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EXHIBIT 10.26
ASSET PURCHASE AGREEMENT
*****
PROVINCE HEALTHCARE COMPANY
A DELAWARE CORPORATION
AS BUYER
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AND
THE COUNTY OF ELKO
A POLITICAL SUBDIVISION OF THE STATE OF NEVADA
AS SELLER
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DATED: JUNE 8, 1998
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TABLE OF CONTENTS
1. Transfer of Assets.......................................................................................1
1.1 Transferred Assets..............................................................................1
1.2 Retained Assets.................................................................................3
2. Purchase Price...........................................................................................4
2.1 Amount..........................................................................................4
2.2 Payment of Purchase Price.......................................................................4
3. Assumption of Obligations................................................................................5
3.1 Obligations Assumed.............................................................................5
3.2 Obligations Not Assumed.........................................................................7
3.3 Mutual Indemnity................................................................................7
4. "As is," "where is"; No Knowledge of Defects.............................................................7
5. Representations and Warranties of Seller.................................................................8
5.1 Organization of Seller..........................................................................8
5.2 Authority.......................................................................................8
5.3 Financial Statements............................................................................8
5.4 Third Party Rights..............................................................................9
5.5 Governmental Consents...........................................................................9
5.6 Litigation......................................................................................9
5.7 Licenses and Permits............................................................................9
5.8 Compliance with Laws...........................................................................10
5.9 Employee Relations.............................................................................10
5.10 Assumed Contracts..............................................................................11
5.11 No Commission..................................................................................11
5.12 U.S. Persons...................................................................................11
5.13 Assets Used in the Operation of the Facilities.................................................11
5.14 Insurance......................................................................................11
5.15 Changes Since Interim Statements...............................................................12
5.16 Medical Staff..................................................................................12
5.17 ▇▇▇▇-▇▇▇▇▇▇ Care...............................................................................12
5.18 Taxes..........................................................................................12
5.19 Employee Benefit Plans.........................................................................12
5.20 Absence of Undisclosed Liabilities.............................................................13
5.21 No Agreements with Third Parties...............................................................13
5.22 Title to Personal Property.....................................................................13
5.23 Disclosure.....................................................................................13
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6. Obligations and Covenants of Seller.....................................................................13
6.1 Conduct of Business............................................................................14
6.2 Access and Information.........................................................................15
6.3 Encumbrances...................................................................................15
6.4 Consent of Others..............................................................................15
6.5 Seller's Efforts to Close......................................................................16
6.7 Insurance Coverage.............................................................................16
6.8 Notice of Developments.........................................................................16
7. Representations and Warranties of Buyer.................................................................16
7.1 Organization and Good Standing.................................................................16
7.2 Authority......................................................................................17
7.3 Consents.......................................................................................17
7.4 Financial Statements...........................................................................17
7.7 Due Diligence; Experience......................................................................18
7.8 No Commission; No Offer of Employment..........................................................18
8. Obligations and Covenants of Buyer......................................................................18
8.1 Consent of Others..............................................................................18
8.2 Inspection by Buyer............................................................................19
8.3 Buyer's Efforts to Close.......................................................................19
8.4 No Liens.......................................................................................19
8.5 Notice to Seller...............................................................................19
9. Conditions Precedent to Obligations of Buyer............................................................20
9.1 Accuracy of Warranties and Representations.....................................................20
9.2 Performance of Obligations.....................................................................20
9.3 [Intentionally left blank].....................................................................20
9.4 Third Party Consents...........................................................................20
9.5 Permits and Program Participation..............................................................20
9.6 Tax Matters....................................................................................20
9.7 Title Policy or Survey.........................................................................21
9.8 Instruments of Transfer........................................................................21
9.9 Officer's Certificate..........................................................................21
9.10 Certified Resolutions..........................................................................21
9.11 Opinion of Seller's Counsel....................................................................22
9.12 Adverse Action.................................................................................22
9.13 Payment of Certain Debt........................................................................22
9.14 Adverse Change.................................................................................22
10. Conditions Precedent to Obligations of Seller...........................................................22
10.1 Accuracy of Warranties and Representations.....................................................23
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10.2 Performance of Obligations.....................................................................23
10.3 Payment of Purchase Price......................................................................24
10.4 Officer's Certificate..........................................................................24
10.5 Certified Resolutions..........................................................................24
10.6 Opinion of Buyer's Counsel.....................................................................24
10.7 Adverse Action.................................................................................24
10.8 Advisory Board.................................................................................25
10.9 Contracts......................................................................................25
10.10 Adverse Change.................................................................................25
11. Closing.................................................................................................25
11.1 Pre-Closing....................................................................................25
11.2 Deliveries at Closing..........................................................................26
11.3 [Intentionally left blank].....................................................................26
12. Casualty and Condemnation...............................................................................26
12.1 Casualty.......................................................................................26
12.2 Condemnation...................................................................................26
13. Additional Covenants....................................................................................27
13.1 Further Documentation or Action................................................................27
13.2 Preservation of and Access to Records..........................................................28
13.3 Litigation Cooperation.........................................................................29
13.4 Allocation of Purchase Price...................................................................29
13.5 [Intentionally left blank].....................................................................29
13.6 Retained Assets and Receivables................................................................29
13.7 Cost Report Audits and Contests................................................................30
13.8 Filing Cost Reports: Amounts Due To or From Third Party Payors.................................31
13.9 Employee Matters...............................................................................31
13.10 Employee Benefit Plans.........................................................................32
13.11 Use of Controlled Substance Permits............................................................33
13.12 Advisory Board.................................................................................33
13.13 Charity and Indigent Care Policies.............................................................35
13.14 Continuation and Expansion of Services.........................................................35
13.15 Medical Staff Bylaws...........................................................................35
13.16 New Facility; Capital Commitment...............................................................35
13.17 Right of First Refusal; Purchase Option........................................................36
13.18 ▇▇▇▇ ▇▇▇▇▇▇....................................................................................38
13.19 Disproportionate Share Payments................................................................38
14. Survival; Limitations ..................................................................................38
15. Remedies................................................................................................39
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16. Termination Prior to Closing............................................................................39
16.1 Termination Upon Certain Events................................................................39
16.2 Effect of Termination..........................................................................40
16.3 Liquidated Damages.............................................................................40
17. General Provisions......................................................................................41
17.1 Notices........................................................................................41
17.2 Form of Instruments............................................................................42
17.3 Attorneys' Fees................................................................................42
17.4 Time Is of the Essence.........................................................................42
17.5 Successors and Assigns.........................................................................43
17.6 Counterparts...................................................................................43
17.7 Captions and Paragraph Headings................................................................44
17.8 Entirety of Agreement, Amendments..............................................................44
17.9 Expenses; Prorations...........................................................................44
17.10 Construction...................................................................................45
17.11 Waiver.........................................................................................45
17.12 Severability...................................................................................45
17.13 Certain Definitions............................................................................45
17.14 Consents Not Unreasonably Withheld.............................................................51
17.15 Governing Law; Venue...........................................................................51
17.16 Tax and Medicare Effect........................................................................51
17.17 Misdirected Payments, Etc......................................................................51
17.18 Additional Assurances..........................................................................52
17.19 Public Announcements...........................................................................52
17.20 Force Majeure..................................................................................52
(iv)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of June 8, 1998, (the "Agreement Date") by and between THE COUNTY OF
ELKO, a political subdivision of the State of Nevada ("Seller"), and PROVINCE
HEALTHCARE COMPANY, a Delaware corporation ("Buyer")(Seller and Buyer being
referred to at times individually as a "Party" and collectively as "Parties"),
with reference to the following facts:
A. Seller owns that certain 50 bed general acute-care facility which is commonly
known as Elko General Hospital (the "Hospital") and certain outpatient centers,
clinics and other activities and businesses related thereto (collectively,
together with the Hospital and any activity or business conducted therewith, but
excluding the Retained Assets, the "Hospital Business").
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, the Hospital Business, and all of the equipment, fixtures and other real
and personal property which are used in or necessary for the operation of the
Hospital Business (other than the Retained Assets), on the terms and conditions
set forth in this Agreement.
C. For purposes of this Agreement (and the Related Agreements except as
may be otherwise expressly stated therein) capitalized terms shall have the
meanings set forth or cross- referenced in Paragraph 17.13 hereof.
NOW, THEREFORE, in consideration of the foregoing recitals, and the
representations, warranties and covenants herein contained, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties, intending to be legally bound, do hereby agree as
follows:
1. TRANSFER OF ASSETS
1.1 TRANSFERRED ASSETS
At the Closing, for the consideration hereinafter
provided, Seller shall sell, transfer, convey, assign and deliver to Buyer, and
Buyer shall purchase and accept from Seller, all of the assets and businesses
which are used in, or necessary for, the operation of the Hospital Business
(collectively, the "Transferred Assets"), including, without limiting the
generality of the foregoing, the following assets, but excluding all Retained
Assets:
(a) The real property upon which the Hospital is
situated, other than the real property referred to in Paragraph 1.2(b), together
with all improvements, construction work-in-progress, buildings and other
improvements thereon, and any and all of Seller's rights, privileges and
easements appurtenant thereto (the "Real Property"), all of which real property
is more specifically identified on Schedule 1.1(a).
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(b) The leasehold estates of Seller, as landlord or
tenant, and the related lease and sublease agreements (collectively, the "Real
Property Leases") with respect to the Real Property Leases, which are identified
on Schedule 1.1(b).
(c) All equipment and other tangible personal
property (other than cash and items of tangible personal property that are
consumed, disposed of or held for sale or are inventoried in the ordinary course
of business) related to the Hospital Business owned by Seller (the "Personal
Property"), including without limitation all equipment, furnishings, fixtures,
machinery, office furnishings, vehicles, instruments, leasehold improvements,
and spare parts, which Personal Property as of February, 1998, is more
specifically described on Schedule 1.1(c) provided to Buyer.
(d) All inventories of supplies, drugs, food,
janitorial and office supplies, maintenance and shop supplies and other
disposables (the "Inventory") related to the Hospital Business which are
existing as of the Closing Date (the "Purchased Inventory").
(e) All of Seller's right, title, and interest in, to
and under all written contracts, agreements, obligations, commitments or
covenants (other than the Real Property Leases and those contracts directly
relating to the Retained Assets or Excluded Liabilities) related to the Hospital
Business in force as of the Closing Date (i) that are set forth on Schedule
1.1(e), (ii) that are not included on Schedule 1.1(e) but relate to the Hospital
Business and which Buyer consents to assume, or (iii) with respect to the
Contracts which are entered into after the Agreement Date, as to which the
requirements of Paragraph 6.1(c) have been satisfied, (all such contracts,
agreements, obligations, commitments or covenants are collectively referred to
as the "Contracts").
(f) To the extent lawfully transferable, all of
Seller's rights to certificates of need, accreditations, registrations,
licenses, permits and other governmental consents or approvals necessary to or
intended for the operation of the Hospital Business as presently conducted by
Seller, including, without limitation those described on Schedule 1.1(f).
(g) All advance payments, prepayments, prepaid
expenses, escrows, deposits and similar assets of Seller related to the Hospital
Business (collectively, the "Prepaids"), which are existing as of the Closing
Date, the categories and amounts of which as of April 30, 1998 are set forth on
Schedule 1.1(g) provided to Buyer.
(h) Effective as of Closing and for so long as Buyer
uses the name, owns the Hospital and carries on the Hospital Business or owns
and carries on the Hospital Business at the New Facility, Buyer shall have an
exclusive, nontransferable, royalty free right to use the name "Elko General
Hospital" and all related names, marks, and logos used in connection with the
Hospital Business; provided, however, Seller disclaims any warranty of title or
noninfringement with respect to any names or marks forming part of the
Transferred Assets and assumes no obligation to register, defend or preserve
such name or ▇▇▇▇, or the right to use the same.
(i) All unexpired warranties and covenants not to
compete to the extent transferable to Buyer, which Seller has received from
third parties with respect to the Transferred Assets, including, without
limitation, such warranties and covenants as are set forth in any construction
agreement, lease agreement, equipment purchase agreement, consulting agreement,
agreement for architectural and engineering services or purchase and sale
agreement.
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(j) Hospital Records (as defined in Paragraph 13.2),
including those that are maintained at the Hospital in the ordinary course of
business.
(k) All claims, choses in action, rights of recovery,
rights of set off, rights to refunds and similar rights pertaining to the
Transferred Assets.
(l) All Seller's rights in the following to the
extent used in the Hospital Business: Intangible assets of an intellectual
property nature, telephone numbers, proprietary computer software, if any,
clinical and policy and procedure manuals and promotional, marketing and
recruiting materials, and any applications or registrations relating to any of
the foregoing.
(m) Seller's rights respecting computer and data
processing software and hardware used by the Hospital and located at the
Hospital.
(n) The Receivables (as defined in Paragraph 17.13
below); provided, however, Seller shall not transfer, convey or assign to Buyer
the Medicare Receivables but rather Buyer shall have the right hereunder to have
transferred to it from Seller, upon Seller's receipt, all amounts which are or
may become due Seller as Medicare Receivables.
(o) Seller's rights, title and interest in and to any
disproportionate share payments from the State of Nevada under Nevada's Medicaid
program related to health care services provided at or through the Hospital for
periods commencing on or after the Closing Date (the "Dispro Payments");
conditioned upon satisfaction of the prerequisites set forth in Section 13.19.
The foregoing (except for the Retained Assets defined in Paragraph 1.2)
comprise substantially all of the property and assets used in the conduct and
operation of the Hospital Business as of the Agreement Date, including without
limitation, those assets reflected on Hospital's Interim Statements (except
Inventory used in the ordinary course of business) and any assets acquired for
use in connection with the Hospital Business between the date thereof and the
Closing Date.
1.2 RETAINED ASSETS
At the Closing, Seller shall retain the following
assets relating to the Hospital Business (the "Retained Assets"):
(a) All cash, cash equivalents, and other marketable
securities.
(b) The real property commonly referred to as the
alley strip and more specifically described on Schedule 1.2(b).
(c) All Cost Report Receivables.
(d) The accounts, notes or other amounts receivable
from Payors, patients, physicians or others arising from or in connection with
the operation of the Hospital Business that have been assigned by Seller to
another person for collection and are not included in the balance sheets of the
Hospital ("Excluded Receivables").
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(e) Such other assets, if any, specifically described
on Schedule 1.2(e).
(f) Seller's minute books, tax records and
Proprietary Documents (as defined in Paragraph 17.13).
(g) Such other assets owned or held by Seller which
are not used in or necessary for the operation of the Hospital or Hospital
Business.
Buyer acknowledges and agrees that Seller shall have
the right to remove, and may remove at any time prior to or following the
Closing Date (at Seller's expense, but without charge by Buyer for storage), all
or any part of the tangible Retained Assets; provided, however, that such
removal by Seller shall, whenever reasonably possible, take place during normal
business hours and with reasonable prior written notice to Buyer of the time
when such removal shall take place. Seller's employees, representatives and
agents shall conduct themselves during such removal process in such a manner so
that Buyer's normal business activities shall not be unduly or unnecessarily
disrupted thereby.
2. PURCHASE PRICE
2.1 AMOUNT
The monetary portion of the purchase price (the
"Purchase Price") to be paid by Buyer to Seller for the Transferred Assets shall
be equal to the sum of (a) Fifteen Million Five Hundred Thousand Dollars
($15,500,000) plus One Hundred Thirty-Four Thousand Nine Hundred Twenty-Five
Dollars ($134,925) for certain major Hospital equipment subject to purchase
orders entered after the date of the Confidentiality Agreement, as set forth on
Schedule 2.1(a), plus (b) an amount equal to the Net Working Capital as of the
Closing Date as determined in Paragraph 2.2(a) below, plus (c) the amount of
indebtedness of the Hospital Business to be paid by Seller on or before Closing
pursuant to Paragraph 9.13 ("Tax Exempt Debt"), plus (d) One Million Seven
Hundred Fifty Thousand Dollars ($1,750,000) as consideration for the Dispro
Payments (the "Dispro Payments Amount") and less (e) the amounts of the
indebtedness of Seller assumed by Buyer (if any) pursuant to Paragraph 3.1(d).
As additional consideration, Buyer shall perform its obligations hereunder,
including those relating to the New Facility, and Buyer shall assume, effective
as of the Closing Date, the Assumed Obligations. In addition, Buyer shall bear
the expense of repairing certain generator switches at Hospital and shall
reimburse Seller for reasonable expenses incurred prior to the Closing Date by
Seller related thereto.
2.2 PAYMENT OF PURCHASE PRICE
(a) Estimated Statement. On or before the Closing,
Seller shall prepare and deliver to Buyer an estimate of Net Working Capital and
Tax Exempt Debt (the "Estimated Statement") based upon the books and records of
Seller with respect to the Hospital Business for the most recent month ending
prior to the Closing for which data is available; provided, however, the value
of the Purchased Inventory shall be determined pursuant to Paragraph 2.2(b)
below. The Estimated Statement shall set forth Seller's estimate of the Net
Working Capital and Tax Exempt Debt as of the Closing Date. Except for the
Purchased Inventory, all determinations made with respect to the Estimated
Statement shall be based upon the internal records of, and the valuations
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customarily used by, Seller and shall be consistent with generally accepted
accounting principles as consistently applied by Seller ("GAAP"). The Purchase
Price, using the Net Working Capital figure and amount of Tax Exempt Debt
determined by reference to the Estimated Statement (the "Tentative Purchase
Price"), shall be paid to Seller by Buyer at the Closing as set forth in
Paragraph 2.2(c).
(b) Inventory. For the purposes of the Estimated
Statement, the Purchased Inventory shall be inventoried and valued with
reference to the April 30, 1998 balance sheet of the Hospital. Within twenty
(20) Business Days after the Closing, a physical inventory shall be conducted by
both parties of the Purchased Inventory as of the Closing Date. For purposes of
this Paragraph 2.2(b), (i) Purchased Inventory shall exclude damaged and
obsolete items, and (ii) the final valuation and any adjustments shall be
determined by the Accounting Firm pursuant to the Net Working Capital adjustment
process in Paragraph 2.2(d) based upon such physical inventory and reference to
the most recent invoice price for each item reflected thereby.
(c) Purchase Price Paid at Closing. At the Closing,
the Purchase Price shall be paid as follows:
(i) Buyer shall wire transfer immediately
available funds to one or more accounts designated by Seller prior to the
Closing in an amount equal to the Tentative Purchase Price less the Dispro
Payments Amount;
(ii) Buyer shall assume Seller's liabilities
under the Assumed Obligations by delivering to Seller an assignment and
assumption of the Assumed Obligations substantially in the form and substance of
Exhibit 2.2; and
(iii) Buyer shall execute and deliver to
Seller a promissory note in the stated principal amount of the Dispro Payments
Amount containing the terms and conditions described in Section 13.19 (the
"Dispro Payments Promissory Note").
(d) Final Post-Closing Purchase Price Adjustment.
Unless waived by mutual agreement of the Parties, the final calculation of Net
Working Capital and Tax Exempt Debt ("Final Report") as of the Closing Date
shall be determined by a mutually agreed upon independent accounting firm or
firms ("Accounting Firm") within 180 days of the Closing Date; provided,
however, the Purchased Inventory calculation shall be made as provided in
Paragraph 2.2(b). Accounting Firm shall follow such procedures, consistent with
GAAP and this Agreement (including without limitation the prorations in
Paragraph 17.9(b)), as it deems appropriate under the circumstances. Seller and
Buyer shall promptly make such information and personnel available as requested
by Accounting Firm and shall both cooperate to collect the Receivables, during
the time period with Buyer using all reasonable commercial collection efforts.
Within five (5) Business Days of receipt of the Final Report, Buyer shall pay
Seller or Seller shall pay Buyer, as the case may be, the difference between the
Estimated Statement and the Final Report. The Final Report by the Accounting
Firm shall establish the Purchase Price and shall be final and binding on all
Parties.
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3. ASSUMPTION OF OBLIGATIONS
3.1 OBLIGATIONS ASSUMED
Buyer shall assume, effective as of the Closing and
as part of the Purchase Price, and shall pay, discharge and perform as and when
due, each of the following obligations of Seller (the "Assumed Obligations"):
(a) All obligations and liabilities of Seller which
arise, first become due or payable, or are to be performed during any period
commencing on or after the Closing Date under the Contracts, Real Property
Leases or Permits (collectively, the "Assumed Contracts").
(b) All obligations and liabilities to the Hired
Employees (as defined in Paragraph 13.9) for paid time off (including vacation
pay and "paid days leave") and sick pay (both regular sick pay and extended sick
leave) through the Closing Date ("Paid Time Off"), together with all payroll
taxes or other Taxes (as defined in Paragraph 17.13) attributable or otherwise
payable with respect thereto (the amount of which Taxes shall be determined as
if the Paid Time Off were payable as of the Closing Date), whether or not the
foregoing have been recorded on the financial records of Seller, and all other
obligations and liabilities concerning employee matters to be assumed by Buyer
pursuant to Paragraph 13.9 or 13.10 (if applicable). Seller has provided Buyer
with a list of accrued Paid Time Off as of June 5, 1998 with respect to all
employees of the Hospital Business, which schedule includes all Paid Time Off
earned by such employees as of such date and also contains a summary of all of
the sick pay benefits made available by Seller to its employees.
(c) Any accrued and unpaid liabilities of Seller in
existence on the Closing Date, which were incurred in the ordinary course of the
operation of the Hospital Business, which represent the following current
liabilities (collectively, together with the liabilities and obligations for
Paid Time Off and related Taxes assumed under Paragraph 3.1(b), the "Accrued
Operating Expenses"): (i) trade payables incurred to suppliers of goods or
services, (ii) water, gas, electricity and other utility charges, (iii) license
fees, (iv) rent, common area maintenance charges, operating expenses and other
charges arising under the Real Property Leases, (v) insurance premiums, but only
with respect to policies that will be continued in force by Buyer after the
Closing, (vi) salaries and other payroll costs respecting Hired Employees
accrued in accordance with the normal accounting practices of Seller (but not
including accrued benefits with respect to Plans (as defined in Paragraph
17.13)), (vii) similar liabilities incurred in the ordinary course of the
operation of the Hospital Business and customarily recorded as a current
liability, other than the current portion of long term liabilities and
obligations, income taxes (whether deferred or currently payable) and the
obligations and liabilities specified in Paragraph 3.2, and (viii) any other
liabilities and obligations, if any, agreed to in writing by Buyer and Seller.
(d) All obligations and liabilities of Seller with
respect to indebtedness set forth on Schedule 3.1(d).
(e) Buyer acknowledges that as of the Closing Date
there will be patients located in the Hospital and Buyer will accept such
patients as patients of Buyer and will assume and accept responsibility and
liability (other than liability for acts and omissions of Seller prior to the
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Closing Date) for treating such patients; subject to Paragraph 13.8, all
revenues and expenses of such patients for periods from and after the Closing
Date shall become revenue and expenses of Buyer.
3.2 OBLIGATIONS NOT ASSUMED
Except for the Assumed Obligations, Buyer shall not assume or
become obligated with respect to any other obligation or liability of Seller of
any nature whatsoever (whether express or implied, fixed or contingent,
liquidated or unliquidated, known or unknown, due or to become due) (the
"Excluded Liabilities"). The Excluded Liabilities shall remain the sole
responsibility of Seller. Without limiting the generality of the foregoing,
Seller is retaining all rights and obligations related to, and Buyer assumes no
liability for or acquires no rights to, (a) the rights of Seller under any
pending litigation or asserted or unasserted claims against any Person (except
for claims related to Assumed Contracts or Transferred Assets which Buyer is
acquiring); (b) liabilities under any Plan (as defined in Paragraph 17.13)
covering Hospital employees as of the Closing Date or related to the termination
of participation in such Plan; (c) liabilities arising from the settlement of
cost reports of Seller, including "recapture" obligations; or (d) liabilities
related to the Tax Exempt Debt. In addition, Seller shall retain liability for
and have appropriate insurance or other coverage for professional liability
claims arising out of the Hospital Business prior to the Closing.
3.3 MUTUAL INDEMNITY.
Buyer shall defend, indemnify and hold Seller, its officers,
employees and agents (including without limitation, County Commissioners and the
Hospital Board of Trustees) harmless from any and all third party claims,
damages, liabilities, losses, costs, or expenses (including attorneys' fees)
("Claims") related to or arising out of the Transferred Assets, Assumed
Obligations or Hospital Business for periods from and after the Closing Date;
provided, however, Buyer shall not be so obligated to indemnify Seller with
respect to Claims described in subsection (iii) of the succeeding sentence.
Seller shall defend, indemnify and hold Buyer, its Affiliates, directors,
officers, employees and agents harmless from any and all Claims (i) related to
or arising out of the Retained Assets or the Excluded Liabilities, (ii) from any
and all Claims related to or arising out of the Hospital Business, Transferred
Assets or Assumed Obligations for periods prior to the Closing Date and (iii)
claims challenging Seller's authority to transfer, convey or assign to Buyer any
of the Transferred Assets or Buyer's assumption from Seller of the Assumed
Obligations.
4. "AS IS," "WHERE IS"; NO KNOWLEDGE OF DEFECTS
Buyer acknowledges that neither Seller, Hospital nor any of
their elected officials, officers, agents or employees has made any written or
oral representations or warranties to Buyer relating to the condition of any of
the Real Property, the Personal Property, the Inventory, or any rights or
property related thereto (for purposes of this Paragraph, collectively, the
"Property"), and except as to the representations and warranties expressly made
in Article 5 hereof and in the Deed, SELLER HEREBY DISCLAIMS ALL OTHER
WARRANTIES AND REPRESENTATIONS, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTY OR REPRESENTATION AS TO FITNESS FOR ANY PARTICULAR PURPOSE,
MERCHANTABILITY, DESIGN, QUALITY, LAYOUT, FOOTAGE, PHYSICAL CONDITION,
OPERATION, COMPLIANCE WITH SPECIFICATIONS, ABSENCE OF UNKNOWN PHYSICAL DEFECTS
OR DAMAGE, OR ANY OTHER MATTER
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AFFECTING OR RELATED TO THE PROPERTY. WITHOUT LIMITING THE FOREGOING, SELLER
DOES NOT AND HAS NOT MADE ANY REPRESENTATION OR WARRANTY REGARDING THE PRESENCE
OR ABSENCE OF ANY HAZARDOUS MATERIALS ON, UNDER OR ABOUT THE PROPERTY OR THE
COMPLIANCE OR NON-COMPLIANCE OF THE PROPERTY WITH ANY ENVIRONMENTAL REGULATIONS.
SUBJECT TO THE FOREGOING, BUYER ACKNOWLEDGES THAT BUYER HAS INSPECTED AND WILL
INSPECT FURTHER, THE PROPERTY AND ACCEPTS THE PROPERTY "AS IS", "WHERE IS" AND
"WITH ALL FAULTS." SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR
WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN, AND SELLER
SHALL NOT BE LIABLE OR BOUND IN ANY MANNER BY ANY STATEMENT OR INFORMATION
CONTAINED IN ANY STUDIES OR REPORTS PROVIDED TO BUYER PURSUANT TO ANY PROVISIONS
OF THIS AGREEMENT, OR ANY OMISSION WITH RESPECT TO ANY SUCH STUDIES OR REPORTS.
NOTWITHSTANDING THE FOREGOING, SELLER DOES REPRESENT AND WARRANT TO BUYER THAT
TO SELLER'S KNOWLEDGE, EXCEPT AS DISCLOSED HEREIN, THERE IS NO PHYSICAL DEFECT
IN OR DAMAGE TO THE TRANSFERRED ASSETS WHICH WOULD HAVE MATERIAL ADVERSE EFFECT
ON THE HOSPITAL BUSINESS AFTER THE CLOSING.
5. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION OF SELLER
Seller is a validly existing political subdivision of
the State of Nevada.
5.2 AUTHORITY
(a) Seller has the full legal power and the authority
to execute and deliver this Agreement and all Related Agreements to which it is
a Party, to perform the obligations and covenants set forth herein and therein
and to carry out the transactions contemplated hereby and thereby; (b) the
execution and delivery of this Agreement and the Related Agreements by Seller
and the consummation of the transactions contemplated hereby or thereby have
been duly authorized by all necessary legal action on the part of Seller,
including approval by the Board of County Commissioners of Elko County, Nevada;
(c) this Agreement and the Related Agreements are legally valid and binding upon
and enforceable against Seller in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to
creditors' rights generally and subject to the availability of equitable
remedies; and (d) the execution, delivery and performance of this Agreement and
all such Related Agreements and the consummation of the transactions
contemplated hereby and thereby will not violate any Law applicable to Seller or
any of the Transferred Assets.
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5.3 FINANCIAL STATEMENTS
(a) Financial Statements. Seller has provided Buyer
with true and complete copies of the audited balance sheets with respect to the
Hospital Business and the Transferred Assets as of June 30, 1995, 1996 and 1997
and the related statements of income for each fiscal year then ended (the "Prior
Years' Statements"), and (ii) the unaudited balance sheet with respect to the
Hospital Business and the Transferred Assets as of April 30, 1998 and the
related statements of income for the ten (10) months then ended (the "Interim
Statements"). The Prior Years' Statements and the Interim Statements are
collectively referred to as the "Financial Statements". Except as disclosed in
the Disclosure Memorandum hereto, the Financial Statements present fairly, in
all material respects, the financial position and results of operations with
respect to the Hospital Business and the Transferred Assets as of the dates and
for the periods indicated, in each case in conformity with GAAP throughout the
periods indicated.
(b) Qualifications to Unaudited Statements.
Notwithstanding the foregoing, the unaudited Financial Statements do not reflect
all adjustments and accruals, do not contain all footnotes or other explanatory
materials associated with financial statements prepared in accordance with GAAP
and do not contain normal and recurring year-end adjustments (provided such
adjustments, if included, would not have a Material Adverse Effect on the
financial position or results of operation of the Hospital Business). The
Financial Statements are to be read in conjunction with, and are subject to, all
notes and other explanatory materials set forth therein.
5.4 THIRD PARTY RIGHTS
Except for the governmental consents referred to in
Paragraph 5.5 and except as otherwise disclosed in the Disclosure Memorandum, as
of the Closing, Seller will have the right to transfer and assign to Buyer all
of its right, title and interest in and to the Transferred Assets without
obtaining the consent or approval of any other Person.
5.5 GOVERNMENTAL CONSENTS
Except as disclosed in the Disclosure Memorandum, no
consent, approval, authorization or order of, and no exemption by or filing
with, any court or governmental agency is required on behalf of Seller in
connection with the execution and delivery of this Agreement or any Related
Agreement, or the consummation and fulfillment by Seller of the transactions
contemplated hereby or thereby, or the performance by Seller of its obligations
hereunder or thereunder.
5.6 LITIGATION
Except as set forth in the Disclosure Memorandum, there are no
actions, suits, claims or proceedings pending or, to the Knowledge of Seller,
threatened against or affecting the Transferred Assets or relating to the
operations of the Hospital Business, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, agency
or instrumentality which would have a Material Adverse Effect on the Transferred
Assets or prevent or materially delay the consummation of the transactions
contemplated hereunder.
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5.7 LICENSES AND PERMITS
Except as set forth in the Disclosure Memorandum,
Seller, in the name of the Hospital, possesses all certificates of need,
licenses, permits and other governmental consents and approvals (the "Permits")
necessary for the operation of the Hospital Business at the locations and in the
manner operated as of the Agreement Date. Except as otherwise disclosed in the
Disclosure Memorandum, the Hospital and such other components of the Hospital
Business as are set forth in the Disclosure Memorandum are fully accredited by
the Joint Commission on Accreditation of Healthcare Organizations ("JCAHO"), are
certified for participation in the Medicare, Medicaid and CHAMPUS programs, have
a current and valid provider contract with each such program and, to the
Seller's Knowledge, are in compliance with the conditions of participation in
each such program and with the indigent care conditions, if any, contained in or
related to any Permits obtained in connection with the Hospital Business. Except
as set forth in the Disclosure Memorandum, (a) to the Seller's Knowledge, Seller
has complied in all material respects with the terms and conditions of all such
Permits, accreditations and participations, and (b) there has occurred no event
nor is any event, action, investigation or proceeding pending or, to Seller's
Knowledge, threatened which could cause or permit revocation or suspension of or
otherwise adversely affect the maintenance of any such Permits, accreditations
or participations. Seller has previously delivered to Buyer true and complete
copies of the most recent JCAHO accreditation survey report and deficiency list,
if any, and all other such surveys and lists received by Seller since January 1,
1996; the most recent Statement of Deficiencies and Plan of Correction; the most
recent state licensing report and list of deficiencies, if any, and all other
such reports and lists received by Seller since January 1, 1996; the most recent
Medicare and Medicaid certification reports and list of deficiencies, if any,
and all other such reports and lists received by Seller since January 1, 1996;
the most recent fire marshal's survey and deficiency list, if any and all other
such surveys and lists received by Seller since January 1, 1996; and the
corresponding plans of correction or other responses to all such reports and
surveys; together with all correspondence in Seller's possession or under its
control relating to the foregoing reports, lists and surveys created from and
after January 1, 1996.
5.8 COMPLIANCE WITH LAWS
Except as disclosed in the Disclosure Memorandum, to
Seller's Knowledge the Hospital Business is in compliance with all applicable
Laws, the violation of which would have a Material Adverse Effect on the
Hospital Business or Transferred Assets; provided that Seller makes no
representations or warranties with respect to compliance with any Environmental
Regulations.
5.9 EMPLOYEE RELATIONS
Seller has provided Buyer with a list as of June 1,
1998 of all of Seller's employees at Hospital, their salary or wage rates,
department and job title or summary of responsibilities of such employees.
Except as set forth in the Disclosure Memorandum, Seller has not entered into
any written agreement with its employees providing for a specified employment
term. Except as disclosed in the Disclosure Memorandum, (a) neither Seller nor
the Hospital Business is a party to any agreement with any union, trade
association or other employee organization with respect to the employees of the
Hospital Business, (b) no demand has been made for recognition by a labor
organization with respect to any employees of the Hospital Business, (c) no
union organizing activities by or with respect to any such employees are taking
place, (d) there are currently no disputes, grievances, charges, complaints or
proceedings involving the employees of the Hospital Business, (e) the Hospital
Business has not suffered any strikes, slowdowns, walkouts, lockouts or
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any other interruptions or disruptions of operations as a result of labor
disturbances with respect to employees of the Hospital Business, (f) as of the
date of this Agreement, to Seller's Knowledge, the employee relations of Seller
with the employees of the Hospital Business as a group are satisfactory within
industry standards, (g) no union representation question exists with respect to
any employees of the Hospital Business, and (h) no collective bargaining
agreement is currently being negotiated by Seller with respect to the employees
of the Hospital Business.
5.10 ASSUMED CONTRACTS
Except as set forth in the Disclosure Memorandum,
with respect to Assumed Contracts, (a) to Seller's Knowledge, there is no
default by Seller under any Assumed Contract, (b) Seller has not received
written or other notice that any Person intends to cancel or terminate any
Assumed Contract or exercise or not exercise any right, remedy or other option
thereunder, (c) to the Seller's Knowledge, all of the Assumed Contracts are in
full force and effect without amendment or modification, (d) except for
obtaining consents from the other parties to the Assumed Contract to the
transfer of the Assumed Contracts from Seller to Buyer, the consummation of the
transactions contemplated by this Agreement and the Related Agreements will not
constitute and, to Seller's Knowledge, no event has occurred which, with or
without the passage of time or the giving of notice, would constitute a breach
or default by any Party to any such Assumed Contract or would cause the
acceleration of any obligation of any Party thereto or the creation of any Lien
upon any Transferred Asset, and (e) to the Seller's Knowledge, Seller has not
waived any material right under any Assumed Contract.
5.11 NO COMMISSION
Neither Seller nor any of its employees has employed,
contracted for the services of or authorized any broker, finder, investment
banker or other Person who would be entitled to receive a commission or fee with
respect to the consummation of the transactions contemplated hereby, and Seller
shall be solely responsible for any fees or commissions payable to any such
Person by reason of the actions (or alleged actions) of Seller or any of its
employees.
5.12 U.S. PERSONS
Seller is not a "foreign person" for purposes of
Section 1445 of the Internal Revenue Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), or any other Laws requiring withholding of
amounts paid to foreign Persons.
5.13 ASSETS USED IN THE OPERATION OF THE FACILITIES
Except for the Retained Assets and Inventory disposed
of by Seller in the ordinary course of business since the date of the Interim
Statements, there are no assets or properties that are used in the conduct of
the operations of the Hospital Business which, individually or in the aggregate,
are necessary or useful for the operation of the Hospital Business that are not
included in the Transferred Assets.
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5.14 INSURANCE
The Disclosure Memorandum contains a list of all
policies of insurance held by (or programs of self-insurance maintained by)
Seller with respect to the Transferred Assets or Hospital Business which are
currently in effect (the "Insurance Policies"). The Disclosure Memorandum
specifies for each Insurance Policy whether it is a "claims made" or an
"occurrence basis" policy and whether, after the Closing, Seller will be
entitled to the benefits of such policies in accordance with their terms for
claims arising out of occurrences prior to the Closing.
5.15 CHANGES SINCE INTERIM STATEMENTS
Since the date of the Interim Statements, other than
as contemplated or permitted by this Agreement, Seller has conducted the
Hospital Business and the Transferred Assets in the ordinary and course of
business and, other than in contemplation or preparation for the closing of the
transactions anticipated to be consummated hereunder, and except as shown in the
Disclosure Memorandum, there has not been any change or loss, which could have a
Material Adverse Effect on the Hospital Business or Transferred Assets.
5.16 MEDICAL STAFF
Seller has previously delivered to Buyer, with
respect to the Hospital Business, (a) a true and correct copy of the blank forms
generally used with respect to medical staff privilege and membership
application or delineation of privileges; (b) the current Medical Staff Bylaws,
respecting the Hospital Business; (c) a list of all physicians and other health
professionals who were members of the medical staff on May 28, 1998 and the
corresponding privileges of each such medical staff member; and (d) all written
contracts with physicians, physician groups or other members of the medical
staff of the Hospital. Except as disclosed in the Disclosure Memorandum, no
proceedings are currently pending, or to Seller's knowledge, threatened, seeking
to remove or limit the privileges of any member of the medical staff of
Hospital.
5.17 ▇▇▇▇-▇▇▇▇▇▇ CARE
Seller received loan a pursuant to the Public Health
Service Act, 42 U.S.C. Section 291 et seq. Seller has satisfied its obligations
under 42 C.F.R. 124, Subpart F, to provide uncompensated services and neither
Seller nor the Transferred Assets are subject to any further monetary
obligations thereunder, but Seller's obligation to provide community service
under 42 C.F.R. 124, Subpart G, continues.
5.18 TAXES
Seller's income is not subject to federal income tax.
Although Hospital's income and its properties are not currently subject to
Nevada state or local ad valorem taxes, no representation is made as to the post
Closing Taxes applicable to Buyer's ownership of Hospital.
5.19 EMPLOYEE BENEFIT PLANS
Except as disclosed in the Disclosure Memorandum,
Seller does not maintain, sponsor or make, nor is it required to make,
contributions to any Plans. True, correct, and complete copies of each of
Hospital's effective Plans, written personnel policies, and a list of each
Active
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Employee's base salary, accrued vacation, accrued sick leave, and insurance and
retirement plan status as of April 30, 1998, have been provided to Buyer. Seller
is not in default with respect to any payment required to be made pursuant to
any such Plan or with respect to any payment or other obligation due to any
Active Employee that would have a Material Adverse Effect on the Hospital
Business or the Transferred Assets. With respect to the Plans, except as
disclosed in the Disclosure Memorandum, to Seller's Knowledge (a) there have
been no prohibited transactions, breaches of fiduciary duty or other violations
of law by Seller that could subject Seller or Buyer to any liability; (b) such
plans are governmental plans as defined in the Code and ERISA; (c) there are no
pending claims, lawsuits or actions against Seller related to such Plans (other
than ordinary course claims for benefits); (d) Hospital has complied with
continuation coverage provisions of COBRA with respect to all current and former
employees. Seller hereby disclaims any representations or warranties relating to
the Public Employees Retirement System ("PERS"), as maintained by the State of
Nevada, except that Seller has or will make under PERS for Hospital employees
and Buyer will be indemnified by Seller for any liability for contributions to
PERS or otherwise under PERS as a result of consummation of this transaction.
5.20 ABSENCE OF UNDISCLOSED LIABILITIES
To the Knowledge of Seller, with respect to the
ownership, use and operation of the Hospital Business and the Transferred
Assets, Seller is not obligated for, nor are the Hospital Business or any of the
Transferred Assets subject to, any liabilities, whether known or unknown,
contingent or absolute, except those which were incurred in the ordinary course
of business and which do not have a Material Adverse Effect on the Hospital
Business or Transferred Assets, other than as disclosed to Buyer in the
Financial Statements and the Disclosure Memorandum.
5.21 NO AGREEMENTS WITH THIRD PARTIES
Seller has not entered into any letters of intent or
understandings which are presently in effect with any other Person with respect
to the sale or other disposition of the Hospital Business or the Transferred
Assets (other than Inventory in the ordinary course of business). Seller is not
party to any presently effective executory agreement with any Person (other than
Buyer) with respect to any such sale or disposition.
5.22 TITLE TO PERSONAL PROPERTY
As of Closing, Seller shall own and hold good title
or valid leasehold interest to all Personal Property which constitutes a portion
of the Transferred Assets and at Closing, upon payment of the Tax Exempt Debt,
Seller will convey to Buyer good title to all such owned Personal Property,
subject to no Lien, except for Liens related to the Assumed Obligations.
5.23 DISCLOSURE
This Agreement and the Disclosure Memorandum hereto
do not and will not contain any untrue statement of a material fact or omit any
material fact necessary to make the statements therein not misleading in any
material respect. As used in this Paragraph, "material" shall be interpreted in
the context of the transactions provided for herein or the operations of the
Hospital, taken as a whole, and not in the context of any single piece of
information provided hereunder.
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6. OBLIGATIONS AND COVENANTS OF SELLER
Seller hereby covenants and agrees as follows:
6.1 CONDUCT OF BUSINESS
From the date hereof to the Closing Date, Seller
agrees that, with respect to the Hospital Business, unless Buyer otherwise
consents in writing and except for actions taken pursuant to Assumed Contracts
in effect on the date hereof or which arise from or are related to the
anticipated transfer of the Transferred Assets or as otherwise contemplated by
this Agreement, Seller shall do or comply with each of the following subject to
the limitations set forth in this Paragraph 6.1 and the Disclosure Memorandum:
(a) Operate the Hospital Business substantially as
presently operated.
(b) Use its reasonable commercial efforts to preserve
the business organization of the Hospital Business intact and to preserve the
Hospital Business' relationships with physicians, patients, Payors, suppliers
and others having business relations with the Hospital Business.
(c) Not enter into any contract or amendment of a
contract (other than one which is described in Paragraph 1.1(e)(ii)) unless
Buyer has failed to disapprove of such contract or amendment in a written notice
to Seller given within five (5) Business Days of Seller's written notice to
Buyer of such proposed contract or amendment accompanied by a copy thereof.
Buyer's disapproval of such contract or amendment shall not be unreasonably
given nor delayed. Any contract or amendment entered into in compliance with
this Paragraph 6.1(c), including any contract permitted by the terms of this
Agreement, shall constitute an Assumed Contract for all purposes of this
Agreement as if it were originally set forth on Schedule 1.1(e).
(d) Maintain the Insurance Policies in full force and
effect.
(e) Except as required by their terms, not amend,
terminate, fail to renew or renegotiate any material contract that would be an
Assumed Contract as of the date hereof, except in the ordinary course of
business consistent with past practices, or default (or take or omit to take any
action that, with or without the giving of notice or passage of time, would
constitute a default) in any of its obligations under any such contracts that
would be an Assumed Contract as of the date hereof.
(f) Not (i) purchase, sell or transfer, or make any
contract for the purchase, sale or transfer of, any assets or properties which
would be included in the Transferred Assets other than Inventory in the ordinary
course of business; (ii) assign or transfer Receivables to collection agencies
in a manner inconsistent with past practice.
(g) Not grant any general or uniform increase in the
rates of pay or benefits to the employees of the Hospital Business (or a class
thereof) or an increase in salary or benefits for any managerial employee of the
Hospital Business, except as described on Schedule 6.1(g).
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(h) Maintain the Transferred Assets in the same
condition as of the date hereof, ordinary wear and tear excepted.
(i) Not take any actions which would cause any of
Seller's representations and warranties set forth in Paragraph 5 to be false as
of the Closing.
Nothing in this Paragraph 6.1 shall, without the
mutual written agreement of Buyer and Seller, obligate Seller to make
expenditures other than in the ordinary course of business. Nothing in this
Paragraph 6.1 shall obligate Seller to make any expenditures to restore or
replace the Real Property or equipment, except for normal, routine maintenance.
6.2 ACCESS AND INFORMATION
Subject to the restrictions set forth in that certain
Letter of Intent and Confidentiality Agreement (the "Confidentiality Agreement")
dated March 16, 1998, executed by Buyer and Seller, and provided that Buyer has
complied with the provisions thereof, Seller shall afford Buyer, and the
counsel, accountants and other representatives of Buyer, reasonable access to
and arrange interviews with, throughout the period from the date hereof to the
Closing, the Transferred Assets and the employees, personnel and medical staff
of the Hospital Business and all the properties, books, contracts, commitments,
cost reports and records of the Hospital Business (regardless of where such
information may be located). Such access shall be afforded after no less than 24
hours prior notice, during normal business hours and only in such manner so as
not to unreasonably disturb patient care or to interfere with the normal
operations of the Hospital Business. Seller may have one of its employees
present during all such times as Buyer is provided access as described in this
Paragraph. Seller also shall furnish to Buyer all such information concerning
the affairs of the Hospital Business as is in the possession or control of
Seller and as Buyer may reasonably request, including the right to have copies
and/or extracts of pertinent records, documents and contracts. In addition,
Seller shall provide such written consents and authorizations as may be
necessary for Buyer to have access to materials on file with governmental
agencies. Seller's covenants under this Paragraph are made with the
understanding that Buyer and any other Person provided with access to
information under this Paragraph shall use all such information in compliance
with the Confidentiality Agreement and all Laws. Neither Buyer nor any other
Person shall have access to employee records, Patient Records or any other
records to the extent that the disclosure of such records would be prohibited by
any Law, rule, regulation or accreditation standards.
6.3 ENCUMBRANCES
From the date hereof and until the Closing, Seller
shall not permit any new Lien to attach upon any of the Transferred Assets,
except for statutory liens for Taxes not yet delinquent and security interests
otherwise permitted pursuant to the provisions of this Agreement. The provisions
of this Paragraph shall not apply to any Liens resulting from acts or omissions
of Buyer.
6.4 CONSENT OF OTHERS
It shall be the responsibility of Buyer to use its
reasonable commercial efforts to obtain any consents required in connection with
the Permits referred to in Paragraph 8.1 (including
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Buyer's licensing requirements); provided, however, Seller shall cooperate with
Buyer in obtaining such consents, prior to and after the Closing so long as such
cooperation is at out-of-pocket cost to Seller.
6.5 SELLER'S EFFORTS TO CLOSE
Seller shall use its reasonable commercial efforts to
satisfy all the conditions precedent set forth in Paragraph 9 to the extent that
Seller's action or inaction can control or influence the satisfaction of such
conditions.
6.6 MONTHLY STATEMENTS
From the date hereof to the Closing, Seller shall
deliver to Buyer within fifteen (15) days after the end of each calendar month
copies of the unaudited balance sheet of the Hospital Business and the
Transferred Assets and the related statement of income for the immediately
preceding calendar month (all such balance sheets and statements of income shall
collectively be referred to as the "Monthly Statements").
6.7 INSURANCE COVERAGE
At or prior to the Closing, Seller shall have
delivered to Buyer written proof, satisfactory to Buyer, that Seller has general
liability and professional liability insurance coverage with respect to all
claims attributable to or arising out of the operation of the Hospital Business
or the Transferred Assets on or before the Closing, regardless of when any such
claims shall be made. At the Closing, Seller shall cause the insurer to issue
and deliver to Buyer a certificate evidencing coverage pursuant to the terms of
this Paragraph 6.7, and Seller shall cause each such insurance policy to contain
a clause requiring the insurer to give not less than thirty (30) days' prior
written notice to Buyer as a condition to any cancellation or modification of
such policy. Following the Closing, Seller shall pay all premiums and take all
other steps as may be reasonably necessary to maintain director and officer
liability insurance policies and pollution coverage in full force and effect for
a period measured by the shorter of the applicable statute of limitations period
plus 2 months or eighty-four (84) months or such lesser period as reasonably
agreed to by Buyer at or following the Closing. The Parties acknowledge that
Seller's general liability and professional liability insurance for the Hospital
is on an occurrence basis, for which no extended reporting period of coverage is
needed.
6.8 NOTICE OF DEVELOPMENTS
From the date hereof and until the Closing, (a)
Seller shall promptly notify Buyer of any material change with respect to the
operations of the Hospital Business or the condition of the Transferred Assets,
and (b) Seller shall, promptly upon becoming aware thereof, give notice to Buyer
of the occurrence of, or the threatened occurrence of, any event which would
cause or constitute a breach, or would have caused or constituted a breach, had
such event occurred or been known to Seller prior to the date of this Agreement,
of any of its covenants, agreements, representations or warranties contained or
referred to in this Agreement or in any Related Agreement.
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7. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants the following:
7.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly incorporated and validly
existing under the Laws of Delaware, and is authorized to exercise its corporate
powers, rights and privileges and is in good standing in, the State of Nevada
and has full corporate power to carry on its business as contemplated hereby and
to own or lease and operate its properties and assets now owned or leased and
operated by it.
7.2 AUTHORITY
Buyer has the full corporate power and authority to
execute and deliver this Agreement and any Related Agreements to which it is a
Party, to perform the obligations and covenants set forth herein and therein and
to carry out the transactions contemplated herein. This Agreement and any
Related Agreements are binding upon and enforceable against Buyer in accordance
with their terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in
effect relating to creditors' rights generally and except that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding may be brought. The execution, delivery and performance of this
Agreement and any Related Agreements and the consummation of the transactions
contemplated hereby or thereby will not (a) violate any Law applicable to Buyer
or any of its assets, except for any violation which would not prevent or delay
in any material respect the consummation of the transactions contemplated hereby
or have a Material Adverse Effect on Buyer, (b) violate or conflict with any
provision of the Articles of Incorporation or Bylaws of Buyer, or (c) will not
conflict with or breach or constitute a default under any contract or
arrangement to which Buyer is a Party or by which it bound other than such
conflict, breach, or default that would not have a Material Adverse Effect on
Buyer.
7.3 CONSENTS
Except as disclosed on Schedule 7.3, no consent,
approval, authorization or order of, and no exemption by or filing with, any
person is required on behalf of Buyer in connection with the execution and
delivery of this Agreement or any Related Agreement, or the consummation and
fulfillment by Buyer of the transactions contemplated hereby or thereby, or the
performance by Buyer of its obligations hereunder or thereunder.
7.4 FINANCIAL STATEMENTS
The audited financial statements of Buyer for the
fiscal years ended December 31, 1996 and 1997, and previously delivered to
Seller, present fairly, in all material respects, the consolidated financial
position of Buyer and its subsidiaries and the consolidated results of their
operations and changes in financial position as of the dates and for the periods
indicated, in conformity with GAAP.
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7.5 ABSENCE OF CHANGES
Since December 31, 1997, Buyer has not suffered any
change or loss which would have a Material Adverse Effect on Buyer.
7.6 COMPLIANCE WITH LAWS
To Buyer's Knowledge, except as disclosed in Schedule
7.6, neither Buyer nor any of its subsidiaries is in violation of any law
applicable to it which violation could have a Material Adverse Effect on Buyer.
7.7 DUE DILIGENCE; EXPERIENCE
(a) Buyer has inspected such of Seller's records and
properties, including the Transferred Assets, as Buyer has deemed appropriate,
and to the degree Buyer has deemed appropriate in light of the risks and
liabilities Buyer is assuming under this Agreement;
(b) Buyer has had ample opportunity to utilize
experts and counsel to assist it in such inspections;
(c) Buyer is not relying on any verbal or written
representation or statement by Seller or anyone purporting to act on Seller's
behalf concerning the condition or value of any Transferred Asset, with Buyer
understanding that the only statements authorized by Seller to be made
concerning the Transferred Assets are made herein, and in the Deed; and
(d) Officers and employees of Buyer are experienced
and well qualified in the development, acquisition, construction, marketing and
operating of new and existing acute care hospitals and familiar with the service
area of the Hospital and the current state of the Hospital Business.
7.8 NO COMMISSION; NO OFFER OF EMPLOYMENT
None of Buyer, its Affiliates or any of their
officers or directors has employed, contracted for the services of, or
authorized any broker, finder, investment banker, or other Person who would be
entitled to receive a commission or fee with respect to the consummation of the
transactions contemplated hereby, and Buyer shall be solely responsible for any
fees or commissions payable to any such Person by reason of the actions (or
alleged actions) of Buyer, its Affiliates or any of their officers or directors.
Neither Buyer, its Affiliates nor any of their employees, officers or directors
has made or offered any contract of employment or other compensation to any
Person connected with Seller or the Hospital Business with respect to the
consummation of the transactions contemplated hereby (except as expressly
contemplated under Paragraph 13.9).
8. OBLIGATIONS AND COVENANTS OF BUYER
Buyer hereby covenants and agrees as follows:
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8.1 CONSENT OF OTHERS
As soon as reasonably practicable after the date of
this Agreement, and in any event prior to the Closing, Buyer shall use its
reasonable commercial efforts to obtain the consents required to be obtained by
Buyer hereunder of all necessary Persons (including governmental agencies having
jurisdiction over this transaction) to the consummation of the transactions
contemplated hereunder, including, without limitation, the Permits,
participations and accreditations referred to in Paragraph 9.5, and the
assignment of the Assumed Contracts; provided, however, it is understood that
the consents necessary to acquire, develop, construct and operate the New
Facility will be obtained after the Closing in accordance with Schedule 13.16.
Notwithstanding anything contained in this Agreement to the contrary, Seller
shall have no liability to Buyer for failing to obtain a consent to the transfer
of an Assumed Contract in respect of any Assumed Contract where Buyer has waived
obtaining consent or in respect of any Permit, participation and accreditation,
referred to in Paragraph 9.5.
8.2 INSPECTION BY BUYER
Buyer has commenced its due diligence investigation
and inspection of the Transferred Assets (structural, operational,
environmental, title or otherwise) and of the business, prospects and affairs of
the Transferred Assets and the Hospital Business (collectively, the
"Inspection"). All costs and expenses incurred in connection with the Inspection
shall be borne by Buyer. Buyer has obtained a preliminary title report (the
"Preliminary Title Report") issued by ▇▇▇▇▇▇▇ Title Company (the "Title
Company") with respect to the Real Property. Buyer and Seller acknowledge and
agree that any Environmental Survey of the Real Property prepared in connection
with this transaction prior to the date of this Agreement is only an initial
environmental site assessment (the "Phase I Assessment"), but will include, if
subsequently determined by Buyer to be necessary or prudent, any further
environmental investigation (including all remediation reports with respect
thereto, the "Phase II Investigation") of the Real Property and that thereafter
all references in this Agreement to the Environmental Survey shall mean both the
Phase I Assessment and all Phase II Investigations. Seller shall grant to Buyer
a right of access to the Real Property for the Inspection, which right shall
include the right to inspect, sample, test or perform any other service or
procedure reasonably necessary for the preparation of the Environmental Survey.
Buyer shall give Seller no less than 24 hours' notice before any of the
Inspections are conducted, and all Inspections shall be conducted during normal
business hours and in a manner so as not to unreasonably disturb patient care or
interfere with the normal operations of the Hospital Business unless otherwise
agreed by Buyer and Seller. Seller shall be permitted to have one of its
employees present during all Inspections, including, without limitation, all
Inspections of and sample gatherings (including borings) from the soil or any
floor tile, insulation or other internal component of the Real Property.
8.3 BUYER'S EFFORTS TO CLOSE
Buyer, shall use its reasonable commercial efforts to
satisfy all the conditions precedent set forth in Paragraph 10 to the extent
that Buyer's action or inaction can control or influence the satisfaction of
such conditions.
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8.4 NO LIENS
Buyer shall not cause or permit any Lien (including,
without limitation, any mechanic's or materialman's lien) to be filed against
any of the Real Property or the other Transferred Assets as a result of Buyer's
activities, acts or omissions (including, without limitation, the Inspections)
before the Closing.
8.5 NOTICE TO SELLER
Buyer shall notify Seller promptly if it become aware
prior to the Closing of (a) any event or condition which would cause Seller's
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect, or (b) any material failure of Seller to
comply with or satisfy any covenants to be complied with or satisfied by Seller
hereunder.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to
the satisfaction or Buyer's waiver in writing, at or prior to the Closing, of
each of the following additional conditions:
9.1 ACCURACY OF WARRANTIES AND REPRESENTATIONS
Each of the representations and warranties of Seller
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and at and as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date.
9.2 PERFORMANCE OF OBLIGATIONS
Seller shall have performed all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Closing.
9.3 [INTENTIONALLY LEFT BLANK]
9.4 THIRD PARTY CONSENTS
Buyer shall have received all necessary consents,
approvals and authorizations of third parties with respect to the assignment to
Buyer of all Assumed Contracts, if any, which have been requested by Buyer and
reasonably determined by Buyer to be material to the operation of the Hospital
Business. Subject to the provisions of Paragraph 6.4, Closing the transaction
contemplated hereunder shall constitute a waiver and release by Buyer of Seller
from any responsibility to obtain consents in regard to the Assumed Contracts.
9.5 PERMITS AND PROGRAM PARTICIPATION
Buyer shall have obtained (or received reasonable
assurances that it shall obtain within a reasonable time after the Closing) all
Permits and accreditations required for the operation of the Hospital Business
by Buyer following the Closing in substantially the same manner as currently
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operated, and Buyer shall have obtained (or received reasonable assurances that
it shall obtain within a reasonable period of time after the Closing) Medicare,
Medicaid and CHAMPUS certification of the Hospital Business and certification of
the participation by the Hospital Business in the programs of any other Payors
reasonably determined by Buyer to be of material importance to the Hospital
Business that will in each instance be effective as of the Closing, so that
after the Closing the Hospital Business may participate in or receive
reimbursement from all such programs effective as of the Closing.
9.6 TAX MATTERS
Seller shall have delivered to Buyer a duly executed
certificate of non-foreign status in the form required by Internal Revenue Code
ss.1445.
9.7 TITLE POLICY OR SURVEY
Buyer shall have received commitments satisfactory to
Buyer from the Title Company to issue as of the Closing Date an owner's (or
leasehold, in the case of leasehold estates) title insurance policy on Owner's
Policy Form 10-17-92 (with the standard "survey" exception deleted and matters
of survey reflected on the survey provided to such Title Company) for the Real
Property, together with improvements, buildings and fixtures thereon, in an
amount consistent with the parties' allocation of Purchase Price. The commitment
shall provide for the issuance of said policy to Buyer as of Closing together
with any endorsements thereto requested by Buyer and available in the State of
Nevada and shall insure good and marketable fee simple title (or leasehold
title, in the case of leasehold estates) to the Real Property in Buyer subject
only to the Permitted Encumbrances. Additionally, Buyer shall have received an
as-built survey of the Real Property acceptable to the Title Company for
purposes of deleting standard survey exceptions as provided above and reflecting
all improvements visible on the grounds and all easements, rights-of-way, means
of ingress or egress, encroachments and drainage ditches, whether abutting or
interior, or record or on the grounds. The survey shall reflect whether and to
the extent any portion of the Real Property lies within the 100-year flood
plain. The survey shall be certified to the Title Company and Buyer and shall be
in a form satisfactory to both. The costs of such title policy (including the
survey exception deletion) and survey shall be borne by Buyer.
9.8 INSTRUMENTS OF TRANSFER
At the Closing, Seller shall have delivered to Buyer
a Grant, Bargain and Sale Deed for the Real Property substantially in the form
attached hereto as Exhibit 9.8, and such bills of sale and assignments of the
Assumed Contracts which shall be effective to transfer to Buyer all of Seller's
right, title and interest in and to the Transferred Assets pursuant to the terms
of this Agreement and to permit the Title Company to issue the Title Policy
pursuant to Paragraph 9.7 hereof with respect to the Real Property. The bills of
sale and the assignment and assumption of the Assumed Contracts shall be
substantially in the form and substance of Exhibit 2.2.
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9.9 OFFICER'S CERTIFICATE
Seller shall have delivered to Buyer a certificate,
dated on the Closing Date, executed by the Chairman of the Elko County
Commissioners on behalf of Seller certifying as to the satisfaction of the
conditions set forth in Paragraphs 9.1 and 9.2.
9.10 CERTIFIED RESOLUTIONS
Seller shall have delivered to Buyer: (a) a copy of
the resolutions of the Board of County Commissioners of Elko County, Nevada,
authorizing the execution of this Agreement and the performance of the
transactions contemplated hereby which shall be certified as true, correct and
effective as of the Closing Date; and (b) an incumbency certificate from Seller
which shall be certified as true, correct and effective as of the Closing Date.
9.11 OPINION OF SELLER'S COUNSEL
Buyer shall have received an opinion from the Elko
County District Attorney's office, dated as of the Closing Date and addressed to
Buyer, regarding matters in Paragraphs 5.1, 5.2 and 5.6 and set forth in
Schedule 9.11 in regard to the laws of the State of Nevada, and from Fulbright &
▇▇▇▇▇▇▇▇ L.L.P. regarding the requirement to make a filing under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, subject to customary conditions and limitations.
9.12 ADVERSE ACTION
No bona fide action or proceeding shall be pending
against either Buyer or Seller wherein an unfavorable judgment, decree or order
would prevent or make unlawful the carrying out of the transactions contemplated
by this Agreement or would compel Buyer's divestiture of all or any part of the
Transferred Assets or any other assets of Buyer or its Affiliates or otherwise
restrict Buyer's operation of the Transferred Assets; and no governmental agency
shall have notified either Buyer or Seller (which notice has not been withdrawn)
that the consummation of the transactions contemplated by this Agreement would
constitute a violation of the Laws of any jurisdiction or would compel Buyer's
divestiture of all or any part of the Transferred Assets or any other assets of
Buyer or its Affiliates or otherwise restrict Buyer's operation of the
Transferred Assets or that it has commenced or intends to commence proceedings
to restrain the consummation of the transactions contemplated hereunder.
9.13 PAYMENT OF CERTAIN DEBT
Seller shall have paid all outstanding Tax Exempt
Debt incurred in connection with the Transferred Assets or otherwise encumbering
the Transferred Assets or the revenues of the Hospital Business as specified in
Schedule 9.13.
9.14 ADVERSE CHANGE
There shall not have occurred after the date of this
Agreement any change that would be materially adverse to the results of
operations, financial condition, prospects or operations of the Hospital, except
to the extent contemplated by the Disclosure Memorandum and actions expressly
contemplated hereunder; Seller shall not have suffered any material loss or
damage to the Transferred Assets or the Hospital Business not covered by
insurance. Seller shall not (a) be in
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receivership or dissolution, (b) have made any assignment for the benefit of
creditors, (c) admitted in writing its inability to pay its debts as they
mature, (d) have been adjudicated a bankrupt or (e) have filed a petition in
voluntary bankruptcy, a petition or answer seeking reorganization, or an
arrangement with creditors under the federal bankruptcy law or any other similar
law or statutes of the United States or any state, nor shall any such petition
have been filed against it.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to
the satisfaction or Seller's waiver in writing, at or prior to the Closing, of
each of the following additional conditions:
10.1 ACCURACY OF WARRANTIES AND REPRESENTATIONS
Each of the representations and warranties of Buyer
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and at and as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date.
10.2 PERFORMANCE OF OBLIGATIONS
Buyer shall have performed all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Closing.
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10.3 PAYMENT OF PURCHASE PRICE
Buyer shall have delivered, or caused to be
delivered, to Seller at the Closing (a) the immediately available funds
described in Paragraph 2.2(c)(i), and (b) the assumption and undertaking of
Assumed Obligations referred to in Paragraph 2.2(c)(ii).
10.4 OFFICER'S CERTIFICATE
Buyer shall have delivered to Seller (a) a
certificate, dated the Closing, executed by its President or any duly authorized
Vice President, on behalf of Buyer certifying as to the satisfaction of the
conditions set forth in Paragraphs 10.1 and 10.2, and (b) a good standing
certificate for Buyer from the Delaware Secretary of State and qualification to
do business in Nevada from the Nevada Secretary of State, dated as of a date not
earlier than ten (10) Business Days prior to the Closing Date.
10.5 CERTIFIED RESOLUTIONS
Buyer shall have delivered to Seller: (a) the
resolutions of the Board of Directors of Buyer authorizing the execution of this
Agreement and the performance of the transactions contemplated hereby which
shall be certified as true, correct and effective as of the Closing Date by the
Secretary or Assistant Secretary of Buyer, and (b) an incumbency certificate of
Buyer which shall be certified as true, correct and effective as of the Closing
Date by the Secretary or Assistant Secretary of Buyer. Buyer shall deliver to
Seller, a certificate of corporate existence of Buyer from the state of its
incorporation and evidence of qualification to do business in Nevada, dated the
most recent practical date prior to the Closing.
10.6 OPINION OF BUYER'S COUNSEL
Seller shall have received an opinion from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, A Professional Limited Liability Company, dated as of
the Closing Date and addressed to Seller, regarding the matters set forth in
Paragraphs 7.1 and 7.2, subject to customary conditions and limitations.
10.7 ADVERSE ACTION
No bona fide action or proceeding shall be pending
against either Buyer or Seller wherein an unfavorable judgment, decree or order
would prevent or make unlawful the carrying out of the transactions contemplated
by this Agreement or would compel Buyer's divestiture of all or any part of the
Transferred Assets or otherwise restrict Buyer's operation of the Transferred
Assets; and no governmental agency shall have notified either Buyer or Seller
(which notice has not been withdrawn) that the consummation of the transactions
contemplated by this Agreement would constitute a violation of the Laws of any
jurisdiction or would compel Buyer's divestiture of all or any part of the
Transferred Assets or otherwise restrict Buyer's operation of the Transferred
Assets or that it has commenced or intends to commence proceedings to restrain
the consummation of the transactions contemplated hereunder.
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10.8 ADVISORY BOARD
Pursuant to the Nevada Transfer Law, Buyer shall have
made appropriate provisions for an Advisory Board (as set forth in Paragraph
13.12) in the Articles of Incorporation of Buyer (or its permitted transferee
under Paragraph 17.5).
10.9 CONTRACTS
Buyer shall have entered into binding commitments on
terms satisfactory to Seller (a) to lease the ambulance barn property to Seller
or its designee, (b) to extend the jail food contract with the County of Elko,
and (c) to continue to provide space and services at the Hospital on the same
terms as of the date hereof to the (i) Auxiliary and (ii) to the extent legally
permissible, to the Hospice; and Buyer shall have executed the Capital
Construction Agreement, substantially in the form of Exhibit 13.16.
10.10 ADVERSE CHANGE
There shall not have occurred after the date of this
Agreement any change that would be materially adverse to the results of
operations, financial condition, prospects, or operations of the Buyer. Buyer
shall not (a) be in receivership or dissolution, (b) have made any assignment
for the benefit of creditors, (c) admitted in writing its inability to pay debts
as they mature, (d) have been adjudicated a bankrupt or (e) have filed a
petition in voluntary bankruptcy, a petition or answer seeking reorganization,
or any arrangement with creditors under the federal bankruptcy law or any other
similar law or statutes of the United States or any state, nor shall any such
petition have been filed against it.
11. CLOSING
The Closing shall take place on June 30, 1998, at Elko,
Nevada, at a time and a location mutually agreeable to the Parties, or such
sooner date as mutually acceptable to Buyer and Seller; provided all conditions
precedent to the Parties' obligations set forth in Paragraphs 9 and 10 shall
have been satisfied, waived or are capable of being performed as of such date.
If the conditions specified in this Agreement have not been fulfilled by such
date, subject to the limitation set forth in Paragraph 16.1(e), either Buyer or
Seller may defer the Closing for a reasonably necessary period or periods by
written notice to the other Party. The date on which the Closing actually occurs
shall be referred to herein as the "Closing Date". The Closing shall be
effective for all purposes as of 11:59 p.m. (determined by reference to the
Pacific time zone) on the day immediately preceding the Closing. The term
"Closing" as used in this Agreement shall mean the meeting of Buyer and Seller
at which the documents and instruments referred to in Paragraph 9.8 are
delivered to Buyer, the documents and funds referred to in Paragraph 10.2 are
delivered to Seller and the other actions required to be taken hereunder shall
have been taken.
11.1 PRE-CLOSING
A preclosing of the transactions contemplated
hereunder may, if either Party so elects, be held at a time and place mutually
agreeable to legal counsel to each of the Parties on the day preceding the
Closing Date.
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11.2 DELIVERIES AT CLOSING
At the Closing, Buyer shall cause the Purchase Price
referred to in Paragraph 2.2(c)(i) to be wired to the account or accounts
designated by Seller and, upon written confirmation from the sending bank that
said wire transfer has commenced (which written confirmation shall include the
confirmation number of such wire transfer), the Parties shall take the actions
set forth below:
(a) Seller shall deliver to Buyer the deeds and other
instruments of transfer, conveyance and assignment as described in Paragraph
9.8, the other agreements, documents and instruments referred to in Paragraph 9,
and a list of the source or access codes to computers, the combinations to any
safe and the location of any safe deposit boxes, together with the keys to any
of the foregoing.
(b) Buyer shall deliver to Seller the agreements,
certificates, documents and instruments referred to in Paragraph 10.
11.3 [INTENTIONALLY LEFT BLANK]
12. CASUALTY AND CONDEMNATION
12.1 CASUALTY
If any material part of the Transferred Assets are
damaged, lost or destroyed (whether by fire, theft, vandalism or other casualty)
in whole or in part prior to the Closing Date, Seller shall promptly notify
Buyer of the same. If the fair market value of such damage or destruction does
not exceed the lesser of $ 1,000,000 or 10% of the allocated portion of the
Purchase Price for such Transferred Assets set forth in Schedule 13.4, Seller
shall, at Buyer's option, either (a) reduce the Purchase Price by the net book
value of the assets destroyed, as reflected on the Interim Statements, or (b)
transfer the insurance proceeds or the rights to insurance proceeds of
applicable insurance to Buyer, and Buyer shall restore the improvements. If any
part of the Transferred Assets is damaged, lost or destroyed (whether by fire,
theft, vandalism or other cause or casualty) in whole or in part prior to the
Closing and the fair market value of such damages exceeds the lesser of $
1,000,000 or 10% of such allocated portion of the Purchase Price, Buyer may
elect either to (d) require Seller to transfer the proceeds (or the right to the
proceeds) of applicable insurance to Buyer, and Buyer shall restore the
improvements, or (e) terminate this Agreement by written notice to Seller within
ten (10) Business Days after Seller's delivery to Buyer of Seller's notice as
described above.
12.2 CONDEMNATION
From the date hereof and until the Closing, in the
event that any material portion of the Transferred Assets (including access
thereto or parking therefor) is taken, reduced or restricted by any pending,
threatened or contemplated condemnation or eminent domain proceeding or
otherwise, then Buyer, at its sole discretion, may elect to terminate this
Agreement by written notice to Seller within five (5) Business Days after the
date that Buyer receives notice of the taking or threatened taking.
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13. ADDITIONAL COVENANTS
The following provisions shall apply, and the following
actions shall be taken, prior to or subsequent to the Closing:
13.1 FURTHER DOCUMENTATION OR ACTION
From time to time, at the request of either Party,
whether on or after the Closing, without further consideration, either Party, at
its expense and within a reasonable amount of time after request hereunder is
made, shall execute and deliver such further instruments of assignment and
transfer and take such other action as may be reasonably required to assign and
transfer more effectively the Transferred Assets to Buyer in a manner consistent
with the terms and conditions of this Agreement, deliver or make the payment of
the Purchase Price to Seller or any amounts due from one Party to the other
pursuant to the terms or this Agreement, confirm Seller's ownership of the
Retained Assets or otherwise carry out the purposes of any provision of this
Agreement. Notwithstanding anything contained in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any Transferred
Asset, or assume any Assumed Obligation, if the attempted assignment or
assumption of the same, as a result of the absence of a consent or authorization
of a third party, would constitute a breach or default under any lease,
agreement or commitment or would in any way adversely affect the rights, or
increase the obligations, of Buyer or Seller with respect thereto; provided,
however, that the assignment of any contract, including, without limitation,
Medicare, Medicaid and similar provider agreements, which may lawfully be made
subject to customary conditions subsequent (such as need surveys, evaluations of
Buyer or other determinations by the counter parties to such agreements) shall
be deemed not to constitute a default under, or in any way adversely affect the
rights or increase the obligations of Buyer with respect to, such lease,
agreement or commitment, unless the counter party indicates prior to the Closing
that such condition or conditions subsequent are not likely to be met. If any
such consent or authorization is not obtained, or if an attempted assignment or
assumption would be ineffective or would adversely affect the rights or increase
the obligations of Seller or Buyer with respect to any such lease, agreement or
commitment, so that Buyer would not, in fact, receive all such rights, or assume
the obligations, of Seller with respect thereto as they exist prior to such
attempted assignment or assumption, then Seller and Buyer shall enter into such
reasonable cooperative arrangements as may be reasonably acceptable to both
Buyer and Seller (including, without limitation, sublease, agency, or payment
arrangements and enforcement for the benefit of Buyer of any and all rights of
Seller against an involved third party) to provide for Buyer the benefits of
such Transferred Asset or to relieve Seller from the obligations of such Assumed
Obligation, and any transfer or assignment to Buyer by Seller of any such
Transferred Asset, or any assumption by Buyer of any such Assumed Obligation,
which shall require the consent or authorization of a third party that is not
obtained shall be made subject to such consent or authorization being obtained.
Furthermore, Seller agrees to continue to use its
reasonable best efforts after Closing to assist Buyer in obtaining written
confirmation of Buyer's right (i) to continue to obtain heat for the Hospital
from the geothermal line underlying the Real Property and subject to a certain
Interlocal Contract, dated as of December 19, 1985 (the "Interlocal Contract"),
on the same terms as presently enjoyed by the Hospital; and (ii) to continue to
sublease from the Elko County Fair Board (the "Fair Board") a certain parking
lot located on 13th Avenue in Elko, Nevada, owned by the City of Elko and leased
to the Fair Board, on the same terms as presently enjoyed by the Hospital.
Seller
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acknowledges it has represented to Buyer that it has received verbal consents
from all relevant parties to the matters described in the immediately preceding
sentence.
13.2 PRESERVATION OF AND ACCESS TO RECORDS
(a) Owner of Hospital Records. The term "Hospital
Records" shall mean (a) all or any portion of the medical, clinical and other
records directly or indirectly associated with the admission, care and treatment
of patients (excluding, however, all billing, other financial and marketing
information related thereto) for periods ending on or prior to the Closing Date
(the "Patient Records"), and (b) all or any portion of the financial and other
records and files of the Hospital Business (including patient billing, other
financial and marketing information, whether or not included as part of the
"financial jacket" of the Patient Records) for periods ending on or prior to the
Closing Date, but excluding Seller's minute books, tax records and Proprietary
Documents and documents related solely to the Retained Assets and Excluded
Liabilities ("Business Records"), and upon the Closing, Seller shall be deemed
to have assigned and transferred to (or, if necessary, waived and released
solely in favor of) Buyer and shall be deemed to have consented to Buyer's
access to all such records, documents and materials. As set forth in Paragraph
1.1, the Hospital Records are Transferred Assets. Notwithstanding the foregoing,
the Parties shall cooperate in providing copies and access to the Hospital
Records as set forth below.
(b) Seller's Access. Buyer shall retain the Hospital
Records at the Hospital (or at such other locations within Elko, Nevada, as
Buyer, in its reasonable discretion, shall determine from time to time) at
Buyer's cost, from and after the Closing for the full period required by
applicable Laws, but at least for a period of 5 years (and, if at the expiration
thereof any tax or Payor audit or administrative or judicial proceeding is in
process or the applicable statute of limitations has been extended, for such
longer period as such audit or proceeding is in process or such statutory period
has been extended) (the "Document Retention Period"). After the Closing, Buyer
shall grant, and Seller shall have, access to the Hospital Records (including
any Patient Records) as needed for any lawful purpose; provided, however, that
Seller shall not have access to any Hospital Record the disclosure of which
would be prohibited by any Law; and provided further, that any Hospital Records
delivered to or made available to Seller and its representatives shall be
treated as confidential by Seller and its representatives, shall not be
disclosed or communicated to any other Person other than Seller and its
representatives who are reasonably required to have access to such information
(unless Seller is compelled to disclose the same by judicial or administrative
process), shall be returned to Buyer when Seller's use therefor has terminated.
Buyer shall instruct the appropriate employees of the Hospital to cooperate in
providing access to such records to Seller and its authorized representatives as
contemplated herein. Access to such records shall be, whenever reasonably
possible, during normal business hours and with at least 24 hours prior written
notice to Buyer of the time when such access shall be needed. Seller's
employees, representatives and agents shall conduct themselves in such a manner
so that Buyer's normal business activities shall not be unduly or unnecessarily
disrupted. Any reasonable, documented, out-of-pocket expenses incurred by Buyer
to third parties in providing Seller the access contemplated by this Paragraph
13.2(b) shall be promptly reimbursed to Buyer by Seller.
(c) Destruction Notice. After the expiration of the
aforementioned Document Retention Period, Buyer may, in its discretion, upon
ninety (90) days prior written notification to Seller (the "Destruction
Notice"), destroy any Hospital Records in its possession; provided, however,
within eighty (80) days after its receipt of the Destruction Notice, Seller
shall
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have the right, at its own expense, to require Buyer to deliver any such records
to Seller, and Buyer shall thereupon deliver the same to Seller. Anything herein
to the contrary notwithstanding, Buyer shall have the right to destroy any of
the Business Records at any time after the fourth anniversary of the Closing
Date provided that (i) Buyer delivers to Seller a Destruction Notice at least
ninety (90) days prior to the date on which Buyer intends to destroy such
Business Records, and (ii) Seller does not, within eighty (80) days after its
receipt of the Destruction Notice, notify Buyer that Seller wants such records
delivered to Seller at Seller's sole cost and expense. Upon the timely delivery
of any such notice to Buyer, Buyer shall deliver to Seller the Business Records
specified therein. Buyer shall not destroy any Hospital Records or Business
Records which either Seller or Buyer were or are then required by Law to
maintain for longer periods.
13.3 LITIGATION COOPERATION
After the Closing, upon reasonable written request,
each Party shall cooperate with the other, at the requesting Party's expense
(but including only out-of-pocket expenses to third parties and not the costs
incurred by any Party for the wages or other benefits paid to its officers,
directors, employees, or agents), in furnishing information, testimony and other
assistance in connection with any actions, tax or cost report audits,
proceedings, arrangements or disputes involving either of the Parties (other
than in connection with disputes between the Parties) and based upon contracts,
arrangements or acts of Seller which were in effect or occurred on or prior to
the Closing and which related to the Hospital Business or the Transferred
Assets, including, without limitation, arranging discussions with, and the
calling as witnesses of, officers, directors, employees, agents and
representatives of Buyer and Seller.
13.4 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated among each of
the Transferred Assets (or, where more practical, each category of Transferred
Assets) in accordance with Schedule 13.4. Except as otherwise required by Law,
Seller and Buyer hereby agree to allocate the Purchase Price in accordance with
Schedule 13.4, to be bound by such allocations for all purposes, to account for
and report the purchase and sale of the Transferred Assets contemplated hereby
for all purposes (including, without limitation, financial, accounting, and
federal and state tax purposes) in accordance with such allocations, and not to
take any position (whether in financial statements, tax returns, tax audits or
otherwise), which is inconsistent with such allocations without the prior
written consent of the other Party.
13.5 [INTENTIONALLY LEFT BLANK]
13.6 RETAINED ASSETS AND RECEIVABLES
(a) General Rule. Any asset (including all
remittances and all mail and other communications) that is determined by the
Parties' agreement, or, absent such agreement, determined by litigation, to be a
Retained Asset and that is or comes into the possession, custody or control of
Buyer or any of its Affiliates shall forthwith be transferred, assigned or
conveyed by Buyer or such Affiliate to Seller, and, until such transfer,
assignment and conveyance, Buyer and its Affiliates shall not have any right,
title or interest in such asset, but instead shall hold such asset in trust for
the benefit of Seller. Any asset (including all remittances and mail and other
communications)
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that is determined by the Parties' agreement or, absent such agreement,
determined by litigation, to be or otherwise relate to a Transferred Asset
(including the proceeds of Medicare Receivables) and that is or comes into the
possession, custody or control of Seller shall forthwith be transferred,
assigned and conveyed by Seller to Buyer, and, until such transfer, assignment
and conveyance, Seller shall not have any right, title or interest in such
asset, but instead shall hold such asset in trust for the benefit of Buyer.
(b) Straddle Patient Receivables. To compensate
Seller for services rendered and medicine, drugs and supplies provided through
the Closing Date with respect to patients ("Straddle Patients") who were
admitted to the Hospital on or before the Closing Date and discharged by the
Hospital after the Closing Date, the following shall apply: All capitation, per
diem and other periodic interim payments which are received by Buyer after the
Closing Date which, pursuant to the remittance advice which accompanies such
payment or otherwise, are attributable to a period on or before the Closing Date
shall constitute Receivables for all purposes of this Agreement (including,
without limitation, for purposes of calculating the Purchase Price). Any
capitation, per diem and other periodic interim payment received by Buyer after
the Closing Date which, pursuant to the remittance advice which accompanies such
payment or otherwise, is attributable partially to a period ending on or before
the Closing Date and partially to a period after the Closing Date shall be
prorated to reflect the number of days included within such periodic interim
payment which occurred on or before the Closing Date, and such prorated amount
shall be included within the foregoing sentence.
(c) Medicare Receivables. Notwithstanding anything in
this Agreement that might be construed to the contrary, this Agreement shall not
constitute an agreement to assign any Medicare Receivable. Seller hereby
appoints, effective as of the Closing Date, Buyer (either alone or through an
Affiliate) as its agent to collect the Medicare Receivables and apply the
proceeds therefrom in discharge of Seller's obligation to deliver the same to
Buyer pursuant to Paragraph 1.1(n), and Buyer hereby accepts such appointment.
Upon receipt of such proceeds, Buyer shall retain the same in satisfaction of
Seller's obligation set forth in Paragraph 1.1(n). All procedures and
requirements specified herein (including, without limitation, Buyer's
obligations under Paragraph 13.6(b)) for the collection of Receivables shall be
fully applicable to such Medicare Receivables, except that any provisions herein
that would otherwise require or provide for Buyer's "reassignment" of a
Receivable that is non-assignable to Buyer in the first instance shall be
construed to require or provide that Buyer, as agent for Seller, return
pertinent documentation respecting such Medicare Receivable to Seller to permit
further collection efforts with respect to such Medicare Receivable by Seller
(in accordance with such collection efforts and procedures as Seller, in its
sole discretion, shall determine). Buyer shall use reasonable commercial efforts
to collect the Medicare Receivables but shall not be required to file any
lawsuit or commence any other proceeding to collect any Medicare Receivable.
Seller covenants and agrees not to instruct any Payor to send any payments with
respect to the Medicare Receivables to any location other than the location of
the Hospital.
13.7 COST REPORT AUDITS AND CONTESTS
After the Closing and for the period of time
necessary to conclude any pending or potential audit or contest of any cost
reports with respect to the Hospital concerning periods ending on or before the
Closing Date, Buyer shall, within five (5) Business Days of Buyer's receipt of
the same, forward to Seller all information received from Payors relating to
periods ending on or
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prior to the Closing Date, including, without limitation, cost report
settlements, notices of program reimbursements, demand letters for payment and
proposed audit adjustments. Upon the reasonable request of Seller, Buyer shall
assist Seller (including by providing the reasonable support of its employees at
no cost to Seller, except reimbursement for Buyer's reasonable, documented,
out-of-pocket third party expenses) in obtaining information deemed by Seller to
be necessary or convenient in connection with any audit or contest of such
reports. Buyer's services hereunder shall be purely ministerial in nature and
under no circumstances shall Buyer perform any services which will cause Buyer
to become an agent or other fiduciary of Seller with respect to such audits or
contests.
13.8 FILING COST REPORTS: AMOUNTS DUE TO OR FROM THIRD
PARTY PAYORS
(a) Filing Procedures. Buyer shall assist Seller in
the preparation of all cost reports (including terminating cost report) and
other filings required to be filed with Medicare, other Payors or governmental
agencies with respect to operations of the Hospital Business for periods ending
on or prior to the Closing Date by providing the reasonable support of its
employees, at no cost to Seller, except reimbursement for Buyer's reasonable,
documented, out-of-pocket third party expenses in obtaining financial
information or data deemed by Seller to be necessary for the preparation of such
cost reports and other filings. Such cost reports and filings shall be prepared
in a manner consistent with the principles applied and practices followed by
Seller in the preparation of such cost reports and filings which were filed
prior to the date of this Agreement.
(b) Retained Rights and Obligations. Seller shall
retain all rights to any amounts receivable from and remain obligated for all
amounts due to Medicare or such other Payors with respect to such filed cost
reports or filings for periods ending on or before the Closing (as reflected
thereon or as finally determined by the audit, contest or other adjustment of
such reports or filings), and the Parties hereby acknowledge and agree that
Buyer is not hereby being assigned or assuming any of the same. Buyer shall
promptly notify Seller of such amounts due to Medicare or other Payors from
Seller or any amounts due from Medicare or other Payors to Seller which are
being withheld by Medicare or such other Payors and the reasons therefor.
Seller's rights shall include, without limitation, the right to dispute or to
appeal any determinations relating to such reports.
13.9 EMPLOYEE MATTERS
(a) Active Employees. Buyer shall offer to hire,
effective on the Closing Date, each of the then active employees of the Hospital
Business for the equivalent position and same salary or hourly rate of
compensation being paid to such employee as of the Closing. ("Active
Employees"). For purposes of this Agreement, active employees are those
employees who are actually providing services to the Hospital Business
(including those employees who are temporarily absent or on leave due to
vacation or other matters in compliance with Law or Seller's policies pertaining
to employee matters). Seller shall have the right but not the obligation to
continue to employ or offer to employ any Active Employee who declines Buyer's
offer of employment.
(b) Hiring of Active Employees by Buyer. Buyer shall
hire at the Closing the Active Employees who elect to accept employment with
Buyer (the "Hired Employees"). Buyer agrees to give the Hired Employees full
credit for the Paid Time Off, either by allowing such employees such Paid Time
Off as to which such employees would have been entitled under the policies of
Seller if such employees had remained employees of Seller or, upon termination
of
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employment, by making full payment to such employees of the Paid Time Off that
such employees would have received under the policies of Seller had they been
terminated while in Seller's employ. The initial annual salaries or hourly rates
of compensation, as applicable, paid by Buyer to the Hired Employees, shall
provide the base for any adjustments in respect of any such employees following
the Closing, with the adjustments to be determined in accordance with the
policies and practices from time to time in effect for Buyer's employees in
general.
(c) Health Benefits. Buyer shall provide the Hired
Employees the program of health care benefits that are made available to Buyer's
employees in general, such benefits which are to be effective as to the Hired
Employees as of the Closing shall be as set forth in Schedule 13.9(c); provided,
however, that such health care benefits shall be immediately available to the
Hired Employees as of the Closing Date who were then participants of and
entitled to receive benefits under Seller's health care plans without any
limitation with respect to preexisting conditions, and such Hired Employees
shall become as of the Closing Date participants thereunder, without regard to
any applicable waiting period. Buyer shall give each Hired Employee credit for
deductibles that have been met under Seller's health benefits as of the Closing
Date and credit for his or her prior service with Seller for purposes of
satisfying any waiting periods of Buyer's health care plans with respect to
eligibility to participate or preexisting conditions.
(d) Continued Employment; Severance Benefits.
Following the Closing, Buyer shall use reasonable efforts to retain Hired
Employees for so long as their services are satisfactory and as long as the
level of staffing is not detrimental to the success of the Hospital. In the
event of an employee reduction, Buyer shall provide each Hired Employee who is
thereby terminated and who is otherwise eligible for severance benefits, the
severance benefits set forth in Schedule 13.9(d).
(e) No Employment Contract. The understandings set
forth in this Paragraph 13.9 and Paragraph 13.10 are solely for the purpose of
defining the obligations between Buyer and Seller with respect to the
individuals employed in the operation of the Hospital Business as of the Closing
Date and shall not be construed as creating any employment contract between
either Buyer or Seller, on the one hand, and any such employee, on the other,
nor to create or modify any Plan. All such employees shall remain terminable at
will by Buyer or Seller, as the case may be, except to the extent otherwise
required by Law or any preexisting employment or other contracts which have been
specifically assumed by Buyer hereunder.
13.10 EMPLOYEE BENEFIT PLANS
(a) Termination of Seller's Plans. Except as may
otherwise be provided in this Paragraph 13.10, Seller (a) shall terminate as of
the Closing Date the active participation of all Hired Employees in all of the
Plans covering such employees, and (b) shall cause the Plans to make timely
appropriate distributions, to the extent required, to the Hired Employees in
accordance with, and to the extent permitted by, the terms and conditions of
such Plans. Buyer and Seller shall coordinate and cooperate prior to Closing as
to communications to the employees of the Hospital Business notifying such
employees of their rights in respect of their cessation of active participation
in the Plans, which rights shall include, among others, such employees rights
under continuation coverage requirements pursuant to COBRA, 42 U.S.C.
ss.300bb-1, et seq., if applicable, and certificates of group health coverage
under HIPAA.
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(b) Credit to Hired Employees for Prior Service.
Buyer shall give each Hired Employee credit for his or her prior service with
Seller for the purpose of determining eligibility to participate and vesting
with respect to accrual of benefits subsequent to Closing in all employee
benefits of Buyer made available to its employees in general, including, without
limitation retirement, severance and Paid Time Off, with the exception of
healthcare benefits subject to HIPAA; provided, however, eligibility for and
vesting of severance benefits after the Closing shall be determined in
accordance with the provisions of Paragraph 13.9(d). Buyer shall treat prior
service with Seller as continuous under HIPAA.
13.11 USE OF CONTROLLED SUBSTANCE PERMITS
To the extent permitted by Law, Buyer shall have the
right, for a period not to exceed ninety (90) days following the Closing Date,
to operate under the Permits of Seller relating to controlled substances and the
operations of pharmacies and laboratories, until Buyer is able to obtain such
permits for itself. In furtherance thereof, Seller shall execute and deliver to
Buyer special limited powers of attorney as reasonably requested by Buyer and in
form and substance satisfactory to Seller. Buyer acknowledges that it shall
apply for all such Permits as soon as reasonably practicable before and after
the Closing Date and shall diligently pursue such applications. Buyer shall
indemnify and hold Seller harmless from and against all losses, liabilities,
damages, costs and expenses, including reasonable attorneys' fees, actually
incurred, paid or required under penalty of Law to be paid by Seller resulting
in whole or in part from the use of such Permits by Buyer.
13.12 ADVISORY BOARD
(a) Within thirty (30) days following the Closing and
Buyer's receipt of the Advisory Board candidate recommendations from the Elko
County Commissioners as contemplated below, and for so long as Buyer owns and
operates the Hospital (including the New Facility), Buyer shall establish and
maintain as an adjunct to Buyer's governing board for the Hospital Business, an
advisory board (the "Advisory Board") which shall have the responsibilities
related to the Hospital Business (including the New Facility) set forth below.
The Advisory Board shall be comprised of nine (9) members consisting of persons
who represent a broad cross-section of people to be served by the Hospital as
required under the Nevada Transfer Law, to be selected by Buyer from candidates
recommended by the Commissioners of Elko County, three (3) of which will be
active members of the medical staff and have privileges at the Hospital. The
members of the initial Advisory Board will include at least two (2) persons who
are members of the Hospital Board of Trustees as of the Closing. The members of
the Advisory Board shall hold office for a three-year term or until their
earlier resignation or removal. A person may not serve more than two consecutive
full terms as a member of the Advisory Board (i.e., six (6) years), but after a
one year absence may serve up to two more consecutive terms. Members may be
removed, with or without cause, by mutual agreement of Buyer and the Elko County
Commissioners. Any member may resign at any time by notifying the Elko County
Commissioners and the Hospital Administrator. Any vacancy will be filled for the
unexpired term in the same manner as provided above by Buyer from a list of
candidates provided by the Elko County Commissioners. Members of the initial
Advisory Board will serve terms of office as follows:
Three (3) shall hold one year terms
Three (3) shall hold two year terms
Three (3) shall hold three year terms
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The determination of which persons shall serve terms as set forth above shall be
determined by Buyer and Seller at the time of their selection.
(b) The Advisory Board shall have the following
responsibilities, and such other duties as may be delegated to it from time to
time by Buyer:
(i) Assist in the development of policy
respecting governance, advising the Buyer regarding strategic planning and
policies and monitoring progress towards strategic goals;
(ii) Recommending and/or advising with
respect to candidates for the position of the Hospital's Chief Executive Officer
and for other strategic positions;
(iii) Review and approval pursuant to
Paragraph 13.14 any material changes in, or termination of, medical services
provided by the Hospital Business;
(iv) Participation in the review of capital
and operating budgets and facility planning for the Hospital Business, including
the New Facility;
(v) Fostering community relationships and
identifying service and education opportunities;
(vi) Review reports of patient, employee and
physician satisfaction;
(vii) Approving new charity care policies
pursuant to Paragraph 13.13;
(viii) Adopting procedural rules relative to
the conduct of the Advisory Board meetings.
(c) The Parties acknowledge that the primary purpose
of this Paragraph 13.12 is to ensure community input and, to the degree herein
provided, direction on health care in Elko County. Accordingly, Buyer also
agrees to consult with the Advisory Board prior to any direct or indirect
involvement in or operation of any clinic or health facility in Elko County
other than the Hospital or the New Facility. The Advisory Board shall be
convened for at least six (6) meetings per year of which at least two meetings
will be open to the general public to attend and have an opportunity to comment;
regular meetings shall be convened by Buyer and if not timely convened by Buyer,
or in the event it is reasonably believed that a need exists for a special
meeting, then the chair of the Advisory Board or 3 members of the Advisory Board
may convene a meeting, provided, that the number of Advisory Board meetings
shall not be unreasonably excessive. Notice of the meetings open to the public
shall be posted conspicuously at the Hospital at least five (5) days in advance
of the meeting. Buyer shall provide the Advisory Board, subject to reasonable
restrictions on confidentiality so as not to disadvantage the Hospital
competitively, a copy of annual financial statements for the Hospital Business.
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13.13 CHARITY AND INDIGENT CARE POLICIES
After the Closing and for so long as Buyer owns and
operates the Hospital Business (including the New Facility), Buyer shall comply
with the Nevada Transfer Law and shall cause the Hospital (or New Facility) to
adopt and maintain as its policies concerning charity and indigent care, the
policies set forth in Schedule 13.13 (or new policies approved by the Advisory
Board that provide an equivalent or greater benefit to the local community), and
Buyer shall continue to apply such policies in a similar manner as heretofore
applied by Seller. Consistent with such policies and Nevada Transfer Law, Buyer
shall not charge Elko County an amount in excess of the actual cost of providing
such indigent care and agrees to receive any person falling sick or maimed
within Elko County. In addition, Hospital and New Facility shall qualify for
participation in the Medicare and Medicaid programs as well as initiate outreach
programs to promote the wellness of the poor in Elko County and to maintain and
enhance other community benefits provided by the Hospital.
13.14 CONTINUATION AND EXPANSION OF SERVICES
Following the Closing, Buyer will operate the
Hospital (including New Facility) as a community-based, general acute care
facility and use best efforts to maintain JCAHO accreditation (or other
accreditation status which provides deemed provider status under the
Medicare/Medicaid programs) and Medicare/Medicaid provider status. Services of
Hospital (and New Facility) shall be available to all persons regardless of
race, religion, national origin, social or economic standing or financial
circumstances. Unless otherwise approved in writing by the Advisory Board, Buyer
agrees to use all reasonable commercial efforts to continue to provide, in all
material respects, at least the same level and percentage of inpatient and
outpatient services offered by the Hospital Business as of the date of this
Agreement. As part of its obligation to maintain the services now offered by
Seller, subject to the qualifications and conditions set forth in the preceding
sentence, Buyer shall continue to support the services set forth on Schedule
13.14, consistent with the past policies and practices of Seller. The approval
rights granted to the Advisory Board in this Paragraph 13.14 are conditioned
upon the Advisory Board not unreasonably withholding approval for reasonable
changes requested by Buyer, taking into account all circumstances, including
changes in community needs and in Laws enacted after the Closing Date and the
financial impact of such changes upon the Hospital Business.
13.15 MEDICAL STAFF BYLAWS
Buyer hereby adopts as the Medical Staff Bylaws for
the Hospital, effective as of the Closing, the Medical Staff Bylaws in effect on
the Closing Date and hereby extends to the Medical Staff of the Hospital as of
the Closing Date, the same medical staff privileges and membership status they
enjoyed on the Closing Date, subject to any existing peer review or other
proceedings.
13.16 NEW FACILITY; CAPITAL COMMITMENT
Within the three year period following the Closing,
Buyer shall, at its sole cost and expense, use best efforts to acquire, develop,
construct, market and operate the New Facility, consistent with the requirements
set forth in Schedule 13.16 and the Capital Construction Agreement
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attached hereto as Exhibit 13.16. In this regard, Buyer agrees to spend at least
$30 million to develop, construct and complete the New Facility within 36 months
of the Closing Date, and to use its best efforts to cause the development and
construction of a medical office building on the campus of the New Facility and
to negotiate in good faith with the County to assure the County is able to meet
its obligations under NRS 450.470. Buyer shall promptly make appropriate filings
to obtain a Certificate of Need for the New Facility consistent with the
requirements forth in Schedule 13.16, but in no event later than 180 days after
the Closing Date.
13.17 RIGHT OF FIRST REFUSAL; PURCHASE OPTION
(a) Right of First Refusal
(i) Notice. If, after the Closing, Buyer receives an
offer from, or desires to enter into an agreement with, a Person to acquire all
or any material part of the Hospital Business (whether by means of a sale of
stock or merger of an entity owning all or a material part of the assets
comprising the Hospital Business, a sale or lease of all or a material part of
the assets comprising the Hospital Business or other similar transaction) or to
acquire or lease the Real Property (whether before or after Hospital services
have been transferred to the New Facility), and Buyer desires to transfer the
Hospital Business and/or the Real Property to such Person, Buyer shall not
accept such offer or enter into such agreement (unless such offer or agreement
is conditioned on Buyer's compliance with the provisions of this Paragraph), or
complete such disposition to such Person, unless such proposed disposition is a
Bona Fide Offer, in which event Buyer shall give Seller written notice of such
Bona Fide Offer and proceed as provided below. For purposes hereof, the Hospital
Business shall include the activity or business conducted at the Hospital and/or
at the New Facility. The notice of Bona Fide Offer shall contain the following:
(A) A description of the securities or of
the assets and properties that Buyer intends to transfer (the "Offered Assets");
(B) A statement indicating the identity and
address of the proposed purchaser (the "Proposed Purchaser");
(C) A statement indicating the proposed
purchase price (the "Proposed Price") and the other material terms and
conditions of the proposed transfer (the "Proposed Terms"); and
(D) An offer (the "Offer") to sell the
Offered Assets to Seller at the Proposed Price of the Bona Fide Offer on the
Proposed Terms.
(ii) Procedures
(A) Seller shall have one hundred twenty
(120) days after delivery of the notice of Bona Fide Offer in which to accept or
reject the Offer. Such acceptance shall be in writing and must be received by
Buyer prior to the expiration of such 120 day period. If Seller does not accept
the Offer within such 120 day period, Seller shall be deemed to have rejected
the Offer, and Buyer thereupon shall be free, for a period of 12 months
following the expiration of such 120 day period, to transfer the Offered Assets
to the Proposed Purchaser at the Proposed Price and on the
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Proposed Terms. If the Offered Assets are not so transferred within said 12
month period, or if there is any material change in the Proposed Purchaser, the
Proposed Price or the Proposed Terms, then the assets of the Hospital Business
and the Real Property shall again be subject to the provisions of Paragraph
13.17(a).
(B) If Seller accepts the Offer within the
120 day period hereinabove provided, Buyer and Seller shall use their reasonable
efforts to consummate the sale of the Offered Assets to Seller at the Proposed
Price and on the Proposed Terms as soon as practicable thereafter. If Seller
does not complete the purchase of the Offered Assets within one hundred twenty
(120) days after the date of its acceptance of the Offer, and provided Buyer is
not in default of any of its obligations with respect to Seller and the
consummation of the sale failed to occur solely due to the acts or omissions of
Seller and through no fault of Buyer, all rights of Seller to acquire the
Offered Assets, and the requirements of this Paragraph 13.17 applicable to the
Hospital Business, automatically shall terminate and be of no further force or
effect, and Buyer thereafter shall be free to sell or lease any or all of the
assets comprising the Hospital Business or Real Property, as the case may be;
provided, however, if Seller is diligently proceeding within financing of the
purchase price, the period can be extended for up to 120 additional days with
the consent of Buyer.
(C) If Buyer proposes to sell the Offered
Assets for a consideration consisting, in whole or in part, of property other
than cash or cash equivalents, then the Purchase Price to be paid by Seller for
the Offered Assets shall be equal to the fair market value of such non-cash
consideration, plus the amount of any cash consideration, and the full amount of
the Purchase Price shall be payable in cash by Seller at the closing of the sale
of the Offered Assets.
(iii) Permitted Transfers. Anything herein to the
contrary notwithstanding, the provisions of this Paragraph 13.17(a) shall not
apply to any transaction (whether or not for value) with respect to any or all
of the Hospital Business, or any of the assets thereof, (i) entered into by
Buyer with any one or more of Buyer's Affiliates, or (ii) pursuant to which (A)
there is a change of control of Buyer or (B) all or substantially all of Buyer's
assets are sold; provided, however, Buyer and such Affiliate, in respect of (i)
above, and any surviving entity, successor to Buyer or transferee of Buyer's
assets, in respect of (ii) above, shall be required to agree to be bound to the
same extent as Buyer hereunder by the terms of this Agreement which survive the
Closing, including without limitation this Paragraph 13.17.
(b) Option to Purchase. In the event Hospital
(including New Facility) (i) loses its license to operate as a general acute
care hospital under Nevada Law, or (ii) Buyer ceases to operate or determines to
cease to operate Hospital as general acute care hospital, or (iii) loses its
Medicare or Medicaid provider status (each, of the foregoing subparagraphs (i)
through (iii) shall constitute a "Trigger Event"), it shall promptly notify
Seller of such and Seller shall have an option to purchase the Hospital, in its
sole election, at the then Appraised Value, all as set forth below. With respect
to a Trigger Event specified in subparagraph (i) above, Buyer shall have 60 days
to fully restore its license (subject to extension, upon Seller's consent, to
120 days), as long as Buyer is exercising diligent and sustained efforts to
restore the license and to otherwise provide or arrange for the provision of
hospital services to patients in Elko County. With respect to the Trigger Event
specified in subparagraph (iii), Buyer shall have 6 months to fully restore such
provider status (subject to extension, upon Seller's consent, to 12 months) as
long as Buyer is exercising diligent and sustained efforts to restore the status
and is providing hospital services so that no patient is required
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to pay any amount which they would not have otherwise been required to pay if
such provider status had not been lost. Seller's purchase option shall be
exercisable within a 90 day period following its receipt of notice of a Trigger
Event (or 90 days after expiration of the cure period, if applicable). If Seller
exercises such option, Seller shall have 150 days after exercise of its option
to pay the Appraised Value. During the period between Seller's exercise of its
purchase option and the closing thereof, Seller has the right to have a third
party manage the Hospital and Buyer will cooperate fully in such operation of
the Hospital. Notice by Buyer to Seller of a Trigger Event is not a condition
precedent to Seller's exercise of its option hereunder if a Trigger Event
actually occurs.
(c) Miscellaneous. The provisions of this Paragraph
13.17 are in addition to, and do not supersede, Seller's reversion rights under
the Nevada Transfer Law, where applicable. The parties agree that a memorandum
of this Paragraph 13.17 may be filed of record by Seller with the real property
records of Elko County with respect to real property comprising the Hospital
Business (including New Facility). To the extent that the rule against
perpetuities is applicable thereto, but not otherwise, it is agreed that the
rights and options granted in this Paragraph shall expire upon the date that is
ninety (90) years after the date of this Agreement.
13.18 ▇▇▇▇ ▇▇▇▇▇▇
From and after Closing, Buyer shall continue to
satisfy Seller and Hospital's obligations, as represented in Paragraph 5.17, to
provide community service under 42 C.F.R. 124, Subpart G.
13.19 DISPROPORTIONATE SHARE PAYMENTS
As a part of the conveyance of the Dispro Payments,
as a part of the Transferred Assets, to Buyer by Seller, (1) the Dispro Payments
Promissory Note shall be payable in twelve (12) equal monthly installments
commencing July 1, 1998, (2) contingent on receipt of timely payments under the
Dispro Payment Promissory Note, Seller shall make intergovernmental transfer
payments to the State of Nevada in the total amount of $1,500,000 in twelve (12)
equal consecutive monthly installments, commencing July 1, 1998 and (3) Seller
and Buyer agree to use reasonable best efforts in the collection and delivery to
Buyer of the Dispro Payments. Seller and Buyer have agreed that Seller is
conveying its right, title and interest in and to the Dispro Payments, and Buyer
is executing and delivering the Dispro Payments Promissory Note, conditioned
upon Buyer and Seller receiving reasonably satisfactory evidence, on or prior to
June 30, 1998 that such conveyance of the Dispro Payments by Buyer, Seller's
purchase thereof and the terms and conditions of any additional instruments or
agreements necessary to effect such conveyance, are in compliance with
applicable federal and Nevada law and are binding and enforceable. If Seller and
Buyer are unable to reach agreement on or before June 30, 1998 that such
arrangement is in compliance with law, upon notice by either Seller or Buyer to
the other so stating, both the conveyance of the Dispro Payments and the Dispro
Payments Promissory Note shall be null, void and of no further force and effect
and neither Seller nor Buyer shall have any further obligation or liability one
to the other in that regard.
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14. SURVIVAL; LIMITATIONS
Notwithstanding any investigation made by Seller or Buyer, the
representations and warranties made by the Parties shall survive the Closing for
one year after the Closing; provided however, Seller's representations and
warranties pursuant to Paragraph 5.17 ("▇▇▇▇-▇▇▇▇▇▇"), 5.18 ("Taxes"), 5.19
("Employee Benefits"), and 5.22 ("Title to Personal Property") shall survive the
Closing for the applicable statutory period of limitation. Notwithstanding the
foregoing, the covenants made by the Parties in Section 13 survive the Closing
for the periods stated therein or the applicable statutory period of
limitations, whichever is longer; provided, however, the rights of a Party to be
defended, indemnified or held harmless pursuant to the provisions of Paragraph
3.3 in respect of a breach of a representation or warranty made herein shall
expire, with respect to Claims not asserted before such time, upon the
expiration of such representation and warranty as provided in this Paragraph 14.
Notwithstanding anything to the contrary contained herein, no claim by reason of
a breach of a representation or warranty of either party hereunder shall be made
until the aggregate amount of losses resulting for such claims shall exceed
$30,000.
15. REMEDIES
(a) Buyer hereby agrees that a breach of the covenants
contained in Paragraphs 13.12, 13.13, 13.14, 13.15, 13.16, 13.17 and 13.18 will
result in irreparable harm and damage to Seller which cannot be adequately
compensated for by a monetary award and that, in addition to all other remedies
available in law or in equity, Seller and its successors and assigns shall be
entitled to the remedy of a temporary restraining order, preliminary injunction
or such other form of injunctive or equitable relief as may be issued by a court
of competent jurisdiction to restrain or enjoin Buyer and its Affiliates from
breaching the provisions of the Paragraphs referenced in this sentence or
otherwise to specifically enforce the provisions of the Paragraphs referenced in
this sentence.
(b) No remedy conferred by any of the specific provisions of
this Agreement or such Related Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of any one or more
remedies by a Party shall not, except as otherwise expressly provided for
herein, constitute a waiver of the right to pursue other available remedies.
(c) From and after the Closing, if any Party hereto shall fail
or refuse to perform any material term condition, obligation or covenant hereof
which is operative after the Closing, such failure or refusal shall be regarded
an "Event of Default." After an Event of Default occurs, the non-defaulting
party may, at its option, give the defaulting party notice of the Event of
Default setting forth what the Event of Default is and how it may be remedied.
Such notice shall be sent as provided in Paragraph 17.1. The defaulting party
shall have ten (10) days from the date the notice is received to remedy the
Event of Default and, if such Event of Default will is not remedied within such
period, the party giving the notice of default may institute such proceedings
and pursue such remedies as may exist at law or in equity.
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16. TERMINATION PRIOR TO CLOSING
16.1 TERMINATION UPON CERTAIN EVENTS
Either Buyer or Seller may, at or prior to the time
set for Closing, terminate this Agreement under any one of the following
circumstances:
(a) If at the time for Closing (i) a bona fide action
or proceeding shall be pending against any Party wherein an unfavorable
judgment, decree or order would prevent or make unlawful the carrying out of the
transactions contemplated by this Agreement, or (ii) any governmental agency
shall have notified any Party that the consummation of the transactions
contemplated by this Agreement would constitute a violation of the Laws of any
jurisdiction and that it has commenced or intends to commence proceedings to
restrain the consummation of the transactions contemplated hereunder, and such
agency has not withdrawn such notice prior to such termination; or
(b) The mutual written agreement of Seller and
Buyer; or
(c) By Seller, upon written notice to Buyer, if the
conditions of this Agreement to be complied with or performed by Buyer at or
before the Closing shall not have been complied with or performed on or before
the date specified for the Closing in Paragraph 11 (or such later date upon
which the Parties shall mutually agree), and such noncompliance or
nonperformance shall not have been waived by Seller; or
(d) By Buyer, upon written notice to Seller, if the
conditions of this Agreement to be complied with or performed by Seller at or
before the Closing shall not have been complied with or performed on or before
the date specified for the Closing in Paragraph 11 (or such later date upon
which the Parties shall mutually agree), and such noncompliance or
nonperformance shall not have been waived by Buyer;
(e) By the non-breaching Party, in the event either
Seller or Buyer commits a material breach of this Agreement;
(f) [intentionally left blank]
(g) If for any reason the Closing shall not have
occurred on or before 60 days after the Agreement Date.
16.2 EFFECT OF TERMINATION
If there has been a termination under Paragraph 16.1,
then this Agreement shall be deemed terminated, and all further obligations of
the Parties hereunder shall terminate, except that those obligations set forth
in the Confidentiality Agreement and Paragraphs 5.11, 7.8, 16.3 and 17.9(a)
hereof.
16.3 LIQUIDATED DAMAGES
In the event this Agreement is terminated by either
Party pursuant to Paragraph 16.1(e), the Parties agree that the damages that
would result from such a material breach hereof would be extremely difficult to
determine in that both Parties are entering into this Agreement in the belief
that consummation of this transaction will bring both tangible and intangible
benefits to them and their respective constituencies and owners. Therefore, the
Parties agree that in the event of a
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termination of this Agreement by a Party pursuant to Paragraph 16.1(e), the
breaching Party shall pay to the non-breaching party the sum of One Million
Dollars ($1,000,000) as liquidated damages and not as a penalty which shall be
the sole and exclusive remedy for a breach hereof which results in a failure to
Close.
17. GENERAL PROVISIONS
17.1 NOTICES
All notices, requests, demands, waivers, consents and
other communications hereunder shall be in writing, shall be delivered either in
person, by telegraphic, facsimile or other electronic means, by commercial
courier or by mail, and shall be deemed to have been duly given and to have
become effective (a) upon receipt if delivered in person or by telegraphic,
facsimile or other electronic means calculated to arrive on any Business Day
prior to 6:00 p.m. local time at the address of the addressee, or on the next
succeeding Business Day if delivered on a non-business day or after 6:00 p.m.
local time, (b) one (1) Business Day after having been delivered to an air
courier for overnight delivery, or (c) three (3) Business Days after having been
deposited in the mails as certified or registered mail, return receipt
requested, all fees prepaid, directed to the Parties or their assignees at the
following addresses (or at such other address as shall be given in writing by a
Party):
If to Buyer, addressed to:
PROVINCE HEALTHCARE COMPANY
Mr. ▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice-President
Acquisitions and Development
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a simultaneous copy to counsel for Buyer:
▇▇▇▇▇▇ ▇. ▇▇▇▇ III, Esq.
General Counsel
Province Healthcare Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Seller, addressed to:
ELKO COUNTY
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Cash A. Minor, Chief Financial Officer
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
with a simultaneous copy to counsel for Seller:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Elko County Chief Civil Deputy
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇. ▇. (▇▇▇▇) ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
17.2 FORM OF INSTRUMENTS
To the extent that a form of any document to be
delivered hereunder is not included herein, such document shall be in form and
substance, and shall be executed and delivered in a manner, reasonably
satisfactory to the recipient thereof and consistent with the provisions of this
Agreement.
17.3 ATTORNEYS' FEES
In any litigation or other proceeding relating to
this Agreement or any Related Agreement, or any transactions contemplated herein
or therein, the prevailing party shall be entitled to recover its costs and
reasonable attorneys' fees.
17.4 TIME IS OF THE ESSENCE
(a) Time is hereby expressly made of the essence with
respect to each and every term and provision of this Agreement and any Related
Agreement. The Parties acknowledge that each will be relying upon the timely
performance by the other of its obligations hereunder and thereunder as a
material inducement to each Party's execution of this Agreement and each Related
Agreement. Consequently, the Parties agree that they are bound strictly by the
provisions concerning timely performance of their respective obligations
contained in this Agreement and each Related Agreement, and that if any attempt
is made by either Party to perform an obligation required to be performed, or to
comply with a provision of this Agreement or any Related Agreement required to
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be complied with, in a manner other than in strict compliance with the time
period applicable thereto, even if such purported attempt is but one day late,
then such purported attempt at performance or compliance shall be deemed a
violation of this Paragraph 17.4, shall be deemed in contravention of the
intention of the Parties, shall be null and void and of no force or effect and
shall constitute such Party's material default under this Agreement or such
Related Agreement.
(b) Notwithstanding the foregoing, in the event that
any action or performance shall be due hereunder or under any Related Agreement
on a Saturday, Sunday or any legal holiday for banks in the jurisdiction in
which such action or performance is due or where the Party required to provide
the same is located, the time for such performance shall automatically be
extended until the end of the next Business Day.
17.5 SUCCESSORS AND ASSIGNS
(a) Restrictions on Assignment. Subject to Paragraph
17.5(b), the rights and obligations hereunder shall not be assignable or
delegable by either party without the prior written consent of the other.
(b) Buyer's Limited Right to Assign. Prior to the
Closing Date, Buyer, may assign any or all of its rights and obligations with
respect to the Hospital Business, the Transferred Assets and the Assumed
Obligations to one or more corporations, partnerships, limited liability
companies or any other Persons which are not individuals in which Buyer and its
Affiliates hold all of the voting stock, partnership interests, membership
interests or other ownership interests ("Buyer's Subsidiary"), provided that no
such assignment shall relieve Buyer of any obligation or liability to Seller
hereunder, and provided further that the following shall apply:
(i) Buyer shall provide Seller of prompt
written notice of any such assignment, together with a copy of the written
assignment, which assignment shall contain the provisions described in clauses
(ii), (iii), and (iv) below.
(ii) No such assignment shall be effected if
the making of the assignment will result in Buyer's inability to obtain, or
Buyer's increased difficulty in obtaining, any consent, approval or
authorization required by Paragraph 9.4 or any Permit required by Paragraph 9.5,
or in Buyer's inability to obtain, or increased difficulty in obtaining, any
consent, approval or authorization required by Paragraph 6.4, and any such
attempted assignment shall be void and of no force or effect.
(iii) Buyer's Subsidiary shall irrevocably
appoint Buyer as its sole and exclusive representative and agent authorized to
act for and to receive notices and payments on its behalf in all matters arising
from or related to this Agreement.
(iv) Buyer shall remain jointly and
severally liable to Seller and to third parties with respect to any Assumed
Obligations transferred to Buyer's Subsidiary and the obligations of Buyer
hereunder including without limitation, those set forth in Paragraph 13.
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17.6 COUNTERPARTS
This Agreement and each of the Related Agreements may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
17.7 CAPTIONS AND PARAGRAPH HEADINGS
Captions and paragraph headings used herein or in any
Related Agreement are for convenience only and are not a part of this Agreement
or such Related Agreement and shall not be used in construing it.
17.8 ENTIRETY OF AGREEMENT, AMENDMENTS
This Agreement (including the Schedules and
Disclosure Memorandum) and the Related Agreements and other documents and
instruments specifically provided for in this Agreement contain the entire
understanding between the Parties concerning the subject matter of this
Agreement and such other documents and instruments and, except as expressly
provided for herein, supersede all prior understandings and agreements, whether
oral or written, between them with respect to the subject matter hereof and
thereof. Notwithstanding the foregoing, the provisions in Section B of the
Confidentiality Agreement shall continue to be operative as specified therein.
There are no representations, warranties, agreements, arrangements or
understandings, oral or written, between the Parties hereto relating to the
subject matter of this Agreement and such other documents and instruments which
are not fully expressed herein or therein. This Agreement and each of the
Related Agreements may be amended or modified only by an agreement in writing
signed by all of the Parties hereto.
17.9 EXPENSES; PRORATIONS
(a) Except as expressly provided herein, each Party
shall bear and pay its own costs and expenses relating to the transactions
contemplated by, or the performance of or compliance with any condition or
covenant set forth in, this Agreement. In determining the costs and expenses of
each Party hereunder, the following rules shall apply: (i) all costs of the
Preliminary Title Reports, the Title Policy and any survey shall be borne by
Buyer and all costs of the Inspection (except the Phase I Assessment, which has
been paid by Seller) shall be paid by Buyer; (ii) any excise or sales tax with
respect to the sale of the Transferred Assets shall be borne by Buyer; (iii) all
documentary and other transfer taxes and recording fees shall be borne by Buyer;
(iv) the cost and expense of Accounting Firm shall be borne equally by Buyer and
Seller; (v) all filing fees payable in connection with submissions to
governmental agencies relating to the approval of the transactions contemplated
hereby shall be paid by the Party filing the same; and (vi) all other costs,
charges and expenses shall, except as otherwise provided in this Agreement, be
allocated between Buyer and Seller in accordance with the customs of Elko
County.
(b) All normal and customarily proratable items,
including taxes and utility bills, shall be prorated as of the Closing Date. The
actual amounts will not be known as of the Closing Date; therefore, prorations
shall be made on the basis of the Estimated Statement and will be settled in the
context of the calculation of the Final Report pursuant to Section 2.2;
provided, however, Buyer shall be solely responsible for all real estate and
property taxes on the Transferred Assets which become due or assessed by reason
of Buyer's ownership thereof.
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17.10 CONSTRUCTION
This Agreement, the Related Agreements and any other
documents or instruments delivered pursuant hereto shall be construed without
regard to the identity of the Person who drafted the various provisions of the
same. Each and every provision of this Agreement, the Related Agreements and
such other documents and instruments shall be construed as though the Parties
participated equally in the drafting of the same. Consequently, the Parties
acknowledge and agree that any rule of construction that a document is to be
construed against the drafting party shall not be applicable to this Agreement,
the Related Agreements or such other documents and instruments.
17.11 WAIVER
Except as provided herein, the failure of any Party
to insist, in any one or more instances, on performance of any of the terms,
covenants and conditions of this Agreement or any Related Agreement shall not be
construed as a waiver or relinquishment of any rights granted hereunder or
thereunder or of the future performance of any such term, covenant or condition,
but the obligations of the Parties with respect thereto shall continue in full
force and effect. No waiver of any provision or condition of this Agreement or
any Related Agreement by any Party shall be valid unless in writing and signed
by such Party or operational by the terms of this Agreement or such Related
Agreement. A waiver by one Party of the performance of any covenant, condition,
representation or warranty of the other Party shall not invalidate this
Agreement, nor shall such waiver be construed as a waiver of any other covenant,
condition, representation or warranty. A waiver by any Party of the time for
performing any act shall not constitute a waiver of the time for performing any
other act or the time for performing an identical act required to be performed
at a later time.
17.12 SEVERABILITY
If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of the Buyer or Seller under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof; (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the legal, invalid or unenforceable provision or by its
severance herefrom; and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible. It is the express intent
of the Parties that the provisions of this Agreement and Related Agreements
satisfy the conditions of the Nevada Transfer Law, and Buyer agrees to own and
operate the Hospital and New Facility in a manner consistent therewith.
17.13 CERTAIN DEFINITIONS
(a) Use of Defined Terms. For purposes of this
Agreement, and the Related Agreements except as may be otherwise expressly
stated therein, the following terms shall have the following meanings:
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"Affiliate" of a specified Person shall mean any
other Person which directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with the Person specified.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person.
"Appraised Value" shall mean the fair market value as
determined by an independent, MAI appraiser. If the two parties cannot agree as
to a single appraiser within 20 days, then each shall appoint a qualified
appraiser within 10 days thereafter and the two appraisers so selected shall
select a third. The cost of the appraisal(s) shall be shared equally by the
parties. The appraised value shall be the middle value of the three appraisers
in the event a panel is convened.
"Bona Fide Offer" shall mean an arm's length offer
made by a Person (a) which is not an Affiliate of Buyer, (b) no member of the
governing board or body of which is an officer, employee or director (or member
of an equivalent governing board or body) of Buyer or an Affiliate of Buyer, (c)
who does not own, directly or indirectly, 5% or more of the capital stock (in
the aggregate if more than one class of stock exists) of Buyer, or an Affiliate
of Buyer (whether as to any one of or in the aggregate for all of Buyer or an
Affiliate of Buyer) and (d) which has the demonstrable ability, financially and
in operational capability, to perform the obligations placed on Buyer under this
Agreement.
"Business Day" shall mean any day other than
Saturday, Sunday or any other day on which banking institutions in Elko, Nevada
are required or authorized by law to suspend operations.
"COBRA" shall mean 29 U.S.C. ▇▇.▇▇. 1161 through
1169, 42 U.S.C. ▇▇.▇▇. 300bb-1 et. seq., and Internal Revenue Code ss. 4980B.
"Cost Report Receivables" shall mean Medicare,
Medicaid and CHAMPUS receivables net of related payables relating to the
settlement of cost reports of Seller for periods ending on or prior to the
Closing Date, including depreciation "recapture" (gain or loss) herein,
including, without limitation, recapture of previously reimbursed depreciation
or their expenses.
"Disclosure Memorandum" shall mean that certain
memorandum attached hereto and incorporated herein.
"Environmental Regulations" shall mean all Laws and
all policies and guidelines relating to the use, handling, treatment, storage,
transportation or Release of Hazardous Materials or otherwise relating to the
protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) or industrial
hygiene.
"Hazardous Materials" shall mean any substance,
material or waste which is now or any time in the future listed, identified or
defined in or pursuant to any Law as "hazardous substances", "hazardous waste",
"toxic substances", "toxic pollutant", "infectious waste" or similarly
identified substances, materials or mixtures (including, without limitation,
medical wastes, asbestos in any form, formaldehyde, radon, radioactive
substances, hydrocarbons, petroleum, gasoline, crude oil or any products,
by-products or fractions thereof, polychlorinated biphenyls, industrial
solvents, flammables, or explosives) or which is either now or anytime in the
future: (i) potentially injurious
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to the public health, safety or welfare or to the environment, (ii) potentially
injurious to, or may impair the value or beneficial use of, the Real Property
(or any improvements thereon), (iii) regulated or monitored by, or required to
be remediated at the behest of, any governmental agency, or (iv) a basis for a
claim or liability of any owner or operator of the Real Property to any Person
under any applicable Law (including the Environmental Regulations).
"HIPAA" shall mean the 1996 Health Insurance
Portability and Accountability Act, including 29 U.S.C. ▇▇.▇▇. 1181 through
1191c, 26 U.S.C. ▇▇.▇▇. 9801 through 9806, and 26 U.S.C. ss. 4980D.
"Knowledge" or "knowledge", or "known" with respect
to Seller, shall mean information actually known by those persons listed on
Schedule 17.13 after due inquiry thereof.
"Laws" shall mean the common law and all statutes,
rules, regulations, ordinances, orders, codes, permits, licenses, policies,
guidelines and agreements with or of any federal, state, local or foreign
governmental or regulatory authorities (including, without limiting the
generality of the foregoing, any of the same which terminates, disqualifies or
otherwise adversely affects a Person's (including any Party) reimbursement or
right to payment from, or participation with, any Payor, including without
limitation the ▇▇▇▇▇ Law (42 U.S.C. ▇▇.▇▇. 1395nn and 1396b), the Medicare and
Medicaid Anti-Kickback Statute (42 U.S.C. ss. 1320a-7b(b)), the False Claims Act
(including 31 U.S.C. ▇▇.▇▇. 3729 et. seq. and 18 U.S.C. ▇▇.▇▇. 371, 666, 3013
and 3571), NRS 439B.420-430 and prohibitions against fee splitting, together
with all amendments thereto) or any applicable accreditation agencies
(including, but not limited to, JCAHO), and any order, writ, injunction or
decree issued by any court, arbitrator or governmental agency or in connection
with any judicial, administrative or other non-judicial proceeding (including,
without limitation, arbitration or reference). Laws shall include those Laws now
or hereafter in effect.
"Liens" shall mean all liens, encumbrances (including
security interests of any kind whatsoever), covenants, conditions, restrictions,
easements, encroachments, rights of way, charges or other rights, options,
claims or interests of any third party whatsoever.
"Material Adverse Effect" shall mean (a) with respect
to Seller or Buyer, a change in the business, results of operations, prospects,
financial condition or liabilities thereof that is (individually or in the
aggregate), or may reasonably be expected to be, material and adverse to Seller
or to Buyer and its Affiliates taken as a whole, as the case may be, or (b) with
respect to the Transferred Assets, a change in the value, condition or use
thereof that (individually or in the aggregate) is, or may reasonably be
expected to be, material and adverse to the Transferred Assets taken as a whole;
provided, however, for all purposes of this Agreement, any actual or prospective
change or changes resulting from changes in financial or market conditions,
general economic conditions or economic, market or regulatory changes affecting
the healthcare industry shall not constitute a Material Adverse Effect.
"Medicare Receivables" shall mean any and all
Receivables due from Medicare, Medicaid or CHAMPUS, (excluding Cost Report
Receivables) or any other Receivable, the assignment of which is either
prohibited by Law or by the terms of any contract with a Payor, and including
all deductibles and co-insurance payments receivable from the patient or other
Payor.
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"Net Working Capital" shall mean the book value of
the Receivables Purchased Inventory (as determined pursuant to Paragraph
2.2(b)), Prepaids, and other current assets of the Hospital Business (excluding
the Retained Assets), less the Accrued Operating Expenses calculated consistent
with the Financial Statements and in accordance with GAAP. Net Working Capital
shall exclude capital lease obligations.
"Nevada Transfer Law" shall mean Nevada Revised
Statutes 450.490.
"New Facility" shall mean that certain 75 bed general
acute care hospital to be constructed after the Closing by Buyer in Elko,
Nevada, as provided in Paragraph 13.16.
"Payor" shall mean Medicare, Medicaid, CHAMPUS and
medically indigent assistance programs, Blue Cross, Blue Shield or any other
third party payor or third party administrator (including an insurance company,
a health maintenance organization, preferred provider organization, employee
welfare benefit plan trust, or any other managed care organization) or any
fiscal intermediary or carrier of any of the foregoing.
"Permitted Exceptions" shall mean such exceptions as
set forth in the preliminary title commitment, agreed to by Buyer as of the
Closing.
"Person" shall mean any individual, partnership,
corporation, limited liability company, trust, unincorporated association, joint
venture or any other legal entity of any kind whatsoever, whether for profit or
not for profit, and any governmental agency.
"Plans" or "Plan" shall mean each plan, program or
arrangement providing for compensation, severance, fringe benefits, or other
employee benefits of any kind, including an "employee benefit plan" within the
meaning of Section 3(3) of ERISA and any "multiemployer plan" within the meaning
of Sections 3(37) or 4001(a)(3) of ERISA, which covers employees of the Hospital
Business.
"Proprietary Documents" shall mean any documents of
Seller not customarily used by Seller or Hospital in the ordinary course of
operating the Hospital Business.
"Reasonable Commercial Efforts" or "Reasonable
Efforts" do not include the provision of any consideration to any third party or
the suffering of any economic detriment to a Party's ongoing operations for the
procurement of any consent, authorization or approval required under this
Agreement except for (i) the costs of gathering and supplying data or other
information or making any filings; (ii) fees and expenses of counsel and
consultants; and (iii) customary fees and charges of governmental authorities
and accreditation organizations.
"Receivables" shall mean all accounts, notes or other
amounts receivable recorded or otherwise accrued by Seller as of the Closing
Date as accounts, notes or other amounts receivable from Payors, patients,
physicians or any other Person (whether or not billed), arising from or in
connection with the operation of the Hospital Business, including (to the extent
not already included) rights to payment for services rendered through the
Closing Date to Straddle Patients, but excluding Cost Report Receivables,
Buyer's share of Straddle Patient Payments pursuant to Paragraph 13.6(b) or any
Transferred Asset described in Paragraph 1.1(k) or (n).
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"Related Agreements" shall mean any and all other
agreements, documents and instruments which may be entered into by and between
or among the Parties under, related to or in connection with this Agreement or
the transactions contemplated hereby, including, without limitation, the
agreements and documents referred to herein or attached hereto as Exhibits.
"Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or as otherwise defined in or pursuant to any
Environmental Regulation.
"Tax Exempt Debt" shall mean those obligations to be
paid by Seller at Closing set forth in Schedule 9.13.
"Taxes" shall mean (i) all federal, state, county and
local income, franchise, sales, use, excise, property, payroll, recordation and
transfer taxes, (ii) all federal, state, county and local taxes, levies, fees,
assessments and surcharges (however designated, including privilege taxes, room
or bed taxes and user fees) which are based on the gross receipts, net operating
revenues or patient days of the Hospital Business, and (iii) any interest,
penalties and additions to tax attributable to any of the foregoing.
(b) Table of Contents for Previously Defined Terms.
The terms listed below are defined elsewhere in this Agreement and, for ease of
reference, the Paragraph containing the definition of each such term is set
forth opposite such term.
Term Paragraph
---- ---------
Accounting Firm 2.2(c)
Accrued Operating Expenses 3.1(c)
Active Employees 13.9
Advisory Board 13.12
Assumed Contracts 3.1(a)
Assumed Obligations 3.1
Business Records 13.2(a)
Buyer's Severance Program 13.9(d)
Buyer's Subsidiary 17.5(a)
Claims 3.3
Closing 11
Confidentiality Agreement 6.2
Contracts 1.1(e)
Destruction Notice 13.2(c)
Disapproved Item 13.7(a)
Dispro Payments 1.1(m)
Dispro Payments Amounts 2.1
Dispro Payments Promissory Note 2.2(c)(iii)
Document Retention Period 13.2(b)
Environmental Survey 8.2
Estimated Statement 2.2
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Term Paragraph
---- ---------
Excluded Liabilities 3.2
Excluded Receivables 1.2(d)
Final Report 2.2(c)
Financial Statements 5.3(a)
Force Majeure 17.20
GAAP 2.2(a)
Hired Employees 13.9(b)
Hospital A
Hospital Business A
Hospital Records 13.2
Inspection 8.2
Inspection Period 9.3
Insurance Policies 5.14
Interim Statements 5.3(a)
Internal Revenue Code 5.12
Inventory 1.1(d)
JCAHO 5.7
Monthly Statements 6.7
Offer 13.17(a)
Offered Assets 13.17(a)
Paid Time Off 3.1(b)
Patient Records 13.2(a)
Permits 5.7
Personal Property 1.1(c)
Phase I Assessment 8.2
Phase II Investigation 8.2
Preliminary Title Reports 8.2
Prepaids 1.1(e)
Prior Years' Statements 5.3(a)
Proposed Price 13.17(a)
Proposed Purchaser 13.17(a)
Proposed Terms 13.17(a)
Purchase Price 2.1
Purchased Inventory 1.1(d)
Real Property 1.1(a)
Real Property Leases 1.1(b)
Retained Assets 1.2
Seller's Severance Program 13.9(d)
Straddle Patients 13.6(b)
Tentative Purchase Price 2.2
Title Company 8.2
Title Policy 9.7
Title Surveys 8.2
Transferred Assets 1.1
Trigger Event 13.17(b)
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17.14 CONSENTS NOT UNREASONABLY WITHHELD
Wherever the consent or approval of any Party is
required under this Agreement or any Related Agreement, such consent or approval
shall not be unreasonably withheld, delayed or conditioned, unless such consent
or approval is expressly stated to be at the sole and absolute discretion of
such Party or is otherwise similarly qualified.
17.15 GOVERNING LAW; VENUE
This Agreement and each Related Agreement shall be
construed and enforced in accordance with the laws of the State of Nevada as
applied between residents of that state entering into contracts to be performed
wholly within the State of Nevada and Buyer hereby consents to jurisdiction in
the State of Nevada. Venue for any action instituted with respect to this
Agreement, Related Agreement or the transactions contemplated hereunder and
thereunder shall lie exclusively in Elko County, Nevada or in the Northern
Division of the U.S. District Court for the District of Nevada.
17.16 TAX AND MEDICARE EFFECT
Neither Party (nor such Party's counsel, accountant
or representatives) has made or is making any representations to the other Party
(nor such Party's legal counsel, accountant or representatives) concerning any
of the Tax or Medicare effects arising by reason of the transactions provided
for in this Agreement or any Related Agreement, as each Party has obtained
independent professional advice with respect thereto and upon which it has
solely relied. Except as otherwise provided in this Agreement, no Party shall be
liable or in any way responsible to any other Party because of any Tax or
Medicare effect resulting from the transactions provided for in this Agreement
or any Related Agreement, and each Party shall be responsible for the payment of
any Tax or Medicare related charge or payment for which it becomes liable by
reason of the consummation of the transactions provided for in this Agreement
and any Related Agreement.
17.17 MISDIRECTED PAYMENTS, ETC.
Seller and Buyer covenant and agree to remit, with
reasonable promptness, to the other, any payments received, which payments are
on or in respect of accounts or notes receivable owned by (or are otherwise
payable to) the other. In addition, and without limitation, in the event of a
determination by Medicare, other Payor or any governmental agency that payments
to Seller or the Hospital resulted in an overpayment or other determination that
funds previously paid by any program or plan to Seller or the Hospital must be
repaid, Seller shall be responsible for repayment of said monies (or defense of
such actions) if such overpayment or other repayment determination was for
services rendered prior to the Closing Date and Buyer shall be responsible for
repayment of said moneys (or defense of such actions) if such overpayment
determined was for services rendered after the Closing Date. In the event that,
following Closing, Buyer suffers any offset against reimbursement under any
program of any Payor due to Buyer relating to amounts owing under any such
program by Seller or any affiliate of Seller, Buyer shall promptly notify Seller
hereof and Seller shall upon written demand from Buyer within ten (10) Business
Days pay to Buyer the amounts so offset.
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17.18 ADDITIONAL ASSURANCES
The provisions of this Agreement shall be
self-operative and shall not require further agreement by the Parties except as
may be herein specifically provided to the contrary; provided, however, at the
request of either Party, the other Party shall execute such additional
instruments and take such additional acts as are reasonably necessary to
effectuate this Agreement as provided in Paragraph 13.1.
17.19 PUBLIC ANNOUNCEMENTS
Neither of the Parties, except as required by Law or
governmental entity, shall issue any press release or other public announcement
related to this Agreement or the transactions contemplated hereby, without
having first obtained the approval of the other Party.
17.20 FORCE MAJEURE
Neither Buyer nor Seller shall be deemed in default
under this Agreement or any Related Agreement if failure to perform is due to
Force Majeure as defined herein. Causes for delay due to Force Majeure shall
excuse performance only during their existence and for such time as reasonably
necessary to recover from such cause or delay. If a party claims any such excuse
for failure or delay, it shall give the other party written notice of the
existence of such cause promptly after the occurrence thereof. The term "Force
Majeure" as used herein shall mean an act of God, strike, lockout, act of public
enemy, war, blockade, civil unrest, earthquake, fire, flood, act of federal,
state or local government (other than enforcement of laws), or other similar
event, which in any case is outside the reasonable control of the party claiming
to be affected and is not a change in market or economic conditions.
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
Buyer:
PROVINCE HEALTHCARE COMPANY
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
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Seller:
BOARD OF ELKO COUNTY COMMISSIONERS
By:
---------------------------------------------
ATTEST:
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