EXHIBIT 10.11
AGREEMENT TO AMEND AND NOT-TO-COMPETE
BY AND BETWEEN
MONTEFIORE MEDICAL CENTER
AND
NEW YORK DIALYSIS MANAGEMENT, INC.
----------------------------------
THIS AGREEMENT TO AMEND AND NOT-TO-COMPETE (the "Agreement") is made this
17th day of July, 1998, by and between Montefiore Medical Center, a non-profit
corporation organized and existing under the laws of the State of New York
("Hospital"), and New York Dialysis Management, Inc., a for-profit corporation
organized and existing under the laws of the State of New York ("NYDM").
WHEREAS, Hospital and NYDM are parties to that certain Agreement To Provide
Management Services For Dialysis Facilities, as amended by Amendment No. 1
thereto and Amendment No. 2 thereto (the "Principal Management Agreement") with
respect to chronic outpatient dialysis programs located at (i) 3547 Webster
Avenue, Bronx, New York, (Dialysis Center I), (ii) 3547 Webster Avenue, Bronx,
New York, (Dialysis Center II), (iii) 1325 Morris Park Avenue, Bronx, New York,
and (iv) 1695 Eastchester Road, Bronx, New York (collectively, the "Centers")
that presently provide hemodialysis, peritoneal dialysis and continuous renal
replacement therapies (the "Business");
WHEREAS, simultaneously with the execution hereof, NYDM's affiliate,
Everest Dialysis Services, Inc., a for-profit corporation organized and existing
under the laws of the State of New York ("EDS"), is entering into a Medical
Asset Purchase Agreement with Hospital (the "MAPA") with respect to the Centers;
and
WHEREAS, the parties desire to enter into certain arrangements in
connection with the continued operation of the Centers and future chronic
dialysis outpatient programs.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Consideration. Upon delivery by Hospital of the documents listed in
Section 2 below (the "Consideration Payment Date"), NYDM shall pay to Hospital
an amount equal to Nineteen Million Two Hundred Sixteen Thousand Dollars
($19,216,000) (the "Consideration"), representing the sum of (i) One Million
Nine Hundred Twenty One Thousand Six Hundred Dollars ($1,921,600) in
consideration for Hospital's covenant not to compete contained in Section 3
below, and (ii) Seventeen Million Two Hundred Ninety Four Thousand Four Hundred
Dollars ($17,294,400) in consideration for the remaining undertakings of
Hospital contained or referred to herein, including without limitation
Hospital's execution of Amendment No. 3 to the Principal Management Agreement,
in form and substance as set forth in Exhibit A attached hereto and incorporated
by reference herein ("Amendment No. 3").
2. Deliveries by the Parties. As a condition to the payment of the
Consideration:
(a) Hospital shall deliver to NYDM a non-competition agreement from
Manush Dasgupta, M.D., duly executed and delivered by each party thereto,
in form and substance as set forth in Exhibit B, attached hereto and
incorporated by reference herein; and
(b) Hospital shall deliver to NYDM resolutions certified by an
Assistant Secretary of Hospital authorizing the consummation of the
transactions contemplated by this Agreement, Amendment No. 3, and the MAPA.
As a condition to the undertakings of Hospital hereunder, NYDM shall
deliver the following to Hospital:
(a) resolutions certified by a Secretary of NYDM authorizing the
consummation of the transactions contemplated by this Agreement, Amendment
No. 3, and the MAPA;
(b) resolutions certified by a Secretary of Everest Healthcare
Services Corporation authorizing its guarantees of the obligations of NYDM
under this Agreement, Amendment No. 3, and that certain Consulting and
Administrative Services Agreement; and
(c) payment by NYDM of the Consideration in immediately available
funds.
3. Hospital's Covenants.
(a) Covenant Not To Compete. For a period of ten (10) years from and
after the Consideration Payment Date or until earlier terminated as described
below (the "Restricted Period"), neither Hospital nor any other hospital or
medical institution controlled by Hospital nor any employee of Hospital or of
any other hospital or medical institution controlled by Hospital ("Employee"),
directly or indirectly, shall own, manage, operate, or control any business,
firm, entity, enterprise, or association that competes with NYDM or its assigns
in providing outpatient dialysis treatments or home dialysis services within the
Borough of the Bronx, New York City, and that area within Westchester County,
New York, south of Route 287 (the "Restricted Area"), nor shall any of the
foregoing engage in the sale of dialysis-related durable medical equipment or
dialysis supplies to home dialysis patients or in the sale of peritoneal
supplies within the Restricted Area except in accordance with the Medical
Director and Administrative Services Agreement. During the Restricted Period,
neither Hospital nor any other hospital or medical institution controlled by
Hospital, directly or indirectly, nor any Employee, shall provide medical
director services to an outpatient dialysis clinic or home dialysis program in
the
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Restricted Area except to EDS in accordance with the Medical Director and
Administrative Services Agreement. Without limitation of the other available
remedies, in the event of the breach of the provisions of this section by
Hospital or by such other person or persons who are bound hereby, NYDM or its
assigns shall be entitled to injunctive relief, without the necessity of posting
bond, restraining the violation. This provision shall not prohibit the purchase
of, or continued investment in, by Hospital or any such person or entity subject
to this provision, stock representing less than five percent (5%) of a publicly
held corporation. This Section shall not apply to (i) Hospital's operating the
Centers prior to Hospital surrendering its operating certificates under the
MAPA, (ii) Hospital providing medical director services to any entity (other
than serving as a medical director of an outpatient dialysis clinic or home
dialysis program within the Restricted Area, which shall be prohibited as set
forth above), (iii) providing dialysis services on its campus in connection with
its acute dialysis program, or (iv) providing incidental outpatient dialysis
services on its campus consistent with its practice of providing such services
during the past twelve (12) months and not to exceed the average number of
patients receiving such services during such period without the prior written
consent of NYDM. Notwithstanding anything herein to the contrary, the Restricted
Period (A) shall be extended (i) for so long as the Management Services
Agreement is in effect, (ii) if the Administrative Services Agreement
contemplated by Amendment No. 3 has been entered into by NYDM and Hospital, for
so long as such agreement is in effect or (iii) if the Medical Director and
Administrative Services Agreement has been entered into by EDS and Hospital, for
so long as such agreement is in effect, and (B) automatically shall terminate in
the event a Termination Event occurs. For these purposes a "Termination Event"
shall mean (i) the non-compete covenant set forth in Section 8 of the Medical
Director and Administrative Services Agreement shall lapse and be of no further
force and effect pursuant to Section 8.3 of the Medical Director and
Administrative Services Agreement, if the Medical Director and Administrative
Services Agreement is entered into between EDS and Hospital; (ii) the Management
Services Agreement is terminated (other than pursuant to the closing of the
MAPA) in accordance with Amendment No. 3 and all agreements between the parties
are terminated and they have no further obligations to each other (not including
obligations of indemnification or confidentiality); or (iii) if the Consulting
and Administrative Services Agreement contemplated by Amendment No. 3 has been
entered into by NYDM and Hospital and is terminated, and in accordance the
provisions thereof, all agreements between the parties are terminated and they
have no further obligations to each other (not including obligations of
indemnification or confidentiality).
(b) Prior Activities. The parties agree that in the event that
Hospital either acquires or is acquired by another corporation, person, or other
entity (whether by merger, sale of assets, change of membership interest, sale
of stock, or otherwise) that has been engaged in any of the activities otherwise
prohibited by Section 3(a) for a period of at least one hundred eighty (180)
days prior to the date such acquisition is consummated (the "Prior Activities"),
provided that the Prior Activities are not all or a substantial portion of the
business activities of such corporation, person or other entity, then Section
3(a) shall not apply to such Prior Activities in the Restricted Area during the
Restricted Period, so long as the surviving corporation, person, or other entity
to such acquisition does not materially expand the scope of such Prior
Activities
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during the Restricted Period.
(c) Insurance. Hospital covenants and agrees that for a period of
five (5) years from and after the Closing Date under the MAPA (the "MAPA Closing
Date"), it will maintain insurance coverage, whether self-insured or purchased
through an insurance carrier, that provides at least three million dollars
($3,000,000) single limits coverage against any act or omission of Hospital, its
agents or employees as to treatments rendered at the Business prior to the MAPA
Closing Date but as to which a claim is asserted after the MAPA Closing Date.
If such insurance is terminated or decreased, or if the value of the assets set
aside for such coverage are adversely affected during such five year period,
then in such event, Hospital agrees to purchase a policy of tail insurance which
will provide such coverage for the remainder of the five (5) year period after
the MAPA Closing Date.
(d) Preparation of Financial Statements. Hospital agrees (i) to
timely cooperate, and to cause its auditors to timely cooperate (at NYDM's
cost), with NYDM and its auditors in the preparation and filing of any audited
financial statements of the operations of the Business by Hospital for such
period as may be required by the rules and regulations of the Securities and
Exchange Commission, (ii) to provide NYDM with access to Hospital's books and
records, and (iii) to use its best efforts to provide NYDM with access to
Hospital's auditor's work papers and files, all as may be reasonably requested
by NYDM in regard to such financial statements. Any such audit shall be
conducted at NYDM's expense.
(e) Breaches by Employees. In the event any Employee breaches Section
3(a) hereof while an Employee, Hospital shall be responsible for such breaches
and at NYDM's request Hospital promptly shall terminate such staff privileges at
Hospital or any other hospital or medical institution controlled by Hospital
(all subject to and in accordance with Hospital's regular procedures applicable
to such termination), and shall cooperate with NYDM to enforce any non-
competition agreements to which such Employee is a party or is bound. Hospital
shall not, directly or indirectly, encourage or facilitate any third party to
take, or omit to take, any action which would frustrate the purposes and intent
of Section 3(a) or seek to avoid the observance or performance of such Section
3(a) and will at all times in good faith assist NYDM as may be necessary or
appropriate in order to preserve the rights granted under such Section 3(a)
against impairment.
4. Amendment No. 3. Simultaneously with the execution hereof, NYDM and
Hospital shall enter into and deliver to each other Amendment No. 3.
5. Non-Competes.
(a) AECOM Non-Compete. Hospital agrees that it shall enforce, at the
request of NYDM, and will not waive, amend, or terminate prior to their
scheduled expiration any non-competition provisions or restrictive covenants it
may have against the Albert Einstein College of Medicine ("AECOM") pursuant to
either that certain Affiliation Agreement by and
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between Hospital and AECOM or pursuant to that certain Sale and Purchase
Agreement dated July 1, 1991, as it relates to the Baumritter facility, in each
case only in accordance with the terms and conditions of each such agreement as
they currently are in effect. Hospital shall be responsible for all fees payable
for medical director services under the Affiliation Agreement. The parties
acknowledge that the consent of AECOM as required is a condition of the closing
of the MAPA. In the event the AECOM consent is not obtained, Hospital agrees
that it shall not support or assist in any manner, directly or indirectly, the
establishment or operation of any clinical practice of nephrology at AECOM for
so long as the noncompetition provision in this Agreement is in effect, and if
Hospital has any legal rights to prevent or impede AECOM from establishing or
operating such clinical practice of nephrology, Hospital will exercise those
rights.
(b) Dasgupta Non-compete. Hospital agrees that it shall enforce, at
the request of NYDM, and will not waive, amend, grant any consent to limit, or
terminate prior to its scheduled expiration, the non-competition agreement with
Manush Dasgupta, M.D., referenced in Section 2(a) hereof, and Hospital agrees to
perform its obligations thereunder.
6. Use of Names. Hospital hereby grants to NYDM and EDS the right to use
at/or in connection with the Centers the names currently used by all of the
Centers from the date hereof until all agreements contemplated hereunder shall
have been terminated and the parties have no further obligations to each other
(not including obligations of indemnification or confidentiality); provided,
however, that in the event the consent of AECOM to the transactions contemplated
hereby and the MAPA is not obtained, this provision shall not apply to names
currently used at the Baumritter facility. Hospital shall cooperate and use its
reasonable efforts to cause any third parties under its control that have any
rights in such names to permit NYDM's continued use of such names in accordance
with this Section.
7. Representations and Warranties of NYDM. NYDM represents and warrants
to Hospital that as of the date hereof and the Consideration Payment Date:
(a) Organization, Qualification, and Corporate Power of NYDM. NYDM
(i) is a corporation duly organized, validly existing, and in good standing
under the laws of the State of New York; and (ii) has all requisite power and
authority and licenses, permits, franchises, certificates, authorizations,
approvals, consents, and rights to carry on its business as now conducted.
(b) Validity. NYDM has the full legal power and authority to execute,
deliver, and perform this Agreement and all other agreements and documents
necessary to consummate the contemplated transactions, and all corporate actions
of NYDM necessary for such execution, delivery, and performance have been duly
taken. This Agreement and all agreements related to this transaction have been
duly executed and delivered by NYDM and
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constitute the legal, valid, and binding obligation of NYDM enforceable in
accordance with their terms (subject as to enforcement of remedies to equitable
principles and to the discretion of courts in awarding equitable relief and to
applicable bankruptcy, reorganization, insolvency, moratorium, and similar laws
affecting the rights of creditors generally). Any other agreement contemplated
to be entered into by NYDM in connection with this Agreement and the
transactions contemplated hereby, when executed and delivered, will constitute
the legal, valid, and binding obligation of NYDM enforceable in accordance with
its respective terms (subject as to enforcement of remedies to equitable
principles and to the discretion of courts in awarding equitable relief and to
applicable bankruptcy, reorganization, insolvency, moratorium, and similar laws
affecting the rights of creditors generally). The execution and delivery by NYDM
of this Agreement, Amendment No. 3, and the other agreements contemplated
hereby, and the performance of its obligations hereunder and thereunder, will
not violate any provision of law, the Articles of Incorporation or Bylaws of
NYDM, any order of any court or other agency of the government, or any
indenture, agreement, or other instrument to which NYDM, or any of its
properties or assets are bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement, or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim, or encumbrance of any nature
whatsoever upon any of the properties or assets of NYDM.
(c) Fees and Commissions. NYDM has not agreed to pay or become liable
to pay any broker's, finder's, or originator's fees or commissions by reason of
services alleged to have been rendered for, or at the instance of, NYDM in
connection with this Agreement and the transactions contemplated hereby.
(d) Other Approvals. There are no consents, approvals,
qualifications, orders, or authorizations of, or filings with, any governmental
authority, including any court or other third party, required in connection with
NYDM's valid execution, delivery, or performance of this Agreement or Amendment
No. 3, or the consummation of any transaction contemplated hereunder and
thereunder, other than approvals necessary for the consummation of the MAPA, the
consent of AECOM, or other consents specifically referenced in this Agreement,
Amendment No. 3, or the MAPA.
(e) Disclosure. No representation or warranty by NYDM in this
Agreement, and no exhibit, schedule, or certificate furnished or to be furnished
by NYDM pursuant hereto, (i) contains any untrue statement of a material fact,
or (ii) omits to state a fact required to be stated herein or therein or
necessary to make the statements contained herein or therein, in light of the
circumstances in which they were made, not materially misleading.
8. Representations and Warranties of Hospital. Hospital represents and
warrants to NYDM that as of the date hereof and the Consideration Payment Date:
(a) Organization, Qualification, and Corporate Power of Hospital.
Hospital (i) is a duly organized and validly existing not-for-profit corporation
in good standing
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under the laws of the State of New York; and (ii) has all requisite power and
authority and licenses, permits, franchises, certificates, authorizations,
approvals and consents and rights to carry on its business as now conducted.
(b) Validity. Hospital has the full legal power and authority to
execute, deliver, and perform this Agreement and all other agreements and
documents necessary to consummate the contemplated transactions, and all actions
of Hospital necessary for such execution, delivery, and performance have been
duly taken. This Agreement and all agreements related to this transaction have
been duly executed and delivered by Hospital and constitute the legal, valid,
and binding obligation of Hospital enforceable in accordance with their
respective terms (subject as to enforcement of remedies to the discretion of
courts in awarding equitable relief and to applicable bankruptcy,
reorganization, insolvency, moratorium, and similar laws affecting the rights of
creditors generally). Any other agreement contemplated to be entered into by
Hospital in connection with this transaction, when executed and delivered, will
constitute the legal, valid, and binding obligation of Hospital enforceable in
accordance with its respective terms (subject as to enforcement of remedies to
the discretion of courts in awarding equitable relief and to applicable
bankruptcy, reorganization, insolvency, moratorium, and similar laws affecting
the rights of creditors generally). The execution and delivery by Hospital of
this Agreement, Amendment No. 3, and the other agreements contemplated hereby
and the performance of its obligations hereunder and thereunder, do not require
any action or consent of any party other than Hospital pursuant to any contract,
agreement, or other undertaking of Hospital, or pursuant to any order or decree
to which Hospital is a party or to which any of its properties or assets are
subject, other than approvals necessary for the consummation of the MAPA and the
consent of AECOM, and will not violate any provision of law, the Articles of
Incorporation or Bylaws of Hospital, any order of any court or other agency of
the government, or any indenture, agreement, or other instrument to which
Hospital, or any of its properties or assets are bound, or conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement, or other instrument, or result in
the creation or imposition of any lien, charge, restriction, claim, or
encumbrance of any nature whatsoever upon any of the properties or assets of
Hospital. The Noncompetition Agreement by and between MMC and Manush Dasgupta,
M.D. set forth in Exhibit B has been duly executed and delivered to MMC by
Manush Dasgupta, M.D., and is enforceable in accordance with its terms (subject
as to enforcement of remedies to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting the rights of creditors generally), assuming that MMC
complies fully with its covenants as set forth therein.
(c) Litigation and Investigations. With respect to the Business
(except for matters as to which NYDM has received any notice other than from
Hospital or its agents, for which matters Hospital gives no representations),
there is no: (i) action, suit, claim, proceeding, or investigation pending or
threatened against or affecting Hospital or any of Hospital's
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employees, by any private party or any federal, state, municipal, or other
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, or, to the best knowledge of Hospital, pending, threatened
against, or affecting persons or entities who perform professional services
under agreement with Hospital before any professional self-governance,
oversight, or regulatory body; (ii) arbitration proceeding relating to Hospital
pending under collective bargaining agreements or otherwise; or (iii)
governmental or professional inquiry pending or threatened against or directly
or indirectly affecting Hospital (including without limitation any inquiry as to
the qualification of Hospital to hold or receive any license or permit), and
there is no basis for any of the foregoing as to Hospital, their members and key
employees, or, to the best knowledge of Hospital, as to entities or persons who
perform professional services for Hospital. Hospital is not in default with
respect to any order, writ, injunction, or decree known to or served upon any of
them of any court or of any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, which affects the Business.
(d) Approvals. Hospital is in compliance in all material respects
with all laws, rules, regulations, and orders applicable to the Business and
Hospital has all necessary permits, licenses, and other authorizations required
to conduct the Business as conducted (except for those matters which are the
obligations of NYDM under the Principal Management Agreement for which Hospital
makes no representations). To the best knowledge of Hospital, there is no
existing law, rule, regulation, or order, or proposed law, rule, regulation, or
order, whether federal, state, local, or professional, which would prohibit or
restrict Hospital from, or otherwise adversely affect Hospital in, conducting
the Business in any jurisdiction in which it is now conducting the Business.
(e) Fees and Commissions. Hospital has not agreed to pay or become
liable to pay any broker's, finder's, or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of,
Hospital in connection with this Agreement and the transactions contemplated
hereby.
(f) Other Approvals. There are no consents, approvals,
qualifications, orders, or authorizations of, or filings with, any governmental
authority, including any court or other third party, required in connection with
Hospital's valid execution, delivery, or performance of this Agreement or
Amendment No. 3, or the consummation of any transaction contemplated hereunder
or thereunder, other than approvals necessary for the consummation of the MAPA,
the consent of AECOM, or other consents specifically referenced in this
Agreement, Amendment No. 3, or the MAPA.
(g) Disclosure. No representation or warranty by Hospital in this
Agreement, and no exhibit, Schedule, or certificate furnished or to be furnished
by Hospital pursuant hereto, (i) contains any untrue statement of a material
fact or (ii) omits to state a fact required to be stated herein or therein or
necessary to make the statements contained herein or therein, in light of the
circumstances in which they were made, not materially misleading.
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(h) Bona Fide Offer. GAMBRO Patient Healthcare Services, Inc.
("GAMBRO") has made a bona fide offer to Hospital to enter into a transaction
with Hospital for the purchase of the Business for a purchase price of twenty
eight million two hundred thousand dollars ($28,200,000) (including both medical
and non-medical assets), with Hospital being entitled to retain the accounts
receivable of the Business subject to Hospital paying all accrued liabilities
due and payable through the date of closing of such transaction, and GAMBRO
assuming only contractual liabilities under the ordinary operating agreements of
the Business which are to be performed on or after the date of closing of such
transaction and on such terms that are at least as favorable to GAMBRO, in
Hospital's reasonable judgment, as the terms of the transactions contemplated by
this Agreement and all the related agreements referenced herein. Such offer is
outstanding on the date hereof and has not been modified in any way which would
be adverse to Hospital.
9. Joint Covenants of the Parties.
(a) Confidentiality of Business Information. The parties heretofore
have received and hereafter may receive various financial and other information
concerning their respective activities, businesses, assets, and properties. The
parties agree that:
(i) all such information thus received by the parties shall not at any
time, or in any way or manner, be utilized by the parties for its advantage
or disclosed by the parties to others for any purpose whatsoever; and
(ii) the parties shall take all reasonable measures to assure that no
employee or agent under its control shall at any time use or disclose any
information described in this Section; and
(iii) this Section 9 shall not apply to (A) any such information that
was known to the parties prior to its disclosure to the parties in
accordance with this Section or was, is, or becomes generally available to
the public other than by disclosure by the parties or any of its employees
or agents in violation of this Section; or (B) any disclosure which such
party makes to any regulatory agency pursuant to that party's obligations
of disclosure to such agency or which is otherwise required by law.
(b) Confidentiality of this Agreement. The existence and contents of
this Agreement and its Schedules and the nature and status of the transactions
described herein and therein are confidential. Without the prior written
consent of the other parties, no party will disclose to any person, other than
to its trustees, directors, officers, key employees, affiliates, accounting,
investment banking, and legal advisers, the existence and contents of this
Agreement and its Schedules and the nature and status of the transactions
described herein unless, in the opinion of counsel to the party seeking to make
the disclosure, such a disclosure is required by
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applicable laws. The timing and content of any announcements, press releases, or
other public statements concerning the transactions contemplated by this
Agreement will occur upon, and be determined by, the mutual agreement and
consent of the parties, which shall not be unreasonably withheld if, in the
opinion of counsel to the party seeking to make the announcement, press release,
or other public statement, such a disclosure is required by applicable laws.
(c) First Refusal. The parties agree that the payments of the
Consideration is being made as a result of the exercise by NYDM of its right of
first refusal under Paragraph 9 of the Principal Management Agreement with
respect to the offer described in Section 8(h) hereof, and such payments
(together with provision for the accounts receivable and accounts payable as
provided in Section 9(d) hereof) are in full satisfaction of all amounts which
would have been owed by the parties to each other under the Principal Management
Agreement, that certain Loan Agreement by and between MMC and NYDM, and any side
letters between the parties or their affiliates relating to early termination
penalties or payments, as a result of the exercise of such right of first
refusal (except for any amounts owed under the MAPA), the termination of the
Principal Management Agreement, and the purchase of the assets of the Business
by Hospital.
(d) Collection of Accounts Receivable and Payment of Accounts Payable.
NYDM shall continue to bill and collect the accounts receivable generated by the
Business and all proceeds shall be paid to NYDM to be disbursed in accordance
with the terms of the Principal Management Agreement. MMC shall cooperate with
NYDM's collection effort as reasonably requested from time to time by NYDM,
promptly remit to NYDM amounts collected, and execute any documents reasonably
necessary to perfect NYDM's interests therein. NYDM shall continue to pay all
accounts payable incurred by NYDM in the operation of the Business.
10. Indemnification.
(a) Indemnification and Payment of Damages by Hospital. Hospital will
indemnify and hold harmless NYDM, its officers, employees, agents, directors,
representatives, stockholders, controlling persons, and affiliates
(collectively, the "NYDM Indemnified Persons") for, and will pay to NYDM
Indemnified Persons the amount of, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of investigation
and defense and reasonable attorneys' fees) or diminution of value, whether or
not involving a third-party claim, arising, directly or indirectly, from or in
connection with:
(i) any material breach of any representation or warranty made by
Hospital in this Agreement or any other certificate or document delivered
by Hospital pursuant to this Agreement other than Amendment No. 3 for which
the respective rights and remedies of the parties are as set forth therein,
or
(ii) any material breach by Hospital of any covenant or obligation of
Hospital in this Agreement.
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The remedies provided in this Section 10(a) will not be exclusive of or
limit any other remedies that may be available to NYDM or other NYDM Indemnified
Persons.
(b) Indemnification and Payment of Damages by NYDM. NYDM will indemnify
and hold harmless Hospital, its employees, agents, trustees, representatives,
controlling persons, and affiliates (collectively, the "Hospital Indemnified
Persons") for, and will pay to Hospital Indemnified Persons the amount of, any
loss, liability, claim, damage (including incidental and consequential damages),
expense (including costs of investigation and defense and reasonable attorneys'
fees) or diminution of value, whether or not involving a third-party claim,
arising, directly or indirectly, from or in connection with:
(i) any material breach of any representation or warranty made by NYDM
in this Agreement or any other certificate or document delivered by NYDM
pursuant to this Agreement other than Amendment No. 3 for which the
respective rights and remedies of the parties are as set forth therein, or
(ii) any material breach by NYDM of any covenant or obligation of NYDM
in this Agreement.
The remedies provided in this Section 10(b) will not be exclusive of or
limit any other remedies that may be available to Hospital or other Hospital
Indemnified Persons.
(c) Procedure for Hospital Indemnification - Third Party Claims.
(i) Promptly after receipt by an NYDM Indemnified Person under Section
10(a) of notice of the commencement of any proceeding against it, such NYDM
Indemnified Person will, if a claim is to be made against Hospital, give
notice to Hospital of the commencement of such claim, but the failure to
notify Hospital will not relieve Hospital of any liability that Hospital
may have to any NYDM Indemnified Person, except to the extent that Hospital
demonstrates that the defense of such action is prejudiced by NYDM
Indemnified Person's failure to give such notice.
(ii) If any proceeding referred to in Section 10(a) is brought against
an NYDM Indemnified Person and such NYDM Indemnified Person gives notice to
Hospital of the commencement of such proceeding, Hospital will be entitled
to participate in such proceeding and, to the extent that it wishes (unless
(A) Hospital is also a party to such proceeding and the NYDM Indemnified
Person determines in good faith that joint representation would be
inappropriate or (B) Hospital fails to provide reasonable assurance to the
NYDM Indemnified Person of its financial capacity to defend such proceeding
and provide indemnification with respect to such proceeding) to assume the
defense of such proceeding with counsel satisfactory to the NYDM
Indemnified Person and, after notice from Hospital to the NYDM Indemnified
Person of its election to assume the defense of such proceeding, Hospital
will not, as long as it diligently conducts
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such defense, be liable to the NYDM Indemnified Person under Section 10(a)
for any fees of other counsel or any other expenses with respect to the
defense of such proceeding, in each case subsequently incurred by the NYDM
Indemnified Person in connection with the defense of such proceeding, other
than reasonable costs of investigation. If Hospital assumes the defense of
a proceeding, (A) it will be conclusively established for purposes of this
Agreement that the claims made in that proceeding are within the scope of
and subject to indemnification; (B) no compromise or settlement of such
claims may be effected by Hospital without the NYDM Indemnified Person's
consent unless (aa) there is no finding or admission of any violation of
legal requirements or any violation of the rights of any person and no
effect on any other claims that may be made against the NYDM Indemnified
Person, and (bb) the sole relief provided is monetary damages that are paid
in full by Hospital; and (C) the NYDM Indemnified Person will have no
liability with respect to any compromise or settlement of such claims
effected without its consent, such consent not to be unreasonably withheld.
If notice is given to Hospital of the commencement of any proceeding and
Hospital does not, within ten (10) days after the NYDM Indemnified Person's
notice is given, give notice to the NYDM Indemnified Person of his election
to assume the defense of such proceeding, Hospital will be bound by any
determination made in such proceeding or any compromise or settlement
effected by the NYDM Indemnified Person which is approved by Hospital, such
approval not to be unreasonably withheld.
(iii) Notwithstanding the foregoing, if an NYDM Indemnified Person
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result
of monetary damages for which it would be entitled to indemnification under
this Agreement, the NYDM Indemnified Person may, by notice to Hospital,
assume the exclusive right to defend, compromise, or settle such
proceeding, but Hospital will not be bound by any determination of a
proceeding so defended or any compromise or settlement effected without his
consent (which may not be unreasonably withheld).
(d) Procedure for NYDM Indemnification - Third Party Claims.
(i) Promptly after receipt by a Hospital Indemnified Person under
Section 10(b) of notice of the commencement of any proceeding against it,
such Hospital Indemnified Person will, if a claim is to be made against
NYDM, give notice to NYDM of the commencement of such claim, but the
failure to notify NYDM will not relieve NYDM of any liability that it may
have to any Hospital Indemnified Person, except to the extent that NYDM
demonstrates that the defense of such action is prejudiced by the Hospital
Indemnified Person's failure to give such notice.
(ii) If any proceeding referred to in Section 10(b) is brought against
a Hospital Indemnified Person and Hospital Indemnified Person gives notice
to NYDM of the commencement of such proceeding, NYDM will be entitled to
participate in such
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proceeding and, to the extent that it wishes (unless (A) NYDM is also a
party to such proceeding and the Hospital Indemnified Person determines in
good faith that joint representation would be inappropriate or (B) NYDM
fails to provide reasonable assurance to the Hospital Indemnified Person of
its financial capacity to defend such proceeding and provide
indemnification with respect to such proceeding) to assume the defense of
such proceeding with counsel satisfactory to the Hospital Indemnified
Person and, after notice from NYDM to the Hospital Indemnified Person of
its election to assume the defense of such proceeding, NYDM will not, as
long as it diligently conducts such defense, be liable to the Hospital
Indemnified Person under Section 10(b) for any fees of other counsel or any
other expenses with respect to the defense of such proceeding, in each case
subsequently incurred by the Hospital Indemnified Person in connection with
the defense of such proceeding, other than reasonable costs of
investigation. If NYDM assumes the defense of a proceeding, (A) it will be
conclusively established for purposes of this Agreement that the claims
made in that proceeding are within the scope of and subject to
indemnification; (B) no compromise or settlement of such claims may be
effected by NYDM without the Hospital Indemnified Person's consent unless
(aa) there is no finding or admission of any violation of legal
requirements or any violation of the rights of any person and no effect on
any other claims that may be made against the Hospital Indemnified Person,
and (bb) the sole relief provided is monetary damages that are paid in full
by NYDM; and (iii) the Hospital Indemnified Person will have no liability
with respect to any compromise or settlement of such claims effected
without its consent, such consent not to be unreasonably withheld. If
notice is given to NYDM of the commencement of any proceeding and NYDM does
not, within ten (10) days after the Hospital Indemnified Person's notice is
given, give notice to Hospital Indemnified Person of its election to assume
the defense of such proceeding, NYDM will be bound by any determination
made in such proceeding or any compromise or settlement effected by the
Hospital Indemnified Person which is approved by Hospital, such approval
not to be unreasonably withheld.
(iii) Notwithstanding the foregoing, if a Hospital Indemnified Person
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result
of monetary damages for which it would be entitled to indemnification under
this Agreement, the Hospital Indemnified Person may, by notice to NYDM,
assume the exclusive right to defend, compromise, or settle such
proceeding, but NYDM will not be bound by any determination of a proceeding
so defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
(e) Procedure for Indemnification - Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
(f) Time Limitations. Hospital will have no liability under Section
10(a)(i), unless
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on or before a date two (2) years from the date hereof, NYDM notifies Hospital
of a claim specifying the factual basis of that claim in reasonable detail to
the extent then known by NYDM. NYDM will have no liability under Section
10(b)(i), unless on or before a date two (2) years from the date hereof,
Hospital notifies NYDM of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Hospital. A claim for
indemnification or reimbursement under Section 10(a)(ii) or Section 10(b)(ii),
may be made at any time.
(g) Limitations on Amount. If the Consideration is paid to Hospital,
Hospital shall have no liability (for indemnification or otherwise) with respect
to any representation or warranty, or covenant or obligation to be performed or
complied with before the Consideration Payment Date, until the total amount of
all damages under this Agreement and Section 10.8 of the MAPA exceeds Five
Hundred Thousand Dollars ($500,000), and then only up to a maximum of eight
million four hundred sixty thousand dollars ($8,460,000) under both this
Agreement and the MAPA when considered in the aggregate.
11 Miscellaneous.
(a) Notice. Whenever notice must be given under the provisions of this
Agreement, such notice must be in writing and will be deemed to have been duly
given by (i) hand-delivery (with written confirmation of receipt) addressed to
the parties at their respective addresses set forth below; or (ii) certified
mail, return receipt requested, postage prepaid, and addressed to the parties at
their respective addresses set forth below; or (iii) telecopier (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, addressed to the parties at their respective addresses
set forth below, and provided further that notice shall be deemed given under
this subsection (iii) when actually received by the recipient:
If to NYDM:
101 North Scoville
Oak Park, IL 60302
Attn: Craig W. Moore
Fax: (708) 386-1711
with copies to:
Katten Muchin & Zavis
525 West Monroe
Chicago, Illinois 60661-3693
Attn.: Alan Berry, Esq. and Matthew S. Brown, Esq.
Fax: (312) 902-1061
and
Hinman, Straub, Pigors & Manning, P.C.
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121 State Street
Albany, New York 12207-1693
Attn.: Ray Kolarsey, Esq.
Fax: (518) 436-4751
If to Hospital:
111 East 210th Street
Bronx, New York 10467
Attn: Stanley L. Jacobson, Esq.
Fax: (718) 652-2161
with a copy to:
Green, Stewart, Farber & Anderson, P.C.
2600 Virginia Avenue, N.W.
Suite 1111
Washington, D.C. 30037
Attn: Philip D. Green, Esquire
Fax: (202) 342-8734
(b) Amendment. No modification, waiver, amendment, discharge, or change of
this Agreement shall be valid unless in writing and signed by the party against
whom enforcement of such modification, waiver, amendment, discharge, or change
is sought.
(c) Assignment. This Agreement shall not be assignable by either party
without the prior written consent of the other. Except as noted herein, no
other person or corporate entity shall acquire or have any rights under or by
virtue of this Agreement.
(d) Severability. If any one or more of the provisions of this Agreement
should be ruled wholly or partly invalid or unenforceable by a court or other
government body of competent jurisdiction, then: (i) the validity and
enforceability of all provisions of this Agreement not ruled to be invalid or
unenforceable shall be unaffected; (ii) the effect of the ruling shall be
limited to the jurisdiction of the court or other government body making the
ruling; (iii) the provision(s) held wholly or partly invalid or unenforceable
shall be deemed amended, and the court or other government body is authorized to
reform the provision(s), to the minimum extent necessary to render them valid
and enforceable in conformity with the parties' intent as manifested herein and
a provision having a similar economic effect shall be substituted; and (iv) if
the ruling and/or the controlling principle of law or equity leading to the
ruling, is subsequently overruled, modified, or amended by legislative,
judicial, or administrative action, the provision(s) in question as originally
set forth in this Agreement shall be deemed valid and enforceable to the maximum
extent permitted by the new controlling principle of law or equity.
-15-
(e) Choice of Law. The interpretation of this Agreement and the rights and
obligations of NYDM and Hospital hereunder shall be governed by the laws of the
State of New York, without regard to choice of law provisions.
(f) Binding Benefit. The provisions, covenants and agreements herein
contained shall inure to the benefit of, and be binding upon, the parties hereto
and its legal representatives, successors and assigns.
(g) Headings and Construction. All headings contained in this Agreement
are for reference purposes only and are not intended to affect in any way the
meaning or interpretation of this Agreement. All words used in this Agreement
shall be construed to be of such gender and number as the circumstances require.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
collectively shall constitute one and the same agreement.
(i) Expenses. Each of the parties shall bear its own expenses in
connection with this Agreement.
(j) Waiver. The waiver by any party of a breach or violation of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of such provision or any other provision of this Agreement.
(k) Construction. This Agreement shall not be construed more strictly
against any party hereto by virtue of the fact that the Agreement may have been
drafted or prepared by such party or its counsel, it being recognized that all
of the parties hereto have contributed substantially and materially to its
preparation and that this Agreement has been the subject of and is the product
of negotiations between the parties.
(l) Cumulative Remedies. Any right, power, or remedy provided under this
Agreement to any party hereto shall be cumulative and in addition to any other
right, power or remedy provided under this Agreement now or hereafter existing
at law or in equity, and may be exercised singularly or concurrently.
(m) Attorney's Fees. In the event that any party breaches this Agreement
in any respect, the prevailing party shall be entitled to recover, in addition
to any and all other remedies, which shall be cumulative, the reasonable
attorney's fees, expenses, and costs which it or she incurs as a result thereof.
(n) Arbitration. In the event of a dispute between the parties arising
from or relating to this Agreement, including, but not limited to, construction,
interpretation, implementation, or enforcement of this Agreement or the
performance or breach of any provision in this Agreement,
-16-
the parties shall meet and confer in good faith to resolve such dispute. In the
event such efforts do not resolve the dispute within fifteen (15) days from the
date the dispute arises, either party may demand arbitration administered and
conducted in New York, New York, by the American Arbitration Association, before
one (1) arbitrator, under its Commercial Arbitration Rules, such arbitration to
be final, conclusive, and binding. Judgment on the award rendered by the
arbitrator may be entered by any court having proper jurisdiction. This
provision shall survive termination of this Agreement. Notwithstanding the
foregoing, any party may seek or assert entitlement to injunctive relief or
specific performance in court as an initial matter and shall have no prior
obligation to establish in arbitration the entitlement to injunctive relief or
specific performance.
(o) Entire Agreement. This Agreement supersedes all prior agreements
between the parties with respect to its subject matter and constitutes (along
with the documents referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement among the parties with respect to its
subject matter.
-17-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MONTEFIORE MEDICAL CENTER NEW YORK DIALYSIS
MANAGEMENT, INC.
/s/ Donald L. Ashkenase /s/ Craig W. Moore
- ---------------------------------- -----------------------------------
Signature Signature
Donald L. Ashkenase Craig W. Moore
- ---------------------------------- -----------------------------------
Print Name Print Name
Executive Vice President-Corporate President
- ---------------------------------- -----------------------------------
Office or Title Office or Title
Everest HealthCare Services Corporation hereby unconditionally guarantees
the full and complete performance by New York Dialysis Management, Inc., and all
of its successors and assigns, of its covenants and obligations hereunder.
EVEREST HEALTHCARE SERVICES
CORPORATION
/s/ Craig W. Moore
---------------------------------------
Signature
Craig W. Moore
---------------------------------------
Print Name
Chairman and Chief Executive Officer
---------------------------------------
Office or Title
July 17, 1998
---------------------------------------
Date
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