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Exhibit 2.12
ASSET PURCHASE AGREEMENT
among
WEST VIRGINIA UNIVERSITY HOSPITALS, INC.,
PSYCHIATRIC INSTITUTE OF WEST VIRGINIA, INC.
and
RAMSAY HEALTH CARE, INC.
July 2, 1998
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TABLE OF CONTENTS
1. DEFINED TERMS..................................................................................................... 1
2. COVENANTS AND UNDERTAKINGS........................................................................................ 8
2.1 Purchase and Sale of Assets.............................................................................. 8
2.2 Excluded Assets ......................................................................................... 9
2.3 Consideration ........................................................................................... 10
2.4 Allocation of Consideration ............................................................................. 11
2.5 Assumption of Liabilities and Obligations ............................................................... 11
2.6 Working Capital Adjustment .............................................................................. 11
2.7 Patient ▇▇▇▇▇▇▇▇ ........................................................................................ 13
2.8 HSR Act Requirements .................................................................................... 13
2.9 Termination of Certain Agreements ....................................................................... 14
2.10 West Virginia Law Requirements .......................................................................... 14
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER.................................................. 15
3.1 Organization, Standing and Authority .................................................................... 15
3.2 Authorization and Binding Obligation .................................................................... 15
3.3 Absence of Conflicting Agreements ....................................................................... 15
3.4 Title to and Condition of Real Property ................................................................. 16
3.5 Title to and Condition of Personalty .................................................................... 17
3.6 Contracts ............................................................................................... 17
3.7 Consents ................................................................................................ 17
3.8 Trademarks, Trade Names and Copyrights .................................................................. 18
3.9 Licenses ................................................................................................ 18
3.10 Compliance with Laws .................................................................................... 18
3.11 Financial Statements .................................................................................... 19
3.12 Insurance ............................................................................................... 19
3.13 Employee Benefit Plans .................................................................................. 19
3.14 Labor Relations ......................................................................................... 20
3.15 Taxes ................................................................................................... 21
3.16 Claims and Legal Actions ................................................................................ 21
3.17 Environmental Matters ................................................................................... 21
3.18 Reports ................................................................................................. 22
3.19 Conduct of Business in Ordinary Course .................................................................. 23
3.20 Cost Reports ............................................................................................ 23
3.21 Medical Staff............................................................................................ 23
3.22 Medicare/Medicaid Participation and Accreditation Investigations ........................................ 23
3.23 ▇▇▇▇-▇▇▇▇▇▇ Care ........................................................................................ 24
3.24 U.S. Person ............................................................................................. 24
3.25 Full Disclosure ......................................................................................... 24
3.26 Assets .................................................................................................. 24
3.27 Intentionally Omitted ................................................................................... 24
3.28 Personnel ............................................................................................... 24
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4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................................... 25
4.1 Organization, Standing, and Authority ................................................................... 25
4.2 Authorization and Binding Obligation .................................................................... 25
4.3 Absence of Conflicting Agreements ....................................................................... 25
4.4 Consents ................................................................................................ 25
4.5 Litigation; Disputes .................................................................................... 26
4.6 Full Disclosure ......................................................................................... 26
4.7 Financing ............................................................................................... 26
5. PRE-CLOSING COVENANTS OF THE SELLER............................................................................... 26
5.1 Negative Covenants ...................................................................................... 26
5.2 Affirmative Covenants ................................................................................... 27
6. ADDITIONAL COVENANTS.............................................................................................. 29
6.1 Consent ................................................................................................. 29
6.2 Cooperation ............................................................................................. 30
6.3 Taxes, Fees and Expenses ................................................................................ 30
6.4 Brokers ................................................................................................. 30
6.5 Confidentiality ......................................................................................... 30
6.6 Risk of Loss ............................................................................................ 30
6.7 Employee Benefit Matters ................................................................................ 31
6.8 Filing of Cost Reports .................................................................................. 33
6.9 Post-Closing Insurance .................................................................................. 34
6.10 Access to Information ................................................................................... 34
6.11 Environmental Reports ................................................................................... 34
6.12 Non-Competition Covenant ................................................................................ 35
6.13 Information Systems ..................................................................................... 35
6.14 Agreement by the Purchaser Regarding No Other Representations or
Warranties by the Shareholder or the Sellers ............................................................ 36
7. ADDITIONAL COVENANTS OF THE PURCHASER............................................................................. 36
7.1 Resale Certificate ...................................................................................... 36
7.2 Records Relating to Cost Reports ........................................................................ 36
7.3 Books and Records of the Seller ......................................................................... 37
7.4 Consents ................................................................................................ 37
7.5 Purchaser's Efforts to Close ............................................................................ 37
8. CONDITIONS TO CLOSING............................................................................................. 37
8.1 Conditions to Obligations of the Purchaser to Close ..................................................... 37
8.2 Conditions to Obligations of the Seller to Close ........................................................ 39
9. CLOSING AND CLOSING DELIVERIES.................................................................................... 39
9.1 Closing ................................................................................................. 39
9.2 Deliveries by the Seller and the Shareholder ............................................................ 40
9.3 Deliveries by the Purchaser ............................................................................. 41
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10. TERMINATION....................................................................................................... 42
10.1 Method of Termination ................................................................................... 42
10.2 Rights Upon Termination ................................................................................. 42
10.3 Sole and Exclusive Remedy ............................................................................... 43
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.................................................... 43
11.1 Representations and Warranties .......................................................................... 43
11.2 Indemnification of the Purchaser by the Seller and the Shareholder ...................................... 43
11.3 Indemnification of the Seller and the Shareholder by the Purchaser ...................................... 44
11.4 Procedure for Indemnification ........................................................................... 45
11.5 Investigation ........................................................................................... 46
11.6 Limitation on Indemnification Obligations ............................................................... 46
11.7 Intentionally Omitted ................................................................................... 47
11.8 Exclusive Remedy ........................................................................................ 47
12. MISCELLANEOUS..................................................................................................... 47
12.1 Further Assurances ...................................................................................... 47
12.2 Notices ................................................................................................. 47
12.3 Waiver .................................................................................................. 47
12.4 Captions; Partial Invalidity ............................................................................ 47
12.5 Counterparts ............................................................................................ 48
12.6 Variations of Pronouns; Number; Gender .................................................................. 48
12.7 Governing Law; Construction ............................................................................. 48
12.8 Third Parties ........................................................................................... 48
12.9 Entire Agreement ........................................................................................ 48
12.10 Remedies ................................................................................................ 48
12.11 Benefit and Binding Effect .............................................................................. 49
12.12 Dispute Resolution ...................................................................................... 49
12.13 Contact with Employees and Other Persons ................................................................ 49
12.14 Schedules and Exhibits .................................................................................. 49
12.15 Best Efforts ............................................................................................ 50
12.16 Knowledge ............................................................................................... 50
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LIST OF EXHIBITS
2.4 Allocation of Consideration
2.6-1 Base Adjusted Working Capital
2.6-2 Adjusted Working Capital Methodology
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LIST OF SCHEDULES
2.2.11 Certain Excluded Assets
2.5 Certain Assumed Liabilities
3.3 List of Violations
3.4.2 Real Property Leases
3.4.3 Condition of Real Property, Etc.
3.4.4 Real Property Construction, Etc. Agreements
3.5.1 Title to Assets (Other than Real Property)
3.5.2 Condition of Assets (Other than Real Property)
3.6.1 Assumed Contracts
3.6.2 Excluded Contracts
3.7 Consents of Sellers
3.8 Trademarks, Trade Names and Copyrights
3.9 Licenses
3.11 Financial Statements
3.12 Insurance Policies
3.13 Employee Plans and Compensation Arrangements
3.14 Labor Relations
3.16 Claims and Legal Actions
3.17 Environmental Matters
3.19 Changes in Conduct of Business
3.20 Cost Report Audits
3.21 Medical Staff
3.22 Medicare Participation and Accreditation Investigations
3.28 Employee Information
4.4 Consents of Purchaser
6.4 Brokers
6.7.2 Description of Severance Terms
6.7.3 Incidents of Loss of Employment
8.1.5 Material Adverse Changes
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, entered into as of this 2nd day of July,
1998, by and among West Virginia University Hospitals, Inc., a West Virginia
private non-stock, non profit corporation (the "PURCHASER"), Psychiatric
Institute of West Virginia, Inc., a Virginia corporation (the "SELLER"), and
Ramsay Health Care, Inc., a Delaware corporation (the "SHAREHOLDER").
W I T N E S S E T H:
WHEREAS, the Shareholder, through the Seller, owns (subject to the
Ground Lease) and operates a behavioral health care facility in Morgantown, West
Virginia; and
WHEREAS, the Seller desires to sell to the Purchaser and the Purchaser
desires to purchase from the Seller substantially all of the assets used and
useful in the operation of said facility upon the terms and conditions set forth
below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. DEFINED TERMS
The following terms shall have the following meanings in this Agreement
(terms defined in the singular to have the same meanings when used in the plural
and VICE VERSA):
"ACCOUNTS RECEIVABLE" means all accounts receivable of the
Seller as of the Closing Date, including, without limitation, accounts
receivable from the Seller's employees, physicians or other representatives, and
all rights of Seller to payment for goods or services rendered by the Seller
prior to the Closing Date, excluding (i) any and all Cost Report Adjustments and
any and all other rights to payment relating to Cost Report Settlements for
periods ending on or prior to the Closing Date, (ii) any and all Intercompany
Receivables and (iii) the West Virginia Receivable.
"ADJUSTED WORKING CAPITAL" shall have the meaning set forth in
Section 2.6.
"AGREEMENT" means this Asset Purchase Agreement, as it may be
amended, modified, or supplemented from time to time in accordance with its
terms.
"ASSETS" means the tangible and intangible assets owned or
held by the Seller which are to be sold to and purchased by the Purchaser
pursuant to Section 2.1.
"ASSUMED CONTRACTS" means the Contracts which are to be
assigned to and assumed by the Purchaser and which are identified on SCHEDULE
3.6.1 and no others, except those entered into in the ordinary course and with
the consent of the Purchaser, as applicable, as contemplated in Section 5.1.2.
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"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 2.1.
"BASE ADJUSTED WORKING CAPITAL" shall have the meaning set
forth in Section 2.6.
"CHARTER AGREEMENT" shall have the meaning set forth in
Section 8.1.9.(i).
"CLAIMANT" has the meaning set forth in Section 11.4.1.
"CLOSING" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Section 9.
"CLOSING DATE" means the date of the Closing specified in
Section 9.1.
"CLOSING DATE ADJUSTED WORKING CAPITAL" shall have the meaning
set forth in Section 2.6.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder, or any subsequent legislative enactment thereof,
as in effect from time to time.
"COMPENSATION ARRANGEMENT" means any plan or compensation
arrangement other than an Employee Plan, whether written or unwritten, which
provides to employees, former employees, officers, independent contractors,
directors and/or shareholders of the Seller or any entity related to the Seller
(under the terms of Sections 414(b), (c), (m) or (o) of the Code) any
compensation or other benefits, whether deferred or not, in excess of base
salary or wages and excluding overtime pay, excluding Assumed Contracts.
"CONSENTS" means all of the consents or approvals of
government authorities and other third parties necessary to sell, transfer and
assign the Assets to the Purchaser and otherwise to consummate the transactions
contemplated hereby in compliance with all applicable laws, regulations, orders
and decrees.
"CONTRACTS" means all (i) agreements with physicians or
physician groups or other health care professionals, (ii) agreements with
Payors, (iii) leases, (iv) health, liability, theft, fidelity, fire and other
forms of insurance policies or commitments, (v) software licenses, (vi)
employment agreements, collective bargaining and trade agreements, (vii) barter
agreements and (viii) other agreements, written or oral (including any
amendments and other modifications thereto), relating to the Facility to which
the Seller is a party or which are binding upon the Seller or affect the Assets
or the business or operations of the Seller relating to the Facility, together
with all advances, deposits and prepaid items related thereto, which are in
effect on the date hereof or are entered into by the Seller in the ordinary
course of business between the date hereof and the Closing Date.
"COST REPORT" means the cost report required to be filed, as
of the end of a provider cost year or for any other required period, including,
without limitation, a terminating cost report, with cost-based Payors with
respect to cost reimbursement.
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"COST REPORT ADJUSTMENTS" shall have the meaning set forth in
Section 6.8.
"COST REPORT SETTLEMENTS" means the right, title and interest
of the Seller in amounts due from Medicare, any state under any state cost-based
programs or from any fiscal intermediary or other Payor in connection with the
resolution of disputes or adjustments relating to Cost Reports filed for periods
ending on or prior to the Closing Date, including initial settlements as well as
reopenings of previously settled Cost Reports, but does not include any amounts
included in Accounts Receivable.
"COVERED LIVES" has the meaning set forth in Section 2.7.1.
"DEFICIENCIES" has the meaning set forth in Section 3.22.
"EMPLOYEE PLAN" means any pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus, incentive, medical, vision,
dental, disability, life insurance or any other employee benefit plan as defined
in Section 3(3) of ERISA to which the Seller or any entity related to the Seller
(under the terms of Sections 414(b), (c), (m) or (o) of the Code) contributes or
otherwise is bound or which the Seller or any entity related to the Seller
(under the terms of Sections 414(b), (c), (m) or (o) of the Code) sponsors or
maintains.
"ENVIRONMENTAL CLAIMS" means any claim, action, cause of
action, investigation or notice by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from, in part or in whole, (i) the presence, or release into the
environment, of any Materials of Environmental Concern at any location, whether
or not owned or operated by the Seller or (ii) circumstances forming the basis
of any violation, or alleged violation, of the Environmental Laws or the Medical
Waste Laws.
"ENVIRONMENTAL LAWS" means the federal, state, regional,
county, parish, municipal and local environmental, health or safety laws,
regulations, ordinances, rules and policies and the common law relating to the
use, refinement, recycling, handling. treatment, removal, storage, production,
manufacture, transportation, disposal, emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise relating
to protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), as the same may
be amended or modified until the date of closing, including, without limitation,
the following statutes: Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901, ET SEQ.; Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601, ET SEQ.; Air
Pollution Prevention and Control Act, 42 U.S.C. Section 7401, ET SEQ.; Water
Pollution Control Act, 33 U.S.C. Section 1251, ET SEQ.; Federal Insecticide,
Fungicide, and Rodenticide Act, Federal Pesticide Act of 1978, 7 U.S.C. Section
136, ET SEQ.; Hazardous Materials Transportation Act, 49 U.S.C. Section 1471,
1472, 1655 and 1801, ET SEQ.; Toxic Substances Control Act, 15 U.S.C. Section
2601, ET SEQ.; Safe Drinking Water Act. 42 U.S.C. Section 300f, ET SEQ.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder, as in effect from time to
time.
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"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"EXCLUDED CONTRACTS" means those Contracts which are not to be
assigned to and assumed by the Purchaser, including, without limitation, those
identified on SCHEDULE 3.6.2.
"EXECUTORY PERIOD" shall have the meaning set forth in Section
5.
"EXISTING AGREEMENTS" shall have the meaning set forth in
Section 2.9.
"FACILITY" means the Morgantown Facility.
"FINANCIAL STATEMENTS" has the meaning set forth in Section
3.11.1.
"FMC" shall mean Facilities Management Corporation, a West
Virginia corporation controlled by the Purchaser, its sole member.
"GROUND LEASE" means that certain Ground Lease between FMC and
the Seller dated as of September 30, 1985.
"HIRED EMPLOYEES" has the meaning set forth in Section 6.7.2.
"HIRED EMPLOYEES RECORDS" has the meaning set forth in Section
2.2.3.
"HSR ACT" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder, or any
subsequent legislative enactment thereof, as in effect from time to time.
"INDEMNIFYING PARTY" has the meaning set forth in Section
11.4.1.
"INFORMATION SYSTEM" has the meaning set forth in Section
6.13.
"INTERCOMPANY RECEIVABLES" means all accounts receivable or
other amounts due from the Seller to the Shareholder and all receivables or
other amounts due from the Shareholder or any of its subsidiaries to the Seller.
"INVENTORY" means the following items of personal property
owned by the Seller relating to the Facility: (i) supplies (office, medical,
food or otherwise), (ii) inventory (office, medical, food, drug or otherwise)
and (iii) other items of tangible personal property typically consumed or sold
by the Seller at the Facility in the ordinary course of business, plus such
additions thereto and less such deletions therefrom arising in the ordinary
course of business between the date hereof and the Closing Date.
"JCAHO" means the Joint Commission on the Accreditation of
Healthcare Organizations.
"LICENSES" means all of the certificates of need,
accreditations, registrations, licenses, permits, certificates and other
authorizations issued by any federal, state or local governmental authorities or
accreditation organizations to the Seller and required in connection with the
conduct of the business or operations of its business or the Facility.
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"LIEN" means any claim, easement, encumbrance, mortgage,
lease, covenant, security interest, lien, option, right of first refusal,
pledge, conditional sales contract, levy, exception, encroachment, limitation,
charge or other restriction of any kind or nature whatsoever.
"LOSSES" means any cost, damage, disbursement, expense,
liability, loss, deficiency, interest, penalty, fine, judgment or settlement of
any kind or nature whatsoever, including, without limitation, reasonable legal,
accounting and other professional fees, expenses and disbursements that may be
imposed on or otherwise incurred or suffered by the Claimant.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any toxic or
hazardous waste, pollutants or substances, including, without limitation,
asbestos, urea formaldehyde, radioactive substances, materials or wastes, PCBs,
petroleum products and byproducts, defined or listed as "hazardous substances,"
"hazardous waste," "toxic substances," "toxic pollutant," "medical waste," "air
pollutants," "hazardous air pollutants" or similarly identified substances or
mixtures, in or pursuant to the Environmental Laws or the Medical Waste Laws.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, operations, properties, financial condition, results of operations
or Assets of the Seller taken as a whole.
"MEDICAL WASTE" means any substance, pollutant, materials or
contaminant listed or regulated under the Medical Waste Laws.
"MEDICAL WASTE LAWS" means the following, including
regulations promulgated and orders issued thereunder, to the extent such laws
regulate Medical Waste, all as may be amended or modified until the date of
closing: Medical Waste Tracking Act of 1988, 42 U.S.C. section 6992, ET SEQ.
("MWTA"), 42 CFR Part 72 and 49 CFR Part 173, 386; Resource Conservation and
Recovery Act of 1976, 42 U.S.C. section 6901 ET SEQ.; Air Pollution Prevention
and Control Act, 42 U.S.C. section 7401 ET SEQ; Water Pollution Control Act, 33
U.S.C. section 1251 ET SEQ.; Marine Protection, Research and Sanctuaries Act of
1972, 33 U.S.C. section 1401 ET SEQ.; Nuclear Regulatory Commission regulations
contained in 10 CFR Parts 20 and 61; Occupational Safety and Health Act, 29
U.S.C. section 651 ET SEQ.; Public Health Service regulations contained in 42
CFR Part 72; Food and Drug Administration regulations contained in 21 CFR Parts
58 and 211; U.S. Department of Transportation regulations contained in 49 CFR
Parts 171-179; The Act to Prevent Pollution from Ships, 33 U.S.C. section 1901
ET SEQ.; U.S. Department of Agriculture regulations contained in 9 CFR Parts
50-56; U.S. Postal Service regulations contained in 39 CFR Part 111; local
environmental and safety laws, rules, regulations and other legally binding
requirements and any other federal, state, regional, county, municipal or other
local laws, regulations and ordinances insofar as they purport to regulate
Medical Waste or impose requirements relating to Medical Waste.
"MORGANTOWN FACILITY" shall mean the behavioral health care
facility owned (subject to the Ground Lease) and operated by the Seller located
in Morgantown, West Virginia.
"MULTI-EMPLOYER PLAN" means a plan, as defined in ERISA
Section 3(37), to which the Seller or any entity related to the Seller (under
the terms of Sections 414(b), (c), (m) or (o) of the Code) contributes or is
required to contribute.
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"NONCOMPETITION COVENANT" has the meaning set forth in Section
6.12.
"OTHER HEALTH AGENCIES" has the meaning set forth in Section
3.22.
"PATIENT RECORDS" has the meaning set forth in Section 2.1.11.
"PAYOR" shall mean Medicare, Medicaid, CHAMPUS and Medically
Indigent Assistance programs, Blue Cross/Blue Shield or any other third-party
payor (including an insurance company and self-insured employer), or any health
care provider (such as a health maintenance organization, preferred provider
organization, peer review organization or any other managed care program).
"PERMITTED LIENS" shall mean:
(a) Liens for Taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves with
respect to contested taxes are maintained;
(b) pledges or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other social security legislation;
(c) easements, rights-of-way, restrictions and other similar
encumbrances previously incurred in the ordinary course of business which are
not material, and which do not materially detract from the value of any such
properties or assets or materially interfere with any present use of such
properties or assets;
(d) carriers, warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 90 days or which are being contested
in good faith by appropriate proceedings;
(e) deposits to secure the performance of bids, contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(f) statutory and contractual Liens in favor of landlords
securing leases; and
(g) Liens set forth on Schedule 3.5.1 indicated with an
asterisk.
"PERSONALTY" means all items of personal property, other than
Inventory, including, without limitation, all medical and diagnostic equipment,
computer equipment, computer software, furniture, fixtures, office and other
equipment and other tangible personal property, which is owned or leased by the
Seller and used or useful as of the date hereof in the conduct of the business
or operations of the Facility, plus such additions thereto and less such
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date.
"PRIMARY TERRITORY" has the meaning set forth in Section
6.12.1.
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"PROFESSIONAL LIABILITY CLAIM" means any professional
liability claim for damages for tort, including, without limitation, bodily
injury, infliction of emotional distress or property damage, arising out of the
businesses or operations of the Facility on or before the Closing Date.
"PURCHASE PRICE" has the meaning set forth in Section 2.3.
"PURCHASER'S WCA STATEMENT" has the meaning set forth in
Section 2 6.
"REAL PROPERTY" means any and all real property interests,
including, without limitation, fee simple ownership interests, leasehold
interests, easements, licenses, rights to access, rights-of-way, all building
and other improvements located thereon and any and all other real property
interests of the Seller which are used as of the date hereof in the business or
operations of the Facility.
"RECORDS NOTICE" has the meaning set forth in Section 6.10.1.
"REIMBURSEMENT PROGRAMS" has the meaning set forth in Section
3.22.
"RELATED AGREEMENTS" means all agreements, instruments and
certificates to be executed and delivered at the Closing pursuant hereto.
"RESTRICTED PERIOD" has the meaning set forth in Section
6.12.1.
"SELLER COST REPORTS" has the meaning set forth in Section
6.8.
"SERVICES AGREEMENT" means that certain Clinical Management
and Shared Services Agreement between the Purchaser and the Seller dated as of
September 30, 1985.
"STRADDLE PATIENTS" has the meaning set forth in Section
2.7.1.
"TAXES" shall mean all federal, state, local and foreign
income, franchise, sales, use, occupation, property, excise, alternative or
add-on minimum, social security, employees' withholding, unemployment,
disability, transfer, capital stock and other taxes, assessments, deficiencies,
fees and other governmental charges or impositions (including, without
limitation, any estimated taxes, and any interest and penalties).
"TERMINATION DATE" means the date on which the covenants,
representations or warranties contained herein shall expire or terminate in
accordance with the provisions of Section 11.1.
"THRESHOLD AMOUNT" has the meaning set forth in Section 11.6.
"TRANSITION PERIOD" has the meaning set forth in Section 6.13.
"WARN ACT" means the Worker Adjustment and Retraining
Notification Act, as amended.
"WCA OBJECTION NOTICE" has the meaning set forth in Section
2.6.
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"WEST VIRGINIA CON LAW" means the laws of the State of West
Virginia related to the issuance of health care certificate of need as found in
Chapter 16, Article 2D, Sections 1, et seq. of the West Virginia Code, as from
time to time amended.
"WEST VIRGINIA RECEIVABLE" has the meaning set forth in
Section 2.2.2.
2. COVENANTS AND UNDERTAKINGS
2.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth in this Agreement, on the Closing Date, the Seller hereby agrees to
sell, assign, transfer, convey and deliver to Purchaser, and the Purchaser
agrees to purchase from the Seller, and agrees to accept and assume certain
liabilities and obligations as set forth in Section 2.5 (the "ASSUMED
LIABILITIES") related to, all of its respective right, title and interest in and
to the Assets (excluding the Excluded Assets), free and clear of any and all
Liens (except for Permitted Liens), which Assets are more specifically described
as follows:
2.1.1. The Assumed Contracts;
2.1.2. The Inventory;
2.1.3. The Licenses, to the extent lawfully transferable;
2.1.4. The Personalty;
2.1.5. The Real Property;
2.1.6. The Accounts Receivable as of the Closing Date, to the
extent lawfully transferable;
2.1.7. All of the Seller's right, title and interest in and to
all copyrights, patents, trademarks, trade names, service names, service marks,
permits and other similar intangible rights and interests applied for, issued to
or owned by the Seller and used in the operation of the Facility, including,
without limitation, those listed in SCHEDULE 3.8 hereto, together with the
goodwill of the business symbolized by and associated therewith; provided,
however, that the Assets shall not include the name "Ramsay" or any
abbreviation, variation or portion thereof regardless of whether any of the
foregoing intangible rights and interests contain, or were used by the Seller in
connection with, "Ramsay" or any abbreviation, variation or portion thereof;
2.1.8. All choses in action of the Seller relating to the
Assets (except to the extent such choses in action relate to liabilities
retained by Seller pursuant to Section 2.5 hereof or to Excluded Assets),
together with all the Seller's remedies, benefits, options, privileges and
warranty claims therein, thereto or thereunder, at law or in equity;
2.1.9. All of the Seller's rights to use the present telephone
and facsimile numbers relating exclusively to the Facility from and after the
Closing Date to the extent transferable;
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2.1.10. All prepaid expenses and deposits (other than bank
deposits) paid by the Seller in connection with the foregoing to the extent they
relate to Assumed Contracts;
2.1.11. The medical, clinical and other records associated
with the admission, care and treatment of patients at the Facility on or prior
to the Closing Date (the "PATIENT RECORDS"), subject to the right of the Seller
to have access to and to copy (at its own expense) any such Patient Records for
any lawful purpose in accordance with the terms of Section 6.10.2 hereof; and
2.1.12. The goodwill generated by the Seller with respect to
the foregoing.
2.2. EXCLUDED ASSETS. Notwithstanding anything contained in this
Agreement to the contrary, the Assets shall not include the following assets:
2.2.1. The Seller's cash on hand and all other cash in any of
its bank or savings accounts as of the Closing Date, letters of credit, stocks,
bonds, certificates of deposit and similar investments and all cash equivalents
other than the prepaid expenses and deposits described in Section 2.1.10;
2.2.2. All accounts receivable related to the West Virginia
juvenile program at the Morgantown Facility for services rendered prior to the
Closing Date (the "WEST VIRGINIA RECEIVABLE") and all Intercompany Receivables
(the West Virginia Receivable was $1,647,137 as of May 30, 1998);
2.2.3. Other than as expressly provided for in Section 2.1,
any books, records, files and other documents of the Seller, including, without
limitation, (i) the Seller's corporate minute books and other documents related
to internal corporate matters, (ii) those required by law to be retained
notwithstanding Section 2.1, (iii) those concerning medical staff and employee
files (provided that the Seller shall provide the Purchaser with copies of the
medical staff files upon receipt of the consent of the particular medical staff
member and that the Seller shall provide the Purchaser with copies of the
employee files of Hired Employees, subject to applicable laws (the "HIRED
EMPLOYEES RECORDS")) and (iv) those regarding any and all Cost Reports relating
to periods ending on or prior to the Closing Date, subject to the right of the
Purchaser to have access to and to copy (at its own expense) any such books,
records, files and documents at any time after the Closing Date at a location in
the continental United States made known to the Purchaser, subject to applicable
laws;
2.2.4. The Information System, together with the Meditech
Software;
2.2.5. Any claims, rights and interests in and to (i) any
refunds of federal, state or local franchise, income or other taxes or fees,
whether attributable to Taxes or fees paid with respect to periods ending on or
before the Closing Date or receivable by reason of any carryback to any such
period, and (ii) all amounts receivable and all other rights in connection with
Cost Report Settlements for periods ending on or before the Closing Date;
2.2.6. Any Employee Plan, Compensation Arrangement or
Multi-employer Plan and any employment or collective bargaining agreements and
all documents, agreements and/or assets relating thereto, except to the extent
any of such employment agreements are Assumed Contracts;
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2.2.7. The name "Ramsay" and any abbreviation, variation or
portion thereof;
2.2.8. All tax returns, and all other records relating to
Excluded Assets;
2.2.9. All ledger and financial records of the Seller or the
Shareholder;
2.2.10. All insurance policies of the Seller or the
Shareholder;
2.2.11. The assets of the Seller set forth on SCHEDULE 2.2.11;
and
2.2.12. All claims, remedies and rights relating to each of
the foregoing or any of the Excluded Liabilities;
(all of the foregoing referred to herein as the "EXCLUDED ASSETS").
2.3. CONSIDERATION. Subject to the terms and conditions hereof, in
consideration of the sale, transfer, conveyance, assignment and delivery of the
Assets, and in reliance upon the representations, warranties, covenants and
agreements of the Seller and the Shareholder set forth in this Agreement, the
Purchaser, in full payment for the Assets and the Noncompetition Covenant, (i)
shall assume the Assumed Liabilities, and (ii) shall pay to the Seller an
aggregate amount equal to FOURTEEN MILLION EIGHT HUNDRED THOUSAND AND NO/100THS
DOLLARS ($14,800,000.00) (the "PURCHASE PRICE"). The Purchase Price shall be
payable in cash by wire transfer of immediately available funds at the Closing
and shall be subject to adjustment as set forth below in Section 2.6.
2.4. ALLOCATION OF CONSIDERATION. The aggregate consideration payable
pursuant to Section 2.3, will be allocated among the Assets and the
Noncompetition Covenant in accordance with EXHIBIT 2.4. The parties hereto agree
to use such allocations for tax and Medicare purposes. The parties hereto agree
that such allocations shall be in accordance with, and as provided by, Section
1060 of the Code. The parties hereto also agree that any tax returns or other
tax information and any Cost Reports or other Medicare information they may file
or cause to be filed with any governmental agency or fiscal intermediary shall
be prepared and filed consistently with such agreed upon allocation. In this
regard, the parties agree that, to the extent required, they will each properly
and timely file Form 8594 in accordance with Section 1060 of the Code.
2.5. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. As of the Closing Date,
the Purchaser shall assume and timely pay, discharge and perform when due or
payable (i) all the obligations and liabilities of the Seller under the Licenses
(to the extent such Licenses are lawfully transferred to the Purchaser) and
under the Assumed Contracts, insofar as such obligations and liabilities relate
to the time period after the Closing and arise out of events occurring after the
Closing or are reflected in the Closing Date Adjusted Working Capital, (ii) all
obligations and liabilities arising out of events occurring after the Closing
related to the Purchaser's ownership of or control over the Assets or the
Purchaser's conduct of the operations of the Facility after the Closing and
(iii) those trade payables, accruals and other current liabilities specifically
set forth
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on SCHEDULE 2.5, including those relating to Hired Employees, or to
the extent they are included in the Closing Date Adjusted Working Capital. All
other obligations and liabilities of the Seller, including, without limitation,
any Environmental Claims arising out of, based on or resulting from conditions
or circumstances existing or occurring prior to the Closing, any obligations
under the Licenses, Assumed Contracts, Cost Reports or Cost Report Settlements
relating to any time prior to the Closing, any pending litigation or proceedings
relating to the business or operation of the Facility prior to the Closing, any
and all wages, salaries, severance, vacation, sick pay or other amounts accrued
or payable to the Seller's employees (other than those included in the Closing
Date Adjusted Working Capital) and any Employee Plan, Compensation Arrangement,
Multi-employer Plan or employment or collective bargaining agreement of the
Seller, other than employment agreements that are Assumed Contracts, shall
remain and be the obligations and liabilities solely of the Seller. Other than
as specified herein, the Purchaser shall assume no liabilities or obligations of
the Seller.
2.6. WORKING CAPITAL ADJUSTMENT. In the event the Adjusted Working
Capital (as said term is defined below), of the Seller with respect to the
Facility, calculated as of the Closing Date (the "CLOSING DATE ADJUSTED WORKING
CAPITAL"), shall equal or exceed the Adjusted Working Capital of the Seller with
respect to the Facility, calculated as of March 31, 1998, a schedule of which is
attached hereto as EXHIBIT 2.6-1 (the "BASE ADJUSTED WORKING CAPITAL") or in the
event the Base Adjusted Working Capital shall exceed the Closing Date Adjusted
Working Capital by an amount not greater than $100,000, then no adjustment to
the Purchase Price will be made pursuant to this Section 2.6. For purposes
hereof, the term "ADJUSTED WORKING CAPITAL" shall mean (i) the sum of the
current assets (net of any reserves therefor) of the Seller which are of a type
to be included in the Assets minus (ii) the sum of the current liabilities of
the Seller which are of a type to be included in the Assumed Liabilities. The
Adjusted Working Capital shall be determined in accordance with generally
accepted accounting principles consistently applied, shall be determined
employing the same methodology with respect to bad debt reserves and
Medicare/Medicaid contractual reserves as that employed in preparing the
Financial Statements and shall be calculated and prepared in a manner consistent
with, including the assumptions, process and procedures described in EXHIBIT
2.6-2 and otherwise in a manner consistent with the Financial Statements. Within
twenty-one (21) days of the date hereof, the Seller and the Shareholder shall
calculate, prepare and deliver to the Purchaser a statement in reasonable detail
of the Adjusted Working Capital as of April 30, 1998 and May 31, 1998, and
within forty-five (45) days of each month thereafter until the Closing Date, the
Seller and the Shareholder shall calculate, prepare and deliver to the Purchaser
a statement in reasonable detail of the Adjusted Working Capital as of the end
of each such month. Within 90 calendar days after the Closing Date, the
Purchaser shall prepare and deliver to the Shareholder a statement of the
Closing Date Adjusted Working Capital in reasonable detail, together with the
calculation and the components thereof (the "PURCHASER'S WCA STATEMENT"). The
Purchaser's WCA Statement will be reviewed by the Shareholder (and, if the
Shareholder so chooses and at its expense, by a firm of independent certified
public accountants), who shall, not later than 60 calendar days after receipt of
the Purchaser's WCA Statement, raise any objections it has to the Closing Date
Adjusted Working Capital calculation set forth in the Purchaser's WCA Statement
by notifying the Purchaser in writing within such time period in a statement
indicating the item or items disputed, and containing, in reasonable detail, the
nature of the Shareholder's objections (a "WCA OBJECTION NOTICE"). During such
60-day period, the Shareholder and any such independent certified public
accountants shall have full access to the
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books and records, other financial information (including the working papers of
the Purchaser's accountants, if any) and appropriate financial personnel of the
Purchaser reasonably necessary for the preparation of a WCA Objection Notice.
Absent delivery of a WCA Objection Notice as provided above, the Purchaser's WCA
Statement of the Closing Date Adjusted Working Capital will be conclusive and
binding upon the parties to this Agreement for the purposes set forth in this
Section 2.6. In the event that a WCA Objection Notice is delivered by the
Shareholder as provided above, the Purchaser and the Shareholder shall each
appoint a representative with negotiating authority who shall negotiate in good
faith for a period of 30 calendar days in an effort to resolve all outstanding
issues and if the Purchaser and the Shareholder are unable within said 30
calendar day period to resolve the disputed exceptions, such disputed exceptions
will be submitted to arbitration pursuant to and in accordance with the
provisions set forth in Section 12.12 below; provided, however, that the
arbitrators shall be certified public accountants. Upon final determination of
the Closing Date Adjusted Working Capital in accordance with the foregoing, in
the event that the amount of the Closing Date Adjusted Working Capital is less
than the amount of the Base Adjusted Working Capital by an amount in excess of
$100,000, then the Purchase Price shall be reduced by the entire difference and
the Seller and the Shareholder shall be obligated to pay to the Purchaser an
amount equal to such difference within five business days of the final
determination of the Closing Date Adjusted Working Capital; provided, however,
notwithstanding anything set forth in this Section 2.6, there shall be no
adjustment to the Purchaser Price pursuant to this Section 2.6 in the event that
the amount of such difference between the Closing Date Adjusted Working Capital
and the Base Adjusted Working Capital is less than or equal to $100,000.
2.7. PATIENT ▇▇▇▇▇▇▇▇.
2.7.1. CUT-OFF ▇▇▇▇▇▇▇▇. To the extent that a Payor will
accept a cut-off billing, the Seller shall prepare cut-off ▇▇▇▇▇▇▇▇ as of the
close of business on the Closing Date for all capitation payments for days
ending on or before the Closing Date for covered lives ("COVERED LIVES") and for
services rendered and medicine, drugs and supplies provided on or prior to the
Closing Date with respect to non-capitated patients of the Facility who are
patients of the Facility on a continuous basis during the period that begins on
or prior to the Closing Date and ends after the Closing Date (the "STRADDLE
PATIENTS"). The Seller acknowledges and agrees that such cut-off billing shall
constitute Accounts Receivable included in the Assets (except to the extent any
of such cut-off billing relates to the West Virginia Receivable).
2.7.2. CUT-OFF ▇▇▇▇▇▇▇▇ NOT ACCEPTED. If the Payor of any
Straddle Patient cannot or does not for any reason accept cut-off ▇▇▇▇▇▇▇▇, then
the Purchaser shall submit billing to such Payor for the entire portion of such
Straddle Patient's stay. In such event, a portion of such billing shall be
treated as an Account Receivable (except to the extent any of such billing
relates to the West Virginia Receivable) in an amount equal to (A) the total
payment received for such Straddle Patient (including any deductible payments
and any co-payments), multiplied by a fraction, the numerator of which shall be
the number of days such Straddle Patient was a patient through and including the
Closing Date, and the denominator of which shall be the total number of days
such Straddle Patient was a patient on a continuous basis during the period that
begins on or prior to the Closing Date and ends after the Closing Date, minus
(B) any deposits or co-payments made to the Seller on or prior to the Closing
Date with respect to such Straddle Patient. If the Payor of any Covered Lives
cannot or does not for any reason accept cut-off
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▇▇▇▇▇▇▇▇, that portion of any capitation payments relating to a period ending on
or before the Closing Date shall be treated as an Account Receivable (except to
the extent any of such payments relates to the West Virginia Receivable).
2.7.3. RECEIPT OF PAYMENTS. If the Seller receives payment of
any amount with respect to Accounts Receivable included in the Assets, the
Seller shall promptly remit said funds to the Purchaser.
2.8. HSR ACT REQUIREMENTS. The obligations of the parties to this
Agreement are subject to the expiration of any waiting periods (including any
extensions of time occasioned by requests by the Federal Trade Commission or the
Department of Justice for further information about the transaction) applicable
to the purchase and sale of the Assets pursuant to this Agreement under the HSR
Act. No Closing shall take place until such waiting periods (including any
extensions thereof) have terminated or expired without the Federal Trade
Commission or the Department of Justice having indicated to any party to this
Agreement an intention to initiate proceedings or having initiated proceedings
which look to preventing the consummation of the transactions contemplated by
this Agreement. The Purchaser, the Seller and the Shareholder shall make, or
cause to be made, all filings required under the HSR Act in order to consummate
the transactions contemplated by this Agreement and shall use their respective
best efforts to make the initial filing no later than July 24, 1998. If the
Federal Trade Commission or the Department of Justice requests additional
information from the Purchaser, the Seller or the Shareholder or imposes any
condition upon the transactions contemplated by this Agreement, the Purchaser,
the Seller and the Shareholder will use their reasonable best efforts to
cooperate with the Federal Trade Commission and the Department of Justice;
provided, however, that nothing herein shall compel the Purchaser, the Seller or
the Shareholder to comply with any condition imposed upon it or its affiliates
that is materially adverse to the interests of the Purchaser, the Seller, the
Shareholder or their respective affiliates as determined by the Purchaser, the
Seller or the Shareholder, respectively, in their sole and absolute discretion.
The Purchaser shall pay 50% and the Shareholder shall pay 50% of the filing fee
required under the HSR Act in connection with the transaction contemplated
hereby.
2.9. TERMINATION OF CERTAIN AGREEMENTS. The Purchaser and the Seller
hereby agree that, effective as of the Closing, the Ground Lease, the Services
Agreement and each other agreement (collectively, the "Existing Agreements") set
forth on Schedule 3.6.1 between either the Purchaser or FMC, on the one hand, or
the Seller or the Shareholder, on the other hand, shall each be terminated by
the respective parties thereto and shall be of no further force and effect
following the Closing, and the Purchaser hereby covenants and agrees to cause
FMC to agree to be bound by this Section 2.9 promptly after the date hereof and
prior to the Closing and to terminate all Existing Agreements effective as of
the Closing as aforesaid. The Purchaser and the Seller hereby further agree that
effective as of the Closing, neither the Seller, the Shareholder, FMC nor the
Purchaser shall have any further liability or obligation under the Ground Lease,
the Services Agreement or any other Existing Agreement. Notwithstanding anything
to the contrary contained in the Ground Lease, the Services Agreement, any other
Existing Agreement or any other document or agreement, each of the Purchaser, on
behalf of itself and on behalf of FMC, the Shareholder and the Seller hereby
waives any and all notice or other rights it may have under the Ground Lease,
the Services Agreement or any other Existing
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Agreement in connection with the execution, delivery and performance of this
Agreement and the transactions contemplated thereby.
2.10. WEST VIRGINIA LAW REQUIREMENTS. The obligations of the parties to
this agreement are subject to the receipt by Purchaser of a certificate of need
decision from the West Virginia Health Care Authority ("WVHCA") which approves
the transaction described in this Agreement ("CON Approval") and is final. For
the purpose of this Agreement, "final" with respect to the CON Approval shall
mean that one of the following events has occurred: (1) no person or entity with
standing has filed a timely request for review of the CON Approval with the West
Virginia Department of Tax and Revenue ("DTR") within the time period permitted
by the West Virginia CON Law as evidenced by the records of the HCCRA and DTR;
or (2) a person or entity with standing has filed a timely request for review of
the CON Approval with DTR within the time period permitted by the West Virginia
CON Law as evidenced by the records of the HCCRA and DTR, and all administrative
and judicial appeals and reviews by such person or entity have been exhausted
with no right on the part of such person or entity to any further appeal or
review, and such administrative and judicial appeals and reviews by such person
or entity have not (a) reversed the CON Approval, or (b) imposed a condition or
limitation upon the certificate of need which would have a material adverse
effect on the financial condition and results of operations of the Facility as
operated by the Purchaser and renders the implementation of the certificate of
need financially infeasible as a result thereof.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER
The Seller and the Shareholder, jointly and severally, represent and
warrant to the Purchaser and its successors and permitted assigns, as of the
date hereof as follows:
3.1. ORGANIZATION, STANDING AND AUTHORITY.
3.1.1. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Virginia. The
Shareholder is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Seller and the Shareholder
have all requisite corporate power and authority (i) to execute, deliver and
perform this Agreement and all Related Agreements, and (ii) to consummate the
transactions contemplated hereby, and the Seller has all requisite corporate
power and authority to conduct the operations of the Facility as presently
conducted.
3.1.2. The Shareholder has full corporate power to vote its shares of
common stock of Americare of Galax, Inc., a Virginia corporation and
wholly-owned subsidiary of the Shareholder ("Galax"), and to cause Galax, the
sole stockholder of the Seller, to vote its shares of common stock of the Seller
without obtaining the consent or approval of any Person or entity, subject to
the Liens on the common stock of Galax and of the Seller arising under the
Credit Agreement and security documents set forth in Item 1 of SCHEDULE 3.7.
3.2. AUTHORIZATION AND BINDING OBLIGATION. All corporate action on the
part of the Seller and the Shareholder and their respective directors and
stockholders necessary for the authorization, execution, delivery and
performance by the Seller and the Shareholder, respectively, of this Agreement
and the Related Agreements has been taken. This Agreement has been duly executed
and delivered by the Seller and the Shareholder,
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and this Agreement and the Related Agreements constitute or will constitute,
when duly executed and delivered, the valid and legally binding obligations of
the Seller and the Shareholder, enforceable against the Seller and the
Shareholder in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally, and except as enforcement of remedies may be limited by
general equitable principles.
3.3. ABSENCE OF CONFLICTING AGREEMENTS. Subject to obtaining the
Consents and except as set forth on SCHEDULE 3.3, the execution, delivery and
performance of this Agreement and the Related Agreements by the Seller and the
Shareholder and the consummation of the transactions contemplated hereby (with
or without the giving of notice, the lapse of time, or both): (i) will not
conflict with any provision of the Certificate of Incorporation or Bylaws of the
Seller or the Shareholder, respectively, (ii) will not conflict with, result in
a breach of, or constitute a default under, any applicable law, rule or
regulation or any applicable judgment, order, ordinance, injunction or decree of
any court or governmental instrumentality, (iii) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any material agreement, instrument, franchise,
certificate, license or permit to which the Seller, or the Shareholder,
respectively, is a party or may be bound or by which the Assets or the Facility
is or may be affected and (iv) will not create any Lien upon the Assets or the
Facility (other than any Liens created by or through the Purchaser or expressly
granted by the Purchaser).
3.4. TITLE TO AND CONDITION OF REAL PROPERTY.
3.4.1. All of the Real Property has legal access to public
roads or streets, and all utilities and services necessary for the proper and
lawful conduct and operation of the Facility as now conducted are being provided
on a permanent basis. All improvements, installations, equipment and facilities
utilized in connection with the Facility currently are maintained, placed and
located in all material respects in accordance with the provisions of all
applicable laws, rules, regulations, deeds, easements. restrictions, leases,
licenses, permits or other arrangements.
3.4.2. The Seller is the lessee under the Ground Lease and no
other real property leases.
3.4.3. Except as disclosed on SCHEDULE 3.4.3, all of the Real
Property (including the buildings and improvements thereon) (i) is in good
condition and repair in accordance with normal and customary industry practices
(ordinary wear and tear excepted), (ii) is available for immediate use in the
conduct of the business or operations of the Facility and (iii) complies in all
material respects with all applicable building, life safety and zoning codes and
the regulations of any governmental authority having jurisdiction. There are no
condemnation proceedings or eminent domain proceedings, lawsuits or legal
proceedings of any kind pending or, to the Seller's and/or the Shareholder's
knowledge, threatened which would involve a taking of any of the Real Property.
The Real Property and the present use and condition thereof do not violate in
any material respect any applicable deed restrictions or other covenants,
restrictions, agreements, existing site plan approvals, zoning or subdivision
regulations or urban redevelopment plans
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applicable to the Real Property as modified by any duly issued variances and no
permits, licenses or certificates pertaining to the ownership or operation of
the Real Property, other than those which are transferable with the Real
Property and the Licenses, are required by any governmental agency having
jurisdiction over the Real Property or their operation. All improvements
constructed by or on behalf of the Seller on the Real Property were constructed
in compliance in all material respects with all applicable federal, state or
other statutes, laws, ordinances, regulations, rules, codes, orders or
requirements (including, but not limited to, any building, zoning or
environmental laws or codes) affecting such premises, and to the knowledge of
Seller and the Shareholder none of such improvements, in the view of the
purposes for which each of them is used, has any material structural or
engineering defect.
3.4.4. The Seller has paid, or shall have paid prior to
Closing, all amounts owing by the Seller to any architect, contractor,
subcontractor or materialman for labor or materials performed, rendered or
supplied to or in connection with the Real Property. SCHEDULE 3.4.4 sets forth a
true and complete list of all construction, architect, engineering and other
agreements, if any, relating to uncompleted construction projects entered into
by the Seller in connection with the Real Property.
3.5. TITLE TO AND CONDITION OF PERSONALTY.
3.5.1. Except with respect to any items of Assets which are
the subject of an Assumed Contract, the Seller owns and has good title to its
respective portion of the Assets (other than the Real Property which is the
subject of Section 3.4), free and clear of all Liens except for (i) Permitted
Liens and (ii) any Liens set forth in SCHEDULE 3.5.1, all of which shall be
removed at or prior to the Closing, except as otherwise specifically noted
therein. The Seller has not materially reduced and, pending the Closing, will
not materially reduce the Inventory of usable supplies from the quantities
normally maintained by it in accordance with its past practices.
3.5.2. Except as set forth in SCHEDULE 3.5.2, the Assets
(other than the Real Property which is the subject of Section 3.4 and intangible
assets) are in good operating condition and repair in all material respects
(ordinary wear and tear excepted) and are available for immediate use in the
business and operations of the Facility. All of the Accounts Receivable reflect
bona fide transactions for billable services and arose in the ordinary course of
business and are not subject to offset or deduction. Neither the Seller nor the
Shareholder has any reason to believe that the bad-debt allowance set forth in
the Financial Statements is not an accurate reflection of the expected
collectibility of the accounts receivable of the Seller as of March 31, 1998
(excluding the West Virginia Receivable).
3.6. CONTRACTS.
3.6.1. SCHEDULE 3.6.1 contains a list (including memoranda of
oral Assumed Contracts) of all the Assumed Contracts. All of the Assumed
Contracts are in full force and effect and are valid and binding upon the Seller
and each other party thereto and enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy insolvency,
reorganization, moratorium and other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally, and except as
enforcement of remedies may be limited
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by general equitable principles. There is not under any Assumed Contract any
material breach or default by the Seller or, to the Seller's and/or the
Shareholder's knowledge, any other party thereto, or any event which, after
notice or lapse of time, or both, would constitute such a material breach or
default. Except as set forth in SCHEDULE 3.6.1, the Seller is not aware of any
intention by any party to any material Assumed Contract to (i) terminate or
amend the terms thereof, (ii) refuse to renew same upon expiration of its
current term or (iii) renew same upon expiration of its current term only on
terms and conditions that are more materially onerous to the Seller than those
pertaining to the Assumed Contracts as of the date hereof.
3.6.2. SCHEDULE 3.6.2 contains a description of Excluded
Contracts.
3.7. CONSENTS. Except for the expiration or termination of any
applicable waiting period under the HSR Act, receipt of CON Approval and the
Consents described in SCHEDULE 3.7, no consent, approval or authorization of, or
declaration to or filing with any governmental or regulatory authority or any
other third party is required by Seller to permit the Seller to assign or
transfer the Assets (including without limitation, the Assumed Contracts and the
Licenses, to the extent the Licenses are transferable) to the Purchaser.
3.8. TRADEMARKS, TRADE NAMES AND COPYRIGHTS. SCHEDULE 3.8 is a list of
all copyrights, trademarks, trade names, logos, licenses, patents, privileges
and other similar intangible property rights and interests (exclusive of those
required to be listed in SCHEDULE 3.9) registered, applied for, issued to or
owned by the Seller, or under which the Seller is licensed or franchised, and
used or useful in the conduct of the business or operations of the Facility (the
"Intellectual Property"). All of the Intellectual Property is valid, and to
Seller's knowledge in good standing and uncontested and will be owned or
available for use by the Purchaser after the Closing, except as specifically set
forth on Schedule 3.8. SCHEDULE 3.8 indicates which items, while used in the
operations of the Facility, will not be transferred to the Purchaser as part of
the Assets. No written claims, notices, oppositions or demands have been
asserted by any third party with respect to any of the items listed in SCHEDULE
3.8 and, to the Seller's and/or the Shareholder's knowledge, no person or entity
has interfered with, infringed upon, misappropriated, acted adversely to or
otherwise come into conflict with the rights of the Seller in any of such items.
To the Seller's and the Shareholder's knowledge, the Seller has not interfered
with, infringed upon, misappropriated, acted adversely to or otherwise come into
conflict with any trademarks, trade names, copyrights, patents, patent
applications, know-how, methods or processes owned by any other person or
persons, and there is no action pending or, to the Seller's and/or the
Shareholder's knowledge, threatened with respect thereto.
3.9. LICENSES. SCHEDULE 3.9 is a list of the material Licenses that the
Seller holds to enable it to carry on the business or operations of the Facility
as presently conducted. The Licenses were validly issued, and the Seller is
currently the authorized legal holder thereof. The Licenses include all of the
material licenses, permits, certificates, accreditations and other
authorizations required from any governmental or regulatory authority or any
accrediting organization, for the conduct of the business and operations of the
Facility in the manner and to the extent they are now conducted by the Seller,
and none of the Licenses is subject to any restriction or condition which would
limit the operation of the Facility in any material respect as presently
operated. The Licenses are in full force and effect, and the conduct of the
business and operations of the Facility is in accordance therewith in all
material respects. The Seller does not
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have reason to believe that any of the Licenses will not be renewed by the
issuing authority or other applicable granting authority in the ordinary course.
3.10. COMPLIANCE WITH LAWS. The Seller is presently operating its
Facility so as to comply in all material respects with (i) all applicable
statutes, ordinances, rules, regulations, laws and orders, other than
Environmental Laws and Medical Waste Laws, of any federal, state or local
governmental authority and (ii) to the extent applicable, all rules and
regulations required as a condition of participation in the Medicare, CHAMPUS
and Medicaid reimbursement programs. The Seller is in compliance in all material
respects with indigent care and other conditions, if any, contained in or
related to any certificates, licenses or other instruments relating to the
Facility, including, without limitation, the certificates of need obtained by it
for the Facility.
3.11. FINANCIAL STATEMENTS.
3.11.1. SCHEDULE 3.11 contains true and complete copies of the
unaudited balance sheet and statement of income of the Seller with respect to
the Facility as at and for the 9-month period ending March 31, 1998
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied (except for the absence of footnotes and normally
reoccurring year-end adjustments including, without limitation, income tax
accruals or any reserves which may be necessary with respect to the West
Virginia Receivable) and present fairly, in all material respects, the financial
condition of the Seller with respect to the Facility as of the date thereof and
results of its operations for the period then ended in accordance with generally
accepted accounting principles consistently applied.
The Shareholder has allocated corporate overhead costs and
expenses with respect to the Facility on a basis consistent with its allocations
to its other subsidiaries with respect to their facilities and operations and
not in a manner intended to understate the true costs and expenses of the
business and operations of the Facility or to inflate the revenues of the
Facility.
3.11.2. The Seller does not have any liability or obligation
related to the Assets or the Facility (whether accrued, absolute, contingent or
otherwise) which is of a nature required to be reflected in financial statements
prepared in accordance with generally accepted accounting principles,
consistently applied, except for (i) the liabilities and obligations of the
Seller which are disclosed or reserved against in the Financial Statements, to
the extent and in the amounts so disclosed or reserved against, and (ii)
liabilities incurred or accrued in the ordinary course of business since the
date of the most recent Financial Statements which do not, either individually
or in the aggregate, have a Material Adverse Effect.
3.11.3. All liabilities or obligations shown or reflected in
the Financial Statements and such liabilities incurred or accrued subsequent to
the date of the most recent Financial Statements have been, or are being, paid
and discharged in the ordinary course consistent with past practice.
3.12. INSURANCE. SCHEDULE 3.12 contains a list of all insurance
policies held by the Seller (or its affiliates) relating to the Assets and/or
the Facility which are all in full force and
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effect. During the three-year period ending on the date hereof, no such policies
have been canceled by an insurer and no application of the Seller for insurance
has been rejected by any insurer.
3.13. EMPLOYEE BENEFIT PLANS.
3.13.1. All Employee Plans and Compensation Arrangements of
the Seller and/or its affiliates that provide benefits coverage to employees of
the Seller employed or previously employed at the Facility are listed in
SCHEDULE 3.13. Complete descriptions of any unwritten Employee Plans or
Compensation Arrangements of the Seller and/or its affiliates that provide
benefits coverage to employees of the Seller employed or previously employed at
the Facility also are provided in SCHEDULE 3.13.
3.13.2. Each of the Employee Plans and Compensation
Arrangements of the Seller listed in SCHEDULE 3.13 has been administered in all
material respects in compliance with its own terms and with ERISA, the Code, the
Age Discrimination in Employment Act and any other applicable federal or state
laws.
3.13.3. Except as disclosed on SCHEDULE 3.13, the Seller does
not contribute to and is not required to contribute to any Multi-employer Plan
with respect to its employees employed or previously employed at the Facility,
and neither the Seller nor any other trade or business under common control with
the Seller (within the meaning of Sections 414(b), (c), (m) or (o) of the Code)
has incurred or reasonably expects to incur any "withdrawal liability," as
defined under Section 4201 ET SEQ. of ERISA.
3.13.4. The Seller is not aware of the existence of any
governmental audit or examination of any of its Employee Plans or Compensation
Arrangements listed in SCHEDULE 3.13 or of any facts which would lead it to
believe that any such audit or examination is pending or threatened. There
exists no action, suit or material claim (other than routine claims for
benefits) with respect to any of the Employee Plans or Compensation Arrangements
of the Seller listed in SCHEDULE 3.13 pending or, to the Seller's and/or the
Shareholder's knowledge, threatened.
3.13.5. Except as described in SCHEDULE 3.13, neither the
Seller nor any other trade or business under common control with the Seller
(within the meaning of Sections 414(b), (c), (m) or (o) of the Code) sponsors,
maintains or contributes to any of the Employee Plans or Compensation
Arrangements of the Seller that provides retiree medical or retiree life
insurance coverage to former employees of the Seller employed or previously
employed at a Facility.
3.13.6. There have been no failures to provide continuation
coverage as required by Section 4980B(f) of the Code.
3.13.7. The Seller has no Employee Plans or Compensation
Arrangements as to which the Purchaser will be required to make any
contributions or with respect to which the Purchaser shall have any obligation
or liability whatsoever, whether on behalf of any of the current employees of
the Facility or on behalf of the Seller or any other trade or business under
common control with the Seller (within the meaning of Sections 414(b), (c), (m)
or (o) of the Code), after the Closing, except as otherwise specifically
provided in this Agreement.
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3.14. LABOR RELATIONS. Except as described in SCHEDULE 3.6.1, the
Seller is not a party to or subject to any collective bargaining agreements with
respect to the Facility. The Seller has no written or oral contracts of
employment with any employee of the Facility, other than those listed in
SCHEDULE 3.6.1 or SCHEDULE 3.6.2. The Seller, in the operation of the Facility,
has complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination and the
payment of social security and other payroll related taxes, and it has not
received any written notice alleging that it has failed to comply with any such
laws, rules or regulations. No lockouts, strikes or proceedings are pending or,
to the Seller's and/or the Shareholder's knowledge, threatened between the
Seller and employees (individually or collectively) of the Facility. Except as
described in SCHEDULE 3.14, no labor union or other collective bargaining unit
represents or, to any Seller's and/or the Shareholder's knowledge, claims to
represent any of the employees of the Facility. To the Seller's and/or the
Shareholder's knowledge, there is no union campaign being conducted to solicit
cards from employees to authorize a union to represent any of the employees at
the Facility or to request a National Labor Relations Board certification
election with respect to any of the employees at the Facility.
3.15. TAXES.
3.15.1. There are no Liens for Taxes (other than any Lien for
current taxes not yet due and payable or which are being contested in good faith
by appropriate proceedings) on any of the assets or properties of the Seller.
There is not and there will not be, any liability for any Taxes arising out of,
or attributable to, or affecting the Assets or any Facility through the close of
business on the Closing Date, or attributable to the conduct of the operations
of any Seller at any time, for which the Purchaser will have any liability for
payment or otherwise except to the extent included in Assumed Liabilities and
reflected in the Closing Date Adjusted Working Capital and except for real
property or other ad valorem Taxes not yet due and payable. There does not exist
and will not exist by virtue of the transactions contemplated by this Agreement
any liability for Taxes (except for sales, use, property and transfer taxes, if
any, incident to the consummation of the transactions contemplated herein) which
may be asserted by any taxing authority against the Assets or the business or
operations of the Facility, and no Lien for Taxes has or will attach to the
Assets or the business or operations of the Facility, except for any Taxes in
the nature of property taxes or other fees or assessments.
3.16. CLAIMS AND LEGAL ACTIONS. Except as set forth in SCHEDULE 3.16,
there is no legal action, counterclaim, suit, arbitration, governmental
investigation or other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending or, to the Seller's and/or the
Shareholder's knowledge, threatened against or relating to the Seller, the
Assets or the business or operations of the Facility. Except as set forth in
SCHEDULE 3.16, there are no actions, suits or proceedings pending or, to the
Seller's and/or the Shareholder's knowledge, threatened, against or affecting
the Seller or the Shareholder which challenge the validity of this Agreement, or
which if adversely determined, would adversely effect any of their ability to
consummate the transactions contemplated by this Agreement or to perform their
respective covenants and agreements under this Agreement.
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3.17. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.17:
3.17.1. the Assets and the business and operations of the
Facility are currently, and, to the knowledge of the Seller and/or the
Shareholder, at all times prior to the date hereof have been, in compliance with
all Environmental Laws and Medical Waste Laws, which compliance includes, but is
not limited to, the possession by the Seller of all material permits and other
governmental authorizations required under the Environmental Laws and Medical
Waste Laws and compliance with the terms and conditions thereof, except where
such non-compliance would not have a Material Adverse Effect;
3.17.2. the Seller has not stored, disposed of or arranged for
disposal of any Materials of Environmental Concern, except in compliance with
the Environmental Laws and Medical Waste Laws, except where such non-compliance
would not have a Material Adverse Effect;
3.17.3. the Seller has not received any written communication,
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that the Seller, the Real Property or the Assets are not in
compliance in all material respects with the Environmental Laws or the Medical
Waste Laws that has not been cured and, to the knowledge of the Seller and/or
the Shareholder, there are no circumstances that may prevent or interfere with
compliance in the future. There are no Environmental Claims pending or, to the
Seller's and/or the Shareholder's knowledge, threatened against the Seller or
associated in any way with the Real Property, the Assets or the business or
operations of the Facility;
3.17.4. there have been no actions, activities, circumstances,
conditions, events or incidents arising out of any act or activities or
condition created by the Seller, including, without limitation, the generation,
handling, transportation, treatment, storage, release, emission, discharge,
presence or disposal of any Materials of Environmental Concern associated in any
way with the Real Property, the Assets or the business or operations of the
Facility, that could result in any Environmental Claims against the Seller that
would have a Material Adverse Effect;
3.17.5. with respect to the generation, transportation,
treatment, storage and disposal or other handling of Medical Waste, the Seller
is presently in compliance with all Medical Waste Laws, except where such
non-compliance would not have a Material Adverse Effect;
3.17.6. during the Seller's ownership of the Assets and the
Real Property, (i) there have been no remedial responses or removal actions
related in any way to Materials of Environmental Concern; (ii) there have been
no underground or above ground tanks for the storage or handling of Materials of
Environmental Concern placed on or under the Real Property by or on behalf of
the Seller; (iii) and no Lien of any type (other than Permitted Liens) has been
attached to any Asset or the Real Property related to the presence or alleged
presence of Materials of Environmental Concern or pursuant to the Environmental
Laws;
3.17.7. there is no friable asbestos at, on, about, under or
within the Real Property or the Assets that would have a Material Adverse
Effect; and
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3.17.8. true, correct and complete copies of all material
permits, licenses, authorizations, registrations and other governmental consents
required by the Environmental Laws which relate to the Assets have been provided
to the Purchaser.
3.18. REPORTS. All material returns, reports and statements which the
Seller is currently required to file with any governmental agency have been
filed, and all reporting requirements of governmental authorities having
jurisdiction thereover have been complied with in all material respects. All of
such reports, returns and statements are complete and correct in all material
respects as filed.
3.19. CONDUCT OF BUSINESS IN ORDINARY COURSE. Since the date of the
most recent Financial Statements, except as set forth in SCHEDULE 3.19, the
Seller has conducted the business and operations of the Facility only in the
ordinary course and has not:
3.19.1. suffered any material adverse change in the business,
properties, financial condition or prospects of the Facility, including any
material damage, destruction or loss affecting the Assets;
3.19.2. changed its accounting methods or business practices
in any material respects with respect to collection of Accounts Receivable or
payment of accounts payable;
3.19.3. made any material increase in compensation payable or
to become payable to any of the employees of the Seller, or made or promised to
make any bonus payment to any employee of the Seller, or made any material
change in personnel policies, insurance benefits or other compensation
arrangements affecting the employees of the Seller other than merit increases
and bonuses in the ordinary course of business consistent with past practice; or
3.19.4. sold, transferred, leased to others or otherwise
disposed of any of the material Assets except for inventory sold or used in the
ordinary course of business consistent with past practices or for assets sold or
disposed of and replaced by other assets of comparable utility and value,
canceled or compromised any debts owed to, or claims relating to, the Seller's
operations, which are of material value, or waived, compromised or released any
rights which are of material value.
3.20. COST REPORTS. The Seller and each of its affiliates has duly
filed in respect of the Facility and the other Assets all Cost Reports for all
prior periods required to be filed as of the date hereof, and such Cost Reports
have been filed when due. All of such Cost Reports accurately reflect in all
material respects the information to be included thereon. Set forth on SCHEDULE
3.20 is the date of the last audited Cost Report for the Seller and a list of
those Cost Reports of the Seller that are still subject to audit. Except as set
forth on SCHEDULE 3.20, neither the Seller nor any of its affiliates has
received notice of any dispute regarding such Cost Reports for any period
subsequent to the periods set forth on SCHEDULE 3.20. The Facility currently
meets, without material exception, the conditions for participation in the
Medicare program and the Facility has not been subject to loss of waiver of
liability for utilization review denials with respect to any program during the
past two years.
3.21. MEDICAL STAFF. Except as set forth on SCHEDULE 3.21, there are no
pending or, to the Seller's and/or the Shareholder's knowledge, threatened
disciplinary or corrective
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proceedings or appeals therefrom against the Seller involving active or applying
medical staff members of the Facility who are not medical staff members or
employees of the Purchaser or its affiliates. SCHEDULE 3.21 also sets forth a
complete and accurate list of each physician of the medical staff of the
Facility.
3.22. Medicare/Medicaid Participation and Accreditation Investigations.
The Facility is qualified for participation in the Medicare, CHAMPUS and
Medicaid reimbursement programs (the "REIMBURSEMENT PROGRAMS"), has current and
valid provider contracts with the Reimbursement Programs, is in compliance in
all material respects with the conditions of participation in the Reimbursement
Programs and has received all approvals or qualifications of the Reimbursement
Programs necessary for capital reimbursement on the Assets. Except as set forth
on SCHEDULE 3.22, neither the Seller nor the Shareholder has received written
notice of any claims by any of the Reimbursement Programs against the Seller
with regard to the Facility. The Facility is duly accredited by the JCAHO and
all other applicable licensing or accreditation agencies listed on SCHEDULE 3.22
(the "OTHER HEALTH AGENCIES"), with no contingencies other than as shown on the
most recent surveys by the JCAHO and the Other Health Agencies (the
"DEFICIENCIES"). The Seller has taken or is taking all necessary steps to
correct all Deficiencies and a description of any uncorrected Deficiency is
listed on SCHEDULE 3.22. True and complete copies of the most recent
accreditation letters, report of survey findings, deficiency lists and all other
related documents from the JCAHO and the Other Health Agencies pertaining to the
Facility have been delivered or made available to the Purchaser. Except as
described on SCHEDULE 3.22, neither the Seller nor any of its affiliates has
received written notice from the Reimbursement Programs, their fiscal
intermediaries, JCAHO, the Other Health Agencies or any other governmental
agency of any pending or, to the Seller's and/or the Shareholder's knowledge,
threatened investigations or surveys with respect to the Facility, and neither
the Seller nor the Shareholder has reason to believe that any such
investigations or surveys are pending or threatened.
3.23. ▇▇▇▇-▇▇▇▇▇▇ CARE. The Seller does not have any outstanding loan,
grant or loan guarantee pursuant to the ▇▇▇▇-▇▇▇▇▇▇ Act (42 U.S.C. section 291a,
ET SEQ.).
3.24. U.S. PERSON. Neither the Seller nor the Shareholder is a "foreign
person" within the meaning of Section 1445 of the Code.
3.25. FULL DISCLOSURE. No representation or warranty made by the Seller
or the Shareholder herein contains any untrue statement of a material fact, or
omits to state any material fact required to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading.
3.26. ASSETS. The Assets constitute all of the assets owned, leased,
used or held for use by the Seller that are necessary for the operation of the
Facility, as presently operated, except for the Excluded Assets.
3.27. INTENTIONALLY OMITTED.
3.28. PERSONNEL. (a) Schedule 3.28 sets forth a complete list (as of
the date set forth therein) of names, positions and current annual salaries or
wage rates, bonus and other
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compensation, accrued sick and vacation days, and period of service credited for
vesting as of the date thereof of all full-time and part-time employees of
Seller or its affiliates and indicating whether such employee is a part-time or
full-time employee.
(b) The Seller and the Shareholder are in material compliance
with all federal and state laws, rules and regulations respecting employment and
employment practices, terms and conditions of employment with respect to their
respective employees who are employed at the Facility (including, but not
limited to, the Fair Labor Standards Act, Title VII of the Civil Rights Act of
1964, the Occupational Safety and Health Act, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, the Family
and Medical Leave Act and the West Virginia Workers' Compensation Act, all as
amended).
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller and the Shareholder
and their respective successors and permitted assigns, as of the date hereof as
follows:
4.1. ORGANIZATION, STANDING, AND AUTHORITY. The Purchaser is a
nonprofit duly organized, validly existing and in good standing under the laws
of the State of West Virginia. The Purchaser and FMC each has all requisite
company power and authority (i) to execute, deliver and perform this Agreement
and all Related Agreements and (ii) to consummate the transactions contemplated
hereby. The Purchaser is the sole member of FMC.
4.2. AUTHORIZATION AND BINDING OBLIGATION. All company action on the
part of the Purchaser and its directors and members and all corporate action on
the part of FMC necessary for the authorization, execution, delivery and
performance by the Purchaser and FMC of this Agreement and the Related
Agreements has been taken with respect to the Purchaser and will be taken on or
prior to the Closing with respect to FMC. This Agreement has been duly executed
and delivered by the Purchaser, and this Agreement and the Related Agreements
constitute or will constitute, when duly executed and delivered, the valid and
legally binding obligations of the Purchaser and FMC, enforceable against the
Purchaser and FMC in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws from time to time in effect affecting the
enforcement of creditors' rights generally, and except as enforcement of
remedies may be limited by general equitable principles.
4.3. ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement and the Related Agreements by the Purchaser and
FMC and the consummation of the transactions contemplated hereby (with or
without the giving of notice, the lapse of time, or both): (i) will not conflict
with any provision of the organizational documents of the Purchaser or FMC, (ii)
will not conflict with, result in a breach of, or constitute a default under,
any applicable law, rule or regulation or, to the Purchaser's knowledge, any
applicable judgment, order, ordinance, injunction or decree of any court or
governmental instrumentality and (iii) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of, any material agreement, instrument, franchise, certificate, license or
permit to which the Purchaser or FMC is a party or may be bound or by which its
assets are or may be affected.
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4.4. CONSENTS. Except for the expiration or termination of any
applicable waiting period under the HSR Act, the receipt of CON Approval and the
Consents described in SCHEDULE 4.4, no consent, approval or authorization of, or
declaration to or filing with any governmental or regulatory authority or any
other third party is required to permit the Purchaser or FMC to consummate the
transactions contemplated by this Agreement.
4.5. LITIGATION; DISPUTES. There are no claims, actions, suits or
proceedings pending or, to the knowledge of the Purchaser, threatened, against
or affecting the Purchaser or FMC which challenge the validity of this
Agreement, or which if adversely determined, would adversely effect its ability
to consummate the transactions contemplated by this Agreement or to perform its
covenants and agreements under this Agreement.
4.6. FULL DISCLOSURE. No representation or warranty made by the
Purchaser herein contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading.
4.7 FINANCING. The Purchaser has available as of the date hereof, and
will have available as of the Closing Date, all funds necessary to pay in full
in cash the Purchase Price at the Closing.
5. PRE-CLOSING COVENANTS OF THE SELLER
Except as contemplated by this Agreement or with the prior written
consent of the Purchaser, between the date hereof and the Closing Date (the
"EXECUTORY PERIOD"), the Seller shall operate its Facility in the ordinary
course of business in accordance with its past practices (except where such
would breach the following covenants or with the Seller's other obligations
hereunder), and shall abide by the following negative and affirmative covenants:
5.1. NEGATIVE COVENANTS. The Seller covenants and agrees that it shall
not do any of the following during the Executory Period:
5.1.1. COMPENSATION. Increase the compensation, bonuses or
other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Facility, except in the
ordinary course of business consistent with past practice or as required by
contract or law;
5.1.2. CONTRACTS. Modify, amend or renew any of the Assumed
Contracts or enter into any new contracts, except in the ordinary course of
business, provided that the Seller shall not renew (other than automatic
renewals) or enter into any new contract providing for payments in excess of
$10,000 per year without the prior written consent of the Purchaser other than
any contract which is terminable on not more than 30 days' notice;
5.1.3. LICENSES. Knowingly do any act or fail to do any act
which could reasonably be expected to result in the expiration revocation,
suspension or modification of any of the Licenses, or fail to prosecute with due
diligence in the ordinary course, consistent with past practices any
applications, or renewals thereof, to any governmental authority, if any, in
connection with the operation of the Facility;
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5.1.4. WAIVER OF RIGHTS. Knowingly waive any material right
relating to the Assets or the Facility;
5.1.5. CONSTRUCTION. Acquire (whether by purchase or lease)
capital assets or incur costs in excess of $10,000 in respect of any new
construction projects relating to the Facility;
5.1.6. ACCOUNTING METHODS AND BUSINESS PRACTICES. Change its
accounting methods or business practices with respect to collection of Accounts
Receivable or payment of accounts payable;
5.1.7. DISPOSITION OF ASSETS. Sell, assign, lease or otherwise
transfer or dispose of any of the Assets, except for assets consumed or disposed
of in the ordinary course of business or that are no longer used or useful in
the business or operations of the Facility or are replaced by property of
substantially similar kind and value;
5.1.8. ENCUMBRANCES. Create, assume or permit to exist any
Lien upon the Assets, except for Permitted Liens; or
5.1.9. NO INCONSISTENT ACTION. Knowingly take any action which
is a breach of its obligations hereunder.
5.2. AFFIRMATIVE COVENANTS. The Seller covenants and agrees
that it shall do the following during the Executory Period:
5.2.1. ACCESS TO INFORMATION. Subject to Section 12.13 hereof,
allow the Purchaser and its authorized representatives reasonable access at the
Purchaser's expense during normal business hours, on reasonable prior notice and
without undue interruption to the operation of the Seller or Shareholder to the
employees and staff of the Seller and to the Assets and all books, records,
files and other documents relating to the Facility for the purpose of audit and
inspection, and the Seller shall furnish or cause to be furnished or made
available at the Facility, or, to the extent previously provided to the
Purchaser or its representatives, at the offices of the Shareholder, all
information with respect to the affairs and business of the Seller relating to
the Assets or the operation of the Facility as the Purchaser may reasonably
request;
5.2.2. MAINTENANCE OF ASSETS. Use its best efforts to maintain
all of the Assets or replacements thereof and improvements thereon in good
condition (ordinary wear and tear excepted) and to use, operate and maintain all
of such assets in a manner consistent with past practice;
5.2.3. INSURANCE. Maintain all existing or comparable
replacement insurance policies with respect to the Assets and the Facility;
5.2.4. CONSENTS. Use its best efforts to obtain the Consents;
5.2.5. PRESERVATIONS OF BUSINESS. Use its best efforts to
preserve the business of the Facility and the Seller's present relationships
with doctors, patients, Payors, suppliers, employees and others having business
relations with it in the ordinary course of business;
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5.2.6. PRESERVATION OF REIMBURSEMENT RATES. Use its best
efforts to maintain the reimbursement rates of the Facility, including, without
limitation, the filing of all reports with Payors necessary to maintain such
rates, consistent with past practice;
5.2.7. BOOKS AND RECORDS. Maintain its books and records in
accordance with past practices;
5.2.8. NOTIFICATION. Promptly notify the Purchaser in writing
of any unusual developments with respect to the business or operations of the
Facility which has resulted in a Material Adverse Effect, and of any change in
any of the information contained in the Seller's representations and warranties
contained in Section 3 or in the schedules hereto which has resulted in a
Material Adverse Effect, provided that such notification shall not relieve the
Seller of any obligations hereunder;
5.2.9. FINANCIAL INFORMATION. Furnish to the Purchaser, within
45 days after the end of each month ending between the date of the most recent
month ended prior to the date hereof and the Closing Date, a statement of income
and expense for the month just ended and such other financial information
(including information on payables and receivables) in each case as the
Purchaser may reasonably request and which is prepared in the ordinary course of
business;
5.2.10. CONTRACTS. Prior to the Closing, deliver to the
Purchaser a list of all material Contracts entered into by the Seller between
the date hereof and the Closing Date; and
5.2.11. CONDUCT OF BUSINESS. Conduct the business and
operations of the Seller with respect to the Facility in the ordinary course of
business consistent with past practice.
5.2.12. INTENTIONALLY OMITTED.
5.2.13. SELLER'S AND SHAREHOLDER'S EFFORTS TO CLOSE. The
Seller and the Shareholder shall use their best efforts to satisfy all of the
conditions precedent set forth in Article 8 to their or Purchaser's obligations
under this Agreement to the extent that Seller's or Shareholder's actions or
inactions can control the satisfaction of such conditions.
5.2.14. NO-SHOP CLAUSE. From and after the date hereof until
the earlier of the Closing or the termination of this Agreement, except as
provided in Section 2.8 of that certain Purchase Agreement dated as of June 24,
1998 among the Shareholder, certain of its subsidiaries and Charter Behavioral
Health Systems, LLC, neither the Seller nor the Shareholder nor Galax shall,
without the prior written consent of Purchaser: (i) offer for sale or lease the
assets of the Facility or the Assets (or any material portion thereof) owned or
leased by the Seller; or any of the stock or other securities of the Seller;
(ii) solicit offers to buy all or any material portion of the Facility or the
Assets or any stock or other securities of the Seller; (iii) hold discussions
with any party (other than the Purchaser) looking toward such an offer or
solicitation or looking toward a merger or consolidation of the Seller; or (iv)
enter into any agreement with any party (other than the Purchaser) with respect
to the sale or other disposition of the Facility or the Assets or of any stock
or other securities of the Seller, or with respect to any merger, consolidation,
or similar transaction involving the Seller.
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6. ADDITIONAL COVENANTS
6.1. CONSENT. Following the execution hereof, the Seller and the
Purchaser shall promptly make applications to all third parties whose Consents
are required for the consummation of the transactions contemplated by this
Agreement (and shall use their respective best efforts to have made such
applications by no later than July 24, 1998), and shall otherwise use their best
efforts to obtain the Consents as expeditiously as possible, each such Consent
being on terms which shall not effect a material adverse change to any License
or Assumed Contract with respect to which such Consent is being obtained. The
Seller shall be ultimately responsible for obtaining all Consents which are
necessary for the Seller to consummate the transactions contemplated hereby,
including, with respect to Assumed Contracts, and the Purchaser shall be
ultimately responsible for filing all applications and obtaining all Consents
which are necessary for the Purchaser to consummate the transactions
contemplated hereby, including, with respect to the transfer or obtaining of
certificates of need and other Licenses. Upon request, the Seller and the
Purchaser shall periodically inform the other party of the status of its efforts
to obtain such Consents and shall reasonably cooperate with each other in
connection therewith. To the extent that a Consent with respect to the
assignment of an Assumed Contract has not been obtained by the Closing and both
the Seller and the Purchaser waive the requirement that such Consent be obtained
for purposes of the Closing, the Seller shall continue to use its best efforts
to obtain such Consent for up to 60 days following the Closing Date and until
such time as the Consent is obtained or rejected or the expiration of such
60-day period the Seller and the Purchaser shall cooperate with each other in
any reasonable and lawful arrangements designed to provide the Purchaser the
benefits of the use of such Contract (subject to the obligations thereunder) for
its term (or any right or benefit arising thereunder, including the enforcement
for the benefit of the Purchaser of any and all rights of the Seller against a
third party thereunder). Once such Consent is obtained, the Seller shall
promptly assign, transfer, convey and deliver such Contract to the Purchaser,
and the Purchaser shall assume the obligations of such Contract. To the extent
that a Consent with respect to the transfer of a License has not been obtained
by the Closing and both the Seller and the Purchaser waive the requirement that
such Consent be obtained for purposes of the Closing, the Purchaser shall
continue to use its best efforts to obtain such Consent and until such time as
the Consent is obtained the Seller shall, to the extent lawfully permitted,
continue to operate under such License for the benefit of the Purchaser. To the
extent that certain Accounts Receivable are not transferable the Seller and the
Purchaser shall treat such Accounts Receivable as though they had been assigned
to the Purchaser and the Seller shall collect Accounts Receivable for the
benefit of the Purchaser and promptly remit to the Purchaser such collections.
To the extent that the Purchaser collects the West Virginia Receivable (or any
portion thereof), such West Virginia Receivable (or portion thereof) shall be
held for the benefit of the Seller and promptly remitted to the Seller (no later
than 3 business days after receipt). Notwithstanding anything to the contrary
set forth herein, there shall be no transfer of ownership or control of the
"controlled substances" in respect of the Assets until such time as the
Purchaser has obtained the appropriate Controlled Substance Registration
Certificate from the United States Drug Enforcement Agency in respect of the
Facility's pharmacy. Until such time, the Seller shall continue to operate the
Facility pharmacy in the manner theretofore operated. The Purchaser shall
indemnify and hold harmless the Seller, the Shareholder and their affiliates in
accordance with Section 11, upon and after the Closing, from and against any
Losses arising out of or relating to (i) the operation of the Facility pharmacy
after the Closing, including, without limitation, the dispensing of controlled
substances
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and (ii) the performance of any Assumed Contract or License on behalf of
Purchaser. The Seller shall use its best efforts to obtain the consent of the
medical staff members other than those who are medical staff or employees of the
Purchaser or its affiliates to the disclosure of such members' existing medical
staff files to the Purchaser.
6.2. COOPERATION. The parties shall reasonably cooperate with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement.
6.3. TAXES, FEES AND EXPENSES. The Seller and the Purchaser shall each
pay one half of all sales, use, transfer, recordation and documentary taxes and
fees, if any, arising out of the transfer of the Assets pursuant to this
Agreement. Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
6.4. BROKERS. Except as set forth on SCHEDULE 6.4, each of the parties
represents and warrants to the other that neither it nor any person or entity
acting on its behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the transaction contemplated by this
Agreement. The Seller and Shareholder shall be responsible for and pay and
indemnify the Purchaser against any and all fees or expenses payable to the
parties set forth on SCHEDULE 6.4.
6.5. CONFIDENTIALITY. Except as necessary for the consummation of the
transactions contemplated hereby or as may be required by law, each of the
parties hereto will keep confidential any information which is obtained from any
other party hereto in connection with the transactions contemplated hereby and
which is not readily available to the general public. In the event this
Agreement is terminated, each party will return all documents, work papers and
other written material obtained by it in connection with the transactions
contemplated hereby, to the party which provided such materials.
6.6. RISK OF LOSS.
6.6.1. The risk of any loss, damage or impairment,
confiscation or condemnation of any of the Assets from any cause whatsoever
shall be borne by the Seller at all times prior to the Closing. In the event of
any material physical loss, damage or impairment, confiscation or condemnation
of any material portion of the Assets prior to the Closing, the Seller shall use
their best efforts to repair, replace or restore such Assets to their prior
condition as soon as reasonably practicable after such loss, damage, impairment,
condemnation or confiscation, and the proceeds of any claim for loss payable
under any insurance policy, judgment or award with respect thereto shall be
applied to such repairs subject to applicable agreements governing indebtedness
of Seller and the Shareholder.
6.6.2. If any material damage or destruction of the Assets or
any other event occurs which prevents the operation of the Facility in the
normal and usual manner and the Seller cannot restore or replace such Assets so
that such conditions are cured in all material respects
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and normal operations are resumed before the Closing Date, the Closing Date
shall be postponed for a period of up to 60 days, to permit the repair or
replacement of the damaged Assets.
6.6.3. In the event of any damage or destruction of Assets
described in Section 6.6.2, if such Assets have not been restored or replaced
and the Facility's normal operations resumed within the 60-day period
contemplated by Section 6.6.2, the Purchaser or the Shareholder may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to the other.
6.7. EMPLOYEE BENEFIT MATTERS.
6.7.1. Except for the Hired Employees, with respect to whom
Purchaser hereby assumes full responsibility and liability, the Seller shall
retain full responsibility and liability for offering and providing
"continuation coverage" to any "qualified beneficiary" who is covered by a
"group health plan" sponsored, maintained or contributed to by the Seller and
who has experienced a "qualifying event" or is receiving such "continuation
coverage" on or prior to the Closing Date. Continuation coverage, qualified
beneficiary, qualifying event and group health plan shall have the meanings
given such terms under Section 4980B of the Code and Section 601 ET SEQ. of
ERISA.
6.7.2. On the Closing Date, the Purchaser shall offer
employment to all employees of the Shareholder employed at the Facility
immediately prior to the Closing Date. Such offers shall be to employ all such
employees as at-will employees of the Purchaser with their initial salary and
benefits set at their current pay rates and otherwise upon terms which, as a
whole, are no less favorable than those in effect prior to the Closing Date and
with benefits no less favorable than those benefits being provided to similarly
situated employees of the Purchaser and its affiliates. To the extent that an
employee of the Shareholder employed at the Facility is not offered employment
with the Purchaser, the Purchaser shall reimburse the Shareholder for all
severance amounts payable to such persons in accordance with severance payment
terms set forth in SCHEDULE 6.7.2 and all other Losses relating thereto. Except
as otherwise set forth herein, to the extent an employee of the Shareholder
employed at the Facility is not offered employment with the Purchaser pursuant
to this Section 6.7.2, the Purchaser shall be responsible for and shall cause to
be discharged and satisfied in full all amounts owed to such employee arising
out of such employee's employment by the Shareholder prior to the Closing,
including, without limitation, wages, salaries, severance, sick pay, accrued
vacation and all amounts owed pursuant to any employment, incentive,
compensation or bonus agreements, and the Purchaser agrees to indemnify the
Shareholder and hold the Shareholder harmless from any such liabilities. The
Purchaser shall assume the obligation of the Seller to pay accrued wages and
salary to the Seller's employees who accept employment with the Purchaser (the
"HIRED EMPLOYEES") but such accrued liability shall be included in the Closing
Date Adjusted Working Capital. The Purchaser shall grant to the Hired Employees,
at the time of hiring, a credit for the amount of paid days off, including
vacation, holiday and sick leave, as each such Hired Employee had accrued but
had nor used under similar programs maintained by the Seller as of the time the
Hired Employee left the employ of the Seller; provided that the monetary value
of such credit shall be included in the Closing Date Adjusted Working Capital.
For purposes of the Purchaser's employee benefit plans and policies that provide
coverage to the Hired Employees on or after the Closing Date, to the extent
permitted or contemplated by such plans and policies,
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the Purchaser shall give credit to employees who accept such offer for their
respective periods of employment with the Seller prior to the Closing.
6.7.3. Except as disclosed in SCHEDULE 6.7.3, the Seller
represents and warrants to the Purchaser that none of the "full-time employees"
of the Seller (as said term is defined under the WARN Act) have experienced an
"employment loss" (as said term is defined under the WARN Act) during the 90-day
period prior to the date hereof, and the Seller agrees to provide to the
Purchaser at the Closing an updated list of such employees, effective as of the
Closing Date. The Purchaser shall indemnify and hold the Shareholder and their
affiliates harmless, in accordance with the provisions set forth in Section 11,
from and against all Losses resulting from any compliance obligation (including,
without limitation, the obligation to give notice or pay any money) that the
Seller and its affiliates or the Purchaser has under the WARN Act arising from
the termination of any Hired Employees or other employees of the Seller at the
Facility on and after the Closing Date or the failure to hire a sufficient
number of any employees of the Seller at the Facility.
6.7.4. The Purchaser shall offer health plan coverage to the
Hired Employees on terms and conditions generally applicable to the Purchaser's
employees. For purposes of providing such coverage, the Purchaser shall waive
all preexisting condition limitations for all such Hired Employees covered by
the Seller's health care plan as of the Closing Date and shall provide such
health care coverage effective as of the Closing Date without the application of
any eligibility period for coverage.
6.7.5. The Seller shall cause all Hired Employees to cease
participation in any employee benefit and incentive plans sponsored or
maintained by or on behalf of the Seller and shall cause all benefits thereunder
by the Seller to be paid thereto in accordance with the terms of such employee
benefit and incentive plans, except for those liabilities or benefits for which
the Purchaser will grant credit pursuant to Section 6.7.2
6.7.6. Notwithstanding the foregoing, nothing in this
Agreement shall, or shall be deemed to, create any rights in favor of any person
not a party hereto or to constitute an employment agreement or condition of
employment for any employee of the Seller or the Purchaser. No provisions of
this Section 6.7 shall be construed to create any right with respect to any
employee of the Seller or the Purchaser, including the Hired Employees, to
continued employment with the Purchaser and the terms of such continued
employment after the Closing Date.
6.7.7. To the extent permitted by applicable law, for purposes
of FICA tax withholding for periods after the Closing Date, the Purchaser shall
treat all wages within the meaning of Section 3121(a) of the Code) paid by the
Seller in the calendar year in which the Closing occurs to each Hired Employee
as if paid by the Purchaser in such calendar year. The Seller agrees to transfer
to the Purchaser any records relating to withholding and payments of income and
unemployment taxes (federal, state and local) and FICA taxes with respect to
wages paid to the Hired Employees at or prior to the Closing. The Purchaser and
the Seller hereby agree that, pursuant to Revenue Procedure 96-60, the Seller
shall be relieved from furnishing Forms W-2 to the Hired Employees for the
calendar year in which the Closing occurs and the Purchaser shall timely furnish
such forms for such year reflecting wages paid and taxes withheld
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by both the Purchaser and the Seller. At or prior to the Closing, the Seller
shall transfer to the Purchaser a current Form W-4 (Employee's Withholding
Allowance Certificate) for each Hired Employee.
6.8. FILING OF COST REPORTS. The Seller shall be entitled to, and shall
be responsible for any and all receivables or payables, claims, rights or other
amounts due (or which may become due) to the Seller as reimbursement or other
payments from the United States government or any agency thereof, any state or
any fiscal intermediary or other Payor in connection with the review, audit or
settlement of Cost Reports filed with the United States government under the
Medicare program, with any state under any state cost-based programs or with any
fiscal intermediary or other Payor, relating to the operations or the businesses
of the Seller (including, without limitation, the Facility) at any time prior to
or on the Closing Date including, without limitation, Cost Report Settlements
(collectively, the "COST REPORT ADJUSTMENTS"), whether or not such Cost Reports
were filed prior to, on or after the Closing Date. The Seller shall be
responsible for filing the Medicare provider, state provider and fiscal
intermediary or other Payor Cost Reports for the Facility for cost reporting
periods ending before or on the Closing Date (the "SELLER COST REPORTS"),
including any terminating Cost Reports due as a result of the transactions
contemplated hereby, and the Seller shall accept full responsibility and
entitlement under the Seller Cost Reports, including without limitation,
responsibility for and entitlement to the Cost Report Adjustments recapture, if
any, and audit and other liability for overpayment or recoupment in connection
with the Seller Costs Reports. The Seller shall be responsible for Medicare and
any state provider appeals relating to the Facility for all periods ended on or
before the Closing Date, both individual as well as group appeals as those terms
are defined in Part I, Section 2920 of the Provider Reimbursement Manual
published by the Health Care Financing Administration. The Seller shall be
entitled to receive all amounts due from the Medicare and any state programs in
respect to all such appeals for periods ended on or before the Closing Date. The
Purchaser agrees that it shall not file or cause to be filed any amended Costs
Reports in the Seller's respective names or otherwise with respect to the
Facility for any period ending on or prior to the Closing Date; it being
understood and agreed that the Seller shall have the sole discretion as to the
filing of such amended Cost Reports. The Seller will cooperate with the
Purchaser regarding amendments to Seller Cost Reports in cases where errors or
omissions in said Cost Reports result in adverse reimbursement consequences to
the Purchaser on an ongoing basis. The Purchaser shall forward to the Seller any
and all correspondence relating to any and all of the Seller Cost Reports, the
Cost Report Adjustments, and the other Excluded Assets promptly following
receipt thereof by the Purchaser. The Purchaser agrees to remit to the Seller
any checks or other receipts included in or relating to the Cost Report
Adjustments and any other item which is an Excluded Asset (including, without
limitation, the West Virginia Receivable or any portion thereof) immediately
upon receipt by the Purchaser.
6.9. POST-CLOSING INSURANCE. For a period of five years after the
Closing, the Seller shall maintain their existing comprehensive general
liability and hospital professional liability insurance coverages, or obtain
extended reporting period tail insurance, with respect to the Facility for all
periods prior to the Closing in substantially their present form as described on
Schedule 3.12.; provided that the Purchaser shall reimburse the Seller on the
Closing Date for one-half of the cost of such insurance coverage.
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6.10. ACCESS TO INFORMATION.
6.10.1. After the Closing, the Seller agrees to allow the
Purchaser and its authorized representatives reasonable access, at its own
expense and during normal business hours upon reasonable prior notice and
without undue interruption, to all books, records, files and other documents
relating to the Facility relating to periods prior to the Closing Date for the
purpose of audit, compliance with laws or other reasonable business purpose,
except as such access may be restricted by law or applicable privilege. The
Seller also agrees to give the Purchaser notice (the "RECORDS NOTICE") of its
intent to destroy any such books, records, files and other documents, and the
Purchaser shall have the option to obtain, at its own expense, such books,
records, files and other documents from the Seller upon the giving of notice of
the Purchaser's desire to obtain such books, records, files and other documents
to the Seller within 15 days of receipt of such Records Notice.
6.10.2. After the Closing, the Purchaser agrees to allow the
Seller and their authorized representatives reasonable access, at their own
expense and during normal business hours upon reasonable prior notice and
without undue interruption, to all Patient Records and all other books, records,
files and other documents relating to the Facility relating to periods prior to
the Closing Date for any lawful purpose, including for the purpose of financial,
tax, audit and compliance with laws or other reasonable business purpose, except
as such access may be restricted by law or applicable privilege, and including,
without limitation in connection with the preparation of the Closing Date
Adjusted Working Capital and any disputes relating thereto, and in connection
with the filing of tax returns and other reports and related matters.
Notwithstanding the foregoing, the Seller's access to, or right to copies of,
any Patient Records shall be subject to any applicable law, accreditation
standard or rule of confidentiality or privilege.
6.11. ENVIRONMENTAL REPORTS. The Purchaser may, at its expense, cause
Phase I and Phase II Environmental Assessments, at no cost to the Seller or the
Shareholder, to be prepared with respect to the Real Property no later than
thirty (30) days after the date hereof. The Seller covenants and agrees at no
cost to the Shareholder or the Seller, to reasonably cooperate with the
Purchaser in the preparation of any said Phase I and Phase II.
6.12. NON-COMPETITION COVENANT.
6.12.1. Subject to the provisions set forth in Section 6.12.2,
the Seller and the Shareholder covenant and agree that, for a period of three
(3) years commencing on the Closing Date (the "RESTRICTED Period"), neither the
Seller, nor the Shareholder nor any subsidiary of any of them shall compete,
directly or indirectly (whether as an agent, broker, consultant, employee,
director, proprietor, owner, operator, manager, partner, joint venturer,
stockholder, Lender, guarantor or other capacity of such competing enterprise),
with the Purchaser by constructing, owning, leasing, operating or managing a
behavioral health care business, whether free standing or as a unit or component
of another facility, anywhere within a 50-mile radius of the Facility the assets
of which are acquired by the Purchaser pursuant to this Agreement (the "PRIMARY
TERRITORY") or otherwise deliver behavioral health care services within the
Primary Territory (the covenant set forth above to be referred to as the
"NONCOMPETITION COVENANT").
6.12.2. The Seller and the Shareholder acknowledge and agree
that (i) the covenants and restrictions contained in Section 6.12.1 are
necessary for the protection of the
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legitimate business interests of the Purchaser and its operation of the
Facility, (ii) the covenants and restrictions contained in Section 6.12.1 are a
mandatory condition to the consummation of the transactions contemplated by this
Agreement, without which the Purchaser would not be acquiring the Assets, (iii)
the scope of the covenants and restrictions contained in Section 6.12.1 with
regard to time, geography and activities is reasonable and (iv) the Seller and
the Shareholder have received adequate consideration for the covenants and
restrictions contained in Section 6.12.1.
6.12.3. The Seller and the Shareholder acknowledge and agree
that the rights of the Purchaser under this Section 6.12 are of a special and
unique character and that immediate and irreparable harm and damage will result
to the Purchaser if the Seller, the Shareholder or any of their affiliates fails
or refuses to perform its obligations under this Section 6.12. In addition to
any other damages or remedies available to the Purchaser, the Purchaser may seek
an injunction or other equitable relief in a court of competent jurisdiction to
restrain or enjoin such failure or refusal or otherwise specifically enforce the
provisions of this Section 6.12, and the Seller, the Shareholder and their
affiliates waive any defense that the Purchaser has an adequate remedy at law.
6.13. INFORMATION SYSTEMS. After the Closing, the Seller agrees to
allow the Purchaser to have reasonable access to the information system used by
them with respect to the business and operations of the Facility (the
"INFORMATION SYSTEM") during a transition period of 180 days or such longer
period reasonably requested by the Purchaser not to exceed a total of 270 days
(the "TRANSITION PERIOD") for purposes of collecting the Accounts Receivable. In
addition, the Seller agrees, at Purchaser's expense and without undue
interruption in the Seller's or the Shareholder's operations or business, to
provide the Purchaser with reasonable support during the Transition Period to
enable the Purchaser to operate the Information System for such purposes.
6.14 Agreement by the Purchaser Regarding No Other Representations or
Warranties by the Shareholder or the Seller. The Purchaser agrees that except
for the representations and warranties (including the Schedules with respect
thereto) made by the Shareholder or the Seller expressly set forth in Section 3
of this Agreement, neither the Shareholder, the Seller nor any affiliate, agent
or representative thereof has made and shall not be construed as having made to
the Purchaser or to any representative or affiliate thereof, and neither the
Purchaser nor any affiliate, agent or representative thereof has relied upon,
any representation or warranty of any kind. Without limiting the generality of
the foregoing, the Purchaser agrees that neither the Shareholder, the Seller nor
any affiliate, agent or representative thereof makes or has made any
representation or warranty to the Purchaser or to any affiliate or
representative thereof with respect to:
(i) any projections, estimates or budgets relating to
the Shareholder, the Seller, the Assets or the Facility or
otherwise heretofore or hereafter delivered to or made
available to the Purchaser or its counsel, accountants,
advisors, lenders, representatives or affiliates of future
revenues, expenses or expenditures, future results of
operations (or any component thereof), future cash flows (or
any component thereof) or future financial condition (or any
component thereof) of the Shareholder, the Seller, the Assets,
the Facility or any of them or the future
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business, operations or affairs of the Shareholder, the
Seller, the Assets, the Facility or any of them; and
(ii) any other information, statement or documents
heretofore or hereafter delivered to or made available to the
Purchaser or its counsel, accountants, advisors, lenders,
representatives or affiliates with respect to the Shareholder,
the Seller, the Assets, the Facility or any of them or the
business, operations or affairs of the Shareholder, the
Seller, the Assets, the Facility or any of them, except to the
extent and as expressly covered by a representation and
warranty (including the Schedules with respect thereto)
contained in Section 3 hereof.
7. ADDITIONAL COVENANTS OF THE PURCHASER
7.1. RESALE CERTIFICATE. The Purchaser agrees to furnish the Seller
with any resale certificate or similar documents reasonably requested by the
Seller to comply with applicable sales and use tax laws or to claim any
available exemption from any such taxes.
7.2. RECORDS RELATING TO COST REPORTS. Until final settlement of all
applicable Cost Reports, the Purchaser shall preserve, and provide Seller or
Shareholder or their representatives reasonable access, during normal business
hours upon reasonable prior notice and without undue interruption (including
without limitation for purposes of obtaining copies at their expense), to all
financial books and records and other information and documents delivered to it
by the Seller or the Shareholder or their representatives relating to the
preparation or settlement of Cost Reports, including, without limitation,
accounts payable invoices, logs and billing information relating to the
Reimbursement Programs, for a period of seven years unless the Seller provides
Purchaser of notice of final settlement of such applicable Cost Reports. The
Seller agrees to give notice to Purchaser of any such formal settlements. The
Purchaser further agrees to forward to the Seller, promptly but not later than
30 days of receipt of same, all information received by the Purchaser from
Payors relating to periods prior to the Closing Date, including, without
limitation, Cost Report Settlements, notices of program reimbursements, demand
letters for payment and proposed audit adjustments.
7.3. BOOKS AND RECORDS OF THE SELLER. Notwithstanding that the books,
records, files and documents of the Seller described in Section 2.2.3 are
Excluded Assets, to the extent required by applicable law or at the Seller's
election, the Seller may choose not to remove such books, records, files and
documents from the Facility or otherwise acquire possession of same after the
Closing. Unless removed by the Seller (which the Seller shall have the right to
do at any time following the Closing), the Purchaser shall, in material
compliance with applicable law, maintain such books, records, files and
documents at the Facility (or at such other mutually approved location) at the
Purchaser's own cost as agent of and bailee for the Seller for a period of seven
years; provided that the Purchaser may remove any of such books, records, files
and documents upon 30 days prior written notice to the Seller, provided that the
Purchaser shall provide the Seller the opportunity to review and remove, at the
Seller's own cost, any of such books, records, files and documents that the
Purchaser in such written notice expresses its intent to remove from the
Facility. After the Closing, the Purchaser shall have the right to assign to an
entity acquiring from the Purchaser substantially all of the Assets and all of
the Purchaser's obligations under this Section 7.3.
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7.4. CONSENTS. The Purchaser covenants and agrees that during the
Executory Period, it shall use its best efforts to obtain the Consents.
7.5. PURCHASER'S EFFORTS TO CLOSE. Purchaser shall use its best efforts
to satisfy all of the conditions precedent set forth in Article 8 to its or the
Seller's or the Shareholder's obligations under this Agreement to the extent
that the Purchaser's actions or inactions can control the satisfaction of such
conditions.
8. CONDITIONS TO CLOSING
8.1. CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO CLOSE. The
obligations of the Purchaser to consummate the closing of the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions, all
or any of which may be waived, in whole or in part, by the Purchaser; provided,
however, that in the event that any or all of such conditions are waived, such
waiver shall be for all purposes and not only for purposes of closing the
transactions contemplated hereby, and the conditions so waived shall not serve
as a basis for indemnification under Section 11.2.
8.1.1. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Seller and the Shareholder contained in this Agreement shall
be true and complete at and as of the Closing Date as though such
representations and warranties were made at and as of such time, except to the
extent that the breach thereof has not resulted in a Material Adverse Effect.
8.1.2. COVENANTS AND CONDITIONS. The Seller shall have
performed and complied in all material respects with all material covenants and
agreements required by this Agreement to be performed or complied with by them
prior to or on the Closing Date.
8.1.3. CONSENTS AND APPROVALS. The applicable waiting period
under the HSR Act shall have expired or been terminated and each of the Consents
with an asterisk next to it on SCHEDULE 3.7 shall have been duly obtained and
delivered to the Purchaser with no material adverse conditions imposed by such
Consent and no material adverse change to the terms of any License or Assumed
Contract with respect to which such Consent is obtained.
8.1.4. DELIVERIES. The Seller and the Shareholder shall have
made or stand willing and able to make all the deliveries to the Purchaser set
forth in Section 9.2.
8.1.5. MATERIAL ADVERSE CHANGE. Except as set forth on
SCHEDULE 8.1.5, between March 31, 1998 and the Closing Date, there shall have
been no change in the business, operations or financial condition of the Assets
or the Facility which has resulted in a Material Adverse Effect.
8.1.6. LICENSES. The Seller shall be the holder of all
material Licenses, and there shall not have been any material adverse
modification of any of such Licenses. No proceeding shall be pending the effect
of which would be to revoke, cancel, fail to renew, suspend or modify adversely
any such Licenses except in connection with the transactions contemplated
hereby.
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8.1.7. NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding or investigation shall have been instituted before any court or
governmental agency to enjoin, restrain, prohibit or obtain substantial damages
in respect of this Agreement or the consummation of the transaction contemplated
hereby. No regulation or legislation shall have been enacted by any legislative
body to enjoin, restrain, prohibit or obtain substantial damages in respect of
this Agreement or the consummation of the transaction contemplated hereby.
8.1.8. PRE-CLOSING CONFIRMATIONS. The Purchaser shall have
obtained documentation or other evidence reasonably satisfactory to it that the
Purchaser has:
(i) Received all material approvals from all
governmental agencies whose approval is required to complete the transactions
herein contemplated, including, without limitation, the CON Approval which shall
be "final" as such term is defined in Section 2.10 of this Agreement;
(ii) Received reasonable assurances from all
applicable licensure agencies that upon or as of the Closing all material
certificates of need, licenses or permits required by law to operate the
Facility as currently operated will be transferred to, or reissued in the name
of, the Purchaser; and
(iii) Obtained reasonable assurances that Medicare
and Medicaid certification of the Facility for its operation by the Purchaser
will be effective as of the Closing and that the Purchaser may participate in
and receive reimbursement from such programs without material interruption
effective from and after the Closing.
8.1.9. INTENTIONALLY OMITTED.
8.2. CONDITIONS TO OBLIGATIONS OF THE SELLER TO CLOSE. The obligations
of the Seller to consummate the closing of the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing Date,
of each and every one of the following conditions, all or any of which may be
waived, in whole or in part, by the Shareholder; provided, however, that in the
event that any or all of such conditions are waived, such waiver shall be for
all purposes and not only for purposes of closing the transactions contemplated
hereby, and the conditions so waived shall not serve as a basis for
indemnification under Section 11.3.
8.2.1. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Purchaser contained in this Agreement shall be true and
complete in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
8.2.2. COVENANTS AND CONDITIONS. The Purchaser shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
8.2.3. CONSENTS AND APPROVALS. The applicable waiting period
under the HSR Act shall have expired or been terminated and each of the Consents
with an asterisk next to it on SCHEDULE 3.7 shall have been duly obtained and
delivered to the Purchaser and the Seller.
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8.2.4. DELIVERIES. The Purchaser shall have made or stand
willing and able to make all the deliveries to the Seller set forth in Section
9.3.
8.2.5. NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative body
to enjoin, restrain, prohibit or obtain substantial damages in respect of, or
which is related to, or arises out of, this Agreement or the consummation of the
transactions contemplated hereby.
9. CLOSING AND CLOSING DELIVERIES
9.1. CLOSING. The Closing shall occur on the later of (i) August 31,
1998, or (ii) within 5 business days and after the satisfaction or waiver of all
other conditions precedent set forth in Sections 8.1 and 8.2 (the "CLOSING
DATE"), and shall be held at the offices of the Purchaser, commencing at 9:00
a.m. local time, or at such other time and place as the Shareholder and the
Purchaser may mutually agree. Notwithstanding the actual time the following
deliveries are made on the Closing Date, the parties hereto agree that the
Closing shall be effective and deemed for all purposes to have occurred as of
11:59 p.m. local time on the day immediately preceding the Closing Date.
9.2. DELIVERIES BY THE SELLER AND THE SHAREHOLDER. Prior to or on the
Closing Date, the Seller and the Shareholder shall deliver to the Purchaser (or
make available at the Facility) the following, in form and substance reasonably
satisfactory to the Purchaser and its counsel:
9.2.1. TRANSFER DOCUMENTS. Duly executed limited warranty
deeds, bills of sale, assignments, motor vehicle titles and other transfer
documents which shall be sufficient to vest good and marketable title to the
Assets in the name of the Purchaser or its permitted assignees, free and clear
of any Liens (except for Permitted Liens);
9.2.2. CONSENTS. An original or copy of each Consent received
by the Seller as of the Closing;
9.2.3. CONTRACTS, BUSINESS RECORDS, ETC. The Patient Records,
the Hired Employees Records, the Licenses (to the extent transferred to the
Purchaser), the Assumed Contracts, provider and supplier lists, blueprints,
working drawings, engineering records and plans related to the Real Property,
warranties and other documents relating to the Personalty and all other files
and records used by the Seller relating to the Assets and in Seller's or the
Shareholder's possession, except for any such files and records that are
Excluded Assets;
9.2.4. SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the Secretary of the Seller certifying that the
resolutions, as attached to such certificate, were duly adopted by the Seller's
Board of Directors and stockholders (if required), authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby and that such resolutions remain in full force and effect;
9.2.5. OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the President or Vice President of the Seller,
certifying that: (i) the representations and warranties of the Seller contained
in this Agreement are true and complete at and as of the
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Closing Date (except to the extent that the breach thereof has not resulted in a
Material Adverse Effect and except for changes that are contemplated by this
Agreement), and (ii) the Seller has performed in all material respects all of
its material obligations and complied in all material respects with all of its
material covenants set forth in this Agreement to be performed or complied with
on or prior to the Closing Date.
9.2.6. INCUMBENCY CERTIFICATES. Certificates of incumbency for
the officers of the Seller duly authorized to execute and deliver this Agreement
and the Related Agreements;
9.2.7. OPINION. An opinion of the Seller's legal counsel in
the form as is mutually agreed to between the Seller and the Purchaser;
9.2.8. CERTIFICATE OF NONFOREIGN STATUS. A certificate of
nonforeign status in the form required by Section 1445 of the Code, duly
executed by an authorized officer of the Seller;
9.2.9. OTHER. Such other evidence of the performance of all
covenants and satisfaction of all conditions required of the Seller and
Shareholder by this Agreement, at or prior to the Closing, as the Purchaser or
its counsel may reasonably require.
9.3. DELIVERIES BY THE PURCHASER. Prior to or on the Closing Date, the
Purchaser shall deliver to the Seller the following, in form and substance
reasonably satisfactory to the Seller and their counsel:
9.3.1. CASH PURCHASE PRICE. The Cash Purchase Price, in cash
by wire transfer of immediately available funds;
9.3.2. INTENTIONALLY OMITTED.
9.3.3. INTENTIONALLY OMITTED.
9.3.4. ASSUMPTION AGREEMENTS. Appropriate assumption
agreements pursuant to which the Purchaser shall assume and undertake to perform
those obligations of the Seller relating to the Assets to be assumed by the
Purchaser pursuant to Section 2.5;
9.3.5. SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the Secretary of the Purchaser certifying that the
resolutions, as attached to such certificate, were duly adopted by the
Purchaser's Board of Directors, or comparable governing body, authorizing and
approving the execution of this Agreement and the consummation of the
transactions contemplated hereby and that such resolutions remain in full force
and effect;
9.3.6. OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the President or Vice President of the Purchaser,
certifying that: (i) the representations and warranties of the Purchaser
contained in this Agreement are true and complete in all material respects at
and as of the Closing Date and (ii) the Purchaser has performed in all material
respects all of its obligations and complied in all material respects with all
of its covenants set forth in this Agreement to be performed or complied with,
on or prior to the Closing Date.
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9.3.7. INCUMBENCY CERTIFICATES. Certificates of incumbency for
the officers of the Purchaser duly authorized to execute and deliver this
Agreement and the Related Agreements;
9.3.8. OPINION. An opinion of the Purchaser's legal counsel in
the form as is mutually agreed to between the Seller and the Purchaser; and
9.3.9. FMC. An agreement by FMC in favor of the Seller and the
Shareholder agreeing to be bound by Section 2.9 hereof and terminating the
Existing Agreements effective as of the Closing, in form and substance
reasonably satisfactory to the Seller.
9.3.10. OTHER. Such other evidence of the performance of all
covenants and satisfaction of all conditions required of the Purchaser by this
Agreement, at or prior to the Closing, as the Seller or their counsel may
reasonably require.
10. TERMINATION
10.1. METHOD OF TERMINATION. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, subject to and in accordance with the terms hereof, the consideration
for which is (i) the covenants, representations and warranties set forth in this
Agreement and (ii) expenditures and obligations incurred and to be incurred by
each of the parties hereto, in respect of this Agreement, and this Agreement may
be terminated or abandoned only as follows:
10.1.1. By the mutual consent of the Purchaser and the
Shareholder.
10.1.2. By the Purchaser or the Shareholder pursuant to the
terms of Section 6.6.
10.1.3. By the Purchaser after October 31, 1998, if any of the
conditions set forth in Section 8.1 to which the obligations of the Purchaser
are subject, have not been fulfilled in all material respects or waived in
writing, unless such fulfillment has been frustrated or made impossible by any
act or failure to act of the Purchaser; provided, however, that, if at October
31, 1998, the CON Approval is still pending or has not become final, the
Purchaser shall have no right to terminate this Agreement under this Section
10.1.3 until the CON Approval, or the denial of such approval, has been received
and become final.
10.1.4. By the Shareholder after October 31, 1998, if any of
the conditions set forth in Section 8.2, to which the obligations of the Seller
are subject, have not been fulfilled in all material respects or waived in
writing, unless such fulfillment has been frustrated or made impossible by any
act or failure to act of any of the Seller or the Shareholder; provided,
however, that, if at October 31, 1998, the Purchaser has used and is using its
best efforts to obtain the CON Approval, to complete all submissions required
with respect to the CON Approval and to cause it to become final, then the
Shareholder shall have no right to terminate this Agreement under this Section
10.1.4, so long as the Purchaser continues to use its best efforts as aforesaid,
until 5 business days after the CON Approval, or the denial of such Approval,
becomes final.
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10.2. RIGHTS UPON TERMINATION.
10.2.1. In the event of a termination of this Agreement
pursuant to Section 10.1.1, Section 10.1.2, Section 10.1.3 (other than by reason
of a willful and knowing breach) or Section 10.1.4 (other than by reason of a
willful and knowing breach), each party shall pay the costs and expenses
incurred by it in connection with this Agreement, and no party (or any of its
officers, directors, employees, agents, representatives or stockholders) shall
be liable to any other party for any costs, expenses, damages or loss of
anticipated profits hereunder.
10.2.2. In the event of a termination of this Agreement
pursuant to Section 10.1.3 and Seller shall have committed a willful and knowing
breach of any material provision of this Agreement, then the Purchaser shall
have all rights and remedies available at law or in equity.
10.2.3. In the event of a termination of this Agreement
pursuant to Section 10.1.4 and Purchaser shall have committed a willful and
knowing breach of any material provision of this Agreement, then the Seller
shall have all rights and remedies available at law or in equity.
10.3 SOLE AND EXCLUSIVE REMEDY. Except as set forth in Section 11.8,
following the termination of this Agreement or, if the Closing does not
otherwise occur, each party hereto acknowledges and agrees that such party's
sole and exclusive remedy with respect to any and all claims for any breach or
liability under this Agreement or otherwise relating to the subject matter of
this Agreement and the transactions contemplated hereby shall be solely in
accordance with, and limited by the right to terminate this Agreement pursuant
to Section 10.1 and the effect of any such termination pursuant to Section 10.2
hereof; provided; however, that nothing set forth in this Section shall prohibit
or restrict a party from not terminating this Agreement pursuant to Section
10.1.3 or 10.1.4 and seeking equitable relief, including, without limitation,
specific performance or injunctive relief.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION
11.1. REPRESENTATIONS AND WARRANTIES. All representations, warranties
and covenants contained in this Agreement shall be deemed continuing
representations, warranties and covenants and shall survive the Closing Date as
follows (i) the representations and warranties set forth in Sections 3.1, 3.2,
4.1 and 4.2 shall continue in full force and effect indefinitely; (ii) the
representations and warranties set forth in Sections 3.13, 3.15 and 3.17 shall
continue in full force and effect for a time period equal to the applicable
statute of limitations with respect to claims pertaining thereto; (iii) all
other representations and warranties shall continue in full force and effect
until the second (2nd) anniversary of the Closing Date; and (iv) except with
respect to any covenants that terminate or expire upon a date specified herein
(including, without limitation, Section 5), all covenants (including, without
limitation, Sections 11.2.3 and 11.3.3) shall continue in full force and effect
indefinitely. Any right of indemnification pursuant to this Section 11 with
respect to a claimed breach of any representation, warranty or covenant shall
expire as of the applicable Termination Date, unless on or prior to the
applicable Termination Date a claim for indemnification has been made against
the party from whom indemnification is sought. If a claim for indemnification is
timely made, it may continue to be asserted beyond the applicable Termination
Date of the representation, warranty or covenant with respect to which such
claim relates.
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11.2. Indemnification of the Purchaser by the Seller and the
Shareholder. From and after the Closing, the Seller and the Shareholder, jointly
and severally, agree to indemnify and hold harmless the Purchaser against and
with respect to:
11.2.1. Any and all Losses to the extent resulting from any
breach of a representation or warranty by the Seller or the Shareholder
contained herein, in the Related Agreements or in any certificate, document or
instrument delivered by the Seller or the Shareholder to the Purchaser hereunder
or thereunder;
11.2.2. Any and all Losses to the extent resulting from any
nonfulfillment of any covenant by the Seller or the Shareholder contained herein
(other than the covenants set forth in Section 5 which shall not survive Closing
and Sections 11.2.3, 11.2.4 and 11.2.5), in the Related Agreements, or in any
document or instrument delivered by the Seller or the Shareholder to the
Purchaser hereunder;
11.2.3. Any and all Losses to the extent arising out of the
obligations of the Seller not assumed by the Purchaser pursuant to the terms
hereof;
11.2.4. Any and all Losses to the extent resulting from (i)
any and all Liens (except for Permitted Liens) on any of the Assets as of the
Closing Date other than any Liens created by or for the Purchaser, (ii) any and
all Taxes imposed on or with respect to the ownership of the Assets and/or the
Excluded Assets and the conduct and operation of the businesses of the Facility
on or prior to the Closing Date except to the extent included in Assumed
Liabilities and reflected in the Closing Date Adjusted Working Capital and (iii)
any and all Cost Reports filed or required to be filed by or on behalf of the
Seller with respect to the businesses or operations of the Facility and (iv) any
and all Professional Liability Claims;
11.2.5. Except as set forth on SCHEDULE 3.1.17, any and all
Losses to the extent arising out of, based on or resulting from (i) claims made
by federal, state or local government authorities or other third parties not
affiliated with the Purchaser relating to the presence of any Materials of
Environmental Concern on, in or under any part of the Assets or the Facility at
any time prior to the Closing Date, (ii) claims made by federal, state or local
government authorities or other third parties not affiliated with the Purchaser
relating to the release into the environment (either before or after the Closing
Date) of any Materials of Environmental Concern that were generated, stored,
handled or disposed of on, in, under or from the Assets or the Facility prior to
the Closing Date or (iii) the violation or alleged violation made by federal,
state or local government authorities or other third parties not affiliated with
the Purchaser relating to the Environmental Laws or the Medical Waste Laws
occurring with respect to the condition or operation of the Assets or the
Facility prior to the Closing; and
11.2.6. Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses to the extent incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
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11.3. Indemnification of the Seller and the Shareholder by the
Purchaser. From and after the Closing, the Purchaser shall indemnify and hold
the Seller and the Shareholder harmless against and with respect to:
11.3.1. Any and all Losses to the extent resulting from any
breach of a representation or warranty by the Purchaser contained herein in the
Related Agreements or in any certificate, document or instrument delivered by
the Purchaser to the Seller or the Shareholder hereunder or thereunder:
11.3.2. Any and all Losses to the extent resulting from any
nonfulfillment of any covenant by the Purchaser or FMC contained herein
including, without limitation, the covenants contained in Sections 2.9, 6.1 and
6.7.3, in the Related Agreements, or in any document or instrument delivered by
the Purchaser or FMC to the Seller or the Shareholder hereunder;
11.3.3. Any and all Losses to the extent arising out of the
Assumed Liabilities or resulting from the Purchaser's operation under the
Licenses (to the extent such Licenses are transferred to the Purchaser) or under
the Assumed Contracts (to the extent such Assumed Contracts are transferred to
the Purchaser or as provided in Section 6.1), which relate to events occurring
after the Closing Date;
11.3.4. Any and all Losses to the extent arising out of, based
on or resulting from (i) claims made by federal, state or local government
authorities or other third parties not affiliated with the Seller or the
Shareholder relating to the presence of any Materials of Environmental Concern
on, in or under any part of the Assets or the Facility at any time on or after
the Closing Date, (ii) claims made by federal, state or local government
authorities or other third parties not affiliated with the Seller or the
Shareholder relating to the release into the environment (either before or after
the Closing Date) of any Materials of Environmental Concern that were generated,
stored, handled or disposed of on, in, under or from the Assets or the Facility
on or after the Closing Date or (iii) the violation or alleged violation made by
federal, state or local government authorities or other third parties not
affiliated with the Seller or the Shareholder relating to the Environmental Laws
or the Medical Waste Laws occurring with respect to the condition or operation
of the Assets or the Facility on or after the Closing Date; and
11.3.5. Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses to the extent incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.4. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
11.4.1. The party claiming indemnification (the "CLAIMANT")
shall give notice to the party from whom indemnification is claimed (the
"INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a
third party, specifying (i) the factual basis for such claim; and (ii) the
amount of the claim, if ascertainable. If the claim relates to an action, suit
or proceeding filed by a third party against Claimant, such notice shall be
given promptly by
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Claimant to the Indemnifying Party after written notice of such action, suit or
proceeding is received by Claimant.
11.4.2. Following receipt of notice from the Claimant of a
claim, the Indemnifying Party shall have 30 days to make such investigation of
the claim as the Indemnifying Company deems necessary or desirable. For the
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said 30-day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree
within said period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate legal remedy.
11.4.3. With respect to any claim by a third party as to which
the Claimant is entitled to indemnification hereunder, the Indemnifying Party
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual and reasonable
out-of-pocket expenses incurred by the Claimant as the result of a request by
the Indemnifying Party. If the Indemnifying Party elects to assume control of
the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the Indemnifying
Party does not elect to assume control or otherwise participate in the defense
of any third-party claim, it shall be bound by the results obtained by the
Claimant with respect to such claim
11.4.4. In the event that the Indemnifying Party assumes
control of the defense of any claim by a third party, the Indemnifying Party
shall have the right to consent or otherwise agree to any monetary settlement,
but shall not have the right to consent or otherwise agree to any non-monetary
settlement or relief, including, without limitation, injunctive relief, without
the prior written consent of the Claimant which shall not be unreasonably
withheld or delayed.
11.4.5. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every reasonable effort
to reach a decision with respect thereto as expeditiously as possible.
11.4.6. The indemnification rights provided in Sections 11.2
and 11.3 shall extend to the affiliates. shareholders, directors, officers,
employees and representatives of the Claimant, although, for the purpose of the
procedures set forth in this Section 11.4. any indemnification claims by such
parties shall be made by and through the Claimant.
11.5. INVESTIGATION. Any investigation made at any time by or on behalf
of any party hereto shall not diminish in any respect whatsoever such party's
right to rely on the representations and warranties made by or on behalf of any
other party herein or pursuant to this Agreement.
11.6. LIMITATION ON INDEMNIFICATION OBLIGATIONS. Notwithstanding
anything contained in this Section 11 to the contrary, no party shall assert a
claim for indemnification against the
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other pursuant to this Section 11 unless and until the amount of all Losses
determined to have been incurred or suffered at the time by the party seeking
indemnification under this Agreement exceeds, in the aggregate, $150,000 (the
"THRESHOLD AMOUNT"), at which time such party may make a claim only to the
extent that the aggregate amount of such claims exceeds the Threshold Amount;
provided, however, the foregoing limitation shall not apply to a claim for
indemnification pursuant to (i) Section 11.2.1 or 11.3.1 with respect to those
matters set forth in Sections 3.1, 3.2, 3.13, 3.15, 4.1 and 4.2, (ii) Section
11.2.2, (iii) Section 11.2.3, (iv) Section 11.2.4, (v) Section 11.3.2. or (vi)
Section 11.3.3. The parties hereto further acknowledge and agree that the total
indemnification obligations of the Seller and the Shareholder, on the one hand,
and the Purchaser, on the other hand, shall not exceed, in the aggregate, the
Purchase Price; provided, however, the foregoing limitation shall not apply to a
claim for indemnification pursuant to (i) Section 11.2.1 or 11.3.1 with respect
to matters set forth in Sections 3.1, 3.2, 3.13, 3.15, 3.17, 4.1 and 4.2, (ii)
Section 11.2.2, (iii) 11.2.3, (iv) 11.2.4, (v) 11.2.5, (vi) 11.3.2, (vii) 11.3.3
or (viii) 11.3.4.
11.7. INTENTIONALLY OMITTED.
11.8. EXCLUSIVE REMEDY. From and after the Closing, the sole and
exclusive remedy of any party for any misrepresentation or any breach of a
warranty or covenant under or pursuant to this Agreement shall be a claim for
indemnification under and pursuant to this Section 11; provided; however, that
nothing set forth in this Section shall prohibit or restrict a party from
seeking equitable relief, including, without limitation, specific performance or
injunctive relief.
12. MISCELLANEOUS
12.1. FURTHER ASSURANCES. Each party hereto shall execute and deliver
all such other documents and do all such other acts and things as may be
reasonably necessary to more fully effectuate this Agreement and the
transactions contemplated hereby.
12.2. NOTICES. All notices and other communications hereunder shall be
(i) in writing, (ii) delivered by telecopy, by commercial overnight or same-day
delivery service with all delivery costs paid by sender, or by registered or
certified mail with postage prepaid, return receipt requested, (iii) deemed
given on the date and at the time shown on the telecopy confirmation of receipt
(if delivered by telecopy), on the date and at the time (if recorded) of
delivery by the commercial delivery service, as shown in the records thereof (if
delivered by commercial overnight or same-day delivery service), or on the date
shown on the return receipt (if delivered by registered or certified mail) and
(iv) addressed to the parties at their addresses specified on the signature page
to this Agreement (or at such other address for a party as shall be specified by
like notice).
12.3. WAIVER. Any waiver of any terms or conditions of this Agreement
shall be in writing and shall not operate as a waiver of any other breach of
such terms or conditions or any other term or condition, nor shall any failure
to enforce any provision of this Agreement operate as a waiver of such provision
or of any other provision of this Agreement.
12.4. CAPTIONS; PARTIAL INVALIDITY. The captions, section numbers and
index appearing in this Agreement are inserted only as a matter of convenience
and in no way define, limit,
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construe or describe the scope or intent of such sections or articles of this
Agreement, nor in any way affect this Agreement. If any term, covenant or
condition of this Agreement or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Agreement, or the application of such term, covenant or condition to
persons or circumstances, other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
12.5. COUNTERPARTS. This Agreement may be executed in counterparts each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument, and in pleading or proving any provision of this
Agreement, it shall not be necessary to produce more than one complete set of
such counterparts. Any counterpart of this Agreement which has attached to it
separate signature pages, which together contain the signatures of all parties
hereto, shall for all purposes be deemed a fully executed original.
12.6. VARIATIONS OF PRONOUNS; NUMBER; GENDER. All pronouns and all
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person or persons or entity
may require. Whenever used herein the singular number shall include the plural,
the plural shall include the singular. and the use of any gender shall include
all genders.
12.7. GOVERNING LAW; CONSTRUCTION. This Agreement shall be governed by
and construed in accordance with the substantive laws of the State of West
Virginia, without regard to its conflict of laws provisions. The parties
acknowledge and agree that they have been represented by counsel and that each
of the parties has participated in the drafting of this Agreement. Accordingly.
it is the intention and agreement of the parties that the language, terms and
conditions of this Agreement are not to be construed in any way against or in
favor of any party hereto by reason of the responsibilities in connection with
the preparation of this Agreement.
12.8. THIRD PARTIES. None of the provisions of this Agreement shall be
for the benefit of, or enforceable by, any employee or creditor of any party
hereto.
12.9. ENTIRE AGREEMENT. This Agreement and all of the related
agreements and exhibits attached hereto shall constitute the entire agreement of
the parties hereto; all prior agreements between the parties, whether written or
oral, are merged herein and shall be of no force and effect (other than the
Ground Lease, the Services Agreement and the other Existing Agreements which
shall remain in full force and effect in accordance with their terms until
terminated pursuant to Section 2.9 hereof and other than the confidentiality
letter agreements by West Virginia United Health Systems in favor of the
Shareholder) and there are no restrictions, agreements, representations,
warranties, arrangements or undertakings, oral or written, between or among the
parties relating to the transactions contemplated hereby which are not fully
expressed or referred to herein. This Agreement cannot be changed, modified or
discharged orally, but only by an agreement in writing, signed by the party
against whom enforcement of the change, modification or discharge is sought.
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12.10. REMEDIES. Except as provided in Sections 10.3 or 11.8, all
remedies available to the parties, at law, in equity or otherwise, shall be
cumulative and may be exercised concurrently or separately, and the exercise of
any one remedy shall not be deemed an election of such remedy to the exclusion
of other remedies. In the event that anything in this Section 12.10 shall or
shall be deemed to conflict with the provisions of Section 12.12, the provisions
of Section 12.12 shall prevail.
12.11. BENEFIT AND BINDING EFFECT. None of the parties hereto may
assign this Agreement without the prior written consent of the other parties
hereto; provided, however, that the Purchaser may assign its rights (but not its
obligations) under this Agreement, in whole or in part, to an affiliate of the
Purchaser for purposes of enabling such affiliate to purchase all or a portion
of the Assets provided no such assignment shall delay the Closing or any
condition to the Closing, and in the event of such assignment by the Purchaser,
Purchaser's assignee shall for all purposes constitute the "Purchaser" with
respect to the portion of the Assets acquired by such assignee. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
12.12. DISPUTE RESOLUTION.
12.12.1. Any dispute, controversy or claim which arises out of
or relates to this Agreement (other than a dispute, controversy or claim which
arises out of or relates to Section 6.5 or Section 6.12) shall be resolved
through binding arbitration held before a three member panel of the American
Arbitration Association in a city mutually acceptable to the Purchaser and the
Shareholder in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Any party to this Agreement may initiate arbitration
under this Section 12.12, and judgment upon the arbitrators' award may be
entered by any court having jurisdiction thereof.
12.12.2. As a condition precedent to the right of any party to
this Agreement to initiate arbitration under the provisions of this Section
12.12.1, the parties shall meet and consult for a period of 30 days upon written
notice issued by any party in an attempt to settle any dispute, controversy or
claim which arises out of or relates to this Agreement.
12.12.3. Notwithstanding anything to the contrary contained in
this Section 12.12. any action for specific performance of this Agreement or any
provision hereof may be filed and pursued by any party to this Agreement in any
court having jurisdiction thereof.
12.12.4. All fees (including, without limitation, arbitrators'
and attorneys' fees) shall be allocated between the parties in accordance with
the decision of the arbitrators.
12.13. CONTACT WITH EMPLOYEES AND OTHER PERSONS. Notwithstanding
anything to the contrary contained in this Agreement, the Purchaser agrees that
it shall not, without the prior written consent of the Vice Chairman of the
Board, the President or the Chief Financial Officer of the Shareholder, contact
any employee, customer, provider or supplier (whether of goods or services) or
any other Person with whom the Shareholder or the Seller have commercial
dealings to discuss the transactions contemplated by this Agreement or the
business, operations or affairs of any of the Shareholder, the Seller, the
Facility or otherwise.
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12.14. SCHEDULES AND EXHIBITS. All Schedules and Exhibits to this
Agreement are integral parts of this Agreement. Any item disclosed hereunder
(including on any Schedule hereto) shall be deemed disclosed for all purposes
hereof irrespective of the specific representation or warranty to which it is
explicitly referenced. Without limiting the generality of the foregoing, the
fact that any disclosure on any of the Schedules is not required to be disclosed
in order to render the applicable representation or warranty to which it relates
true, or that the absence of such disclosure on the Schedule would not
constitute a breach of such representation or warranty, shall not be deemed or
construed to expand the scope of any representation or warranty hereunder or to
establish a standard of disclosure in respect of any representation or warranty.
12.15. BEST EFFORTS. Whenever used in this Agreement, the words "best
efforts" or "reasonable best efforts" or similar words shall mean diligently,
promptly and in good faith taking actions which are reasonable, necessary and
appropriate to accomplish the objective requiring the use of best efforts, but
shall not include any obligation (a) to make any payment, incur any costs,
commit available resources, or forego the receipt of any payment, which in any
case is material in amount in light of the required objective, (b) to initiate
any lawsuit or other proceeding to achieve the required objective, or (c) to
take any action which is unlawful.
12.16 KNOWLEDGE. Whenever used in this Agreement, the words "to the
knowledge of the Shareholder or the Seller" "to the best knowledge of the
Shareholder or the Seller" or similar words shall mean the actual knowledge or
awareness of the executive officers of the Shareholder or the Seller or the
chief executive officer, chief financial officer, chief operating officer, chief
personnel officer or officer in charge of environmental matters of the Facility
(or officers or employees of the Seller or the Shareholder who perform such
functions in respect of the Facility, regardless of title).
* * *
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
SELLER:
PSYCHIATRIC INSTITUTE OF WEST VIRGINIA, INC.
By:
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Title:
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Address for Notices:
Columbus Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
SHAREHOLDER:
RAMSAY HEALTH CARE. INC
By:
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Title:
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Address for Notices:
Columbus Center
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Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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PURCHASER:
WEST VIRGINIA UNIVERSITY HOSPITALS, INC.
By:
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Title:
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Address for Notices:
West Virginia University Hospitals, Inc.
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
West Virginia United Health Systems
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▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Battle, PLLC
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇