EXHIBIT 10.1
MASTER PURCHASE AND SALE AGREEMENT
Between
▇▇▇▇▇▇ FOUNDATION HEALTH PLAN OF TEXAS
(As Seller)
and
HMO TEXAS, L.C.
(As Buyer)
Dated: June 5, 1998
TABLE OF CONTENTS
Page
ARTICLE I
GENERAL...........................................................................................................1
1.1 Agreement to Sell and Purchase................................................1
1.2 Purchase Price................................................................4
1.3 Escrow Deposit................................................................4
ARTICLE II
TITLE COMMITMENT AND SURVEY;
REVIEW AND INSPECTION BY BUYER....................................................................................4
2.1 Title Commitment and Survey...................................................4
2.2 Review and Inspection by Buyer................................................5
2.3 Due Diligence Notice..........................................................6
ARTICLE III
REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS....................................................................................................7
3.1 Representations and Warranties of Seller......................................7
(a) Organization and Good Standing................................................7
(b) Seller's Authority and No Breach..............................................8
(c) No Violations.................................................................8
(d) Seller's Financial Statements.................................................8
(e) Litigation....................................................................8
(f) No Brokers or Finders.........................................................8
(g) Seller's Consents.............................................................9
(h) Tax Returns and Tax Liabilities...............................................9
(i) No Untrue Representation or Warranty..........................................9
(j) Inspection, Representations and Warranties of Seller..........................9
(k) Due Diligence Materials......................................................11
(l) Licenses and Permits.........................................................11
(m) Zoning.......................................................................11
(n) Proceedings..................................................................11
(o) Improvements.................................................................11
(p) Representations and Warranties True and Correct at Closing;
Breaches
11
3.2 Representations and Warranties of Buyer......................................12
(a) Organization and Good Standing...............................................12
(b) Buyer's Authority and No Breach..............................................12
(c) No Brokers or Finders........................................................12
(d) Buyer's Consents.............................................................12
(e) No Untrue Representation or Warranty.........................................12
(f) Representations and Warranties True and Correct at Closing;
Breaches
12
3.3 Survival of Provisions.......................................................13
3.4 Operations Pending Closing...................................................13
3.5 Communications...............................................................14
3.6 Indemnification..............................................................15
(a) Indemnification by Seller....................................................15
(b) Indemnification by Buyer.....................................................15
(c) Limitation...................................................................15
3.7 Guarantees...................................................................16
ARTICLE IV
CONDITIONS PRECEDENT; TERMINATION................................................................................16
4.1 Conditions to Buyer's Obligations............................................16
4.2 Conditions to Seller's Obligations...........................................17
4.3 Joint Conditions Precedent to Closing........................................17
4.4 Termination..................................................................17
ARTICLE V
THE CLOSING......................................................................................................18
5.1 The Closing Date.............................................................18
5.2 Seller's Obligations at the Closing..........................................18
5.3 Buyer's Obligations at the Closing...........................................19
5.4 Closing Costs................................................................20
5.5 Prorations...................................................................20
ARTICLE VI
DAMAGE OR CONDEMNATION PRIOR TO THE CLOSING......................................................................21
6.1 Damage.......................................................................21
6.2 Condemnation.................................................................21
ARTICLE VII
DEFAULTS.........................................................................................................22
7.1 Default by Seller............................................................22
7.2 Default by Buyer.............................................................22
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ARTICLE VIII
MISCELLANEOUS....................................................................................................22
8.1 Notices......................................................................22
8.2 Waiver.......................................................................24
8.3 Counterparts.................................................................24
8.4 Brokerage Fees and Commissions...............................................24
8.5 Entire Agreement.............................................................24
8.6 Modification.................................................................24
8.7 Applicable Law...............................................................24
8.8 Headings.....................................................................25
8.9 Assignment...................................................................25
8.10 Further Assurances...........................................................25
8.11 Time of Essence..............................................................25
8.12 Severability.................................................................25
8.13 Attorneys' Fees..............................................................25
8.14 Construction.................................................................25
LIST OF EXHIBITS:
EXHIBIT A - The Land
EXHIBIT B - Special Warranty Deed With Vendor's Lien
EXHIBIT C - ▇▇▇▇ of Sale
EXHIBIT D - Assignment and Assumption of Intangible Property
EXHIBIT E - Assignment and Assumption of Leases
EXHIBIT F - Note
EXHIBIT G - Deed of Trust
EXHIBIT H - Certificate of Nonforeign Status
EXHIBIT I - Estoppel Certificate
EXHIBIT J - Subleases
EXHIBIT K - Limited Guaranty
EXHIBIT L - Sublease Guaranty
DEFINITIONS:
"ADA" can be found in Paragraph 2.3.
"Adjustment Date" can be found in Paragraph 5.5.
"Agreement" can be found on page 1.
"Applicable Environmental Laws" can be found in Paragraph 3.1(j)(viii).
"Applicable Laws" can be found in Paragraph 3.1(j)(vii).
"Appurtenances" can be found in Paragraph 1.1(b).
"Business day" can be found in Paragraph 1.3.
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"Buyer" can be found on page 1.
"Buyer's Due Diligence Notice" can be found in Paragraph 2.3.
"Buyer's Parent" can be found in Paragraph 3.7(b).
"CERCLA" can be found in Paragraph 3.1(j)(viii).
"Centex" can be found in Paragraph 3.4(c).
"Closing" can be found in Paragraph 5.1.
"Closing Date" can be found in Paragraph 5.1.
"Closing Rent Roll" can be found in Paragraph 5.2(c).
"Damage" can be found in Paragraph 6.1.
"Deeds" can be found in Paragraph 1.1(a).
"Down Payment" can be found in Paragraph 1.2(a).
"Due Diligence Materials" can be found in Paragraph 2.2.
"Escrow Deposit" can be found in Paragraph 1.3.
"Estoppels" can be found in Paragraph 3.4(i).
"Execution Date" can be found on page 1.
"HMO Agreement" can be found in Recital A.
"Hazardous substance" can be found in Paragraph 3.1(j)(viii).
"Health Plan Agreements" can be found in Recital A.
"Improvements" can be found in Paragraph 1.1(c).
"Intangible Property" can be found in Paragraph 1.1(e).
"Land" can be found in Paragraph 1.1(a).
"Leases" can be found in Paragraph 1.1(f).
"Loan Documents" can be found in Paragraph 1.2(b).
"Loss" and "Losses" can be found in Paragraph 3.6(a).
"Material" can be found in Paragraph 6.1(c).
"Notice Date" can be found in Paragraph 2.3.
"Owner Title Policy" can be found in Paragraph 5.2(e).
"Permitted Exceptions" can be found in Paragraph 2.1(b).
"Personal Property" can be found in Paragraph 1.1(d).
"Property" or "Properties" can be found in Paragraph 1.1(f).
"Purchase Price" can be found in Paragraph 1.2.
"RCRA" can be found in Paragraph 3.1(j)(viii).
"Real Property" can be found in Paragraph 1.1(f).
"Rent Roll" can be found in Paragraph 2.2(c).
"Returns" can be found in Paragraph 3.1(h).
"Seller" can be found on page 1.
"Seller's Affiliate" can be found in Paragraph 3.7(a).
"Seller's Title Indemnity" can be found in Paragraph 2.1(b).
"Subleases" can be found in Paragraph 5.3(b).
"Tenant Deposits" can be found in Paragraph 1.1(f).
"Tenant Notices" can be found in Paragraph 5.2(f).
"Title Commitment" can be found in Paragraph 2.1(a).
"Title Company" can be found in Paragraph 1.3.
"Title Exceptions" can be found in Paragraph 2.1(b).
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"Violation" can be found in Paragraph 3.1(c).
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MASTER PURCHASE AND SALE AGREEMENT
THIS MASTER PURCHASE AND SALE AGREEMENT ("Agreement") is made and
entered into as of this 5th day of June, 1998 ("Execution Date"), by and between
HMO TEXAS, L.C., a Texas limited liability company ("Buyer"), and ▇▇▇▇▇▇
FOUNDATION HEALTH PLAN OF TEXAS, a Texas non-profit corporation ("Seller").
RECITALS:
A. Buyer, Seller and their affiliates have entered into various
agreements pursuant to which Seller or its affiliates will convey to Buyer or
its affiliates certain assets and liabilities of the ▇▇▇▇▇▇ Permanente Health
Care Program in the State of Texas. These agreements include, without
limitation, that certain Asset Sale and Purchase Agreement of even date herewith
between Buyer and Seller (the "HMO Agreement"). The HMO Agreement and the other
agreements referenced in this recital are hereinafter sometimes collectively
referred to as the "Health Plan Agreements."
B. Seller owns in fee simple eight (8) medical office and
administrative office facilities in Tarrant and Dallas Counties in the State of
Texas, which constitute a portion of the operating assets used by Seller in the
operation of its health care delivery system. Buyer desires to purchase from
Seller and Seller desires to sell to Buyer Seller's interest in these Properties
(as further defined in Article I below) on the terms and conditions set forth
herein.
C. The parties intend for this Agreement to be executed, closed and
funded concurrently with the execution, closing and funding of the Health Plan
Agreements.
NOW, THEREFORE, for and in consideration of the above recitals and the
representations, warranties, mutual covenants, and agreements herein expressed,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby expressly acknowledged, the parties hereby agree as follows:
ARTICLE I
GENERAL
1.1 Agreement to Sell and Purchase. Seller hereby agrees to sell and
convey to Buyer, and Buyer hereby agrees to purchase and accept from Seller, for
the Purchase Price (hereinafter defined) and upon and subject to the terms and
conditions hereinafter
set forth, all of the following described property:
(a) Land. Eight (8) improved parcels of land (the "Land") located in
Tarrant and Dallas Counties in the State of Texas and described in Exhibit A
hereto, commonly known as:
o NorthPoint I
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
o NorthPoint II
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
o North Point III (North Dallas)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
o Northpoint IV (Dallas Specialty Center)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
o Mesquite
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
o SW Dallas
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
o Central FW
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
o Arlington
▇▇▇▇-▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All of the Land shall be conveyed to Buyer through a special warranty deed for
the Dallas County Real Property and a special warranty deed for the Tarrant
County Real Property with vendor's lien in the form of Exhibit B hereto (the
"Deeds");
(b) Appurtenances. All rights, privileges and easements appurtenant to
and for the benefit of the Land of Seller, including, without limitation, all
minerals, oil, gas and other hydrocarbon substances on and/or under the Land, as
well as all development
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rights, air rights, water, water rights and water stock relating to the Land and
any easements, rights-of-way or appurtenances relating to or used in connection
with the ownership, operation, use, occupancy or enjoyment of the Land, the
Improvements (as defined in Paragraph 1.1(c) below), the Intangible Property (as
defined in Paragraph 1.1(e) below), or any other appurtenance, together with all
rights of Seller in and to streets, sidewalks, alleys, driveways, parking areas
and areas adjacent thereto or used in connection therewith, and any land lying
in the bed of any existing or proposed street adjacent to the Land (all of which
are collectively referred to as the "Appurtenances");
(c) Improvements. All improvements, structures, buildings and fixtures
owned by Seller and presently and/or hereafter located on the Land and all
apparatus, equipment and appliances located on and/or used in connection with
the ownership, operation, use, occupancy or enjoyment thereof (such as heating
and air conditioning systems, and facilities used to provide any utility
services, parking services, refrigeration, ventilation, garbage disposal,
recreation or other services thereto including, without limitation, any and all
computers and/or computer systems used for or in connection with any building
operating systems, elevator systems, irrigation systems, climate control systems
and security systems), all landscaping thereon and all leasehold improvements of
tenants, if any, which remain a part of the Property upon expiration of any
Lease (as defined in Paragraph 1.1(f) below) (all of which are collectively
referred to as the "Improvements");
(d) Personal Property. All personal property owned by Seller located
on, situated in or used in connection with the Land, the Appurtenances and/or
the Improvements including, without limitation, that certain personal property
described in the schedule of personal property attached to Exhibit C hereto
("Personal Property"), and all of which Personal Property shall be transferred
and assigned to Buyer pursuant to an instrument in the form of Exhibit C hereto
(the "▇▇▇▇ of Sale");
(e) Intangible Property. All of the interest of Seller in any
contractual rights and intangible personal property owned by Seller relating to
or used in connection with the ownership, operation, use, occupancy or enjoyment
of the Land, Appurtenances, Improvements or Personal Property, and, to the
extent approved by Buyer in writing pursuant to the provisions of this
Agreement, any and all development agreements, permits, contracts, service and
vendor contracts, warranties, guarantees, indemnities, agreements, utility
contracts, permits, licenses and other rights owned by Seller relating to or
used in connection with the ownership, operation, use, occupancy or enjoyment of
all or any part of the Land, Appurtenances, Improvements or Personal Property
(all of which are collectively referred to as the "Intangible Property"), and
all of which shall be assigned to Buyer pursuant to an assignment in the form of
Exhibit D hereto (the "Assignment and Assumption of Intangible Property"); and
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(f) Leases. All of the interest of Seller, as landlord, in and to the
leases of the Land or space in the Improvements and any amendments,
modifications or supplements thereto in effect now and on the Closing Date (as
defined in Paragraph 5.1 below) including, without limitation, those certain
leases described in the schedule of leases attached to Exhibit E hereto (the
"Leases"), and all security, advance rental and other deposits made under the
tenant leases (the "Tenant Deposits"); all of which shall be assigned to Buyer
pursuant to an instrument in the form of Exhibit E attached hereto (the
"Assignment and Assumption of Leases").
All of the items described in Paragraphs 1.1(a), 1.1(b), 1.1(c),
1.1(d), 1.1(e) and 1.1(f) above are sometimes hereinafter collectively referred
to as the "Property" or the "Properties;" provided however that, notwithstanding
the foregoing, the Personal Property and Intangible Property shall not include
any Assets or Excluded Assets, as defined in the HMO Agreement or any other
asset expressly retained by Seller pursuant to the terms of the Health Plan
Agreements. The items described in Paragraphs 1.1(a), 1.1(b) and 1.1(c) above
are sometimes hereinafter referred to collectively as the "Real Property."
1.2 Purchase Price. The purchase price (the "Purchase Price") to be paid
for the Properties shall be Forty Four Million and No/100 Dollars
($44,000,000.00), payable to Seller on the Closing Date (hereinafter defined) as
follows:
(a) The sum of $8,800,000, inclusive of the Escrow Deposit, as hereinafter
defined (the "Down Payment"), and
(b) A promissory note in the amount of $35,200,000 in the form of
Exhibit F attached hereto (the "Note"), secured by a Deed of Trust and Security
Agreement in the form of Exhibit G attached hereto (the "Deed of Trust"), which
Note and Deed of Trust are sometimes hereinafter referred to as the "Loan
Documents."
1.3 Escrow Deposit. Within five (5) business days after the execution
hereof, and as a condition to Seller's obligations hereunder, Buyer shall
deposit with Republic Title Insurance Company of Texas, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Attn: ▇▇▇▇ ▇▇▇▇▇▇, Escrow Officer) (the "Title
Company"), in escrow, the sum equal to Seventy Five Thousand and No/100 Dollars
($75,000.00), which amount shall be invested by the Title Company in an
interest-bearing account with a financial institution approved by Seller and
Buyer whose accounts are insured by the Federal Deposit Insurance Corporation,
and be held and disbursed by the Title Company strictly in accordance with the
terms and provisions of this Agreement. The amount of such deposit is
hereinafter referred to as the "Escrow Deposit." At the Closing, the Escrow
Deposit shall be applied to the payment of the Purchase Price. If this Agreement
is terminated due to the default of the Buyer, the Escrow Deposit shall be
released and paid to Seller and shall constitute Seller's liquidated damages.
All accrued interest on the Escrow Deposit shall
4
be paid to Buyer regardless of the ultimate disposition of the Escrow Deposit
itself. The term "business day" shall mean Monday through Friday, excluding
federal holidays.
ARTICLE II
TITLE COMMITMENT AND SURVEY;
REVIEW AND INSPECTION BY BUYER
2.1 Title Commitment and Survey. Prior to the date of this Agreement,
Seller has caused to be issued and delivered to Buyer the following:
(a) A commitment for title insurance for the Properties (the "Title
Commitment") prepared by Title Company, accompanied by a copy of all recorded
documents affecting the Properties and listed as title exceptions in Schedule B
of the Commitment; and
(b) All of the surveys of the Properties in Seller's possession,
prepared by a licensed land surveyor.
Buyer shall review the Title Commitment and may order surveys of the Properties.
Buyer agrees to accept the condition of title subject only to the liens,
encumbrances and exceptions arising out of the actions of Buyer, and any
encumbrances that do not materially interfere with Buyer's intended use of the
Properties (the "Permitted Exceptions"). Notwithstanding the foregoing, none of
the following items shall constitute Permitted Exceptions, and all of such items
shall be discharged, satisfied, cured or insured over, as appropriate, by Seller
at or prior to the Closing:
(i) All mortgages or deeds of trust affecting the Properties;
(ii) All past due ad valorem taxes and assessments of
any kind constituting a lien against the Property, except
taxes for the year 1998, not yet due and payable, which shall
be prorated between the parties and any special assessments in
excess of $10,000;
(iii) All mechanic's, materialman's and similar liens
(and/or affidavits claiming the same) filed against all or any
portion of the Property;
(iv) Judgments which have been abstracted and become a lien against all or
any portion of the Property; and
(v) Any federal tax lien against all or any portion
of the Property.
5
If Seller is unable to discharge, satisfy, cure or insure over any title or
survey defects, encroachments over building and property lines, liens,
encumbrances or exceptions that materially interfere with Buyer's intended use
of the Property (the "Title Exceptions") on or before the Closing Date, Buyer
agrees to take title subject to the Title Exceptions; provided that Seller shall
indemnify and hold Buyer harmless in accordance with Paragraph 3.6 ("Seller's
Title Indemnity"). Title Exceptions shall not include matters set forth in
Paragraph 2.1(b)(i) through (v), above, which Seller shall discharge, satisfy,
cure or insure over, as appropriate, at or prior to the Closing.
2.2 Review and Inspection by Buyer. Seller has delivered to Buyer or will
deliver to Buyer within ten (10) days after the Execution Date all of the books,
inspection reports and other information in Seller's possession containing
material information pertaining to the Properties (the "Due Diligence
Materials"). The Due Diligence Materials include the following information and
documents:
(a) An unaudited Income and Expense Statement for the calendar quarter
ended March, 1998, showing first quarter 1998 operating income and expenses for
the Properties;
(b) A copy of each of the Leases;
(c) A Rent Roll (the "Rent Roll") for any Property subject to a Lease,
including for each Lease (i) the tenant's name, (ii) the area leased to the
tenant, (iii) the monthly rental payable by the tenant, (iv) the amount of any
security or other deposit, (v) the date of commencement of the Lease, (vi) the
term and the date of expiration of the Lease, (vii) any renewal or expansion
options, and (viii) any rents or other charges in arrears or prepaid thereunder
and the period for which the rents or other charges are in arrears or have been
prepaid;
(d) A copy of the most recent ad valorem tax statement for each of the
Properties;
(e) Any "as-built" plans and specifications with respect to the
Improvements that Seller possesses;
(f) A copy of any licenses and permits owned by Seller in connection
with the ownership, occupancy and operation of the Property;
(g) A copy of any hazardous materials inspection reports in Seller's
possession; and
(h) Copies of any guaranties and warranties in Seller's possession
pertaining to all Personal Property and equipment at the Properties.
6
From the Execution Date through the Closing Date, Buyer, its counsel,
accountants, and other representatives shall, subject to confidentiality
covenants made by Seller to third parties and state and federal antitrust laws,
have the right to inspect (without copying) additional books and records of
Seller relating to the Properties located at Seller's administrative offices in
Dallas, Texas, except for market valuation information such as Property
appraisals, purchase and sale agreements, and information pertaining to the book
value of the Properties. Any such inspection shall occur during normal business
hours and shall be scheduled by Buyer and Seller following request for
inspection made to Seller. Buyer and its representatives shall use their best
efforts to conduct their inspection in such a manner as not to be disruptive to
Seller's employees or business operations and without infringing upon the
confidential nature of physician-patient encounters. Buyer shall reimburse
Seller for any damage to the Property caused by Buyer or Buyer's representatives
during the inspection process. All information provided by Seller to Buyer or
obtained by Buyer relating to the Property in the course of its review shall be
treated as confidential information by Buyer. Buyer shall defend, indemnify and
hold Seller harmless from and against any liabilities, claims, demands, actions,
loss or damage to the Property incident to, resulting from or in any way arising
out of any entry upon or inspection by or on behalf of Buyer of the Property. By
entering into this Agreement, Buyer shall be deemed to have determined that the
Property is in satisfactory condition and suitable for Buyer's purposes.
2.3 Due Diligence Notice. Buyer shall have thirty-five (35) days from
the Execution Date (the "Notice Date") to notify Seller in writing of any
matters pertaining to (i) the presence or release of Hazardous Materials on the
Properties, (ii) the violation of any zoning laws pertaining to the Properties,
and (iii) any violations of the Americans with Disabilities Act (the "ADA")
arising from any improvements or renovations performed by Seller after the
passage of the ADA ("Buyer's Due Diligence Notice"). Buyer's Due Diligence
Notice shall describe the nature of the concern arising from Buyer's due
diligence review and shall include any supporting documentation that may be
necessary for Seller to fashion an appropriate cure for the matter referenced in
said notice. Within fifteen (15) days after receipt of Buyer's Due Diligence
Notice, Seller shall advise Buyer in writing that Seller will either remedy,
discharge, repair, remediate, insure over or cure said matters referenced in
Buyer's Due Diligence Notice. Alternatively, Seller may notify Buyer that it
will indemnify Buyer with regard to such matters in accordance with Paragraph
3.6.
BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE AND DOES NOT HEREBY MAKE
ANY REPRESENTATIONS, WARRANTIES, OR COVENANTS OF ANY KIND OR CHARACTER
WHATSOEVER WITH RESPECT TO THE PROPERTIES, WHETHER EXPRESSED OR IMPLIED, EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, AND AS LIMITED BY THE INFORMATION
PROVIDED IN BUYER'S DUE DILIGENCE NOTICE. FURTHERMORE, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT
7
MADE AND DOES NOT MAKE, AND BUYER HEREBY DISCLAIMS THE EXISTENCE OF OR RELIANCE
UPON, ANY IMPLIED WARRANTY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. BUYER HEREBY REPRESENTS THAT IT IS NOT RELYING
UPON ANY WARRANTIES, PROMISES, GUARANTEES, OR REPRESENTATIONS MADE BY SELLER OR
ANYONE ACTING OR CLAIMING TO ACT ON BEHALF OF SELLER IN PURCHASING THE
PROPERTIES, OTHER THAN THE WARRANTIES SET OUT IN THE DEEDS OR THIS AGREEMENT.
ARTICLE III
REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS
3.1 Representations and Warranties of Seller. As of the Execution Date,
Seller represents and warrants to Buyer as follows:
(a) Organization and Good Standing. Seller is a non-profit corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite corporate power and
authority to own, lease and operate the Properties and is duly qualified and in
good standing to do business under the corporate law of each jurisdiction in
which the ownership or leasing of the Properties makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect, as defined in the HMO Agreement.
(b) Seller's Authority and No Breach. Seller has all requisite
corporate power and corporate authority to enter into this Agreement and all of
the other agreements contemplated hereby, and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Seller. This Agreement and each
other agreement contemplated hereby constitute valid and binding agreements of
Seller, enforceable against Seller in all material respects in accordance with
their respective terms except insofar as enforcement may be limited by
insolvency or similar laws affecting the enforcement of creditors' rights in
general, and except as enforceability may be limited by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(c) No Violations. Except for consents of third parties required under
any contracts, the execution and delivery of this Agreement and the other
agreements contemplated hereby and the consummation of the transactions
contemplated hereby or thereby will not: (i) conflict with, or result in any
material violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or the loss of a material benefit
8
under, or the creation of a material lien, material security interest or other
material encumbrance pursuant to, any material contract, lease, mortgage,
instrument or other agreement to which Seller is a party or by which it is bound
that will not be paid or satisfied prior to or at Closing, with respect to, any
Property (any such conflict, violation, default, right of termination,
cancellation or acceleration, loss or creation, a "Violation"), pursuant to any
provisions of the Articles of Incorporation or Bylaws of Seller; (ii) result in
any Violation of any material agreement to which the Properties are subject;
(iii) result in any Violation of any judgment, order, injunction or decree
entered into with respect to Seller or to which the Properties are subject, or;
(iv) to Seller's knowledge, result in any Violation of any statute, law,
ordinance, rule or regulation applicable to the Properties, except in each of
clauses (i) through (iv), where such Violations, individually or in the
aggregate, would not have a Material Adverse Effect, as defined in the HMO
Agreement.
(d) Seller's Financial Statements. Seller has delivered or will deliver
to Buyer as Seller's Financial Statements in accordance with Section 2.1.5 of
the HMO Agreement.
(e) Litigation. To Seller's knowledge, there are no actions, suits,
proceedings, or investigations of any kind now pending or threatened in writing
against Seller that may have a Material Adverse Effect (as defined in the HMO
Agreement), except as set forth in the HMO Agreement.
(f) No Brokers or Finders. No broker or finder is involved on behalf of
Seller or any affiliate of Seller in connection with the sale of the Properties,
nor may any broker or finder involved on behalf of Seller claim any commission
on account of the sale of the Properties, except for ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
The fees due ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. relating to this transaction are not real
estate broker commissions and shall be paid
in accordance with the HMO Agreement.
(g) Seller's Consents. Except as set forth in the HMO Agreement, Seller
is not required to obtain the consent or approval of any government agency,
department or other government body to perform its obligations under this
Agreement.
(h) Tax Returns and Tax Liabilities. To Seller's knowledge, Seller has
made and is current with respect to all reports, returns and other filings
(collectively, the "Returns") required to be furnished from time to time to all
federal, state, local or other governmental tax or fiscal authorities
(including, without limitation, all real and personal property, franchise and
withholding taxes and other Returns); all such Returns so furnished were correct
in all material respects; and based on the applicable measure of Seller's
operations or Assets during the period in question; each such Return correctly
stated and reported the amount due in all material respects; true and correct
copies of all such Returns are included in Seller's files; and all amounts
reflected as due and payable on the Returns have been paid.
9
(i) No Untrue Representation or Warranty. To Seller's knowledge, no
representation or warranty by Seller in this Agreement, nor any statement or
certificate furnished or to be furnished to Buyer pursuant hereto or in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a
material fact.
(j) Inspection, Representations and Warranties of Seller. Seller
represents and warrants to Buyer as follows, except as set forth to the contrary
in the Due Diligence Materials, that:
(i) There are no adverse or other parties in possession of the Property, or
of any part thereof, except Seller and tenants under the Leases;
(ii) There is direct access between the Properties
and adjacent public streets, and there are utilities necessary
for the operation of the Property as it is currently being
operated, and no fact or condition exists that would result in
the termination of access to and from the Property or the
cessation of utilities necessary for the operation of the
Property as it is currently being or intended to be operated;
(iii) Each Lease furnished to Buyer pursuant to this
Agreement is in good standing and in full force and effect,
and has not been amended, modified, or supplemented in any way
that has not been shown on the Rent Roll and Closing Rent Roll
(hereinafter defined);
(iv) Neither Seller nor, to Seller's knowledge, any
of Seller's predecessors in interest has within the past five
(5) years has claimed with respect to the Land the benefit of
any law permitting a special use valuation (such as
"agricultural" or "open space") for the purpose of obtaining a
lower tax assessment or rate;
(v) No condemnation proceedings or similar actions or proceedings are now
pending or, to Seller's knowledge, threatened against the Property or any part
thereof;
(vi) Seller now has, and on the Closing Date Seller
will have, and will convey to Buyer good and indefeasible
title to the Property. The Properties consist of all of the
real property owned by Seller in the State of Texas;
(vii) To Seller's knowledge, the occupancy, operation
and use of the Property does not violate any applicable law,
statute, ordinance, rule,
10
regulation, order or determination of any Governmental Authority affecting
the Property, including without limitation the Americans With Disabilities Act
of 1990, 42 U.S.C. ▇▇.▇▇. 12101 et seq. and regulations thereunder (hereinafter
sometimes collectively called "Applicable Laws");
(viii) To Seller's knowledge, no asbestos, material
containing asbestos which is or may become friable, or
material containing asbestos deemed hazardous by Applicable
Laws has been installed in the Property, and the Property and
Seller are not in violation of or subject to any existing
investigation or inquiry by any governmental authority or to
any remedial obligations under any Applicable Laws pertaining
to health, safety or the environment (such Applicable Laws as
they now exist or are hereafter enacted and/or amended
hereinafter sometimes collectively called "Applicable
Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (hereinafter called
"CERCLA"), and the Resource Conservation and Recovery Act of
1976, as amended (hereinafter called "RCRA"). As used in this
Agreement, the term "release" shall have the meaning specified
in CERCLA, the terms "solid waste" and "disposal" (or
"disposed") shall have the meanings specified in RCRA, and the
term "hazardous substance" shall mean: (i) any "hazardous
substance" as defined in CERCLA and regulations promulgated
thereunder; (ii) any "hazardous substance" as defined in RCRA
and regulations promulgated thereunder; (iii) any petroleum,
including crude oil or any fraction thereof which is not
otherwise specifically listed or designated as a hazardous
substance under the definition of hazardous substance in
CERCLA as well as natural gas, natural gas liquids, liquefied
natural gas, or synthetic gas usable for fuel (or mixtures of
natural gas and such synthetic gas), and other petroleum
products and by-products; (iv) formaldehyde, urea,
polychlorinated biphenyls, radon, and "source," "special
nuclear" and "by-product" materials as defined in the Atomic
Energy Act of 1985, 42 U.S.C. ▇▇.▇▇. 3011 et seq.; (v) any
material defined as hazardous or toxic under any statute or
regulation of the State of Texas or any agency thereof; and
(vi) any other material or substance which is toxic,
ignitable, reactive or corrosive and which is regulated by any
Applicable Environmental Law; provided, (i) all such terms
shall be deemed to include all similar terms used in any
Applicable Environmental Laws or regulations thereunder
(including by way of example, but not limitation, pollutant,
contaminant, toxic substance, discharge and migration), and
(ii) to the extent that any Applicable Environmental Laws or
regulations thereunder are amended so as to broaden the
meaning, or otherwise establish a meaning, for "hazardous
substance," "release," "solid waste," or "disposal" (or
"disposed"), or any similar terms, which is broader than that
specified
11
above, such broader meaning shall apply. Applicable
Environmental Laws shall not include any substance that is
customarily used in the delivery of health care services;
detergents, solvents and other substances that are customarily
used in administrative and medical offices; and biohazardous
and other wastes, chemicals and pharmaceuticals stored and
used in accordance with Applicable Law;
(k) Due Diligence Materials. The Due Diligence Materials contain all of
the information in Seller's possession relating to the existence of any
hazardous materials, as defined by state and federal law, in, on or under any of
the Properties.
(l) Licenses and Permits. To Seller's knowledge, Seller has obtained
all licenses, permits, variances, approvals, authorizations, easements and
rights of way, including proof of dedication, required from all Governmental
Authorities having jurisdiction over the Property or from private parties for
the intended use, operation and occupancy of the Property and to insure
vehicular and pedestrian ingress to and egress
from the Property.
(m) Zoning. To Seller's knowledge, the zoning of the Property permits
the current use of the Property, and there exists no judicial, quasi-judicial,
administrative or other proceeding which might adversely affect the validity of
such zoning.
(n) Proceedings. To Seller's knowledge, there exists no judicial,
quasi-judicial, administrative or other proceeding or court order, building code
provision, deed restriction or restrictive covenant (recorded or otherwise) or
other private or public limitation which might in any way impede or adversely
affect the use of the Property by Buyer as offices or medical offices.
(o) Improvements. To Seller's knowledge, the Improvements are in good
condition and repair, free of any patent structural defects.
(p) Representations and Warranties True and Correct at Closing;
Breaches. Seller shall execute and deliver to Buyer a certificate signed by an
authorized representative of Seller, dated as of the Closing Date, stating that
each of the representations and warranties of Seller made herein are true and
correct in all respects as of the Closing Date, or describing the manner in
which such representations and warranties are not true and correct. If any of
the representations and warranties of Seller are not true and correct as of the
Closing Date, then Buyer shall be entitled to indemnification for any and all
losses arising therefrom in accordance with Paragraph 3.6, but shall
nevertheless be obligated to conclude the transactions contemplated hereby. The
consummation of the transactions under this Agreement by Buyer shall not
constitute a waiver of Buyer's rights to indemnification for a breach of a
representation or warranty
12
provided for in this Paragraph. Seller's representations and warranties
shall survive for a period of five (5) years after the Closing Date.
3.2 Representations and Warranties of Buyer. As of the Execution Date,
Buyer represents and warrants to Seller as follows:
(a) Organization and Good Standing. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Texas. Buyer is authorized under state law to conduct business in
the State of Texas.
(b) Buyer's Authority and No Breach. Buyer has all requisite corporate
power and corporate authority to enter into this Agreement and all of the other
agreements contemplated hereby, and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement and each other agreement
contemplated hereby constitute valid and binding agreements of Buyer,
enforceable against Buyer in all material respects in accordance with their
respective terms, except insofar as enforcement may be limited by insolvency or
similar laws affecting the enforcement of creditors' rights in general, and
except as enforceability may be limited by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law.)
(c) No Brokers or Finders. No broker or finder is involved on behalf of
Buyer or any affiliates of Buyer in connection with the sale of the Properties
nor may any broker or finder involved on behalf of Buyer claim any commission on
account of the sale of the Properties. The parties acknowledge that Bear ▇▇▇▇▇▇▇
has been engaged by Buyer as a financial advisor to Buyer, and the fees of Bear
▇▇▇▇▇▇▇ shall be paid for by Buyer in accordance with the HMO Agreement.
(d) Buyer's Consents. Except as set forth in the HMO Agreement, Buyer
is not required to obtain the consent or approval of any government agency,
department or other government body to perform its obligations under this
Agreement.
(e) No Untrue Representation or Warranty. To Buyer's knowledge, no
representation or warranty by Buyer in this Agreement, nor any statement or
certificate furnished or to be furnished to Seller pursuant hereto or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a
material fact.
(f) Representations and Warranties True and Correct at Closing;
Breaches. Buyer shall execute and deliver to Seller a certificate signed by an
authorized representative of Buyer, dated as of the Closing Date, stating that
each of the representations and warranties of Buyer made herein is true and
correct in all respects
13
as of the Closing Date, or describing the manner in which such representations
and warranties are not true and correct. If any of the representations and
warranties of Buyer are not true and correct as of the Closing Date, then Seller
shall be entitled to indemnification for any and all losses as provided in
Paragraph 3.6. The consummation of the transactions under this Agreement by
Seller shall not constitute a waiver of Seller's rights to indemnification for a
breach of a representation or warranty provided for in this Paragraph.
3.3 Survival of Provisions. The representations, warranties, covenants,
agreements, indemnities, terms and provisions contained herein shall survive the
Closing for a term of five (5) years and shall not be deemed to have been merged
with or into the
Deeds.
3.4 Operations Pending Closing. From the date hereof through the Closing
Date, Seller agrees as follows:
(a) Seller will manage, operate, repair and maintain the Property in
the same manner as it operated the Property prior to the date hereof and will
keep the Property in its present state of repair subject to normal wear and
tear, exercising the same degree of care in such matters as Seller has
previously exercised and in compliance with Applicable Laws and Applicable
Environmental Laws. Except for the sale or use of operating inventories in the
ordinary course of business, Seller shall not remove any item of Personal
Property from the Property without replacing the same with property of equal or
greater value.
(b) Except as permitted by the HMO Agreement, Seller will not enter
into any renewal, extension, modification or replacement of any existing service
contract or enter into any new employment, maintenance, service, supply or other
agreement relating to the Property without the express written permission of
Buyer.
(c) Without the prior written consent of Buyer, Seller shall not (i)
enter into any new leases or occupancy agreements for space at the Property,
(ii) modify, amend, terminate, renew, extend or waive any rights under any
existing Lease, (iii) apply any rental security deposits against sums payable
under any Lease, (iv) grant any concession, rebate, allowance or free rent to
any tenant for any period, or (v) accept the surrender of or terminate any
Lease. Notwithstanding the foregoing, to the extent available at the time of
Closing, Buyer shall use its best efforts to lease to Seller up to 10,000 square
feet, at Seller's option, of currently built-out administrative space in either
North Point I (▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇) or Hillcrest (▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇) (but in no event less than 5,000 square feet) for not more than
18 months for gross rent equal to $11.00 per foot per year (Seller shall pay for
electricity). The lease, if entered into, shall be executed and delivered at
Closing, shall allow Seller to release space back to Buyer as Seller's
operations wind down, in 1,000 square foot increments,
14
at months end, and shall contain such other terms as are typically including in
third party leases at the same building. In addition, Seller shall attempt to
satisfy Seller's transition space requirements from Centex Real Estate
Corporation ("Centex") first and shall have the option to sublease any portion
of the premises now leased to Centex and not subleased to third parties upon
such terms as Seller may deem appropriate as between Centex and Seller without
modification of the terms of the Lease Agreement now in effect between Centex
and Seller covering premises located in North Point I. There are approximately
15,000 square feet of space not subleased by Centex to third parties at this
time. Buyer agrees not to compete for the Centex space until Seller's space
requirements have been satisfied.
(d) Seller will continue to self-insure for all existing fire and
casualty liability, which self-insurance shall inure to the benefit of Buyer.
(e) Seller shall perform its obligations when due pursuant to the
Leases, including, without limitation, any maintenance or repair of the Property
to be performed by Seller as landlord under the Leases; and except as provided
this Agreement, all construction of tenant improvements and other work required
to be performed under any Lease entered into prior to the Closing shall be
completed, satisfied and paid in full by Seller prior to Closing.
(f) Buyer or representatives of Buyer shall have access to the Property
during normal business hours if Buyer notifies Seller in writing at least 48
hours in advance of the time Buyer desires access to the Property.
(g) Seller will not cause any action to be taken which would cause any
of the representations or warranties made by Seller in this Agreement to be
false on or as of the Closing Date. Seller shall promptly notify Buyer in
writing of the occurrence of any event or condition which occurs prior to the
Closing Date which causes an adverse change in any of the representations or
warranties made in Article III of this Agreement.
(h) Seller shall give Buyer prompt notice of the institution of any
litigation, arbitration or administrative proceeding or condemnation proceeding
of which it becomes aware prior to the Closing Date involving Seller relating to
the Real Property.
(i) Seller shall make best efforts to obtain estoppel certificates in
the form of Exhibit I attached hereto (the "Estoppels") and deliver said
Estoppels to Buyer on or before the Closing Date. If Seller is unable to obtain
such Estoppels, Seller may substitute a certificate from Seller substantially in
the form of the Estoppels.
3.5 Communications. Between the Execution Date and the Closing Date,
and unless otherwise specifically authorized in this Agreement, Buyer may not
communicate, orally or in writing, with Members (as defined in the HMO
Agreement), service providers
15
of Seller, employees of Seller, vendors of Seller, suppliers of Seller, or other
third party contractors of Seller, concerning this transaction, without the
prior written consent of Seller (which shall not be unreasonably withheld)
except for communications with ▇▇▇▇▇ ▇▇▇▇, Director of Acquisitions/Alliance
Services for Seller, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Senior Counsel for Seller, or their
designees, or as provided in the Health Plan Agreements. Nothing in this
Paragraph shall preclude either Buyer or Seller from communicating as it deems
advisable with its own subscribers, government regulators, service providers,
employees, vendors, shareholders, suppliers, and third party contractors as
required by law in the ordinary course of business, or prohibit Buyer from doing
its due diligence review, including inspections with surveyors, property
inspectors, environmental consultants and title officers and the obtaining of
zoning and other similar property related information from local governmental
authorities. In no event shall either party cause any oral or written
communication to be issued relating to this transaction which disparages any
other party or its affiliates, unless required by law. Communications with the
media shall be subject to the joint work plan to be developed by Buyer and
Seller pursuant to the HMO Agreement.
3.6 Indemnification.
(a) Indemnification by Seller. Subject to Paragraph 3.6(c) below,
Seller shall indemnify and hold harmless Buyer and its respective officers,
directors, employees, agents and affiliates against any and all actual damages
resulting from claims, losses, costs, expenses, fees, liabilities and damages,
including interest, penalties and reasonable attorneys' fees and disbursements
(each individually a "Loss" and collectively "Losses") arising out of, in
connection with or otherwise relating to:
(i) Seller's indemnification obligation set forth in Paragraph 2.1;
(ii) Seller's indemnification obligation set forth in Paragraph 2.3; and
(iii) The material breach by Seller of any
representation, warranty, covenant or agreement made by Seller
in this Agreement, or in any other agreement executed in
connection herewith.
(b) Indemnification by Buyer. Subject to the limitations of Paragraph
3.6(c) below, Buyer shall indemnify and hold harmless Seller and its respective
officers, directors, employees, agents and affiliates, against any losses
arising out of, in connection with or otherwise relating to the material breach
by Buyer of any representation, warranty, covenant or agreement made by Buyer in
this Agreement, or
in any other agreements executed in connection therewith.
16
(c) Limitation. The indemnification rights and obligations set forth in
this Paragraph 3.6 shall survive the Closing and shall expire as provided in
Paragraph 3.3; provided, however, that with respect to claims notified in good
faith to the indemnifying party prior to the expiration of the indemnity rights,
the parties' obligations with respect to its indemnity rights and obligations
shall continue in effect until payment or other resolution of such claims. Each
party's liability hereunder shall be limited to actual damages and no party
shall be liable to any other party hereunder for special, consequential,
incidental, punitive or other damages. If a party is entitled to indemnification
under the specific indemnification provisions of this Agreement with respect to
a particular claim, then such indemnification shall be such party's sole and
exclusive remedy; provided however, indemnification shall not be the sole and
exclusive remedy under the documents, agreements and certificates delivered at
Closing pursuant to Paragraph 5.2 hereof. This subparagraph shall be subject to
and limited by the provisions contained in Sections 11.4 and 11.6 of the HMO
Agreement, which are incorporated herein by reference.
3.7 Guarantees.
(a) Seller's Guarantor. ▇▇▇▇▇▇ Foundation Hospitals ("Seller's
Affiliate") hereby irrevocably and unconditionally agrees to cause Seller to
fully perform its obligations under this Agreement in a timely manner, and
unconditionally guarantees the full and timely performance of this Agreement by
Seller in accordance with its terms. The foregoing guarantee includes a
guarantee of the immediate payment when due of all amounts for which Seller may
at any time be liable on account of the Agreement. Buyer may, at it option,
proceed directly against Seller's Affiliate for the performance of any
obligations of Seller hereunder or for any amounts which may be recoverable as a
result of any misrepresentation, breach of warranty, breach of covenant or other
cause of Seller's liability under this Agreement, without any requirement to
proceed against Seller either prior to or concurrently with proceeding against
Seller's Affiliate. Seller's Affiliate further agrees that its guarantee shall
continue in effect notwithstanding any modification, extension, waiver or other
changes in or under this Agreement or any guaranteed obligation of any other act
or thing which might otherwise operate as a legal or equitable discharge of a
guarantor. Seller's Affiliate hereby waives all special suretyship defenses and
notice requirements.
(b) Buyer's Guarantor. Sierra Health Services, Inc. ("Buyer's Parent")
shall enter into the guarantees referenced in Paragraph 5.3(c) below.
ARTICLE IV
CONDITIONS PRECEDENT; TERMINATION
17
4.1 Conditions to Buyer's Obligations. Buyer's agreement to purchase
and to pay for the Properties hereunder is subject to compliance with and the
occurrence of each of the following conditions on or before Closing, except as
any thereof may be
waived in writing by Buyer:
(a) Agreements. Seller shall have executed and delivered to Buyer all
agreements, instruments, certificates and other documents to be delivered by
Seller, including those required by Paragraph 5.2 below. Buyer shall be
obligated to consummate this transaction if Seller has substantially performed
its obligations under Paragraph 3.4 and is proceeding in good faith and with due
diligence with respect to such obligations.
(b) Corporate Resolutions. Seller shall provide Buyer with appropriate
resolutions from its Board of Directors, authorizing Seller to effectuate the
actions required by Seller to consummate the transactions contemplated by this
Agreement.
(c) Delivery of Certificate. The representations and warranties of
Seller set forth in Paragraphs 3.1(a), 3.1(b), 3.1(d) and 3.1(j)(vi) shall be
true and correct in all material respects as of the Execution Date and as of the
Closing Date as though made on and as of the Closing Date. Buyer shall have
received a certificate signed on behalf of Seller by an authorized officer of
Seller to the effect that such representations and warranties of Seller (as
amended by the Due Diligence Notice and through disclosures submitted to Buyer
on or before the Closing Date regarding events arising since the Execution Date)
shall be true and correct in all material respects as of the Execution Date and
as of the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated in this Agreement.
Except as provided to the contrary herein, in the event that any of the
foregoing conditions are not satisfied as of the Closing Date, Buyer shall have
the right at its option to terminate this Agreement by written notice thereof
given to both Seller and the Title Company, and upon receipt of such notice, the
Title Company shall forthwith return the Escrow Deposit to Buyer.
4.2 Conditions to Seller's Obligations. Seller's agreement to sell and
to deliver the Properties to be sold hereunder is subject to the payment at
Closing of the Purchase Price and compliance with and the occurrence of each of
the following conditions on or before Closing, except as any thereof may be
waived in writing by Seller:
(a) Agreements. Buyer shall have executed and delivered to Seller all
agreements, instruments, certificates and other documents to be delivered by
Buyer, including those required by Paragraph 5.3.
18
(b) Delivery of Purchase Price; Documents. Buyer shall deliver the
Purchase Price on the Closing Date.
(c) Delivery of Corporate Resolution. Buyer shall provide Seller with
appropriate resolutions from its Board of Directors (which resolutions were
obtained prior to the execution of this Agreement), authorizing Buyer to
effectuate the actions required by Buyer to consummate the transactions
contemplated by this Agreement.
(d) Buyer's Representations and Warranties True and Correct. The
representations and warranties of Buyer set forth in Paragraphs 3.2(a) and
3.2(b) shall be true and correct in all material respects as of the Execution
Date and as of the Closing Date as though made on and as of the Closing Date.
Seller shall have received a certificate signed on behalf of Buyer by an
authorized officer of Buyer to the effect that the representations and
warranties set forth in those Paragraphs (as amended through disclosures
submitted to Buyer on or before the Closing Date regarding events arising since
the Execution Date) shall be true and correct in all material respects as of the
Execution Date and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated in this Agreement.
4.3 Joint Conditions Precedent to Closing. The transactions contemplated by
the HMO Agreement and referenced in Section 7.4 therein and further described in
the Health Plan Agreements shall have closed concurrently with the transactions
contemplated by this Agreement.
4.4 Termination. This Agreement and the transactions contemplated
hereby may be terminated or abandoned at any time prior to the Closing Date:
(a) By the mutual consent of Buyer and Seller; or
(b) By Seller or Buyer if the Closing shall not have occurred on or
before October 31, 1998, in which event the Escrow Deposit shall be returned to
Buyer.
ARTICLE V
THE CLOSING
5.1 The Closing Date. The actions contemplated to consummate the
transactions under this Agreement shall take place on the date which, unless
otherwise agreed by Buyer and Seller, shall be the Closing Date set forth in the
HMO Agreement (the "Closing Date") in accordance with the HMO Agreement. Unless
otherwise agreed to by the parties, the closing ("Closing") shall be deemed to
be effective as of and to occur, and the risk of loss shall pass Seller to
Buyer, at 12:01:01 a.m. (Central Standard Time, adjusted for daylight savings
time, if applicable) on the Closing Date. Closing shall
19
commence on the Closing Date at the offices of Seller's counsel, the law firm of
Jenkens & ▇▇▇▇▇▇▇▇▇, A Professional Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. (Central Standard Time, adjusted for daylight
savings time, if
applicable).
5.2 Seller's Obligations at the Closing. Seller shall deliver or cause
to be delivered to Buyer the following items at the Closing.
(a) The Deeds, executed by Seller conveying the Real Property to Buyer,
subject to the Permitted Exceptions and the Title Exceptions;
(b) The ▇▇▇▇ of Sale executed by Seller;
(c) The Assignment and Assumption of Leases executed by Seller, with a
Rent Roll dated as of the Closing Date (the "Closing Rent Roll") and the
Subleases, as defined below.
(d) A certificate of nonforeign status (the "Certificate of Nonforeign
Status"), executed by Seller, in the form of the Certificate of Nonforeign
Status attached hereto as Exhibit H.
(e) An Owner Policy of Title Insurance (the "Owner Title Policy")
issued by the Title Company, insuring good and indefeasible fee simple title to
the Property in Buyer in a face amount equal to the Purchase Price, and
containing no exceptions other than the Permitted Exceptions and the Title
Exceptions, the standard printed title company exceptions, an exception for
taxes for the calendar year in which the Closing occurs and subsequent years,
and subsequent assessments for prior years due to change in land usage or
ownership, an exception for "shortages in area," and an exception for the rights
of the tenants (as tenants only) in possession under the Leases listed in the
Closing Rent Roll.
(f) Notices to each of the tenants of the Property (the "Tenant
Notices"), executed by Seller, advising each of the tenants of the Property of
the sale of the Property to Buyer, and stating that future rents should be paid
as specified by Buyer. The Tenant Notices shall also be executed by Buyer and
shall contain a statement acknowledging that Buyer has received and is
responsible for the tenants' security deposit and specifying the exact dollar
amount of the deposit.
(g) All executed original Estoppels in the form of the Estoppel
Certificate attached hereto as Exhibit I (or Seller's certificate in lieu
thereof), Leases and contracts to be assumed by Buyer in Seller's possession.
20
(h) Keys and electronic pass cards or devices to all entrance doors to,
and equipment and utility rooms and vault boxes located in, the Property.
(i) The closing certificates described in Paragraphs 3.1(p) and 4.1(c)
above. ----------------------------
(j) A credit in the amount of the Tenant Deposits.
(k) Appropriate resolutions from Seller's Board of Directors, authorizing
Seller to effectuate the actions required by Seller to consummate the
transactions contemplated by this Agreement.
(l) Such other documents as may be required by this Agreement or by the
Title Company in order to consummate this transaction and issue the Title Policy
to Buyer.
5.3 Buyer's Obligations at the Closing. Buyer shall deliver or cause to
be delivered to Seller the following items at the Closing:
(a) The Purchase Price required above, by delivery to Seller of (i) the
Down Payment, as prorated and adjusted in accordance with Paragraphs 5.4 and 5.5
herewith, in readily available funds via federal wire transfer to the account of
Seller, and (ii) the
Note and Deed of Trust;
(b) The subleases substantially in the form attached as Exhibit J for
Seller's leasehold estates located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇; One Forest Medical Plaza,
12200 Park Central, Suite 210, Dallas, Texas; 12720 Hillcrest, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇; and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, 502 and ▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇, subject to subleases to third parties (collectively, the
"Subleases");
(c) The Limited Guaranty attached as Exhibit K executed by Buyer's
Parent and the Sublease Guaranty attached as Exhibit L executed by Buyer's
Parent; and
(d) Buyer shall provide Seller with appropriate resolutions from Buyer's
managers authorizing Buyer to effectuate the actions required by Buyer to
consummate the transactions contemplated by this Agreement.
5.4 Closing Costs. The premium for issuing the Owner Title Policy, the
cost of insuring over any Title Exceptions, as set forth in this Agreement, and
the escrow fees of the Title Company shall be borne by Seller. Buyer shall pay
for any surveys, the cost of recording the Deeds and the cost of any survey
endorsements. Except as otherwise provided herein, each party shall pay its own
attorneys' fees and costs.
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5.5 Prorations. At the Closing, the following items of revenue and expense
shall be adjusted and apportioned in cash as of 12:01 a.m. on the Closing Date
(the "Adjustment Date"):
(a) Real estate and other ad valorem taxes, personal property or use
taxes, on the basis of the fiscal year for which such taxes or charges are
assessed. If the actual ad valorem taxes are not available on the Closing Date
for the tax year in which the Adjustment Date occurs, the proration of such
taxes at the Closing shall be estimated based upon reasonable information
available to the parties, including information disclosed by the local tax
office or other public information, and an adjustment shall be made when actual
figures are published or otherwise become available; provided, however, that any
prorations made pursuant to the HMO Agreement shall not be duplicated in making
the prorations hereunder.
(b) All costs and expenses of operating the Property, and amounts paid
or payable under the service contracts shall be determined to the Adjustment
Date and paid by the Seller. If Buyer assumes any service contract or agrees to
pay any of such charges, an appropriate cash adjustment will be made at the
Closing.
(c) Water and sewer charges, fuel charges, electricity, gas or utility
charges (including, without limitation, telephone, gas and electricity) shall be
prorated as of the Adjustment Date, and Seller shall terminate its account (but
not the service itself) with the providers of all such services as of the
Adjustment Date. Buyer shall, prior to the Closing Date, make application to the
providers of such services for the continuation of such services in the name of
Buyer or its designee. If termination of such accounts on the Adjustment Date is
not feasible, the meters will be read on or about the Adjustment Date and the
Seller shall be responsible for paying the bills for such services accruing
prior to the Adjustment Date and the Buyer shall be responsible for the payment
of all such accounts accruing on or after the Adjustment Date.
(d) Collected rents and other sums payable under the Leases which have
accrued prior to the Adjustment Date shall be prorated as of the Closing Date
and Seller shall receive a credit at Closing for such amounts. Buyer and Seller
shall have the right to collect delinquent rents directly from a tenant by any
legal means, provided that neither party shall be obligated to attempt to
collect such delinquent rents, and any recovery, after the costs of collection,
shall be prorated equitably as of the Adjustment Date.
ARTICLE VI
DAMAGE OR CONDEMNATION PRIOR TO THE CLOSING
6.1 Damage. If, at any time after the date hereof and on or before the
Closing Date, all or a portion of any Property is damaged, destroyed or rendered
inoperative
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(collectively, the "Damage"), by fire, flood, natural elements or other causes
beyond Seller's control, then the following shall apply:
(a) If the Damage is not Material (hereinafter defined), Buyer shall
proceed to close and purchase the Property as diminished by such Damage, subject
to a reduction in the Purchase Price equal to the cost of repairing or restoring
the Damage, as determined under subparagraph (c) below.
(b) If the Damage is Material, then Buyer, at its sole option, may
elect either (i) to terminate this Agreement by written notice to Seller given
at or prior to the Closing, whereupon the Title Company shall immediately return
the Escrow Deposit to Buyer and, upon Buyer's receipt thereof, neither party
hereto shall have any further rights against, or obligations to, the other under
this Agreement; or (ii) require Seller to agree to close and complete the repair
or restoration of the Damage after the Closing.
(c) For the purposes of this Paragraph 6.1, Damage shall be deemed to
be "Material" if (i) the cost of repairing the Damage equals or exceeds
$250,000. The cost of repairing the Damage shall be determined in the following
manner: Within 10 days after the Damage occurs, each party shall designate an
engineering firm to act on its behalf, and the firms designated shall promptly
consult with each other in an attempt to mutually agree upon the cost of
repairing the Damage. If the firms cannot agree on the cost within the 10-day
period after they have both been designated, they shall, within five days after
such 10-day period, designate a third engineering firm, which shall be
instructed to determine the cost of repairing the Damage within 10 days after
its designation. The cost of repairing the Damage as determined by the third
engineering firm shall be conclusive.
(d) This Agreement shall not be interpreted as including an agreement
by the parties that they shall have the rights and duties prescribed by Section
5.007 of the Texas Property Code.
6.2 Condemnation. If, prior to the Closing Date, all or a material
portion of the Property is taken by, or made subject to, condemnation, eminent
domain or other governmental acquisition proceedings, then Buyer, at its sole
option, may elect either:
(a) To terminate this Agreement by written notice to Seller given at or
prior to the Closing, whereupon the Title Company shall immediately return the
Escrow Deposit to Buyer and, upon Buyer's receipt thereof, neither party hereto
shall have any further rights against, or obligations to, the other under this
Agreement; or
(b) To agree to close and deduct from the Purchase Price an amount
equal to any sum paid to Seller for such governmental acquisition, in which
event Seller shall assign, transfer and set over to Buyer all of Seller's right,
title and interest in and to any awards which may in the future be made on
account of such governmental acquisition.
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(c) A "Material" taking shall be a taking and the payment of
compensation in excess of $5,000,000.
ARTICLE VII
DEFAULTS
7.1 Default by Seller. In the event Seller shall default in its
obligation to convey the Real Property to Buyer pursuant to this Agreement, the
Buyer may, as its sole alternatives, either (i) enforce specific performance of
this Agreement, or (ii) terminate this Agreement by written notice to Seller and
the Title Company, in which event the Escrow Deposit shall be returned to Buyer,
or (iii) institute suit against Seller for damages.
7.2 Default by Buyer. In the event Buyer defaults in its obligation to
purchase the Real Property from Seller pursuant to this Agreement, Seller may,
as its sole and exclusive remedy for such breach, terminate this Agreement by
written notice to Buyer and the Title Company, and upon any such termination the
Title Company shall immediately deliver the Escrow Deposit to Seller, such sum
being agreed upon as the amount payable by Buyer to Seller as liquidated damages
and in consideration of Buyer having the option to refuse to purchase the
Property without any liability on account of its refusal other than payment of
the Escrow Deposit.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices and other communications hereunder shall be in
writing and shall be either (i) be deposited in first class United States mail,
certified, with postage prepaid, (ii) delivered by messenger, (iii) sent by
overnight courier, or (iv) sent by fully completed and confirmed facsimile
transmission (with a written confirmation simultaneously sent in first class
United States mail), as follows:
If to the Seller: Copy to:
▇▇▇▇▇▇ Foundation Health Plan of Texas Jenkens & ▇▇▇▇▇▇▇▇▇
c/o Kaiser Foundation Hospitals ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇.▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Director of Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Acquisitions/Alliance Services
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With an Additional Copy to:
▇▇▇▇▇▇ Foundation Hospitals
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer: Copy to:
HMO Texas, ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
c/o Sierra Health Services, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ (for Fed. Exp.) ▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
P. O. Box 15645 (for U.S. mail) Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Corporate Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With an Additional Copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: M. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or fax number as any party may request by notice given as
aforesaid. Notices sent as provided herein shall be deemed given on the date
received by the recipient. If a recipient rejects or refuses to accept a notice
given pursuant to this Paragraph, or if a notice is not deliverable because of a
changed address or fax number of which no notice was given in accordance with
the provisions hereof, such notice shall be deemed to be received two days after
such notice was mailed (whether as the actual notice or as the confirmation of a
faxed notice) in accordance with the terms hereof. The foregoing shall not
preclude the effectiveness of actual written notice given to a party at any
address or by any means.
8.2 Waiver. No waiver by either Buyer or Seller hereto of its rights
under any provision of this Agreement shall constitute a waiver of such party's
rights under such provision at any other time or a waiver of such party's rights
under any other provision of this Agreement.
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8.3 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 instrument. An executed faxed copy of
this Agreement shall
be deemed an original executed copy of this Agreement.
8.4 Brokerage Fees and Commissions. Except as set forth herein, neither
Seller nor Buyer has contracted with any other real estate broker, agent, finder
or similar person in connection with the negotiation and execution of this
Agreement, the transactions contemplated hereby or the sale and purchase of the
Property. It is agreed that if any claims for any other brokerage fees are ever
made against Seller or Buyer in connection with the transactions contemplated by
this Agreement, all such claims shall be paid by the party whose commitments
form the basis of such claims. Seller and Buyer each agree to indemnify and hold
harmless the other from and against any and all liabilities, claims, demands or
actions for or with respect to any other brokerage fees asserted by any person,
firm or corporation in connection with this Agreement or the transactions
contemplated hereby, and any court costs, attorneys' fees or other costs and
expenses arising therefrom, insofar as any such liabilities, claims, demands or
actions are based upon a contract or commitment of the indemnifying party.
8.5 Entire Agreement. This Agreement (including the Exhibits and
Schedules) and the other agreements, certificates and documents of Seller and
Buyer contemplated herein constitute the entire agreement between the parties
hereto with respect to the matter hereof, and supersedes all prior agreements or
understandings between the parties. No amendment, alteration, or modification of
this Agreement shall be valid unless in each instance such amendment,
alteration, or modification is expressed in a written instrument duly executed
by the parties hereto.
8.6 Modification. Neither this Agreement nor any provision hereof may
be waived, modified, amended, discharged or terminated except as provided herein
or by an instrument in writing signed by the party against which the enforcement
of such waiver, modification, amendment, discharge or termination is sought, and
then only to the extent set forth in such instrument.
8.7 Applicable Law. This Agreement is to be governed by and interpreted
under the laws of the State of Texas, without resort to choice of law or
conflict of law principles which direct the application of the laws of a
different state.
8.8 Headings. The headings contained in this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.
8.9 Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto.
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Notwithstanding the foregoing, this Agreement shall not be assignable by any
party without the prior written consent of the other, and any attempt at an
assignment in violation of this Paragraph shall be void ab initio; provided,
however, that this Agreement may be assigned to an affiliate of Buyer without
Seller's consent.
8.10 Further Assurances. Each party hereto agrees for the benefit of
the other parties hereto to execute and deliver any necessary documents,
instruments or agreements, and to take any and all necessary actions, in order
to (i) fully vest in Buyer all right, title and interest to the Property, and
(ii) carry out the terms of this Agreement
and the transactions contemplated by this Agreement.
8.11 Time of Essence. Time is of the essence of this Agreement and of
each covenant and agreement that is to be performed at a particular time or
within a particular period of time. However, if the final date of any period
which is set out in any provision of this Agreement (other than the Closing
Date) falls on a Saturday, Sunday or legal holiday under the laws of the United
States or the State of Texas, then the time of such period shall be extended to
the next date which is not a Saturday, Sunday or legal holiday.
8.12 Severability. If any provision of this Agreement is held by final
judgment of a court of competent jurisdiction to be invalid, illegal or
unenforceable, such invalid, illegal or unenforceable provision shall be severed
from the remainder of this Agreement, and the remainder of this Agreement shall
be enforced. In addition, the invalid, illegal or unenforceable provision shall
be deemed to be automatically modified, and, as so modified, to be included in
this Agreement, such modification being made to the minimum extent necessary to
render the provision valid, legal and enforceable. Notwithstanding the
foregoing, however, if the severed or modified provision concerns all or a
portion of the essential consideration to be delivered under this Agreement by
one party to the other, the remaining provisions of this Agreement shall also be
modified to the extent necessary to adjust equitably the parties' respective
rights and obligations hereunder.
8.13 Attorneys' Fees. If either party defaults in its obligations
hereunder, the defaulting party shall pay the reasonable attorneys' fees
incurred by the other party in order to enforce its rights hereunder.
8.14 Construction. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine,
and neuter, and the number of all words herein shall include the singular and
plural. All parties to this Agreement have been represented by counsel and,
accordingly, this Agreement shall not be construed strictly for or against any
party hereto. The Schedules and Exhibits attached hereto are incorporated herein
for all purposes and made a part of this Agreement as if set out in full in this
Agreement.
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[Signatures on following page]
28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Execution Date.
BUYER:
HMO TEXAS, L.C.,
a Texas limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
SELLER:
▇▇▇▇▇▇ FOUNDATION HEALTH PLAN OF
TEXAS, a Texas non-profit corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Sierra Health Services, Inc. and ▇▇▇▇▇▇ Foundation Hospitals have executed
this Agreement below solely with respect to their respective guarantee
obligations set forth in Paragraph 3.7. SIERRA HEALTH SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: Chairman and CEO
SELLER:
▇▇▇▇▇▇ FOUNDATION HOSPITALS
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Acting Senior Vice President