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EXECUTION COPY
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STOCK PURCHASE AGREEMENT
by and among
NAHC GEORGIA HOLDINGS, INC.
("Buyer")
THE SHAREHOLDERS OF
MEMORIAL HOSPITAL OF ADEL, INC.
(collectively, the "Shareholders")
and
NEW AMERICAN HEALTHCARE CORPORATION
("Parent")
Dated as of October 31, 1998
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TABLE OF CONTENTS
PAGE
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE..............................................................1
1.1 Purchase and Sale of Shares at Closing..........................................................1
1.2 Closing and Closing Date........................................................................1
1.3 Further Assurances..............................................................................1
2. TERMS OF THE ACQUISITION.................................................................................2
2.1 Consideration...................................................................................2
2.2 Determination of Estimated Net Working Capital..................................................2
2.3 Payment of Consideration at Closing.............................................................2
2.4 Determination of Purchase Price.................................................................3
2.5 Excluded Assets.................................................................................4
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER.......................................................4
3.1 Organization, Good Standing, Authority and Enforceability.......................................4
3.2 Agreement Not in Breach of Other Instruments....................................................4
3.3 Compliance with Laws............................................................................4
3.4 No Legal Bar....................................................................................5
3.5 Purchaser Financing.............................................................................5
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.............................................................................................5
4.1 Organization, Good Standing and Authority.......................................................5
4.2 Authorization of Agreement; Capital Stock.......................................................5
4.3 Title to Assets; Adequacy.......................................................................6
4.4 Financial Statements............................................................................6
4.5 Absence of Certain Changes......................................................................6
4.6 Real Property and Leaseholds....................................................................7
4.7 Tangible Personal Property Other Than Inventory.................................................9
4.8 Intangible Personal Property....................................................................9
4.9 Inventory......................................................................................10
4.10 Accounts Receivable............................................................................10
4.11 Insurance......................................................................................10
4.12 Environmental Matters..........................................................................11
4.13 Employment Matters.............................................................................12
4.14 Employee Benefit Plans.........................................................................12
4.15 Freedom to Deal; Agreement Not in Breach of Other Instruments..................................13
4.16 Taxes..........................................................................................13
4.17 Litigation.....................................................................................14
4.18 Compliance with Law; Licenses and Permits......................................................14
4.19 Brokerage......................................................................................14
4.20 Contracts......................................................................................14
4.21 No Undisclosed Liabilities.....................................................................15
4.22 Regulatory Approvals...........................................................................15
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4.23 Bank Accounts..................................................................................15
4.24 Other Material Circumstances...................................................................15
4.25 Other Information..............................................................................16
4.26 Conflicts of Interest..........................................................................16
4.27 Cost Reports, Third Party Receivables and Conditions of Participation..........................16
4.28 Medical Staff..................................................................................16
4.29 ▇▇▇▇-▇▇▇▇▇▇ and Related Liens..................................................................17
5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES....................................................17
5.1 Access: Due Diligence..........................................................................17
5.2 Confidentiality................................................................................18
5.3 Conduct of Business............................................................................19
5.4 Preservation of Organization...................................................................19
5.5 Current Information............................................................................19
5.6 Contracts Requiring Consent....................................................................20
5.7 Environmental Audits...........................................................................20
5.8 Access to Records and Files....................................................................20
5.9 Medicare and Medicaid Change of Control........................................................20
5.10 "Tail Insurance" Policy........................................................................21
5.11 Tax Matters....................................................................................21
5.12 Risk of Loss...................................................................................23
5.13 Covenant Not to Compete........................................................................24
5.14 Enforceability.................................................................................24
5.15 Title Report and Policy........................................................................24
5.16 Survey.........................................................................................25
5.17 UCC Searches...................................................................................25
5.18 Defects and Cure...............................................................................25
6. CONDITIONS TO CLOSING...................................................................................26
6.1 Conditions to Obligations of Each Party........................................................26
6.2 Conditions to Obligations of Parent and Buyer..................................................26
6.3 Conditions to Obligations of the Shareholders..................................................28
7. INDEMNIFICATION.........................................................................................29
7.1 Indemnification by the Shareholders............................................................29
7.2 Indemnification by Parent and Buyer............................................................30
7.5 Interest.......................................................................................32
7.6 Indemnification Payments.......................................................................32
7.7 Limitations on Indemnification.................................................................32
7.8 UST Indemnification............................................................................33
8. ADDITIONAL COVENANTS AND AGREEMENTS.....................................................................33
8.1 Expenses.......................................................................................33
8.2 Survival of Representations and Warranties.....................................................33
8.3 Public Releases................................................................................34
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8.4 Other Transactions Prohibited..................................................................34
9. TERMINATION, REMEDIES...................................................................................34
9.1 Termination....................................................................................34
9.2 Liability in the Event of Termination; Remedies................................................35
10. MISCELLANEOUS...........................................................................................35
10.1 Entire Agreement...............................................................................35
10.2 Amendments.....................................................................................36
10.3 Successors: Assignment.........................................................................36
10.4 Notices........................................................................................36
10.5 Waiver.........................................................................................37
10.6 Severability...................................................................................38
10.7 No Third Party Beneficiary.....................................................................38
10.8 Applicable Law.................................................................................38
10.9 Arbitration....................................................................................38
10.10 References to Best Knowledge...................................................................38
10.11 Counterparts...................................................................................38
10.12 Exclusivity....................................................................................39
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of October
31, 1998, by and among NEW AMERICAN HEALTHCARE CORPORATION, a Delaware
corporation ("Parent"); NAHC GEORGIA HOLDINGS, INC., a Tennessee corporation
("Buyer"); and ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, M.D. AND ▇▇▇▇▇▇▇ ▇▇▇▇▇ III
(collectively, the "Shareholders").
RECITALS:
A. WHEREAS, the Shareholders own all of the issued and
outstanding capital stock of Memorial Hospital of Adel, Inc. (the "Company"),
which operates an acute care hospital known as Memorial Hospital of Adel located
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, together with various related
businesses including a home health agency known as Memorial Home Health and
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, and a convalescent center known as Memorial Convalescent
Center and located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇ (collectively, the
"Hospital");
B. WHEREAS, the parties hereto desire to enter into this
Agreement pursuant to which Parent and Buyer will purchase from the Shareholders
all of the capital stock of the Company upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties and covenants contained herein, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE.
1.1 Purchase and Sale of Shares at Closing. On the terms
and subject to the conditions set forth herein, on the Closing Date (as defined
in Section 1.2 hereof), the Shareholders shall convey, sell, transfer and
deliver to Buyer all of the issued and outstanding shares of capital stock of
the Company, as set forth on Exhibit A attached hereto (the "Company Shares"),
free and clear of all liens, claims, security interests, options, charges,
pledges and other restrictions or encumbrances of any kind (the "Acquisition").
1.2 Closing and Closing Date. The closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ on October 31, 1998, or at such other place, at
such other time or in such other manner as Buyer and the Shareholders may
mutually agree; the date of the Closing as determined pursuant to this Section
1.2 shall be referred to herein as the "Closing Date."
1.3 Further Assurances. From time to time after the
Closing, as and when required by the Shareholders, Buyer or Parent, or by their
respective successors or assigns, there
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shall be executed and delivered on behalf of Buyer, Parent, the Company and the
Shareholders such deeds and other instruments, and there shall be taken or
caused to be taken all such further and other action, as shall be appropriate,
advisable or necessary, in order to vest, perfect or confirm, of record or
otherwise, in Buyer all right and title to, and possession of, the Company
Shares and otherwise to carry out the purposes of this Agreement.
2. TERMS OF THE ACQUISITION.
2.1 Consideration. The consideration to be paid by Parent
and Buyer to the Shareholders for the sale, transfer and conveyance of the
Company Shares shall be:
(a) $11,439,200; plus
(b) The amount of the Company's Net Working
Capital (as hereinafter defined). "Net Working Capital" shall mean the amount
derived by subtracting from the book value of the total current assets of the
Company (less the Excluded Assets, and less cash and cash equivalents to the
extent such items are paid as a dividend or otherwise distributed, transferred
or conveyed by the Company at or before Closing) on the Closing Date, determined
in accordance with generally accepted accounting principles ("GAAP"),
consistently applied, the aggregate amount of the book value of the current
liabilities of the Company on the Closing Date, determined in accordance with
GAAP, consistently applied.
2.2 Determination of Estimated Net Working Capital. Not
later than ten (10) business days prior to the Closing Date, the Shareholders
shall cause the Company to furnish to Parent and Buyer the Company's best
estimate (along with supporting documentation) of the Net Working Capital of the
Company as of the Closing Date (the "Estimated Net Working Capital").
2.3 Payment of Consideration at Closing. On the Closing
Date, Buyer or Parent shall deliver:
(a) To the Shareholders, a cash payment by wire
transfer of immediately available funds to such account or accounts as the
Shareholders shall designate in the aggregate amount of $11,439,200, plus the
amount of the Estimated Net Working Capital as of the Closing Date, less the
amount wired to Escrow Agent pursuant to subsection (b) below;
(b) To First Union National Bank, Atlanta,
Georgia, as escrow agent (the "Escrow Agent"), by wire transfer in the amount of
$2,000,000 to be held pursuant to and in accordance with an Escrow Agreement
substantially in the form of Exhibit B attached hereto and made a part hereof.
The sum of (i) the amount of the cash payment provided for in Section 2.3(a),
plus (ii) the amount delivered to the Escrow Agent as provided in this Section
2.3(b), is referred to herein as the "Estimated Purchase Price."
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2.4 Determination of Purchase Price.
(a) Not later than one hundred twenty (120) days
following the Closing Date, either Parent or Buyer, at its expense, shall
furnish to the Shareholders (i) a balance sheet of the Company as of the Closing
Date prepared by Parent or Buyer (the "Closing Date Balance Sheet") and (ii) a
Schedule (the "Schedule") prepared by Parent or Buyer setting forth the purchase
price determined in accordance with Section 2.1 based upon the Audited Closing
Date Balance Sheet (the "Purchase Price"). The Closing Date Balance Sheet shall
be prepared in accordance with, and any determination of Net Working Capital
hereunder shall be made in accordance with, GAAP, as consistently applied by the
Company. The Shareholders shall have the right to have its accountants review
all work papers of Parent in connection with the preparation and audit of such
Closing Date Balance Sheet.
(b) The Shareholders shall have thirty (30) days
following the receipt of the Closing Date Balance Sheet and the Schedule to
agree or disagree with the calculation of the Purchase Price set forth in the
Schedule. If Parent and the Shareholders agree as to the Purchase Price within
such thirty (30) day period, payment of any difference between the Estimated
Purchase Price and the Purchase Price shall be made in cash as provided in
Section 2.4(d) hereof. If, however, Shareholders disagree with Buyer's
calculation of the Purchase Price, Shareholders shall notify Buyer in writing
within said thirty (30) days, said notice shall include Shareholders'
calculation of the Purchase Price, and the disagreement shall be resolved by
Ernst & Young, LLP, located in Atlanta, Georgia (the "Independent Accountants").
In connection with the foregoing, the Independent Accountants shall have
reasonable access to all documents and facilities necessary in their judgment to
perform their function. The determination of the Independent Accountants with
regard to the disagreement shall be final and binding on the parties.
(c) All fees and expenses owed to the
Independent Accountants in connection with the resolution of the dispute shall
be (i) paid by Shareholders if the Purchase Price as determined by the
Independent Accountants is closer to the Purchase Price calculated by Buyer
pursuant to Section 2.4(a) above than it is to the Purchase Price stated in the
notice delivered by Shareholders pursuant to this Section 2.4(b) and (ii) paid
by Buyer if the Purchase Price as determined by the Independent Accountants is
closer to the Purchase Price in Shareholders' notice than to the Purchase Price
calculated by Buyer. Except as set forth above, the Shareholders and Parent
shall each be responsible for the fees of their own attorneys and accountants,
and other expenses incurred in connection with the resolution of the dispute.
(d) If the Purchase Price is greater than the
Estimated Purchase Price, Parent shall pay the difference between such amounts,
together with interest thereon as provided below, to the Shareholders. If the
Purchase Price is less than the Estimated Purchase Price, the Shareholders shall
pay the difference between such amounts, together with interest thereon as
provided below, to Parent. The payments required by this Subsection (d) shall be
made in cash within ten (10) days after the earlier to occur of (i) the date
Parent and the Shareholders agree as to the Purchase Price or (ii) the
determination of the Purchase Price according to the provisions of
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Subsection (b) above. The payment shall bear interest from the Closing Date
until the date of payment at the rate of five percent (5%) per annum.
2.5 Excluded Assets. Prior to conveyance of the Company
Shares, Company shall transfer to Shareholders those items listed on Schedule
2.5 (collectively, the "Excluded Assets"). All tangible Excluded Assets, if any,
shall be removed from the Hospital, without damage or defacement to the Assets,
by Shareholders prior to Closing. All intangible Excluded Assets will be
assigned to and assumed by the Shareholders at or prior to Closing.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER.
Parent and Buyer, jointly and severally, hereby represent and warrant
to the Shareholders that:
3.1 Organization, Good Standing, Authority and
Enforceability. Each of Parent and Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the States of Delaware
and Tennessee, respectively. Each of Parent and Buyer has full authority and
power to carry on its business as it is now conducted, and to own, lease and
operate the assets owned, leased or operated by it. Each of Parent and Buyer has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, subject to the approval of the
sole shareholder of Buyer and the board of directors of Parent and the board of
directors of Buyer. This Agreement and each other agreement herein contemplated
to be executed in connection herewith by Parent or Buyer have been (or upon
execution will have been) duly executed and delivered by Parent or Buyer, as the
case may be, and constitute (or upon execution will constitute) legal, valid and
binding obligations of Parent or Buyer, as the case may be, enforceable against
Parent or Buyer, as the case may be, in accordance with their respective terms.
3.2 Agreement Not in Breach of Other Instruments. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof will not violate or
result in a breach of any of the terms or provisions of, or constitute a default
(or any event which, with notice or the passage of time, or both, would
constitute a default) under, or conflict with or result in the termination of,
or accelerate the performance required by, (i) any agreement, indenture or other
instrument to which Parent or Buyer is a party or by which either of them is
bound, (ii) the Certificate of Incorporation, Articles of Incorporation or
Bylaws of Parent or Buyer, (iii) any judgment, decree, order or award of any
court, governmental body or arbitrator by which Parent or Buyer is bound, or
(iv) any law, rule or regulation applicable to Parent or Buyer.
3.3 Compliance with Laws. All consents, approvals and
authorizations and all other requirements prescribed by any law, rule or
regulation which must be obtained or satisfied by Parent or Buyer and which are
necessary for the execution and delivery by Parent or Buyer of this Agreement
and the documents to be executed and delivered by Parent or Buyer in connection
herewith and in order to permit the consummation of the transactions
contemplated by this
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Agreement have been obtained and satisfied or shall be obtained and satisfied by
Closing. A list of such consents and authorizations is set forth on Schedule 3.3
hereto.
3.4 No Legal Bar. Neither Parent nor Buyer is prohibited
by any order, writ, injunction or decree of any body of competent jurisdiction
from consummating the transactions contemplated by this Agreement and all other
agreements referenced herein, and no such action or proceeding is pending
against Parent or Buyer which questions the validity of this Agreement or any of
such other agreements, any of the transactions contemplated hereby or thereby or
any action which has been taken by any of the parties in connection herewith or
therewith or in connection with any of the transactions contemplated hereby or
thereby.
3.5 Purchaser Financing. Subject to customary and
reasonable closing conditions, Parent has obtained financing commitments from
financially responsible and reputable third parties that, when added to Parent's
already available funds, will be sufficient to enable Parent or Buyer to pay the
Purchase Price.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Shareholders, jointly and severally, hereby represent and warrant
to Parent and Buyer that:
4.1 Organization, Good Standing and Authority. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia. True and correct copies of the Company's
Articles of Incorporation and bylaws, together with all amendments thereto, have
previously been provided to Buyer. The Company has full authority and power to
carry on its business as it is now conducted, and to own or lease its assets and
to operate the Hospital. The Company is qualified to do business and is in good
standing and has all required and appropriate licenses in each jurisdiction in
which its failure to obtain or maintain such qualification, good standing or
licensing would have a material and adverse effect on the condition (financial
or otherwise), assets, properties or prospects of the Company, and said
jurisdictions are identified on Schedule 4.1. The Company owns no capital stock
or other equity interests of any kind or nature in any partnership, corporation,
limited liability company, limited liability partnership or other entity.
4.2 Authorization of Agreement; Capital Stock.
(a) The Company has all requisite corporate
power and authority, and the Shareholders have full capacity and authority, to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement and each other agreement and instrument to be executed by
the Company and the Shareholders in connection herewith have been (or upon
execution will have been) duly executed and delivered by the Company and the
Shareholders, as the case may be, have been effectively authorized by all
necessary corporate action of the Company and constitute (or upon execution will
constitute) legal, valid and binding obligations of the Company
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and the Shareholders, as the case may be, enforceable against each of them in
accordance with their respective terms.
(b) The Shareholders own the number of the
Company Shares, as set forth on Exhibit A attached hereto, free and clear of all
liens, claims, security interests, options, charges, pledges and other
restrictions or encumbrances of any kind. No other party has any legal,
equitable or beneficial ownership in the Company Shares. The Company Shares, in
the aggregate, constitute all of the issued and outstanding shares of the
capital stock of the Company. There are no options, warrants, conversion rights
or other rights to subscribe for or purchase, or other contracts with respect
to, any capital stock of the Company. There are no voting agreements,
shareholder agreements, or any other similar agreements or restrictions with
respect to the Company Shares.
4.3 Title to Assets; Adequacy. The Company is the lawful
owner of or has the right to use all of the assets used in the operation of the
Hospital, and, except as disclosed in Schedule 4.3 hereto, such assets are free
and clear of all liens, mortgages, pledges, security interests, restrictions,
prior assignments, encumbrances and claims of any kind or nature whatsoever. The
assets of the Company are adequate and constitute all of the assets necessary
for the operation of the Hospital by the Company in the ordinary course
consistent with past practice and custom.
4.4 Financial Statements.
(a) Annual Financial Statements. Included with
Schedule 4.4(a) hereto are the balance sheets of the Company as of June 30,
1996, 1997 and 1998, and the related statements of income for the fiscal years
then ended (collectively, the "Annual Financial Statements"). Except as
disclosed on Schedule 4.4(a), the Annual Financial Statements (i) have been
prepared in accordance with the books and records of the Company, (ii) have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a basis consistent with all prior periods of the Company, (iii)
fairly present in all material respects the financial condition and the results
of operations of the Company as of the date thereof and for the period covered
therein, and (iv) contain and reflect all necessary adjustments and accruals for
a fair presentation of the financial condition and results of operations of the
Company as of the date thereof and for the period covered by such financial
statements.
(b) Interim Statements. Included with Schedule
4.4(b) hereto is an unaudited balance sheet and the related statement of income
of the Company as of and for the three month period ended September 30, 1998
(collectively, the "Interim Financial Statements"). Except as disclosed on
Schedule 4.4(b), such Interim Financial Statements have been prepared in
accordance with the books and records of the Company.
4.5 Absence of Certain Changes. Except as disclosed on
Schedule 4.5 hereto or as otherwise provided for or contemplated in this
Agreement, since the date of the Interim Financial Statements, there has not
been (i) any transaction or occurrence relating to the Company not in the
ordinary course of business, (ii) any sale or disposition of any assets of the
Company not in the ordinary course of business, (iii) any material change in the
Hospital's medical staff; or (iv) any
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event or condition of any character which could reasonably be expected to have
or has had a material and adverse effect on the condition (financial or
otherwise), assets, properties or prospects of the Company.
4.6 Real Property and Leaseholds. At or prior to closing,
the Company shall have good and marketable fee title to or a valid leasehold
interest in the properties described on Schedule 4.6 (collectively, the
"Properties") free and clear of all liens, restrictions or encumbrances except
for the following (collectively the "Permitted Exceptions") (i) taxes not yet
delinquent, (ii) easement rights of record and other matters of public record,
or (iii) other items acceptable to Buyer as set forth on Schedule 4.6. The
Permitted Exceptions do not materially impair the use of any or all of the
Properties for its present purpose, or result in the title thereto not being
good or marketable. Neither the Company nor the Shareholders have received any
notice from a governmental agency or authority of any breach or violation with
regard to the Property of any ordinance, regulation, law, building or safety
code, or rule, to the best knowledge of the Shareholders, no such breach or
violation exists. Neither the Company nor the Shareholders has received any lien
assessment or the like relating to any part of the Property or the operation
thereof. There is no condemnation or similar proceeding that could have a
material adverse effect on the Company title to the Property, and to the best
knowledge of the Shareholders, there is no proposed condemnation proceedings
that would have such an effect. Except as indicated on Schedule 4.6, hereto:
(a) All of the buildings, fixtures and other
improvements constituting part of the Property are in good operating condition
and repair as of the date of this Agreement.
(b) The Company holds all certificates,
approvals and other permits and licenses required by applicable law relating to
the operation of its respective facilities, including without limitation all
certificates of occupancy, underwriters' certificates relating to electrical
work, zoning, building, housing, safety, fire and health approvals.
(c) The Company has not experienced during the
two years preceding the date hereof any material interruption in the delivery of
adequate quantities of any utilities (including, without limitation,
electricity, natural gas, potable water, water for cooling or similar purposes,
and fuel oil) or other public services (including, without limitation, sanitary
and industrial sewer service) required in the operation of the facilities
situated on the Property during such period. Neither the Company nor the
Shareholders are aware of any situation which could reasonably be expected to
result in such a material interruption in the future. All such utilities are
located on the Property or in valid and recorded easements serving the Property.
(d) The zoning of each parcel of Property
permits the presently existing improvements and the continuation of the business
of the facilities situated on the Property presented being conducted. The
Company has not commenced, nor received notice of the commencement of, any
proceeding that would affect the present zoning classification of any such
period.
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(e) No person has any right, agreement,
commitment, option, right of first refusal or any other agreement, whether oral
or written, with respect to the purchase, assignment or transfer of all or any
portion of the Property.
(f) The Company has not taken any action (or
failed to take any action) or received any notice from any insurance carrier of
any defects or inadequacies in the Property or any portion thereof which would
adversely affect the insurability of the Property or the cost of such insurance.
(g) The Property is not subject to or affected
by any special assessment for public improvements or otherwise, whether or not
presently a lien upon the Property. Except as set forth in Schedule 4.6 hereto,
the Company has not made a commitment to any governmental authority, utility
company, school board, church or religious body, home owner or homeowner's
association or any other organization, group or individual relating to the
Property which would impose an obligation upon the Company or its successors or
assigns to make, following the Closing, any contributions or dedications of
money or land, or to construct, install or maintain, following the Closing, any
improvements of a public or private nature as part of the Property or upon
separate lands. No governmental authority has imposed any requirement that the
Shareholders or the Company pay, directly or indirectly, any special fees or
contributions or incur any expenses or obligations in connection with the
development of the Property or any portion thereof, following the Closing, other
than any regular and nondiscriminatory local real estate or school taxes
assessed against the Property. The separate properties constituting the Property
are separately assessed for real property tax assessment purposes and are not
combined with any other real property for tax assessment purposes. Except as
disclosed on Schedule 4.6 hereto, the Company has not received any notice of any
contemplated or actual reassessment of the Property or any portion thereof for
general real estate tax purposes. As of the date hereof, all due and payable
taxes, assessments, water charges and sewer charges affecting the Property or
any portion thereof have been paid.
(h) No portion of the Property is located in an
area designated as a "flood hazard area" in accordance with the document
entitled "Department of Housing and Urban Development, Federal Insurance
Administration - Special Flood Hazard Area Maps" or within the 100-year flood
plain as depicted on the U.S. Army Corps of Engineers Geodetic Maps of such
flood plain areas.
(i) The Company nor the Shareholders has
received any written notice from the holder of any mortgage or deed of trust
encumbering any of the Property, or any portion thereof or interest therein, or
from any insurance company which has issued a policy with respect to any of the
Property or from any board of fire underwriters (or other body exercising
similar functions) claiming any defect or deficiency in the Property or
requiring the performance of repairs, alterations or other work to the Property.
(j) Neither the company nor the Shareholders are
a "foreign person" as that term is defined in the Code and the Regulations
promulgated pursuant thereto.
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4.7 Tangible Personal Property Other Than Inventory.
Schedule 4.7 attached hereto includes (i) a list of each item of tangible
personal property other than inventory owned by the Company having on the date
hereof a depreciated book value in excess of $500, or not owned by the Company
but in the possession of or used by the Company without regard to the amount of
rental payments, and (ii) a list of all leased items of tangible personal
property together with the owners thereof, and copies of any agreements relating
to the use of, each such item of tangible personal property not owned by the
Company and the circumstances under which such property is used and what
consents or authorizations are necessary for such property to continue after the
Closing Date to be used by the Company. Except as indicated on Schedule 4.7
hereto:
(a) The Company has good and marketable title to
each item of tangible personal property which it owns free and clear of all
liens, leases, encumbrances, claims under bailment and storage agreements,
equities, conditional sales contracts, security interests, charges and
restrictions except for liens, if any, for personal property taxes not yet due
and payable;
(b) Each item of tangible personal property not
owned by the Company is currently in such condition that upon the return of such
property to its owner in its present condition at the end of the relevant lease
term or as otherwise contemplated by the applicable agreement between the
Company and the owner or lessor thereof, the obligations of the Company to such
owner or lessor would be discharged without further obligation or the payment of
any termination fee, penalty or other fees;
(c) Each item of tangible personal property
(whether owned or leased) is, and as of the Closing Date shall be, in good
operating condition and repair, subject only to ordinary wear and tear;
(d) At Closing, the Company shall own all of the
assets reflected on the Annual Financial Statements and the Interim Financial
Statements except for the Excluded Assets and those items disposed of in the
ordinary course of business since the date of such financial statements;
(e) The Company owns or otherwise has the right
to use all of the tangible personal property now used by it in the operation of
the Hospital, including all instances where the use of which is necessary for
the performance of any contract or proposal to which the Company is a party; and
(f) Each item of tangible personal property
whether owned or leased by the Company has been used by the Company in the
ordinary course of its business.
4.8 Intangible Personal Property. Schedule 4.8 hereto
includes (i) a list and description of all intangible personal property owned by
the Company, including, but not limited to, computer software and programs
(except for personal computer software generally available to the public),
software in process, computer operating systems and applications, proprietary
knowhow, United States and foreign patents, patent applications, assumed names,
trade names, trademarks,
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service marks, trade name and trademark registrations, copyright registrations
and applications for any of the foregoing, and (ii) a true and complete list of
all licenses or similar agreements or arrangements to which the Company is a
party either as licensee or licensor for each such item of intangible personal
property. Except as indicated on Schedule 4.8:
(a) The Company owns or has the right to use
such intangible personal property, free and clear of all liens, security
interests, charges and encumbrances;
(b) No interference actions or other judicial or
adversary proceedings concerning any of such items of intangible personal
property have been initiated and, to the best knowledge of the Shareholders, no
such action or proceeding is threatened;
(c) The Company has the right and authority to
use such items of intangible personal property in connection with the conduct of
its business in the manner presently conducted, and such use does not conflict
with, infringe upon or violate any rights of any other person, firm or
corporation;
(d) There are no outstanding or, to the best
knowledge of the Shareholders, threatened disputes or other disagreements with
respect to any licenses or similar agreements or arrangements described in
Schedule 4.8; and
(e) There is no intangible personal property
currently used in the operations of the Company as presently conducted which is
not owned by or licensed to the Company.
4.9 Inventory. The inventory of the Company: (i) is good,
usable, merchantable and saleable in the ordinary course of the Company; (ii) is
owned by the Company free and clear of all liens, security interests and other
charges; and (iii) is consistent, both in aggregate amount and distribution
among products, with the normal operation of the Company in the ordinary course
in all prior periods.
4.10 Accounts Receivable. Except as set forth on Schedule
4.10 hereto, the accounts receivable of the Company (i) arose out of the sale of
goods and services in the ordinary course of the Company's operations, (ii) have
been billed or invoiced in the ordinary course of the Company's operations and
in accordance with all applicable laws, regulations and administrative rulings
and procedures, and (iii) represent bona fide indebtedness of the applicable
account debtor, not subject to any defense, setoff or counterclaim.
4.11 Insurance. The Company has in effect and has
continuously maintained insurance coverage for its operations, personnel and
assets. Schedule 4.11 hereto sets forth a true and correct list of all insurance
policies (including binders, declaration pages and endorsements) of any nature
whatsoever maintained by the Company on the date of this Agreement or at any
time during the preceding three (3) years and the annual or other premiums
payable from time to time thereunder. Complete copies of all such policies have
been furnished to Parent or Buyer. All such
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policies are valid, in full force and effect and enforceable with no premium
arrearages. Schedule 4.11 also includes a list of any pending insurance claim
relating to the Company. Except as disclosed on Schedule 4.11, neither the
Company or the Shareholders have received any written notice, nor is aware of
any specific facts or circumstances which would cause it or him to conclude,
that there are any outstanding requirements or recommendations by any insurance
company or by any Board of Fire Underwriters or other similar body exercising
similar functions or by any governmental authority exercising similar functions
which require or recommend any change in the conduct of the Company's
operations, or any repairs or other work to be done on or with respect to any of
the properties, vehicles or assets of the Company. Except as set forth on
Schedule 4.11, the Company has received no notice or other communication from
any such insurance company within the three (3) years preceding the date hereof
canceling or materially amending any insurance policies or materially increasing
the annual or other premiums payable under any of such insurance policies and no
such cancellation, amendment or material increase of premiums is threatened.
4.12 Environmental Matters.
(a) Except as set forth on Schedule 4.12 hereto,
no toxic, hazardous, explosive or otherwise dangerous materials, substances,
pollutants or wastes (as those terms are used in the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act of 1976, the Hazardous
Materials Transportation Act, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Emergency Planning and
Community Right to Know Act or in any other federal, state or local
environmental law (collectively "Environmental Laws")), petroleum products,
polychlorinated biphenyls, ureaformaldehyde foam, or radioactive materials (all
of the above being collectively referred to herein as "Hazardous Materials")
have been or are stored, treated, disposed of, managed, generated, manufactured,
produced, released (as defined in CERCLA Section 101(22)), emitted or discharged
on, to, in, under or from the real estate upon which the Hospital, or any other
facility owned, occupied or operated by the Company, is situated.
(b) Except as set forth on Schedule 4.12, the
Company has been and is in compliance in all material respects with all
Environmental Laws and has obtained all environmental licenses, permits,
approvals, registrations and authorizations (federal, state and local) material
to the operation of the Company. Except as set forth on Schedule 4.12, all such
licenses, permits, approvals, registrations and authorizations will remain in
full force and effect after the Acquisition.
(c) Except as set forth on Schedule 4.12, no
governmental or private action, suit or proceeding to enforce or impose
liability under any Environmental Laws has been instigated or, to the best
knowledge of the Shareholders, threatened against the Company and no lien has
been created on the Hospital or any other facility owned, occupied or operated
by the Company, or the real estate upon which they are situated, under any
Environmental Laws.
(d) To the best of Shareholders' knowledge, the
Company has not installed or permitted to be installed, in or on the Properties
friable asbestos or any substance containing
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asbestos or any other substance deemed hazardous by Environmental Laws or by
Federal or state regulations respecting such material. The Company is compliance
with all OSHA requirements respecting friable asbestos and to the extent needed,
and the Company has properly implemented a training program for certain of its
employees in the proper handling and removal of asbestos.
(e) The Properties are not and have never been
listed on the National Priorities List or the Comprehensive Environmental
Response, Compensation and Liability Information System (as promulgated under
CERCLA), or any comparable state list, and neither Shareholders nor the Company
has received any written notice from any person under or relating to CERCLA or
any comparable state or local law.
(f) No petroleum hydrocarbons have migrated on
or below the surface of any portion of the Properties. There are no underground
storage tanks on any portion of the Properties. The Properties are free of
dangerous levels of naturally emitted radon. No portion of the Properties
constitutes a wetlands or has ever been used as a landfill or burial site. The
Company has furnished to Buyer a copy of any environmental audit, report or
other analysis, including any Phase I, II or III environmental audits or reports
and any other engineering reports or inspections which have been prepared
relating to the Properties.
4.13 Employment Matters. Except as set forth on Schedule
4.13 hereto, (i) there are no claims by any current or former employee of the
Company against the Company other than for compensation and benefits due in the
ordinary course of employment; (ii) there are no pending claims against the
Company arising out of any statute, ordinance or regulation relating to
employment practices or occupational or safety and health standards; (iii) there
are no pending or, to the best knowledge of the Shareholders, threatened labor
disputes, strikes or work stoppages against the Company; and (iv) to the best
knowledge of the Shareholders, there are no union organizing activities in
process or contemplated with respect to any business or operation of the
Company. Schedule 4.13 identifies all collective bargaining units which have
been certified or recognized by the Company, and Parent or Buyer has been
supplied with all collective bargaining agreements covering the Company's
employees. Schedule 4.13 also identifies all employees on leave of absence and
all current and former employees and their dependents receiving health benefits,
or eligible to receive health benefits, as required by Sections 601606 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
Section 4980(B) of the Code (together, "COBRA"). Notice of the availability of
COBRA coverage for current and former employees of the Company and qualified
beneficiaries, in accordance with the requirements of COBRA, has been provided
to all persons entitled thereto, and all persons electing such coverage are
being (or have been, if applicable) provided such coverage.
4.14 Employee Benefit Plans. Schedule 4.14 hereto lists
all plans, programs, agreements, commitments and arrangements maintained by or
on behalf of the Company that provide benefits or compensation to, or are for
the benefit of, any current or former employee of the Company (the "Plans").
Except as set forth on Schedule 4.14, only current and former employees (and
eligible dependents and beneficiaries of such current and former employees)
participate in the Plans. All of the Plans covered thereby are in compliance in
all material respects with ERISA and
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the Code. All of the Plans which are intended to meet the requirements of
Section 401(a) of the Code have been determined by the Internal Revenue Service
to be "qualified" within the meaning of Section 401(a) of the Code, and there
are no facts which would adversely affect the qualified status of any of the
Plans. Except as set forth on Schedule 4.14, (i) there is no accumulated funding
deficiency, within the meaning of Section 412(a) of the Code or Section
302(a)(2) of ERISA, in connection with the Plans; (ii) no reportable event, as
defined in Section 4043(b) of ERISA, has occurred in connection with the Plans;
(iii) the Plans have not, nor has any trustee or administrator of the Plans,
engaged in any prohibited transaction as defined in Sections 406 and 407 of
ERISA or Section 4975 of the Code; (iv) the Company is not contributing to, and
has not, since January 1, 1974, contributed to, any multiemployer plan, as
defined in Section 4001(a)(3) of ERISA; and (v) the Company has not, since
January 1, 1974, terminated a single employer plan, as defined in Section 4001
(a)(1 5) of ERISA.
4.15 Freedom to Deal; Agreement Not in Breach of Other
Instruments. The Company and the Shareholders are free to deal with Parent and
Buyer, to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of the
terms hereof will not violate or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which, with notice or the
passage of time, or both, would constitute a default) under, or conflict with or
result in the termination of, or accelerate the performance required by any (i)
material agreement, (ii) indenture or other instrument to which the Company or
the Shareholders are a party or by which the Company or the Shareholders are
bound, (iii) the Company's Articles of Incorporation, Bylaws or similar
organizational documents, or (iv) any judgment, decree, order or award of any
court, governmental body or arbitrator by which the Company or the Shareholders
are bound, or (v) any law, rule or regulation applicable to the Company or the
Shareholders.
4.16 Taxes. Except as disclosed on Schedule 4.16 hereto:
(a) Within the times and in the manner
prescribed by law, the Company has filed all federal, state and local tax
returns (including information returns) and all tax returns for foreign
countries, provinces and other governing bodies having jurisdiction to levy
taxes upon the Company required to have been or to be filed, and, except to the
extent and in the amount reserved for in the Closing Date Balance Sheet or
otherwise included in the Net Working Capital, has paid in full all taxes shown
to be due to any taxing authority on a timely basis or will pay all taxes shown
to be due to any taxing authority, with respect to all periods ending prior to
or on the Closing Date;
(b) All tax returns filed or to be filed by the
Company through the Closing Date constitute complete and accurate
representations of the tax liabilities of the Company as appropriate (and any
predecessor or subsidiary entity) for such years and accurately set forth all
items (to the extent required to be included or reflected in such returns)
relevant to its future tax liabilities, including the tax bases of its
properties and assets;
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(c) The Company is not obligated to make any
payments, and is not a party to any agreement that could obligate it to make any
payments, that will not be deductible under Section 280G of the Code; and
(d) The Shareholders have not at any time made a
valid election for the Company to be taxed as a "small business corporation"
pursuant to Section 1362 of the Code.
As used in this Section 4.16, the term "taxes" shall include
all federal, state, local, foreign or other income, gross profits, payroll,
workers' compensation, unemployment, withholding, excise, sales, use, property,
ad valorem or other taxes of any kind or nature whatsoever, together with any
penalties or interest applicable thereto.
4.17 Litigation. Except as listed on Schedule 4.17 hereto,
there is no action, suit, proceeding or investigation to which the Company is a
party (either as a plaintiff or defendant) presently pending, nor has any such
action, suit, proceeding or investigation been pending at any time during the
past five years, before any court or governmental agency, authority or body or
arbitrator; to the best knowledge of the Shareholders, there is no action, suit,
proceeding or investigation threatened against the Company; and, to the best
knowledge of the Shareholders, there is no basis for any such action, suit,
proceeding or investigation.
4.18 Compliance with Law; Licenses and Permits. The
Company now holds and has held all licenses, permits, certifications and
accreditations in all applicable jurisdictions necessary or appropriate to
conduct the operations of the Company as a whole, and the operations of the
Company are and have been conducted in compliance in all material respects with
all applicable laws, and regulations, including, without limitation, Medicare
and Medicaid fraud and abuse laws and regulations and any similar state law.
There is no default under any of such licenses, permits and accreditations, and
there exist no grounds for revocation, suspension or limitation thereof. A
complete and accurate list of these licenses, permits, certifications and
accreditations are attached to and listed on Schedule 4.18. The most recent
licensure and accreditation surveys and deficiency reports related to each of
these items have previously been provided to Buyer.
4.19 Brokerage. Except as set forth on Schedule 4.19, the
Shareholders are not obligated to make any payment to any finder, broker,
investment banker or financial advisor in connection with any of the
transactions contemplated by this Agreement or the negotiations looking toward
the consummation of such transactions.
4.20 Contracts. Schedule 4.20 hereto sets forth a true and
correct list of each material contract, agreement, purchase order, lease,
license, indenture or commitment, written or oral, to which the Company is a
party or by which any of its properties or assets are bound or affected, or from
which the Company benefits, together with all amendments and modifications
thereto (collectively, the "Contracts"). True, complete and correct copies of
each of the Contracts, or where they are oral, true and complete written
summaries thereof, have been delivered to Parent or Buyer by the Shareholders.
Except as expressly described on Schedule 4.20 hereto:
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(a) The Company has fulfilled all material
obligations required through the date hereof pursuant to each Contract to have
been performed by the Company, and the Company up through the Closing Date and
thereafter will be able to fulfill, when due, all of its obligations under the
Contracts which remain to be performed after the date hereof;
(b) There has not occurred any default under any
of the Contracts on the part of the Company or any other party thereto, nor has
any event occurred which, with the giving of notice or the lapse of time, or
both, would constitute a default on the part of the Company under any of the
Contracts, nor has any event occurred which, with the giving of notice or the
lapse of time, or both, would constitute a default on the part of any other
party to any of the Contracts; and
(c) Except as set forth on Schedule 4.20, no
consent of any party to any of the Contracts is required for the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
4.21 No Undisclosed Liabilities. Except as disclosed on
Schedule 4.21, as specifically delineated in any other Schedule to this
Agreement or as specifically referred to in the Annual or Interim Financial
Statements, the Company has no liabilities or obligations, whether absolute,
accrued, contingent or otherwise, and whether due or to become due (including,
without limitation, any liability for taxes, interest, penalties or other
charges payable with respect to any such liability).
4.22 Regulatory Approvals. All consents, approvals and
authorizations and all other requirements prescribed by any law, rule or
regulation which must be obtained or satisfied by the Shareholders that are
necessary for (a) the execution and delivery by the Shareholders of this
Agreement and the documents to be executed and delivered by the Company and the
Shareholders in connection herewith and (b) in order to permit the consummation
of the transactions contemplated by this Agreement have been, or at or prior to
Closing shall have been, obtained and satisfied. A list of such consents,
approvals and authorizations is set forth on Schedule 4.22 hereto.
4.23 Bank Accounts. The bank accounts listed on Schedule
4.23 hereto constitute all of the checking accounts, savings accounts, money
market accounts, custodial accounts, certificates of deposit, safe deposit boxes
and other bank accounts maintained by the Company. Copies of the signature cards
for each such bank account are attached to Schedule 4.23.
4.24 Other Material Circumstances. To the best knowledge
of the Shareholders, there is no material fact or circumstance related to the
Company, or the assets or liabilities of the Company, which constitutes or would
constitute a serious threat to the viability or survival of the Company after
the Closing Date.
4.25 Other Information. The information concerning the
Company set forth in this Agreement, the Schedules hereto and any document to be
delivered by the Company or the Shareholders at the Closing to Parent or Buyer
pursuant hereto, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated herein or
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therein or necessary to make the statements and facts contained herein or
therein, in light of the circumstances under which they are made, not false or
misleading. Copies of all documents heretofore or hereafter delivered or made
available to Parent or Buyer pursuant hereto were or will be complete and
accurate copies of such documents.
4.26 Conflicts of Interest. Except as disclosed in
Schedule 4.26 hereto, no officer, director or shareholder of the Company, or any
relative or affiliate of any such person, now has or within the past three (3)
years had, either directly or indirectly, (a) an equity or debt interest in any
corporation, partnership, joint venture, association, organization or other
person or entity which furnishes or sells, or during such period furnished or
sold, any services or products to the Company, or purchases, or during such
period purchased, from the Company any goods or services, or otherwise does, or
during such period did, business with the Company; or (b) a beneficial interest
in any contract, commitment or agreement to which the Company is or was a party
or under which the Company was obligated or bound or to which its properties may
be or may have been subject, other than stock options and other contracts,
commitments or agreements between the Company and such persons in their
capacities as employees, officers or directors of the Company.
4.27 Cost Reports, Third Party Receivables and Conditions
of Participation. The cost reports for Medicare or Medicaid payments to the
Company under the Medicare program or the Medicaid program of the State of
Georgia or any other third party payor program for the fiscal years indicated in
Schedule 4.27 hereto, have been audited and fully settled. All Medicare or
Medicaid or other cost reports of the Company were filed by the required filing
dates, and (except for insignificant amounts) such reports do not claim, nor has
the Company or the Shareholders, received reimbursement in excess of the amount
provided by law. Except as listed on Schedule 4.27 hereto, there is no dispute
between the Company and governmental authorities or any Medicare or Medicaid
fiscal intermediary or other applicable party regarding such cost reports or the
remaining unaudited cost reports, other than with respect to adjustments thereto
made in the ordinary course of business and no audit is currently in process.
4.28 Medical Staff. The Company and Shareholders have
previously delivered to Buyer a true and correct copy of medical staff privilege
and membership application forms, a description of medical staff privileges, all
current medical staff bylaws, rules and regulations and amendments thereto, all
credentials and appeals procedures not incorporated therein, the name of each
current member of the medical staff of the Hospital, the age of each medical
staff member, the specialty, if any, of each medical staff member, and all
contracts with physicians, physician groups, or other members of the medical
staff of the Hospital. There are no pending or threatened appeals, challenges,
disciplinary or corrective actions, or disputes involving applicants, staff
members, or health professionals and there is no basis therefore.
4.29 ▇▇▇▇-▇▇▇▇▇▇ and Related Liens. Neither the Company
nor any of its predecessors has received any loans, grants or loan guarantees
pursuant to the ▇▇▇▇-▇▇▇▇▇▇ Act program, the Health Professions Educational
Assistance Act, the Nurse Training Act, the National Health Planning and
Resources Development Act, and the Community Mental Health Centers Act,
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as amended, or similar laws or acts providing for the recovery of any public
funds advanced under the provisions of such laws or acts relating to health care
facilities.
5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
5.1 Access: Due Diligence.
(a) Between the date hereof and the Closing
Date, (i) authorized representatives of Parent shall have reasonable access to
all properties, books, records, Contracts and documents of the Company, (ii) the
Company and the Shareholders will furnish to Parent all information with respect
to the Company's affairs and the Hospital that Parent and Buyer may reasonably
request, and (iii) Parent and Buyer shall have the right to discuss the affairs
and the Hospital of the Company with the employees of the Company; provided,
however, that Parent and Buyer shall not contact any employee, customer or
supplier of the Company unless such employee, customer or supplier previously
has been designated in writing by the Company, or Parent and/or Buyer receives
the prior authorization of the President of the Company. The Company shall have
the right to have its designated representative present during any such
discussions and, to the extent practical, Parent will conduct its review at a
site other than the Hospital.
(b) Following the Closing, Buyer shall cause the
Company to permit Sellers' representatives (including, without limitation, their
counsel, accountants and auditors), during normal business hours and upon
appropriate advance notice, to (i) have reasonable access to, and examine and
make copies of all books and records of the Hospital and the Related Facilities,
including all medical records and medical charts of any patient admitted to the
Hospital and the Related Facilities, to the maximum extent permitted by law and
(ii) have reasonable access without cost to the Hospital's employees and their
successors, relating to transactions or events occurring prior to the Closing
and Shareholders' obligations under this Agreement, as long as such requests do
not unreasonably interfere with the operation of the Hospital. For a period of
seven (7) years after the Closing, Buyer agrees that, prior to the destruction
or disposition of any such books or records, Buyer shall provide not less than
forty-five (45) days', nor more than ninety (90) days' prior written notice to
Shareholders of such proposed destruction or disposal. If Shareholders desire to
obtain any of such documents, they may do so by notifying Buyer in writing at
any time prior to the date scheduled for such destruction or disposal. In such
event, Buyer shall cause the Company to not destroy such documents and the
parties shall then promptly arrange for the delivery of such documents to
Shareholders, their successors or assigns. All out-of-pocket costs associated
with the delivery of the requested documents shall be paid by Shareholders.
(c) Following the Closing, Shareholders shall
permit Buyer and its representatives (including, without limitation, their
counsel, accountants and auditors), during normal business hours, to have access
to, and examine and make copies of, all books and records relating to the
Hospital or the Company Shares, which books and records are retained by
Shareholders, if any, and which relate to transactions or events contemplated by
this Agreement occurring prior to the Closing, to the maximum extent permitted
by law. For a period of seven (7) years after the Closing, Shareholders agree
that, prior to the destruction or disposition of any such
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books or records, Shareholders shall provide not less than forty-five (45)
days', nor more than ninety (90) days' prior written notice to Buyer of such
proposed destruction or disposal. If Buyer desires to obtain any such documents,
it may do so by notifying Shareholders in writing at any time prior to the date
scheduled for such destruction or disposal. In such event, Shareholders shall
not destroy such documents and the parties shall then promptly arrange for the
delivery of such documents to Buyer, its successors or assigns. All
out-of-pocket costs associated with the delivery of the requested documents
shall be paid by Buyer.
(d) Shareholders shall cause or use reasonable
best efforts to cause Company's accounting firm to consent to the inclusion of
the Financial Statements in any registration statements, private placement
memoranda, and periodic reports, if any, necessary or appropriate in order to
enable Buyer or its affiliates to comply with any applicable registration or
reporting requirements of federal or state securities laws.
5.2 Confidentiality.
(a) All information relating to the Shareholders
individually which Parent and its authorized representatives obtain in
connection with the completion of the transactions contemplated by this
Agreement shall be kept confidential by Parent and Buyer at all times whether
before or after the Closing and shall not be used by it for any purpose other
than in connection with the transactions contemplated hereby; provided, however,
that the foregoing shall not apply to (i) any information generally available to
the public on the date hereof or which becomes generally available to the public
through no fault or negligence of Parent or Buyer, but only from and after the
date such information becomes so available, (ii) any information obtained by
Parent or Buyer from a third party having the right to disclose the same, (iii)
any information not first given to Parent or Buyer by the Company, the
Shareholders or their agents, that was known to Parent or Buyer as of the date
of this Agreement or developed independently by Parent or Buyer after the date
hereof, or (iv) any information Parent or Buyer is required by law to disclose.
In the event no Closing occurs, at the request of the Shareholders, Parent
and/or Buyer shall promptly return all such written information, and all copies
thereof, to the Shareholders.
(b) All information relating to the Company
obtained prior to the Closing by Parent or Buyer and their authorized
representatives pursuant to Section 5.1 hereof or otherwise in connection with
the transactions contemplated hereby shall be kept confidential by Parent and
Buyer prior to the Closing and shall not be used by it for any purpose other
than in connection with the transactions contemplated hereby; provided, however,
that the foregoing shall not apply to (i) any information generally available to
the public on the date hereof or which becomes generally available to the public
through no fault or negligence of Parent or Buyer, but only from and after the
date such information becomes so available, (ii) any information obtained by
Parent or Buyer from a third party having the right to disclose such
information, (iii) any information not first given to Parent or Buyer by the
Company, the Shareholders, or their agents, that was known to Parent or Buyer as
of the date of this Agreement or developed independently by Parent or Buyer
after the date hereof, or (iv) any information Parent or Buyer is required by
law to disclose; and provided, further, that Parent or Buyer shall have no
obligation with respect to, or be restricted in its use of, any such
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information after the Closing. In the event no Closing occurs, upon the request
of the Company, Parent and/or Buyer shall promptly return all such written
information, and all copies thereof, to the Company.
5.3 Conduct of Business. The Company shall operate the
Hospital from the date of this Agreement through the Closing in accordance with
prior practice and only in the ordinary course of the Company's business, and,
without limiting the generality of the foregoing, the Company shall not (except
with the prior written consent of Parent or Buyer): (i) enter into any material
transaction not in the ordinary course of the Company's business; (ii) sell or
transfer any of its assets, including, without limitation, any fixed assets,
except for sales in the ordinary course of the business or immaterial amounts of
other tangible personal property not required in the business; (iii) mortgage,
pledge or encumber any of the properties or assets of the Company, except liens
for taxes not yet due and payable and existing bank indebtedness; (iv) amend,
modify, or terminate any Contract other than in the ordinary course of the
business; (v) make any increase in, or any commitment to increase, the benefits
or compensation payable to any of its officers, directors, shareholders,
employees or agents; (vi) reduce the amount of its inventory, if any, or other
assets other than in the ordinary course of the business; (vii) materially alter
the manner of keeping its books, accounts, or records or the accounting
practices therein reflected; (viii) make any changes in its capital or corporate
structures, or make any distribution with respect to its capital, whether by way
of management fee, redemption, dividend, bonus or otherwise; (ix) delay the
payment of any account payable;(x) make any material changes in its methods of
business operations; (xi) make, enter into any agreement to make or become
obligated to make, any capital expenditure in excess of $5,000; (xii) make,
enter into or renew any agreement for services to be provided to the Company, or
permit the automatic renewal of any such agreement; (xiii) discount or forgive
any accounts receivable; (xiv) amend its Articles of Incorporation; or (xv) fail
to maintain the condition of its assets on the date hereof until the Closing.
5.4 Preservation of Organization. Prior to the Closing,
the Company shall use its commercially reasonable efforts to preserve the
operations of the Company as it exists on the date hereof, to keep available the
services of the Company's employees, and to preserve the Company's favorable
business relationships with its suppliers, customers and others with whom
business relationships exist.
5.5 Current Information.
(a) The Shareholders will advise Parent or Buyer
in writing immediately, but in any event prior to the Closing, of:
(i) the occurrence of any event which
renders any of the representations or warranties set forth herein
inaccurate or the awareness of the Company that any representation or
warranty set forth herein was not accurate when made;
(ii) any fact that, if existing or known
on the date hereof, would have been required to be set forth or
disclosed in or pursuant to this Agreement; and
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(iii) the failure of the Company or the
Shareholders to comply with or accomplish any of the covenants or
agreements set forth herein.
(b) The Shareholders shall cause the Company to
provide to Parent copies of all operating and financial reports prepared by or
for the Company after the date hereof and prior to the Closing Date as soon as
such reports become available.
5.6 Contracts Requiring Consent. The Shareholders, Parent
and Buyer shall use their respective best efforts and work cooperatively to
timely procure all consents, approvals, authorizations, waivers and all other
requirements which must be obtained or satisfied by the Company, the
Shareholders, Buyer or Parent for the completion of the transactions
contemplated hereby, including all required consents from third parties under
the Contracts or otherwise so that the Company may continue to operate without
interruption or any adverse effect following the Closing Date.
5.7 Environmental Audits. In its sole discretion, Buyer
may cause an environmental audit to be performed on the Property and any other
properties as Buyer deems appropriate. Any such audits shall be at Buyer's sole
expense and may be performed by its employees or by outside counsel and
consultants as Buyer may select. The scope of each such audit shall be
determined by Buyer in its sole discretion. The Shareholders shall cause the
Company to cooperate with Buyer and Buyer's representatives during any such
audit and to provide access to the Property and any other properties, access to
records and access to the Company's employees and representatives who might
possess pertinent knowledge. The Shareholders acknowledge and agree that the
audit may include invasive sampling of environmental media, insulation, tanks
and other structures.
5.8 Access to Records and Files. The Shareholders shall
have the right for a period of five (5) years following the Closing Date to have
reasonable access (for any proper business purpose, of which the Shareholders
shall inform the Company at the time such access is requested) to such books,
records and accounts, correspondence, production records, employment records and
other similar information (the "Records") as are retained by the Company in
accordance with its records retention policies in effect from time to time after
the Closing Date, other than such Records constituting or including trade
secrets or privileged information.
5.9 Medicare and Medicaid Change of Control. To the
extent required, the Shareholders shall cause the Company to provide reasonable
assistance to Buyer and assist Buyer in effecting the change of control of the
Company as required in connection with the Medicare program and the Medicaid
program in Georgia, the cost of which shall be borne solely by Buyer or Parent.
5.10 "Tail Insurance" Policy. Effective at the Closing,
the Shareholders shall cause the Company to provide, at its sole expense, for
the benefit and in the name of the Company, a so-called "tail insurance" policy
covering general and professional liability and malpractice claims against the
Company for all periods prior to the Closing Date with such deductibles and
terms
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substantially similar to the professional liability insurance policy in effect
for the Company immediately prior to the Closing. The coverage will be
$1,000,000 per occurrence and $3,000,000 in the aggregate with a $5,000,000
umbrella. The policy will name Buyer and Parent as additional insureds.
5.11 Tax Matters. The following provisions shall govern
the allocation of responsibility as between the Buyer and the Shareholders for
certain tax matters after the Closing:
(a) Tax Periods Ending on or Before the Closing
Date. The Buyer shall prepare or cause to be prepared and file or cause to be
filed on or before the date such returns as are due (taking into account any
extensions of time granted in connection with such filing) all tax returns for
the Company for all periods ending on or prior to the Closing Date that are
filed after the Closing Date. At least twenty (20) business days prior to the
due date of each such return, Buyer shall deliver a copy of each such return to
the Shareholders for their approval, which shall not be unreasonably withheld or
delayed.
(b) Tax Periods Beginning Before and Ending
After the Closing Date. Buyer shall prepare or cause to be prepared and file or
cause to be filed on or before the date such returns are due (taking into
account any extensions of time granted in connection with such filing), all tax
returns for the Company for all tax periods that begin before the Closing Date
and end after the Closing Date.
(c) Cooperation on Tax Matters. Buyer and the
Shareholders shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of tax returns pursuant to this
Section 5.11.
(d) Closing Date. Notwithstanding anything
contained in this Agreement to the contrary, Company shall not (and Buyer shall
not cause Company to) take any action outside the ordinary course of business
after the closing on the Closing Date that will cause the Shareholders to be
liable pursuant to this Agreement or otherwise for taxes.
(e) Amended Returns. Buyer agrees that it will
not amend or cause the Company to amend any Company tax returns attributable to
taxable years commencing before the Closing Date if the position taken by the
Company and such amended return would have any adverse effect on the tax
liability of any Shareholder without such Shareholder's advance written consent.
(f) Controversies. After the Closing Date, Buyer
and Shareholders each shall promptly notify the other party in writing of the
commencement of any tax audit or administrative or judicial proceeding affecting
the taxes of the Company relating to taxable years commencing before the Closing
Date. Such notice shall include copies of any document received from any taxing
authority. If either Buyer or Shareholders fails to give the other party prompt
notice of an asserted tax liability as required by this Section, then (a) if the
indemnifying party is precluded by such failure from contesting any asserted tax
liability in the appropriate administrative or judicial forums, then such
indemnifying party shall not have any obligation to indemnify the other party
for
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any loss or damage arising out of such asserted tax liability, and (b) if the
indemnifying party is not so precluded from contesting such asserted tax
liability but such failure results in a detriment to the indemnifying party,
then any amount which the indemnifying party would otherwise be required to pay
pursuant to this Agreement shall be reduced by the amount of such detriment.
The Shareholders may participate, through counsel of
its own choosing and at its own expense, in any audit, or administrative or
judicial proceeding involving any asserted tax liability with respect to which
indemnity may be sought herein against the Shareholders (any such audit or
proceeding relating to an asserted tax liability is referred to herein
collectively as a "Contest"). Any of the Shareholders may elect to participate
in the portion of the Contest with respect to which indemnity may be sought. If
any of the Shareholders so elect to participate in the Contest of an asserted
tax liability, such Shareholders shall notify the Buyer of its intent to do so,
and the Buyer and the Shareholders shall cooperate in good faith and the Buyer
shall cause the Company or its successor to cooperate in good faith in each
phase of such Contest. The portion of the Contest with respect to which
indemnity may be sought shall not be settled without the consent of Sellers
(which shall not be unreasonably withheld or delayed). If the Shareholders elect
in writing not to participate in the contest or contests its obligation to
indemnify hereunder, the Buyer or the Company may pay, compromise or contest
such asserted tax liability. However, in such case, neither the Buyer nor the
Company (including any designated representative of either) may settle or
compromise any asserted tax liability in a manner that would create an
indemnification obligation unless such settlement or compromise would be
reasonable in the case of a person that owned the Company both before and after
the Closing Date.
(g) Records. Buyer will maintain and preserve
all tax records and supporting documents of the Company necessary for
Shareholders to establish the positions taken by the Company on any tax return
for any taxable period prior to and including the Closing Date. Buyer will
provide Shareholders reasonable access to such records as necessary for
Shareholders to establish any such position in a Contest. Buyer waives its right
to indemnification to the extent its failure either to adequately maintain and
preserve the Company's books and records or to provide Sellers reasonable access
to such books and records prejudices Shareholders' ability to defend any
Contest.
(h) Allocation of Federal Income Tax Liabilities
Among Short Tax Years. The parties acknowledge that, after the closing, the
Company will be a member of an affiliated group for which a consolidated tax
income tax return will be filed. Under Treas. Reg. ss.1.1502-76(b)(1), the
Company's taxable year will end on the end of the Closing Date ("Separate Return
Short Year") and a new taxable year will begin on the day after the Closing Date
("Consolidated Return Short Year"). The allocation of the items to be included
on the federal income tax return related to the Separate Return Short Year and
the federal income tax return related to the Consolidated Return Short Year
shall be made pursuant to Treas. Reg. ss.1.1502-76(b)(2)(i). The Company does
not intend to elect to make a ratable allocation of tax items between the
Separate Return Short Year and the Consolidated Return Short Year under Treas.
Reg. ss.1.1502-76(b)(2)(ii). All taxes allocated to the Separate Return Short
Year that have not been paid or reserved for shall contribute to the
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aggregate amount of the book value of the current liabilities of the Company as
referred to in Section 2.1(b) to the extent not already included in such amount.
(i) Allocation of Tax Liability for Straddle
Period. For purposes of this Agreement, in the case of taxes that are payable
with respect to a taxable period that begins before the Closing Date and ends
after the Closing Date, the portion of any such tax that is allocable to the
portion of the period ending on the Closing Date shall: (i) in the case of taxes
that are either (x) based upon or related to income or receipts or (y) imposed
in connection with any sale, other transfer or assignment or any deemed sale,
transfer or assignment of property (real or personal, tangible or intangible),
be deemed equal to the amount that would be payable if the taxable year ended on
the Closing Date, and (ii) in the case of taxes imposed on a periodic basis with
respect to the assets of the Company or otherwise measured by the level of any
item, be deemed to be the amount of such taxes for the entire period (or, in the
case of such taxes determined on an arrears basis, the amount of such taxes for
the immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the portion of such period ending on and
including the Closing Date and the denominator of which is the number of
calendar days in the entire period. For purposes of clause (i) above, any
exemption, deduction, credit or other item that is calculated on an annual basis
shall be allocated to the period beginning before the Closing Date and, pursuant
to clause (i) treated as ending on the Closing Date, based on the pro rata
portion of such item determined by multiplying the total amount of such item
times a fraction, the numerator of which is the number of calendar days in the
period up to and including the Closing Date and the denominator of which is the
total number of calendar days in the entire period.
(j) Refunds. The Shareholders shall be entitled
to all refunds of any taxes of the Company attributable to periods on or prior
to the Closing Date to the extent not included in the Closing Date Balance Sheet
and the Company shall cooperate with Shareholders in filing any claims for
refunds; provided that such claim does not have any adverse effect on the tax
liability of the Company after Closing.
5.12 Risk of Loss. The Shareholders shall bear all risk of
condemnation, destruction, loss or damage due to fire or other casualty from the
date of this Agreement through the Closing. If the condemnation, destruction,
loss or damage is such that the business of the Company is materially
interrupted or curtailed, then the Buyer, on one hand, and the Shareholders on
the other hand, shall have the right to terminate this Agreement.
5.13 Covenant Not to Compete. The Shareholders hereby
covenant and agree with Parent and Buyer that during the ["NONCOMPETE PERIOD"]
within the ["NONCOMPETE AREA"] they shall not directly or indirectly without
prior written consent of Buyer, (a) acquire, lease, manage, consult for, finance
or own any part of (as member, shareholder or partner) any health care facility
which provides any services similar to the services provided by the Hospital,
including general surgical, acute care, and diagnostic services, including
laboratory work related thereto, or (b) solicit for employment or employ any
person who at Closing remained an employee of Company, or (c) disrupt or attempt
to disrupt any past, present or reasonably foreseeable future relationship,
contractual or otherwise between Buyer, on the one hand, and any physician,
physician group, or
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other healthcare provider with whom Buyer contracts in connection with the
Hospital, on the other hand. The "Noncompete Period" shall commence at the
Closing and terminate on the second anniversary period. The "Noncompete Area"
shall mean the City of Adel, Georgia, and the area within thirty (30) miles of
Adel, Georgia. Ownership of less than five percent (5%) of the stock of a
publicly held company shall not be deemed a breach of this covenant.
5.14 Enforceability. In the event of a breach of Section
5.14 hereof, Shareholders recognize that monetary damages shall be inadequate to
compensate Company and Buyer and Company and Buyer shall be entitled, without
the posting of a bond, to an injunction restraining such breach, with the costs
including attorneys' fees of securing such injunction to be borne by
Shareholders (unless it is determined that the Shareholders have not breached
Section 5.14). Nothing herein contained shall be construed as prohibiting Buyer
from pursuing any other remedy available to it for such breach or threatened
breach.
5.15 Title Report and Policy. At least ten (10) days prior
to Closing, the Company shall deliver to Buyer, at Shareholders' expense, a
current ALTA preliminary title commitment issued by Chicago Title Insurance
Company, or other company which is mutually acceptable to the parties, of the
condition of title to each tract of the Properties (the "Commitment") for a
title insurance policy, ALTA Owner's Policy Form 1992 (the "Title Policy"). The
Commitment and Title Policy shall show that the Properties are owned in fee
simple or leasehold by the Company, free from all Liens, except the Permitted
Exceptions and the Commitment may also be subject to such other items as the
Company can cause to be removed prior to or at Closing. The Commitment and Title
Policy will also contain (a) a so-called "tax parcel endorsement" listing all of
the tax parcel identification numbers affecting the Properties covered by the
policy and that no other property is included in the Properties and that no
other tax parcel identification numbers affect such Properties, (b) a contiguity
and nonimputation endorsement, (c) a 3.1 zoning endorsement or its equivalent as
then in use by the title company in form and substance acceptable to Buyer, (d)
extended coverage deleting all standard and general exceptions, (e) affirmative
coverage against any ▇▇▇▇-▇▇▇▇▇▇ lien, and (f) any additional endorsements or
insurance as Buyer may reasonably require. The Title Policy shall be in form
acceptable to Buyer and Buyer's lender and shall permit a simultaneous issue
rate for the lender's mortgage title policy with the cost of all special lender
endorsements required by Buyer's lender to be borne by Buyer. The title company
shall provide when delivering the Commitment one (1) copy of all recorded
documents affecting title of the Properties to Buyer. At Closing, there shall be
issued to Buyer, at Shareholders' expense, the Title Policy in the amount of the
Purchase Price which is allocated to the Properties as improved. In the event
Buyer requests, and at Buyer's expense, the title company shall issue a mortgage
title policy in an amount up to the Purchase Price which is allocated to the
Properties as improved, at simultaneous issue rates.
5.16 Survey. At least thirty (30) days prior to Closing,
Shareholders shall cause to be delivered to Buyer, at Shareholders' expense, an
"as-built" survey of the Real Estate accompanied by a certificate of a
registered surveyor licensed in the State of Georgia, certified as directed by
Buyer in full ALTA form, sufficient to cause the title company to delete the
standard printed survey exception and to issue the Title Policy free from any
survey objections or exceptions whatsoever (the "Survey"). The Survey shall show
the boundaries of the Properties, separate legal
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descriptions and boundaries for the tracts, the location and dimension of all
improvements, the physical location of all utilities, and the location of all
streets, highways, alleys and public ways crossing or abutting said Properties,
all dominant and servient easements identified by recording information, all
building lines and all buildings and structures as are situated thereon as of
said date. Said certificate shall state that the improvements situated on the
Properties lie wholly within the boundaries thereof and that no part thereof
encroach upon or overhang any easement or rights-of-way or upon the land of
others; that such improvements are wholly within the building restriction lines
however established and do not violate any use or other restriction contained in
prior conveyances, zoning ordinances or regulations; that no adjoining structure
encroaches upon the Properties or upon any dominant easement appurtenant
thereto; and that as of said date there were no visible encroachments, overlaps,
overhangs, easements, improvements, utility lines or rights-of-way on, above or
below the ground except as shown on the survey plat. Said certificate shall also
state whether or not the Properties or any part thereof lie within the
boundaries of a local, state or federal flood plain designation. The Survey
shall also provide tax map identification numbers, zoning information and other
data sufficient for the title company to provide the title insurance coverage
and endorsements as described in Section 5.15 above.
5.17 UCC Searches. UCC Financing Statement searches, local
and central, including fixtures, and federal and state tax lien and judgment
searches, with respect to the Company, its affiliates and predecessors,
including all "DBA's", trade names and fictitious names of Company from each of
the jurisdictions in which such entity does business or has done business within
the preceding five (5) years (the "UCC Searches"), shall be obtained by
Shareholders, at Shareholders' cost, and delivered to Buyer at least ten (10)
days prior to Closing. The results shall be updated to Closing to reflect the
release of all Liens other than the Permitted Exceptions or those matters
described on Schedule 4.7 .
5.18 Defects and Cure. The Commitment, Title Policy, the
Survey and UCC Searches described in Sections 5.15, 5.16 and 5.17 are
collectively referred to as "Title Evidence". Buyer shall notify the
Shareholders as soon as reasonably possible of any Liens disclosed in the Title
Evidence which do not constitute Permitted Exceptions (collectively "Defects").
The Shareholders, at their sole cost and expense, may elect to not cure the
Defects and shall give written notice to Buyer within ten (10) days of its
receipt of Buyer's objections of its decision whereupon Buyer may waive such
Defects and close or may terminate this Agreement, which election shall be made
within ten (10) days of receipt of notice from the Shareholders. If the
Shareholders fail to timely give such notice, the Shareholders shall be deemed
to have elected not to cure the Defects, whereupon Buyer may waive such
objection and close or may terminate this Agreement, which election by Buyer
shall be made within thirty (30) days following notice of objection to the
Shareholders. Upon termination of this Agreement under the terms of this Section
5.18, no party to this Agreement shall have any further claims under this
Agreement against any other party.
5.19 Transfer Taxes and Recording Fees. All sales, use,
transfer and all other non-income taxes, and any fees incurred in connection
with this Agreement and the purchase of the Company Shares (the "Transfer
Taxes") shall be borne equally by Buyer and Shareholders. Buyer and Shareholders
will file all necessary documents required to be filed with respect to all such
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Transfer Taxes. The parties will cooperate to the extent reasonably necessary to
make such filings or returns as may be required.
6. CONDITIONS TO CLOSING.
6.1 Conditions to Obligations of Each Party. Buyer, the
Company and the Shareholders to consummate the transactions contemplated hereby
shall be subject to the fulfillment, on or prior to the Closing Date, of the
following conditions:
(a) Compliance with Law. There shall have been
obtained all permits, approvals, consents and authorizations of all governmental
bodies or agencies necessary or appropriate so that consummation of the
transactions contemplated by this Agreement will be in compliance with
applicable laws, and so that the Company, from and after the Closing, will be
eligible to operate the Company and qualify for reimbursement by all applicable
federal and state regulatory agencies for services and goods rendered. A list of
such consents is set forth on Schedule 6.1(a) hereto.
(b) No Action or Proceeding. No claim, action,
suit, investigation or other proceeding brought by any governmental agency or
other third party shall be pending or threatened before any court or
governmental agency which presents a substantial risk of the restraining or
prohibition of the transactions contemplated by this Agreement or the obtaining
of material damages from Parent, Buyer, the Company or the Shareholders or other
relief in connection therewith.
(c) Consents Required by Contracts. All
necessary consents to the Acquisition required by the Contracts shall have been
obtained in written instruments reasonably satisfactory to the parties hereto. A
list of such consents is set forth on Schedule 6.1(c) hereto.
6.2 Conditions to Obligations of Parent and Buyer. The
obligations of Parent and Buyer to consummate the transactions contemplated
hereby shall be subject to the fulfillment, at or prior to the Closing, of the
following additional conditions:
(a) Representations and Warranties True. The
representations and warranties of the Shareholders contained in this Agreement,
the Schedules to this Agreement or in any other document delivered by the
Company or the Shareholders pursuant hereto upon which Parent and Buyer have
reasonably relied shall have been true and correct in all respects as of the
date of this Agreement or when otherwise given and shall be true and correct in
all respects on the Closing Date with the same effect as if made on the Closing
Date, and at the Closing the Shareholders shall cause the Company to deliver to
Parent and Buyer certificates to such effect signed by a duly authorized officer
of the Company and by the Shareholders.
(b) Performance of Covenants. Each of the
obligations of the Company and the Shareholders to be performed by them on or
before the Closing Date pursuant to the terms of this Agreement shall have been
duly performed in all respects on or before the Closing Date, and at the Closing
the Company and the Shareholders, as applicable, shall have delivered to Parent
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certificates to such effect signed by a duly authorized officer of the Company
and by the Shareholders.
(c) Authority. All actions required to be taken
by, or on the part of, the Company and the Shareholders to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
the board of directors of the Company and by the Shareholders.
(d) Opinion of the Company's and Shareholders'
Counsel. Parent shall have been furnished at the Closing with an opinion of
▇▇▇▇▇▇ & Bird LLP, counsel to the Shareholders, dated the Closing Date,
substantially in the form of Exhibit C attached hereto.
(e) Additional Closing Documents of the Company
and the Shareholders. Parent shall have received at the Closing the following
documents, dated the Closing Date:
(i) A copy, certified by the Secretary
of the Company, of resolutions of the Shareholders and the board of
directors of the Company authorizing the execution, delivery and
performance of this Agreement and all other agreements, documents and
instruments relating hereto and the consummation of the transactions
contemplated hereby to which the Company or the Shareholders are a
party;
(ii) The Escrow Agreement, duly executed
by the Shareholders and the Escrow Agent;
(iii) Certificates representing all of
the Company Shares, duly endorsed in blank;
(iv) A good standing certificate from
the State of Georgia dated not more than twenty (20) days prior to
Closing;
(v) Incumbency Certificates of the
Company's officers executing any documents or instruments delivered to
Parent or Buyer hereunder;
(vi) Resignations of all of the officers
and directors of the Company effective as of the Closing Date;
(vii) The Company's original minute book
and stock ledger, certified as original by the Company's secretary;
(viii) The Title Policy, or in lieu
thereof, a pro forma ▇▇▇▇-up of the Commitment in form acceptable to
Buyer; and
(ix) Such further Closing documents and
instruments as Parent or Buyer may reasonably request.
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(f) No Material Adverse Changes. Between the
date of this Agreement and the Closing Date there shall not have occurred any
damage or destruction of, or loss to, any of the assets of the Company, whether
or not covered by insurance, which has had or may reasonably be expected to have
a material and adverse effect on the Hospital or any prospects of the Company,
nor shall there have occurred any other event or condition which has had or
which reasonably may be expected to have a material and adverse effect on the
results of operations, condition (financial or otherwise), assets, properties or
prospects of the Hospital.
(g) Results of Environmental Audits. If Buyer
elects to perform an environmental audit of the Properties or any other site as
contemplated by Section 5.7 hereof, such audit shall not have disclosed any
facts or circumstances which have or might reasonably be expected to have a
material adverse effect on the Company or the use or value of the Company.
6.3 Conditions to Obligations of the Shareholders. The
obligation of the Shareholders to consummate the transactions contemplated
hereby shall be subject to the fulfillment, at or prior to the Closing Date, of
the following additional conditions:
(a) Representations and Warranties True. The
representations and warranties of Parent and Buyer contained in this Agreement,
the Schedules to this Agreement or in any other document delivered by Parent and
Buyer upon which the Company has reasonably relied pursuant hereto shall have
been true and correct in all respects as of the date of this Agreement or when
otherwise given and shall be true and correct in all respects on the Closing
Date with the same effect as if made on the Closing Date, and at the Closing
Parent shall have delivered to the Shareholders a certificate to such effect,
signed by a duly authorized officer of each of Parent and Buyer.
(b) Performance of Covenants. Each of the
obligations of Parent and Buyer to be performed on or before the Closing Date
pursuant to the terms of this Agreement shall have been duly performed on or
before the Closing Date, and at the Closing Parent shall have delivered to the
Company a certificate to such effect signed by a duly authorized officer of each
of Parent and Buyer.
(c) Authority. All actions required to be taken
by, or on the part of, Parent and Buyer to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the sole
shareholder and the board of directors of Buyer and the board of directors of
Parent.
(d) Opinion of Parent's and Buyer's Counsel. The
Shareholders shall have been furnished with an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ & Manner, P.C., counsel to Parent and Buyer, dated the Closing Date,
substantially in the form of Exhibit D attached hereto.
(e) Additional Closing Documents of Parent. The
Company and the Shareholders shall have received at the Closing the following
documents, each dated the Closing Date:
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(i) Copies, certified by the Secretary
of Parent and Buyer, of resolutions of the sole shareholder of Buyer
and the respective boards of directors of Parent and Buyer authorizing
the execution and delivery of this Agreement and all other agreements,
documents or instruments relating hereto and the consummation of the
transactions contemplated hereby;
(ii) The Escrow Agreement, duly executed
by Buyer, Parent and the Escrow Agent;
(iii) Incumbency Certificates of Buyer's
or Parent's officers executing any documents or instruments delivered
to the Company hereunder;
(iv) Such other Closing documents as the
Company or the Shareholders may reasonably request; and
(v) A good standing certificate for the
Parent and Buyer from the Secretary of State of its state
incorporation, dated not more than twenty (20) days prior to Closing.
7. INDEMNIFICATION.
7.1 Indemnification by the Shareholders. The Shareholders
agree to defend, indemnify and hold Parent and Buyer, their respective officers,
directors, agents, representatives, subsidiary and parent entities and
affiliates and their successors and assigns, harmless from and against any
claim, suit, action, proceeding, assessment, liability, expense, loss or other
damage (including court costs, reasonable attorneys' fees and expenses)
("Claims") in respect of:
(a) any and all Claims resulting from any
misrepresentation or breach of warranty or violation of any covenant made by the
Company or the Shareholders hereunder, or in any Schedule or other document or
instrument furnished or to be furnished by the Company or the Shareholders
hereunder, including, without limitation, any documents or instruments furnished
at Closing;
(b) any and all Claims relating to the conduct
or operation of the Company prior to Closing, except to the extent such Claims
(including the full amount thereof) are reflected in the Closing Date Balance
Sheet; and
(c) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, reasonable costs and expenses incident
to any item to which the foregoing indemnity relates.
7.2 Indemnification by Parent and Buyer. Parent and
Buyer, jointly and severally, agree to defend, indemnify and hold the
Shareholders, and their personal representatives and
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permitted assigns, harmless from and against any Claim (including reasonable
attorneys' fees and expenses) in respect of:
(a) any and all Claims resulting from any
misrepresentation or breach of warranty or violation of any covenant made by
Parent or Buyer hereunder or in any Schedule or Certificate furnished or to be
furnished by Parent or Buyer hereunder, including, without limitation, any
documents or instruments furnished at Closing;
(b) any and all Claims relating to the conduct
or operation of the Company after the Closing occurs;
(c) any and all Claims resulting from any
broker, finder, investment banker or financial advisor retained, hired or
engaged by Buyer or Parent in connection with the Acquisition; and
(d) any and all actions, suits, proceedings,
claims, demands, assessments, judgments, reasonable costs and expenses incident
to any item to which the foregoing indemnity relates.
7.3 Procedures for Indemnification.
(a) Any claim made under Section 7.1 or 7.2
("Indemnification Claim") shall be made by the party seeking indemnification
(the "Indemnitee") by delivery of a written notice to the party from whom
indemnification is sought (the "Indemnitor") requesting indemnification and
specifying the basis on which indemnification is sought and the amount of the
asserted Claim and, in the case of a claim made by a third party ("Third Party
Claim"), containing (by attachment or otherwise) such other information as such
Indemnitee shall have concerning such Third Party Claim.
(b) If the Indemnification Claim involves a
Third Party Claim the procedures set forth in Section 7.4 hereof shall be
observed.
(c) If the Indemnification Claim involves a
matter other than a Third Party Claim, the Indemnitor shall have thirty (30)
calendar days to object to such Indemnification Claim by delivery of a written
notice of such objection to the Indemnitee specifying in reasonable detail the
basis for such objection. Failure to timely so object shall constitute a final
and binding acceptance of the Indemnification Claim by the Indemnitor, and the
Indemnification Claim shall be paid in accordance with subsection (d) hereof. If
an objection is timely interposed by the Indemnitor and the dispute is not
resolved by the Indemnitee and the Indemnitor within fifteen (15) business days
from the date the Indemnitee receives such objection, such dispute shall be
resolved by arbitration as provided in Section 10.9 of this Agreement.
(d) Upon determination of the amount of an
Indemnification Claim, whether by agreement between the Indemnitor and the
Indemnitee or by an arbitration award or by
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any other final adjudication, the Indemnitor shall pay the amount of such
Indemnification Claim within ten (10) business days of the date such amount is
determined.
7.4 Third Party Claims. The objections and liabilities of
the parties hereunder with respect to a Third Party Claim shall be subject to
the following terms and conditions:
(a) The Indemnitee shall give the Indemnitor
written notice of a Third Party Claim promptly after receipt by the Indemnitee
of notice thereof, and the Indemnitor may undertake the defense, compromise and
settlement thereof by representatives of its own choosing reasonably acceptable
to the Indemnitee. The failure of the Indemnitee to notify the Indemnitor of
such claim shall not relieve the Indemnitor of any liability that it may have
with respect to such claim except to the extent the Indemnitor demonstrates that
the defense of such claim is prejudiced by such failure. The assumption of the
defense, compromise and settlement of any such Third Party Claim by the
Indemnitor shall be an acknowledgment of the obligation of the Indemnitor to
indemnify the Indemnitee with respect to such claim hereunder. If the Indemnitee
desires to participate in the defense, compromise and settlement of any claim
being defended by the Indemnitor, it may do so at its sole cost and expense. If,
however, the Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within ten (10) business days after written notice of such claim has
been given to the Indemnitor by the Indemnitee, the Indemnitee shall have the
right to undertake the defense, compromise and settlement of such claim with
counsel of its own choosing at the Indemnitor's expense. In the circumstances
described in the preceding sentence, the Indemnitee shall, promptly upon its
assumption of the defense of such claim, make an Indemnification Claim as
specified in Section 7.3 which shall be deemed an Indemnification Claim that is
not a Third Party Claim for the purposes of the procedures set forth herein.
(b) No settlement of a Third Party Claim
involving the asserted liability of the Indemnitor under this Section 7.4 shall
be made without the prior written consent by or on behalf of the Indemnitor,
which consent shall not be unreasonably withheld or delayed. Consent shall be
presumed in the case of settlements of $10,000 or less where the Indemnitor has
not responded within five (5) business days of notice of a proposed settlement.
If the Indemnitor assumes the defense of such a Third Party Claim, (a) no
compromise or settlement thereof may be effected by the Indemnitor without the
Indemnitee's consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person and no effect on
any other claim that may be made against the Indemnitee, (ii) the sole relief
provided is monetary damages that are paid in full by the Indemnitor, and (iii)
the compromise or settlement includes, as an unconditional term thereof, the
giving by the claimant or the plaintiff to the Indemnitee of a release, in form
and substance satisfactory to the Indemnitee, from all liability in respect of
such Third Party Claim, and (b) the Indemnitee shall have no liability with
respect to any compromise or settlement thereof effected without its consent.
(c) In connection with the defense, compromise
or settlement of any Third Party Claim, the parties to this Agreement shall
provide access to the counsel, accountants and other representatives of each
party during normal business hours to all properties, personnel, books, tax
records, contracts, commitments and all other business records of such other
party and will furnish
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to such other party copies of all such documents as may reasonably be requested
(certified, if requested).
7.5 Interest. Any indemnification payment pursuant to
this Article 7 shall include interest at a floating rate equal to one (1) point
over the prime rate of Citibank N.A., from time to time (the "Rate"), from the
date the loss, costs, expenses or damages were actually incurred by the
Indemnitee until the date of payment.
7.6 Indemnification Payments. So long as the Escrow Funds
continue to be held by the Escrow Agent, Parent and Buyer may satisfy their
respective Claims pursuant to this Article 7 from the Escrow Funds in accordance
with the terms of the Escrow Agreement.
7.7 Limitations on Indemnification. Any amounts which any
party hereto may be obligated to pay another party hereto pursuant to this
Article 7 will be reduced by an amount equal to any insurance recovery with
respect to such losses received by the Indemnitee (net of the present value of
reasonably anticipated increases in the future insurance premiums of the
indemnified party). In addition, the Shareholders shall not be liable to Parent
or Buyer pursuant to this Article 7 until the aggregate of all claims pursuant
to Section 7.1 for which the Shareholders would, but for this provision, be
liable exceeds on a cumulative basis an amount equal to $100,000.00, and then
the Shareholders shall be liable for all such claims including the first
$100,000.00 of claims. Likewise, Parent and Buyer shall not be liable to the
Shareholders pursuant to this Article 7 until the aggregate of all claims
pursuant to Section 7.2 for which Parent and Buyer would, but for this
provision, be liable exceeds on a cumulative basis an amount equal to
$100,000.00. The threshold amounts in the two preceding sentences shall not be
applicable to (i) any payment due under Section 2.4, (ii) any Claim arising
under Section 7.1(b), or (iii) any Claim which is a Third Party Claim. In
determining whether the threshold amounts have been met, any individual claims
of less than $5,000.00 shall be excluded. Neither the Shareholders nor Parent
and Buyer collectively shall be obligated to make payments to satisfy
indemnification obligations under this Article 7 in excess of $3,000,000.00;
provided that with respect to any Claim which is based on or arises from (i)
fraud, (ii) a violation of state or federal health care laws (including any
civil claims arising from such violation), including those laws and regulations
pertaining to Medicare and Medicaid, the anti-kickback statute, the False Claims
Act, any state or the ▇▇▇▇▇ II Self-Referral Laws and any other law or
regulation related to the regulation, certification or licensure of health care
providers, or (iii) a violation of state or federal employment laws (including
any civil claims arising from such violation), the limit on indemnification
obligations shall be equal to the Purchase Price.
7.8 UST Indemnification. There were previously located on
the Properties, three (3) underground storage tanks which are no longer in use
(the "USTs"). Buyer has received insufficient information to determine whether
the USTs were properly removed. Soil testings near the sites of the USTs have
been ordered to determine if any materials have leaked from the USTs, but such
tests are not expected to be completed prior to Closing. As a result, and
without otherwise limiting the terms of this Article 7, Shareholders hereby
agree to indemnify and hold Buyer and Parent harmless from all costs, expenses,
liabilities and obligations arising from any soil
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contamination above legal limits disclosed by the soil tests and the remediation
of such contamination. The indemnification obligations of Shareholders hereunder
shall not be subject to the threshold limitation contained in Section 7.8. If
requested by Buyer, Shareholders shall be pay any amounts owed to Buyer under
this Section 7.8 in lieu of Buyer making a claim for such amounts against the
Escrow Funds.
7.9 Exclusive Remedies. Except to the extent that Parent,
Buyer or the Shareholders shall elect to pursue its equitable remedies in
respect of the breach or threatened breach of any of the provisions hereof for
which such a remedy is available, and except to the extent that Parent, Buyer or
the Shareholders shall seek to recover monetary damages in respect of a breach
of any of the provisions of Section 5.13, following the closing, the sole and
exclusive remedy of each of the parties hereof with respect any claim described
in Sections 7.1 or 7.2, misrepresentations or breach of any warranty, covenant
or agreement by the other party or parties hereof shall be an indemnification
claim under the provisions of this Section 7.
8. ADDITIONAL COVENANTS AND AGREEMENTS.
8.1 Expenses. Each party hereto shall bear and pay all
costs and expenses incurred by it in connection with the transactions
contemplated by this Agreement including, without limitation, fees, costs and
expenses of its own financial consultants, accountants and counsel.
8.2 Survival of Representations and Warranties. The
covenants, obligations, representations and warranties of the parties hereto
contained in this Agreement shall be deemed to be material and to have been
relied upon by the parties hereto notwithstanding any investigation prior to
Closing, and shall survive the Closing. The representations and warranties
contained in Articles 3 and 4 of this Agreement shall survive the Closing until
the second annual anniversary of the Closing Date; provided, however, that (i)
if any representation or warranty contained in Articles 3 and 4 is fraudulently
given, it shall survive the Closing Date for an unlimited period of time; (ii)
the representations and warranties set forth in Sections 4.12, 4.14, 4.16 and
4.27 shall survive the Closing Date until 60 days after the expiration of the
applicable statutes of limitation; (iii) the representations and warranties set
forth in Sections 3.1, 4.1 and 4.2 shall survive the Closing Date for an
unlimited period of time; (iv) any specific claim or action of which specific
written notice is given to the party which made such representation or warranty
prior to the date on which such representation or warranty otherwise terminates
as provided herein, may continue to be asserted and shall be indemnified against
pursuant to Article 7; and (iv) any Claim based on any claim or proceeding
brought by a third party shall survive the Closing Date until 60 days after the
expiration of the statute of limitations applicable to the underlying claims.
8.3 Public Releases. Buyer and the Shareholders shall
agree with each other as to the form and substance of any press release related
to this Agreement or the transactions contemplated hereby, and shall consult
with each other as to the form and substance of other public disclosures related
thereto; provided, however, that nothing contained herein shall prohibit any
party hereto from making any disclosure which it deems necessary in light of
applicable laws or
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regulations, after notice to the other party with the opportunity to comment to
the extent that delay of the disclosure is permitted under such laws or
regulations.
8.4 Other Transactions Prohibited. During the period from
the date of this Agreement to the Closing Date, or termination hereof, neither
the Company nor the Shareholders shall, and shall not permit their
representatives to, directly or indirectly, initiate, solicit, negotiate with,
encourage discussions with, provide information to, or agree to a transaction
with, any corporation, partnership, person or other entity or group concerning
any merger or any sale of the Company's assets, sale of shares of capital stock
(or securities convertible or exchangeable into or otherwise evidencing, or any
agreement or instrument evidencing, the right to acquire capital stock) or
similar transaction involving the Company (any such transaction being referred
to herein as an "Acquisition Transaction"). The Company and the Shareholders
shall promptly communicate to Parent the terms of any proposal which either may
receive in respect of an Acquisition Transaction and any request by or
indication of interest on the part of any third party with respect to initiation
of any Acquisition Transaction or discussions with respect thereto.
9. TERMINATION, REMEDIES.
9.1 Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to Closing by written
notice delivered by the Shareholders to Parent or by Parent to the Shareholders,
as the case may be, in the following instances:
(a) By Parent or Buyer if there has been a
material misrepresentation, a material breach of warranty or a material failure
to comply on the part of the Company or the Shareholders with respect to any of
the representations, warranties, covenants or provisions set forth herein (or
delivered in any other document pursuant hereto), including without limitation,
any misrepresentation, breach or failure to comply that is evidenced in any
Schedule delivered by the Company, and such misrepresentation, breach or failure
has or may reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), assets or properties of the Company after
the Acquisition and has not been cured, if capable of cure, in full within 20
days of receipt by the Shareholders of notice from Parent.
(b) By the Shareholders if there has been a
material misrepresentation, a material breach of warranty or a material failure
to comply with any covenant on the part of Parent or Buyer with respect to the
representations, warranties or covenants set forth herein (or delivered in any
other document pursuant hereto) and such misrepresentation, breach or failure to
comply has not been cured, if capable of cure, within 20 days of receipt by
Parent or Buyer of notice from the Shareholders.
(c) At any time prior to Closing by the mutual
consent in writing of the Shareholders, Parent and Buyer.
(d) By any party not then in default hereunder
in the event Closing has not occurred by December 31, 1998.
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(e) By Parent or Buyer pursuant to Section 5.18.
9.2 Liability in the Event of Termination; Remedies.
(a) In the event of termination of this
Agreement and the transactions contemplated hereby pursuant to Sections 9.1(a)
or (b) hereof, the nonbreaching party may avail itself of all rights, power and
remedies now or hereafter existing at law or in equity or by statute or
otherwise.
(b) In the event of termination of this
Agreement and the transactions contemplated hereby pursuant to Section 9.1(c),
(d) or (e) hereof, this Agreement shall, with the exception of Sections 5.2, 8.1
and 8.3 hereof, become void and have no further effect, without any liability on
the part of any party hereto.
(c) Section 5.2 hereof shall survive the
termination of this Agreement regardless of the reason for such termination.
10. MISCELLANEOUS.
10.1 Entire Agreement. This Agreement (including all
Exhibits and Schedules hereto) supersedes any and all other agreements, oral or
written, between the parties hereto with respect to the subject matter hereof,
including that certain letter of intent dated August 18, 1998 from Parent to the
Shareholders and contains the entire agreement between such parties with respect
to the transactions contemplated hereby.
10.2 Amendments. This Agreement shall not be modified or
amended except by an instrument in writing signed by or on behalf of all of the
parties hereto.
10.3 Successors: Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted transferees and assignees.
Neither this Agreement nor any interest herein may directly or indirectly be
transferred or assigned by any party, in whole or in part, without the written
consent of the other parties, except that Parent may effect any such assignment
to any affiliated company, but any such assignment shall not relieve Parent or
Buyer of its duties and obligations contained in this Agreement.
10.4 Notices. All notices, requests, demands, and other
communications to be delivered hereunder shall be in writing and shall be
delivered by hand or mailed, by fax (receipt confirmed), by express mail
services, by registered or certified mail, postage prepaid, at or to the
following addresses:
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(a) If to the Company (prior to the Closing
Date) and the Shareholders:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Parent or Buyer:
New American Healthcare Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P. O. Box 3689
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C.
1800 First American Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to such other person as any party shall have last
designated by written notice to the other parties. Notices, requests, demands,
and other communications so delivered shall be deemed given upon receipt.
10.5 Waiver. If any party expressly waives in writing an
unsatisfied condition, representation, warranty, undertaking, covenant or
agreement (or portion thereof) set forth herein, the waiving party shall
thereafter be barred from recovering, and thereafter shall not seek to recover,
any damages, claims, losses, liabilities or expenses, including, without
limitation, legal and other
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expenses, from the other parties in respect of the matter or matters so waived.
Any such waiver shall not constitute a covenant to waive any such matter or
matters in the future.
10.6 Severability. If any term or provision of this
Agreement or any application thereof shall be invalid or unenforceable, the
remainder of this Agreement and any other application of such term or provision
shall not be affected thereby.
10.7 No Third Party Beneficiary. This Agreement is for the
benefit of, and may be enforced only by the Shareholders, Parent and Buyer, and
their respective successors and permitted transferees and assignees, and is not
for the benefit of, and may not be enforced by, any third party.
10.8 Applicable Law. This Agreement shall be governed by
and construed and enforced in accordance with, the laws of the State of Georgia.
10.9 Arbitration.
(a) Any controversy, dispute or claim arising
out of, in connection with, or in relation to the interpretation, performance or
breach of this Agreement, including, without limitation, any claim based on
contract, tort or statute and any claim pursuant to the provisions of Article 2
or 7 hereof, shall be settled by arbitration. Any arbitration pursuant to this
Agreement shall be conducted in Atlanta, Georgia and in accordance with the then
existing Rules for Commercial Arbitration of the American Arbitration
Association, provided that three arbitrators as selected by Parent and the
Shareholders in accordance with the rules of the American Arbitration
Association shall conduct any arbitration proceeding. Any arbitration shall be
final and binding. Any judgment upon any interim or final award or order
rendered by the arbitrator may be entered by any federal or state court having
jurisdiction thereof.
(b) The parties intend that the agreement to
arbitrate as set forth in this Section 10.9 shall be valid, enforceable and
irrevocable. Each party in any arbitration proceeding commenced hereunder shall
bear such party's own costs and expenses (including expert witness and
attorneys' fees) of investigating, preparing and pursuing such arbitration
claim. The parties to any arbitration shall have the right to discover the
relevant books and records of the other side that are not confidential or
privileged.
10.10 References to Best Knowledge. All references in this
Agreement to the best knowledge of the Shareholders shall mean that the
Shareholders have made a diligent investigation and inquiry with respect to the
correctness of the statement being made including due inquiry of the Company's
officers and key employees.
10.11 Counterparts. This Agreement may be executed in two
or more counterparts and by the parties on separate counterparts, all of which
shall be considered one and the same agreement, and each of which shall be
deemed an original.
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10.12 Exclusivity. Buyer contemplates the expenditure of
substantial sums of time and money in connection with legal, accounting,
financial, and due diligence work to be performed in conjunction with the
transactions contemplated under this Agreement. To induce Buyer to proceed with
the transactions, Shareholders shall not, and shall cause the Company to not
directly or indirectly, without Buyer's prior written consent, initiate or hold
discussions with any person or entity concerning a purchase, affiliation, or
lease of all or a material part of the Assets, directly or indirectly, whether
by sale of stock, merger, consolidation, sale or lease of material assets,
affiliation, joint venture, or other material transaction for the while this
Agreement is in effect. Shareholders will promptly notify Buyer by telephone and
confirm in writing via fax, if any such discussions or negotiations are sought
to be initiated with, or any such proposal or possible proposal is received
directly or indirectly, by Company, or Shareholders. In the event Company,
Shareholders receive an unsolicited offer related to a type of transaction
described in this paragraph, Company and Shareholders shall promptly inform the
person making such unsolicited offer of the existence of its obligations under
this Section 10.12, and, subject to legal and fiduciary obligations,
Shareholders shall reject and cause the Company to reject such offer and
promptly notify Buyer thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed as of the date first set forth above.
PARENT:
NEW AMERICAN HEALTHCARE
CORPORATION
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Title: President
------------------------------------
Date: October 30, 1998
------------------------------------
BUYER:
NAHC GEORGIA HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Title: President
------------------------------------
Date: October 30, 1998
------------------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, M.D.
-------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, M.D.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ III
-------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ III
[Signature Page to Stock Purchase Agreement]
44
INDEX TO EXHIBITS AND SCHEDULES
Exhibit No. Exhibit Matter
----------- --------------
A Company Shares
B Form of Escrow Agreement
C Form of Opinion of Counsel to the Company and Shareholders
D Form of Opinion of Counsel to Parent and Buyer
Schedule Schedule Matter
-------- ---------------
2.6 Excluded Assets
3.3 Consents and Authorizations
4.1 Jurisdictions/Capital Stock or Equity Interests
4.3 Encumbrances
4.4(a) Annual Financial Statements
4.4(b) Interim Financial Statements
4.5 Certain Changes
4.6 Properties; Permitted Exceptions
4.7 Tangible Personal Property
4.8 Intangible Personal Property
4.10 Accounts Receivable
4.11 Insurance
4.12 Environmental Matters
4.13 Employment Matters
4.14 Employee Benefit Plans
4.16 Tax Returns
4.17 Litigation
4.18 Licenses and Permits
4.19 Brokerage
4.20 Contracts
4.21 Undisclosed Liabilities
4.22 Regulatory Approvals
4.23 Bank Accounts
4.26 Conflicts of Interest
4.27 Cost Reports
6.1(a) Governmental Consents
6.1(c) Consents required under Contracts