolving any investigation or other regulatory inquiry
concerning the transactions contemplated by this Agreement commenced by either
the FTC or the DOJ.
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5.9 Group Purchasing Contract. Following the Closing, Purchaser
shall cause the Hospital to participate in specified national purchasing
contracts of Seller and its affiliates. Seller agrees that it will make
available to Purchaser the opportunity for other health care facilities owned or
operated by Purchaser or its affiliates to participate in such contracts. At
Closing, Purchaser shall execute a "Group Purchasing Contract" substantially in
the form of Exhibit 5.9 for such purpose; provided, however, that the assignment
provision and monthly information provision thereof remain subject to the mutual
reasonable agreement of both parties. The Group Purchasing Contract to be
executed by the parties shall provide, among other things, that either party
thereto may terminate such Contract without cause on sixty (60) days prior
written notice. Included as part of Exhibit 5.9 is a list of all of the national
purchasing contracts of Seller and its affiliates in effect as of the Effective
Date which do not preclude participation by persons or entities which are not
affiliates of Seller.
5.10 Acknowledgement Regarding Year 2000 Compliance. Subject to the
accuracy of the representation and warranties set forth in Section 2.19 and
Seller's compliance with its obligations under Section 4.18 of this Agreement,
Purchaser acknowledges that Purchaser assumes all liability with respect to Year
2000 compliance relating to the Assets. As used herein, the term "Year 2000
compliance" includes the ability to perform any of the following functions: (i)
to consistently handle date information before, at and after January 1, 2000,
including accepting date input, providing date output, and performing
calculations on dates or portions of dates; (ii) to function accurately without
interruption (or disruption of other software or systems) before, at and after
January 1, 2000, without any change in operations associated with the advent of
the new century; (iii) to respond to two-digit date input in a way that resolves
any ambiguity as to century; and (iv) to store and provide output of date
information in ways that are unambiguous as to century.
5.11 Waiver of Bulk Sales Law Compliance. Purchaser hereby waives
compliance by Seller and the Subsidiaries with the requirements, if any, of
Article 6 of the Uniform Commercial Code as in force in any state in which the
Assets are located and all other similar laws applicable to bulk sales and
transfers.
5.12 Preserve Accuracy of Representations and Warranties. Purchaser
shall refrain from any action or inaction that would render any representation
or warranty contained in Article 3 inaccurate as of the Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Seller's obligation to sell the Assets and to close the transactions as
contemplated by this Agreement shall be subject to the satisfaction of each of
the following conditions, as to the Assets taken as a whole on or prior to the
Closing Date unless specifically waived in writing by Seller in whole or in part
at or prior to the Closing:
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6.1 Closing of Related Asset Sale Transaction. Concurrent with
Closing the transactions contemplated by this Agreement, Purchaser and Tenet
shall close the Asset Sale Agreement between Tenet and Purchaser (the "Related
Asset Sale Agreement") pursuant to which Purchaser shall have purchased and
wholly-owned subsidiary corporations and majority-owned partnerships of Tenet
shall have sold substantially all of the assets with respect to the operation of
various Tenet hospitals in the States of Florida, Texas and Arizona (the
"Related Assets").
6.2 Failure to Exercise Right of First Refusal. The limited partners
of Seller shall not have exercised their right to purchase Seller's assets
pursuant to Section 2.2(a) of that certain Restated Articles of Limited
Partnership, dated November 7, 1989.
6.3 Warranties True and Correct. The representations and warranties
made by Purchaser and set forth in this Agreement and in the exhibits and
schedules attached hereto shall be true and correct in all material respects, as
to the Assets taken as a whole, when made and as of the Closing Date.
6.4 Signing and Delivery of Instruments. Purchaser shall have
executed and delivered all documents, instruments and certificates required to
be executed and delivered pursuant to the provisions of this Agreement.
6.5 Unfavorable Action or Proceeding. On the Closing Date, no
orders, decrees, judgments or injunctions of any court or governmental body
shall be in effect, and no claims, actions, suits, proceedings, arbitrations or
investigations shall be pending or threatened, which challenge or seek to
challenge, or which could prevent or cause the rescission of, the consummation
of the transactions contemplated in this Agreement.
6.6 Performance of Covenants. Purchaser shall have in all respects
performed or complied with each and all of the obligations, covenants,
agreements and conditions required to be performed or complied with by it on or
prior to Closing.
6.7 Opinion of Counsel for Purchaser. Seller shall have received the
favorable opinion of Purchaser's counsel, dated the Closing Date, in
substantially the form set forth in Exhibit 6.5 attached to this Agreement.
6.8 Hart-Scott-Rodino Filings. All filings required to be made and
notices required to be given pursuant to the HSR Act shall have been made, all
approvals or consents required thereby shall have been obtained and the waiting
periods required thereby, if any, shall have expired or terminated.
6.9 Consents, Approvals and Authorizations. The parties shall have
obtained all material consents, licenses, approvals, permits, certificates of
need, waivers and authorizations from governmental agencies or bodies and third
parties that are necessary or required for completion of the transactions
contemplated by this Agreement.
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6.10 Exhibits and Schedules.
(a) The provisions of the exhibits and schedules that were
not attached to this Agreement at the Effective Date, or such later date as is
expressly contemplated by this Agreement, shall not be material as to the Assets
taken as a whole.
(b) To the extent the provisions of the exhibits and
schedules attached to this Agreement as of the Effective Date (or were deemed to
be attached to this Agreement as of the Effective Date pursuant to Section 4.19
of this Agreement) were updated after the Effective Date (or the date on which
schedules and exhibits addressed by Section 4.19 were agreed upon by the
parties), such updates shall not be material as to the Assets taken as a whole.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
Purchaser's obligation to purchase the Assets and to close the
transactions contemplated by this Agreement shall be subject to the satisfaction
of each of the following conditions as to the Assets and operations of the
Hospital taken as a whole on or prior to the Closing Date unless specifically
waived in writing by Purchaser in whole or in part at or prior to the Closing.
7.1 Closing of Related Asset Sale Transaction. Concurrent with
Closing the transactions contemplated by this Agreement, Purchaser and Tenet
shall close the Related Asset Sale Agreement pursuant to which Purchaser shall
have purchased and wholly-owned subsidiary corporations and majority-owned
partnerships of Tenet shall have sold the Related Assets.
7.2 Failure to Exercise Right of First Refusal. The limited partners of
Seller shall not have exercised their right to purchase Seller's assets pursuant
to Section 2.2(a) of that certain Restated Articles of Limited Partnership,
dated November 7, 1989.
7.3 Warranties True. Each of the representations and warranties made
by Seller and set forth in this Agreement and in the Disclosure Schedule,
exhibits and schedules attached hereto shall be true and correct in all material
respects when considered together with the representations and warranties made
by Tenet and set forth in the Related Asset Sale Agreement and in the disclosure
schedule, exhibits and schedules attached thereto, as to the Assets and the
Related Assets taken as a whole, when made and as of the Closing Date.
7.4 Consents, Approvals and Authorizations. The parties shall have
obtained all material consents, licenses, approvals, permits, certificates of
need, waivers and authorizations from governmental agencies or bodies and third
parties that are necessary or required for completion of the transactions
contemplated by this Agreement or the operation of the business of the Hospital;
provided, however that the landlord consents contemplated to be obtained by
Section 1.6.13 hereof shall be deemed the "material" landlord consents for this
purpose.
7.5 Signing and Delivery of Instruments. Seller shall have executed
and delivered all documents, instruments and certificates required to be
executed and delivered pursuant to all of the provisions of this Agreement.
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7.6 Performance of Covenants. Seller shall have in all material
respects performed or complied with the material obligations, covenants,
agreements and conditions required to be performed or complied with by Seller on
or prior to Closing.
7.7 Unfavorable Action or Proceeding. On the Closing Date, no
orders, decrees, judgments or injunctions of any court or governmental body
shall be in effect, and no claims, actions, suits, proceedings, arbitrations or
investigations shall be pending or threatened, which challenge or seek to
challenge, or which could prevent or cause the rescission of, the consummation
of the transactions contemplated in this Agreement, or materially and adversely
impair Purchaser's rights to own or operate the Hospital after the Closing Date.
7.8 Hart-Scott-Rodino Filings. All filings required to be made and
notices required to be given pursuant to the HSR Act shall have been made, all
approvals or consents required thereby shall have been obtained and the waiting
periods required thereby, if any, shall have expired or terminated.
7.9 Governmental Concurrences. Purchaser shall have obtained
assurances from all of the necessary governmental authorities, in form and
substance reasonably satisfactory to Purchaser, that Purchaser will be granted
all material governmental approvals, licenses, clearances, certifications and/or
provider numbers necessary or appropriate for the continued, uninterrupted
operation of the Hospital following the Closing. Purchaser shall have received
approvals, consents or commitments from Medicare, Medicaid, and the fiscal
intermediary with respect to the Hospital, to the extent any such approvals,
consents or commitments are reasonably needed, for Purchaser's continued
participation in each program and providing satisfactory assurances that there
shall be no material interruptions in program payments.
7.10 Opinion of Counsel. Purchaser shall have received the favorable
opinion of Seller's in-house counsel dated the Closing Date, in substantially
the form attached hereto as Exhibit 7.8.
7.11 Exhibits and Schedules.
(a) The provisions of the exhibits and schedules that were
not attached to this Agreement at the Effective Date, or such later date as is
expressly contemplated by this Agreement, shall not be material as to the Assets
taken as a whole.
(b) To the extent the provisions of the Disclosure Schedule
and the exhibits and schedules attached to this Agreement as of the Effective
Date (or were deemed to be attached to this Agreement as of the Effective Date
pursuant to Section 4.19 of this Agreement) were updated after the Effective
Date (or the date on which schedules and exhibits addressed by Section 4.19 were
agreed upon by the parties), such updates shall not be material as to the Assets
taken as a whole.
7.12 Title Insurance Policy. Purchaser shall have received a fully
effective Title Policy issued to Purchaser by the Title Company covering the
Owned Real Property and of the Leased Real Property subject to ground leases in
the amount of the full insurable value of the Owned
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Real Property and such Leased Real Property, respectively (which amount shall be
set forth in Schedule 11.1(b)). The Title Policy shall show fee simple title to
the Owned Real Property vested in Purchaser, or valid leasehold title to the
Leased Real Property subject to ground leases, subject only to: (i) current real
estate taxes not yet due and payable; and (ii) the permitted title exceptions
listed in Schedule 7.10 hereto (the "Permitted Exceptions"). Purchaser's counsel
has reviewed the title commitments and identified certain issues related thereto
prior to the Effective Date; Purchaser's counsel shall use its commercially
reasonable efforts to identify any additional issues within ten (10) business
days following the Effective Date and bring such issues promptly to Seller's
attention. The Title Policy shall have all standard and general exceptions
deleted so as to afford full "extended form coverage" and include all
endorsements reasonably requested by Purchaser.
7.13 Financing. The Purchaser shall have available to it the proceeds
of the financing described in the letters included in Exhibit 7.11 attached
hereto or other financing agreements. The Purchaser shall use its best efforts
to cause all conditions in such letters and any related credit facility
agreement to be timely satisfied.
7.14 Material Adverse Change. Since May 31, 1999, (i) Seller shall
have operated the Hospital and the Assets in the ordinary course of business,
consistent with past practice, and (ii) there shall not have occurred any event,
change or development which, individually or in the aggregate, could reasonably
be expected to have a material adverse effect on the business, assets, financial
condition or operation of the Hospital.
7.15 Audit. Seller shall have delivered the Audit with respect to the
Financial Statements referred to in Section 4.8(b) hereto.
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior
to Closing:
(a) by the mutual written consent of the parties;
(b) by either Purchaser or Seller (the "Nondefaulting
Party") if a material breach of any provision of this Agreement has been
committed by the other party (the "Breaching Party") and such breach has not
been (i) waived in writing by the Nondefaulting Party or (ii) cured by the
Breaching Party to the reasonable satisfaction of the Nondefaulting Party within
fifteen (15) business days after service by the Nondefaulting Party upon the
Breaching Party of a written notice which describes the nature of such breach;
(c) by Purchaser if any of the conditions in Article 7 have
not been satisfied as of the Closing Date or if satisfaction of any such
condition is or becomes impossible (other than through the failure of Purchaser
to comply with its obligations under this Agreement) and Purchaser has not
waived such condition in writing on or before the Closing Date;
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(d) by Seller if any of the conditions in Article 6 have
not been satisfied as of the Closing Date or if satisfaction of any such
condition is or becomes impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller has not waived such
condition in writing on or before the Closing Date;
(e) by either Purchaser or Seller if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before November 30, 1999.
8.2 Termination Consequences. If this Agreement is terminated
pursuant to Section 8.1, all further obligations of the parties under this
Agreement shall terminate, except that the obligations in Sections 5.6, 12.3,
12.8, and 12.12 shall survive; provided, however, that nothing contained herein
shall relieve any party from liability for any intentional breach of this
Agreement.
8.3 Costs. In the event of a termination of this Agreement pursuant
to Section 8.1(a) or 8.1(c) through 8.1(e) hereof, (a) each party shall pay the
costs and expenses incurred by it in connection with this Agreement, except as
provided in Section 12.12, and (b) no party shall be liable to any other party
for any costs, expenses, damage or loss of anticipated profits hereunder other
than the liquidated damages provided to Seller pursuant to Section 8.2. In the
event of a termination of this Agreement pursuant to Section 8.1(b), then the
parties shall have the right to pursue all remedies available at law or in
equity.
ARTICLE 9
POST-CLOSING MATTERS
9.1 Excluded Assets and Excluded Liabilities. Subject to Section
11.2 hereof, any asset (including Accounts Receivable) or any liability, all
other remittances and all mail and other communications that are determined by
the parties' agreement, or, absent such agreement, determined by litigation, to
be or otherwise relate to an Excluded Asset or an Excluded Liability and that is
or comes into the possession, custody or control of Purchaser (or its successors
in interest or assigns, or its respective affiliates) shall forthwith be
transferred, assigned or conveyed by Purchaser (or its respective successors in
interest or assigns and its respective affiliates) to Seller at Seller's cost.
Until such transfer, assignment and conveyance, Purchaser (and its respective
successors in interest and assigns and its respective affiliates) shall not have
any right, title or interest in or obligation or responsibility with respect to
such asset or liability except that Purchaser shall hold such asset in trust for
the benefit of Seller. Purchaser (and its respective successors in interest and
assigns and its respective affiliates) shall have neither the right to offset
amounts payable to Seller under this Section 9.1 against, nor the right to
contest its obligation to transfer, assign and convey to Seller because of,
outstanding claims, liabilities or obligations asserted by Purchaser against
Seller including but not limited to pursuant to the post-Closing Purchase Price
adjustment of Section 1.4 and the indemnification provisions of Section 10.2.
The terms of this Article 9 shall not be subject to the time limitations
contained in Section 10.1 of this Agreement.
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9.2 Preservation and Access to Records After the Closing.
(a) From the Closing Date until seven (7) years after the
Closing or such longer period as required by law (the "Document Retention
Period"), Purchaser shall keep and preserve all medical records, patient
records, medical staff records and other books and records of Seller and the
Hospital existing as of the Closing relating to tax or other liabilities of
Seller prior to the Closing, but excluding any records which are among the
Excluded Assets. Purchaser will afford to the representatives of Seller,
including its counsel and accountants, full and complete access to, and copies
of, such records with respect to time periods on or prior to the Closing Date
(including, without limitation, access to records of patients treated at the
Hospital on or prior to the Closing Date) during normal business hours after the
Closing Date, to the extent reasonably needed by Seller (or its affiliates) for
business purposes. Purchaser acknowledges that, as a result of entering into
this Agreement and operating the Hospital, it will gain access to patient
records and other information which are subject to rules and regulations
concerning confidentiality. Purchaser shall abide by any such rules and
regulations relating to the confidential information it acquires. Purchaser
shall maintain the patient and medical staff records at the Hospital in
accordance with applicable law and the requirements of relevant insurance
carriers. After the expiration of the Document Retention Period, if Purchaser
intends to destroy or otherwise dispose of any of the documents described in
this Section 9.2(a), Purchaser shall provide written notice to Seller of
Purchaser's intention no later than thirty (30) calendar days prior to the date
of such intended destruction or disposal. Seller shall have the right, at its
sole cost, to take possession of such documents during such forty-five (45)
calendar day period. If Seller does not take possession of such documents during
such forty-five (45) calendar day period, Purchaser shall be free to destroy or
otherwise dispose of such documentation upon the expiration of such forty-five
(45) day period.
(b) Purchaser shall give reasonable cooperation to Seller
and its affiliates and its insurance carriers in respect of the defense of
claims by third parties against Seller, in respect of events occurring on or
prior to the Closing with respect to the operation of the Hospital. Such
cooperation shall include, without limitation, making the Hired Employees
available for interviews, depositions, hearings and trials. Such cooperation
shall also include making all of its employees available to assist in the
securing and giving of evidence and in obtaining the presence and cooperation of
witnesses (all of which shall be done without payment of any fees or expenses to
Purchaser or to such employees). In addition, Seller and its affiliates shall be
entitled to access any such records, but only for purposes of pending litigation
involving the persons to whom such records refer, as certified in writing by
counsel retained by Seller or any of its affiliates in connection with such
litigation. Such records shall be, at Purchaser's option either (i) copied by
Purchase for Seller at Seller's expense or (ii) removed from the premises by
Seller, copied by Seller and promptly returned to Purchaser unless the originals
of such records must be introduced into evidence in which case Seller shall
return them as soon as practicable.
(c) In connection with (i) the transition of the Hospital
pursuant to the transaction contemplated by this Agreement, (ii) Seller's rights
to the Excluded Assets, (iii) Seller's obligations under the Excluded
Liabilities and (iv) Seller's preparation of the Final Balance Sheet pursuant to
Section 1.4, Purchaser shall after the Closing Date give Seller, Seller's
affiliates and their respective representatives reasonable access during normal
business hours to
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Purchaser's books, accounts and records and all other relevant documents and
information with respect to the assets, liabilities and business of the Hospital
as representatives of Seller and Seller's affiliates may from time to time
reasonably request, all in such manner as not to unreasonably interfere with the
operations of the Hospital. Seller acknowledges that it shall coordinate its
activities contemplated by this Section 9.2(c) through Frank Coyle, or his
designee.
(d) Purchaser and its representatives shall be given access
by Seller during normal business hours to the extent reasonably needed by
Purchaser for business purposes to all documents, records, correspondence, work
papers and other documents retained by Seller pertaining to any of the Assets or
with respect to the operation of the Hospital on or prior to the Closing Date,
all in such manner as to not interfere unreasonably with Seller's business. Such
documents and other materials shall be, at Seller's option, either (i) copied by
Seller for Purchaser at Purchaser's expense, or (ii) removed by Purchaser from
the premises, copied by Purchaser and promptly returned to Seller.
ARTICLE 10
SURVIVAL AND INDEMNIFICATION
10.1 Survival. Except as expressly set forth in this Agreement to the
contrary, all representations and warranties of Purchaser and Seller,
respectively, contained in this Agreement or in any document delivered pursuant
hereto shall be deemed to be material and to have been relied upon by Purchaser
and Seller, respectively, and shall continue to be fully effective and
enforceable following the Closing Date for two years, and shall thereafter be of
no further force and effect. Notwithstanding the foregoing, the representations
and warranties set forth in Section 2.7(a) and (b) and Section 2.13 shall
continue to be fully effective and enforceable following the Closing Date for
the applicable statutes of limitations periods, plus 30 days, and the
indemnification provisions contained in Sections 10.2.1(ii), (iii), (iv), (v),
(vi), (vii) and (viii), and 10.3.1(iv) shall continue to be fully effective and
enforceable following the Closing Date until the expiration of any applicable
statute of limitations period, or, if none, without any time limitation;
provided, however, that if there is an outstanding notice of a claim at the end
of any such applicable period in compliance with the terms of Section 10.4, such
applicable period shall not end in respect of such claim until such claim is
resolved. All covenants of Purchaser and Seller herein shall survive Closing in
accordance with their terms. The parties acknowledge and agree that the
provisions of Section 10.2.1(ii), (iii), (iv), (v), (vi), (vii) and (viii) shall
remain in full force and effect notwithstanding the expiration of any survival
period referred to in this Section 10.1 and that Purchaser's right to bring any
claims for damages under such provisions shall be unimpaired by the expiration
of any such survival period (notwithstanding the fact that such claims could
have been brought under Section 10.2.1(i).
10.2 Indemnification of Purchaser by Seller.
10.2.1 Indemnification. Seller shall keep and save Purchaser,
its controlled affiliates and their respective directors, officers, employees,
agents and other representatives (the "Purchaser Group"), forever harmless from
and shall indemnify and defend the Purchaser Group
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against any and all obligations, judgments, liabilities, penalties, violations,
fees, fines, claims, losses, costs, demands, damages, liens, encumbrances and
expenses including reasonable attorneys' fees (collectively, "Damages"), whether
direct or consequential and no matter how arising, to the extent, connected with
or arising or resulting from or proximately related to (i) any breach of any
representation or warranty of Seller under this Agreement, (ii) any breach or
default by Seller of any covenant or agreement of Seller under this Agreement,
(iii) the Excluded Liabilities, (iv) the Excluded Assets, (v) all Taxes relating
to Seller or (for any period ending on or prior to the Closing Date) the Assets
("Seller Tax Claims"), (vi) any professional or general liability claim arising
out of the business operations of the Hospital on or prior to the Closing Date
and (vii) any act, conduct or omission of Seller, or any event or circumstance
pertaining to Seller or the Assets, that has accrued, arisen, occurred or come
into existence at any time on or prior to the Closing Date, including without
limitation failure to comply with bulk sales laws. No provision in this
Agreement shall prevent Seller from pursuing any of its legal rights or remedies
that may be granted to Seller by law against any person or legal entity other
than any other member of the Purchaser Group.
10.2.2 Indemnification Limitations. (a) Seller shall be
under no liability to indemnify the Purchaser Group under Section 10.2.1 and no
claim under Section 10.2.1 of this Agreement shall:
(i) be made unless notice thereof shall have
been given by or on behalf of Purchaser to
Seller in the manner provided in Section
10.4, unless failure to provide such notice
in a timely manner does not materially
impair Seller's ability to defend its
rights, mitigate damages, seek
indemnification from a third party or
otherwise protect its interests;
(ii) be made to the extent that such claim
relates to a liability arising out of or
relating to any act, omission, event or
occurrence connected with:
(A) the use, ownership or operation of any
of the Hospital, or
(B) the use, ownership or operation of any
of the Assets,
after the Closing Date; other than as
specifically included in the Excluded
Liabilities;
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(iii) be made to the extent that such claim (or
the basis therefor) is set forth in the
Disclosure Schedule unless Seller's
indemnification of Purchaser is based on a
provision hereof other than Section
10.2.1(i);
(iv) be made if and to the extent that proper
provision or reserve was made for the matter
giving rise to the claim in Net Working
Capital;
(v) be made to the extent such claim relates to
an obligation or liability for which
Purchaser has agreed to indemnify Seller
pursuant to Section 10.3; and
(vi) to the extent such claim is made pursuant to
Section 10.2.1(i), accrue to Purchaser
unless and only to the extent that (A)
Damages in respect of any single claim under
Section 10.2.1(i) exceeds Five Thousand
Dollars ($5,000) (a "Relevant Claim") and
(B) the total actual liability of Seller in
respect of all Relevant Claims in the
aggregate exceeds Three Hundred Seventy Two
Thousand Dollars ($372,000) (the "Aggregate
Amount"), in which event Purchaser shall be
entitled to seek indemnification under
Section 10.2.1(i) for all Relevant Claims
only in an amount of Damages which exceed
the Aggregate Amount; provided, however,
that with respect to claims made pursuant to
Section 10.2.1(i) based on Damages incurred
as a result of any breach of Section 2.4(a),
any single claim or series of related claims
for amounts in excess of $100,000 shall be
paid in full by Seller without regard to the
provisions of this clause (vi).
(b) Notwithstanding any other provision of this Agreement
to the contrary, the maximum aggregate liability of Seller to Purchaser under
this Agreement shall not exceed the Purchase Price.
(c) If Purchaser is entitled to recover any sum (whether
by payment, discount, credit or otherwise) from any third party (other than an
insurance carrier) in respect of any matter for which a claim of indemnity could
be made against Seller hereunder, Purchaser either shall, at its option, use its
reasonable endeavors to recover such sum from such third party and any sum
recovered will reduce the amount of the claim or shall assign to Seller the
right of Purchaser to pursue such third party. If Seller pays to Purchaser an
amount in respect of a claim, and Purchaser subsequently recovers from a third
party a sum which is referable to that claim, Purchaser shall forthwith repay to
Seller so much of the amount paid by it as does not exceed the sum recovered
from the third party less all reasonable costs, charges and expenses incurred by
Purchaser in obtaining payment in respect of that claim and in recovering that
sum from the third party.
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10.3 Indemnification of Seller by Purchaser.
10.3.1 Indemnification. Purchaser shall keep and save Seller,
and their respective directors, officers, employees, agents and other
representatives, forever harmless from and shall indemnify and defend Seller
against any and all Damages, whether direct or consequential and no matter how
arising, in any way related to, connected with or arising or resulting from (i)
any breach of any representation or warranty of Purchaser under this Agreement,
(ii) any breach or default by Purchaser under any covenant or agreement of
Purchaser under this Agreement, (iii) cost reports (and all claims with respect
thereto) relating to Purchaser with respect to Medicare, Medicaid, CHAMPUS or
Blue Cross programs or any other third-party payor for all periods beginning
after the Closing Date, (iv) the Assumed Obligations, (v) any professional or
general liability claim arising out of the business operations of the Hospital
after the Closing Date, (vi) any Assumed Obligations, (vii) liabilities to the
Hired Employees arising out of actions of Purchaser based wholly or in part upon
the contents of the personnel records of such employees, and (viii) involuntary
termination of the Hired Employees after the Transition Date, which termination
would constitute a "mass layoff" or a "plant closing" within the meaning of
WARN. No provision in this Agreement shall prevent Purchaser from pursuing any
of its legal rights or remedies that may be granted to Purchaser by law against
any person or legal entity other than Seller or any affiliate of Seller.
10.3.2 Indemnification Limitations. (a) Purchaser shall be
under no liability to indemnify Seller under 10.3.1 and no claim under Section
10.3.1 of this Agreement shall:
(i) be made unless notice thereof shall have
been given by or on behalf of Seller to
Purchaser in the manner provided in Section
10.4, unless failure to provide such notice
in a timely manner does not materially
impair Seller's ability to defend its
rights, mitigate damages, seek
indemnification from a third party or
otherwise protect its interests;
(ii) be made to the extent that any loss may be
recovered under a policy of insurance in
force on the date of loss; provided,
however, that this Section 10.3.2(ii) shall
not apply to the extent that coverage under
the applicable policy of insurance is denied
by the applicable insurance carrier;
(iii) be made to the extent that such claim
relates to a liability arising out of or
relating to any act, omission, event or
occurrence connected with:
(A) the use, ownership or operation of any
of the Hospital, or
(B) the use, operation or ownership of any
of the Assets,
on or prior to the Closing Date, other than
as specifically included in the Assumed
Obligations; and
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(iv) be made to the extent such claim relates to
an obligation or liability for which Seller
has agreed to indemnify Purchaser pursuant
to Section 10.2.
(b) If Seller is entitled to recover any sum (whether by
payment, discount, credit or otherwise) from any third party in respect of any
matter for which a claim of indemnity could be made against Purchaser hereunder,
Seller shall use its reasonable endeavors to recover such sum from such third
party and any sum recovered will reduce the amount of the claim. If Purchaser
pays to Seller an amount in respect of a claim, and Seller subsequently recovers
from a third party a sum which is referable to that claim, Seller shall
forthwith repay to Purchaser so much of the amount paid by it as does not exceed
the sum recovered from the third party less all reasonable costs, charges and
expenses incurred by Seller in obtaining payment in respect of that claim and in
recovering that sum from the third party.
10.4 Method of Asserting Claims. All claims for indemnification by
any person entitled to indemnification hereunder (the "Indemnified Party") under
this Article 10 will be asserted and resolved as follows:
(a) In the event any claim or demand, for which a party
hereto (an "Indemnifying Party") would be liable for the Damages to an
Indemnified Party, is asserted against or sought to be collected from such
Indemnified Party by a person other than Seller, Purchaser or their affiliates
(a "Third Party Claim"), the Indemnified Party shall deliver a notice of its
claim (a "Claim Notice") to the Indemnifying Party within thirty (30) calendar
days after the Indemnified Party receives notice of such Third Party Claim;
provided, however, that notice shall be provided to the Indemnifying Party
within fifteen (15) calendar days after receipt of a complaint, petition or
institution of other formal legal action by the Indemnified Party. If the
Indemnified Party fails to provide the Claim Notice within such applicable time
period after the Indemnified Party receives notice of such Third Party Claim and
thereby materially impairs the Indemnifying Party's ability to protect its
interests, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim. The Indemnifying Party
will notify the Indemnified Party within thirty (30) calendar days after receipt
of the Claim Notice (the "Notice Period") whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified
Party within the Notice Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this Section
10.4(a), then, subject to the immediately succeeding sentence, the Indemnifying
Party will have the right to defend, at its sole cost and expense, such Third
Party Claim by all appropriate proceedings, which proceedings will be prosecuted
by the Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party. To the extent the Claim is solely for
money damages, the Indemnifying Party will have full control of such defense and
proceedings, including any compromise or settlement thereof. Notwithstanding the
foregoing, the Indemnified Party may, at its sole cost and expense, file during
the Notice Period any motion, answer or other pleadings that the Indemnified
Party may deem necessary or appropriate to protect its interests or those of the
Indemnifying Party and which is not prejudicial, in the reasonable judgment of
the Indemnifying
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Party, to the Indemnifying Party. Except as provided in Section 10.4(a)(ii)
hereof, if an Indemnified Party takes any such action that is prejudicial and
causes a final adjudication that is adverse to the Indemnifying Party, the
Indemnifying Party will be relieved of its obligations hereunder with respect to
the portion of such Third Party Claim prejudiced by the Indemnified Party's
action. If requested by the Indemnifying Party, the Indemnified Party agrees, at
the sole cost and expense of the Indemnifying Party, to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, or, if appropriate and related to the
Third Party Claim in question, in making any counterclaim against the person
asserting the Third Party Claim, or any cross-complaint against any person
(other than the Indemnified Party or any of its affiliates). The Indemnified
Party may participate in, but not control, any defense or settlement of any
Third Party Claim controlled by the Indemnifying Party pursuant to this Section
10.4(a)(i), and except as specifically provided in this Section 10.4(a)(i), the
Indemnified Party will bear its own costs and expenses with respect to such
participation.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Notice Period that the Indemnifying Party desires
to defend the Indemnified Party pursuant to this Section 10.4(a), or if the
Indemnifying Party gives such notice but fails to prosecute diligently or settle
the Third Party Claim, or if the Indemnifying Party fails to give any notice
whatsoever within the Notice Period, then the Indemnified Party will have the
right to defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings will be
promptly and reasonably prosecuted by the Indemnified Party to a final
conclusion or will be settled at the discretion of the Indemnified Party. The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party agrees, at the sole
cost and expense of the Indemnifying Party, to cooperate with the Indemnified
Party and its counsel in contesting any Third Party Claim which the Indemnified
Party is contesting, or, if appropriate and related to the Third Party Claim in
question, in making any counterclaim against the person asserting the Third
Party Claim, or any cross-complaint against any person (other than the
Indemnifying Party or any of its affiliates). Notwithstanding the foregoing
provisions of this Section 10.4(a)(ii), if the Indemnifying Party has notified
the Indemnified Party with reasonable promptness that the Indemnifying Party
disputes its liability to the Indemnified Party with respect to such Third Party
Claim and if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 10.4(a)(ii) or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party will reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. Subject to the above terms of this Section 10.4(a)(ii),
the Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section
10.4(a)(ii), and the Indemnifying Party will bear its own costs and expenses
with respect to such participation. The Indemnified Party shall give sufficient
prior notice to the Indemnifying Party of the initiation of any discussions
relating to the settlement of a Third Party Claim to allow the Indemnifying
Party to participate therein.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that either (i) does not involve a
Third Party Claim being asserted
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against or sought to be collected from the Indemnified Party or (ii) is a Seller
Tax Claim, the Indemnified Party shall deliver an Indemnity Notice (as
hereinafter defined) to the Indemnifying Party. (The term "Indemnity Notice"
shall mean written notification of a claim for indemnity under Article 10 hereof
(which claim does not involve a Third Party Claim or is a Seller Tax Claim) by
an Indemnified Party to an Indemnifying Party pursuant to this Section 10.4,
specifying the nature of and specific basis for such claim and the amount or the
estimated amount of such claim.) The failure by any Indemnified Party to give
the Indemnity Notice shall not impair such party's rights hereunder except to
the extent that an Indemnifying Party demonstrates that it has been prejudiced
thereby.
(c) If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) calendar days following its receipt of a
Claim Notice or an Indemnity Notice that the Indemnifying Party disputes its
liability to the Indemnified Party hereunder, such claim specified by the
Indemnified Party will be conclusively deemed a liability of the Indemnifying
Party hereunder and the Indemnifying Party shall pay the amount of such
liability to the Indemnified Party on demand, or on such later date (i) in the
case of a Third Party Claim, as the Indemnified Party suffers the Damages in
respect of such Third Party Claim, (ii) in the case of an Indemnity Notice in
which the amount of the claim is estimated, when the amount of such claim
becomes finally determined or (iii) in the case of a Seller Tax Claim, within
fifteen (15) calendar days following final determination of the item giving rise
to the claim for indemnity. If the Indemnifying Party has timely disputed its
liability with respect to such claim, as provided above, the Indemnifying Party
and the Indemnified Party agree to proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations, such
dispute will be resolved pursuant to Section 12.17 hereof.
(d) The Indemnified Party agrees to give the Indemnifying
Party reasonable access to the books and records and employees of the
Indemnified Party in connection with the matters for which indemnification is
sought hereunder, to the extent the Indemnifying Party reasonably deems
necessary in connection with its rights and obligations hereunder.
(e) The Indemnified Party shall assist and cooperate with
the Indemnifying Party in the conduct of litigation, the making of settlements
and the enforcement of any right of contribution to which the Indemnified Party
may be entitled from any person or entity in connection with the subject matter
of any litigation subject to indemnification hereunder. In addition, the
Indemnified Party shall, upon request by the Indemnifying Party or counsel
selected by the Indemnifying Party (without payment of any fees or expenses to
the Indemnified Party or an employee thereof), attend hearings and trials,
assist in the securing and giving of evidence, assist in obtaining the presence
or cooperation of witnesses, and make available its own personnel; and shall do
whatever else is necessary and appropriate in connection with such litigation.
The Indemnified Party shall not make any demand upon the Indemnifying Party or
counsel for the Indemnifying Party in connection with any litigation subject to
indemnification hereunder, except a general demand for indemnification as
provided hereunder. If the Indemnified Party shall fail to perform such
obligations as Indemnified Party hereunder or to cooperate fully with the
Indemnifying Party in Indemnifying Party's defense of any suit or proceeding,
such cooperation to include, without limitation, attendance at all relevant
depositions and the provision of all documents (subject to appropriate
privileges) relevant to the defense of
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any claim, then, except where such failure does not materially impair the
Indemnifying Party's defense of such claims after notice from the Indemnified
Party and 15 days to cure, the Indemnifying Party shall be released from all of
its obligations under this Agreement with respect to that suit or proceeding and
any other claims which had been raised in such suit or proceeding.
(f) Following indemnification as provided for hereunder,
the Indemnifying Party shall be subrogated to all rights of the Indemnified
Party with respect to all persons or entities relating to the matter for which
indemnification has been made.
10.5 Exclusive. Other than claims for fraud or equitable relief, any
dispute arising under this Agreement or in connection with or as a result of the
transactions contemplated by this Agreement or any Damages or injury alleged to
be suffered by either party as a result of the actions or failure to act by any
other party shall, unless otherwise specifically stated in this Agreement, be
governed solely and exclusively by the provisions of this Article 10.
10.6 Reduction of the Purchase Price. If Seller pays any sum to
Purchaser in respect of a claim under Article 10, the Purchase Price and total
consideration received by Seller for the sale of the Assets shall be deemed to
be reduced by the amount of such payment.
ARTICLE 11
TAX AND COST REPORT MATTERS
11.1 Tax Matters; Allocation of Purchase Price.
(a) After the Closing, the parties shall cooperate fully
with each other and shall make available to each other, as reasonably requested,
all information, records or documents relating to tax liabilities or potential
tax liabilities attributable to Seller with respect to the operation of the
Hospital for all periods on or prior to the Closing Date and shall preserve all
such information, records and documents at least until the expiration of any
applicable statute of limitations or extensions thereof. The parties shall also
make available to each other as reasonably required, and at the reasonable cost
of the requesting party (for out-of-pocket costs and expenses only), personnel
responsible for preparing or maintaining information, records and documents in
connection with tax matters.
(b) The Purchase Price shall be allocated among each of the
Assets (or, where more practical, each category of Assets) in accordance with
Schedule 11.1(b), which will be agreed upon within five (5) business days prior
to the Closing Date by Seller and Purchaser. Seller and Purchaser hereby agree
to allocate the Purchase Price in accordance with Schedule 11.1(b), to be bound
by such allocations for all purposes, to account for and report the purchase and
sale of the Assets contemplated hereby for all purposes (including, without
limitation, financial reporting, accounting, Medicare reimbursement and federal
and state tax purposes) in accordance with such allocations, and not to take any
position (whether in financial statements, cost reports, tax returns, cost
report or tax audits, or otherwise), which is inconsistent with such allocations
without the prior written consent of the other party.
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11.2 Cost Report Matters.
(a) Seller shall prepare and timely file all cost reports
relating to the periods ending on or prior to the Closing Date or required as a
result of the consummation of the transactions described herein, including,
without limitation, those relating to Medicare, Medicaid, Blue Cross and other
third party payors which settle on a cost report basis (the "Subsidiaries' Cost
Reports"). Purchaser shall forward to Seller any and all correspondence relating
to the Accounts Receivable, Seller's Cost Reports or rights to settlements and
retroactive adjustments on the Seller's Cost Reports ("Agency Settlements")
within five (5) business days of receipt by Purchaser. Purchaser shall not reply
to any such correspondence without Seller's written approval. Purchaser shall
remit any receipts relating to the Accounts Receivable, the Seller's Cost
Reports or the Agency Settlements within five (5) business days after receipt by
Purchaser (except those receipts to be retained by Purchaser pursuant to Section
11.3) and will forward any demand for payments within five (5) business days.
Purchaser (and its respective successors in interest and assigns and its
respective affiliates) shall have neither the right to offset amounts payable to
Seller under this Section 11.2 against, nor the right to contest its obligation
to transfer, assign and convey to Seller because of, outstanding claims,
liabilities or obligations asserted by Purchaser against Seller including but
not limited to pursuant to the post-closing Purchase Price adjustment of Section
1.4 and the indemnification provisions of Section 10.2. Seller shall retain all
rights to the Seller's Cost Reports and to the Accounts Receivable including,
without limitation, any payables resulting therefrom or receivables relating
thereto and the right to appeal any Medicare determinations relating to the
Agency Settlements and the Seller's Cost Reports. Seller will furnish copies of
the Receivables Records to Purchaser upon request and allow Purchaser and its
representatives reasonable access to such documents.
(b) Upon reasonable notice and during normal business
office hours, Purchaser will cooperate with Seller in regard to the preparation,
filing, handling, and appeals of the Seller's Cost Reports. Upon reasonable
notice and during normal business office hours, Purchaser will cooperate with
Seller in connection with any cost report disputes and/or other claim
adjudication matters relative to governmental program reimbursement. Such
cooperation shall include the providing of statistics and obtaining files at the
Hospital and the coordination with Seller pursuant to adequate notice of
Medicare and Medicaid exit conferences or meetings. Purchaser will, upon
reasonable notice, during normal business office hours and at the sole cost and
expense of Seller, and subject to applicable law regarding confidentiality of
patient records, provide Seller reasonable access to all records of the Hospital
and will allow Seller and its respective representatives to copy any documents
relating to the Seller's Cost Reports and appeals thereof.
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11.3 Transition Services. To compensate Seller for services rendered
and medicine, drugs, and supplies provided on or before the Closing Date at any
of the Hospital (the "Transition Services") with respect to patients whose
medical care is paid for, in whole or in part, by Medicare, Medicaid, CHAMPUS,
Blue Cross or any other third party payor who pays on a DRG, case rate or other
similar arrangement, and who are admitted to the Hospital on or before the
Closing Date but who are not discharged until after the Closing Date
("Governmental Program Transition Patients"), the parties shall take the
following action:
(a) As soon as practicable after the Closing Date, Seller
shall deliver to Purchaser a statement itemizing the inpatient hospital
Transition Services provided by Seller with respect to the operation of the
Hospital on or prior to the Closing Date to Governmental Program Transition
Patients. For the Transition Services, Purchaser shall pay to Seller an amount
equal to the DRG and outlier payments, the case rate payment or other similar
payment received by Purchaser on behalf of a Governmental Program Transition
Patient, multiplied by a fraction (the "Fraction"), the numerator of which shall
be the total charges for the Transition Services provided to such Governmental
Program Transition Patient by Seller and the denominator of which shall be the
sum of the total charges for the Transition Services provided to such
Governmental Program Transition Patient by Seller plus the total charges for the
Transition Services provided to such Governmental Program Transition Patient by
Purchaser after the Closing Date. The parties shall reconcile the payments
within ninety (90) calendar days after both the tentative and final Medicare
cost report settlement and any other payor settlement affecting the Governmental
Program Transition Patients (the "Reconciliation").
(b) Subject to Section 11.3(d), payments made pursuant to
Section 11.3(a) shall be made to Seller monthly, on the twenty-fifth (25th) day
of each month, for payments received by Purchaser during the previous month,
accompanied by copies of remittances and other supporting documentation as is
reasonably requested by Seller. Any other payments required to be made by Seller
to Purchaser, or by Purchaser to Seller, as the case may be, as a result of (i)
the Reconciliation, (ii) a notice of program reimbursement with respect to the
operations of the Hospital or (iii) other notice from a governmental agency or
third party payor with respect to Transition Services shall be made within
thirty (30) calendar days after the Reconciliation or the receipt of any such
notice, as applicable. In the event that Purchaser and Seller are unable to
agree on the amount to be paid to Seller or Purchaser, as the case may be, under
this Section 11.3, then such amount shall be determined by the Independent
Auditor at their joint expense.
(c) The parties acknowledge that all charges for outpatient
and other cost-based services shall be made (i) by Seller for all periods on or
prior to the Closing Date and (ii) by Purchaser for all periods after the
Closing Date.
(d) Notwithstanding the first sentence of Section 11.3(b),
Purchaser shall make a distribution to Seller within three (3) business days if
at any time during the applicable calendar month the funds to be distributed to
Seller pursuant to Section 11.3(a) exceed Fifty Thousand Dollars ($50,000). The
amount of such distribution shall be all amounts payable to Seller pursuant to
Section 11.3(a) which have not been previously distributed to Seller. All such
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distributions shall be made by wire transfer of immediately available funds to
Seller to the account(s) specified by Seller to Purchaser in writing from time
to time.
(e) Purchaser (and its respective successors in interest
and assigns and its respective affiliates) shall have neither the right to
offset amounts payable to Seller under this Section 11.3 against, nor the right
to contest its obligation to transfer, assign and convey to Seller because of,
outstanding claims, liabilities or obligations asserted by Purchaser against
Seller including but not limited to pursuant to the post-closing Purchase Price
adjustment of Section 1.4 and the indemnification provisions of Section 10.2.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Further Assurances and Cooperation. Seller shall execute,
acknowledge and deliver to Purchaser any and all other assignments, consents,
approvals, conveyances, assurances, documents and instruments reasonably
requested by Purchaser at any time and shall take any and all other actions
reasonably requested by Purchaser at any time for the purpose of more
effectively assigning, transferring, granting, conveying and confirming to
Purchaser, the Assets. After consummation of the transaction contemplated
herein, the parties agree to cooperate with each other in regards to all matters
arising from the transition of ownership of the Assets and the business of the
Hospital from Seller to Purchaser.
12.2 Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto;
provided, however, that no party hereto may assign any of its rights or delegate
any of its duties under this Agreement without the prior written consent of the
other party, except that Purchaser may assign any of its rights or delegate any
of its duties under this Agreement to any controlled affiliate of Purchaser upon
Seller's receipt of Purchaser's guaranty of such controlled affiliate's
obligations, in a form reasonably acceptable to Seller, and Purchaser may assign
its rights (but not its obligations) under this Agreement to any of its
financing sources.
12.3 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York as applied to
contracts made and performed within the State of New York.
12.4 Amendments. This Agreement may not be amended other than by
written instrument signed by the parties hereto.
12.5 Exhibits, Schedules and Disclosure Schedule. The Disclosure
Schedule and all exhibits and schedules referred to in this Agreement shall be
attached hereto and are incorporated by reference herein. Any matter disclosed
in this Agreement or in the Disclosure Schedule with reference to any Section of
this Agreement shall be deemed a disclosure in respect of all sections as to
which the relevance of such disclosure is reasonably apparent.
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12.6 Notices. Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
when personally delivered, when received by telegraphic or other electronic
means (including facsimile) or overnight courier, or five (5) calendar days
after being deposited in the United States mail, with postage prepaid thereon,
certified or registered mail, return receipt requested, addressed as follows:
If to Seller: Odessa Hospital Ltd.
c/o Tenet HealthSystem
14001 Dallas Parkway
Dallas, Texas 75240
Attention: David R. Mayeux
Facsimile No.: (972) 789-2385
With a copy to: Tenet Healthcare Corporation
c/o Tenet HealthSystem
14001 Dallas Parkway
Dallas, Texas 75240
Attention: William A. Barrett, Esq.
Facsimile No.: (972) 789-6164
With a copy to: McDermott, Will & Emery
2049 Century Park East
Suite 3400
Los Angeles, California 90067
Attention: Ira J. Rappeport, Esq.
Facsimile No.: (310) 277-4730
If to Purchaser: JLL Hospital, LLC
Attn: Jeffrey C. Lightcap
450 Lexington Ave.
Suite 3350
New York, NY 10017
Facsimile No.: (212) 286-8626
With copies to: Skadden, Arps, Slate, Meagher &
Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899-0636
Attention: Robert Pincus
Facsimile No.: (302) 651-3001
Iasis Healthcare
104 Woodmont, Suite 101
Nashville, Tennessee 37205
Attention: Frank A. Coyle
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(615) 846-3006
or at such other address as one party may designate by notice hereunder to the
other parties.
12.7 Headings. The section and other headings contained in this
Agreement and in the Disclosure Schedule, exhibits and schedules to this
Agreement are included for the purpose of convenient reference only and shall
not restrict, amplify, modify or otherwise affect in any way the meaning or
interpretation of this Agreement or the Disclosure Schedule, exhibits and
schedules hereto.
12.8 Confidentiality and Publicity. The parties hereto shall hold in
confidence the information contained in this Agreement, and all information
related to this Agreement, which is not otherwise known to the public, shall be
held by each party hereto as confidential and proprietary information and shall
not be disclosed without the prior written consent of the other party.
Accordingly, Purchaser and Seller shall not discuss with, or provide nonpublic
information to, any third party (except for such party's attorneys, accountants,
directors, officers and employees, the directors, officers and employees of any
affiliate of any party hereto, and other consultants and professional advisors)
concerning this transaction prior to the Closing, except: (i) as required in
governmental filings or judicial, administrative or arbitration proceedings,
including without limitation the filings to be made by the parties with respect
to the HSR Act; (ii) pursuant to public announcements made with the prior
written approval of Seller and Purchaser; or (iii) as required in connection
with the Financing by Purchaser. The rights of Seller under this Section 12.8
shall be in addition and not in substitution for the rights of Seller under the
Confidentiality Agreement, which shall survive Closing.
12.9 Fair Meaning. This Agreement shall be construed according to
its fair meaning and as if prepared by all parties hereto.
12.10 Gender and Number; Construction. All references to the neuter
gender shall include the feminine or masculine gender and vice versa, where
applicable, and all references to the singular shall include the plural and vice
versa, where applicable. Unless otherwise expressly provided, the word
"including" followed by a listing does not limit the preceding words or terms
and shall mean "including, without limitation."
12.11 Third Party Beneficiary. None of the provisions herein contained
are intended by the parties, nor shall they be deemed, to confer any benefit on
any person not a party to this Agreement.
12.12 Expenses and Attorneys' Fees. Except as otherwise provided in
this Agreement, each party shall bear and pay its own costs and expenses
relating to the preparation of this Agreement and to the transactions
contemplated by, or the performance of or compliance with any condition or
covenant set forth in, this Agreement, including without limitation, the
disbursements and fees of their respective attorneys, accountants, advisors,
agents and other representatives, incidental to the preparation and carrying out
of this Agreement, whether or not the transactions contemplated hereby are
consummated. The parties expressly agree that each of Seller and Purchaser shall
bear 50 percent (50%) of the aggregate amount of the following
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categories of expenses: (a) expenses relating to the preparation and delivery by
Seller of the audited combined financial statements of the Hospital contemplated
by Section 4.8(b) of this Agreement (including the opinion of KPMG Peat Marwick
with respect thereto); (b) all costs of the Title Commitment and the Title
Policy; (c) all documentary transfer, sales and similar taxes and recording
charges in connection with the conveyance of the Assets to Purchaser; (d) all
costs of the Surveys; (e) all costs of the Environmental Survey; (f) the cost of
an environmental compliance audit to be conducted by Purchaser at the Hospital;
and (g) all filing fees imposed in connection with Seller's and Purchaser's
filings under the HSR Act. As and when either party receives an invoice or other
evidence of incurrence or payment with respect to any expense described in the
foregoing categories, such party shall forward promptly to the other party a
copy of such invoice or other evidence. The parties shall each calculate the net
balance owed from one party to the other under this Section 12.12, exchange such
calculations and agree on such amount and to whom it is owed within fifteen (15)
business days of the first to occur of (i) the Closing Date or (ii) the
termination of this Agreement. The party owing such net balance shall deliver to
the party to whom the balance is owed the payor's check in payment of such net
balance within twenty-five (25) business days following the first to occur of
(i) the Closing Date or (ii) the termination of this Agreement. The covenants
set forth in the preceding sentence shall be binding upon the parties
notwithstanding failure to consummate the transaction contemplated hereby;
provided, however, that Seller agrees to reimburse Purchaser for any amounts
payable by it under this Section 12.12 to the extent attributable to the
Hospital within the twelve (12) months immediately following the termination of
this Agreement. Notwithstanding the foregoing, Seller shall bear 100 percent
(100%) of the amount of said expenses in excess of an aggregate of Three Million
Dollars ($3,000,000) minus the aggregate expenses payable under Section 12.12 of
the Related Asset Sale Agreement. If any action is brought by any party to
enforce any provision of this Agreement, the prevailing party shall be entitled
to recover its court costs, arbitration expenses and reasonable attorneys' fees.
12.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement, binding on all of the
parties hereto.
12.14 Entire Agreement. This Agreement, the Disclosure Schedule, the
exhibits and schedules, and the documents referred to herein contain the entire
understanding between the parties with respect to the transactions contemplated
hereby and supersede all prior or contemporaneous agreements, understandings,
representations and statements, oral or written, between the parties on the
subject matter hereof, and shall be of no further force or effect.
12.15 No Waiver. Any term, covenant or condition of this Agreement may
be waived at any time by the party which is entitled to the benefit thereof but
only by a written notice signed by the party expressly waiving such term or
condition. The subsequent acceptance of performance hereunder by a party shall
not be deemed to be a waiver of any preceding breach by the other party of any
term, covenant or condition of this Agreement, other than the failure of such
party to perform the particular duties so accepted, regardless of such party's
knowledge of such preceding breach at the time of acceptance of such
performance. The waiver of any term, covenant or condition shall not be
construed as a waiver of any other term, covenant or condition of this
Agreement.
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12.16 Severability. If any term, provision, condition or covenant of
this Agreement or the application thereof to any party or circumstance shall be
held to be invalid or unenforceable to any extent in any jurisdiction, then the
remainder of this Agreement and the application of such term, provision,
condition or covenant in any other jurisdiction or to persons or circumstances
other than those as to whom or which it is held to be invalid or unenforceable,
shall not be affected thereby, and each term, provision, condition and covenant
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
12.17 Arbitration. Any disagreement, dispute or claim arising out of
or relating to this Agreement which cannot be settled by the parties hereto
shall be settled by arbitration in accordance with the following provisions:
12.17.1 Forum. Forum for arbitration shall be Manhattan,
New York.
12.17.2 Law. Governing law shall be the law of the State of
New York.
12.17.3 Selection. The number of arbitrators shall be three
(3), unless the parties hereto are able to agree on a single arbitrator. In the
absence of such agreement within ten (10) business days after the initiation of
an arbitration proceeding, Seller shall select one (1) arbitrator and Purchaser
shall select one (1) arbitrator, and those two arbitrators shall then select,
within ten (10) business days, a third arbitrator. If those two (2) arbitrators
are unable to select a third arbitrator within such ten (10) business day
period, a third arbitrator shall be appointed by the commercial panel of the
American Arbitration Association. The decision in writing of at least two (2) of
the three (3) arbitrators shall be final and binding upon the parties.
12.17.4 Administration. Arbitration shall be administered by
the American Arbitration Association.
12.17.5 Rules. Rules of arbitration shall be the Commercial
Arbitration Rules of the American Arbitration Association, as modified by any
other instructions that the parties hereto may agree upon at the time, except
that each party hereto shall have the right to conduct discovery in any manner
and to the extent authorized by the Federal Rules of Civil Procedure as
interpreted by the federal courts in New York. The arbitrators shall not modify
the terms of this Agreement.
12.17.6 Award. The award rendered by arbitration shall be final
and binding upon the parties hereto, and judgment upon the award may be entered
in any court of competent jurisdiction in the United States.
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12.18 Time is of the Essence. Time is of the essence for all dates and
time periods set forth in this Agreement and each performance called for in this
Agreement.
IN WITNESS WHEREOF, this Agreement has been entered into as of the day
and year first above written.
PURCHASER:
JLL Hospital, LLC, a Delaware limited liability
company
By: /s/ J. C. Lightcap
-------------------------------
Name: Jeffrey C. Lightcap
-----------------------------
Its: Authorized Person
-------------------------------
SELLER:
ODESSA HOSPITAL LTD., a Texas limited
partnership
By: /s/ David R. Mayeux
-------------------------------
Name: /s/ David R. Mayeux
-----------------------------
Its: Executive Vice President
-------------------------------
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