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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
by and among
▇▇▇▇ UNIVERSITY SCHOOL OF NURSING AND HEALTH SCIENCES, INC.
("Purchaser"),
FOREST PARK HOSPITAL CORPORATION #1
("Seller")
and
DOCTORS COMMUNITY HEALTHCARE CORPORATION
("Parent")
Dated as of March 15, 2005
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ARTICLE I DEFINITIONS 1
1.1 Definitions 1
1.2 Interpretation 8
ARTICLE II SALE AND PURCHASE OF ASSETS; ASSUMPTION OF
ASSUMED LIABILITIES 8
2.1 Purchased Assets 8
2.2 Assignment of Contracts and Permits 9
2.3 Excluded Assets 10
2.4 Assumed Liabilities 10
2.5 No Other Liabilities Assumed 11
2.6 Disclaimer of Warranties 11
ARTICLE III PURCHASE PRICE AND PAYMENT 11
3.1 Payment of the Closing Purchase Price 11
3.2 Pre-Closing Purchase Price Adjustment 12
3.3 Post-Closing Purchase Price Adjustment; Payment of
Holdback Amount 12
3.4 Prorations 13
3.5 Allocation of Consideration 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER 14
4.1 Due Incorporation, etc 14
4.2 Due Authorization 14
4.3 Consents and Approvals; No Conflicts, etc 14
4.4 Financial Statements; No Undisclosed Liabilities 15
4.5 No Adverse Effects or Changes 15
4.6 Title to Assets 17
4.7 Condition and Sufficiency of Assets 17
4.8 Real Property 17
4.9 Leased Personal Property 17
4.10 Accounts Receivable 17
4.11 Intellectual Property 17
4.12 Contracts 18
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4.13 Permits and Regulatory Compliance 20
4.14 Insurance 21
4.15 Employee Benefit Plans and Employment Agreements 21
4.16 Employment and Labor Matters 22
4.17 Taxes 22
4.18 No Defaults or Violations 22
4.19 Environmental Matters 23
4.20 Litigation 23
4.21 Information and Records 24
4.22 No Other Agreement 24
4.23 Brokers 24
4.24 Accuracy of Statements 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER 25
5.1 Due Incorporation 25
5.2 Due Authorization 25
5.3 Consents and Approvals; No Conflicts, etc 25
5.4 Brokers 26
5.5 Representations of Seller 26
5.6 Legal Proceedings 26
5.7 Ability to Perform 26
5.8 Solvency 26
ARTICLE VI COVENANTS OF SELLER 26
6.1 Implementing Agreements 27
6.2 Consents and Approvals 27
6.3 Preservation of Business 28
6.4 Access to Information 31
6.5 Supplemental Information 31
6.6 Confidentiality 31
6.7 Tax Matters 31
6.8 Cooperation 31
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ARTICLE VII COVENANTS OF PURCHASER 31
7.1 Implementing Agreement 32
7.2 Consents and Approvals 32
7.3 Confidentiality 32
7.4 Tax Matters 32
7.5 Cooperation 32
ARTICLE VIIICONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER 32
8.1 Representations and Warranties 33
8.2 Agreements and Covenants 33
8.3 Consents and Approvals 33
8.4 No Material Adverse Change 33
8.5 Actions or Proceedings 33
8.6 Purchaser's Due Diligence 33
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER 33
9.1 Representations and Warranties 34
9.2 Agreements and Covenants 34
9.3 Consents and Approvals 34
9.4 Actions or Proceedings 34
9.5 Signing and Delivery of Documents and Instruments 34
ARTICLE X EMPLOYEES AND BENEFIT PLANS 34
10.1 Certain Employee Matters. 34
10.2 Liabilities Under Benefit Plans 36
ARTICLE XI CLOSING 36
11.1 Closing 36
11.2 Deliveries by Seller 36
11.3 Deliveries by Purchaser 37
ARTICLE XII TERMINATION 38
12.1 Termination 38
12.2 Effect of Termination 38
ARTICLE XIIISURVIVAL AND INDEMNIFICATION 39
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13.1 Survival 39
13.2 Indemnification by Seller 39
13.3 Indemnification by Purchaser 39
13.4 Claims 40
13.5 Notice of Third Party Claims; Assumption of
Defense 40
13.6 Settlement or Compromise 40
13.7 Parent Guarantee 41
ARTICLE XIV NONCOMPETITION 42
14.1 Noncompetition 42
14.2 Remedies 43
ARTICLE XV PURCHASER'S RIGHT OF FIRST REFUSAL 43
15.1 Right of First Refusal 43
ARTICLE XVI MISCELLANEOUS 44
16.1 Expenses 44
16.2 Amendment 44
16.3 Extended Affiliation 44
16.4 Notices 44
16.5 Effect of Investigation 45
16.6 Waivers 45
16.7 Assignment 45
16.8 No Third Party Beneficiaries 45
16.9 Publicity 45
16.10 Further Assurances 46
16.11 Severability 46
16.12 Entire Understanding 46
16.13 Governing Law 46
16.14 Counterparts 46
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EXHIBITS
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of ▇▇▇▇ of Sale
Exhibit C Form of Clinical Affiliation Agreement
Exhibit D Form of Lease
Exhibit E Form of Services Agreement
SCHEDULES
Schedule 1.1(a) Current Tangible Assets and Current
Liabilities
Schedule 1.1(b) Financial Statements
Schedule 2.1(a) Tangible Property
Schedule 2.1(c) Owned Intellectual Property
Schedule 2.2(a) Personal Property Leases
Schedule 2.2(b) Intellectual Property Licenses
Schedule 2.2(c) Transferred Contracts
Schedule 2.2(d) Transferred Permits
Schedule 4.1 Capital Stock of Other Persons Owned by
Deaconess
Schedule 4.3 Seller Consents
Schedule 4.5 Adverse Effects or Changes
Schedule 4.6 Liens
Schedule 4.7 Condition of Assets
Schedule 4.8 Real Property
Schedule 4.10 Out-of-the-Ordinary-Course-of-Business
Accounts Receivable
Schedule 4.11 Licensed Intellectual Property
Schedule 4.12 Identified Contracts
Schedule 4.13 Permits
Schedule 4.14 Insurance
Schedule 4.15 Benefit Plans
Schedule 4.16 Employees
Schedule 4.18 Defaults
Schedule 4.19 Environmental Matters
Schedule 4.20 Litigation
Schedule 6.3 Permitted Changes in Assets and Business from
Execution to Closing
Schedule 6.6 Confidentiality
Schedule 14.1 Nursing Schools
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of March
15, 2005, by and among ▇▇▇▇ UNIVERSITY SCHOOL OF NURSING AND
HEALTH SCIENCES, INC., a Delaware corporation ("Purchaser"),
FOREST PARK HOSPITAL CORPORATION #1, a Missouri corporation
("Seller"), and DOCTORS COMMUNITY HEALTHCARE CORPORATION, a
Delaware corporation ("Parent"). Certain capitalized terms used
herein are defined in Article I.
W I T N E S S E T H:
WHEREAS, subject to the terms and conditions set forth
herein, Seller desires to sell, assign and transfer to Purchaser,
and Purchaser desires to purchase, assume and take assignment and
delivery of, substantially all of the assets of Seller's
Deaconess College of Nursing Division ("Deaconess"), and to
assume certain liabilities related thereto.
NOW, THEREFORE, in consideration of the foregoing and the
mutual warranties, representations, covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
"Accounts Receivable" shall mean all accounts
receivable, trade receivables, notes receivable and other
receivables owed to Deaconess.
"Affiliate" shall mean, with respect to any specified
Person, any other Person which, directly or indirectly, owns or
controls, is under common ownership or control with, or is owned
or controlled by, such specified Person.
"Agreement" shall mean this Asset Purchase Agreement,
including all exhibits and schedules hereto, as it may be amended
from time to time in accordance with its terms.
"Assets" shall mean the Purchased Assets and the Leased
Assets.
"Assignment and Assumption Agreement" shall mean an
assignment and assumption agreement between Purchaser and Seller
to be dated as of the Closing Date, in the form attached hereto
as Exhibit A.
"Assumed Liabilities" shall have the meaning provided
in Section 2.4.
"Benefit Plans" shall have the meaning provided in
Section 4.15.
"▇▇▇▇ of Sale" shall mean a ▇▇▇▇ of sale from Seller to
Purchaser to be dated as of the Closing Date, in the form
attached hereto as Exhibit B.
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"Business" shall mean the business of educating and
training nurses that is currently conducted by Deaconess at its
existing location and on-line.
"Business Day" shall mean any day of the year other
than (i) any Saturday or Sunday or (ii) any other day on which
banks located in Chicago, Illinois generally are closed for
business.
"Cash" shall mean all cash, certificates of deposits,
bank deposits and other cash equivalents, together with all
accrued but unpaid interest thereon.
"Clinical Affiliation Agreement" shall mean a clinical
affiliation agreement between Purchaser and Seller to be dated as
of the Closing Date, in the form attached hereto as Exhibit C.
"Closing" shall mean the consummation of the
transactions contemplated herein in accordance with Article XI.
"Closing Balance Sheet" shall have the meaning provided
in Section 3.3(a).
"Closing Date" shall mean the date on which the Closing
occurs or is to occur.
"Closing Purchase Price" shall have the meaning
provided in Section 3.1(b).
"Code" shall mean the United States Internal Revenue
Code of 1986, as amended.
"Confidential Information" shall mean all Information
and Records and Intellectual Property that are not and have not
become ascertainable or obtainable from public information.
"Contested Adjustments" shall have the meaning provided
in Section 3.3(b).
"Contract" shall mean any contract, lease, commitment,
understanding, sales order, purchase order, agreement, indenture,
mortgage, note, bond, right, warrant, instrument, plan, permit or
license, whether written or verbal, which is intended or purports
to be binding and enforceable with respect to the Business.
"Current Tangible Assets" shall mean the current
tangible assets of Deaconess as calculated pursuant to Schedule
1.1(a), as of the Closing Date.
"Current Liabilities" shall mean the current
liabilities of Deaconess as calculated pursuant to Schedule
1.1(a), as of the Closing Date.
"Deaconess" shall have the meaning provided in the
recitals to this Agreement.
"Deaconess Employee" shall mean any employee of
Deaconess or any employee of Seller whose responsibilities are
primarily related to the operation of the Business.
"DOE" shall mean the United States Department of
Education.
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"DOE Application" means a "materially complete
application" (as that term is defined at 34 C.F.R. 600.20(g))
for approval of the change of ownership and provisional extension
of certification to participate in the Title IV HEA student
financial assistance programs.
"Environmental Law" shall mean any Law which relates to
or otherwise imposes liability or standards of conduct concerning
discharges, emissions, releases or threatened releases of noises,
odors or any pollutants, contaminants or hazardous or toxic
wastes, substances or materials, whether as matter or energy,
into ambient air, water or land, or otherwise relating to the
manufacture, processing, generation, distribution, use,
treatment, storage, disposal, cleanup, transport or handling of
pollutants, contaminants or hazardous or toxic wastes, substances
or materials, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the
Occupational Safety and Health Act, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the
Toxic Substances Control Act of 1976, as amended, the Federal
Water Pollution Control Act Amendments of 1972, the Clean Water
Act of 1977, as amended, any so-called "Superfund" or "Superlien"
Law (including those already referenced in this definition) and
any other Law having a similar subject matter.
"Environmental Permit" shall mean any Permit required
by or pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Excluded Assets" shall have the meaning provided in
Section 2.3.
"Excluded Contracts" shall have the meaning provided in
Section 2.3(c).
"Excluded Liabilities" shall have the meaning provided
in Section 2.5.
"Expiration Date" shall have the meaning provided in
Section 13.1.
"Financial Statements" shall mean the Deaconess (i)
audited balance sheet as of, and audited income statement for the
12 month period ended, May 31, 2004, and (ii) unaudited balance
sheet as of, and unaudited income statement for the seven month
period ended, January 31, 2005, which are attached hereto as
Schedule 1.1(b).
"GAAP" shall mean United States generally accepted
accounting principles, applied in a manner consistent with the
that used in preparing the Financial Statements.
"Governmental Authority" shall mean the government of
the United States or any foreign country or any state or
political subdivision thereof and any entity, body or authority
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Obligations" shall have the meaning set
forth in Section 13.7(a).
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"Hazardous Substance" shall mean any material or
substance which (i) constitutes a hazardous substance, toxic
substance or pollutant (as such terms are defined by or pursuant
to any Environmental Law) or (ii) is regulated or controlled as a
hazardous substance, toxic substance, pollutant or other
regulated or controlled material, substance or matter pursuant to
any Environmental Law.
"Higher Education Act" shall have the meaning set forth
in Section 4.13(c)(i).
"Hired Employees" shall have the meaning set forth in
Section 10.1(a).
"Holdback Amount" shall mean the amount of Five Hundred
Thirty Thousand Dollars ($530,000).
"Identified Contracts" shall have the meaning set forth
in Section 4.12.
"Indemnified Person" shall mean the Person or Persons
entitled to, or claiming a right to, indemnification under
Article XIII.
"Indemnifying Person" shall mean the Person or Persons
claimed by the Indemnified Person to be obligated to provide
indemnification under Article XIII.
"Independent Accountants" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP.
"Information and Records" shall have the meaning
provided in Section 2.1(b).
"Intellectual Property" shall mean all United States
and foreign patents (including continuations, continuations-in-
part, reissues and re-examinations thereof) and patent
applications; registered and unregistered trade names,
trademarks, service names and service marks (and applications for
registration of the same) and all goodwill associated therewith;
copyrights and copyright registrations (and applications for the
same); trade secrets, computer data (including formulations and
analyses), computer software (in source code and object code
form) and all related programming, user and systems
documentation; inventions, processes and designs (whether or not
patentable or reduced to practice); know-how and formulae; and
all other intangible assets, properties and rights.
"Intellectual Property Licenses" shall have the meaning
provided in Section 2.2(b).
"Law" shall mean any law (including common law),
statute, regulation, ordinance, rule, order, decree, judgment,
consent decree, settlement agreement or governmental requirement
enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority, in each case as amended, modified,
codified, replaced or re-enacted, in whole or in part, and in
effect on the date hereof, including rules, regulations,
enforcement procedures and any interpretations promulgated
thereunder.
"Lease" shall mean a lease agreement between Purchaser
and Seller to be dated as of the Closing Date, in the form
attached hereto as Exhibit D.
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"Leased Assets" shall mean all assets leased or
licensed to Deaconess or to Seller for use by Deaconess pursuant
to any of the Personal Property Leases or Intellectual Property
Licenses.
"Licensed Intellectual Property" shall have the meaning
provided in Section 4.11.
"Lien" shall mean any mortgage, lien (except for any
lien for Taxes not yet due and payable), charge, pledge, security
interest, option, lease or sublease, claim, right of any third
party, easement, encroachment, encumbrance or other restriction
or limitation of any kind.
"Loss" or "Losses" shall mean any and all liabilities,
losses, costs, claims, damages (other than punitive damages),
penalties and expenses (including attorneys' fees and expenses
and costs of investigation and litigation, including costs of
litigation incurred in enforcing the indemnity provisions of this
Agreement).
"Lutheran Assets" shall have the meaning provided in
Section 15.1.
"Material Adverse Change" shall mean a change (or
circumstance involving a prospective change) in the business,
operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of the
Business or the Assets that is material and adverse. For
purposes of this Agreement only the occurrence of the following
shall be deemed to be a "Material Adverse Change": (i) decrease
in net revenue or increase in net expense by more than ten
percent (10%) over an eight (8) month period; and (ii) a loss of
accreditation or license to operate the Business.
Notwithstanding the foregoing, "Material Adverse Change" does not
include any event, condition or circumstance affecting the
institution certified under the Higher Education Act, the
announcement or pendency of the transaction contemplated herein,
any action taken by Seller or Parent at Purchaser's request or
pursuant to this Agreement, acts of terrorism, general economic,
political or financial market conditions, any reduction in the
availability of third party financial aid to students of
Deaconess, or any other matter disclosed in any schedule hereto.
"Material Adverse Effect" shall mean an effect (or
circumstance involving a prospective effect) on the business,
operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of the
Business or the Assets that is material and adverse. For
purposes of this Agreement only the occurrence of the following
shall be deemed to be a "Material Adverse Effect": (i) decrease
in net revenue or increase in net expense by more than ten
percent (10%) over an eight (8) month period; and (ii) a loss of
accreditation or license to operate the Business.
Notwithstanding the foregoing, "Material Adverse Event" does not
include any event, condition or circumstance affecting the
institution certified under the Higher Education Act, the
announcement or pendency of the transaction contemplated herein,
any action taken by Seller or Parent at Purchaser's request or
pursuant to this Agreement, acts of terrorism, general economic,
political or financial market conditions, any reduction in the
availability of third party financial aid to students of
Deaconess, or any other matter disclosed in any schedule hereto.
"NCA" shall mean the North Central Association
Commission on Accreditation and School Improvement.
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"NCA Approval" shall mean the accreditation transfer
approval of the NCA pursuant to their process and procedures.
"Necessary Regulatory Authorities" shall mean the DOE
and the NCA.
"Net Tangible Assets" shall mean the difference, as of
the Closing Date, between Current Tangible Assets and Current
Liabilities. All Excluded Assets and Excluded Liabilities will
be excluded from the calculation of Net Tangible Assets.
"Owned Intellectual Property" shall have the meaning
provided in Section 2.1(c).
"Pending Lawsuits" shall mean those lawsuits set forth
on Schedule 4.20.
"Permits" shall mean (i) all certifications,
accreditations, licenses, permits and other authorizations,
including Program Participation Agreements, necessary to allow
individuals enrolled in training programs conducted by Deaconess
to qualify for educational loans, grants and other forms of
student financial assistance from governmental agencies and other
sources referred to in the catalogs and advertising literature of
Deaconess, including, without limitation, all certifications,
accreditations, licenses, permits and other authorizations
necessary for Deaconess to participate in student financial aid
programs administered by the DOE pursuant to Title IV and (ii)
any other permits, tariffs, authorizations, licenses,
certificates, variances, interim permits, approvals, franchises
and rights under any Law or otherwise required by any
Governmental Authority for the operation of the Business and any
applications for the foregoing.
"Person" shall mean any individual, corporation,
proprietorship, firm, partnership, limited partnership, limited
liability partnership, limited liability company, trust,
association or other entity.
"Personal Property Leases" shall have the meaning
provided in Section 2.2(a).
"Preliminary Closing Balance Sheet" shall have the
meaning provided in Section 3.2.
"Prime Rate" shall mean the Prime Rate as published on
each Business Day in The Wall Street Journal.
"Purchase Price" shall have the meaning provided in
Section 3.1(b).
"Purchased Assets" shall have the meaning provided in
Section 2.1.
"Purchased Contracts and Permits" shall have the
meaning provided in Section 2.2.
"Purchaser" shall have the meaning provided in the
preamble.
"Purchaser Consents" shall have the meaning provided in
Section 5.3(a).
"Purchaser Notice" shall have the meaning provided in
Section 15.1(a).
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"Purchaser's Knowledge" shall mean the actual
knowledge, without independent investigation, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
No constructive or imputed knowledge shall be attributed to any
such individual by virtue of any position held, relationship to
any other Person, or for any other reason.
"Purchaser Indemnified Party" shall have the meaning
provided in Section 13.2.
"Real Property" shall have the meaning provided in
Section 4.8.
"Related Agreement" shall mean any Contract which is or
is to be entered into at the Closing or otherwise pursuant to
this Agreement, including the Assignment and Assumption Agreement
and ▇▇▇▇ of Sale, the Lease, the Services Agreement and the
Clinical Affiliation Agreement.
"Releases" shall mean the releases from all third party
lenders in connection with all indebtedness of and guarantees by
Seller, stating that Deaconess is released from all obligations
thereunder and that all Liens placed by such lenders on the
Assets will be released upon the execution of such releases and
confirming that such lenders shall forthwith execute and deliver
to Seller or its Affiliates (as applicable) any and all
terminations and releases (including, without limitation, UCC-3
termination statements) necessary to evidence the foregoing
release.
"Retained Management Employees" shall have the meaning
provided in Section 10.1(a).
"Seller" shall have the meaning provided in the
preamble.
"Seller Consents" shall have the meaning provided in
Section 4.3(a).
"Seller's Knowledge" shall mean the actual knowledge,
without independent investigation, of ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇. No constructive or imputed knowledge shall be attributed
to any such individual by virtue of any position held,
relationship to any other Person, or for any other reason.
"Services Agreement" shall mean a shared services
agreement between Purchaser and Seller to be dated as of the
Closing Date, in the form attached hereto as Exhibit E.
"Tangible Property" shall have the meaning provided in
Section 2.1(a).
"Tax Return" shall mean any report, return, document or
other information required to be supplied to a Governmental
Authority in connection with any Taxes.
"Tax Statute of Limitations Date" shall mean the close
of business on the 90th day after the expiration of the
applicable statute of limitations with respect to Taxes,
including any extensions thereof (or if such date is not a
Business Day, the next Business Day).
"Tax Warranties" shall mean the representations and
warranties in Section 4.17.
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"Taxes" shall mean all taxes, charges, fees, duties
(including customs duties), levies or other assessments,
including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible),
sales, use, franchise, excise, value added, stamp, leasing,
lease, user, transfer, fuel, excess profits, occupational,
interest equalization, windfall profits, license, payroll,
environmental, capital stock, disability, severance, employee's
income withholding, other withholding, unemployment and Social
Security taxes, which are imposed by any Governmental Authority,
and such term shall include any interest, penalties or additions
to tax attributable thereto.
"Title IV" means Title IV of the Higher Education Act
of 1965, as amended.
"Title IV Program Funds" means federal student
financial assistance funds authorized by the Higher Education Act
of 1965, as amended, 20 U.S.C. 1071 et seq. or any other
similar law.
"Title and Authorization Warranties" shall mean the
representations and warranties in Sections 4.1, 4.2, 4.3 and 4.6.
"Transfer Notice" shall have the meaning provided in
Section 15.1(a).
"Transferred Contracts" shall have the meaning provided
in Section 2.2(c).
"Transferred Permits" shall have the meaning provided
in Section 2.2(d).
1.2 Interpretation. The headings preceding the text of Articles
and Sections included in this Agreement and the headings to
Schedules and Exhibits attached to this Agreement are for
convenience only and shall not be deemed part of this Agreement
or be given any effect in interpreting this Agreement. The use
of the masculine, feminine or neuter gender or the singular or
plural form of words herein shall not limit any provision of this
Agreement. The use of the terms "including" or "include" shall
in all cases herein mean "including, without limitation" or
"include, without limitation," respectively.
ARTICLE II
SALE AND PURCHASE OF ASSETS;
ASSUMPTION OF ASSUMED LIABILITIES
2.1 Purchased Assets. Subject to the terms and conditions of
this Agreement, at and as of the Closing, Seller shall sell,
assign, convey, transfer and deliver to Purchaser, and Purchaser
shall purchase, acquire and take assignment and delivery of all
of Seller's assets (wherever located) used in the operation of
the Business (except those assets covered by the Services
Agreement plus the Excluded Assets), including all of Seller's
right, title and interest in and to the following:
(a) Tangible Property. All fixed assets, furniture, equipment,
materials, supplies, textbooks, computers, printers, servers and
other items of tangible personal property of every kind and
description used by Seller solely in the operation of the
Business (collectively, the "Tangible Property"), including the
Tangible Property set forth on Schedule 2.1(a);
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(b) Information and Records. All books, records, files,
databases, plans, specifications, technical information,
confidential information, course and price lists, promotional
materials, advertising copy and data, marketing research and
information, competitive analysis, enrollment records, student
lists and files, other student, instructor and staff information
and all other proprietary information, other than the
Intellectual Property, used in the operation of the Business,
including the following papers and records in Seller's care,
custody or control or otherwise available to it: all Deaconess
tax records and financial records and files, personnel and labor
relations records and employee benefits and compensation plans
and records (collectively, the "Information and Records");
(c) Intellectual Property. All Intellectual Property owned by
Seller for the exclusive use by Deaconess or otherwise in
connection with the operation of the Business (the "Owned
Intellectual Property"), including the Owned Intellectual
Property set forth on Schedule 2.1(c);
(d) Other Intangibles. All third party relationships and
goodwill, if any, used exclusively in, related to or arising in
conjunction with the Business;
(e) Accounts Receivable. All Accounts Receivable;
(f) Restricted Accounts. All cash in restricted accounts
related to the Business; and
(g) Other Assets. All other assets of Seller used exclusively
in the operation of the Business, including prepaid expenses and
utility and similar deposits of Seller, claims and rights to
insurance proceeds and awards and any and all other deposits,
prepayments, and claims and rights of or for the benefit of
Deaconess or Seller that are exclusively related to the Business.
All of the foregoing assets described in this Section 2.1,
together with the Purchased Contracts and Permits, are referred
to herein collectively as the "Purchased Assets."
2.2 Assignment of Contracts and Permits. Subject to the terms
and conditions of this Agreement, at and as of the Closing,
Seller shall assign and transfer to Purchaser all of Seller's
right, title and interest in and to, and Purchaser shall take
assignment of, (i) all of the Contracts related exclusively to
the Business to which Deaconess or Seller is a party and (ii) all
of the Permits of Deaconess or Seller related exclusively to the
Business which are transferable, including the following:
(a) Personal Property Leases. All leases to or by Deaconess (or
to or by Seller exclusively in connection with the Business) of
personal property (collectively, the "Personal Property Leases"),
including the Personal Property Leases set forth on Schedule
2.2(a);
(b) Intellectual Property Licenses. All agreements for the
license to or by Deaconess (or to or by Seller exclusively in
connection with the Business) of any Intellectual Property
(collectively, the "Intellectual Property Licenses"), including
the Intellectual Property Licenses set forth on Schedule 2.2(b);
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(c) Transferred Contracts. All Contracts of Deaconess (or of
Seller related exclusively to the Business) (collectively, the
"Transferred Contracts"), including the Transferred Contracts set
forth on Schedule 2.2(c); and
(d) Transferred Permits. All Permits held by or in the name of
Deaconess (or of Seller that are related to the Business) and
which are transferable (collectively, the "Transferred Permits"),
including the Transferred Permits set forth on Schedule 2.2(d).
All of the foregoing are referred to herein collectively as the
"Purchased Contracts and Permits." Notwithstanding anything in
this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign any Contract or Permit or any
claim or right or any benefit or obligation thereunder or
resulting therefrom if an assignment thereof, without the consent
of a third party thereto, would constitute a breach or violation
thereof and if such a consent is not obtained at or prior to the
Closing. If a consent or approval is required by any party under
any of the Contracts included in the Purchased Contracts and
Permits and is not obtained on or before the Closing or if an
attempted assignment is ineffective, Seller shall cooperate with
Purchaser, with each party bearing its own costs, in any
reasonable arrangement requested by Purchaser to provide for
Purchaser the benefits under any such Contracts.
2.3 Excluded Assets. Notwithstanding the terms of Sections 2.1
and 2.2, the following assets of Seller shall be retained by
Seller, are not being sold or assigned to Purchaser hereunder and
do not constitute Purchased Assets (all of the following are
referred to herein collectively as the "Excluded Assets"):
(a) Cash. All Cash of Seller and Deaconess, except for cash in
restricted accounts;
(b) Intercompany Receivables. All receivables due to Seller or
Deaconess from Parent or any of its Affiliates (other than Seller
and Deaconess);
(c) Excluded Contracts. All Contracts of Seller not listed on
Schedule 4.12 (the "Excluded Contracts");
(d) Benefit Plan Assets. All assets of any Benefit Plan;
(e) Unrelated Assets. All assets of Seller that are not related
to the Business; and
(f) Library. All assets related to the library used by the
Business.
2.4 Assumed Liabilities. At the Closing, Purchaser shall
assume, and agree to pay, perform, fulfill and discharge, only
the following obligations of Deaconess and Seller (collectively,
the "Assumed Liabilities"):
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(a) Contract Obligations. The obligations of Seller or
Deaconess which are required to be performed, and which accrue,
after the Closing Date under the Purchased Contracts and Permits
(but not any liabilities of Seller or Deaconess in respect of a
breach by Seller or Deaconess of or default by Seller or
Deaconess under such Purchased Contracts or Permits or any
liabilities or obligations incurred prior to the Closing), to the
extent such Purchased Contracts and Permits, and all rights of
Seller and Deaconess thereunder, are effectively assigned to
Purchaser on the Closing Date pursuant to Section 2.2, but
excluding any Contracts entered into in violation of Section 6.3;
and
(b) Current Liabilities. The Current Liabilities of Deaconess
(other than Taxes) as of the Closing Date.
In no event shall the Assumed Liabilities include the Excluded
Liabilities.
2.5 No Other Liabilities Assumed. Notwithstanding anything in
this Agreement to the contrary, except as specifically set forth
in Section 2.4, neither Purchaser nor any of its Affiliates shall
assume or otherwise be liable in respect of, or be deemed to have
assumed or otherwise be liable in respect of, any debt, claim,
obligation or other liability (including any litigation or
potential litigation to which Seller is or may be a party, and
any other liability, undisclosed liability, contingent liability
or unknown liability) of Deaconess or Seller or any of their
Affiliates whatsoever (collectively, the "Excluded Liabilities").
2.6 Disclaimer of Warranties. Subject to the representations
and warranties of Seller in Article IV, the Assets sold and
leased to Purchaser will be sold and leased by Seller and
purchased by Purchaser in their physical condition at the Closing
Date, "AS IS, WHERE IS AND WITH ALL FAULTS" WITH NO WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, with respect to the physical
condition of the Assets, any and all of which warranties Seller
expressly disclaims.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Payment of the Closing Purchase Price. Subject to the terms
and conditions hereof, in consideration for the sale of the
Purchased Assets by Seller, Purchaser shall on the Closing Date:
(a) assume the Assumed Liabilities; and
(b) pay to Seller in cash, by electronic transfer to an account
of Seller as provided in writing to Purchaser at least three
Business Days prior to the Closing Date, the amount of Four
Million Seven Hundred Seventy Thousand Dollars ($4,770,000) (the
"Closing Purchase Price"); (the assumption of the Assumed
Liabilities together with the Closing Purchase Price and the
Holdback Amount shall be referred to herein as the "Purchase
Price"). The Purchase Price is subject to adjustment pursuant to
Sections 3.2 and 3.3.
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3.2 Pre-Closing Purchase Price Adjustment. At least two
Business Days prior to the Closing, Seller shall deliver to
Purchaser an estimate of the balance sheet for Deaconess as of
the Closing Date (the "Preliminary Closing Balance Sheet"), which
shall be prepared in accordance with GAAP and exclude the
Excluded Assets and Excluded Liabilities. Upon delivery of the
Preliminary Closing Balance Sheet, the Closing Purchase Price
shall be adjusted as follows: (a) if the Net Tangible Assets as
set forth on the Preliminary Closing Balance Sheet are greater
than $0 (if the Current Tangible Assets less the Current
Liabilities results in a positive number), then the Closing
Purchase Price shall be increased by the amount of such excess
and (b) if the Net Tangible Assets as set forth on the
Preliminary Closing Balance Sheet are less than $0 (if the
Current Tangible Assets less the Current Liabilities results in a
negative number), then the Closing Purchase Price shall be
decreased by the amount of such deficit.
3.3 Post-Closing Purchase Price Adjustment; Payment of Holdback
Amount.
(a) As soon as practicable, but within 60 days after the Closing
Date, Purchaser shall prepare and deliver to Seller a balance
sheet for Deaconess as of the close of business on the Closing
Date (the "Closing Balance Sheet"). Seller shall fully cooperate
with Purchaser in the preparation of the Closing Balance Sheet.
The Closing Balance Sheet shall be prepared in accordance with
GAAP and exclude the Excluded Assets and Excluded Liabilities and
shall include the same categories of assets and liabilities as
the Preliminary Closing Balance Sheet.
(b) Upon receipt of the Closing Balance Sheet, Seller shall have
a period of 30 days to review such Closing Balance Sheet and
supporting work papers and propose any adjustments thereto. All
adjustments proposed by Seller shall be set out in a written
statement delivered to Purchaser and shall be incorporated into
the Closing Statement unless Purchaser shall object in writing to
such proposed adjustments within 30 days of delivery by Seller to
Purchaser of such proposed adjustments. If Purchaser does object
in writing within 30 days to any such proposed adjustment (the
proposed adjustment or adjustments to which Purchaser objects are
referred to herein as the "Contested Adjustments"), Seller and
Purchaser shall use reasonable efforts to resolve their dispute
regarding the Contested Adjustments, but if a final resolution
thereof is not obtained within 10 days after Purchaser delivers
to Seller Purchaser's written objection to the Contested
Adjustments, Seller and Purchaser shall promptly retain the
Independent Accountants to resolve any remaining disputes
concerning the Contested Adjustments. If the Independent
Accountants are retained, then (i) Seller and Purchaser shall
each submit to the Independent Accountants in writing within 15
days after the Independent Accountants are retained their
respective proposals with respect to the Contested Adjustments,
together with such supporting documentation as they deem
necessary or as the Independent Accountants shall reasonably
request (provided that if any documentation requested by the
Independent Accountants cannot be obtained by either Seller or
Purchaser within such 15-day period (acting in good faith and in
a diligent manner), then such 15-day period shall be extended for
such period of time as is reasonably necessary for such
information to be obtained), (ii) the Independent Accountants
shall select, within 30 days after receiving the proposals of
both Seller and Purchaser and all supplementary supporting
documentation requested by the Independent Accountants, either
Seller's or Purchaser's proposal, but not a different proposal,
with respect to the Contested Adjustments, which selection shall
be final and binding on both Seller and Purchaser, and (iii) the
fees and expenses of the Independent Accountants shall be shared
equally by the parties.
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(c) Within five Business Days after the Closing Balance Sheet
has become final and binding upon both Seller and Purchaser
pursuant to Section 3.3(b), the Purchase Price shall be adjusted
as follows:
(i) if Net Tangible Assets as set forth on the Closing Balance
Sheet are greater than Net Tangible Assets as set forth on the
Preliminary Closing Balance Sheet, then Seller shall receive from
Purchaser a payment in an amount equal to the Holdback Amount
plus such difference; or
(ii) if Net Tangible Assets as set forth on the Closing Balance
Sheet are less than Net Tangible Assets as set forth on the
Preliminary Closing Balance Sheet, then (A) if the amount of such
difference is less than the Holdback Amount, Seller shall receive
from Purchaser a payment in an amount equal to the Holdback
Amount less such difference or (B) if the amount of such
difference is greater than the Holdback Amount, Purchaser shall
receive from Seller a payment equal to the amount by which such
difference is greater than the Holdback Amount;
(iii) provided, however, that unless the difference (pursuant
to either clause (i) or (ii) above) between Net Tangible Assets
as set forth on the Closing Balance Sheet and Net Tangible Assets
as set forth on the Preliminary Closing Balance Sheet is greater
than One Hundred Thousand Dollars ($100,000), no adjustment to
the Purchase Price shall be made and Seller shall receive from
Purchaser a payment in an amount equal to the Holdback Amount.A
Any amounts payable under this Section 3.3(c) shall be made
by electronic transfer of immediately available funds to such
account or accounts as the party being paid shall specify to the
paying party.
3.4 Prorations. Each of the items listed below relating to the
Business and the Purchased Assets will be prorated as of the
Closing Date and shall be accrued on the Closing Balance Sheet,
with Seller liable to the extent such items relate to any time
period up to and including the Closing Date and Purchaser liable
to the extent such items relate to periods subsequent to the
Closing Date:
(a) rents, Taxes, royalties and other items which in any case
are payable periodically by or to Seller under any of the
Personal Property Leases or Intellectual Property Licenses;
(b) the amount of any fees and charges which in any case are
payable periodically by Seller pursuant to any of the Transferred
Contracts; and
(c) the amount of any fees or charges which in any case are
payable by Seller periodically with respect to any of the
Transferred Permits.
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Seller agrees to furnish Purchaser with such documents and other
records as Purchaser reasonably requests in order to confirm all
adjustment and proration calculations made pursuant to this
Section 3.4. Final payments with respect to prorations
contemplated by this Section 3.4 that are not ascertainable on or
before the Closing Date shall be settled between the parties as
soon as practicable after they are ascertainable.
3.5 Allocation of Consideration. The Purchase Price shall be
allocated among the Purchased Assets in accordance with a
schedule prepared by Purchaser and delivered to Seller within 90
days after the Closing Balance Sheet has become final and binding
upon both Seller and Purchaser pursuant to Section 3.3(b) and
consented to by Seller, which consent shall not be unreasonably
withheld. Following the Closing, Purchaser and Seller in
connection with their respective U.S. federal, state and local
income Tax Returns and other filings (including Internal Revenue
Service Form 8594), shall not take any position inconsistent with
such allocation. Any adjustment to the Purchase Price shall be
allocated as provided by Treas. Reg. 1.1060-1(c).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser, as of the date
of this Agreement, as follows:
4.1 Due Incorporation, etc. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Missouri, with all requisite corporate power and
authority to own, lease and operate its properties and to carry
on the Business as they are now owned, leased and operated.
Except as set forth on Schedule 4.1, Deaconess does not own any
capital stock or other equity interest in any Person.
4.2 Due Authorization. Seller has full power and authority to
execute, deliver and perform this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Seller
of this Agreement and the Related Agreements and the consummation
by Seller of the transactions contemplated hereby and thereby
have been duly and validly approved by all necessary corporate
action, and no other actions or proceedings on the part of Seller
are necessary to authorize the execution, delivery and
performance by Seller of this Agreement, the Related Agreements
or the transactions contemplated hereby and thereby. Seller has
duly and validly executed and delivered this Agreement and has
duly and validly executed and delivered (or prior to or at the
Closing will duly and validly execute and deliver) the Related
Agreements. This Agreement constitutes legal, valid and binding
obligations of Seller, and the Related Agreements upon execution
and delivery by Seller will constitute legal, valid and binding
obligations of Seller, in each case, enforceable in accordance
with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally, by equitable
limitations on the availability of specific remedies and by
principles of equity.
4.3 Consents and Approvals; No Conflicts, etc.
(a) Except for the consents set forth on Schedule 4.3 ("Seller
Consents"), no consent, authorization or approval of, filing or
registration with, waiver of any right of first refusal or first
25
offer from, or cooperation from, any Governmental Authority or
any other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by Seller
of this Agreement and the Related Agreements or the consummation
by Seller of the transactions contemplated hereby or thereby.
(b) Except as set forth on Schedule 4.3, the execution, delivery
and performance by Seller of this Agreement and the Related
Agreements and the consummation by Seller of the transactions
contemplated hereby and thereby do not and will not (i) violate
any Law applicable to Seller, Deaconess, the Business or any of
the Assets; (ii) violate or conflict with, result in a breach or
termination of, constitute a default or give any third party any
additional right (including a termination right), permit
cancellation of, result in the creation of any Lien upon any of
the Assets, or result in or constitute a circumstance which, with
or without notice or lapse of time or both, would constitute any
of the foregoing under, any Contract to which Seller or Deaconess
is a party or by which Seller or Deaconess or any of the Assets
are bound; (iii) permit the acceleration of the maturity of any
indebtedness of Seller or Deaconess or indebtedness secured by
any of the Assets; or (iv) violate or conflict with any provision
of any of the articles of incorporation, bylaws or similar
organizational instruments of Seller.
4.4 Financial Statements; No Undisclosed Liabilities. Attached
hereto as Schedules 1.1(b) are true, accurate and complete copies
of the Financial Statements. The Financial Statements present
fairly the financial position, assets and liabilities of
Deaconess as of the dates thereof and the revenues, expenses and
results of operations of Deaconess for the periods covered
thereby are in accordance with the books and records of
Deaconess. The Financial Statements make full and adequate
disclosure of, and provision for, all material obligations and
liabilities of Deaconess as of the dates thereof. The audited
financial statements included within the Financial Statements
have been prepared in accordance with GAAP, consistently applied.
Except as set forth in the balance sheets included in the
Financial Statements and liabilities incurred in the ordinary
course since January 31, 2005, there are no material liabilities,
debts, claims or obligations, whether accrued, absolute,
contingent or otherwise (including "off-balance sheet"
liabilities), whether due or to become due.
4.5 No Adverse Effects or Changes. Except as set forth
on Schedule 4.5, since the date of the unaudited Financial
Statements, the Business has been conducted in all respects only
in the ordinary course and consistent with past practices.
Without limiting the foregoing, except as set forth on Schedule
4.5, since the date of the unaudited Financial Statements,
neither Seller with respect to the Business nor Deaconess has:
(a) suffered any Material Adverse Change;
(b) suffered any material damage, destruction or loss to any of
its assets exclusively related to the Business (whether or not
covered by insurance);
(c) taken any action, or entered into or authorized any Contract
or transaction or any amendment or modification to any Contract
or transaction related exclusively to the Business, other than in
the ordinary course of business and consistent with past
practice;
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(d) sold, transferred, conveyed, assigned or otherwise disposed
of any of its assets related to the Business, other than in the
ordinary course of business and consistent with past practice;
(e) acquired or leased any assets related to the Business other
than in the ordinary course of business and consistent with past
practices;
(f) waived, released or canceled any claims against third
parties or debts owing to it or any rights which have any value
related to the Business;
(g) made any changes in its accounting systems, policies,
principles or practices;
(h) in connection with the Business, made any borrowing,
incurred any debt (other than trade payables in the ordinary
course of business and consistent with past practice) or assumed,
guaranteed, endorsed (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of
business and consistent with past practice) or otherwise become
liable (whether directly, contingently or otherwise) for the
obligations of any other Person, or made any payment or repayment
in respect of any indebtedness (other than trade payables and
accrued expenses in the ordinary course of business and
consistent with past practice);
(i) suffered or permitted the creation of any Lien over any of
the Assets other than in the ordinary course of business and
consistent with past practice;
(j) made any loan, advance or capital contribution to, or
investment in, any other Person other than in the ordinary course
of business and consistent with past practice;
(k) entered into, adopted, amended or terminated any bonus,
profit sharing, compensation, termination, stock option, stock
appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer,
consultant or employee, or increased in any manner the
compensation or fringe benefits of any director, officer,
consultant or employee other than scheduled increases in the
ordinary course of business and consistent with past practices or
paid any benefit not required by any existing plan and
arrangement or entered into any Contract or arrangement to do any
of the foregoing;
(l) made any Tax election or settled or compromised any federal,
state or local Tax liability, or waived or extended the statute
of limitations in respect of any such Taxes;
(m) paid any amount, performed any obligation or agreed to pay
any amount or perform any obligation, in settlement or compromise
of any suits or claims of liability against Deaconess or the
Business, or any of the directors, officers, employees or agents
of Seller related to the Business or Deaconess;
27
(n) terminated the employment of any employee of Seller that was
material to the operation of the Business; or
(o) entered into any transaction or arrangement of any kind with
any director, officer or employee (whose responsibilities relate
to the operation of the Business) of Seller or any of the
respective Affiliates of such individuals or any Affiliate of
Seller.
4.6 Title to Assets. Except as set forth on Schedule 4.6,
Seller has good and marketable and valid record and equitable
title to, and is the lawful owner of, the Purchased Assets, free
and clear of any Lien. Seller has the full right to sell,
convey, transfer, assign and deliver the Purchased Assets to
Purchaser, and, at and as of the Closing, Seller will convey the
Purchased Assets to Purchaser by bills of sale and instruments of
assignment and transfer effective to vest in Purchaser, and
Purchaser shall have, good and marketable and valid record and
equitable title to all of the Purchased Assets, free and clear of
all Liens.
4.7 Condition and Sufficiency of Assets. Except as set forth on
Schedule 4.7, all of the tangible Assets, whether real or
personal, owned or leased, have been well maintained and are in
good operating condition and repair (with the exception of normal
wear and tear). The Assets constitute all the assets, properties
and rights (except as provided in the Lease, the Services
Agreement and under this Agreement) that are required for or
currently used in connection with the conduct of the Business as
it is presently conducted and has been conducted since December
31, 2004.
4.8 Real Property.
(a) Schedule 4.8 sets forth true and accurate descriptions of
all of the real property leased or owned by Seller that is used
exclusively in the operation of the Business (the "Real
Property").
(b) None of the Real Property is subject to any Lien, easement,
right-of-way, building or use restriction, exception, variance,
reservation or limitation as might in any material respect
interfere with or impair the present and continued use thereof in
the usual and normal conduct of the Business.
4.9 Leased Personal Property. Schedule 2.2(a) sets forth a
true, complete and accurate list of all of the Personal Property
Leases. Seller has delivered to Purchaser true, accurate and
complete copies of all Personal Property Leases as amended or
modified.
4.10 Accounts Receivable. Except as set forth on Schedule 4.10,
to Seller's Knowledge, (a) the Accounts Receivable outstanding as
of January 31, 2005 are collectable in accordance with their
terms net of any reserve set forth on the most recent balance
sheet contained in the Financial Statements and (b) the Accounts
Receivable outstanding at the Closing Date will be collectable in
accordance with their terms net of any reserve set forth on the
Preliminary Closing Balance Sheet.
4.11 Intellectual Property. Schedule 2.1(c) sets forth a true,
accurate and complete list of all Owned Intellectual Property.
Schedule 2.2(b) sets forth a true, accurate and complete list of
all Intellectual Property Licenses. Schedule 4.11 sets forth a
complete list of all Intellectual Property licensed to Seller or
Deaconess under the Intellectual Property Licenses (the "Licensed
Intellectual Property"). Except as set forth on Schedule 4.11:
28
(a) all of the Owned Intellectual Property is owned by Seller or
Deaconess free and clear of all Liens, and is not subject to any
license, royalty or other agreement, and neither Seller nor
Deaconess has granted any license or agreed to pay or receive any
royalty in respect of any Owned Intellectual Property or, except
as provided in the Intellectual Property Licenses, any Licensed
Intellectual Property;
(b) none of the Owned Intellectual Property or the Licensed
Intellectual Property has been or is the subject of any pending
or, to Seller's Knowledge, threatened litigation or claim of
infringement or misappropriation and there is no basis for making
any such claim;
(c) to Seller's Knowledge, no Intellectual Property License is
in breach or default by any party thereto or the subject of any
notice of termination given or threatened;
(d) Neither Seller nor Deaconess has made or threatened to make
any claim that any product or service sold or provided by any
Person, or any process, method, part, design, material or
Intellectual Property employed by any Person, or any marketing or
use by any Person of any such product or service, infringes or
misappropriates any Owned Intellectual Property or Licensed
Intellectual Property or confidential or proprietary rights of
Seller or Deaconess;
(e) the products and services sold and provided by Deaconess,
each process, method, part, design, material or other
Intellectual Property it employs, and the marketing and use by
Seller in connection with the Business or Deaconess of any
product, service or Intellectual Property, do not, to Seller's
knowledge, infringe or misappropriate any Intellectual Property
or confidential or proprietary rights of another Person, and
neither Seller nor Deaconess has received any written notice
making or threatening to make any claim of infringement or
misappropriation of any Intellectual Property of another Person
or contesting Deaconess or Seller's right to market or use any
such product, service, process, method, part, design, material or
other Intellectual Property and there is no basis for making such
a claim; and
(f) Seller or Deaconess currently owns or possesses adequate
rights in and to all Intellectual Property necessary to conduct
the Business as presently conducted.
4.12 Contracts. Schedule 4.12 sets forth a true, accurate and
complete list of all Contracts and arrangements of the following
types to which Seller related to the Business or Deaconess is a
party or by which it is bound that are related exclusively to the
Business or to which any of the Assets is subject:
(a) any collective bargaining agreement;
29
(b) any Contract or arrangement of any kind with any director,
officer, stockholder or employee of Seller or any of the
respective Affiliates of such individuals, and any Contract or
other arrangement of any kind with any Affiliate of Seller;
(c) any Contract or arrangement with any Person for the purchase
or sale of goods or services for resale;
(d) any Contract or arrangement pursuant to which Seller grants
or is granted any license or other rights to use any of the
Assets or any rights of joint use with respect to any of the
Assets (other than any Personal Property Lease or Intellectual
Property License);
(e) any Contract or arrangement that either (i) requires a
payment by any party in excess of, or a series of payments which
in the aggregate exceed, $50,000 or provides for the delivery of
goods or performance of services, or any combination thereof,
having a value in excess of $50,000 or (ii) has a term, or
requires the performance of any obligations by Seller over a
period, in excess of one (1) year;
(f) any Contract or arrangement pursuant to which Seller or
Deaconess has made or will make loans or advances, or has or will
have incurred debts or become a guarantor or surety or pledged
its credit on or otherwise become responsible with respect to any
undertaking of another Person (except for the negotiation or
collection of negotiable instruments in transactions in the
ordinary course of business);
(g) any indenture, credit agreement, loan agreement, note,
mortgage, security agreement, lease of real property or personal
property, loan commitment or other Contract or arrangement
relating to the borrowing of funds, an extension of credit or
financing;
(h) any Contract or arrangement involving a partnership, joint
venture or other cooperative undertaking;
(i) any Contract or arrangement involving any restrictions with
respect to the geographical area of operations or scope or type
of business of Seller or Deaconess;
(j) any power of attorney or agency agreement or arrangement
with any Person pursuant to which such Person is granted the
authority to act for or on behalf of Seller or Deaconess, or
Seller or Deaconess is granted the authority to act for or on
behalf of any Person;
(k) any Contract, whether or not fully performed, relating to
any acquisition or disposition of any stock of, or any material
portion of the assets of, Seller or Deaconess, or any acquisition
or disposition of any subsidiary, division, line of business or
real property of Seller or Deaconess;
(l) any Contract not made in the ordinary course of business and
consistent with past practice and that is to be performed in
whole or in part at or after the Closing Date of this Agreement;
and
30
(m) any Contract not specified above that is material to the
Business.
Seller has delivered to Purchaser (i) true, accurate and
complete copies of each document set forth on Schedule 4.12 as
amended or modified and each of the Contracts included in the
Purchased Contracts and Permits as amended or modified
(collectively, the "Identified Contracts") and (ii) a written
description of each oral arrangement so listed on Schedule 4.12.
Except as set forth on Schedule 4.12, all such Identified
Contracts and arrangements have been entered into by Seller or
Deaconess in the ordinary course of business. Seller has
delivered to Purchaser true, accurate and complete copies of each
form of agreement that has been used in the Business, if
applicable, and is in effect with respect to any third party.
4.13 Permits and Regulatory Compliance.
(a) Schedule 4.13 contains a complete and accurate statement of
all Permits granted to Deaconess or to Seller that are related
exclusively to the Business, the date each Permit was last
granted and the current term of each Permit. Each Permit set
forth on Schedule 4.13 is in full force and effect, and is valid,
binding and enforceable by or against Deaconess or Seller, as
applicable. To Seller's Knowledge, no event has occurred that
limits or, with the giving of notice or the passage of time, or
both, would limit the legal effect or validity of such Permit.
No action or proceeding for the suspension or cancellation of any
Permit is pending or, to Seller's Knowledge, is threatened, and,
to Seller's Knowledge, there are no material facts, circumstances
or omissions concerning Deaconess or Seller that would likely
lead to any such action or proceeding. Except as set forth on
Schedule 4.13, Deaconess or Seller has received and maintained
without interruption, in all material respects, all necessary
Permits related to the operation of the Business and receipt of
all student financial assistance including those Permits required
for Deaconess to offer educational programs, and to offer student
financial assistance, including Title IV Program Funds, to the
students enrolled in such educational programs. Except for the
Permits set forth on Schedule 4.13, no Permits are necessary to
operate the Business.
(b) Except as set forth on Schedule 4.13, neither Deaconess nor
Seller has received written or oral notice that Deaconess is on
probation or warning or is in material violation of any of the
terms or conditions of any of the Permits or has received written
or oral notice that any of the Permits will not be renewed and,
to Seller's Knowledge, there is no basis for nonrenewal of any of
the Permits.
(c) U.S. Department of Education Certification and Eligibility.
(i) Seller has provided Purchaser with a copy of Deaconess's
most recent DOE Application for Institutional Participation in
Programs Under the Higher Education Act of 1965, as amended (the
"Higher Education Act"), and Institutional Eligibility and
Certification for Title IV Student Financial Aid.
(ii) Seller has accurately disclosed to the DOE the ownership of
Deaconess to the extent, and in the manner, required by DOE
regulations.
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(iii) Deaconess materially satisfies the DOE standards of
administrative capability, as set forth at 34 C.F.R. 668.16,
including all requirements pertaining to satisfactory academic
progress. Further, each program offered by Deaconess is an
eligible program in accordance with the requirements of 34 C.F.R.
668.8.
(iv) Deaconess provides refunds substantially in accordance with
applicable governmental and regulatory refund policies and as
required pursuant to 34 C.F.R. 668.22.
(v) Deaconess did not receive for the fiscal year ending
May 31, 2004, greater than ninety percent (90%) of its revenues from
Title IV or other federal student financial aid funds and
Deaconess satisfies the requirements regarding grants, loans and
work study program revenues for tuition established by the DOE as
set forth at 34 C.F.R. 600.5. Schedule 4.13 contains a correct
statement of Deaconess's percentage of revenue from such federal
funding sources.
(vi) the cohort default rates published by the DOE for fiscal
years 2001 and 2002 for Deaconess are listed on Schedule 4.13.
Deaconess will not have cohort default rates attributed to it of
25% or over for three consecutive years and Deaconess could not
be declared ineligible to participate in Federal Family Education
Loan programs.
(vii) Deaconess is authorized by the Missouri State Board of
Nursing.
(viii) Deaconess is accredited by the Higher Learning
Commission of the North Central Association of Colleges and
Schools.
(ix) Deaconess's nursing programs are accredited by the National
League for Nursing Accrediting Commission and the Commission on
Collegiate Nursing Education.
4.14 Insurance. Schedule 4.14 sets forth a true, accurate and
complete list of all policies of fire and casualty, liability,
workmen's compensation, title and other forms of insurance held
by Seller or Deaconess and applicable exclusively to any Asset or
the Business. All such policies are in full force and effect,
all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid (or will be paid by
Seller prior to the due dates therefor), and no notice of
cancellation or termination has been received with respect to any
such policy. Such policies are sufficient for compliance with
(i) all requirements of Law and (ii) all Contracts to which
Seller is a party, and are valid, outstanding and enforceable
policies. Except as set forth on Schedule 4.14, there are no
pending or threatened claims under any insurance policy set forth
thereon.
4.15 Employee Benefit Plans and Employment Agreements. True,
accurate and complete copies or descriptions of all "employee
welfare benefit plans" or "employee pension benefit plans" as
those terms are respectively defined in sections 3(1) and 3(2) of
ERISA, and all retirement or deferred compensation plans,
incentive compensation plans, stock plans, unemployment
compensation plans, vacation pay, severance pay, bonus or benefit
arrangements, insurance or hospitalization programs or any other
fringe benefit arrangements (whether pursuant to Contract,
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arrangement, custom or informal understanding) which do not
constitute "employee benefit plans" (as defined in section 3(3)
of ERISA) and all employment agreements, covering any Deaconess
Employee (collectively, the "Benefit Plans") have been supplied
to Purchaser. All Benefit Plans comply in form and operation
with all requirements of applicable Law. Schedule 4.15 sets
forth the names of the Benefit Plans.
4.16 Employment and Labor Matters. Schedule 4.16 sets forth a
true, accurate and complete list of the names and titles or job
descriptions of each Deaconess Employee whose services are
related exclusively to the operation of the Business and the
annual compensation payable to each such individual for the
current fiscal year. Except as set forth on Schedule 4.16, since
December 31, 2004, there has been no material change in
compensation, by means of wages, salaries, bonuses, gratuities or
otherwise, or any change in compensation to Deaconess Employees
for reimbursable business expenses. Since December 31, 2004, the
Business has been and currently is conducted in compliance with
all Laws relating to employment and employment practices, terms
and conditions of employment, wages and hours and
nondiscrimination in employment, except where the failure to
comply could reasonably be expected to result in a Material
Adverse Effect. Except as set forth on Schedule 4.16, Seller's
relationship with the Deaconess Employees is good and there is,
and, to Seller's Knowledge, no labor strike, dispute, slow-down
or work stoppage actually pending or threatened involving the
Business. None of the Deaconess Employees is covered by any
collective bargaining agreement other than the agreements listed
on Schedule 4.16, no collective bargaining agreement is currently
being negotiated and, to Seller's Knowledge, no attempt is
currently being made or has been made to organize any of the
Deaconess Employees to form or enter into any labor union or
similar organization.
4.17 Taxes.
(a) All federal, state, local and foreign income, corporation
and other Tax Returns have been filed for Seller and all other
filings in respect of Taxes have been made for Seller (or will be
filed or made prior to the due dates therefor) for all periods
through and including the Closing Date as required by applicable
Law. All Taxes shown as due on all such Tax Returns and other
filings have been paid (or will be paid prior to the due dates
therefor). Each such Tax Return and filing is true, accurate and
complete. All unpaid Taxes of Seller are reflected as accrued
liabilities in its books and records as of the date hereof and
the Closing Date. There are no Tax liens (other than Liens for
current Taxes not yet due and payable) upon any of the Assets.
All Taxes that Seller is required by Law to withhold or collect,
including sales and use taxes, and amounts required to be
withheld for Taxes of employees and other withholding taxes, have
been duly withheld or collected and, to the extent required, have
been paid over to the proper Governmental Authorities or are held
in separate bank accounts for such purpose and will be so paid
prior to or on the applicable due date.
(b) Seller is not a foreign person within the meaning of Section
1445(f)(3) of the Code.
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4.18 No Defaults or Violations. Except as set forth on Schedule 4.18:
(a) neither Seller nor Deaconess has breached any provision of,
nor is it in default under the terms of, any Identified Contract
and, to Seller's Knowledge, no other party to any Identified
Contract has breached any provision of, or is in default under
the terms of, any Identified Contract.
(b) Seller and Deaconess are in compliance with, and no
violation exists under, any and all Laws applicable to the
Business, except where the failure to comply could reasonably be
expected not to have a Material Adverse Effect.
(c) No written or oral notice from any Governmental Authority
has been received by Seller or Deaconess claiming any violation
of any Law (including any building, zoning or other ordinance) or
requiring any work, construction or expenditure, or asserting any
Tax, assessment, interest or penalty.
4.19 Environmental Matters. Except as set forth on Schedule 4.19:
(a) Seller and Deaconess are in material compliance with all
Environmental Laws, and no condition exists or event has occurred
which, with or without notice or the passage of time or both,
would constitute a violation of any Environmental Law or give
rise to any Lien on any of the Assets under any Environmental
Law; except where the failure to comply or condition could
reasonably be expected not to have a Material Adverse Effect;
(b) Seller and Deaconess are in possession of all Environmental
Permits required for the ownership of the Purchased Assets or the
conduct or operation of the Business (or any part thereof) and
are in material compliance with all of the requirements and
limitations included in such Environmental Permits; except where
the failure to comply could reasonably be expected not to have a
Material Adverse Effect;
(c) To Seller's Knowledge, neither Seller nor Deaconess has used
or stored any, Hazardous Substances in, on or at any Real
Property;
(d) Neither Seller nor Deaconess has received any written notice
from any Governmental Authority or any other Person that Seller
or Deaconess is in violation of any Environmental Law or
Environmental Permit, or that Seller or Deaconess is responsible
(or potentially responsible) for the cleanup or remediation of
any substances at any location; and
(e) no condition has existed or event has occurred with respect
to any property used by Seller or Deaconess or to Seller's
knowledge, any predecessor to Seller in connection with the
Business that in any case could, with or without notice, passage
of time or both, give rise to any present or future liability of
Seller or Deaconess pursuant to any Environmental Law.
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4.20 Litigation.
(a) Except as set forth on Schedule 4.20, there are no actions,
suits, mediations, arbitrations, regulatory proceedings or other
litigation, proceedings or governmental investigations pending or
threatened against or affecting Deaconess or Seller (as such is
related to the Business) or any of their respective officers,
directors, employees, agents or stockholders in their capacity as
such, and to Seller's Knowledge, there are no facts or
circumstances which may give rise to any of the foregoing.
Except as set forth on Schedule 4.20, all of the proceedings set
forth thereon are fully covered by insurance policies (or other
indemnification agreements with third parties) and are being
defended by the insurers (or such third parties), subject to such
deductibles as are set forth on Schedule 4.20. Except as set
forth on Schedule 4.20, neither Deaconess nor Seller (with
respect to the Business) is subject to any order, judgment,
decree, injunction, stipulation or consent order of or with any
court or other Governmental Authority. Neither Deaconess nor
Seller (with respect to the Business) has entered into any
agreement to settle or compromise any proceeding pending or
threatened against it which has involved any obligation other
than the payment of money or for which Seller or Deaconess has
any continuing obligation.
(b) There are no claims, actions, suits, proceedings or
investigations pending or threatened by or against Seller with
respect to this Agreement or any of the Related Agreements, or in
connection with the transactions contemplated hereby or thereby,
and to Seller's Knowledge, there is no valid basis for any such
claim, action, suit, proceeding or investigation.
4.21 Information and Records. The Information and Records are
true, accurate and complete and, at Seller's expense, will be
transferred to Purchaser at or after the Closing promptly at
Purchaser's request in such form and format (including
disaggregating such data from other data of Seller) as Seller
currently maintains (unless such Information and Records cannot
be segregated from Seller's Excluded Assets in which case, in a
commercially reasonable manner). Deaconess's current record-
keeping policies and practices conform to and are in material
compliance with all DOE requirements and guidelines applicable
thereto.
4.22 No Other Agreement. Except for sales of assets in the
ordinary course of business, none of Deaconess, Seller or any of
their Affiliates has any Contract or arrangement with respect to
the sale or other disposition of the Business or any of the
Assets of Seller, except as set forth in this Agreement.
4.23 Brokers. Seller has not used any broker or finder in
connection with the transactions contemplated hereby, and neither
Purchaser nor any Affiliate of Purchaser has or shall have any
liability or otherwise suffer or incur any Loss as a result of or
in connection with any brokerage or finder's fee or other
commission of any Person retained by Seller in connection with
any of the transactions contemplated by this Agreement or the
Related Agreements.
4.24 Accuracy of Statements. Neither this Agreement nor any
Related Agreement nor any schedule or exhibit furnished or to be
furnished by or on behalf of Seller to Purchaser or any
representative or Affiliate of Purchaser in connection with this
Agreement, any Related Agreement or any of the transactions
contemplated hereby or thereby contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they
are made, not misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller, as of the date
of this Agreement, as follows:
5.1 Due Incorporation. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware, with all requisite corporate power and
authority to own, lease and operate its properties and to carry
on its business as they are now owned, leased and operated.
5.2 Due Authorization. Purchaser has full power and authority
to execute, deliver and perform this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by
Purchaser of this Agreement and the Related Agreements and the
consummation by Purchaser of the transactions contemplated hereby
and thereby have been duly and validly approved by all necessary
corporate action and no other actions or proceedings on the part
of Purchaser are necessary to authorize the execution, delivery
and performance of this Agreement, the Related Agreements or the
transactions contemplated hereby and thereby. Purchaser has duly
and validly executed and delivered this Agreement and has duly
and validly executed and delivered (or prior to or at the Closing
will duly and validly execute and deliver) the Related
Agreements. This Agreement constitutes legal, valid and binding
obligations of Purchaser and the Related Agreements upon
execution and delivery by Purchaser will constitute legal, valid
and binding obligations of Purchaser, in each case, enforceable
in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally, by
equitable limitations on the availability of specific remedies
and by principles of equity.
5.3 Consents and Approvals; No Conflicts, etc.
(a) Except for any required consents from the DOE or any
applicable state regulatory authorities (the "Purchaser
Consents"), no consent, authorization or approval of, or filing
or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement is
necessary in connection with the execution, delivery and
performance by Purchaser of this Agreement and the Related
Agreements and the consummation by Purchaser of the transactions
contemplated hereby or thereby.
(b) The execution, delivery and performance by Purchaser of this
Agreement and the Related Agreements and the consummation by
Purchaser of the transactions contemplated hereby and thereby do
not and will not (i) violate any Law applicable to Purchaser or
any of its properties or assets; (ii) violate or conflict with,
result in a breach or termination of, constitute a default or
give any third party any additional right (including a
termination right), permit cancellation of, result in the
creation of any Lien upon any of the assets or properties of
Purchaser under, or result in or constitute a circumstance which,
with or without notice or lapse of time or both, would constitute
any of the foregoing, any Contract to which Purchaser is a party
or by which Purchaser or any of its assets are bound; (iii)
permit the acceleration of the maturity of any indebtedness of
36
Purchaser or indebtedness secured by any of its assets or
properties; or (iv) violate or conflict with any provision of the
certificate of incorporation or bylaws or similar organizational
instruments of Purchaser.
5.4 Brokers. Purchaser has not used any broker or finder in
connection with the transactions contemplated hereby, and neither
Seller nor any Affiliate of Seller has or shall have any
liability or otherwise suffer or incur any Loss as a result of or
in connection with any brokerage or finder's fee or other
commission of any Person retained by Purchaser in connection with
any of the transactions contemplated by this Agreement or the
Related Agreements.
5.5 Representations of Seller. Except for the representations
and warranties set forth in Article IV, Purchaser acknowledges
that it is purchasing the Purchased Assets and leasing the Leased
Assets on a "AS IS, WHERE IS" basis (as more particularly
described in Section 2.6), and that Purchaser is not relying on
any representation or warranty (express or implied, oral or
otherwise) made on behalf of Seller other than as expressly set
forth in this Agreement.
5.6 Legal Proceedings. Except as set forth on Schedule 5.6,
there are no claims, proceedings or investigations pending or, to
Purchaser's Knowledge, threatened relating to or affecting
Purchaser or any Affiliate of Purchaser before any court or
Governmental Authority in which an adverse determination would
materially adversely affect the business condition (financial or
otherwise) of Purchaser or any Affiliate of Purchaser. Neither
Purchaser nor any Affiliate of Purchaser is subject to any
judgment, order, decree or other governmental restriction
specifically applicable to Purchaser or any Affiliate of
Purchaser that materially adversely affects the business
condition (financial or otherwise) of Purchaser or any Affiliate
of Purchaser.
5.7 Ability to Perform. Purchaser has the ability to obtain
funds in cash in amounts equal to the Purchase Price and will at
the Closing have immediately available funds in cash, which are
sufficient to pay the Purchase Price and to pay any other amounts
payable pursuant to this Agreement or the Related Agreements and
to consummate the transactions contemplated hereby and thereby.
5.8 Solvency. Purchaser is not insolvent and will not be
rendered insolvent as a result of any of the transactions
contemplated by this Agreement or by the Related Agreements. For
purposes of this Section 5.8, the term "solvency" means that: (i)
the fair saleable value of Purchaser's tangible assets is in
excess of the total amount of its liabilities (including for
purposes of this definition all liabilities, whether or not
reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, and whether direct or
indirect, fixed or contingent, secured or unsecured, and disputed
or undisputed); (ii) Purchaser is able to pay its debts or
obligations in the ordinary course as they become due; and (iii)
Purchaser has capital sufficient to carry on its businesses and
all businesses in which it is about to engage.
ARTICLE VI
COVENANTS OF SELLER
Seller agrees to perform each of the following covenants:
37
6.1 Implementing Agreements. Subject to the terms and
conditions hereof, Seller shall use commercially reasonable
efforts in taking all action reasonably required of it to fulfill
its obligations under the terms of this Agreement and the Related
Agreements and shall otherwise use all commercially reasonable
efforts to facilitate the consummation of the transactions
contemplated hereby and thereby. Seller agrees that it will not
take any action that would have the effect of preventing or
impairing Seller's performance of its obligations under this
Agreement and the Related Agreements.
6.2 Consents and Approvals. Seller shall reasonably cooperate
with Purchaser and its representatives and attorneys in:
(a) Purchaser's commercially reasonable efforts to obtain all
consents, approvals, certificates and other documents required in
connection with the performance by it of its obligations under
this Agreement and the Related Agreements and the consummation by
it of the transactions contemplated hereby and thereby, including
all such consents and approvals by each party to any of the
Contracts included in the Purchased Contracts and Permits. If a
consent or approval is required by any party under any of the
Contracts included in the Purchased Contracts and Permits and is
not obtained on or before the Closing or if an attempted
assignment is ineffective, Seller shall cooperate with Purchaser,
with each party bearing its own costs, in any reasonable
arrangement requested by Purchaser to provide for Purchaser the
benefits under any such Contracts.
(b) Purchaser's commercially reasonable efforts to obtain all
required consents and approvals (if any) to assign and transfer
the Permits to Purchaser at Closing and, to the extent that one
or more of the Permits are not transferable, to obtain
replacements therefor. If certain Permits are not transferable
or replacements therefor are not obtainable on or before the
Closing, but such Permits are transferable or replacements
therefor are obtainable after the Closing, Seller shall continue
to use such efforts in cooperation with Purchaser, with each
party bearing its own costs, after the Closing as may be required
to obtain all required consents and approvals to transfer, or
obtain replacements for, such Permits after Closing.
(c) Purchaser's efforts to make all filings, notices,
applications, statements and reports to all Governmental
Authorities and other Persons that are required to be made prior
to the Closing Date pursuant to any applicable Law or Contract in
connection with this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby and Seller shall
cooperate with Purchaser in making all such filings, notices,
applications, statements and reports that are required to be made
prior to the Closing Date by or on behalf of Purchaser or any of
its Affiliates pursuant to any applicable Law in connection with
this Agreement and the Related Agreements and the transactions
contemplated hereby and thereby. Without limiting the generality
of the foregoing, from and after the date hereof, Purchaser shall
take all actions required in connection with the filing of the
DOE Application and the NCA Approval and to otherwise make
notifications to, and secure authorizations, consents or similar
approvals from, as the case may be, the Necessary Regulatory
Authorities in connection with the transactions contemplated
hereby
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(d) As part of such cooperation, Seller shall use all
commercially reasonable efforts when requested by Purchaser, but
shall not be obligated to obtain the approval or consent from any
party required in connection with the performance of this
Agreement, including the Purchased Contracts and Permits and any
notices to the Governmental Authorities before or after the
Closing, even if any such Purchased Contracts and Permits are not
assignable without the Seller's consent. In addition, any and
all liability resulting from the assignment of the Purchased
Contracts and Permits without a required consent thereto shall
rest with Purchaser.
6.3 Preservation of Business.
(a) Until the Closing, Seller shall incur and pay costs and
otherwise operate the Business only in the usual, regular and
ordinary course and in a manner consistent with past practice,
and shall use commercially reasonable efforts to (i) preserve
intact the present business organization and personnel of the
Business, (ii) preserve the goodwill and advantageous
relationships of the Business with students, faculty, suppliers,
independent contractors, employees and other Persons material to
the operation of the Business, (iii) prevent any event that could
have a Material Adverse Effect and (iv) not permit any action or
omission that would cause any of the representations or
warranties of Seller contained herein to become inaccurate or any
of the covenants of Seller to be breached.
(b) Without limiting the generality of clause (a), until the
Closing, except as set forth on Schedule 6.3 or with the prior
written consent of Purchaser, Seller shall not:
(i) take any action or omit to take any action, or permit any
action or omission, which would cause a material breach of any of
the Purchased Contracts and Permits or any other Contract or
obligation the breach of which could have a Material Adverse
Effect;
(ii) take any action, or enter into or authorize any Contract or
transaction or any amendment or modification to any Contract or
transaction, other than in the ordinary course of business and
consistent with past practice;
(iii) sell, transfer, convey, assign or otherwise dispose of
any of the Assets, other than in the ordinary course of business
and consistent with past practice;
(iv) except for capital improvements, purchases and expenditures
permitted by clause (v) (below), acquire or lease any assets
other than in the ordinary course of business and consistent with
past practices or any assets that are material to the Business;
(v) authorize or make any capital improvements or purchases or
other capital expenditures related to the Business that
individually or in the aggregate are in excess of $50,000;
39
(vi) waive, release or cancel any claims against third parties or
debts owing to it, or any rights which have any value;
(vii) make any changes in its accounting systems, policies,
principles or practices;
(viii) make any borrowing, incur any debt (other than trade
payables in the ordinary course of business and consistent with
past practice), or assume, guarantee, endorse (except for the
negotiation or collection of negotiable instruments in the
ordinary course of business and consistent with past practice) or
otherwise become liable (whether directly, contingently or
otherwise) for the obligations of any other Person, or make any
payment or repayment in respect of any indebtedness (other than
trade payables and accrued expenses in the ordinary course of
business and consistent with past practice);
(ix) suffer or permit the creation of any Lien over any of the
Assets other than in the ordinary course of business and
consistent with past practice;
(x) make any loan, advance or capital contribution, with respect
to the Business, to, or investment in, any other Person;
(xi) enter into, adopt, amend or terminate any bonus, profit
sharing, compensation, termination, stock option, stock
appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund or other
arrangement with respect to the Business for the benefit or
welfare of any director, officer, consultant or employee, or
increase in any manner the compensation or fringe benefits of any
director, officer, consultant or employee or pay any benefit not
required by any existing plan and arrangement or enter into any
Contract or arrangement to do any of the foregoing;
(xii) make any Tax election or settle or compromise any
federal, state or local Tax liability, or waive or extend the
statute of limitations with respect to the Business in respect of
any such Taxes;
(xiii) pay any amount, perform any obligation or agree to pay
any amount or perform any obligation, in settlement or compromise
of any suits or claims of liability against Seller or any of its
directors, officers, employees or agents with respect to the
Business;
(xiv) terminate, rescind, modify, amend or otherwise alter or
change any of the terms or provisions of any of the Purchased
Contracts and Permits (other than in the ordinary course of
business and consistent with past practice), or reduce, discount,
waive or forego any material payment or right thereunder, or
agree to any compromise or settlement with respect thereto (other
than in the ordinary course of business and consistent with past
practice);
40
(xv) hire any new employees in connection with the operation of
the Business or terminate the employment of any Deaconess
Employee (other than in the ordinary course of business and
consistent with past practice);
(xvi) enter into any Contract or arrangement of any kind with
respect to the Business with any director, officer or employee of
Seller or any of the respective Affiliates of such individuals,
or any Contract or other arrangement of any kind with any
Affiliate of Seller;
(xvii) enter into any Contract or arrangement pursuant to
which Seller grants or is granted any license or other right to
use any of the Assets; or
(xviii) incur any obligation or enter into any Contract or
arrangement with respect to the Business that either (i) requires
a payment by any party in excess of, or a series of payments
which in the aggregate exceed, $50,000 or provides for the
delivery of goods or performance of services, or any combination
thereof, having a value in excess of $50,000 or (ii) has a term,
or requires the performance of any obligations by Seller over a
period, in excess of one year.
(c) Without limiting the generality of clause (a), until the
Closing, except as set forth on Schedule 6.3, Seller shall:
(i) maintain its books, accounts and records related to the
Business in the usual, regular and ordinary manner, and on a
basis consistent with the Financial Statements and past
practices,
(ii) except as otherwise provided in Section 6.3(d), continue to
carry its existing insurance through the Closing Date, and shall
not allow any breach, default, termination or cancellation of
such insurance policies or agreements to occur or exist, and
(iii) duly comply with all Laws applicable to Seller or as
may be required for the valid and effective transfer and
assignment of the Purchased Assets.
(d) Seller shall continue to carry its existing "claims-made"
liability insurance applicable to periods up to the Closing Date
and shall not allow any breach, default, termination or
cancellation of such insurance policies or agreements to occur or
exist.
(e) Any Contract or other obligation which requires the prior
written consent of Purchaser pursuant to Section 6.3(b) and which
is entered into or incurred with the prior written consent of
Purchaser shall be included in the Purchased Assets and Permits
and shall constitute an Assumed Liability, and the Schedules to
this Agreement shall be deemed to have been updated to include
any such Contract or obligation. Any Contract or other
obligation entered into or incurred in violation of Section
6.3(b) shall not be included in the Purchased Assets and Permits,
shall constitute an Excluded Liability, and shall not be included
on any of the Schedules to this Agreement.
41
6.4 Access to Information. Prior to the Closing, Seller shall
give Purchaser and Purchaser's representatives reasonable access
during normal business hours to all of the Contracts, books and
records of Seller related to the Business (including employment
histories and other information relating to employees), the Real
Property and any other locations where any Information and
Records are maintained or processed. Seller shall make the
officers and employees of Seller available to Purchaser and its
representatives as Purchaser and its representatives shall from
time to time reasonably request upon no less than twenty-four
(24) hours prior notice. Purchaser and its representatives will
be furnished with any and all information, to the extent such
information is maintained by Seller, concerning the Business that
Purchaser or its representatives reasonably request. Without
limiting the foregoing, upon reasonable notice to Seller and
during normal business hours, Seller shall give Purchaser and its
representatives access to the books and records, which are
related to the Business, of Seller to perform such auditing
procedures as Purchaser or its representatives may reasonably
determine.
6.5 Supplemental Information. From time to time prior to the
Closing, Seller will promptly disclose in writing to Purchaser
any matter hereafter arising which, if existing, occurring or
known at the date of this Agreement would have been required to
be disclosed to Purchaser on the Schedules hereto or which would
render inaccurate any of the representations, warranties or
statements set forth in Article IV. No information provided to
Purchaser pursuant to this Section 6.5 shall be deemed to cure
any breach of any representation, warranty or covenant made in
this Agreement or in any Related Agreement. Purchaser shall, at
its option, be entitled to add any of the information disclosed
pursuant to this Section 6.5 to the Schedules hereto upon written
notice to Seller, in which case such information shall be deemed
to have been disclosed to Purchaser from the date of this
Agreement.
6.6 Confidentiality. Except as required by Law or any
Governmental Authority or as set forth on Schedule 6.6, after the
Closing, Seller shall maintain all Confidential Information
(other than such Confidential Information which after the Closing
is received from a third party (provided such third party is not
known by Seller to be bound by an obligation of secrecy)) in
strict confidence in accordance with the procedures it uses to
protect its own information of a similar nature and shall not use
any such Confidential Information for any purpose.
6.7 Tax Matters. After the Closing, Seller shall make available
to Purchaser such records pertaining to the Business as Purchaser
may reasonably require for the preparation of any Tax Returns or
other similar governmental reports, documents or forms required
to be filed by Purchaser and such records pertaining to the
Business as Purchaser may reasonably require for the defense of
any audit, examination, administrative appeal or litigation of
any such Tax Return or other similar governmental report,
document or form.
6.8 Cooperation. Prior to the Closing, Seller shall cooperate
with Purchaser and shall take all actions reasonably requested by
Purchaser to ensure a smooth transition of the Business from
Seller to Purchaser.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser agrees to perform each of the following covenants:
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7.1 Implementing Agreement. Subject to the terms and conditions
hereof, Purchaser shall take all reasonable action required of it
to fulfill its obligations under the terms of this Agreement and
shall use all commercially reasonable efforts to facilitate the
consummation of the transactions contemplated hereby. Except as
otherwise expressly permitted hereby, Purchaser agrees that it
will not take any action that would have the effect of preventing
or impairing Purchaser's performance of its obligations under
this Agreement.
7.2 Consents and Approvals. Purchaser shall use all
commercially reasonable efforts to obtain all consents,
approvals, certificates and other documents required in
connection with the performance by it of its obligations under
this Agreement and the Related Agreements and the consummation by
it of the transactions contemplated hereby and thereby.
Purchaser shall make, or cause to be made, all filings, notices,
applications, statements and reports to all Governmental
Authorities and other Persons that are required to be made prior
to the Closing Date by or on behalf of Purchaser or any of its
Affiliates pursuant to any applicable Law or Contract in
connection with this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby and shall cooperate
with Seller in making all such filings, notices, applications,
statements and reports that are required to be made prior to the
Closing Date by or on behalf of Seller or any of its Affiliates
pursuant to any applicable Law in connection with this Agreement
and the Related Agreements and the transactions contemplated
hereby and thereby. Purchaser's failure to obtain any or all of
the Purchased Contracts and Permits and Governmental Authority
consents or estoppel certificates as of the Closing Date shall
not be a condition precedent to either party's obligation to
close the transaction contemplated by this Agreement.
7.3 Confidentiality. Except as required by Law or any
Governmental Authority, after the Closing, Purchaser shall
maintain all of Seller's confidential information (other than
such confidential information that after the Closing is received
from a third party (provided such third party is not known by
Purchaser to be bound by an obligation of secrecy)) in strict
confidence in accordance with the procedures it uses to protect
its own information of a similar nature and shall not use any
such confidential information for any purpose.
7.4 Tax Matters. After the Closing, Purchaser shall make
available to Seller such records pertaining to the Business as
Seller may reasonably require for the preparation of any Tax
Returns or other similar governmental reports, documents or forms
required to be filed by Seller and such records pertaining to the
Business as Seller may reasonably require for the defense of any
audit, examination, administrative appeal or litigation of any
such Tax Return or other similar governmental report, document or
form.
7.5 Cooperation. Prior to the Closing, Purchaser shall
cooperate with Seller and shall take all actions reasonably
requested by Seller to ensure a smooth transition of the Business
from Seller to Purchaser.
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ARTICLE VIII
CONDITIONS PRECEDENT
TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or
waiver by Purchaser of the following conditions on or prior to
the Closing Date:
8.1 Representations and Warranties. The representations and
warranties of Seller contained herein and in the Related
Agreements shall have been true, accurate and correct on and as
of the date of this Agreement, and shall also be true, accurate
and correct on and as of the Closing Date with the same force and
effect as though made by Seller on and as of the Closing Date,
subject to the provisions of Section 6.5.
8.2 Agreements and Covenants. Seller shall have performed and
complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement and in the
Related Agreements to be performed and complied with by it on or
prior to the Closing Date.
8.3 Consents and Approvals. Purchaser shall have received
written evidence satisfactory to it that (a) all Seller Consents
and Purchaser Consents have been obtained, and no such consent or
approval shall contain any terms which, in the reasonable
judgment of Purchaser, would have a Material Adverse Effect on
Purchaser or its operation of the Business after the Closing,
provided, however, that such terms are not of a type generally
applicable to any entity obtaining a comparable consent, and (b)
all required filings with Governmental Authorities have been
made.
8.4 No Material Adverse Change. Subject to the other provisions
of this Agreement, no Material Adverse Change shall have occurred
and no event shall have occurred which, in the reasonable
judgment of Purchaser, could reasonably be expected to have a
Material Adverse Effect.
8.5 Actions or Proceedings. No action or proceeding by any
Governmental Authority or other Person shall have been instituted
or threatened which (a) might have a Material Adverse Effect or
(b) could enjoin, restrain or prohibit, or could result in
substantial damages in respect of, any provision of this
Agreement or any Related Agreement or the consummation of the
transactions contemplated hereby or thereby or any integration of
the Business with that of Purchaser and its Affiliates.
8.6 Purchaser's Due Diligence. Purchaser shall have completed
to its satisfaction, in its sole discretion, Purchaser's due
diligence review of financial and legal matters with respect to
the Business.
ARTICLE IX
CONDITIONS PRECEDENT
TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or
waiver by Seller of the following conditions on or prior to the
Closing Date:
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9.1 Representations and Warranties. The representations and
warranties of Purchaser contained herein and in the Related
Agreements shall have been true, accurate and correct on and as
of the date of this Agreement, and shall also be true, accurate
and correct on and as of the Closing Date with the same force and
effect as though made by Purchaser on and as of the Closing Date.
9.2 Agreements and Covenants. Purchaser shall have performed
and complied with all of its covenants, obligations and
agreements contained in this Agreement and in the Related
Agreements to be performed and complied with by it on or prior to
the Closing Date.
9.3 Consents and Approvals. Seller shall have received written
evidence satisfactory to it that (a) all Seller Consents and
Purchaser Consents have been obtained, and no such consent or
approval shall contain any terms which, in the reasonable
judgment of Seller, would have a Material Adverse Effect on
Seller or its operation after the Closing and (b) all required
filings with Governmental Authorities have been made
9.4 Actions or Proceedings. No action or proceeding by any
Governmental Authority or other Person shall have been instituted
or threatened which could enjoin, restrain or prohibit, or could
result in substantial damages in respect of, any provision of
this Agreement or any Related Agreement or the consummation of
the transactions contemplated hereby or thereby
9.5 Signing and Delivery of Documents and Instruments.
Purchaser shall have executed and delivered all documents,
instruments and certificates required to be executed and
delivered pursuant to the provisions of this Agreement, including
but not limited to those documents set forth in Section 11.3.
Purchaser acknowledges that Purchaser shall not satisfy the
condition precedent set forth in this Section 9.5 unless
Purchaser initiates the wire transfer of the amount set forth in
Section 3.1 to Seller, and provides to Seller a Federal Reserve
wire reference number with respect thereto, in accordance with
Section 3.1.
ARTICLE X
EMPLOYEES AND BENEFIT PLANS
10.1 Certain Employee Matters.
(a) Purchaser covenants and agrees that it shall make offers of
employment (in substantially equivalent positions) to
substantially all Deaconess Employees (whether such employees are
full-time employees, part-time employees, on short-term or long-
term disability or on leave of absence pursuant to Seller's
policies, the Family and Medical Leave Act of 1993 or other
similar local law) as of the Closing Date. Notwithstanding the
foregoing, Purchaser acknowledges that Seller has the right, but
is not required, to retain any management-level Deaconess
Employee who does not accept Purchaser's employment offer made
under this Section 10.1(a), which individuals will remain
employed by Seller as of the Closing Date (the "Retained
Management Employees"). Any of the Deaconess Employees who
accept an offer of employment with Purchaser as of or after the
Closing Date shall be referred to in this Agreement as the "Hired
Employees." Purchaser agrees that it shall continue to employ in
comparable positions the Hired Employees for a period of no less
than ninety (90) calendar days following the Closing Date, unless
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Purchaser sooner terminates the employment of any Hired Employee
for cause or any Hired Employee voluntarily resigns or retires.
For a period of one year from the Closing Date, Purchaser shall
ensure that the terms and conditions of employment (including
initial position, cash compensation, shifts, benefits, including
without limitation health, dental, disability, life insurance and
retirement plans) of each of the Hired Employees on and after the
Closing Date are, in the aggregate, substantially equivalent to
that provided the Deaconess Employees as of the Closing Date,
provided, however, that the entitlement of any of the Deaconess
Employees to retention bonuses as of the Closing Date shall not
constitute a term and condition of employment of any Hired
Employee as to which Purchaser must provide a substantially
equivalent benefit.
(b) Purchaser shall give all Hired Employees full credit for
extended sick pay (Reserve Sick) as of the Closing Date, and all
other paid time off pay, either by (i) crediting such employees
the time off reflected in the employment records of Seller
immediately prior to the Closing Date, or (ii) by making full
payments to such employees of the amounts that such employees
would have received had they taken such paid time off.
(c) Hired Employees shall be eligible for a medical and hospital
plan sponsored by Purchaser. Hired Employees shall be given
credit for periods of employment with Seller, as applicable,
prior to the Closing Date for purposes of determining eligibility
to participate and vesting of benefits in Purchaser's employee
benefit plans, and preexisting condition limitations will be
waived with respect to Hired Employees and their covered
dependents unless such preexisting conditions, to the extent
required by law, were applicable prior to the Closing Date.
(d) Seller shall be responsible to provide continuation coverage
pursuant to the requirements of Code section 4980B and Part 6 of
Title I of ERISA ("COBRA Coverage") with respect to the Deaconess
Employees (and their dependents) whose qualifying event occurred
prior to the date on which the Deaconess Employees become Hired
Employees. Purchaser shall be responsible to provide COBRA
Coverage with respect to each of the Hired Employees (and their
dependents) whose qualifying event occurs on or after the date on
which such Deaconess Employees become Hired Employees.
(e) After the Closing Date, Purchaser's human resources
department will give reasonable assistance to Seller's human
resources department with respect to Seller's post-Closing
administration of Seller's pre-Closing employee pension benefit
plans and employee health or welfare benefit plans for the
Deaconess Employees (other than the Retained Management
Employees). Within ten (10) days after the Closing Date,
Purchaser shall provide to Seller a list of all of the Deaconess
Employees who were offered employment by Purchaser but refused
such employment.
(f) With respect to all Deaconess Employees (including Hired
Employees), Seller shall be responsible for and shall pay, on or
prior to the Closing Date, all wages, bonuses, vacation pay, pay
for other compensated absences and other remuneration (including
mandatory or discretionary benefits) earned or accrued by such
employees as of the close of business on the Closing Date,
including any related payroll deductions (such as FICA and any
pension or other employee benefit plan contributions and
employment Taxes) with respect thereto, regardless of whether
such amounts have been accrued on the books of Seller at the
close of business on the Closing Date.
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(g) Seller shall have liability for and shall pay all severance
payments (if any) due to any of the Deaconess Employees
(including any Hired Employee) as a result of the termination of
their employment with Seller.
10.2 Liabilities Under Benefit Plans.
(a) Seller shall retain all, and Purchaser shall not purchase
any assets of, and Purchaser shall not assume and shall not be
deemed to have assumed any liability or responsibility for any
obligations or liabilities under, with respect to or arising in
connection with, any Benefit Plan or, any obligation or
liabilities with respect to any Deaconess Employee, including
Hired Employees, arising prior to or as of the Closing.
(b) Purchaser or its Affiliates may, in their sole discretion,
give credit for service with Seller rendered prior to the Closing
Date to Hired Employees who remain employed by Purchaser or its
Affiliates for some minimum period of time after the Closing Date
under one or more of Purchaser's or its Affiliates' employee
benefit plans and arrangements under which Hired Employees will
be covered after the Closing Date, but in no event will such
service recognition extend to the accrual of any benefits under
any of Purchaser's or its Affiliates' pension plans (whether
qualified or non-qualified).
10.3 No Third Party Beneficiaries. It is understood and
agreed between the parties that all provisions contained in this
Agreement with respect to employee benefit plans or employee
compensation are included for the sole benefit of the respective
parties hereto and do not and shall not create any right in any
other Person, including any Hired Employee, any participant in
any benefit or compensation plan or any beneficiary thereof.
ARTICLE XI
CLOSING
11.1 Closing. The Closing shall take place at the offices of
Mayer, Brown, ▇▇▇▇ & Maw, LLP, at 10:00 a.m. Chicago time on
March [__], 2005, or such other place and time as the parties
shall agree, or if the closing conditions set forth in Articles
VIII and IX are not met on such date, the date that is at the
earliest agreed upon by the parties following satisfaction of the
closing conditions set forth in Articles VIII and IX. The
Closing, and all transactions to occur at the Closing, shall be
deemed to have taken place at, and shall be effective as of, the
close of business on the Closing Date.
11.2 Deliveries by Seller. At the Closing, Seller shall deliver
to Purchaser the following:
(a) the Assignment and Assumption Agreement and the ▇▇▇▇ of
Sale, each duly executed by Seller;
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(b) the Lease duly executed by Seller;
(c) the Services Agreement duly executed by Seller;
(d) the Clinical Affiliation Agreement duly executed by Seller;
(e) the Releases;
(f) other instruments of transfer reasonably required by
Purchaser to evidence the transfer of the Purchased Assets to
Purchaser, including assignments with respect to any Intellectual
Property registered, recorded or filed with any Governmental
Authority, in form suitable for registration, recordation or
filing with such Governmental Authority, in each case duly
executed by Seller;
(g) a certificate, dated the Closing Date, of Seller certifying
as to the compliance by Seller with Sections 8.1 and 8.2;
(h) a certificate of the secretary of Seller certifying
resolutions of the board of directors of Seller approving and
authorizing the execution, delivery and performance of this
Agreement and the Related Agreements and the consummation by
Seller of the transactions contemplated hereby and thereby;
(i) letters of resignation from all of the members of the
Deaconess College of Nursing Board of Directors; and
(j) such other instruments, certificates , consents and other
documents that are reasonably necessary to carry out the
transaction contemplated by this Agreement and to comply with the
terms hereof.
11.3 Deliveries by Purchaser. At the Closing, Purchaser shall
make the payment described in Section 3.1 and deliver to Seller
the following:
(a) the Assignment and Assumption Agreement and the ▇▇▇▇ of
Sale, each duly executed by Purchaser;
(b) the Lease duly executed by Purchaser;
(c) the Services Agreement duly executed by Purchaser;
(d) the Clinical Affiliation Agreement duly executed by
Purchaser;
(e) a certificate, dated the Closing Date, of Purchaser,
certifying as to compliance by Purchaser with Sections 9.1 and
9.2;
(f) a certificate of the secretary of Purchaser certifying
resolutions of the board of directors of Purchaser approving and
authorizing this Agreement and the Related Agreements and the
consummation by Purchaser of the transactions contemplated hereby
and thereby;
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(g) such other instruments, certificates , consents and other
documents that are reasonably necessary to carry out the
transaction contemplated by this Agreement and to comply with the
terms hereof; and
(h) favorable original certificate of good standing, or
comparable status, of Purchaser, issued by the Delaware Secretary
of State, dated no earlier than a date that is fifteen (15)
calendar days prior to the Closing Date.
ARTICLE XII
TERMINATION
12.1 Termination. This Agreement may be terminated at any time
on or prior to the Closing Date:
(a) With the mutual consent of Seller and Purchaser;
(b) By Purchaser, if there shall have been a material breach of
any covenant, representation or warranty of Seller hereunder or
under any of the Related Agreements, and such breach shall not
have been remedied within thirty (30) days after receipt by
Seller of a notice in writing from Purchaser specifying the
breach and requesting such be remedied;
(c) By Seller, if there shall have been a material breach of any
covenant, representation or warranty of Purchaser hereunder or
under any of the Related Agreements, and such breach shall not
have been remedied within thirty (30) days after receipt by
Purchaser of notice in writing from Seller specifying the breach
and requesting such be remedied; or
(d) By Seller or Purchaser, if the Closing shall not have taken
place on or before April 30, 2005; provided, that the right to
terminate this Agreement under this clause (d) shall not be
available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date.
In the event of any termination pursuant to this Section
12.1 (other than pursuant to clause (a)), written notice setting
forth the reasons therefor shall forthwith be given by the
terminating party to the other party.
12.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 12.1, all obligations of the parties
hereunder shall terminate, except for the obligations set forth
in Sections 15.1 (Expenses), 15.7 (No Third Party Beneficiaries),
15.8 (Publicity), 15.10 (Severability), 15.11 (Entire
Understanding) and 15.12 (Governing Law), which shall survive the
termination of this Agreement, and except that no such
termination shall relieve any party from liability for any prior
willful breach of this Agreement.
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ARTICLE XIII
SURVIVAL AND INDEMNIFICATION
13.1 Survival. The representations and warranties of the parties
contained herein shall survive the Closing until the date that is
one year after the Closing Date (the "Expiration Date"), except
that the Tax Warranties shall survive until the Tax Statute of
Limitations Date and the Title and Authorization Warranties shall
survive forever.
13.2 Indemnification by Seller. Seller shall indemnify Purchaser
and its Affiliates (each a "Purchaser Indemnified Party")
against, and agrees to hold each of them harmless from, any and
all Losses incurred or suffered by them relating to or arising
out of or in connection with any of the following:
(a) any breach of or any inaccuracy in (or any alleged breach of
or inaccuracy in) any representation or warranty made by Seller
in this Agreement or any Related Agreement or any document
delivered by Seller at the Closing; provided, that (i) except for
breaches of or inaccuracies in Tax Warranties or Title and
Authorization Warranties, a notice of the Purchaser Indemnified
Party's claim shall have been given to Seller not later than the
close of business on the Expiration Date and (ii) in the case of
a Tax Warranty, a notice of the Purchaser Indemnified Party's
claim shall have been given to Seller not later than the Tax
Statute of Limitations Date;
(b) any breach of or failure by Seller to perform any covenant
or obligation of Seller set out or contemplated in this Agreement
or any Related Agreement or any document delivered by Seller at
the Closing;
(c) the Excluded Assets and the Excluded Liabilities;
(d) any products provided or services performed by Deaconess or
Seller on or before the Closing Date;
(e) any matters identified on Schedule 4.19; or
(f) the Pending Lawsuits.
Seller shall not be required to indemnify Purchaser for any
Loss arising out of breaches of representations and warranties
whatsoever unless the aggregate Losses of Purchaser exceed
$50,000, in which case Seller shall be responsible for the entire
amount of the Loss and all Losses thereafter. Notwithstanding
any provision to the contrary contained in this Agreement, the
maximum aggregate liability of Seller to Purchaser under this
Agreement shall not exceed the Purchase Price.
13.3 Indemnification by Purchaser. Purchaser shall indemnify
Seller and its Affiliates against, and agrees to hold each of
them harmless from, any and all Losses incurred or suffered by
them relating to or arising out of or in connection with any of
the following:
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(a) any breach of or any inaccuracy in (or any alleged breach of
or inaccuracy in) any representation or warranty made by
Purchaser in this Agreement or any Related Agreement or any
document delivered by Purchaser at the Closing;
(b) any breach of or failure by Purchaser to perform any
covenant or obligation of Purchaser set out or contemplated in
this Agreement or any Related Agreement or any document delivered
by Purchaser at the Closing;
(c) any products provided or services performed by Deaconess or
Purchaser after the Closing Date
(d) the Assets (to the extent such Losses arise out of
Purchaser's ownership of the Assets after the Closing Date); or
(e) the Assumed Liabilities.
13.4 Claims. As soon as is reasonably practicable after becoming
aware of a claim for indemnification under this Agreement not
involving any claim, or the commencement of any suit, action or
proceeding, of the type described in Section 13.5, the
Indemnified Person shall promptly give notice to the Indemnifying
Person of such claim and the amount the Indemnified Person will
be entitled to receive hereunder from the Indemnifying Person;
provided, that the failure of the Indemnified Person to give
notice shall not relieve the Indemnifying Person of its
obligations under this Article XIII except to the extent (if any)
that the Indemnifying Person shall have been actually prejudiced
thereby.
13.5 Notice of Third Party Claims; Assumption of Defense. The
Indemnified Person shall give notice as promptly as is reasonably
practicable to the Indemnifying Person of the assertion of any
claim, or the commencement of any suit, action or proceeding, by
any Person not a party hereto in respect of which indemnity may
be sought under this Agreement; provided, that the failure of the
Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this Article XIII
except to the extent (if any) that the Indemnifying Person shall
have been actually prejudiced thereby. The Indemnifying Person
shall, at its own expense, assume the defense of any claim, suit,
action or proceeding with counsel reasonably satisfactory to the
Indemnified Person. The Indemnifying Person shall thereafter
consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with
respect to such claim, suit, action or proceeding. The
Indemnified Person shall have the right (but not the obligation)
to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by the
Indemnifying Person. If, however, the Indemnified Person
reasonably determines in its judgment that representation by the
Indemnifying Person's counsel of both the Indemnifying Person and
the Indemnified Person would present such counsel with a conflict
of interest, then such Indemnified Person may employ separate
counsel to represent or defend it in any such claim, action, suit
or proceeding and the Indemnifying Person shall pay the fees and
disbursements of such separate counsel. All of the parties
hereto shall cooperate in the defense or prosecution thereof.
13.6 Settlement or Compromise. Any settlement or compromise made
or caused to be made by the Indemnified Person or the
Indemnifying Person, as the case may be, of any such claim, suit,
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action or proceeding of the kind referred to in Section 13.5
shall also be binding upon the Indemnifying Person or the
Indemnified Person, as the case may be, in the same manner as if
a final judgment or decree had been entered by a court of
competent jurisdiction in the amount of such settlement or
compromise; provided, that no such settlement shall be binding
upon the Indemnified Person without its prior written consent,
which shall not be unreasonably withheld or delayed, and provided
further, that no obligation, restriction or Loss shall be imposed
on the Indemnified Person as a result of such settlement.
13.7 Parent Guarantee.
(a) Terms. Subject to all of the limitations on liability set
forth in this Article XIII, Parent hereby unconditionally,
absolutely and irrevocably guarantees, as a primary obligor and
not merely as a surety, to Purchaser the complete and timely
performance by Seller of all of Seller's indemnification
obligations under this Article XIII and any equitable remedy
awarded to Purchaser under Section 14.3 (collectively, the
"Guaranteed Obligations"). Parent's obligation under this
Section 13.7 shall be a guaranty of payment and performance, and
not of collection only. The obligations of Parent pursuant to
this Section 13.7 shall remain in full force and effect without
regard to, and shall not be impaired by: (i) any amendment,
modification, addition, supplement, extension or acceleration of
any part of this Agreement, (ii) any exercise or non-exercise by
Purchaser of any right or privilege under this Agreement, (iii)
any bankruptcy, insolvency, reorganization, dissolution,
liquidation, or other similar proceeding relating to Seller or
any of its Affiliates (including any release, limitation or
impairment of Seller's obligations under this Agreement in such
proceeding), or (iv) the existence or any facts or circumstances
that cause any of the representations and warranties of Seller in
this agreement to be (or being) inaccurate. Purchaser shall not
be required to seek to enforce or resort to any remedies against
Seller on account of the Guaranteed Obligations. Parent
unconditionally waives: (i) any demand, protest, or notice as the
same pertains to Seller, (ii) any right to require Purchaser to
proceed against Seller or to exhaust any security held by
Purchaser or to pursue any other remedy, (iii) any defense based
upon an election of remedies by Purchaser, and (iv) any duty of
Purchaser to advise Parent of any information known to Purchaser
regarding Seller. The obligations of Parent under this Section
13.7 shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of Seller or any other
Person in respect of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of any of such
Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise. Parent agrees that
until the indefeasible payment and satisfaction in full of a
Guaranteed Obligation, it shall not exercise any right or remedy
arising by reason of any performance by it of its guaranty
contained herein, whether by subrogation or otherwise, against
Seller with respect to such Guaranteed Obligation; provided that
no such delay in exercising any such right or remedy shall
prejudice Parent, in Parent's sole discretion, in the exercise of
any such right or remedy. Parent's obligations under this
Section 13.7 constitute a continuing guaranty and shall continue
in full force and effect until such time as Seller's obligations
under Article XIII have been fully performed. Notwithstanding
any provision to the contrary contained in this Agreement, the
maximum aggregate obligation of Parent to Purchaser under this
Section 13.7 shall not exceed the Purchase Price.
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(b) Representations of Parent. Parent represents and warrants
to Purchaser on the date hereof and as of the Closing Date that,
(i) Parent is a corporation validly existing and in good standing
under the laws of Delaware and has all requisite power and
authority to enter into this Agreement and to carry out the
transactions contemplated herein, (ii) the execution and delivery
of this Agreement and the performance by Parent of its
obligations hereunder do not violate, conflict with, breach, or
cause a default under, in any material respect, (A) any term,
condition or provision of any Law applicable to Parent, (B) any
material agreement to which Parent is a party, or (C) any
provision of the certificate of incorporation or by-laws (or
equivalent organizational documents) of Parent, (iii) the
execution and delivery of this Agreement and the performance of
Parent's obligations hereunder have been duly authorized by all
necessary corporate action, and (iv) this Agreement constitutes
the legal, valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, except as may be
limited by (x) applicable bankruptcy, insolvency, moratorium,
reorganization or similar Laws from time to time in effect which
affect creditors' rights generally or (y) legal and equitable
limitations on the availability of specific remedies.
ARTICLE XIV
NONCOMPETITION
14.1 Noncompetition.
(a) Except as set forth on Schedule 14.1, Seller expressly
covenants and agrees that for a period of five years from and
after the Closing Date, neither Seller nor any of its Affiliates
will directly or indirectly, without the prior express written
consent of Purchaser, (i) own, (other than ownership of less than
1% of the issued and outstanding securities of an entity
registered under the Securities Exchange Act of 1934) manage,
operate, join, control, consult with or participate in or with
any business, individual, partnership, firm, corporation or other
entity which is engaged in the nursing education business in the
States of Missouri or Illinois, or any "on-line" or web-based
nursing education business, or (ii) disturb or attempt to disturb
any business relationship between any third party and Purchaser
or any of its Affiliates in connection with the Business, except
any such relationships involving Seller or Seller's Affiliates.
Notwithstanding any provision to the contrary contained in this
Agreement, this Section 14.1 shall not restrict, prohibit or
affect any current or future clinical affiliation agreements
entered into by Seller or any of its Affiliates.
(b) For a period of 12 months following the Closing Date,
Purchaser agrees that it shall not solicit or encourage any
officer or employee not related to the Business, who is employed
by Seller to leave the employ or retention of Seller; provided
that this restriction shall not apply to employees who respond to
general ads or general solicitations of the hiring party.
(c) For a period of 12 months following the Closing Date, Seller
agrees that it shall not solicit or encourage any officer or
employee employed by the Business to leave the employ or
retention of the Business; provided that this restriction shall
not apply to employees who respond to general ads or general
solicitations of the hiring party.
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14.2 Remedies. Each party expressly agrees that the remedies at
law for any breach of the provisions of this Article XIV would be
inadequate and that, in addition to any other remedies that a
party may have, each party shall be entitled to temporary and
permanent injunctive relief without the necessity of proving
actual damages or posting bond. To the extent that any part of
this Article XIV may be invalid, illegal or unenforceable for any
reason, it is intended that such part shall be enforceable to the
extent that a court of competent jurisdiction shall determine
that such part, if more limited in scope, would have been
enforceable. Seller acknowledges that Purchaser would not enter
into this Agreement or acquire the Purchased Assets unless Seller
agreed to the provisions of this Article XIV.
ARTICLE XV
PURCHASER'S RIGHT OF FIRST REFUSAL
15.1 Right of First Refusal. For so long as Parent or any of its
Affiliates owns the assets of Lutheran Hospital School of Nursing
(the "Lutheran Assets"), prior to making any sale or transfer of
the Lutheran Assets (other than to any Affiliate of Parent),
Parent shall give Purchaser the opportunity to purchase the
Lutheran Assets in the following manner:
(a) Parent shall give notice (the "Transfer Notice" ) to
Purchaser in writing of such intention specifying the portion of
the Lutheran Assets proposed to be sold or transferred. If
Parent (i) has received an offer from a third party with a
proposed purchase price, then Parent shall include in the
Transfer Notice such price and the other material terms upon
which such disposition is proposed to be made, or (ii) if Parent
has not received an offer from a third party with a proposed
purchase price and the other material terms upon which such
disposition may be made, then Parent shall include in the
Transfer Notice the price and other material terms in which it
wishes to dispose of such assets. Purchaser shall have the right
exercisable by written notice (the "Purchaser Notice") to Parent
within thirty (30) Business Days after receipt of the Transfer
Notice, to elect to purchase all, but not less than all, of the
Lutheran Assets that Purchaser proposes to transfer at the price
set forth in the Transfer Notice plus 10% thereof and on the
other terms set forth in the Transfer Notice.
(b) If Purchaser exercises its right of first refusal under
Section 15.1 (a), the closing of the purchase of the Lutheran
Assets with respect to which such right has been exercised shall
take place within thirty (30) calendar days after the date Parent
receives the Purchaser Notice, and Parent and Purchaser shall be
legally obligated to consummate the purchase contemplated thereby
and shall use their reasonable efforts to secure any approvals
required in connection therewith.
(c) If Purchaser does not exercise its right of first refusal
hereunder within the time specified for such exercise or does not
purchase the Lutheran Assets within the time specified for such
purchase, then Parent shall be free, during the period of ninety
(90) calendar days following the expiration of such time for
exercise or purchase, to sell the Lutheran Assets specified in
such Transfer Notice, at a price equal to or greater than the
price set forth therein and with other terms no less favorable to
Parent than the terms set forth in the Transfer Notice.
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(d) Purchaser may assign its rights under this Section 15.1 to
any of its Affiliates.
ARTICLE XVI
MISCELLANEOUS
16.1 Expenses. Except as otherwise provided herein, each party
hereto shall bear its own expenses with respect to the
transactions contemplated hereby; provided that both parties
shall equally split payment for (a) all sales, use, stamp,
transfer, service, recording, real estate and like taxes or fees,
if any, imposed by any Governmental Authority in connection with
the transfer and assignment of the Purchased Assets and (b) all
costs of transferring the Information and Records to Purchaser.
16.2 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument signed by each of the
parties hereto.
16.3 Extended Affiliation. The parties agree, for the ninety
(90) days after execution of this Agreement, to use good faith
efforts to negotiate a comprehensive clinical affiliation
agreement between DeVry, Inc. and the Parent.
16.4 Notices. Any notice, request, instruction or other document
to be given hereunder by a party hereto shall be in writing and
shall be deemed to have been given (a) when received if given in
person or by courier or a courier service, (b) on the date of
transmission if sent by telex, facsimile or other wire
transmission (receipt confirmed) or (c) three Business Days after
being deposited in the mail, certified or registered, postage
prepaid:
If to Seller or Parent, addressed as follows:
Doctors Community Healthcare Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
55
If to Purchaser, addressed as follows:
▇▇▇▇ University School of Nursing and Health Sciences,Inc.
c/o DeVry Inc.
▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Mayer, Brown, ▇▇▇▇ & Maw LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other individual or address as a party hereto may
designate for itself by notice given as herein provided.
16.5 Effect of Investigation. Any due diligence review, audit or
other investigation or inquiry undertaken or performed by or on
behalf of Purchaser shall not limit, qualify, modify or amend the
representations, warranties or covenants of, or indemnities by,
Seller made or undertaken pursuant to this Agreement or any
Related Agreement, irrespective of the knowledge and information
received (or which should have been received) therefrom by
Purchaser.
16.6 Waivers. The failure of a party hereto at any time or times
to require performance of any provision hereof shall in no manner
affect its right at a later time to enforce the same. No waiver
by a party of any condition or of any breach of any term,
covenant, representation or warranty contained in this Agreement
shall be effective unless in writing, and no waiver in any one or
more instances shall be deemed to be a further or continuing
waiver of any such condition or breach in other instances or a
waiver of any other condition or breach of any other term,
covenant, representation or warranty.
16.7 Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns; provided, that no assignment of any
rights or obligations shall be made by Seller or Parent without
the written consent of Purchaser or by Purchaser without the
written consent of Seller, except that Purchaser may assign any
or all of its rights hereunder without such consent to any
Affiliate of Purchaser.
16.8 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and, to the extent provided
herein, their respective Affiliates, and no provision of this
Agreement shall be deemed to confer upon any other third parties
any remedy, claim, liability, reimbursement, cause of action or
other right.
16.9 Publicity. Prior to the Closing Date, except as required by
Law or the rules of any stock exchange, no public announcement or
other publicity regarding the transactions referred to herein
shall be made by any of the parties or any of their respective
Affiliates, officers, directors, employees, representatives or
56
agents, without the prior written agreement of Purchaser and
Seller, in any case, as to form, content, timing and manner of
distribution or publication; provided, that nothing in this
Section 16.9 shall prevent such parties from discussing such
transactions with those Persons whose approval, agreement or
opinion, as the case may be, is required for consummation of such
transactions.
16.10 Further Assurances. Upon the reasonable request of
Purchaser, Seller will on and after the Closing Date execute and
deliver to Purchaser such other documents, deeds, releases,
assignments and other instruments as may be required to
effectuate completely the transfer and assignment to Purchaser
of, and to vest fully in Purchaser title to, each of the
Purchased Assets, and to otherwise carry out the purposes of this
Agreement. Seller further agrees that, from and after the
Closing Date, it will cooperate in all reasonable efforts of
Purchaser to enforce or preserve its rights in and to all
Intellectual Property conveyed to Purchaser pursuant to this
Agreement.
16.11 Severability. If any provision of this Agreement shall
be held invalid, illegal or unenforceable, the validity, legality
or enforceability of the other provisions hereof shall not be
affected thereby, and there shall be deemed substituted for the
provision at issue a valid, legal and enforceable provision as
similar as possible to the provision at issue.
16.12 Entire Understanding. This Agreement and the Related
Agreements set forth the entire agreement and understanding of
the parties hereto with respect to the transactions contemplated
hereby and supersede any and all prior agreements, arrangements
and understandings among the parties relating to the subject
matter hereof.
16.13 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of
the State of Delaware without giving effect to the principles of
conflicts of law thereof.
16.14 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this
Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
* * *
57
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above
written.
▇▇▇▇ UNIVERSITY SCHOOL OF NURSING
AND HEALTH SCIENCES, INC.
By:
Name:
Title:
FOREST PARK HOSPITAL
CORPORATION #1
By:
Name:
Title:
DOCTORS COMMUNITY HEALTHCARE
CORPORATION
By:
Name:
Title: