ASSET PURCHASE AGREEMENT
FOR
CHICO COMMUNITY REHABILITATION HOSPITAL
THIS ASSET PURCHASE AGREEMENT FOR CHICO COMMUNITY REHABILITATION
HOSPITAL (this "AGREEMENT"), dated as of December 15, 1997, among
▇▇▇▇▇▇▇▇▇▇ Healthcare Corporation ("▇▇▇▇▇▇▇▇▇▇"), a California corporation,
Chico Community Hospital, Inc.("CCH" and "SELLER"), a California
corporation and N.T. ▇▇▇▇▇ Memorial Hospital, a California nonprofit public
benefit corporation ("BUYER") and ▇▇▇▇▇ Health System, a California
nonprofit public benefit corporation ("SYSTEM").
RECITALS
A. WHEREAS, ▇▇▇▇▇▇▇▇▇▇ is the parent corporation of Seller;
B. WHEREAS, CCH leases and operates a 60 bed licensed general acute
care rehabilitation hospital at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and conducts such business as Chico Community Rehabilitation Hospital
("CRH");
C. WHEREAS, Seller and Buyer have entered into that certain Asset
Purchase Agreement and First Amendment to Asset Purchase Agreement and
▇▇▇▇▇▇▇ Money Deposit Agreement (collectively, the "CCH AGREEMENT")
whereunder Seller has agreed to sell to Buyer substantially all of the
assets, real and personal, tangible and intangible, used by Seller in the
operation of Chico Community Hospital (collectively, "CCH FACILITY");
D. WHEREAS, ▇▇▇▇▇▇▇▇▇▇ and CCH desire to sell to Buyer and Buyer
desires to purchase substantially all of the assets, real and personal,
tangible and intangible, used by CCH in the operation of CRH, including
Buyer's assumption of Seller's leasehold estate (the "CRH LEASE") in CRH
(collectively the "BUSINESS");
E. WHEREAS, ▇▇▇▇▇▇▇▇▇▇, Seller, Buyer and System acknowledge the
uncertainty related to Seller's ability to assign the CRH Lease and for
Buyer to assume the CRH Lease based on the existing terms of the CRH Lease,
the difference in the corporate status of the parties and other factors
which render uncertainty in the ability of the parties to consummate that
transaction;
F. WHEREAS, ▇▇▇▇▇▇▇▇▇▇, Seller, Buyer and System entered into that
certain First Amendment to Asset Purchase Agreement and ▇▇▇▇▇▇▇ Money
Deposit Agreement dated December 15, 1997 providing for Seller's granting
to Buyer of an option, and Buyer's exercise of that option, to accomplish
the sale and purchase of the Business pursuant to this Agreement.
W I T N E S S E T H:
NOW, THEREFORE, for and in consideration of the foregoing premises and
the agreements, covenants, representations and warranties hereinafter set
forth and other good and valuable consideration, the receipt and adequacy
of all of which are acknowledged and agreed, the parties hereto agree as
follows:
1. SALE OF ASSETS AND CERTAIN RELATED MATTERS.
1.1 SALE OF ASSETS. Subject to the terms and conditions of this
Agreement, at the Closing (as hereinafter defined), Seller shall sell,
transfer, convey, assign and deliver to the Buyer, and Buyer shall purchase
from Seller, the following assets and properties:
(a) the assignment of leasehold interests held by Seller in real
property and other real property interests used in connection with the
operation of the Business or owned by Seller, including, without
limitation, the lease and related obligations from ▇▇▇▇ Atlantic Tricon
Leasing Corporation and its successors or assigns (the "FACILITY LEASE")
for Chico Community Rehabilitation Hospital (the "HOSPITAL"), such
leasehold interests being more specifically described in SCHEDULE 1.1(A);
(b) all tangible personal property (excluding cash and cash
equivalents) owned by Seller and used in connection with the Business,
including, without limitation, all equipment, furniture, fixtures,
machinery, vehicles, office furnishings, instruments, leasehold
improvements and spare parts described in SCHEDULE 1.1(B), and, to the
extent assignable or transferable by Seller, all rights in all warranties
of any manufacturer or vendor with respect thereto (collectively the
"PERSONAL PROPERTY"), but excluding the personal property described in
Section 1.2(ix) hereof.
(c) all rights, to the extent assignable or transferable, to all
licenses, certificates of need, certificates of exemption, franchises,
accreditations and registrations and other licenses or permits issued in
connection with the Business (the "LICENSES"), including, without
limitation, the Licenses described in SCHEDULE 1.1(C);
(d) all of Seller's interest in and to those personal property leases
relating to the Business described in SCHEDULE 1.1(D) (all of such leases,
including the Facility Lease, being referred to collectively as the
"LEASES");
(e) all of Seller's interest in, to and under those contracts and
agreements relating to the Business set forth in SCHEDULE 1.1(E) (the
"CONTRACTS");
(f) any deposits, escrows, prepaid taxes or other advance payments
relating to any expenses of the Business, as identified on SCHEDULE 1.1(F)
as prepaid expenses to be transferred to Buyer (the "PREPAID EXPENSES"),
but excluding the prepaid expenses of Seller described in SCHEDULE 1.1(F)
hereof as prepaid expenses to be retained by Seller ("EXCLUDED PREPAID
EXPENSES");
(g) all inventories of supplies, drugs, food, janitorial and office
supplies and other disposables and consumables owned by Seller on the
Closing Date (as hereinafter defined) and located at the premises of Seller
or purchased by Seller for use in connection with the Business (the
"OPERATING INVENTORY");
(h) all accounts receivable with respect to the Business, including
all accounts receivable arising from the rendering of services to
inpatients and outpatients at the Hospital, billed and unbilled, recorded
or unrecorded, accrued and existing in respect of services up to the
effective date of the Closing, including those from any source, excluding,
however, the Excluded Receivables, as defined below (the "ACCOUNTS
RECEIVABLE");
(i) all documents, records, operating manuals and files, and computer
software owned by Seller, pertaining to or used in connection with the
Business, including, without limitation, all patient records, medical
records, financial records, equipment records, construction plans and
specifications, and medical and administrative libraries, but excluding
Seller's corporate minute books, minutes, tax records and any other records
of Seller required to be maintained as a matter of law.
(j) to the extent transferable by Seller, all unexpired warranties
and covenants not to compete relating to the Business for which Seller is
the beneficiary;
(k) to the extent transferable by Seller, all rights and interest of
Seller in all joint ventures, partnerships, corporations and other entities
listed on SCHEDULE 1.1(K) and accepted by Buyer;
(l) except as expressly excluded herein, all other property owned by
Seller, whether tangible or intangible, located at the premises of Seller
or used in connection with the Business whether or not reflected on the
balance sheet of Seller, and specifically including the name "Chico
Community Rehabilitation Hospital"; and
(m) an amount equal to the Medicare Receivables, which shall be
evidenced by the Medicare Reconciliation Note.
The foregoing, which (except for the Excluded Assets, as defined in
Section 1.2) are hereafter referred to, collectively, as the "ASSETS",
comprise substantially all of the property and assets used in the conduct
and operation of the Business as of October 31, 1997, including without
limitation, those assets reflected on the unaudited balance sheet of Seller
dated October 31, 1997 (the "BALANCE SHEET"), and all assets acquired by
Seller between October 31, 1997 and the Closing.
1.2 EXCLUDED ASSETS. The following items which are related to the
Assets are not intended by the parties to be a part of the sale and
purchase contemplated hereunder and are excluded from the Assets
(collectively, the "EXCLUDED ASSETS"):
(i) all cash and cash equivalents and temporary investments;
(ii) (a) all amounts payable or to become payable to Seller from third
party payors in respect of periods prior to the Cut-Off Point in
respect of third party payor cost reports, including, without
limitation, Medicare and Medi-Cal cost reports, filed or to be
filed by Seller (the "COST REPORT RECEIVABLES"),
(b) all accounts receivable from Medicare, MediCal and CHAMPUS
with respect to the Business arising from the rendering of
services to inpatients and outpatients at the Hospital, billed
and unbilled, recorded and unrecorded, accrued and existing in
respect of services up to the effective date of Closing (such
accounts receivable, excluding the Cost Report Receivables,
are referred to herein as the "MEDICARE RECEIVABLES"), and
(c) the accounts receivable set forth on SCHEDULE 1.2(II) hereto,
(such receivables referred to in clauses (a), (b) and (c) above,
the "EXCLUDED RECEIVABLES");
(iii) Seller's corporate minute books, minutes, tax records and other
records of Seller required to be maintained by Seller as a matter
of law (it being understood that patient medical records of the
Hospital are not intended to be excluded);
(iv) all Excluded Prepaid Expenses of Seller identified in SCHEDULE
1.1(F) hereto;
(v) all supplies, drugs, food and other disposables and consumables
disposed of in the ordinary course of business prior to the
Closing;
(vi) the name "▇▇▇▇▇▇▇▇▇▇" and all variations thereof;
(vii) all rights and privileges under contracts, agreements and leases
not listed on SCHEDULES 1.1(D) OR 1.1(E) hereto;
(viii) any claims by Seller against third parties whether known or
unknown, contingent or otherwise, except those expressly
described in Section 1.1(b);
(ix) all intercompany accounts of Seller and ▇▇▇▇▇▇▇▇▇▇ and their
affiliates;
(x) any proprietary information contained in Seller's employee or
operation manual that does not pertain to the ongoing operations
of the Hospital;
(xi) all commitments, contracts, leases, capital leases, notes, and
agreements between Seller, ▇▇▇▇▇▇▇▇▇▇ and their affiliates.
(xii) the property described in SCHEDULE 1.2(XII) hereto.
1.3 ASSETS FREE AND CLEAR; ASSIGNMENT AND UNDERTAKING.
(a) The Assets shall be sold free and clear of all liabilities, liens
and encumbrances, except for Permitted Encumbrances (as hereinafter
defined). At Closing, the parties will execute and deliver an assignment
and undertaking (the "ASSIGNMENT AND UNDERTAKING"), in the form of APPENDIX
1.3, pursuant to which Seller shall assign to Buyer its future rights, and
Buyer shall assume from Seller its future obligations, under those
Contracts and Leases described in SCHEDULE 1.3; pursuant to which Buyer
shall assume from Seller, Seller's future obligations in respect of the
Assumed Liabilities (as hereinafter defined).
(b) As of the Cut-Off Point, and in conjunction with the transfer of
the Assets Buyer shall assume and/or agree to pay, perform and discharge
the Assumed Liabilities. As used in this Agreement, "ASSUMED LIABILITIES"
shall mean the following liabilities of Seller: (i) the obligations of
Seller arising subsequent to the Cut-Off Point under the Leases and
Contracts (collectively, the "SELLER CONTRACTS") (ii) Seller's current
payables, but only to the extent included in the determination of the
Working Capital (as hereinafter defined); (iii) Seller's obligations as of
the Cut-Off Point in respect of the accrued vacation, holiday and sick
leave of Seller's employees who are employed by Seller in connection with
the Business as of the Closing Date; (iv) the obligations of Seller under
capital leases described in the Financial Statements; (v) the Facility
Lease; and (vi) credit balances owed to third parties on account with
Seller as and to the extent such credit balances are reflected in the book
value of the Accounts Receivable or in the book value of the Medicare
Receivables that are reflected in the Medicare Reconciliation Note.
(c) Buyer shall not be liable for (1) any claims arising from
Seller's assignment and Buyer's assumption of the Seller Contracts, (2)
performance by Seller under, and defaults by Seller in performance of, the
Seller Contracts for periods prior to the Cut-Off Point, and (3) unpaid
amounts in respect of the Seller Contracts that are past due as of the Cut-
Off Point (unless included in Working Capital). Except as expressly
provided to the contrary in Section 1.3(b) above, under no circumstance
shall Buyer be obligated to pay or assume, and none of the Assets shall be
or become liable for or subject to, any liability of Seller or its
affiliates, including, without limitation, the following, whether fixed or
contingent, recorded or unrecorded (collectively, the " Excluded
Liabilities"):
(I) current liabilities (to the extent not taken into
consideration in determining the Working Capital), long-term
liabilities (excluding capital lease obligations specifically
assumed) and all indebtedness and obligations or guarantees of
Seller;
(II) liabilities or obligations of Seller in respect of
periods prior to and including the Cut-Off Point arising under
the terms of the Medicare, Medi-Cal, Blue Cross or other managed
care or third party payor programs, including, but not limited
to, any retroactive denial of claims, recapture, civil monetary
penalties or any gain on sale that may be recognized under the
Medicare program as a result of the consummation of the
transactions described herein;
(III) federal, state or local tax liabilities or obligations
of Seller in respect of periods prior to Cut-Off Point or
resulting from the consummation of the transactions contemplated
herein, including, without limitation, any income tax, any
franchise tax, any tax recapture, any sales and/or use tax, any
indigent care tax, any state and local recording fees and taxes
which may arise upon the consummation of the transactions
contemplated herein and any FICA, FUTA, workers' compensation and
any and all other taxes or amounts due and payable as a result of
the exercise by any of Seller's employees of such employees'
right to vacation, sick leave and holiday benefits accrued while
in the employ of Seller (to the extent not taken into
consideration in determining the Working Capital);
(IV) liability for any and all claims by or on behalf of
Seller's employees relating to periods prior to Cut-Off Point,
including, without limitation, liability for any pension, profit
sharing, deferred compensation, or any other employee health and
welfare benefit plans, liability for violations of ERISA,
liability for any EEOC claim, wage and hour claim, unemployment
compensation claim, workers' compensation claim or any other
agreement, and liability for all employee wages and benefits,
including, without limitation, (but only to the extent not
assumed by Buyer pursuant to Section 1.3(b) hereof) accrued
vacation, sick leave and holiday pay, severance pay and related
taxes or other liability related thereto in respect of Seller's
employees (to the extent not taken into consideration in
determining the Working Capital);
(V) liabilities or obligations arising subsequent to Cut-Off
Point under contracts, commitments, leases or agreements to which
Seller is a party, except to the extent Buyer accepts benefits
under any such contracts, commitments, leases or agreements
subsequent to Cut-Off Point and except for the Seller Contracts;
(VI) liabilities or obligations arising out of any breach by
Seller of any Seller Contract;
(VII) any liability arising out of or in connection with
claims for acts or omissions of Seller and Seller's employees,
agents and independent contractors which allegedly occurred prior
to Cut-Off Point including, without limitation, all malpractice
and general liability claims, whether or not same are pending,
threatened, known, or unknown;
(VII) contracts and agreements between Seller and one or
more of Seller affiliates;
(IX) any debt, obligation, expense or liability of Seller
arising out of or incurred solely as a result of any transaction
of Seller occurring after Cut-Off Point or for any violation by
Seller of any law, regulation or ordinance at any time; and
(IX) any liability or obligation associated with or relating
to any of the Excluded Assets.
1.4 PURCHASE PRICE; PRORATIONS; ALLOCATION.
(a) The purchase price of the Assets (the "PURCHASE PRICE") shall be
cash in the amount of THREE HUNDRED THOUSAND DOLLARS ($300,000) PLUS
Working Capital (as hereinafter defined).
(b) At Closing, the payment for Working Capital and the amount of the
Medicare Reconciliation Note shall initially be made based upon the
determination of Initial Working Capital (as hereinafter defined) and
thereafter an adjusted payment and an adjustment to the Medicare
Reconciliation Note shall be made as provided in Section 1.7.
(c) Buyer and Seller shall prorate real estate and personal property
lease payments, payments under any construction contracts assumed by Buyer
pursuant to the Assignment and Undertaking, interest, real estate and
personal property taxes, real estate lease deposits and escrows, other
assessments, plus all other revenues and expenses with respect to the
Business which are normally prorated upon the sale of assets of a going
concern; provided, however, that the parties will not prorate any Prepaid
Expenses. Seller shall order final readings of all power and other utility
charges to be made as of the Cut-Off Point and shall pay when due all
charges in respect thereof. All prorations contemplated by this Section
1.4(c) shall be made as of the Cut-Off Point.
(d) For income tax purposes, the Purchase Price shall be allocated
as provided in SCHEDULE 1.4(D) hereto.
1.5. INITIAL WORKING CAPITAL. (a) The "INITIAL WORKING CAPITAL" shall
be an amount equal to the value of Seller's Initial Net Working Capital (as
hereinafter defined) as of the date of, and based upon Seller's latest
regularly prepared balance sheet in respect of the Business (the "INTERIM
BALANCE SHEET") available prior to Closing, which shall be not more than 61
days old.. The Interim Balance Sheet shall be prepared using the same
methodologies and assumptions used in connection with the preparation of
Financial Statements (as hereinafter defined), and in accordance with
generally accepted accounting principles ("GAAP") applicable to interim
financial statements. The Interim Balance Sheet shall also be used for
purposes of determining the initial principal balance of the Medicare
Reconciliation Note and the amount of cash to be delivered by Buyer to
Seller with respect to the Medicare Reconciliation Note.
For the purpose of the Initial Working Capital, "SELLER'S INITIAL NET
WORKING CAPITAL" shall be equal to THE SUM OF (A) the amounts set forth on
SCHEDULE 1.5.1(A); PLUS (B) the amount of any capital expenditures made by
Seller from and after December 1, 1997 until the Cut-Off Point (as defined
at Section 2.1); MINUS (C) the amount of Seller's capital leases
obligations assumed by Buyer, other than the Facility Lease.
(b) No increase to Seller's Initial Net Working Capital shall be
effected with respect to (i) any single item involving a capital
expenditure in excess of $25,000, or (ii) within any 30 day period, any two
or more items involving capital expenditures in excess of $50,000, in
either case unless Seller shall have obtained Buyer's prior written consent
to such expenditure. Buyer hereby acknowledges that it has consented to
the capital expenditures described in SCHEDULE 1.5.1(B), but such consent
is limited as to scope and dollar amount as described in SCHEDULE 1.5.1(B).
In order that Buyer may know the methodology to determine Seller's
Initial Net Working Capital, attached hereto as SCHEDULE 1.5.1(C) is a
determination of Seller's Net Working Capital based upon the October 31,
1997 unaudited balance sheet of Seller and Seller hereby agrees to use the
same methodology (as may be supplemented by the working papers thereto) to
prepare SCHEDULE 1.5.1(A).
1.6 WORKING CAPITAL DETERMINATION.
(a) Not more than 60 days after the Closing Date (i) Seller shall
deliver to Buyer the balance sheet for Seller with respect to the Business
as of the Cut-Off Point (the "CLOSING BALANCE SHEET"). The Closing Balance
Sheet shall be prepared using the same methodologies and assumptions used
in connection with the preparation of the Interim Balance Sheet, except as
modified herein. The amount of the Medicare Reconciliation Note shall be
determined from the Closing Balance Sheet.
(b) The "WORKING CAPITAL" shall be an amount equal to the value of
Seller's Net Working Capital (as hereinafter defined) as of the date of,
and based upon the Closing Balance Sheet.
(c) For the Working Capital, "SELLER'S NET WORKING CAPITAL" shall be
determined using the same methodologies used to determine Seller's Initial
Net Working Capital, but using the Closing Balance Sheet.
(d) No more than three days prior to the Closing Date, Seller and
Buyer shall conduct a physical inventory of the inventory and supplies on
hand at the Hospital. Based on such inventory, and Seller shall value the
supplies using the same methodology as Seller used in SCHEDULE 1.5.1(C) and
Seller shall prepare a schedule thereof. In calculating the Working
Capital, the amount of the inventory supplies shall be increased or
decreased, as appropriate, to reflect the value of the additions to, and
deletions from, the inventory and supplies between the inventory date and
the Cut-Off Point.
1.7 PAYMENT OF POST-CLOSING WORKING CAPITAL ADJUSTMENT; DISPUTE
RESOLUTION.
(a) On or before 90 days after the Closing Date, Buyer will pay to
Seller the amount by which Working Capital exceeds Initial Seller's Working
Capital, or Seller will pay to Buyer the amount by which Seller's Working
Capital is less than Seller's Initial Working Capital, in each case
adjusted for differences in the amount of the Medicare Reconciliation Note
as determined from the Interim Balance Sheet and the Closing Balance Sheet.
Simultaneously with Seller's delivery of the Closing Balance Sheet to
Buyer, Seller shall deliver a schedule to Buyer detailing any adjustments
between the amount of the Purchase Price paid at Closing and any required
adjustments resulting from the determination of Working Capital and
adjustments to the principal amount of the Medicare Reconciliation Note.
(b) In the event that Seller and/or Buyer shall dispute the working
capital determination to be effected hereunder and such dispute is not
resolved to the mutual satisfaction of Seller and Buyer within 90 days
after the Closing Date, Seller and Buyer shall each have the right to
require that such disputed determinations be submitted to Coopers & ▇▇▇▇▇▇▇
LLP acting as experts and not as arbitrators, or to such other certified
public accounting firm as Seller and Buyer may then mutually agree upon in
writing, for computation or verification in accordance with the provisions
of this Agreement and interpretation, where applicable, in accordance with
GAAP. The certified public accounting firm so selected shall use its best
efforts to make the computations or verifications within 60 days of their
engagement. Both Seller and Buyer shall provide such access to the books
and records of Seller as may be requested by such certified public
accounting firm. The foregoing provisions for certified public accounting
firm review shall be specifically enforceable by the parties; the decision
of such accounting firm shall be final and binding upon Seller and Buyer;
there shall be no right of appeal from such decision; and such accounting
firm's fees and expenses for each such disputed determination shall be
borne by the party whose determination has been modified by such accounting
firm's report or by both parties in proportion to the relative amount each
party's determination has been modified.
1.8 RECEIVABLES. Seller shall promptly remit to Buyer any payments
it may receive which constitute payments of accounts receivable of Buyer,
including any of the Accounts Receivable purchased pursuant to this
Agreement. Seller also shall promptly remit to Buyer any payments it may
receive which constitute payments with respect to the Medicare Receivables
that Seller is obligated to pay to Buyer pursuant to the Medicare
Reconciliation Note. Buyer shall promptly remit to Seller any payments it
may receive that constitute payments of the Excluded Receivables except
payments it may receive which constitute payments with respect to the
Medicare Receivables that Seller is obligated to pay to Buyer pursuant to
the Medicare Reconciliation Note. Seller shall provide Buyer with such
agreements as may be necessary to permit Buyer to negotiate, deposit and
otherwise receive for its own account the Assets and receive payments on
the Medicare Reconciliation Note.
2. CLOSING.
2.1 CLOSING. Subject to the conditions set forth in Articles 7 and 8
hereof, the consummation of the sale and purchase of the Assets
contemplated by and described in this Agreement (the "Closing") shall take
place in San Francisco, California, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP or other agreed upon location, at 10:00 A.M. local time (a) on February
27, 1998 (if the applicable waiting periods required by the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976 and all regulations promulgated
thereunder (the "HSR Act"), shall have expired or been terminated, or (b)
such date as may be agreed by the parties, not to extend past 180 days from
the date of this Agreement set forth in the preamble hereof, unless within
the 60 day period commencing on the 120th day from the date of this
Agreement set forth in the preamble hereof, the applicable waiting period
required by the HSR Act shall have terminated, in which case, Buyer may
elect to extend Closing for a period not to exceed 60 days from the date
such applicable waiting period under the HSR Act shall have terminated.
Notwithstanding the foregoing, the Closing shall not occur prior to the
Closing Date (as defined in Section 2.1 of the CCH Agreement. The date on
which the Closing occurs is referred to herein as the "CLOSING DATE." The
Closing of the transactions shall be deemed to be effective as of 11:59
P.M. (California time) on the Closing Date or such other time which the
parties may mutually designate in writing. The time at which the Closing
shall be deemed to be effective is referred to herein as the "CUT-OFF
POINT."
2.2 ACTION OF SELLER AT CLOSING. At the Closing, Seller shall
deliver or shall cause to be delivered to Buyer the following:
(a) consent of ▇▇▇▇ Atlantic Tricon Leasing Corporation or its
successors or assigns to the assignment of the Facility Lease on terms
mutually agreed to by Buyer and Seller, including without limitation
an Estoppel Certificate reasonably acceptable to Buyer, which consent,
estoppel certificate and such other agreements executed by the parties
shall be attached hereto as SCHEDULE 2.2.A;
(b) the Assignment and Undertaking;
(c) bills of sale and assignments conveying and assigning to Buyer all
other Assets;
(d) copies of corporate resolutions duly adopted by the respective
Boards of Directors of Seller and by the shareholder of Seller,
authorizing and approving each such corporation's performance of the
transactions contemplated hereby and the execution and delivery of the
documents described herein, certified as true and of full force as of
Closing by appropriate officers of each such corporation;
(e) certificates, dated as of the Closing Date, of appropriate
officers of each of Seller certifying that, to the best of such
officer's knowledge and belief, as of Closing all of the respective
representations and warranties by or on behalf of Seller contained in
this Agreement are true and correct and all respective covenants and
agreements of Seller to be performed prior to or as of Closing
pursuant to this Agreement have been performed;
(f) certificates of incumbency, dated as of the Closing Date, for the
officers of each Seller making certifications for Closing, or
executing deeds, the Assignment and Undertaking, the ▇▇▇▇ of sale, the
Information Systems Agreement (as hereinafter defined), the Medicare
Reconciliation Note, other agreements delivered at Closing or this
Agreement;
(g) certificates of corporate existence or good standing certificates
of each of Seller and ▇▇▇▇▇▇▇▇▇▇ from the State of California, dated
the most recent practical date prior to Closing;
(h) subject to Section 1.2 hereof, all of Seller's Contracts, Leases,
commitments, books, records and other data relating to the Assets, and
simultaneously with such delivery and Seller will take all such steps
as may reasonably be required to put Buyer in actual possession and
operating control of the Assets;
(i) the Information Systems Agreement (if not executed separately from
the Information Systems Agreement executed by the parties pursuant to
Section 2.2(i) of the CCH Agreement).
(j) such agreements as may be necessary to permit Buyer to negotiate,
deposit and otherwise receive for its own account the Assets and
receive payments on the Medicare Reconciliation Note; and
(k) the Medicare Reconciliation Note.
2.3 ACTION OF BUYER AT CLOSING. At the Closing, Buyer shall deliver
to Seller the following:
(a) payment in cash or immediately available funds of an amount equal
to (i) the Purchase Price; plus (ii) Working Capital;
(b) the Assignment and Undertaking;
(c) copies of corporate resolutions duly adopted by the Board of
Directors of Buyer authorizing and approving Buyer's performance of
the transactions contemplated hereby and the execution and delivery of
the documents described herein, certified as true and of full force as
of Closing by appropriate officers of Buyer;
(d) certificates, dated as of the Closing Date, of appropriate
officers of Buyer certifying that, to the best of such officers'
knowledge and belief, as of Closing all of the respective
representations and warranties by or on behalf of the Buyer contained
in this Agreement are true and correct and all respective covenants
and agreements of Buyer to be performed prior to or as of Closing
pursuant to this Agreement have been performed;
(e) a certificate of incumbency, dated as of the Closing Date, for the
officers of Buyer making certifications for Closing or executing the
Assignment and Undertaking, the Information Systems Agreement, or this
Agreement;
(f) a certificate of corporate existence of Buyer from the State of
California, dated the most recent practical date prior to Closing; and
(g) the Information Systems Agreement (if not executed separately
from the Information Systems Agreement executed by the parties
pursuant to Section 2.2(i) of the CCH Agreement).
3. REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date hereof, Seller represents and warrants to Buyer that:
3.1 CORPORATE CAPACITY. (a) Seller and ▇▇▇▇▇▇▇▇▇▇ are corporations
duly organized, validly existing and in good standing under the laws of
California, with all requisite corporate power and authority to own,
operate and lease their respective properties and to carry on their
businesses as now being conducted.
(b) SCHEDULE 3.1(B) contains a complete and correct copy of the
Articles of Incorporation and all amendments thereto to the date hereof and
the Bylaws as presently in effect of Seller and ▇▇▇▇▇▇▇▇▇▇.
3.2 CORPORATE POWERS; ABSENCE OF CONFLICTS WITH OTHER AGREEMENTS,
ETC.
(a) The execution and delivery by Seller and ▇▇▇▇▇▇▇▇▇▇ of this
Agreement and the performance of this Agreement and the other agreements
and transactions contemplated hereby to be executed and performed by Seller
and ▇▇▇▇▇▇▇▇▇▇:
(i) are within Seller's and ▇▇▇▇▇▇▇▇▇▇' respective corporate
powers, are not in contravention of the terms of Seller's or
▇▇▇▇▇▇▇▇▇▇' Articles of Incorporation, Bylaws or any amendments
thereto;
(ii) except as set forth on SCHEDULE 3.2, upon the Closing, (A)
will not result in any breach or acceleration of maturity of any
indenture, agreement, lease or instrument, to which Seller or
▇▇▇▇▇▇▇▇▇▇ is a party or by which Seller or ▇▇▇▇▇▇▇▇▇▇ or any of the
Assets is bound, (B) will not constitute a violation of any judgment,
decree, or order of any court of competent jurisdiction applicable to
Seller or ▇▇▇▇▇▇▇▇▇▇, (C) will not violate any law, rule or regulation
of any governmental authority applicable to the Seller, ▇▇▇▇▇▇▇▇▇▇,
the Business or any of the Assets and (D) will not require any
consent, approval or authorization of, or notice to, or declaration,
filing or registration with, any governmental or regulatory authority.
(b) This Agreement has been duly and validly executed and delivered
by Seller and ▇▇▇▇▇▇▇▇▇▇, and, as of the Closing, the other agreements and
instruments contemplated hereby to be executed and delivered by Seller
and/or ▇▇▇▇▇▇▇▇▇▇ will have been duly and validly executed and delivered by
Seller and, where applicable, ▇▇▇▇▇▇▇▇▇▇. Upon approval of this Agreement
and the other agreements and instruments contemplated hereby by the Board
of Directors of Seller and ▇▇▇▇▇▇▇▇▇▇, this Agreement will constitute, and
upon such approval and their execution and delivery, the other agreements
and instruments contemplated hereby to be executed and delivered by Seller
and/or ▇▇▇▇▇▇▇▇▇▇ will constitute, the valid, legal and binding obligation
of each of Seller and, where applicable, ▇▇▇▇▇▇▇▇▇▇, enforceable against
each of them in accordance with their respective terms except as such
enforceability may be limited by bankruptcy, reorganization, insolvency, or
other laws affecting the enforcement of creditors' rights generally or the
availability of equitable remedies.
3.3 FINANCIAL STATEMENTS. SCHEDULE 3.3 hereto consists of true,
correct and complete copies of the unaudited income statement of Seller
with respect to the Business for the nine months ended October 31, 1997
(the "INCOME STATEMENT"), and the Balance Sheet as of the end of such
period (the Income Statement and the Balance Sheet are referred to
collectively as the "FINANCIAL STATEMENTS"). The Income Statement has been
prepared from and is in accordance with the books and records of Seller,
and fairly presents the operations of Seller for the period indicated,
except (a) as indicated by the notes thereto and (b) with respect to any
changes which would result from year-end audit adjustments which in the
aggregate are not materially adverse to the business or financial condition
of Seller.
3.4 POST-BALANCE SHEET RESULTS. Since October 31, 1997, with respect
to the Assets there has not been:
(a) any damage, destruction or loss (whether or not covered by
insurance)materially adversely affecting the Assets, taken as
a whole;
(b) any sale, lease, transfer or disposition by Seller of the Assets
except sales of inventories, supplies or accounts receivable and
except for sales, leases, transfers or dispositions of non-material
portions of the Assets in the ordinary course of Seller's business; or
(c) any change or the occurrence of any fact or condition which may be
reasonably expected to have a material adverse effect on the Business
or the value of the Assets, other than such changes, facts and
conditions, if any, generally affecting the hospital service area in
which the Hospital is located, generally affecting the healthcare
industry, or resulting from the announcement of the transactions
contemplated hereby.
3.5 LICENSES. Seller has all licenses and permits relating to the
ownership of the Assets and operation of the Business as are necessary and
required for such ownership and operation except where the failure to
obtain such licenses or permits would not have a material adverse effect on
the ownership of the Assets or the operation of the Business. SCHEDULE 3.5
hereto contains a complete description of all material licenses, permits,
franchises, certificates of need, certificate of need applications, and PRO
memos, if any, and their respective dates of termination or renewal, owned
or held by Seller relating to the ownership, development or operation of
the Assets or the Business, together with any formal and specific notices
or directives received by Seller from the agency responsible for such
SCHEDULE 3.5 item, for which noncompliance with such notice or directive
would likely cause the revocation, suspension or diminution in term for
such item, all of which are, to Seller's knowledge, in good standing.
3.6 CERTAIN CONTRACTS. SCHEDULE 3.6 lists all contracts to which
Seller is a party involving obligations in respect of the Business for
payment, performance of services or delivery of goods in excess of $5,000
or which require Seller to continue to perform for a period of longer than
12 months ("SCHEDULED CONTRACTS"). Seller has delivered or made available
to Buyer true and correct copies of all Scheduled Contracts. Except as set
forth in SCHEDULE 3.6, all of the Contracts which Buyer has agreed to
assume pursuant to the Assignment and Undertaking are valid and binding
obligations of the parties thereto, are in full force and effect, and are
enforceable against the parties thereto in accordance with their respective
terms. To the best of Seller's knowledge, neither Seller nor any of the
other parties to those Contracts which Buyer has agreed to assume pursuant
to the Assignment and Undertaking (i) are in default under such contracts
or (ii) consider Seller to be in default thereunder. Except as expressly
noted in SCHEDULE 3.6, to the best of Seller's knowledge, no party to any
of those Contracts which Buyer has agreed to assume pursuant to the
Assignment and Undertaking intends to terminate or adversely modify its
agreement(s) with respect thereto, or adversely change the volume of
business done thereunder.
3.7 CERTAIN LEASES. SCHEDULE 3.7 lists all leases to which Seller is
a party in respect of the Business involving annual obligations on the part
of Seller for the payment of rent in excess of $5,000 or involving rental
of real property by Seller as lessor, lessee, sublessor or sublessee
("SCHEDULED LEASES"). Seller has delivered or made available to Buyer true
and correct copies of all Scheduled Leases. All of the Scheduled Leases
which Buyer has agreed to assume pursuant to the Assignment and Undertaking
are valid and binding obligations of the parties thereto, are in full force
and effect, and are enforceable against the parties thereto in accordance
with their terms; and to the best of Seller's knowledge, no event has
occurred including, but not limited to, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby which (whether with or without notice, lapse of time or
both) would constitute a default thereunder. To the best of Seller's
knowledge, neither Seller nor any of the other parties to any of those
Scheduled Leases which Buyer has agreed to assume pursuant to the
Assignment and Undertaking (i) is in default under any such Scheduled Lease
or (ii) considers Seller to be in default thereunder. Seller has not, as
lessor under any such Scheduled Lease, accepted prepaid rent more than one
month in advance or waived any rights or obligations thereunder. No
consents are required for Seller's assignments of the Scheduled Leases to
be assigned except as disclosed in SCHEDULE 3.7 and the lease from ▇▇▇▇
Atlantic Tricon Leasing Corporation relating to CRH.
3.8 TITLE TO PROPERTIES AND RELATED MATTERS. On the Closing Date
Seller will hold and convey to Buyer good, valid and marketable title to
all of the Assets free and clear of all title defects, liens, pledges,
claims, charges, rights of first refusal (or other claims of interest),
security interests or other encumbrances except as otherwise hereinafter
provided. SCHEDULES 1.1(A) AND 1.1(D) include true and accurate
descriptions of all real property owned or leased by Seller and all
tangible personal property (excluding cash, property with an aggregate
value in a non-material amount and the other Excluded Assets) leased by
Seller and reflected on Seller's financial statements. The Assets
consisting of owned personal property are subject to no liens or
encumbrances except the security interests of record set forth on SCHEDULE
3.8(C), which Schedule is a copy of a Uniform Commercial Code ("UCC")
search duly obtained by Seller in the last 30 days and which search shows
security interests of record relating to such Assets in the State of
California. Seller agrees to remove all security interests relating to
property interests of Seller included in the Assets reflected on such UCC
search, if any, prior to the Closing (except those approved by Buyer in
writing) and to remove any other security interests filed with respect to
such Assets between the date of such UCC search and the date of Closing.
SCHEDULE 3.8(D) describes all construction work, if any, which Seller or
its predecessors have contracted for and which is presently in progress in
respect of the Business, and also contains a good faith estimate, as of the
date of this Agreement, of the cost to complete each such project.
3.9 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.9 lists any "employee benefit
plans" that are described in the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA"), that cover one or more employees of Seller and that are
sponsored or contributed to by Seller (other than any defined contribution
"employee pension benefit plan" as defined in ERISA, that does not require
any contribution by Seller, any paid time-off policy or
vacation/holiday/sick leave policy, and any "employee welfare benefit plan"
as defined in ERISA, that is sponsored by Seller). Neither Seller nor, to
the best knowledge of Seller and ▇▇▇▇▇▇▇▇▇▇, any other person has engaged
in a transaction with respect to any employee benefit plan listed or
required to be listed on SCHEDULE 3.9 which could subject Buyer to a
penalty under ERISA or a tax under the Internal Revenue Code of 1986, as
amended (the "CODE"). Each of the employee benefit plans listed or
required to be listed on SCHEDULE 3.9 has been operated and administered in
accordance with applicable law, including without limitation ERISA, except
for any such failure which would not subject Buyer to any penalty or other
liability. Seller has not incurred nor presently expects to incur any
liability under Title IV of ERISA that could result in liability to Buyer.
Each employee benefit plan listed or required to be listed on SCHEDULE 3.9
that is a group health plan within the meaning of Section 5000(b)(1) of the
Code is in compliance with the provisions of Section 4980B(f) of the Code,
except for any such non-compliance which would not subject Buyer to any
penalty or liability.
3.10 LITIGATION OR PROCEEDINGS. SCHEDULE 3.10(A) contains a list of
each lawsuit or legal proceeding to which Seller is a party and which arose
out of or in connection with the Business or, to Seller's knowledge, which
has been threatened against Seller in connection with the Business. Except
as disclosed on SCHEDULE 3.10(B), Seller has not received notice of any
formal or informal investigations or proceedings of the California
Department of Health Services, the United States General Accounting Office,
the Health Care Financing Administration, the Department of Justice, the
Federal Trade Commission or other similar governmental agencies (except for
any investigations being conducted in the ordinary course of business and
applicable to all hospitals) with respect to the Business. There are no
such claims, actions, proceedings or investigations of which Seller has
received written notice pending or, to the best knowledge of Seller,
threatened challenging the validity or propriety of the transactions
contemplated by this Agreement. Except as disclosed in SCHEDULE 3.10(B),
Seller is not now, or has never been, a party to any injunction, order, or
decree restricting the method of the conduct of the Business or the
marketing of any of the Business' services, nor, except as disclosed on
SCHEDULE 3.10(B), has any governmental agency investigated or requested
(other than on a routine basis) information with respect to such methods of
business or marketing of services; Seller has not received any notice that
Seller currently violates any federal, state, or local law, ordinance, rule
or regulation, which could have an adverse effect on the Business and, to
the best of Seller's knowledge, no such claim is or has been threatened;
and there have been no developments materially adverse to Seller with
respect to any pending or threatened claim, action or proceeding of an
administrative or judicial nature, including but not limited to those
referred to in SCHEDULES 3.10(A) AND (B), and including without limitation
any such pending or threatened claim, action or proceeding arising from or
relating to (i) the assertion by any governmental authority of any
retroactive adjustment of the sums which Seller was entitled to receive
pursuant to government or third party reimbursement programs such as (but
not limited to) Medicare and Medi-Cal, or (ii) any allegation by any
governmental authority of fraud or abuse by any current or former officers
or employees of Seller in connection with the making of any application for
reimbursement pursuant to the government or third party reimbursement
programs referred to in the preceding clause (i) while such individuals
were officers or employees of Seller.
3.11 INSURANCE. SCHEDULE 3.11 summarizes the professional and
general liability insurance policies covering the Business, and the
property insurance policies covering the Assets, which SCHEDULE 3.11
reflects the policies' numbers, terms, identity of insurers, amounts and
coverage. All such policies are currently in effect and to the best
knowledge of Seller there are no defaults or alleged defaults thereunder.
3.12 SELLER'S EMPLOYEES. (a) SCHEDULE 3.12 contains a list of all
of Seller's employees as of December 1, 1997, which list includes the then
current estimated annualized salaries based on then current hourly wage
rates and scheduled hours worked, department and job title or other summary
of the responsibilities of such employees, any severance arrangements with
such employees. Since December 1, 1997 there has not been any increase in
the compensation payable or to become payable by Seller to any of its
officers, employees or agents, or any bonus payment or arrangement made to
or with any such person, nor has there been any change in Seller's
personnel policies, except (in either case) in the ordinary course of
Seller's business in accordance with established personnel policies or
except as described in SCHEDULE 3.12.
(b) Except as set forth on SCHEDULE 3.12, none of Seller's employees
are employed by Seller pursuant to an employment agreement and/or severance
agreement. SCHEDULE 3.12 includes a list of all employees of Seller (other
than "part-time employees" as such term is defined in the Worker Adjustment
and Retraining Notification Act, hereinafter referred to as the "WARN ACT")
who have been terminated or laid-off or whose employment with Seller
otherwise has ceased since November 1, 1997.
3.13 LABOR MATTERS. Seller does not have any collective bargaining
agreements with any labor union and there are no current negotiations with
a labor union. Seller is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice except
where such non-compliance would not have a material adverse effect on the
Business or the Assets. Seller has not received any notice of an unfair
labor practice complaint against Seller pending before the National Labor
Relations Board. There is no labor strike, dispute, slowdown or stoppage
actually pending against or affecting Seller, nor has Seller received
notice of any threatened labor strike, dispute, slowdown or stoppage. No
grievance which might have an adverse effect on Seller or any such
arbitration proceeding arising out of or under collective bargaining
agreements is pending and Seller has no knowledge that any claim therefor
exists. Seller has not experienced any employee strikes since the date it
acquired the Business. Seller will advise Buyer of any such labor dispute
which shall arise before the Closing.
3.14 CERTAIN REPRESENTATIONS WITH RESPECT TO THE BUSINESS.
(a) The Hospital has current contractual arrangements with third
party payors. A complete and accurate copy of the existing third party
payor contracts of the Hospital has been furnished or made available to
Buyer. The Hospital is presently in compliance with all of the terms,
conditions and provisions of such contracts except where failure to be in
compliance would not have a material adverse effect on the Business or the
Assets. SCHEDULE 3.14(A) lists all third-party payor and managed care
agreements which are currently in effect and identifies all risk pools to
which Seller is a party.
(b) The Hospital is accredited as a general hospital by the Joint
Commission on Accreditation of Healthcare Organizations ("JCAHO") and
complete and accurate copies of its most recent survey reports, lists of
deficiencies, if any, and Certificates of Accreditation relating to the
Hospital have been furnished or made available to Buyer.
(c) The Hospital is qualified for participation in the Medicare
program. A complete and accurate copy of each existing Medicare contract
has been furnished or made available to Buyer. The Hospital is presently
in compliance with all of the terms, conditions and provisions of such
contracts except where failure to be in compliance would not have a
material adverse effect on the Business or the Assets.
(d) The Hospital is qualified for participation in the Medi-Cal
program. A complete and accurate copy of Seller's existing Medi-Cal
contracts have been furnished or made available to Buyer. The Hospital is
presently in compliance with all of the terms, conditions and provisions of
such contracts except where failure to be in compliance would not have a
material adverse effect on the Business or the Assets.
(e) The Hospital participates in the CHAMPUS program. The Hospital
is presently in compliance in all material respects with all of the terms
and conditions of such participation except where failure to be in
compliance would not have a material adverse effect on the Business or the
Assets.
(f) Complete and accurate copies of all fire marshal reports in
Seller's possession or, to the best of Seller's knowledge, available to
Seller with respect to the Hospital after January 1, 1997, have been, or
will be prior to Closing, furnished to Buyer.
(g) Seller has not received any written notice from any applicable
governmental agency, nor does it have knowledge, of any violation of local
building codes, ordinances or zoning laws applicable to the Hospital.
(h) Copies of all licensure survey reports of the Hospital by the
California Department of Health Services issued from and after January 1,
1996, that are in Seller's possession have been, or will be prior to
Closing, supplied or made available to Buyer.
(i) Copies of the Bylaws of the medical staff of the Hospital,
together with copies of minutes of meetings thereof since January 1, 1996,
that are in Seller's possession have been supplied or will prior to Closing
be made available to Buyer. No proceedings are pending or, to the best of
Seller's knowledge, threatened, seeking to remove or limit the privileges
of any member of the Hospital medical staffs or appealing any such decision
of such medical staff.
(j) CRH is licensed by the California Department of Health Services
as a general acute care rehabilitation hospital authorized to operate 60
beds in its existing location in Chico, California. CRH is presently in
compliance with all the terms, conditions and provisions of such license
except where failure to be in compliance would not have a material adverse
effect on the Business or the Assets. SCHEDULE 3.14(J) contains a copy of
such license. The facilities, equipment, staffing and operations of CRH
satisfy the applicable hospital licensing requirements of the State of
California except where failure to be in compliance would not have a
material adverse effect on the Business or the Assets.
(k) The Hospital currently has a memorandum of understanding with the
appropriate peer review organization, and complete and accurate copies of
all such memoranda of understanding have been furnished or made available
to Buyer, or will prior to Closing be made available to Buyer.
(l) Seller is in material compliance with all applicable laws and
regulations that relate to the Assets and Business, except where the
failure thereof would not have a material adverse effect on the Business.
(m) Seller has not received any written notice of, nor has knowledge
of, any threatened termination, cancellation or limitation, or other
material adverse modification or change in, Seller's relationship with any
payor, physician, medical group (including IPAs), the medical staff or
suppliers.
3.15 REIMBURSEMENT MATTERS. Seller has delivered or made available
to Buyer complete copies of all Medicare cost reports and related forms
that have been filed during the past three years with respect to the
Business. Seller has not received any written notices that either Medicare
or Medi-Cal has any claims against it which may reasonably be expected to
result in consolidated net offsets against future reimbursement in excess
of that provided for in such Financial Statements. Seller has not been
indicted, convicted or, to the best of Seller's knowledge, subject to an
investigation of the Office of Inspector General of the Department of
Health and Human Services (the "OIG") or other applicable government
agency, or received a notice from the OIG or other applicable government
agency, with respect to a violation or an alleged violation of the Medicare
and Medi-Cal fraud and abuse provisions of the federal Social Security Act
or the physician ownership and referral provisions of the Ethics in Patient
Referral Act, and to the best of Seller's knowledge, has Seller not
committed a violation of any of such provisions.
3.16 TAXES. Seller has filed all tax returns required by law to be
filed by it and has paid all taxes, assessments and other governmental
charges shown thereon as due and payable, other than those presently
payable without penalty or interest or those being contested in good faith
by appropriate procedures. There are no liens with respect to taxes
(except for liens with respect to real property taxes not yet due) upon any
of the Assets. Seller has not conducted the Business or engaged in any
transaction which would cause the transaction contemplated hereby to be
taxable under the California sales and use tax laws.
3.17 ENVIRONMENTAL. Except as disclosed in the McLaren/▇▇▇▇ Phase I
Site Assessment of the Chico Community Hospital Rehabilitation Facility
(October 24, 1997) obtained by Buyer relating to the Assets (the
"Environmental Reports"):
(a) Seller is currently, and at all times has been, in compliance
with all Environmental Laws (as defined below) except where failure to
comply with such Environmental Laws would not have a material adverse
effect on the Business;
(b) Seller has all permits, authorizations or other approvals
required under environmental laws to operate the Assets and the Real
Property, and is in compliance with all such permits, authorizations and
approvals except where failure to comply with such permits, authorizations
or approvals, individually or in the aggregate, would not have a material
adverse effect on the Business;
(c) Seller has not generated, handled, stored, disposed of or
released any Hazardous Substance (as defined below) on any of the Real
Property, except in compliance with applicable Environmental Laws except
where failure to comply with such Environmental Laws, individually or in
the aggregate, would not have a material adverse effect on the Business;
(d) There are no polychlorinated biphenyls (PCBs) or transformers,
capacitors, ballasts or other equipment that contains dielectric fluid
containing PCBs at levels in excess of fifty parts per million (50 ppm)
present, constructed, placed, deposited, stored, disposed of or located on
the Real Property;
(e) There are currently no aboveground or underground storage tanks
for the storage of Hazardous Substances located on the Real Property, and,
to the best knowledge of Seller, there have never been any such aboveground
or underground storage tanks located on the Real Property;
(f) Seller has not received any communication (written or oral),
whether from a governmental authority, citizens group, employee or
otherwise, that alleges that Seller is not in full compliance with
Environmental Laws. There is no Environmental Claim (as defined below)
pending or threatened against Seller or with respect to the Assets.
(g) There are no present or, to the best of Seller's knowledge, past
actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the generation, storage, release, emission,
discharge, presence or disposal of any Hazardous Substance, that could form
the basis of any Environmental Claim against Seller under any Environmental
Law in effect at any time at or prior to the Closing.
(h) The inclusion of any item disclosed in SCHEDULE 3.17 and the
inclusion of the reference to the Environmental Reports hereinabove does
not constitute an admission by Seller, ▇▇▇▇▇▇▇▇▇▇ or Buyer that any matters
disclosed in such schedule or Environmental Report constitutes a violation
of any Environmental Law.
The following terms shall have the following meanings:
"ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (a) the presence, or release
into the environment, of any Hazardous Substances at any location, whether
or not owned or operated by the Seller or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" means the federal, state (including specifically,
but not by way of limitation, the State of California), and local
environmental, health or safety laws, regulations, ordinances, rules and
policies and common law in effect on the date hereof and the Closing Date
relating to the generation, use, refinement, handling, treatment, removal,
storage, production, manufacture, transportation, disposal, arranging for
disposal, emissions, discharges, releases or threatened releases of
Hazardous Substances, or otherwise relating to protection of human health,
worker safety or the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), as
the same may be amended or modified to the date hereof and the Closing
Date, including, without limitation, the statutes and regulations listed
below:
Federal Resource Conservation and Recovery Act of 1976, 42 U.S.C.
6901, ET SEQ.
Federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. 9601, ET SEQ.
Federal Clean Air Act, 42 U.S.C. 7401, ET SEQ.
Federal Water Pollution Control Act, Federal Clean Water Act of 1977,
33 U.S.C. 1251, ET SEQ.
Federal Insecticide, Fungicide, and Rodenticide Act, Federal Pesticide
Act of 1978, 7 U.S.C. 136, ET SEQ.
Federal Hazardous Materials Transportation Act, 49 U.S.C.
1801, ET SEQ.
Federal Toxic Substances Control Act, 15 U.S.C. 2601, ET
SEQ.
Federal Safe Drinking Water Act, 42 U.S.C. 300f, ET SEQ.
Federal Occupational Safety & Health Act of 1970, 29 U.S.C.
651, ET SEQ.
Medical Waste Tracking Act of 1988, 42 U.S.C. 6992, ET SEQ.
Marine Protection Research & Sanctuaries Act of 1972, 33 U.S.C.
1401, ET SEQ.
The Act to Prevent Pollution from Ships, 33 U.S.C. 1901, ET
SEQ.
California Environmental Quality Act of 1970 (CEQA), California
Government Code, 65914.
California Hazardous Waste Control Law, California Health & Safety
Code, Section 25100 et seq..
Nuclear Regulatory Commission Regulations, 10 C.F.R. Part 20 and 10
C.F.R. Part 61.
Public Health Service Regulations, 42 C.F.R. Part 72.
Food & Drug Administration Regulations, 21 C.F.R. Parts 58 and 211.
U.S. Department of Transportation Regulations, 49 C.F.R. Parts 171-
179.
U.S. Department of Agricultural Regulations, 9 C.F.R. Parts 50-56.
U.S. Postal Service Regulations, 39 Part III.
"HAZARDOUS SUBSTANCES" means any toxic or hazardous waste, pollutants
or substances, explosives, radioactive materials, or Medical Waste (as
defined below), including, without limitation, friable asbestos, asbestos-
containing material, PCBs, petroleum products and byproducts, substances
defined or listed as "hazardous substance", "toxic substance", "toxic
pollutant", or similarly identified substance or mixture, in or pursuant to
any Environmental Law.
"MEDICAL WASTE" means any substance, pollutant, material, or
contaminant listed or regulated under the Medical Waste Tracking Act of
1988, 42 U.S.C. 6992, ET SEQ., 49 C.F.R. 173, 186,
and/or the California Waste Management Act, California Health & Safety
Code, 117600 et seq.
3.18 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or specifically reserved against (which reserves are believed
adequate in amount) in the Financial Statements, to the best of Seller's
knowledge, Seller did not have, at the date of such Financial Statements,
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise and whether due or to become due) required to be
reflected thereon or included therein, except for any liabilities which
have been incurred since the dates of such Financial Statements in the
ordinary course of business consistent with past practice or which have
been discharged or paid in full prior to the date hereof.
3.19 BROKERAGE. Neither Seller nor ▇▇▇▇▇▇▇▇▇▇ has engaged any
financial advisor, broker or similar entity in respect of the transactions
contemplated hereby which may be entitled to a fee or commission in
connection with such transactions, other than ABN-AMRO Chicago Corporation.
Any fee due to such firm is solely a liability of Seller and ▇▇▇▇▇▇▇▇▇▇.
3.20 NO MISLEADING STATEMENTS. No representation or warranty by
Seller contained in this Agreement, and no statement contained in any
Schedule (including any supplement or amendment thereto) and the documents
to be delivered at the Closing by or on behalf of Seller to Buyer or any of
its representatives in connection with the transactions contemplated hereby
(the Schedules, including any supplement or amendment thereto, and such
Closing documents are herein referred to, collectively, as the "ADDITIONAL
DOCUMENTS"), contains or will contain any untrue statement of a material
fact, or, to the best knowledge of Seller and ▇▇▇▇▇▇▇▇▇▇, omits or will
omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein
or therein not misleading. Copies of all documents described on any
Schedule hereto which have been furnished, provided or made available to
Buyer or are hereafter furnished, provided or made available to Buyer are
or shall be, to the best of Seller's knowledge, true, correct and complete.
3.21 DISCLAIMER OF WARRANTIES. The Assets will be sold by Seller and
purchased by Buyer in their condition at Closing, "AS IS", WITH NO WARRANTY
OF HABITABILITY OR FITNESS FOR HABITATION, with respect to the Real
Property, and WITH NO WARRANTIES, INCLUDING THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, with respect to the
Personal Property and Operating Inventory, any and all of which warranties
(both express and implied) Seller hereby disclaims. Nothing in this
Section 3.21 shall be construed to limit the scope or effect of the express
representations and warranties contained elsewhere in this Article III.
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND SYSTEM.
As of the date hereof, Buyer and the System represent and warrant to
Seller and ▇▇▇▇▇▇▇▇▇▇ the following:
4.1 BUYER AND SYSTEM CAPACITY.
(a) Buyer and System are nonprofit public benefit corporations duly
organized, validly existing and in good standing under the laws of the
States of California, with all requisite corporate power and authority to
own, operate and lease their properties.
(b) SCHEDULE 4.1 contains complete and correct copies of the Articles
of Incorporation and all amendments thereto to the date hereof and the
Bylaws as presently in effect of Buyer and System.
4.2 CORPORATE AUTHORIZATION/CONTRACT BINDING. (a) The execution,
delivery and performance by Buyer and System of this Agreement and the
other agreements and transactions contemplated hereby to be executed and
performed by Buyer:
(i) are within Buyer's and System's corporate powers, are not in
contravention of the terms of Buyer's or System's Articles of
Incorporation, Bylaws or any amendments thereto and have been duly
authorized by the board of directors of Buyer and System; and
(ii) except as set forth on SCHEDULE 4.2, on the Closing Date,
(A) will not result in any breach of any indenture, agreement, lease
or instrument to which Buyer or System is a party or by which Buyer or
System is bound, (B) will not constitute a violation of any judgment,
decree or order of any court of competent jurisdiction applicable to
Buyer or System, (C) will not violate any law, rule or regulation of
any governmental authority applicable to Buyer or System and (D) will
not require any consent, approval or authorization of, or notice to,
or declaration, filing or registration with, any governmental or
regulatory authority.
(b) This Agreement has been duly and validly executed and delivered
by Buyer and System, and, as of the Closing, the other agreements and
instruments contemplated hereby will have been duly and validly executed
and delivered by Buyer and System. This Agreement constitutes, and upon
their execution and delivery, the other agreements and instruments
contemplated hereby will constitute, the valid, legal and binding
obligations of Buyer and System, enforceable against each in accordance
with their respective terms except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, or other laws affecting the
enforcement of creditors' rights generally or the availability of
equitable remedies.
4.3 BROKERAGE. Buyer has not engaged any financial advisor, broker or
similar entity in respect of the transactions contemplated hereby which may
be entitled to a fee or commission in connection with such transactions.
5. COVENANTS OF SELLER PRIOR TO CLOSING.
Between the date of this Agreement and the Closing Date:
5.1 INFORMATION. Seller shall afford, to the officers and authorized
representatives of Buyer access to the Assets and will furnish to Buyer
such additional financial data and other information relating to the Assets
or the Business as Buyer may from time to time reasonably request; provided
such access shall occur at such time or times as will not disrupt delivery
of care to patients. Seller agrees to cooperate reasonably with Buyer in
Buyer's efforts (i) to make any required filings and to obtain any
governmental approvals necessary in order to consummate the transactions
contemplated hereby, (ii) to respond to any governmental investigation of
such transactions, and (iii) to defend any legal or administrative
proceedings challenging such transactions. Seller will, upon reasonable
request, cooperate with Buyer, its representatives and counsel in the
preparation of any document or other material which may be required by any
governmental agency as a predicate to or result of the transaction herein
contemplated. Seller shall provide Buyer, when normally available, monthly
statements of income with respect to the Business for the interim period
between the effective date of this Agreement and Closing.
5.2 OPERATIONS. With respect to the ownership of the Assets and the
operation of the Business, Seller will use its reasonable best efforts to:
(a) carry on the Business in substantially the same manner as it has
been conducted heretofore and not make any change in personnel (other
than in the ordinary course of business) or operations, and not make
any change in finance or accounting policies;
(b) maintain the Assets in as good working order and condition as at
present, ordinary wear and tear excepted;
(c) perform in all material respects Seller's obligations under
agreements relating to or affecting the Assets or the Business;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use commercially reasonable efforts to maintain and preserve the
business organization of Seller intact, retain their present employees
and maintain their relationship with suppliers, customers and others
having business relations with Seller;
(f) within a reasonable time prior to Closing, permit Buyer to make
offers to any of the personnel who work at the Hospital or otherwise
in the Business for employment by Buyer subsequent to the Closing,
which personnel shall be allowed by Seller to accept or reject such
offers without penalty (for the purpose of this Section 5.2(f),
"penalty" shall not be interpreted to refer to the availability, or
lack of availability of any severance benefit);
(g) without the consent of Buyer, which will not be unreasonably
withheld, Seller will not incur or commit to any obligation with
respect to (i) individual purchase orders in excess of $40,000 for
supplies or equipment, (ii) within any 30 day period, any two or more
purchase orders in excess of $450,000, (iii) any single capital
expenditure in excess of $25,000, or (iv) within any 30 day period,
any two or more items involving capital expenditures in excess of
$50,000; and
(h) except in the ordinary course of business, Seller will not enter
into, amend, or cancel Scheduled Contracts or Scheduled Leases that
will be assumed by Buyer, without Buyer's prior written consent.
5.3 CERTAIN CHANGES. Without the prior written consent of Buyer,
which consent will not be unreasonably withheld, Seller will not:
(a) sell or agree to sell any of the Assets except for the depletion
of inventories in the ordinary course of business; or
(b) engage in any transaction out of the ordinary course of business,
including any sale, transfer, lease, encumbrance or granting of a lien
upon or a security interest in any portion of the Assets (except as
provided in Section 5.3(a) above).
5.4 CASUALTY. If, prior to the Closing, the Hospital facility or
other Assets sustain damage or destruction that Seller has not repaired
prior to Closing, then the following provisions shall apply:
(a) If --
(i) such damage or destruction results in either Hospital
facility being unusable for its current purpose, or
(ii) the cost to repair such damage or destruction, or to replace
such damaged or destroyed facilities or other Assets
(collectively, the "Cost to Repair"), is greater than $2,500,000
and Seller does not have insurance coverage therefor,
then Buyer may elect either (1) to terminate this Agreement and all
obligations of the parties hereunder or (2) to complete the transactions
contemplated herein and receive as a credit to the Purchase Price the
amount of such Cost to Repair and thereafter Seller shall have no
obligation to repair such damage or destruction;
(b) If subparagraph (a) does not apply, then:
(i) If Seller has insurance coverage for the Cost to Repair any
damage or destruction, then Buyer may elect either (1) to receive
from Seller all of the proceeds of such insurance paid or payable
and pay to Seller the full Purchase Price hereunder or (2) to
allow Seller to retain all such insurance proceeds subject to a
reduction of the Purchase Price in the amount thereof; and
(ii) If and to the extent that the Cost to Repair any damage or
destruction is not covered by insurance, including without
limitation costs that are subject to a deductible or self-insured
retention, then the Purchase Price shall be reduced by an amount
equal to that portion of the Cost to Repair such damage or
destruction that is not covered by insurance.
5.5 This Section intentionally omitted.
5.6 BEST EFFORTS TO CLOSE. Seller and ▇▇▇▇▇▇▇▇▇▇ shall use their
best efforts to proceed toward the Closing and to cause the conditions to
Closing to be met as soon as practicable and consistent with other terms
contained herein. Seller and/or ▇▇▇▇▇▇▇▇▇▇ shall notify Buyer as soon as
practicable of any event or matter which comes to Seller's or ▇▇▇▇▇▇▇▇▇▇'
attention which may reasonably be expected to prevent the conditions to
Seller's obligation being met.
5.7 INSURANCE RATINGS. Seller shall take all action reasonably
requested by Buyer to enable Buyer to succeed to the Worker's Compensation
and Unemployment Insurance ratings, insurance policies, deposits and other
interests of Seller and other ratings for insurance or other purposes
established by Seller; provided, however, that the covenants contained in
this sentence shall not require Seller to expend its own funds to satisfy
such obligations, nor shall such covenants permit Buyer to acquire Seller's
deposits without compensation to Seller. Buyer shall not be obligated to
succeed to any such rating, insurance policy, deposit or other interest,
except as it may elect to do so.
5.8 NOTICE; EFFORTS TO REMEDY. Seller will notify Buyer promptly in
writing of, and contemporaneously will provide Buyer with true and
complete copies of any and all information and documents relating to, and
will use their best efforts to cure as soon as practicable (or by any
subsequent date agreed upon by the parties), any event, transaction or
circumstance occurring that causes or would cause any covenant or agreement
of Seller or ▇▇▇▇▇▇▇▇▇▇ under this Agreement to be breached, or that
renders or would render untrue any representation or warranty of Seller
contained in this Agreement as if the same were made on or as of the date
of such event, transaction or circumstance. Seller and ▇▇▇▇▇▇▇▇▇▇ also
will use their reasonable best efforts to cure, as soon as practicable (or
by any subsequent date agreed upon by the parties), any violation or breach
of any representation, warranty, covenant or agreement made by either of
them in this Agreement. Seller and ▇▇▇▇▇▇▇▇▇▇ shall have a reasonable time
within which to effect a cure of such breach or misrepresentations before
Buyer may terminate this Agreement (to the extent such remedy is available
to Buyer pursuant to Section 11.1(d) hereof); provided, however, that after
the date established by the parties for Closing, Buyer may terminate this
Agreement (to the extent such remedy is available to Buyer pursuant to
Section 11.1(d) hereof) unless such breach or misrepresentation has been
cured to the reasonable satisfaction of Buyer . Furthermore, Seller and
▇▇▇▇▇▇▇▇▇▇ shall notify Buyer promptly in writing of any event, transaction
or circumstance occurring that causes or would cause any covenant or
agreement of Buyer under this Agreement to be breached, or that renders or
would render untrue any representation or warranty of Buyer contained in
this Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. Buyer shall have a reasonable time in which
to effect a cure of such breach or misrepresentation before Seller may
terminate this Agreement (to the extent such remedy is available to Seller
pursuant to Section 11.1(d) hereof); provided, however, that after the date
established by the parties for Closing, Seller may terminate this Agreement
(to the extent such remedy is available to Seller pursuant to Section
11.1(d) hereof) unless the breach or misrepresentation has been cured to
the reasonable satisfaction of Seller and ▇▇▇▇▇▇▇▇▇▇. The failure of
Seller to notify Buyer of any such discovered event, transaction or
circumstance shall not release Buyer from any liability to Seller
resulting from the breach attendant to such discovered event, transaction
or circumstance; provided, however, that, unless Buyer had independent
knowledge of such event, circumstance or condition, Buyer's liability shall
be limited to the damages that would have nonetheless resulted to Seller
had Seller disclosed such discovered event, transaction or circumstance to
Buyer prior to Closing.
5.9 COOPERATION WITH BUYER. Seller shall cooperate in all reasonable
respects with Buyer in connection with Buyer's efforts to obtain regulatory
consents to and approvals of the transfer of the Licenses described in
SCHEDULE 3.5 hereof. Seller also agrees that upon the written request of
Buyer, Seller will use its reasonable best efforts to obtain any consents
necessary for the assignment of the contracts and leases to be assumed by
Buyer pursuant to the Assignment and Undertaking. The parties agree that
Buyer will be primarily responsible for obtaining all such approvals and
consents.
6. INDEMNIFICATION.
6.1 INDEMNITY BY BUYER AND SYSTEM. From and after Closing, Buyer and
System shall indemnify, defend and hold harmless Seller and ▇▇▇▇▇▇▇▇▇▇ and
their respective officers, employees, affiliates and agents (collectively,
"BUYER INDEMNIFIED PARTIES") from and against any and all liabilities,
losses, damages, demands, claims, suits, actions, judgments, causes of
action, assessments, costs and expenses, including, without limitation,
interest, penalties, reasonable attorneys' fees, any and all expenses
incurred in investigating, preparing and defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts
paid in settlement of any claim or litigation (collectively, "DAMAGES"),
asserted against, resulting to, imposed upon, or incurred or suffered by
any of them, directly or indirectly, as a result of or arising from the
following:
(i) any inaccuracy in or breach or nonfulfillment of any of the
representations, warranties, covenants or agreements made by Buyer or
System in this Agreement or the other agreements contemplated hereby;
(ii) any liability imposed on any Buyer Indemnified Party to the
extent such liability has been expressly assumed by Buyer pursuant to
the Assignment and Undertaking;
(iii) any misrepresentation in or any omission from any
certificate or other document (collectively, the "BUYER ADDITIONAL
DOCUMENTS") furnished or to be furnished by or on behalf of Buyer or
System at Closing under this Agreement;
(iv) any liability, obligation or indebtedness of Buyer or any
alleged liability, obligation or indebtedness of Buyer, including
without limitation those relating to contractual obligations,
liabilities to Medicare or Medi-Cal programs, tax liabilities or
professional malpractice or general liability claims, arising out of
the operation of the Business after the Cut-Off Point which is imposed
on or made against any Buyer Indemnified Party, except to the extent
such liability or alleged liability arises out of a liability of
Seller that has not been expressly assumed by Buyer pursuant to the
Assignment and Undertaking;
(v) any claims for fees or commissions of a broker, agent or
similar entity employed or alleged to have been employed by or on
behalf of Buyer in connection with the transactions contemplated
hereby; and
(vi) any liability imposed on any Buyer Indemnified Party arising
out of the use by Buyer (or its assignees) of Seller's Drug
Enforcement Agency Registration Numbers pursuant to the powers of
attorney delivered in accordance with Section 9.10 of this Agreement.
6.2 INDEMNITY BY SELLER AND ▇▇▇▇▇▇▇▇▇▇. From and after the Closing,
Seller and ▇▇▇▇▇▇▇▇▇▇, jointly and severally, shall indemnify, defend and
hold harmless Buyer and its respective officers, directors, employees,
shareholders, affiliates and agents (collectively, the "SELLER INDEMNIFIED
PARTIES") from and against any and all Damages asserted against, resulting
to, imposed upon, or incurred or suffered by any of them, directly or
indirectly, as a result of or arising from the following:
(i) any inaccuracy in or breach or nonfulfillment of any of the
representations, warranties, covenants or agreements made by Seller or
▇▇▇▇▇▇▇▇▇▇ in this Agreement or the other agreements contemplated
hereby;
(ii) any liability, obligation or indebtedness of Seller or
▇▇▇▇▇▇▇▇▇▇ or any alleged liability, obligation or indebtedness of
Seller or ▇▇▇▇▇▇▇▇▇▇, including without limitation those relating to
contractual obligations, liabilities (including recapture of
depreciation) to the Medicare or Medi-Cal programs, tax liabilities or
professional malpractice or general liability claims, arising out of
the operation of the Business prior to the Cut-Off Point which is
imposed on or made against any Seller Indemnified Party, except to the
extent certain contractual obligations have been expressly assumed by
Buyer pursuant to the Assignment and Undertaking;
(iii) any misrepresentation in or any omission from any
certificate or other document (collectively, the "SELLER ADDITIONAL
DOCUMENTS") furnished or to be furnished by or on behalf of Seller or
▇▇▇▇▇▇▇▇▇▇ at Closing under this Agreement; and
(iv) any claims for fees or commissions of a broker, agent or
similar entity employed or alleged to have been employed by or on
behalf of Seller or ▇▇▇▇▇▇▇▇▇▇ in connection with the transactions
contemplated hereby.
6.3 CLAIMS PROCEDURE. (a) If a party to this Agreement ("CLAIMING
PARTY") learns of a circumstance giving rise to a claim for another party
to this Agreement ("PERFORMING PARTY") to make payment, performance, or
indemnity under this Agreement, then the Claiming Party shall give the
Performing Party written notice thereof within a reasonable time
considering the circumstances. No delay in giving notice to the Performing
Party shall work a forfeiture of the rights of Claiming Party or shall
limit the Performing Party's obligations under this Agreement. If,
however, a delay in giving notice within a reasonable time prejudices the
Performing Party and materially impairs its ability to mitigate loss, then
the Performing Party shall have no obligation to pay that part of a loss
caused by the delay.
(b) The Performing Party shall defend, and shall have the right to
settle, claims or suits by third parties that are payable or that are to be
indemnified by the Performing Party under this Agreement. The Claiming
Party shall reasonably cooperate with the Performing Party in the defense
of claims and suits that the Performing Party defends, and the Performing
Party shall reimburse the Claiming Party for out-of-pocket expenses
incurred in cooperating at the Performing Party's request. The Claiming
Party shall not settle such claims or suits defended by the Performing
Party without the Performing Party's prior consent, which shall not be
unreasonably withheld. The Claiming Party shall have the right to approve
defense counsel selected by the Performing Party, which approval shall not
be unreasonably withheld, and the right fully to participate in the defense
of such claims and suits at the Claiming Party's sole cost and expense.
The Claiming Party shall have the right to defend and settle claims or
suits without prejudice to any of their rights against the Performing Party
under this Agreement if the Performing Party declines or is unable to
undertake the defense of a claim or suit within a reasonable time after the
Performing Party's receipt of notice thereof. If the Performing Party
disputes the Claiming Party's entitlement to indemnity and asserts the
right to defend a claim or suit, and if the Claiming Party reasonably
believes that the Performing Party's control of the defense of a claim or
suit might prejudice the Claiming Party, then the Claiming Party shall have
the right to defend such claim or suit. Performing Party shall have the
right fully to participate in the defense of such claim or suit, and
Claiming Party shall not settle such claim or suit without the Performing
Party's prior consent, which Performing Party shall not unreasonably
withhold.
6.4 LIMITATION ON CLAIMS.
(a) No Seller Indemnified Party nor Buyer Indemnified Party shall
make any claim for indemnification pursuant to Sections 6.1 or 6.2 with
respect to any matter unless:
(i) the amount of the Damages arising out of such matter is in
excess of $25,000 (a "RELEVANT CLAIM"); and
(ii) the aggregate amount of all Damages with respect to which a
Relevant Claim is being made by an Indemnified Party against any or
all of the applicable Indemnifying Parties (together with all such
Relevant Claims previously made by the applicable Indemnified Parties
against the applicable Indemnifying Parties) exceeds $250,000.
(b) Notwithstanding the provisions of Section 6.4(a), any indemnified
claim having its basis in any of the following shall not be subject to the
thresholds established by such provisions: (A) a breach of the
representations, warranties, covenants and agreements made in
1.3(c)(ii),3.15, 3.16, 3.17, 3.18, 3.19 and 4.3, (B) fraud or intentional
misrepresentation, (C) a breach by Buyer to pay or observe any obligation
of Seller assumed by Buyer pursuant to the Assignment and Undertaking, (D)
a breach by Seller of its obligations under Section 1.3 hereof to pay or
observe any of its obligations for trade payables, contracts, leases or
other liabilities reflected on Seller's financial statements (other than
those assumed by Buyer pursuant to the Assignment and Undertaking) and to
satisfy prior to Closing all obligations secured by a lien on, or a
security interest in, the Assets, (E) any breach by Buyer to pay the
Purchase Price hereunder, or (F) a breach by Buyer or Seller of its
obligation under Section 1.7.1 and 1.7.2 to pay any post-Closing adjustment
to the Purchase Price required by such Sections.
(c) Neither Seller nor ▇▇▇▇▇▇▇▇▇▇ shall be under any liability and no
claim under Section 6.2 of this Agreement shall be made to the extent that
any Damages may be recovered under a policy of insurance, except that
(subject to the other limitations set forth in this Agreement) Seller and
▇▇▇▇▇▇▇▇▇▇ shall be liable to the extent of any deductibles under such
insurance policy.
(d) Neither Buyer nor System shall be under any liability and no
claim under Section 6.1 of this Agreement shall be made to the extent that
▇▇▇▇▇▇▇▇▇▇ or Seller discovered such breach prior to the Closing Date and
failed to disclose such breach to Buyer as provided in Section 5.8 hereof,
except that Buyer and System shall be liable to the extent Buyer or System
had knowledge of such breach or to the extent ▇▇▇▇▇▇▇▇▇▇ or Seller would
have nonetheless suffered damages had such breach been disclosed to Buyer
prior to the Closing Date.
(e) Neither Seller nor ▇▇▇▇▇▇▇▇▇▇ shall be under any liability and no
claim under Section 6.2 of this Agreement shall be made to the extent that
Buyer discovered such breach prior to the Closing Date and failed to
disclose such breach to ▇▇▇▇▇▇▇▇▇▇ and Seller as provided in Section 9.9
hereof, except that ▇▇▇▇▇▇▇▇▇▇ and Seller shall be liable to the extent
either ▇▇▇▇▇▇▇▇▇▇ or Seller had knowledge of such breach or to the extent
Buyer would have nonetheless suffered damages had such breach been
disclosed to ▇▇▇▇▇▇▇▇▇▇ or Seller prior to the Closing Date.
(f) If an Indemnifying Party is liable to an Indemnified Party for
breach of any representation, warranty or undertaking, the liability of the
Indemnifying Party shall be reduced and any amount paid by such
Indemnifying Party shall be refunded to the extent that the Indemnified
Party is eligible to obtain a reduction in its liability for tax (whether
by way of credit or otherwise and calculated assuming that the Indemnified
Party is taxed at the maximum rate applicable to such entity) which it
would not have been eligible for had the breach which gave rise to
liability of the Indemnifying Party not arisen.
(g) Each Indemnified Party shall cooperate in all reasonable respects
with the reasonable requests of its applicable Indemnifying Parties in the
conduct of litigation, the making of settlements and the enforcement of any
right of contribution to which the Indemnified Parties may be entitled from
any person or entity in connection with the subject matter of any
litigation subject to indemnification hereunder. In addition, the
Indemnified Parties shall, upon the reasonable requests by their applicable
Indemnifying Parties or counsel selected by such Indemnifying Parties,
attend hearings and trials, assist in the securing and giving of evidence,
assist in obtaining the presence or cooperation of witnesses, make
available its own personnel, and assist in effecting settlements; and shall
take such action as is reasonably necessary and appropriate in connection
with such litigation. Seller Indemnified Parties shall not, except at
their own cost, voluntarily make any payment, assume any obligation, incur
any expense, or settle or compromise any claim without the express approval
of Seller Indemnifying Parties in connection with any matter that is
subject to indemnification hereunder.
(h) The indemnification provided under Sections 6.1 and 6.2 shall
survive the execution and delivery of this Agreement, the closing of the
transactions contemplated hereby and the satisfaction of all other
obligations of any party hereto under this Agreement. In respect of the
indemnification provided under Section 6.1(i) and 6.2(i) relating to or
arising out of a breach of a representation or warranty, and with respect
to the indemnification provided under Sections 6.1(iii) and 6.2(iii)
relating to or arising out of a misrepresentation in or omission from a
Buyer Additional Document or a Seller Additional Document and which
constitutes a "bring down" of a party's representations and warranties made
in this Agreement, no indemnification may be asserted under this Agreement
unless the party making the claim gives the party against whom the claim is
to be made notice of such claim before the end of the applicable Survival
Period (as defined in Section 12.18 hereto); PROVIDED, that such claim
shall survive the expiration of the Survival Period if notice thereof, as
required by Section 6.3, was given prior to the expiration of the Survival
Period. In respect of the other indemnification provided under Sections
6.1 and 6.2, there shall be no limitation on when a claim for
indemnification hereunder may be sought other than as set forth in Section
6.1 or 6.2, and the parties hereby waive any such limitation which may be
imposed by law.
(i) If a Performing Party pays a claim to a Claiming Party pursuant
to this Agreement, then such party shall be subrogated to all rights of the
party to or for whom the claim was paid against others for recovery of the
loss, except affiliates, employees, officers, directors, successors or
assigns of the party to or for whom the claim was paid.
6.5 JURISDICTION; SERVICE OF PROCESS. (a) Each of the parties hereto
severally agrees that any legal action or proceeding with respect to this
Agreement or to enforce any judgment obtained against any party hereto in
connection with this Agreement may be brought by any other party hereto or
any Seller Indemnified Party or Buyer Indemnified Party in the courts of
the State of California or in the United States District Courts which are
located in the City of Sacramento, California, or any other court to the
jurisdiction of which such party hereto or any of its respective properties
is or may be subject. In connection with any action or proceeding relating
to this Agreement, each of the parties hereto severally irrevocably submits
to the jurisdiction of the courts of the State of California and of the
United States District Courts located in the city of Sacramento,
California, and irrevocably waives any present or future objection to venue
in any such court, and any present or future claim that any such court is
an inconvenient forum. Nothing herein shall affect the right of the a
party to serve process in any manner permitted by law or to bring any civil
suit, action or proceeding against any party hereto or its respective
property in the courts of any jurisdiction in which venue may be granted.
(b) For the purposes of any legal action or proceeding brought by any
party hereto or by any Seller Indemnified Party or any Buyer Indemnified
Party with respect to this Agreement, each party hereto hereby irrevocably
designates and appoints CT Corporation System, currently located at ▇▇▇ ▇.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as its authorized agent for
service of process in the State of California. Each party hereto and each
Seller Indemnified Party and each Buyer Indemnified Party shall for all
purposes be entitled to treat such designee of each party hereto as the
authorized agent to receive for and on its behalf service of writs or
summons or other legal process in the State of California. In the event
that, for any reason, such agent or his successor shall no longer serve as
agent of any party hereto to receive service or process in the State of
California, such party shall appoint a person in the State of California as
a successor so to serve and advise the other parties hereto so that at all
times each party hereto will maintain an agent to receive service of
process in the State of California on its behalf with respect to this
Agreement. In the event that, for any reason, service of legal process
cannot be made in the manner described above, such service may be made in
such other manner as permitted by law.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are subject to the satisfaction,
on or prior to the Closing Date, of the following conditions unless waived
in writing by Buyer:
7.1 REPRESENTATIONS/WARRANTIES; COMPLIANCE WITH COVENANTS. The
representations and warranties of Seller contained in this Agreement shall
be true and correct in all material respects when made and on and as of the
Closing Date, as though such representations and warranties had been made
on and as of such Closing Date; and the covenants and conditions of this
Agreement to be complied with or performed by Seller or ▇▇▇▇▇▇▇▇▇▇ on or
before the Closing Date pursuant to the terms hereof shall have been duly
complied with and performed in all material respects.
7.2 OPINION OF SELLER'S COUNSEL. Buyer shall have received an
opinion from Michener, Larimore, Swindle, Whitaker, Flowers, Sawyer,
▇▇▇▇▇▇▇▇ & Chalk L.L.P., counsel to Seller and ▇▇▇▇▇▇▇▇▇▇, dated as of the
Closing Date, substantially in the form of APPENDIX 7.2.
7.3 PRE-CLOSING CONFIRMATIONS. Buyer shall not have received in
writing any notice from the California Department of Health Services or any
other applicable agencies or licensing authorities that Buyer shall not be
issued effective as of or promptly after the Closing a license to operate
the Hospital and licenses or permits to provide all presently authorized
supplemental and special services.
7.4 ACTION/PROCEEDING. No action, proceeding, investigation or
administrative hearing before a court or any other governmental agency or
body shall have been instituted against any party hereto (and remain
unresolved) which seeks injunctive relief in anticipation of the sale of
the Assets and may reasonably be expected to prohibit the sale of the
Assets to Buyer or seeks damages in a material amount by reason of the
consummation of such sale; nor shall any party hereto have received
notification from any governmental agency of the United States of America
or the State of California of such agency's current intent to seek
injunctive relief in anticipation of the sale of the Assets to prohibit the
sale of the Assets to Buyer.
7.5 [OMITTED]
7.6 [OMITTED]
7.7 [OMITTED]
7.8 DELIVERY OF CERTAIN DOCUMENTS. At the Closing, the Seller shall
have delivered to Buyer all documents, agreements and instruments
contemplated by Section 2.2.
7.9 INFORMATION SYSTEMS AGREEMENT. If applicable, ▇▇▇▇▇▇▇▇▇▇ and
Buyer shall have executed and delivered an Information Systems Agreement
(the "INFORMATION SYSTEMS AGREEMENT"), in substantially the form attached
hereto as APPENDIX 7.9.
7.10 CERTIFICATE OF NON-FOREIGN STATUS. Seller shall have duly
executed and delivered to Buyer a Certificate of Non-Foreign Status in the
form attached hereto as APPENDIX 7.10.
7.11 HSR APPROVAL. The all applicable waiting periods specified in
the HSR Act shall have expired or been terminated.
7.12 MEDICARE RECONCILIATION NOTE. Seller shall have delivered to
Buyer a promissory note in the form of APPENDIX 7.12 hereto (the "MEDICARE
RECONCILIATION NOTE"). The original principal balance of the Medicare
Reconciliation Note will be an amount equal to the book value of the
Medicare Receivables, net of the allowance for doubtful accounts and
contractual adjustments related thereto, all as reflected on the Interim
Balance Sheet. As provided in such Medicare Reconciliation Note and in
Sections 1.6 and 1.7 hereof, the principal balance of such note will be
adjusted to reflect changes in such net book value amount between the date
of the Interim Balance Sheet and the date of the Closing Balance Sheet.
7.13 BUYER AND SYSTEM BOARD APPROVAL. The Board of Directors of Buyer
and System shall have approved this Agreement and the transactions
contemplated hereby.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND ▇▇▇▇▇▇▇▇▇▇.
The obligations of Seller and ▇▇▇▇▇▇▇▇▇▇ hereunder are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions
unless waived in writing by Seller and ▇▇▇▇▇▇▇▇▇▇:
8.1 REPRESENTATIONS/WARRANTIES; COMPLIANCE WITH COVENANTS. The
representations and warranties of Buyer contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date
as though such representations and warranties had been made on and as of
such Closing Date; the covenants and conditions of this Agreement to be
complied with or performed by Buyer on or before the Closing Date pursuant
to the terms hereof shall have been duly complied with and performed in all
material respects.
8.2 OPINION OF BUYER'S COUNSEL. Seller shall have received from
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to Buyer, an opinion dated as of the
Closing Date and addressed to Seller and ▇▇▇▇▇▇▇▇▇▇, substantially in the
form of APPENDIX 8.2.
8.3 ACTION/PROCEEDING. No action, proceeding, investigation or
administrative hearing before a court or any other governmental agency or
body shall have been instituted against any party hereto (and remain
unresolved) which seeks injunctive relief in anticipation of the sale of
the Assets and may reasonably be expected to prohibit the sale of the
Assets to Buyer or seeks damages in a material amount by reason of the
consummation of such sale; nor shall any party hereto have received
notification from any governmental agency of the United States of America
or the State of California of such agency's current intent to seek
injunctive relief in anticipation of the sale of the Assets to prohibit the
sale of the Assets to Buyer or the parties' execution.
8.4 DELIVERY OF CERTAIN DOCUMENTS. At the Closing, the Buyer shall
have delivered to Seller all documents, agreements and instruments
contemplated by Section 2.3.
8.5 HSR APPROVAL. The all applicable waiting periods specified in
the HSR Act shall have expired or been terminated.
8.6 SELLER AND ▇▇▇▇▇▇▇▇▇▇ BOARD APPROVAL. The Board of Directors of
Seller and ▇▇▇▇▇▇▇▇▇▇ shall have approved this Agreement and the
transactions contemplated hereby.
9. PARTICULAR COVENANTS OF BUYER.
9.1 BEST EFFORTS TO CLOSE. Buyer and System shall use their best
efforts to proceed toward the Closing and to cause the conditions to
Closing to be met as soon as practicable and consistent with other terms
contained herein. Buyer shall notify Seller as soon as practicable of any
event or matter which may reasonably be expected to prevent the conditions
to Buyer's obligations being met.
9.2 EMPLOYMENT OF EMPLOYEES OF SELLER; ADDITIONAL EMPLOYEE MATTERS.
(a) (i) Prior to Closing, Buyer shall offer, effective as of the Cut-Off
Point, employment to all employees of Seller (except as provided in
subsection (d) below) who are on the active payroll of Seller with respect
to the Business on the Closing Date (including for this purpose any
employee of Seller who elects to be treated as a retiree of Seller as of
the Cut-Off Point for the purpose of qualifying for certain employee
benefits). Buyer shall give the same offer of employment to any employee
who is in paid or unpaid inactive status as of the Closing, and who is
available for return to active status within 90 days after Closing (or at
such later date as may be required by applicable law). All such employees
who accept Buyer's offer of employment shall be referred to as the "Hired
Employees."
(ii) Each offer of employment under paragraph 9.2(a)(i) shall be for a
substantially equivalent position, and at a substantially similar wage or
salary, as provided by Seller to the Hired Employee immediately prior to
the Closing Date (or, as to any employee who is in paid or unpaid inactive
status as of the Closing Date who receives an offer of employment from
Buyer upon becoming available to return to active status, immediately prior
to the first day of such employee's paid or unpaid leave from Seller. As
to each Hired Employee, Buyer shall also provide employee welfare benefits
and paid time-off that are commensurate with those of other employees of
Buyer having similar positions. Buyer agrees that, for the purpose of
determining welfare benefits coverage and other related matters (including
eligibility and participation, but not vesting or benefit accrual, under
any Buyer pension benefit plan), each Hired Employee will be considered to
have commenced employment with Buyer on the date such Hired Employee
commenced uninterrupted employment with Seller (whichever is earlier).
Notwithstanding the preceding sentence, Buyer shall not be obligated to
provide Hired Employees any accrued sick or vacation days upon hiring them
except as and to the extent provided in Sections 9.2(e) and (f) hereof.
For the purpose of determining vesting and benefit accrual under all Buyer
pension benefit plans, each Hired Employee will be considered to have
commenced employment with Buyer on the Employment Commencement Date (as
defined below). Health benefits coverage provided by Buyer for Hired
Employees (and any dependents thereof) shall apply to covered expenses
incurred on and after the Employment Commencement Date, and Buyer agrees to
waive any limitations for pre-existing conditions with respect to any
conditions affecting any Hired Employees (and any dependents thereof);
subject to the following limitations: (x) the pre-existing condition
provisions of Seller's health benefit plans shall apply in lieu of the pre-
existing condition provisions of Buyer's plans to all Hired Employees (and
their dependents) who are eligible for benefits under Seller's health
benefits plans as of the Closing Date but who are subject to pre-existing
condition limitations as of the Closing Date and (y) the pre-existing
conditions limitations under Buyer's medical benefits plans shall apply to
any Hired Employee (and his or her dependents) who is not eligible for
benefits under Seller's health benefits plans as of the Closing Date, and
any such Hired Employee shall be treated as having been hired by Buyer on
the date such employee commenced employment with Seller for purposes of
applying such pre-existing condition limitations to such Hired Employee
(and such Hired Employee's dependents).
(iii) The term "EMPLOYEE COMMENCEMENT DATE" shall mean the day
immediately following the Cut-Off Point; provided, however, that with
respect to any employee who is in paid or unpaid inactive status as of the
Closing Date and to whom Buyer offers employment pursuant to this Section
9.2(a) the term "EMPLOYEE COMMENCEMENT DATE" shall mean such employee's
first day of employment with Buyer.
(b) Subject to the accuracy of Seller's representations and
warranties in Section 3.12 and SCHEDULE 3.12, (i) on and after the Closing
Date, Buyer shall be responsible for any and all notices required with
respect to Buyer's termination of employees, and (ii) any liabilities or
obligations arising under the WARN Act on or after the Closing Date shall
be those of Buyer and not Seller.
(c) After the Closing, Buyer will, upon reasonable request, give
assistance to human resources personnel of ▇▇▇▇▇▇▇▇▇▇ and/or Seller in the
post-closing administration of the respective employee benefit plans of
Seller as they apply to Hired Employees. For this purpose, "assistance"
includes reasonable access to the pre-Closing personnel records of Hired
Employees.
(d) Notwithstanding the provisions of Section 9.2(a), Buyer shall not
be required to offer employment to (i) any person whom Buyer could
otherwise terminate for cause, (ii) any person whom Buyer has prior to
Closing previously employed and subsequently terminated for cause, or (iii)
the President and Chief Executive Officer, the Chief Financial Officer or
the Chief Operating Officer of Seller.
(e) Buyer agrees that it shall assume, from and after the Cut-Off
Point, the accrued liability of Seller for accrued vacation, holiday and
sick day benefits and related taxes that relate to the Hired Employees, to
the extent such amounts are included in Working Capital. Buyer agrees that
(i) Hired Employees will be entitled to use such benefits in accordance
with the generally applicable policies and procedures established by Buyer
for use of paid leave, (ii) that such benefits will be in addition to any
holidays, vacation days, sick days or other paid leave earned by the Hired
Employees after the Cut-Off Point as employees of Buyer, and (iii) that
such benefits will not (unless previously paid by Seller) be eliminated by
Buyer without payment in full to the Hired Employees. Seller agrees that
it will furnish to Buyer at Closing a schedule (dated as of the most recent
date practicable prior to Closing) showing the name of each Hired Employee
(and each employee of Seller on inactive status) and as to each such person
the amount of accrued APL that such person has as of such date. As soon as
possible after the Closing, Seller will furnish to Buyer a schedule showing
such information as of the Cut-Off Point.
9.3 [omitted]
9.4 CONSENTS AND REGULATORY APPROVALS. Buyer acknowledge that
except as provided in Section 5.9 hereof, neither Seller nor ▇▇▇▇▇▇▇▇▇▇
shall have any responsibility for obtaining any regulatory consents to and
approvals of the transfer of the Licenses described in SCHEDULE 3.5 hereof
or for obtaining any necessary consents to the assignment of the contracts
and leases. Buyer agrees to use its reasonable best efforts to secure such
approvals and consents as soon as practicable and prior to the Closing.
9.5 CHANGE OF NAME. Buyer agrees that it will cause all signs, if
any, incorporating the names "▇▇▇▇▇▇▇▇▇▇" and "▇▇▇▇▇▇▇▇▇▇ Healthcare"(and
all variations thereof) which are located at any of the Real Property or
the improvements thereto to be removed or modified as soon as reasonably
practicable after the Closing Date and in any event within 30 days after
the Closing Date, such that such names are no longer used at such Real
Property or upon such improvements.
9.6 BUYER'S PAYMENT OF THE PURCHASE PRICE. Subject to the conditions
to Closing set forth in this Agreement, Buyer shall pay the Purchase Price
for the Assets in accordance with Section 2.3(a).
9.7 [omitted]
9.8 PRESERVATION AND ACCESS TO BOOKS AND RECORDS AFTER THE CLOSING.
(a) After the Closing, Buyer shall keep and preserve all medical records
and medical charts existing as of the Closing of patients of the Hospital
for so long as Buyer is required by law to maintain such records (but in no
event less that seven years, beginning on the Closing Date). Buyer
acknowledges that as a result of entering into this Agreement and operating
the Business, it will gain access to patient and other information which is
subject to rules and regulations concerning confidentiality. Buyer agrees
to abide by any such rules and regulations relating to the confidential
information it acquires. Buyer agrees after Closing to maintain the
patient records at the Business in accordance with applicable law
(including, if applicable, Section 1861(v)(i)(I) of the Social Security Act
(42 U.S.C. 1395x(v)(1)(I)) and requirements of relevant insurance
carriers. In addition, Seller and ▇▇▇▇▇▇▇▇▇▇ shall be entitled to remove
from the Hospital any such patient records, but only for purposes of
pending litigation involving a patient to whom such records refer, as
certified in writing prior to removal by counsel retained by Seller or
▇▇▇▇▇▇▇▇▇▇ in connection with such litigation; provided, however, that to
the extent ▇▇▇▇▇▇▇▇▇▇ or Seller are not required by subpoena or court order
to use originals of the patient records for such purposes, ▇▇▇▇▇▇▇▇▇▇ shall
(a) use copies of patient records, where appropriate and (b) cause Seller
to use copies of patient records. Any original patient records so removed
from the Business shall be promptly returned to Buyer following its use by
Seller or ▇▇▇▇▇▇▇▇▇▇. Notwithstanding the foregoing provisions, Seller or
▇▇▇▇▇▇▇▇▇▇ shall not be entitled to review, have access to, have copies of
or remove from the premises of the Business any medical records or patient
charts relating to any period after the expiration of the applicable
statute of limitations expires for the bringing of any action against
Seller for its ownership of the Business prior to the Cut-Off Point.
(b) After the Closing, Buyer shall keep and preserve all other
records of the Business existing as of the Closing which are delivered to
Buyer by Seller for a period of 7 years or such longer period (if any) as
such records are required to be kept and preserved by any federal or state
law or regulation. After the Closing, upon reasonable written notice by
Seller to Buyer, Seller shall be entitled, during regular business hours,
to have access to and make copies of all records pertaining to the
operation of the Business (other than medical records which shall be
governed by the provisions of Section 9.8(a) hereof) prior to the Closing
for any lawful corporate purpose.
(c) Should Buyer decide to dispose of any books or records which they
have been obligated to maintain pursuant to Section 9.8, Buyer shall advise
Seller in writing of such intention and Seller shall have not less than 60
days after receipt of such notice to elect in writing to have Buyer deliver
such records to Seller.
9.9 NOTICE; EFFORTS TO REMEDY. Buyer will notify Seller and
▇▇▇▇▇▇▇▇▇▇ promptly in writing of, and contemporaneously will provide
Seller and ▇▇▇▇▇▇▇▇▇▇ with true and complete copies of any and all
information and documents relating to, and will use their best efforts to
cure as soon as practicable (or by any subsequent date agreed upon by the
parties), any event, transaction or circumstance occurring that causes or
would cause any covenant or agreement of Buyer under this Agreement to be
breached, or that renders or would render untrue any representation or
warranty of Buyer contained in this Agreement as if the same were made on
or as of the date of such event, transaction or circumstance. Buyer also
will use their best efforts to cure, as soon as practicable (or by any
subsequent date agreed upon by the parties), any violation or breach of any
representation, warranty, covenant or agreement made by either of them in
this Agreement. Buyer shall have a reasonable time within which to effect
a cure of such breach or misrepresentations before Seller or ▇▇▇▇▇▇▇▇▇▇ may
terminate this Agreement (to the extent such remedy is available to Seller
or ▇▇▇▇▇▇▇▇▇▇ pursuant to Section 11.1(d) hereof); provided, however, that
after the date established by the parties for Closing, Seller or ▇▇▇▇▇▇▇▇▇▇
may terminate this Agreement (to the extent such remedy is available to
Seller or ▇▇▇▇▇▇▇▇▇▇ pursuant to Section 11.1(d) hereof) unless such breach
or misrepresentation has been cured to the reasonable satisfaction of
Seller or ▇▇▇▇▇▇▇▇▇▇. Furthermore, Buyer shall notify Seller and
▇▇▇▇▇▇▇▇▇▇ promptly in writing of any event, transaction or circumstance
occurring that causes or would cause any covenant or agreement of Seller or
▇▇▇▇▇▇▇▇▇▇ under this Agreement to be breached, or that renders or would
render untrue any representation or warranty of Seller or ▇▇▇▇▇▇▇▇▇▇
contained in this Agreement as if the same were made on or as of the date
of such event, transaction or circumstance. Seller and ▇▇▇▇▇▇▇▇▇▇ shall
have a reasonable time in which to effect a cure of such breach or
misrepresentation before Buyer may terminate this Agreement (to the extent
such remedy is available to Buyer pursuant to Section 11.1(d) hereof);
provided, however, that after the date established by the parties for
Closing, Buyer may terminate this Agreement (to the extent such remedy is
available to Buyer pursuant to Section 11.1(d) hereof) unless the breach or
misrepresentation has been cured to the reasonable satisfaction of Buyer .
The failure of Buyer to notify Seller and ▇▇▇▇▇▇▇▇▇▇ of any such discovered
event, transaction or circumstance shall not release Seller and ▇▇▇▇▇▇▇▇▇▇
from any liability to Buyer resulting from the breach attendant to such
discovered event, transaction or circumstance; provided, however, that,
unless Seller or ▇▇▇▇▇▇▇▇▇▇ had independent knowledge of such event,
circumstance or condition, ▇▇▇▇▇▇▇▇▇▇' and Seller's liability shall be
limited to the damages that would have nonetheless resulted to Buyer had
Buyer disclosed such discovered event, transaction or circumstance to
Seller and ▇▇▇▇▇▇▇▇▇▇ prior to Closing.
9.10 POWER OF ATTORNEY FOR D.E.A. REGISTRATION NUMBER(S) AND
CALIFORNIA PHARMACY LICENSE(S). Buyer covenants that it shall promptly
apply for all necessary United States Department of Justice Drug
Enforcement Agency ("D.E.A.") registration(s) or California Pharmacy
License(s) with respect to the Hospital as soon as possible. At or prior
to Closing, Seller shall execute in favor of Buyer one or more Powers of
Attorney for Order Forms authorizing Buyer or a representative of Buyer to
execute applications for books of official order forms and to sign such
order forms, under Seller's D.E.A. Registration Number(s) or Seller's
Pharmacy License(s) as required for all necessary controlled substances on
an interim basis until such time as Buyer shall receive approval of all
necessary D.E.A. registration(s) or California Pharmacy License(s). Seller
covenants that it shall cooperate with Buyer and provide such information
as Buyer may reasonably request in making all such applications for
registration or licensing.
9.11 GOVERNMENTAL APPROVALS. Buyer shall assist and cooperate with
Seller and Seller's representatives and counsel in obtaining all
governmental consents, approvals and licenses which Seller reasonably deems
necessary or appropriate and in the preparation of any document or other
material which may be required by any governmental agency as a predicate to
or result of the transactions contemplated herein.
9.12 FTC NOTIFICATION. Buyer shall, if and to the extent required by
law, (i) file all reports or other documents required under the HSR Act or
requested by the DOJ or the FTC under the HSR Act, and all regulations
promulgated thereunder, or in order to permit all applicable waiting
periods under the HSR Act to expire, (ii) seek early termination of such
waiting periods concerning the transactions contemplated hereby, and (iii)
comply promptly with any requests by the FTC or DOJ for additional
information concerning such transactions, so that the applicable waiting
period specified in the HSR Act will expire as soon as reasonably possible
after the execution and delivery of this Agreement. Buyer agrees to
furnish to Seller such information concerning Buyer as Seller needs to
perform its obligations under Section 10.3 of this Agreement.
10. PARTICULAR COVENANTS OF SELLER AND ▇▇▇▇▇▇▇▇▇▇.
10.1 REIMBURSEMENT OF BUYER. If any third party payor deducts any
amount from payments due Buyer in respect of claims against or amounts owed
by ▇▇▇▇▇▇▇▇▇▇ or Seller, then ▇▇▇▇▇▇▇▇▇▇ and/or Seller will promptly
reimburse Buyer for the amounts so deducted within 10 days after written
demand therefor by Buyer. Buyer agrees to give prompt notice to Seller and
▇▇▇▇▇▇▇▇▇▇ of the assertion of any claim, formal or informal, by any third
party payor for which, if deducted by such third party payor, Buyer would
be entitled to reimbursement by ▇▇▇▇▇▇▇▇▇▇ and/or Seller hereunder and will
cooperate in good faith, at no out-of-pocket cost to Buyer, so as to permit
▇▇▇▇▇▇▇▇▇▇ and/or Seller to mitigate the amount of any such claim by any
such third party payor.
10.2 GOVERNMENTAL APPROVALS. Seller and ▇▇▇▇▇▇▇▇▇▇ shall assist and
cooperate with Buyer and Buyer's representatives and counsel in obtaining
all governmental consents, approvals and licenses which Buyer reasonably
deems necessary or appropriate and in the preparation of any document or
other material which may be required by any governmental agency as a
predicate to or result of the transactions contemplated herein.
10.3 FTC NOTIFICATION. Seller and ▇▇▇▇▇▇▇▇▇▇ shall, if and to the
extent required by law, (i) file all reports or other documents required
under the HSR Act or requested by the DOJ or the FTC under the HSR Act, and
all regulations promulgated thereunder, or in order to permit all
applicable waiting periods under the HSR Act to expire, (ii) seek early
termination of such waiting periods concerning the transactions
contemplated hereby, and (iii) comply promptly with any requests by the FTC
or DOJ for additional information concerning such transactions, so that the
applicable waiting period specified in the HSR Act will expire as soon as
reasonably possible after the execution and delivery of this Agreement.
Seller and ▇▇▇▇▇▇▇▇▇▇ agree to furnish to Buyer such information concerning
Seller and ▇▇▇▇▇▇▇▇▇▇ as Buyer needs to perform its obligations under
Section 9.12 of this Agreement.
11. TERMINATION.
11.1 OPTIONAL TERMINATION. This Agreement may be terminated at any
time prior to the Closing as follows:
(a) by the mutual agreement of Buyer and Seller;
(b) by Buyer in accordance with the provisions of Section 5.4;
(c) by either Buyer or Seller, if any court of competent jurisdiction
in the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree, ruling or other action
shall have become final and non-appealable;
(d) in the event either Seller or ▇▇▇▇▇▇▇▇▇▇, on one hand, or either
Buyer or System on the other hand, commits a material breach of any
representation, warranty, covenant or agreement made herein, which
breach, if left uncured, would result in a material adverse effect on
the condition or value of the Assets or the operation of the Business,
by either Buyer or Seller, provided such terminating party did not
commit such breach and not an affiliate of the party that committed
such breach, and provided further that this right to terminate shall
be subject to the parties' rights to cure set forth herein; and
(e) by either Buyer or Seller if the Closing has not occurred by the
180th day after the date of this Agreement as set forth in the
preamble hereof because a condition to the terminating party's
obligation to close set forth, in respect of Buyer in Article 7, or
such later date as permitted under Section 2.1(b), and, in respect of
Seller and ▇▇▇▇▇▇▇▇▇▇ in Article 8, was not satisfied on such date,
unless the date for Closing has been extended by the mutual agreement
of the parties hereto.
11.2 NOTICE OF ABANDONMENT. In the event of any termination pursuant
to Section 11.1, written notice shall forthwith be given to the other
parties hereto except with respect to a termination pursuant to Section
11.1(a).
11.3 EFFECT OF TERMINATION. Except for the obligations contained in
Sections 6.1(v), 6.2(v), 12.8, 12.9 and 12.21 hereof, upon the due
termination of this Agreement pursuant to Section 11.1(a), (b), (c) or
(e), this Agreement shall forthwith become null and void, and neither party
hereto nor any of its officers, directors, trustees, members or
shareholders shall have liability hereunder, provided, however that in no
event shall a party hereto be released from liability for damages under
this Agreement or otherwise following termination under Section 11.1(d) in
the event such party's breach resulted in the failure to close by any such
termination date and such breaching party was not otherwise excused from
its obligation so to close under this Agreement. Any and all claims or
awards for damages (including without limitation punitive damages)
following termination under Section 11.1(d) shall not exceed $5,000,000.
Parties specific agreement to and acknowledgment of the preceding:
_______________[▇▇▇▇▇▇▇▇▇▇ initials], _______________[CCH initials],
_______________[▇▇▇▇▇ initials], and _______________[System initials].
12. GENERAL.
12.1 EXHIBITS, SCHEDULES AND OTHER INSTRUMENTS. Each Exhibit,
Certificate, Appendix and Schedule, if any, to this Agreement shall be
considered a part hereof as if set forth herein in full. Any fact disclosed
on one Schedule hereto shall be deemed to be disclosed on each other
applicable schedule. Buyer shall have 10 days following receipt of any
Schedule not provided on the date of execution of this Agreement to approve
or disapprove of any such Schedule. Seller shall have the right to update
any Schedule prior to Closing, which updated Schedule shall also be subject
to Buyer's approval. Buyer shall not unreasonably disapprove of any
updated Schedule that reflects only changes resulting from operations of
the Hospital in the ordinary course. Upon receiving notice from Buyer of a
disapproved Schedule, Seller shall use its best efforts to remove or remedy
any item or event disclosed in the disapproved Schedule, but if sit is
unable to do so within 10 business days, Buyer shall have the option of
waiving its disapproval or terminating this Agreement without liability to
either party.
12.2 PRE-CLOSING ACCESS. Seller shall give Buyer, its accountants,
counsel, and other representatives access to the premises and offices of
the Hospital, management and supervisory employees of the Hospital, and
make such information as Buyer may reasonably request available to Buyer,
as may be necessary for Buyer to examine the Assets and Business being
acquired. No such inspection by Buyer shall unreasonably interfere with
Seller's conduct of business in the ordinary course.
12.3 TERMINATING COST REPORT. Seller agrees to file a terminating
cost report in connection with third party receivables of the Business with
applicable agencies and shall provide Buyer with a copy thereof prior to
such filing.
12.4 ADDITIONAL ASSURANCES. The provisions of this Agreement shall
be self-operative and shall not require further agreement by the parties
except as may be herein specifically provided to the contrary; provided,
however, at the request of either party, the other party shall execute such
additional instruments and take such additional acts as are reasonably
necessary to effectuate this Agreement.
12.5 CONSENTS, APPROVALS AND DISCRETION. Whenever this Agreement
requires any consent or approval to be given by either party or either
party must or may exercise discretion, the parties agree that such consent
or approval shall not be unreasonably withheld or delayed and such
discretion shall be reasonably exercised.
12.6 CHOICE OF LAW. THE PARTIES AGREE THAT THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA AND VENUE SHALL BE BUTTE OR SACRAMENTO COUNTIES.
12.7 BENEFIT/ASSIGNMENT. Subject to the provisions herein to the
contrary, this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective legal representatives, successors
and assigns; provided, however, that no party may assign this Agreement
without the prior written consent of the other party.
12.8 COSTS OF TRANSACTION. Subject to the other terms and provisions
hereof, whether or not the transactions contemplated hereby shall be
consummated, the parties agree as follows: (i) Seller and ▇▇▇▇▇▇▇▇▇▇ will
pay the fees, expenses, and disbursements of Seller and ▇▇▇▇▇▇▇▇▇▇ and
their respective agents, representatives, accountants, and counsel incurred
in connection with the subject matter hereof and any amendments hereto; and
(ii) Buyer shall pay the fees, expenses and disbursements of Buyer and its
respective agents, representatives, accountants and counsel incurred in
connection with the subject matter hereof and any amendments hereto. Buyer
shall pay any transfer taxes and recording fees resulting from the
consummation of the transactions contemplated hereby.
12.9 CONFIDENTIALITY. With respect to Confidential Information
provided by ▇▇▇▇▇▇▇▇▇▇ or Seller in connection with and relative to the
transactions contemplated by this Agreement, Buyer agrees to use reasonable
best efforts to cause its officers, employees, representatives and agents
to hold all such Confidential Information in strict confidence and only to
disclose such Confidential Information to such duly authorized persons as
are necessary to effect the transactions contemplated hereby, and, if
requested, to return all originals and copies of any such written
Confidential Information to Seller or ▇▇▇▇▇▇▇▇▇▇ in the event for any
reason the sale of the Assets is not consummated. Nothing in this Section
shall prohibit the use of such Confidential Information for such
governmental filings as are required by law or governmental regulations or
the disclosure of such Confidential Information if such disclosure is
compelled by judicial or administrative process or, in the opinion of
Buyer's counsel, other requirements of law. Subject to ▇▇▇▇▇▇▇▇▇▇'
disclosure obligations under federal securities laws, any release to the
public of information with respect to the transactions contemplated hereby
will be made only in the form and manner approved by the parties and their
respective representatives. Buyer agrees that it will not use, and will
not knowingly permit others to use, any Confidential Information in a
manner detrimental to the Business, ▇▇▇▇▇▇▇▇▇▇ or Seller or to their
competitive disadvantage. Buyer , its officers, employees and agents
recognize that any breach of this Section would result in irreparable harm
to Seller and ▇▇▇▇▇▇▇▇▇▇ and that therefore either Seller or ▇▇▇▇▇▇▇▇▇▇
shall be entitled to an injunction to prohibit any such breach by Buyer and
its officers, employees and agents in addition to all of their other legal
and equitable remedies. For the purposes hereof, "CONFIDENTIAL
INFORMATION" shall mean all information of any kind concerning ▇▇▇▇▇▇▇▇▇▇
or Seller obtained, directly or indirectly, from ▇▇▇▇▇▇▇▇▇▇ or Seller in
connection with the transactions contemplated by this Agreement except
information (i) ascertainable or obtained from public or published
information, (ii) received from a third party not known by Buyer to be
under an obligation to keep such information confidential, (iii) which is
or becomes known to the public (other than through a breach of this
Agreement), or (iv) which was in Buyer's possession prior to disclosure
thereof to Buyer in connection herewith.
12.10 WAIVER. The waiver by either party of a breach or violation of
any term or provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same provision by
any party or of the breach of any other term or provision of this
Agreement. The delay or a failure of a party to transmit any written
notice hereunder shall not constitute a waiver by such party of any default
hereunder or of any other or further default under this Agreement except as
may expressly be provided for by the terms of this Agreement.
12.11 TAX ALLOCATION. The allocation of the Purchase Price for tax
purposes shall be set forth in a statement prepared in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended, which
statement shall be prepared in a manner generally consistent with the form
of Internal Revenue Service Form 8594 and a manner consistent with the
Purchase Price allocation provided under Section 1.4. Buyer and Seller
shall cooperate in the preparation of such statement of allocation and each
party hereto shall file a copy of such statement as, and if, required by
applicable law.
12.12 INTERPRETATION. Each of the parties has agreed to the use of
the particular language of the provisions of this Agreement including all
attached Exhibits and Schedules and any questions of doubtful
interpretation shall not be resolved by any rule or interpretation against
the draftsman but rather in accordance with the fair meaning thereof,
having due regard to the benefits and rights intended to be conferred upon
the parties hereto and the limitations and restrictions upon such rights
and benefits intended to be provided. Whenever any matter herein is
represented, warranted or stated herein to be to the "KNOWLEDGE OF," to the
"BEST KNOWLEDGE OF" or to the "BEST KNOWLEDGE AND BELIEF OF" Seller or
▇▇▇▇▇▇▇▇▇▇, or words of similar import, such representation, warranty or
statement shall mean all matters with respect to which (a) Seller has
received written notice or (b) any of the following persons has knowledge
or with reasonable inquiry under the circumstances would have knowledge:
any director or officer of Seller, or any administrator, assistant
administrator or controller at the Hospital.
12.13 NOTICE. Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be in writing and shall
be deemed effectively given when personally delivered, when received by
telegraphic or other electronic means (including telefax and telex) or
overnight courier, or five days after being deposited in the United States
mail, with postage prepaid, certified mail, return receipt requested,
addressed as follows:
Buyer: N.T. ▇▇▇▇▇ Memorial Hospital
▇. ▇▇▇ ▇▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Seller: ▇▇▇▇▇▇▇▇▇▇ Healthcare Corporation
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
or to such other address, and to the attention of such other person or
officer as any party may designate, with copies thereof to the respective
counsel thereof as notified by such party.
12.14 SEVERABILITY. In the event any provision of this Agreement is
held to be invalid, illegal or unenforceable for any reason and in any
respect, such invalidity, illegality, or unenforceability shall in no event
affect, prejudice or disturb the validity of the remainder of this
Agreement, which shall be in full force and effect, enforceable in
accordance with its terms, including, without limitation, those terms which
contemplate or require the further agreements of the parties. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Agreement a provision as similar in
terms to such illegal, invalid or unenforceable provision as may be
possible and still be legal, valid or enforceable.
12.15 GENDER AND NUMBER. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine,
feminine and neuter, and the number of all words herein shall include the
singular and plural.
12.16 DIVISIONS AND HEADINGS. The divisions of this Agreement into
sections and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall have no legal effect in
construing the provisions of this Agreement.
12.17 CONSENTED ASSIGNMENT. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any claim, right, contract, license, lease, commitment, sales
order or purchase order if an attempted assignment thereof without the
consent of another party thereto would constitute a breach thereof or in
any material way affect the rights of Seller thereunder, unless such
consent is obtained. If such consent is not obtained, or if an attempted
assignment would be ineffective or would materially affect Seller's rights
thereunder so that Buyer would not in fact receive all such rights, Seller
shall cooperate in any reasonable arrangement designed to provide for Buyer
during the Contract Period (as defined below) the benefit under any such
claims, rights, contracts, licenses, leases, commitments, sales orders or
purchase orders, including, without limitation, enforcement, at no out-of-
pocket cost to Seller, of any and all rights of Seller against the other
party or parties thereto arising out of the breach or cancellation by such
other party or otherwise. To the extent that any claim, right, contract,
license, lease, commitment, sales order or purchase order to be assigned to
or acquired by Buyer pursuant to this Agreement also applies to facilities
or operations other than those being sold pursuant hereto, then Seller also
agrees that during the Contract Period, upon the written request of Buyer,
it will use its reasonable best efforts to cause the services, property or
other benefits provided or made available under such claim, right,
contract, license, lease, commitment, sales order or purchase order to
continue to be available to Buyer on terms and conditions substantially
similar to those presently in effect. The term "CONTRACT PERIOD" shall
mean with respect to any contract or other right the period beginning on
the Closing Date and ending on the earlier of (a) the expiration of the
term of the given contract or other right and (b) the third anniversary of
the Closing Date.
12.18 SURVIVAL. The representations, warranties, covenants and
agreements made by the parties herein shall survive the Closing; provided,
however, that the representations and warranties made by the parties herein
shall expire on the first anniversary of the Closing Date except with
respect to matters for which Buyer has given notice of claim under Section
6.3, and except with respect to the representations and warranties set
forth in Sections 3.1, 3.2, 3.10, 3.15, 3.16, 3.17, 3.19, 4.1, 4.2 and 4.3
(and the indemnities with respect thereto), which shall survive for the
applicable statute of limitations periods (collectively, the "SURVIVAL
PERIOD").
12.19 ENTIRE AGREEMENT/AMENDMENT. Except for the Confidentiality
Agreement between ▇▇▇▇▇▇▇▇▇▇ and Superior California Medical Center (now
known as the System), dated June 16, 1997 (which Confidentiality Agreement
will survive the execution and delivery of this Agreement), this Agreement
supersedes all prior contracts, understandings and agreements, whether
written or oral, and constitutes the entire agreement of the parties
respecting the within subject matter and no party shall be entitled to
benefits other than those specified herein. As between or among the
parties, no oral statements or prior written material (other than the
Confidentiality Agreement) not specifically included herein shall be of any
force and effect; the parties specifically acknowledge that in entering
into and executing this Agreement, the parties rely solely upon the
representations and agreements contained in this Agreement and no others.
No terms, conditions, warranties, or representations, other than those
contained herein (or in the Confidentiality Agreement) and no amendments or
modifications hereto, shall be binding unless made in writing and signed by
the party to be charged. Without limiting the foregoing, this Asset
Purchase Agreement for Chico Community Rehabilitation Hospital supersedes
and replaces that certain Asset Purchase Agreement dated December 15, 1997
among ▇▇▇▇▇▇▇▇▇▇, Seller, Buyer and System, with respect to the Business.
12.20 COUNTERPARTS. This Agreement may be executed in multiple
originals or counterparts, each and all of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
12.21 RISK OF LOSS. Notwithstanding any other provision hereof to
the contrary, the risk of loss in respect of casualty to the Assets shall
be borne by Seller through the time of Closing and by the Buyer thereafter.
12.22 PUBLIC ANNOUNCEMENT. ▇▇▇▇▇▇▇▇▇▇ and Seller, on one hand, and
Buyer, on the other hand, mutually agree that, prior to the Closing, no
party shall issue any press release or make any public announcement of the
transaction which is the subject of this Agreement without the prior
consent of each other party, except where a public announcement is required
by law as reasonably determined by such party. Additionally, ▇▇▇▇▇▇▇▇▇▇
and Seller, on one hand, and Buyer on the other hand, each agrees that,
prior to the Closing, it will not, and will cause its officers, directors,
partners, employees, counselors and representatives not to, discuss any
aspects of this Agreement with any third party (other than their respective
representatives, lenders, prospective underwriters and counselors) without
the prior written consent of the other party hereto.
The next page of this Agreement is the signature page, which is
page number "S-1."
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in multiple originals by their duly authorized officers and
their corporate seals duly affixed hereto, all as of the day and year first
above written.
▇▇▇▇▇▇▇▇▇▇ HEALTHCARE CORPORATION
By:
Title:
SELLER:
CHICO COMMUNITY HOSPITAL, INC.
By:
Title:
N.T. ▇▇▇▇▇ MEMORIAL HOSPITAL
By:
Title:
▇▇▇▇▇ HEALTH SYSTEM
By:
Title:
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
FOR
CHICO COMMUNITY REHABILITATION HOSPITAL
THIS FIRST AMENDMENT ("FIRST AMENDMENT") to the Asset Purchase
Agreement for Chico Community Rehabilitation Hospital (the "AGREEMENT") is
entered into as of the effective date set forth in Section 10 hereof, by
and between ▇▇▇▇▇▇▇▇▇▇ HEALTHCARE CORPORATION ("▇▇▇▇▇▇▇▇▇▇"), a California
corporation, CHICO COMMUNITY HOSPITAL, INC. ("CCH" and "SELLER"), a
California corporation, and N.T. ▇▇▇▇▇ MEMORIAL HOSPITAL ("BUYER"), a
California nonprofit public benefit corporation, and ▇▇▇▇▇ HEALTH SYSTEM
("SYSTEM"), a California nonprofit public benefit corporation.
WHEREAS, Buyer, System, Seller and ▇▇▇▇▇▇▇▇▇▇ have entered into the
Agreement dated as of December 15, 1997 for the purchase by ▇▇▇▇▇ of the
Business of CRH (as defined in the Agreement); and
WHEREAS, the Agreement contemplated that Seller would assign to Buyer
at Closing all its interests in the Facility Lease (as defined in the
Agreement); and
WHEREAS, Buyer has entered into a Purchase and Sale Agreement with
Finova Capital Corporation ("FINOVA"), the landlord under the Facility
Lease, whereunder Buyer will purchase all of Finova's interest in the real
and personal property comprising CRH, and the parties to the Facility Lease
and related agreements and leases will terminate the Facility Lease and the
related agreement and leases, all occurring concurrent with the Closing
under the Agreement; and
WHEREAS, Buyer and Seller wish to amend certain terms of the Agreement
to reflect the purchase of the real and personal property as well as a
later than anticipated closing of the Transaction.
NOW THEREFORE, BUYER, SYSTEM, SELLER AND ▇▇▇▇▇▇▇▇▇▇ AGREE AS FOLLOWS:
1. Recitals D and E are hereby amended in their entirety, as follows:
D. WHEREAS, ▇▇▇▇▇▇▇▇▇▇ and CCH desire to sell to Buyer and
Buyer desires to purchase substantially all of the assets, real
and personal, tangible and intangible, used by CCH in the
operation of CRH (collectively the "BUSINESS);
E. WHEREAS, ▇▇▇▇▇ and Finova Capital Corporation ("FINOVA"),
a Delaware corporation which owns all of the real property and a
substantial amount of the personal property comprising CRH and
leases such real and personal property to CCH, have entered into
that certain Purchase and Sale Agreement (the "FINOVA AGREEMENT")
whereunder Buyer will purchase all of Finova's interest in the
real and personal property comprising CRH; it is the intent of
the parties hereto that the closing on this Agreement shall be
concurrent with the closing by the parties to the Finova
Agreement; and
2. Section 1.1(a) of the Agreement is deleted in its entirety.
3. Section 1.1(d) of the Agreement is amended by deleting "including the
Facility Lease," in the second line thereof.
4. Section 1.3(b) is amended by deleting "(v) the Facility Lease; and
(vi)" and inserting "and (v)."
5. Section 2.1 of the Agreement is hereby amended in its entirety, as
follows:
2.1 CLOSING. Subject to the conditions set forth in Articles 7
and 8 hereof, the consummation of the sale and purchase of the
Assets contemplated by and described in this Agreement (the
"CLOSING") shall take place in San Francisco, California, at the
offices of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other agreed upon
location, at 10:00 A.M. local time on such date as may be agreed
by the parties, not to extend past June 30, 1998. The date on
which the Closing occurs is referred to herein as the "CLOSING
DATE." The Closing of the transactions shall be deemed to be
effective as of 11:59 P.M. (California time) on the Closing Date
or such other time which the parties may mutually designate in
writing. The time at which the Closing shall be deemed to be
effective is referred to herein as the "CUT-OFF POINT."
6. Section 2.2(a) is deleted in its entirety.
7. Section 3.7 is amended to read by deleting "and the lease from ▇▇▇▇
Atlantic Tricon Leasing Corporation relating to CRH" in the final line
thereof.
8. Sections 7.5 and 7.6 are amended in their entirety to read as follows:
7.5 TERMINATION OF FACILITY LEASE AND RELATED AGREEMENTS.
Effective the Closing Date, the respective parties to the leases
and agreements set forth below have terminated all such leases
and agreements on terms acceptable to Buyer and the parties
thereto, which terms shall include without limitation (i) the
agreement and acknowledgment by the parties that Buyer shall have
no liability whatsoever related to any claim, dispute, default or
other matter arising out of the performance of the parties to
such leases and agreements prior to the termination date thereof;
(ii) that no party to the termination agreements shall have
recourse against Buyer or the real or personal property which are
the subjects of the leases and agreements arising out of any
claim, dispute, default or other matter arising out of the
performance of the parties to such leases and agreements prior to
the termination date thereof; and (iii) there has been no
assignment of the rights and/or obligations of any parties to
each terminated lease or agreement. The leases and agreements to
be terminated shall include the following:
(a) The Facility Lease dated June 7, 1991, as amended
December 20, 1991 and June 30, 1994 by and between CCH, as
assignee of Chico Rehabilitation Hospital, Inc. ("CRHI"), and
Finova, as successor in interest to ▇▇▇▇ Atlantic Tricon Leasing
Corporation ("BATLC").
(b) The following agreements between CCH and Finova, each of
which CCH has assumed from CRHI and Finova has succeeded to the
interest therein of BATLC:
(i) Memorandum of Lease and Grant of Option for North
Valley Rehabilitation Hospital, dated June 7, 1991;
(ii) Tax Indemnity Agreement, dated as of June 7, 1991
and amended on December 20, 1991;
(iii) Equipment Lease No. 2911 dated December 27, 1990,
as amended by Amendment One dated December 27, 1990, Amendment
Two dated December 27, 1990 and Amendment Three dated March 28,
1991;
(iv) Subordination and Continuous Ownership Agreement,
dated June 7, 1991;
(v) Security Agreement and Assignment, dated June 7,
1991; and
(vi) the Financing Statements identified on Schedule A
hereto.
(c) The following agreements entered into by Paracelus, as
assignee of Continental Medical Systems, Inc., a Delaware
corporation ("CMS") with or for the benefit of Finova, each of
which Finova has succeeded to the interest therein of BATLC:
(i) the Tax Indemnity Agreement, dated as of June 7,
1991 and amended on December 20, 1991;
(ii) the Subordination and Continuous Ownership
Agreement, dated June 7, 1991;
(iii) Guaranty Agreement, dated June 7, 1991; and
(iv) Guaranty, dated December 29, 1990 (guaranteeing
the obligations of CCH under the Equipment Lease).
d. The Memorandum of Repurchase Option whereunder
▇▇▇▇▇▇▇▇▇▇, and CCH granted an option to CRHI, CMS and any
majority-owned subsidiary of CMS to repurchase CRH.
7.6 CLOSING OF THE FINOVA AGREEMENT. The parties to the Finova
Agreement have closed the transaction contemplated therein
concurrent with the Closing.
9. Section 8 is amended by adding new Sections 8.7 and 8.8 as follows:
8.7 TERMINATION OF FACILITY LEASE AND RELATED AGREEMENTS. Effective
the Closing Date, the respective parties to the leases and agreements
set forth in Section 7.5 have terminated all such leases and
agreements on terms acceptable to Seller and the parties thereto.
8.8 CLOSING OF THE FINOVA AGREEMENT. The parties to the Finova
Agreement have closed the transaction contemplated therein concurrent
with the Closing.
10. Section 11.1(e) is of the Agreement is hereby amended in its entirety,
as follows:
(e) by either Buyer or Seller if the Closing has not
occurred by June 30, 1998, because a condition to the terminating
party's obligation to close set forth, in respect of Buyer in
Article 7, and, in respect of Seller and ▇▇▇▇▇▇▇▇▇▇ in Article 8,
was not satisfied on such date, unless the date for Closing has
been extended by the mutual agreement of the parties hereto.
11. The First Amendment shall be effective upon the execution by ▇▇▇▇▇ and
Finova of the Finova Agreement.
12. Except as amended by this First Amendment, the Agreement is hereby
ratified and confirmed by the parties and shall remain in full force and
effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
▇▇▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇▇▇ HEALTHCARE CORPORATION
a California corporation
By:
Name:
Its authorized agent
By:
Name:
Its authorized agent
SELLER:
CHICO COMMUNITY HOSPITAL, INC.
a California corporation
By:
Name:
Its authorized agent
By:
Name:
Its authorized agent
BUYER:
N.T. ▇▇▇▇▇ MEMORIAL HOSPITAL
a California nonprofit public benefit corporation
By:
Name:
Its authorized agent
By:
Name:
Its authorized agent
SYSTEM:
▇▇▇▇▇ HEALTH SYSTEM
a California nonprofit public benefit corporation
By:
Name:
Its authorized agent
By:
Name:
Its authorized agent