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ASSET EXCHANGE AGREEMENT
BY
AND
BETWEEN
CHAMPION HEALTHCARE HOLDINGS, INC.
CHC-PRATTVILLE, INC.
AND
CHC-NURSING CENTER, INC.
AND
WEST JORDAN HOSPITAL CORPORATION
DATED AS OF NOVEMBER 9, 1995
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TABLE OF CONTENTS
1. EXCHANGE OF ASSETS AND CERTAIN RELATED MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Ownership of Champion Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Exchange of Champion Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Champion Hospital Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Champion SNF Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Excluded Champion Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Conveyance of WJHC Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Excluded WJHC Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8 Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. FINANCIAL ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Exchange of Assets and Other Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Champion Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Excluded Champion Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 WJHC Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Excluded WJHC Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Initial Working Capital Differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7 Initial Champion Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 Initial WJHC Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Working Capital Differential. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.10 Champion Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 WJHC Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.12 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.13 Payment of Post-Closing Differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.14 Dispute of Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Action of Champion at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Action of WJHC at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.4 Additional Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4. REPRESENTATIONS AND WARRANTIES OF CHAMPION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Corporate Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Corporate Powers; Consents; Absence of Conflicts With Other Agreements, Etc . . . . . . . . . . . . 21
4.3 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Extraordinary Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Licenses and Certificates of Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Medicare Participation/Accreditation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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4.8 Regulatory Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.9 Agreements and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.10 The Scheduled Champion Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.11 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.12 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.13 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.14 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.15 Quality and Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.17 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.18 Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.19 Litigation or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.20 Special Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.21 Medical Staff Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.22 Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.23 Post-Balance Sheet Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.24 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.25 Asbestos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.26 Statutory Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.27 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5. REPRESENTATIONS AND WARRANTIES OF WJHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.1 Corporate Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2 Corporate Powers; Consents; Absence of Conflicts With Other Agreements, Etc . . . . . . . . . . . . 34
5.3 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.5 Extraordinary Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.6 Licenses and Certificate of Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.7 Medicare Participation/Accreditation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.8 Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.9 Agreements and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.10 The Scheduled WJHC Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.11 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.12 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.13 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.14 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.15 Quality and Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.17 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.18 Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.19 Litigation or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.20 Special Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.21 Medical Staff Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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5.22 Tax Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.23 Post-Balance Sheet Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.24 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.25 Asbestos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.26 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6. COVENANTS OF CHAMPION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.2 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.3 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.4 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.5 FTC Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.6 Additional Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.7 Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.8 Champion Title and Survey Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.9 No-Shop Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.10 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.11 Southridge, L.L.C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7. COVENANTS OF WJHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.1 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.2 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.3 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.4 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.5 FTC Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.6 Additional Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.7 Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.8 Title and WJHC Survey Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.9 No-Shop Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.10 Southridge Professional Plaza, L.L.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.11 Data Processing Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF WJHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.1 Representations/Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.2 Opinion of Champion's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.3 Pre-Closing Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.4 Action/Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.5 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.6 Extraordinary Liabilities/Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.7 Vesting/Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.8 Title Policy and Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.9 Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.10 Recent Agreements and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.11 Wages and Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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8.12 Environmental Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.13 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.14 CHC Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF CHAMPION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.1 Representations/Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2 Opinion of WJHC's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.3 Pre-Closing Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.4 Action/Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.5 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.6 Extraordinary Liabilities/Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.7 Vesting/Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.8 Title Policy and Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.9 Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.10 Recent Agreements and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.11 Wages and Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.12 Data Processing Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.13 Environmental Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.14 HTI Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.15 L.L.C. Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10. TRANSITIONAL ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.1 Champion Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.2 WJHC Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.3 Allocation to Exchange Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.4 Section 1060 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.5 Champion's Cost Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.6 WJHC's Cost Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.1 Data Processing Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.2 Termination Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.3 Post-Closing Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.4 Preservation and Access to Records After the Closing . . . . . . . . . . . . . . . . . . . . . . . . 69
11.5 Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.6 Restriction on Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.7 Champion Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.8 WJHC Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.9 Covenants of WJHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.10 Covenants of Champion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.11 Cooperation on Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
11.12 Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.13 Utah Provider Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.14 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
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12. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.1 Indemnification by Champion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.2 Limitations/Champion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
12.3 Recovery from Third Parties/Champion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.4 Indemnification by WJHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.5 Limitations/WJHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
12.6 Recovery from Third Parties/WJHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
12.7 Notice and Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
12.8 Payments and Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
12.9 Indemnity Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
13. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.1 Consented Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.2 Consents, Approvals and Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.3 Legal Fees and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.4 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.5 Benefit/Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.6 Assignment to Qualified Intermediary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.7 Accounting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
13.8 No Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
13.9 Cost of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
13.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
13.11 Waiver of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
13.12 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
13.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.14 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.15 Divisions and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.16 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
13.17 Entire Agreement/Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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List of Schedules
Schedule 1.5 Excluded Champion Assets
Schedule 1.7 Excluded WJHC Assets
Schedule 2.7 Initial Working Capital Determination
Schedule 2.7.1 Champion Approved Expenditures
Schedule 2.7.2 Estimated Value of Champion Assumed Debt
Schedule 2.7.3 Champion Assumed Capital Leases
Schedule 2.8.1 WJHC Approved Expenditures
Schedule 2.8.2 Estimated Value of WJHC Assumed Debt
Schedule 2.8.3 WJHC Assumed Capital Leases
Schedule 4.4 Champion Financial Statements
Schedule 4.5 Champion Extraordinary Liabilities
Schedule 4.6 Champion Licensure Matters
Schedule 4.7 Champion Medicare Matters
Schedule 4.8 Champion Regulatory Compliance
Schedule 4.9 Scheduled Champion Contracts
Schedule 4.12 Champion Equipment
Schedule 4.13 Champion Real Property
Schedule 4.16 Champion Insurance
Schedule 4.17.2 Champion Employee Benefit Plans
Schedule 4.18 Champion Employee Relations
Schedule 4.19 Champion Litigation
Schedule 4.21 Champion Medical Staff Matters
Schedule 4.24.2 Champion Environmental Matters
Schedule 4.25 Champion Asbestos
Schedule 5.4 WJHC Financial Statements
Schedule 5.5 WJHC Extraordinary Liabilities
Schedule 5.6 WJHC Licensure Matters
Schedule 5.7 WJHC Medicare Matters
Schedule 5.8 WJHC Regulatory Compliance
Schedule 5.9 Scheduled WJHC Contracts
Schedule 5.12 WJHC Equipment
Schedule 5.13 WJHC Real Property
Schedule 5.16 WJHC Insurance
Schedule 5.17.2 WJHC Employee Benefit Plans
Schedule 5.18 WJHC Employee Relations
Schedule 5.19 WJHC Litigation
Schedule 5.21 WJHC Medical Staff Matters
Schedule 5.25.2 WJHC Environmental Matters
Schedule 5.25 WJHC Asbestos
Schedule 8.10 Champion Recent Agreements
Schedule 9.10 WJHC Recent Agreements
Schedule 10.1 Champion ▇▇▇▇▇▇▇▇▇
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▇
▇▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇ Employees
Schedule 10.4 1060 Allocation
Schedule 11.7 Champion Excluded Contracts
Schedule 11.8 WJHC Excluded Contracts
Schedule 11.9 Excluded WJHC Services
Schedule 11.10 Excluded Champion Services
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into
as of November 9, 1995, by and between Champion Healthcare Holdings, Inc., a
Delaware corporation ("CHCH"), CHC-PRATTVILLE, INC., an Alabama corporation
("CHCP") and CHC-NURSING CENTER, INC., an Alabama corporation ("CHCN") (CHCH,
CHCP and CHCN are collectively referred to herein as "Champion" or the
"Champion Entities") and WEST JORDAN HOSPITAL CORPORATION, a Utah corporation
("WJHC").
W I T N E S S E T H:
WHEREAS, CHCH is the parent corporation of CHCP and CHCN;
WHEREAS, CHCP owns and operates the general acute care hospital
located in Prattville, Alabama known as the Autauga Medical Center, licensed by
the Alabama Department of Public Health to operate 85 beds (the "Champion
Hospital") and other assets and operations associated with the Champion
Hospital (the Champion Hospital and such other operations being referred to
collectively as the "Hospital Business");
WHEREAS, CHCN owns and operates the skilled nursing facility located
in Prattville, Alabama known as the Autauga Health Care Center licensed by the
Alabama Department of Public Health to operate 72 beds (the "Champion SNF") and
other assets and operations associated with the Champion SNF (the Champion SNF
and such other operations being referred to collectively as the "SNF
Business");
WHEREAS, WJHC owns and operates the general acute care hospital
located in West Jordan, Utah known as the Jordan Valley Hospital licensed by
the Health Facility Licensure Bureau to operate 50 beds (the "WJHC Hospital")
and other assets and operations associated with the WJHC Hospital (the WJHC
Hospital and such other operations being referred to collectively as the "WJHC
Business");
WHEREAS, the WJHC Hospital is the subject of the terms of a certain
Decision and Order (the "Order") of the Federal Trade Commission (the "FTC")
FTC Docket No. C-3619 (October 3, 1995) whereby Columbia/HCA Healthcare
Corporation, the ultimate parent corporation of WJHC, is required to divest its
interest in the WJHC Hospital in accordance with such terms and conditions as
approved by the FTC;
WHEREAS, in order to comply with the Order, WJHC, as of Closing (as
hereinafter defined), intends to accomplish a like-kind exchange transaction as
described in Section 1031 of the Internal Revenue Code of 1986, as amended (the
"Code") and an exchange of assets under 42 C.F.R. Section 413.134(f)(4)
whereby WJHC shall exchange substantially all of the assets, real, personal and
mixed, tangible and intangible, owned or leased by WJHC or its affiliates and
associated with or employed in the operations of the WJHC Business for
substantially all of the
10
assets, real, personal and mixed, tangible and intangible, owned or leased by
Champion or its affiliates and associated with or employed in the operations of
the Hospital Business and the SNF Business (collectively, the "Champion
Business"), all as more fully set forth below;
WHEREAS, immediately prior to the Closing Date, CHCH shall cause CHCP
and CHCN to merge with CHC-Jordan Valley, Inc., a Utah corporation ("CHCJV")
with CHCJV as the surviving corporation;
WHEREAS, Champion desires to enter into such like-kind exchange and
exchange of assets transaction with WJHC as of the Closing, all as more fully
set forth below.
NOW, THEREFORE, for and in consideration of the premises, and the
agreements, covenants, representations and warranties hereinafter set forth,
and other good and valuable consideration, the receipt and adequacy all of
which are forever acknowledged and confessed, the parties hereto hereby agree
as follows:
1. EXCHANGE OF ASSETS AND CERTAIN RELATED MATTERS
1.1 OWNERSHIP OF CHAMPION ASSETS. Prior to the Closing Date, CHCH
shall cause CHCP and CHCN to merge into CHCJV with CHCJV as the surviving
corporation. As of Closing, CHCJV shall own and hold good and marketable title
to the Hospital Assets (as hereinafter defined) and the SNF Assets (as
hereinafter defined) (collectively, the "Champion Assets") and all parts
thereof, free and clear of all liens, pledges, rights of first refusal,
options, restrictions, encumbrances, liabilities, claims, assessments, security
interests and defects in title, except for the Permitted Encumbrances (as
hereinafter defined).
1.2 EXCHANGE OF CHAMPION ASSETS. Subject to the terms and
conditions of this Agreement, CHCJV shall convey, transfer and deliver to WJHC
at Closing the Champion Assets free and clear of any adverse claims, liens,
security interests, pledges, rights of first refusal, options, restrictions,
liabilities, encumbrances, or defects in title, except for the Champion
Permitted Encumbrances.
1.3 CHAMPION HOSPITAL ASSETS. As used in this Agreement, the term
"Hospital Assets" shall mean all assets, real, personal and mixed, tangible and
intangible, owned or leased by CHCP and employed in the operations of the
Hospital Business, other than the Champion Excluded Assets (as hereinafter
defined), including, without limitation, the following items (collectively, the
"Hospital Assets"): (i) fee or leasehold title, to all real property,
including, without limitation, the real property described in Schedule 4.13
hereto, together with all improvements, buildings and fixtures located thereon
or therein, which shall include, without limitation, the Champion Hospital and
all medical office buildings, parking garages and parking lots (collectively,
the "Hospital Real Property"); (ii) all major, minor or other equipment,
whether movable or attached to the Hospital Real Property, (including, without
limitation, all computer equipment and hardware at the Champion Hospital),
vehicles, furniture and furnishings, including, without limitation, those taken
into consideration in the preparation of the depreciation schedule
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set forth in Schedule 4.12 hereto; (iii) all usable supplies and inventory;
(iv) prepaid expenses which will result in economic value to WJHC and are
included in the Value of CHCP Prepaid Expenses (as hereinafter defined); (v)
claims of CHCP for refunds against third parties (other than the Champion
Agency Settlements (as defined in Section 1.5)); (vi) all claims and recorded
or unrecorded interests in real property not described in subparagraph (i);
(vii) all current financial, patient, medical staff and personnel records
(including, without limitation, all equipment records, medical/administrative
libraries, medical records, documents, catalogs, books, records, files,
operating manuals and current personnel records); (viii) all of the interest of
CHCP in all commitments, contracts, leases, and agreements outstanding in
respect of the Hospital Assets which are required by Section 4.9 to be
described in Schedule 4.9 and are described therein (other than those
specifically designated in Schedule 11.7 not to be assigned to or assumed by
WJHC) and those that, according to Section 4.9, are not required to be
described in Schedule 4.9 (collectively, the "Hospital Contracts"); (ix) all
licenses and permits to the extent assignable, held by CHCP relating to the
ownership, development and operations of the Hospital Business (including,
without limitations, any pending or approved governmental approvals regarding
the Hospital Business); (x) all patents and patent applications and all names,
trade names, trademarks and service marks (or variations thereof) associated
with the Champion Business, including, but not limited to, the name "Autauga
Medical Center" and all derivatives thereof; (xi) all accounts receivable
arising from the rendering of services to inpatients and outpatients at the
Champion Hospital, billed and unbilled, recorded or unrecorded, accrued and
existing in respect of services up to the effective date of the Closing (other
than receivables from governmental third party payors which by law may not be
assigned) ("Hospital Patient Receivables"); (xii) an amount equal to the value
of all receivables of CHCP arising from the rendering of services to inpatients
and outpatients at the Champion Hospital (billed and unbilled, recorded or
unrecorded), from governmental third party payors which by law may not be
assigned ("Hospital Government Receivables") to the extent included in the
determination of the CHCP's Net Working Capital; (xiii) CHCP's goodwill in the
Hospital Business; and (xiv) CHCP's interest in all property, real, personal
and mixed, tangible and intangible, arising or acquired in the ordinary course
of the Hospital Business between the effective date hereof and Closing.
1.4 CHAMPION SNF ASSETS. As used in this Agreement, the term "SNF
Assets" shall mean all assets, real, personal and mixed, tangible and
intangible, owned or leased by CHCN and employed in the operations of the SNF
Business, other than the Champion Excluded Assets, including, without
limitation, the following items (collectively, the "SNF Assets"): (i) fee or
leasehold title, to all real property, including, without limitation, the real
property described in Schedule 4.13 hereto, together with all improvements,
buildings and fixtures located thereon or therein, which shall include, without
limitation, the Champion SNF and all medical office buildings, parking garages
and parking lots (collectively, the "SNF Real Property"); (ii) all major, minor
or other equipment, whether movable or attached to the SNF Real Property,
(including, without limitation, all computer equipment and hardware at the
Champion SNF), vehicles, furniture and furnishings, including, without
limitation, those taken into consideration in the preparation of the
depreciation schedule set forth in Schedule 4.12 hereto; (iii) all usable
supplies and inventory; (iv) prepaid expenses which will result in economic
value to WJHC and are included in the Value of CHCN Prepaid Expenses (as
hereinafter defined); (v) claims of CHCN
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for refunds against third parties (other than the Champion Agency Settlements
(as hereinafter defined)); (vi) all claims and recorded or unrecorded interests
in real property not described in subparagraph (i); (vii) all current
financial, patient, medical staff and personnel records (including, without
limitation, all equipment records, medical/administrative libraries, medical
records, documents, catalogs, books, records, files, operating manuals and
current personnel records); (viii) all of the interest of CHCN in all
commitments, contracts, leases, and agreements outstanding in respect of the
SNF Assets which are required by Section 4.9 to be described in Schedule 4.9
and are described therein (other than those specifically designated in Schedule
11.7 not to be assigned to or assumed by WJHC) and those that, according to
Section 4.9, are not required to be described in Schedule 4.9 (collectively,
the "SNF Contracts"); (ix) all licenses and permits to the extent assignable,
held by CHCN relating to the ownership, development and operations of the SNF
Business (including, without limitations, any pending or approved governmental
approvals regarding the SNF Business); (x) all patents and patent applications
and all names, trade names, trademarks and service marks (or variations
thereof) associated with the SNF Business, including, but not limited to, the
name "Autauga Health Care Center" and all derivatives thereof; (xi) all
accounts receivable arising from the rendering of services to inpatients and
outpatients at the Champion SNF, billed and unbilled, recorded or unrecorded,
accrued and existing in respect of services up to the effective date of the
Closing (other than receivables from governmental third party payors which by
law may not be assigned) ("SNF Patient Receivables"); (xii) an amount equal to
the value of all receivables of CHCN arising from the rendering of services to
inpatients and outpatients at the Champion SNF from governmental third party
payors which by law may not be assigned ("SNF Government Receivables") to the
extent included in the determination of CHCN's Net Working Capital; (xiii)
CHCN's goodwill in the SNF Business; and (xiv) CHCN's interest in all property,
real, personal and mixed, tangible and intangible, arising or acquired in the
ordinary course of the SNF Business between the effective date hereof and
Closing.
1.5 EXCLUDED CHAMPION ASSETS. The following items which are
related to the Champion Assets are not intended by the parties to be a part of
the exchange contemplated hereunder and are specifically excluded from the
Champion Assets (the "Excluded Champion Assets"): (i) restricted and
unrestricted cash and cash equivalents; (ii) temporary investments; (iii)
rights to settlements and retroactive adjustments, if any, whether arising
under a cost report of CHCP or CHCN or otherwise, for cost reporting periods
ending on or prior to the Closing Date, whether open or closed, arising from or
against the United States government under the terms of the Medicare program
and against the State of Alabama under the Medicaid program and against Blue
Cross and Blue Shield and other third party payor programs which settle upon a
basis other than an individual claims basis ("Champion Agency Settlements");
(iv) all intercompany accounts of Champion and its affiliates; (v) all
inventory and prepaid expenses disposed of or exhausted prior to Closing in the
ordinary course of business and items of equipment transferred or disposed of
in accordance with Section 6.3(e); (vi) obsolete supplies and inventory; (vii)
any records which by law Champion is required to retain in its possession;
(viii) any proprietary information contained in Champion's employee or
operation manuals, which shall include all information that does not pertain to
the ongoing operations of the Champion Facilities; (ix) the Champion prepaid
expenses not included in the determination of the Value of Champion Prepaid
Expenses; (x) all
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commitments, contracts, leases, capital leases and agreements between Champion
and its affiliates; (xi) the Champion Excluded Contracts (as defined in Section
11.7); and (xii) such other assets as are set forth on Schedule 1.5 hereto.
All other assets owned or leased by Champion or any affiliate of Champion and
associated with or employed in the operation of the Champion Business, whether
or not scheduled and described herein, are and shall be included in the
Champion Assets to be conveyed to WJHC, as of Closing.
1.6 CONVEYANCE OF WJHC ASSETS. Subject to the terms and
conditions of this Agreement, WJHC shall convey, transfer and deliver to
Champion at Closing, all assets, real, personal and mixed, tangible and
intangible, owned or leased by WJHC and employed in the operations of the WJHC
Business free and clear of any adverse claims, liens, security interests,
pledges, rights of first refusal, options, restrictions, liabilities,
encumbrances, or defects in title, except for the WJHC Permitted Encumbrances,
other than the WJHC Excluded Assets (as hereinafter defined), including,
without limitation, the following items (collectively, the "WJHC Assets"): (i)
fee or leasehold title, to all real property, including, without limitation,
the real property described in Schedule 5.13 hereto, together with all
improvements, buildings and fixtures located thereon or therein, which shall
include, without limitation, the WJHC Hospital and all medical office
buildings, parking garages and parking lots (collectively, the "WJHC Real
Property"); (ii) all major, minor or other equipment, whether movable or
attached to the WJHC Real Property, (including, without limitation, all
computer equipment and hardware at the WJHC Hospital), vehicles, furniture and
furnishings, including, without limitation, those taken into consideration in
the preparation of the depreciation schedule set forth in Schedule 5.12 hereto;
(iii) all usable supplies and inventory; (iv) prepaid expenses which will
result in economic value to Champion and are included in the Value of WJHC
Prepaid Expenses (as hereinafter defined); (v) claims of WJHC for refunds
against third parties (other than the WJHC Agency Settlements (as hereinafter
defined)); (vi) all claims and recorded or unrecorded interests in real
property not described in subparagraph (i); (vii) all current financial,
patient, medical staff and personnel records (including, without limitation,
all equipment records, medical/administrative libraries, medical records,
documents, catalogs, books, records, files, operating manuals and current
personnel records); (viii) all of the interest of WJHC in all commitments,
contracts, leases, and agreements outstanding in respect of the WJHC Assets
which are required by Section 5.9 to be described in Schedule 5.9 and are
described therein (other than those specifically designated in Schedule 11.8
not to be assigned to or assumed by Champion) and those that, according to
Section 5.9, are not required to be described in Schedule 5.9 (collectively,
the "WJHC Contracts"); (ix) all licenses and permits to the extent assignable,
held by WJHC relating to the ownership, development and operations of the WJHC
Business (including, without limitations, any pending or approved governmental
approvals regarding the WJHC Business); (x) all patents and patent applications
and all names, trade names, trademarks and service marks (or variations
thereof) associated with the WJHC Business, including, but not limited to the
name "Jordan Valley Hospital" and all derivatives thereof; (xi) license to
operate the computer software as provided in Section 11.1; (xii) all accounts
receivable arising from the rendering of services to inpatients and outpatients
at the WJHC Hospital, billed and unbilled, recorded or unrecorded, accrued and
existing in respect of services up to the effective date of the Closing (other
than receivables from governmental third party payors which by law may not be
assigned) ("WJHC Patient
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Receivables"); (xiii) an amount equal to the value of all receivables of WJHC
arising from the rendering of services to inpatients and outpatients at the
WJHC Hospital (billed and unbilled, recorded or unrecorded) from governmental
third party payors which by law may not be assigned ("WJHC Government
Receivables") to the extent included in the determination of the WJHC's Net
Working Capital; (xiv) WJHC's goodwill in the WJHC Business; (xv) WJHC's
membership interest in Southridge Professional Plaza L.L.C. ("Southridge,
L.L.C."); and (xvi) WJHC's interest in all property, real, personal and mixed,
tangible and intangible, arising or acquired in the ordinary course of the WJHC
Business between the effective date hereof and Closing. WJHC shall convey good
and marketable title to the WJHC Assets and all parts thereof to Champion free
and clear of all liabilities, claims, assessments, security interests, liens,
restrictions and encumbrances, except as expressly provided herein to the
contrary.
1.7 EXCLUDED WJHC ASSETS. The following items which are related
to the WJHC Assets are not intended by the parties to be a part of the exchange
contemplated hereunder and are specifically excluded from the WJHC Assets (the
"Excluded WJHC Assets"): (i) restricted and unrestricted cash and cash
equivalents; (ii) temporary investments; (iii) rights to settlements and
retroactive adjustments, if any, whether arising under a cost report of WJHC or
otherwise for cost reporting periods ending on or prior to the Closing Date,
whether open or closed, arising from or against the United States government
under the terms of the Medicare program and against the State of Utah under the
Medicaid program and against Blue Cross and Blue Shield and other third party
payor programs which settle upon a basis other than an individual claims basis
("WJHC Agency Settlements"); (iv) all intercompany accounts of WJHC and its
affiliates; (v) all inventory and prepaid expenses disposed of or exhausted
prior to Closing in the ordinary course of business and items of equipment
transferred or disposed of in accordance with Section 7.3(e); (vi) obsolete
supplies and inventory; (vii) any records which by law WJHC is required to
retain in its possession; (viii) any proprietary information contained in
WJHC's employee or operation manuals, which shall include all information that
does not pertain to the ongoing operations of the WJHC Hospital; (ix) prepaid
expenses not included in the determination of the Value of WJHC Prepaid
Expenses; (x) all commitments, contracts, leases, capital leases and agreements
between WJHC and its affiliates; (xi) the WJHC Excluded Contracts (as defined
in Section 11.8); and (xii) such other assets as are set forth on Schedule 1.7
hereto. All other assets owned or leased by WJHC or any affiliate of WJHC
associated with or employed in the operation of the WJHC Business, whether or
not scheduled and described herein, are and shall be included in the WJHC
Assets to be conveyed to Champion, as of Closing.
1.8 DISCLAIMER OF WARRANTIES. Except as expressly set forth in
Article 4 and Article 5 hereof, the Champion Assets and the WJHC Assets,
respectively, are transferred in their condition on the Closing Date, "AS IS,"
WITH NO WARRANTY OF HABITABILITY OR FITNESS FOR HABITATION, WITH RESPECT TO
LAND, BUILDINGS AND IMPROVEMENTS, AND WITH NO WARRANTIES, INCLUDING, WITHOUT
LIMITATION, THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, with respect to the equipment, inventory, and supplies, any and all of
which warranties (both express and implied) Champion and WJHC, respectively,
hereby disclaim. All of the Champion Assets and the WJHC Assets shall be
further subject to normal
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wear and tear on the buildings, improvements and equipment and normal and
customary use of the inventory and supplies up to the Closing.
2. FINANCIAL ARRANGEMENTS
2.1 EXCHANGE OF ASSETS AND OTHER CONSIDERATION. Subject to the
terms and conditions hereof, in reliance upon the representations and
warranties of each party herein set forth, Champion and WJHC hereby agree to
exchange the Champion Assets for the WJHC Assets. As additional consideration
for the conveyance and transfer of the WJHC Assets, Champion agrees to tender
to WJHC, or its designee, at Closing Seven Million Five Hundred Thousand and
no/100 Dollars ($7,500,000.00) (the "Additional Consideration") payable in
immediately available funds.
In addition, at the Closing, Champion and WJHC shall also provide for
the Initial Working Capital Differential as described in Section 2.6 hereof.
2.2 CHAMPION LIABILITIES. As of Closing, and in conjunction with
the transfer of the Champion Assets for the WJHC Assets, WJHC shall assume
and/or agree to pay, perform and discharge the Champion Assumed Liabilities.
As used in this Agreement, "Champion Assumed Liabilities" shall mean the
following liabilities of Champion: (i) the obligations of Champion arising
subsequent to the Closing Date under the Hospital Contracts and the SNF
Contracts (collectively, the "Champion Contracts") (ii) Champion's current
payables, but only to the extent included in the determination of the Champion
Working Capital (as hereinafter defined); (iii) Champion's obligations as of
the Closing Date in respect of the accrued vacation and the sick leave of
Champion's employees who are employed by WJHC as of the Closing Date, but only
to the extent such accrued vacation and sick leave is included in the
determination of the Champion Working Capital; (iv) the obligations of Champion
under the capital leases described in Schedule 2.7.3 but only to the extent
included in the determination of the Champion Working Capital; and (v) the
principal balance outstanding and all interest accrued thereon under the
indebtedness (both short-term and long-term) described on Schedule 2.7.2 but
only to the extent included in the determination of the Champion Working
Capital.
2.3 EXCLUDED CHAMPION LIABILITIES. WJHC shall not be liable for
(i) any claims arising from Champion's assignment and WJHC's assumption of the
Champion Contracts, (ii) defaults in performance of the Champion Contracts for
periods prior to Closing, and (iii) unpaid amounts in respect of the Champion
Contracts that are past due as of Closing (unless included in the Champion
Working Capital). Except as expressly provided to the contrary in Section 2.2
above, under no circumstance shall WJHC be obligated to pay or assume, and none
of the Champion Assets shall be or become liable for or subject to, any
liability of Champion or its affiliates, including, without limitation, the
following, whether fixed or contingent, recorded or unrecorded (collectively,
the "Champion Excluded Liabilities"):
(a) current liabilities (to the extent not taken into
consideration in determining the Champion Working Capital), long-term
liabilities (excluding the
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liabilities described in Section 2.2(v) hereof) and all indebtedness
and obligations or guarantees of Champion;
(b) liabilities or obligations of Champion in respect of
periods prior to and including Closing arising under the terms of the
Medicare, Medicaid, Blue Cross or other third party payor programs,
including, but not limited to, any retroactive denial of claims, civil
monetary penalties or any gain on sale that may be recognized under
the Medicare program as a result of the consummation of the
transactions described herein;
(c) federal, state or local tax liabilities or
obligations of Champion in respect of periods prior to Closing or
resulting from the consummation of the transactions contemplated
herein, including, without limitation, any income tax, any franchise
tax, any tax recapture, any sales and/or use tax, any indigent care
tax, any state and local recording fees and taxes which may arise upon
the consummation of the transactions contemplated herein and any FICA,
FUTA, workers' compensation and any and all other taxes or amounts due
and payable as a result of the exercise by any of Champion's employees
of such employees' right to vacation, sick leave and holiday benefits
accrued while in the employ of Champion (to the extent not taken into
consideration in determining the Champion Working Capital);
(d) liability for any and all claims by or on behalf of
Champion's employees relating to periods prior to Closing, including,
without limitation, liability for any pension, profit sharing,
deferred compensation, or any other employee health and welfare
benefit plans, liability for any EEOC claim, wage and hour claim,
unemployment compensation claim, workers' compensation claim or any
other agreement, and liability for all employee wages and benefits,
including, without limitation, (but only to the extent not assumed by
WJHC pursuant to Section 2.2 hereof) accrued vacation, sick leave and
holiday pay, severance pay and related taxes or other liability
related thereto in respect of Champion's employees (to the extent not
taken into consideration in determining the Champion Working Capital);
(e) liabilities or obligations arising subsequent to
Closing under contracts, commitments, leases or agreements to which
Champion is a party, except to the extent WJHC accepts benefits under
any such contracts, commitments, leases or agreements subsequent to
Closing and except for the Champion Contracts;
(f) liabilities or obligations arising out of any breach
by Champion of any Champion Contract;
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(g) any obligation or liability attributable to periods
prior to or as of Closing and asserted under the federal ▇▇▇▇-▇▇▇▇▇▇
program or other restricted grant and loan programs with respect to
the ownership or operation of the Champion Assets;
(h) any liability arising out of or in connection with
claims for acts or omissions of Champion and Champion's employees,
agents and independent contractors which allegedly occurred prior to
Closing including, without limitation, all malpractice and general
liability claims, whether or not same are pending, threatened, known,
or unknown;
(i) contracts and agreements between Champion and one or
more of Champion's affiliates;
(j) any debt, obligation, expense or liability of
Champion arising out of or incurred solely as a result of any
transaction of Champion occurring after Closing or for any violation
by Champion of any law, regulation or ordinance at any time; and
(k) notwithstanding anything set forth herein,
liabilities or obligations arising under any contract described in
Section 11.7.
2.4 WJHC LIABILITIES. As of Closing, and in conjunction with the
transfer of the WJHC Assets for the Champion Assets, Champion shall assume
and/or agree to pay, perform and discharge the WJHC Assumed Liabilities. As
used in this Agreement, "WJHC Assumed Liabilities" shall mean the following
liabilities of WJHC: (i) the obligations of WJHC arising subsequent to the
Closing Date under the WJHC Contracts, (ii) WJHC's current payables, but only
to the extent included in the determination of the WJHC Working Capital (as
hereinafter defined); (iii) WJHC's obligations as of the Closing Date in
respect of accrued paid time off of WJHC's employees who are employed by
Champion as of the Closing Date, but only to the extent such accrued paid time
off is included in the determination of WJHC Working Capital; (iv) the
obligations of WJHC under the Capital Leases described in Schedule 2.8.3 but
only to the extent included in the determination of the WJHC Working Capital;
and (v) the principal balance outstanding and all interest accrued thereon
under the indebtedness (both short-term and long-term) described on Schedule
2.8.2 but only to the extent included in the determination of the WJHC Working
Capital.
2.5 EXCLUDED WJHC LIABILITIES. Champion shall not be liable for
(i) any claims arising from WJHC's assignment and Champion's assumption of the
WJHC Contracts, (ii) defaults in performance of the WJHC Contracts for periods
prior to Closing and (iii) unpaid amounts in respect of the WJHC Contracts that
are past due as of Closing (unless included in the WJHC Working Capital).
Except as expressly provided to the contrary in Section 2.4 above, under no
circumstance shall Champion be obligated to pay or assume, and none of the WJHC
Assets shall be or become liable for or subject to, any liability of WJHC or
its affiliates,
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including, without limitation, the following, whether fixed or contingent,
recorded or unrecorded (collectively, the "WJHC Excluded Liabilities"):
(a) current liabilities (to the extent not taken into
consideration in determining the WJHC Working Capital), long-term
liabilities (excluding the liabilities described in Section 2.4(v)
hereof) and all indebtedness and obligations or guarantees of WJHC;
(b) liabilities or obligations of WJHC in respect of
periods prior to and including Closing arising under the terms of the
Medicare, Medicaid, Blue Cross or other third party payor programs,
including, but not limited to, any retroactive denial of claims, civil
monetary penalties or any gain on sale that may be recognized under
the Medicare program as a result of the consummation of the
transactions described herein;
(c) federal, state or local tax liabilities or
obligations of WJHC in respect of periods prior to Closing or
resulting from the consummation of the transactions contemplated
herein, including, without limitation, any income tax, any franchise
tax, any tax recapture, any sales and/or use tax, any indigent care
tax, any state and local recording fees and taxes which may arise upon
the consummation of the transactions contemplated herein and any FICA,
FUTA, workers' compensation and any and all other taxes or amounts due
and payable as a result of the exercise by any of WJHC's employees of
such employees' right to vacation, sick leave and holiday benefits
accrued while in the employ of WJHC (to the extent not taken into
consideration in determining the WJHC Working Capital);
(d) liability for any and all claims by or on behalf of
WJHC's employees relating to periods prior to Closing, including,
without limitation, liability for any pension, profit sharing,
deferred compensation, or any other employee health and welfare
benefit plans, liability for any EEOC claim, wage and hour claim,
unemployment compensation claim or workers' compensation claim or any
other agreement, and liability for all employee wages and benefits,
including, without limitation, (but only to the extent not assumed by
Champion pursuant to Section 2.4 hereof) accrued vacation, sick leave
and holiday pay, severance pay and related taxes or other liability
related thereto in respect of the WJHC's employees (to the extent not
taken into consideration in determining the WJHC Working Capital);
(e) liabilities or obligations arising subsequent to
Closing under contracts, commitments, leases or agreements to which
WJHC is a party, except to the extent Champion accepts benefits under
any such contracts, commitments, leases or agreements subsequent to
Closing and except for WJHC Contracts;
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(f) liabilities or obligations arising out of any breach
by WJHC of any WJHC Contract;
(g) any obligation or liability attributable to periods
prior to or as of Closing and asserted under the federal ▇▇▇▇-▇▇▇▇▇▇
program or other restricted grant and loan programs with respect to
the ownership or operation of the WJHC Assets;
(h) any liability arising out of or in connection with
claims for acts or omissions of WJHC and WJHC's employees, agents and
independent contractors which allegedly occurred prior to Closing
including, without limitation, all malpractice and general liability
claims, whether or not same are pending, threatened, known, or
unknown;
(i) contracts and agreements between WJHC and one or more
of WJHC's affiliates;
(j) any debt, obligation, expense or liability of WJHC
arising out of or incurred solely as a result of any transaction of
WJHC occurring after Closing or for any violation by WJHC of any law,
regulation or ordinance at any time; and
(k) notwithstanding anything set forth herein,
liabilities or obligations arising under any contract described in
Section 11.8.
2.6 INITIAL WORKING CAPITAL DIFFERENTIAL. At Closing, as the
"Initial Working Capital Differential", either (i) Champion shall pay WJHC in
immediately available funds the amount by which the amount of the Initial WJHC
Working Capital (as hereinafter defined) exceeds the amount of the Initial
Champion Working Capital (as hereinafter defined) or (ii) WJHC shall pay
Champion in immediately available funds the amount by which the amount of the
Initial WJHC Working Capital is less than the amount of the Initial Champion
Working Capital, as applicable.
2.7 INITIAL CHAMPION WORKING CAPITAL. The "Initial Champion
Working Capital" shall be an amount equal to the value of (A) CHCP Initial Net
Working Capital (as hereinafter defined) as of the date of, and based upon the
most recently available Unaudited Balance Sheet of CHCP available prior to
Closing (the "CHCP Interim Balance Sheet") and (B) CHCN Initial Net Working
Capital (as hereinafter defined) as of the date of, and based upon the most
recently available Unaudited Balance Sheet of CHCN available prior to Closing
(the "CHCN Interim Balance Sheet"), (the CHCP Interim Balance Sheet and the
CHCN Interim Balance Sheet are collectively, referred to herein as the
"Champion Interim Balance Sheets"). (The Champion Interim Balance Sheets and
the WJHC Interim Balance Sheets shall all be as of the same date.) The
Champion Interim Balance Sheets shall be prepared using the same methodologies
and assumptions used in connection with the preparation of each entities'
applicable Champion Financial Statements, and in accordance with generally
accepted accounting principles ("GAAP").
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For the purpose of the Initial Champion Working Capital, (A) "CHCP's
Initial Net Working Capital" shall be equal to (a) the amounts set forth on
Schedule 2.7; plus (b) the Value of CHCP Approved Capital Expenditures (as
defined in Section 2.7.1); minus (c) the Estimated Value of CHCP Assumed Debt
(as defined in Section 2.7.2); and minus (d) the Estimated Value of CHCP
Assumed Capital Leases (as defined in Section 2.7.3), (B) "CHCN's Initial Net
Working Capital" shall be equal to (a) the amounts set forth on Schedule 2.7;
plus (b) the Value of CHCN Approved Capital Expenditures (as defined in Section
2.7.1); minus (c) the Estimated Value of CHCN Assumed Debt (as defined in
Section 2.7.2); and minus (d) the Estimated Value of CHCN Assumed Capital
Leases (as defined in Section 2.7.3).
In order that Champion and WJHC may set forth the methodology to
determine CHCP's and CHCN's Initial Net Working Capital, attached hereto as
Schedule 2.7 is a determination of CHCP's and CHCN's Net Working Capital based
upon the September 30, 1995 Unaudited Balance Sheet of CHCP and CHCN. Champion
and WJHC hereby agree to use the same methodology (as may be supplemented by
the working papers thereto) to prepare Schedule 2.7 for purposes of the CHCP
Initial Net Working Capital and the CHCN Initial Net Working Capital,
including, without limitation, reserving 100% for all accounts receivable over
150 days old. For purposes of valuing the sick leave earned by the current
employees of CHCP and CHCN, the parties hereto hereby agree to value such sick
leave at 30% of the amount earned by such employees for purposes of the
Champion Working Capital.
2.7.1 ASSUMED CAPITAL EXPENDITURES. As required by Section
6.2 hereof, Champion shall make such capital improvements and repairs as it
would make in the ordinary course of the Champion Business. For capital
improvements estimated to cost in excess of $25,000 (per improvement) Champion
shall obtain WJHC's written consent, which consent shall not be unreasonably
withheld, prior to making such improvement (the "Champion Approved
Expenditures") (Schedule 2.7.1). The sum of the Champion Approved Expenditures
for each one of the Champion Businesses shall equal the "CHCP Approved Capital
Expenditures" and "CHCN Approved Capital Expenditures", respectively.
2.7.2 ASSUMED DEBT. Prior to the Closing Date, WJHC shall
notify Champion of the long-term indebtedness of the Champion Business that
WJHC desires to assume (Schedule 2.7.2). Based upon the Champion Interim
Balance Sheets, the parties shall determine the amount of outstanding principle
and accrued interest on the debt listed on Schedule 2.7.2 as of the date of
such Interim Balance Sheet (the "Estimated Value of CHCP Assumed Debt" and
"Estimated Value of CHCN Assumed Debt", respectively).
2.7.3 ASSUMED CAPITAL LEASES. Prior to the Closing Date,
WJHC shall notify Champion of the capital leases of the Champion Business that
WJHC desires to assume (Schedule 2.7.3). Based upon the Champion Interim
Balance Sheets, the parties shall determine the amount thereafter due on the
capital leases listed on Schedule 2.7.3 as of the
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date of such Interim Balance Sheets (the "Estimated Value of CHCP Assumed
Capital Leases" and "Estimated Value of CHCN Assumed Capital Leases",
respectively).
2.8 INITIAL WJHC WORKING CAPITAL. The "Initial WJHC Working
Capital" shall be an amount equal to the value of the WJHC Initial Net Working
Capital (as hereinafter defined) as of the date of, and based upon the most
recently available Unaudited Balance Sheet of WJHC available prior to Closing
(the "WJHC Interim Balance Sheet"). The WJHC Interim Balance Sheet shall be
prepared using the same methodologies and assumptions used in connection with
the preparation of WJHC's Financial Statements, and in accordance with GAAP.
For the purpose of the Initial WJHC Working Capital, "WJHC's Initial
Net Working Capital" shall be equal to (a) the amounts set forth on Schedule
2.7 plus (b) the Value of WJHC Approved Capital Expenditures (as defined in
Section 2.8.1), minus (c) the Estimated Value of WJHC Assumed Debt (as defined
in Section 2.8.2) and minus (d) the Estimated Value of WJHC Assumed Capital
Leases (as defined in Section 2.8.3).
In order that Champion and WJHC may set forth the methodology to
determine WJHC's Initial Net Working Capital, attached hereto as Schedule 2.7
is a determination of WJHC's Net Working Capital based upon the September 30,
1995 Unaudited Balance Sheet of WJHC. Champion and WJHC hereby agree to use
the same methodology (as may be supplemented by the working papers thereto) to
prepare Schedule 2.7 for purposes of the WJHC Initial Net Working Capital,
including, without limitation, reserving 100% for all accounts receivable over
150 days old.
2.8.1 ASSUMED CAPITAL EXPENDITURES. As required by Section
7.2 hereof, WJHC shall make such capital improvements and repairs as it would
make in the ordinary course of the WJHC Business. For capital improvements
estimated to cost in excess of $25,000 (per improvement) WJHC shall obtain
Champion's written consent, which consent shall not be unreasonably withheld,
prior to making such improvement (the "WJHC Approved Capital Expenditures")
(Schedule 2.8.1).
2.8.2 ASSUMED DEBT. Prior to the Closing Date, Champion
shall notify WJHC of the long-term indebtedness of the WJHC Business that
Champion desires to assume (Schedule 2.8.2). Based upon the WJHC Interim
Balance Sheet, the parties shall determine the amount of outstanding principle
and accrued interest on the debt listed on Schedule 2.8.2 as of the date of
such Interim Balance Sheet (the "Estimated Value of WJHC Assumed Debt").
2.8.3 ASSUMED CAPITAL LEASES. Prior to the Closing Date,
Champion shall notify WJHC of the capital leases of the WJHC Business that
Champion desires to assume (Schedule 2.8.3). Based upon the WJHC Interim
Balance Sheet, the parties shall determine the amount thereafter due on the
capital leases listed on Schedule 2.8.3 as of the date of such Interim Balance
Sheet (the "Estimated Value of WJHC Assumed Capital Leases").
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2.9 WORKING CAPITAL DIFFERENTIAL. Not more than sixty (60) days
after the Closing Date (i) Champion shall deliver to WJHC the balance sheets
for CHCP and CHCN as of the Closing Date (the "Champion Closing Balance
Sheets") and (ii) WJHC shall deliver to Champion a balance sheet for WJHC as of
the Closing Date (the "WJHC Closing Balance Sheet"). The Champion Closing
Balance Sheets and the WJHC Closing Balance Sheet shall be prepared using the
same methodologies and assumptions used in connection with the preparation of
the Champion Interim Balance Sheets and the WJHC Interim Balance Sheet,
respectively, and in accordance with GAAP, except as modified herein. The
"Working Capital Differential" shall be the amount that either (i) the Champion
Working Capital is greater than the WJHC Working Capital or (ii) the amount the
Champion Working Capital is less than the WJHC Working Capital, as applicable.
2.10 CHAMPION WORKING CAPITAL. The "Champion Working Capital"
shall be an amount equal to the value of (A) CHCP Net Working Capital (as
hereinafter defined) as of the date of, and based upon the Closing Date Balance
Sheet of CHCP and (B) CHCN Net Working Capital (as hereinafter defined) as of
the date of, and based upon the Closing Date Balance Sheet of CHCN.
For the Champion Working Capital, "CHCP's Net Working Capital" and
"CHCN's Net Working Capital" shall be determined using the same methodologies
used to determine CHCP's Initial Net Working Capital and CHCN's Initial Net
Working Capital, respectively, using the respective Closing Date Balance Sheets
of CHCP and CHCN except that (i) the amount of the "Supplies" shall be replaced
with the Value of CHCP Supplies and the Value of CHCN Supplies, as appropriate
(as each of such terms is hereinafter defined) and (ii) the amount of the
"Prepaids" shall be replaced with the Value of CHCP Prepaids and the Value of
CHCN Prepaids, as appropriate (as each of such terms is hereinafter defined).
2.10.1 SUPPLIES. No more than three days prior to the
Closing Date, Champion and WJHC shall conduct a physical inventory of the
inventory and supplies on hand at the Champion Hospital and the Champion SNF
(collectively, the "Champion Facilities"). Based on such inventory, WJHC and
Champion shall value the supplies at each one of the Champion Facilities using
the lower of cost or market method (the "Value of CHCP Supplies" and "Value of
CHCN Supplies", respectively) as of the date of such inventory and Champion
shall prepare a schedule thereof. In calculating the Champion Working Capital,
the amount of the Value of CHCP Supplies and the Value of CHCN Supplies shall
be increased or decreased, as appropriate, to reflect the value of the
additions to, and deletions from, the supplies of the Champion Facilities
between the inventory date and the Closing Date.
2.10.2 CHAMPION PREPAIDS. Based on the Closing Date Balance
Sheet, Champion and WJHC shall agree prior to the Post Closing Adjustment Date
on the prepaid expenses in respect of which WJHC shall receive an economic
benefit for each one of the Champion Facilities (the "Value of CHCP Prepaids"
and "Value of CHCN Prepaids", respectively), and the prepaid expenses which are
among the Excluded Assets (the "Champion Excluded Prepaid Expenses").
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2.11 WJHC WORKING CAPITAL. The "WJHC Working Capital" shall be an
amount equal to the value of the WJHC Net Working Capital (as hereinafter
defined) as of the date of, and based upon the Closing Date Balance Sheet of
WJHC.
For the WJHC Working Capital, "WJHC's Net Working Capital" shall be
determined using the same methodologies used to determine WJHC's Initial Net
Working Capital using the Closing Date Balance Sheet of WJHC, except that (i)
the amount of the "Supplies" shall be replaced with the Value of WJHC Supplies
(as hereinafter defined) and (ii) the amount of "Prepaids" shall be replaced
with the Value of WJHC Prepaids (as hereinafter defined).
2.11.1 SUPPLIES. No more than three days prior to
the Closing Date, Champion and WJHC shall conduct a physical inventory of the
inventory and supplies on hand at the WJHC Hospital. Based on such inventory,
Champion and WJHC shall value the supplies at the WJHC Hospital using the lower
of cost or market method (the "Value of WJHC Supplies") as of the date of such
inventory and WJHC shall prepare a schedule thereof. In calculating WJHC's Net
Working Capital for the WJHC Working Capital, the amount of the Value of WJHC
Supplies shall be increased or decreased, as appropriate, to reflect the value
of the additions to, and deletions from, the supplies of the WJHC Hospital
between the inventory date and the Closing Date.
2.11.2 WJHC PREPAID EXPENSES. Based on the Closing
Date Balance Sheet, Champion and WJHC shall agree prior to the Post Closing
Adjustment Date on the prepaid expenses in respect of which WJHC shall receive
an economic benefit for each one of the WJHC Hospital (the "Value of WJHC
Prepaids"), and the prepaid expenses which are among the Excluded Assets (the
"WJHC Excluded Prepaid Expenses").
2.12 PRORATION. For purposes of the Working Capital Differential,
Champion and WJHC shall prorate, as of the Closing Date, for each of the
Champion Business and the WJHC Business any amounts which become due and
payable after the Closing Date, which are attributable to services received or
taxes associated with periods prior to Closing with respect to (i) the Champion
Contracts or the WJHC Contracts; (ii) ad valorem taxes, if any, on the Champion
Assets or the WJHC Assets; (iii) property taxes on the Champion Assets or the
WJHC Assets; and (iv) all utilities servicing any of the Champion Assets or the
WJHC Assets, including, without limitation, water, sewer, telephone,
electricity and gas service (the "Prorations").
2.13 PAYMENT OF POST-CLOSING DIFFERENTIAL. On or before 90 days
after the Closing Date, (i) WJHC will pay to Champion the amount by which
Champion Working Capital exceeds Initial Champion Working Capital, or Champion
will pay to WJHC the amount by which Champion Working Capital is less than
Initial Champion Working Capital, and (ii) Champion will pay to WJHC the amount
by which WJHC Working Capital exceeds Initial WJHC Working Capital, or WJHC
will pay to Champion the amount by which WJHC Working Capital is less than
Initial WJHC Working Capital.
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2.14 DISPUTE OF ADJUSTMENTS. In the event that Champion and/or
WJHC shall dispute the working capital determination to be effected hereunder
and such dispute is not resolved to the mutual satisfaction of Champion and
WJHC within ninety (90) days after the Closing Date, Champion and WJHC shall
each have the right to require that such disputed determinations be submitted
to KPMG Peat Marwick acting as experts and not as arbitrators, or to such other
certified public accounting firm as Champion and WJHC may then mutually agree
upon in writing, for computation or verification in accordance with the
provisions of this Agreement and interpretation, where applicable, in
accordance with GAAP. The foregoing provisions for certified public accounting
firm review shall be specifically enforceable by the parties; the decision of
such accounting firm shall be final and binding upon Champion and WJHC; there
shall be no right of appeal from such decision; and such accounting firm's fees
and expenses for each such disputed determination shall be borne by the party
whose determination has been modified by such accounting firm's report or by
both parties in proportion to the relative amount each party's determination
has been modified.
2.15 INTERPRETATION. In this Agreement, unless the context
otherwise requires:
2.15-1 references to this Agreement are references to this
Agreement and to the Schedules and Exhibits hereto (as hereinafter defined);
2.15-2 references to Articles and Sections are references to
articles and sections of this Agreement;
2.15-3 references to any party to this Agreement shall
include references to its respective successors and permitted assigns;
2.15-4 references to a judgment shall include references to
any order, writ, injunction, decree, determination or award of any court or
tribunal;
2.15-5 references to a "Person" shall mean to any
individual, company, body corporate, association, partnership, limited
liability company, firm, joint venture, trust and governmental agency;
2.15-6 the terms "hereof," "herein," "hereby," and
derivative or similar words will refer to this entire Agreement;
2.15-7 references to any document (including this Agreement)
are references to that document as amended, consolidated, supplemented, novated
or replaced by the parties from time to time in accordance with Section 13.17;
2.15-8 references to "Champion" shall mean each of CHCJV,
CHCH, CHCP and CHCN, jointly and severally;
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2.15-9 references to any law are references to that law as of
the Closing Date, unless clearly indicated otherwise, and shall also refer to
all rules and regulations promulgated thereunder, unless the context requires
otherwise;
2.15-10 the word "including" shall mean including without
limitation;
2.15-11 each representation, warranty and covenant contained
herein shall have independent significance. If any party hereto has breached
any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity)
which such party has not breached shall not detract from or mitigate the fact
that the party is in breach of the first representation, warranty or covenant;
and
2.15-12 references to time are references to Central Standard
or Daylight time (as in effect on the applicable day) unless otherwise
specified herein; and
2.15-13 all Schedules attached hereto by the respective
parties shall clearly identify the Business to which each item on each one of
the Schedules pertains.
2.15-14 The word "affiliate" shall mean as to any Person any
other Person directly or indirectly controlling, controlled by or under common
control with such Person; and the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person through ownership of voting securities, by contract or
otherwise.
3. CLOSING
3.1 CLOSING. Subject to the satisfaction or waiver by the
appropriate party of all the conditions precedent to Closing specified in
Sections 8 and 9 hereof, the consummation of the exchange of the Champion
Assets and the WJHC Assets and the other transactions contemplated by and
described in this Agreement (the "Closing") shall take place at the offices of
Columbia/HCA Healthcare Corporation located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ at 10:00 a.m. local time on or before December 31, 1995 or at such
date and/or at such other location as the parties hereto may mutually designate
in writing (the "Closing Date"). The Closing shall be effective as of 12:01
a.m. on the calendar day following the Closing Date or such other date and time
as the parties may mutually designate in writing.
3.2 ACTION OF CHAMPION AT CLOSING. At the Closing and unless
otherwise waived in writing by WJHC each of CHCJV, CHCH, CHCP and CHCN, as
applicable, shall deliver to WJHC the following:
(a) The Additional Consideration;
(b) The Initial Working Capital Differential, if
required;
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(c) Deeds containing special warranty of title, fully
executed by CHCJV in recordable form, conveying to WJHC good and
marketable fee title, to the Hospital Real Property and the SNF Real
Property (collectively, the "Champion Real Property") subject only to
the liens and encumbrances permitted herein;
(d) A General ▇▇▇▇ of Sale and Assignment, fully executed
by CHCJV, conveying to WJHC good and marketable title to all tangible
assets which are a part of the Champion Assets and valid title to all
intangible assets which are a part of the Champion Assets, free and
clear of all liabilities, claims, liens, security interests and
restrictions other than the Champion Assumed Liabilities;
(e) An Assignment of Leases and Contracts, fully executed
by CHCJV, conveying to WJHC Champion's interest in the Champion
Contracts;
(f) CHCJV's signature to the WJHC Data Processing
Services Agreement as described in and provided by Section 11.1
hereof, fully executed by Columbia/HCA Information Systems, Inc.;
(g) A Final Title Commitment covering the Champion Real
Property as described in and provided by Section 6.8(a) hereof;
(h) Copies of resolutions duly adopted by the
shareholders of CHCJV authorizing and approving its performance of the
transactions contemplated hereby and the execution and delivery of
this Agreement and the documents described herein, certified as true
and of full force as of Closing, by the appropriate officers of
Champion;
(i) Copies of resolutions duly adopted by the board of
directors of CHCJV, CHCH and CHCP authorizing and approving its
performance of the transactions contemplated hereby and the execution
and delivery of this Agreement, the merger of CHCP and CHCN into CHCJV
and the documents described herein, certified as true and of full
force as of Closing, by the appropriate officers of CHCJV, CHCH and
CHCP;
(j) Certificates of the President or a Vice President of
CHCJV certifying that each covenant and agreement of CHCP or CHCN to
be performed prior to or as of Closing pursuant to this Agreement has
been performed in all material respects;
(k) Certificates of the President or a Vice President of
CHCJV certifying that each of the representations and warranties of
CHCP or CHCN set forth herein is true and correct in all material
respects as of the Closing Date;
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(l) Certificates of incumbency for the respective
officers of CHCJV, CHCP and CHCH executing this Agreement or making
certifications for Closing dated as of Closing;
(m) Certificates of existence and good standing of CHCJV,
CHCH, CHCP and CHCH from the state in which it is incorporated, each
dated the most recent practical date prior to Closing;
(n) Certificate of merger of CHCP and CHCN into CHCJV
together with a copy of the articles of merger affixed thereto from
the states in which CHCJV, CHCP and CHCN are incorporated;
(o) The opinion of the general counsel or an assistant
general counsel to Champion Healthcare Corporation ("CHC") as
described in and provided by Section 8.2 hereof;
(p) An Assumption Agreement, fully executed by CHCJV,
pursuant to which CHCJV shall assume the future payment and
performance of the WJHC Assumed Liabilities as herein provided;
(q) A Guaranty from CHC in form and substance
satisfactory to WJHC, pursuant to which CHC shall guaranty the
performance of the obligations and covenants of Champion hereunder;
and
(r) Such other instruments and documents as WJHC
reasonably deems necessary to effect the transactions contemplated
hereby.
3.3 ACTION OF WJHC AT CLOSING. At the Closing and unless
otherwise waived in writing by Champion, WJHC shall deliver to Champion the
following:
(a) The Initial Working Capital Differential, if
required;
(b) Deeds containing special warranty of title, fully
executed by WJHC in recordable form, conveying to CHCJV good and
marketable fee title, to the WJHC Real Property, subject only to the
liens and encumbrances permitted herein;
(c) A General ▇▇▇▇ of Sale and Assignment, fully executed
by WJHC, conveying to CHCJV good and marketable title to all tangible
assets which are a part of the WJHC Assets and valid title to all
intangible assets which are a part of the WJHC Assets, free and clear
of all liabilities, claims, liens, security interests and restrictions
other than the WJHC Assumed Liabilities;
(d) An Assignment of Leases and Contracts, fully executed
by WJHC, conveying to CHCJV, WJHC's interest in the WJHC Contracts;
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(e) The WJHC Data Processing Services Agreement as
described in and provided by Section 11.1 hereof;
(f) A Final Title Commitment covering the WJHC Real
Property as described in and provided by Section 7.8 hereof;
(g) Copies of resolutions duly adopted by the board of
directors of WJHC authorizing and approving its performance of the
transactions contemplated hereby and the execution and delivery of
this Agreement and the documents described herein, certified as true
and of full force as of Closing, by the appropriate officers of WJHC;
(h) Certificates of the President or a Vice President of
WJHC certifying that each covenant and agreement of WJHC to be
performed prior to or as of Closing pursuant to this Agreement has
been performed in all material respects;
(i) Certificates of the President or a Vice President of
WJHC certifying that each of the representations and warranties of
WJHC set forth herein is true and correct in all material respects as
of the Closing Date;
(j) Certificates of incumbency for the respective
officers of WJHC executing this Agreement or making certifications for
Closing dated as of Closing;
(k) Certificates of existence and good standing of WJHC
from the state in which it is incorporated, dated the most recent
practical date prior to Closing;
(l) The opinion of an in-house counsel to Columbia/HCA
Healthcare Corporation as described in and provided by Section 9.2
hereof;
(m) An Assumption Agreement, fully executed by WJHC,
pursuant to which WJHC shall assume the future payment and performance
of the Champion Assumed Liabilities as herein provided;
(n) A Guaranty from HTI of Utah, Inc., a Utah
corporation, ("HTI") in form and substance satisfactory to Champion,
pursuant to which HTI shall guarantee the performance of the
obligations and covenants of WJHC hereunder.
(o) Such other instruments and documents as Champion
reasonably deems necessary to effect the transactions contemplated
hereby.
3.4 ADDITIONAL ACTS. From time to time after Closing, Champion
and WJHC shall execute and deliver such other instruments of conveyance and
transfer, and take such other actions as either party reasonably may request,
to more effectively convey and transfer full right, title and
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interest to, vest in, and place such party in legal and actual possession of,
any and all of the Champion Assets or the WJHC Assets, as the case may be.
4. REPRESENTATIONS AND WARRANTIES OF CHAMPION
As of the date hereof and as of the Closing Date, except as disclosed
in the Schedules, Champion represents and warrants to WJHC the following:
4.1 CORPORATE CAPACITY. Each of the Champion Entities is a
corporation duly organized and validly existing and in good standing under the
laws of the states in which it is incorporated. Each Champion Entity has the
requisite corporate power and authority to enter into this Agreement, perform
its obligations hereunder and to conduct its businesses as now being conducted.
4.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery and performance of this Agreement by
Champion and all other agreements referenced in or ancillary hereto to which it
is a party and the consummation of the transactions contemplated herein by
Champion:
(a) are within Champion's corporate powers, are not in
contravention of law or of the terms of its Articles of Incorporation,
Bylaws or any amendments thereto and have been duly authorized by all
appropriate corporate action;
(b) to the best of Champion's knowledge after due inquiry
and except as otherwise expressly herein provided, do not require any
approval or consent of, or filing with, any governmental agency or
authority bearing on the validity of this Agreement which is required
by law or the regulations of any such agency or authority;
(c) will neither conflict with nor result in any material
breach or contravention of, nor permit the acceleration of the
maturity of the Champion Assumed Liabilities, or the creation of any
lien, charge or encumbrance affecting any Champion Assets,
individually or in the aggregate, having a value in excess of Five
Thousand Dollars ($5,000);
(d) will not violate any statute, law, rule or regulation
of any governmental authority to which Champion or the Champion Assets
may be subject and which may have an effect on the Champion Assets
causing liability in excess of Five Thousand Dollars ($5,000); and
(e) will not violate any judgment of any court or
governmental authority to which Champion or the Champion Assets may be
subject and which may have an effect on the Champion Assets causing
liability in excess of Five Thousand Dollars ($5,000).
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4.3 BINDING AGREEMENT. This Agreement and all agreements to which
Champion will become a party hereunder are and will constitute the valid and
legally binding obligation of Champion, and are and will be enforceable against
it in accordance with the respective terms hereof or thereof.
4.4 FINANCIAL STATEMENTS. Champion has delivered to WJHC copies
of the following financial statements of CHCP and CHCN on an accrual-basis
(Schedule 4.4) (the "Champion Financial Statements"):
(a) Unaudited Balance Sheets dated as of September 30,
1995 (the "Balance Sheet Date");
(b) Unaudited Income Statements for the nine-month period
ended as of the Balance Sheet Date; and
(c) Unaudited Balance Sheets, Income Statements and
Statements of Cash Flows for the fiscal years of the Champion Business
ended on December 31, 1993 and 1994.
Such unaudited Champion Financial Statements materially conform to
generally accepted accounting principles and practices consistently applied,
except as set forth in Schedule 4.4. Such Champion Balance Sheets present
fairly the financial condition of the Champion Business as of the dates
indicated thereon, and such Champion Income Statements and Statements of Cash
Flows present fairly the results of operations and cash flows of the Champion
Business for the periods indicated thereon. Since the Balance Sheet Date,
there have occurred no material adverse changes in the financial condition or
business of the Champion Business as reflected in such Champion Financial
Statements.
4.5 EXTRAORDINARY LIABILITIES. Champion has delivered to WJHC an
accurate list (Schedule 4.5) of all liabilities of Champion relating to the
Champion Business not included within Schedule 4.4, which are of the kind and
character required in financial statements prepared in accordance with
generally accepted accounting principles and which were incurred other than in
the ordinary course of business, whether accrued, absolute, contingent or
otherwise, together with, in the case of those liabilities as to which the
liabilities are not fixed, a reasonable estimate of the maximum amount which
may be payable in respect thereof. Except as disclosed in Schedules 4.4, 4.5,
or 4.9 and to the best of Champion's knowledge, Champion has no liabilities of
any nature, whether accrued, absolute, contingent or otherwise. To the best of
Champion's knowledge, there are no facts in existence on the date hereof known
or which should be known to Champion which might reasonably serve as the basis
for any liability or obligation of Champion relating to the Champion Business
which is not fully disclosed in Schedule 4.4, 4.5 or 4.19.
4.6 LICENSES AND CERTIFICATES OF NEED. (A) The Champion Hospital
is duly licensed by the Alabama Department of Public Health as a 85-bed acute
care hospital. The Champion SNF is duly licensed by the Alabama Department of
Public Health as a 72-bed skilled nursing facility.
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The Champion Facilities' pharmacies, laboratories and all other ancillary
departments located at the Champion Facilities or operated for the benefit of
the Champion Facilities, which are required to be specially licensed, are
licensed by the appropriate licensing agency. Champion has all other licenses,
permits, and approvals which are needed or required by law to operate the
Champion Business and to use its assets as those assets are currently used,
except where the failure to obtain and maintain any such licenses, permits or
approvals would not have a material adverse effect on the operations or
financial condition of the Champion Facilities. The Champion Facilities and
each of such ancillary departments is in compliance with all such licensing
requirements. Champion has delivered to WJHC all such licenses and permits,
owned or held by Champion relating to the ownership, development or operations
of the Champion Business or Champion Assets all of which are now and
immediately prior to Closing shall be, to the best of Champion's knowledge
after due inquiry, in good standing. To the best of Champion's knowledge,
immediately prior to Closing there will be no, provisions in, or agreements
relating to, any such licenses or permits which would preclude or limit
Champion from operating the Champion Business and using all the beds of the
Champion Facilities as they are currently classified. Champion has no
knowledge of any fire code violations in the Champion Facilities. Champion has
delivered to WJHC the Champion Facilities' most recent state licensing report
and list of deficiencies, if any, and the Champion Facilities' most recent fire
▇▇▇▇▇▇▇▇ survey and list of deficiencies, if any. Except as provided in
Schedule 4.6, Champion has cured all deficiencies noted therein.
(b) COMPLIANCE WITH APPLICATION FOR CERTIFICATE OF NEED. Except
as set forth in Schedule 4.6 hereto, (i) no application for any Certificate of
Need, Exemption Certificate or Declaratory Ruling has been made by Champion
with the State Health Planning Agency of Alabama ("CON Agency") which is
currently pending or open before the CON Agency and no such application
(collectively "Applications") filed by Champion within the past three (3) years
has been ultimately denied by any commission, board or agency or withdrawn by
Champion: (ii) as of the date hereof, no Applications are being prepared by or
for or on behalf of Champion for submission to or before any commission, board
or agency; (iii) Champion has not prepared, filed, supported or presented
opposition to any Applications filed by another hospital or health care
facility with any commission, board or agency within the past three (3) years;
(iv) Champion has no Applications pending and has no approved Applications
which related to projects not yet completed; and (v) Champion has properly
filed all required applications which are complete and correct in all material
respects with respect to any and all material improvements, projects, changes
in services, zoning requirements, construction and equipment purchases, and
other changes for which approval is required under the Code of Ala., 1975,
Sections 22-21-20, et seq. or under the Social Security Act, occurring on or
before the date hereof.
As used herein "Certificate of Need" means a written statement issued
by the CON Agency evidencing community need for a new, converted, expanded or
otherwise significantly modified health care facility, health service or
hospice and "Exemption Certificate" means a written statement from the CON
Agency stating that a health care project is not subject to the certificate of
need provisions of the Code of Ala., 1975, Sections 22-21-20, et seq.
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4.7 MEDICARE PARTICIPATION/ACCREDITATION. Champion is eligible to
receive payment under Titles XVIII and XIX of the Social Security Act and is a
"provider" under existing provider agreements with the Medicare and Medicaid
programs (the "Programs") through the applicable intermediaries. The Champion
Facilities are in compliance with the conditions of participation of the
Programs and have received all approvals or qualifications necessary for
capital reimbursement on the Champion Assets. There is not pending, nor to the
best of Champion's knowledge threatened, any proceeding or investigation under
the Programs involving the Champion Facilities or any of the Champion Assets.
The cost reports of the Champion Facilities for the Programs and for
reimbursement of any other Agency Receivables for the fiscal years through
December 31, 1994, have been filed and are complete and correct in all material
respects. The cost reports of the Champion Facilities were filed when due.
True and correct copies of all such reports for the three (3) most recent
fiscal years of the Champion Facilities have been furnished to WJHC. There are
no claims, actions or appeals pending (and Champion has not filed any claims or
reports which should result in any such claims, actions or appeals) before any
commission, board or agency, including, without limitation, any intermediary or
carrier, the Provider Reimbursement Review Board or the Administrator of the
Health Care Financing Administration, with respect to any state or Federal
Medicare or Medicaid cost reports or claims filed by Champion on or before the
date hereof, or any disallowances by any commission, board or agency in
connection with any audit of such cost reports, except as specifically
described and set forth on Schedule 4.7. No validation review or program
integrity review related to the Champion Facilities, the operation thereof, or
the consummation of the transactions contemplated herein, or related to the
Champion Assets has been conducted by any commission, board or agency in
connection with the Programs, and to the best knowledge of Champion, no such
reviews are scheduled, pending or threatened against or affecting the Champion
Facilities, or any of the Assets, or the consummation of the transactions
contemplated hereby. The Champion Facilities are in full compliance in all
material respects with all rules, regulations and requirements of all
governmental agencies having jurisdiction over the Champion Facilities or their
operations. Champion has delivered to WJHC true and complete copies of the
Champion Facilities' most recent Joint Commission on Accreditation of
Healthcare Organizations ("JCAHO") accreditation survey report and deficiency
list, if any and the Champion Facilities most recent Statement of Deficiencies
and Plan of Correction. Except as provided in Schedule 4.7, Champion has cured
all deficiencies noted therein.
4.8 REGULATORY COMPLIANCE. Except as set forth on Schedule 4.8
hereto, Champion is in compliance in all material respects with all applicable
rules, regulations and requirements of all federal, state and local
commissions, boards, bureaus and agencies having jurisdiction over the Champion
Business and the operations of the Champion Business, including, without
limitation, appropriate state licensing agencies and the Internal Revenue
Service, and Champion has timely filed all reports, data and other information
required to be filed with such commissions, boards, bureaus and agencies where
a failure to file timely would have a material adverse effect on the Champion
Assets.
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4.9 AGREEMENTS AND COMMITMENTS. Champion has delivered to WJHC an
accurate list (Schedule 4.9) (the "Scheduled Champion Contracts") of all
commitments, contracts, leases and agreements which do or may materially affect
the Champion Business, the Champion Assets or the operation thereof, to which
Champion is a party or by which Champion or any of the Champion Assets are
bound (including, without limitation, provider based physician agreements,
agreements with health maintenance organizations, preferred provider
organizations or other alternative delivery systems, joint venture or
partnership agreements, employment agreements, contracts, tenant leases,
equipment leases, equipment maintenance agreements, agreements with
municipalities and labor organizations, loan agreements, bonds, mortgages,
liens or other security agreements). Champion has delivered true and correct
copies of such agreements to WJHC. Except for commitments, contracts, leases
and agreements listed on Schedule 4.9, there are not:
(a) any contracts or commitments involving any material
obligation which materially affects the Champion Assets and which
cannot, or in reasonable probability will not, be performed or
terminated before ninety (90) days after the Closing Date without
payment of penalty or equivalent thereof;
(b) any contracts or commitments materially affecting
ownership of, title to, use of, or any interest in real estate used or
proposed to be used in connection with the Champion Assets;
(c) any patent licensing agreements or any other
agreements, licenses or commitments with respect to patents, patent
applications, trademarks, trade names, technical assistance,
copyrights or other like terms affecting the Champion Assets;
(d) any contract, license or commitment relating to data
processing programs, software or source codes utilized in connection
with the Champion Assets;
(e) any collective bargaining agreements or other
contracts or commitments to or with any labor unions or other employee
representatives or groups of employees affecting or which could affect
the Champion Assets;
(f) any employment contracts or any other contracts,
agreements or commitments to or with individual employees or agents
affecting or which could affect the Champion Assets;
(g) any contracts or commitments providing for payments
based in any manner on the revenues or profits of the Champion Assets;
or
(h) any contract or commitment, whether in the ordinary
course of business or not, which involves future payments, performance
or services or delivery of goods or materials, to or by Champion of
any amount or value in
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excess of Five Thousand Dollars ($5,000) in the aggregate affecting or
which could affect the Champion Assets.
4.10 THE SCHEDULED CHAMPION CONTRACTS. Except as expressly set
forth on Schedule 4.9,
(a) The Scheduled Champion Contracts constitute valid and
legally binding obligations of Champion and to the knowledge of
Champion the Scheduled Champion Contracts constitute valid and legally
binding obligations of the other parties thereto and are enforceable
in accordance with their terms;
(b) Each Scheduled Champion Contract constitutes the
entire agreement by and between the respective parties thereto;
(c) In all material respects, all obligations required to
be performed under the terms of the Scheduled Champion Contracts have
been performed, no act or omission has occurred or failed to occur
which, with the giving of notice, the lapse of time or both would
constitute a default under the Champion Contracts and each of such
Champion Contracts is now and will be upon and after the Closing Date
in full force and effect without default on the part of the parties
thereto; and
(d) Champion will use its best efforts to obtain
assignments by the other party thereto in respect of the Scheduled
Champion Contracts.
4.11 SUPPLIES. Inventory and supplies are carried at cost on a
first-in, first-out basis and are properly stated in the unaudited Champion
Business Balance Sheet as of the Balance Sheet Date.
4.12 EQUIPMENT. Champion has delivered to WJHC a depreciation
schedule as of December 31, 1994 (Schedule 4.12) which, to the best of
Champion's knowledge, takes into consideration all the equipment associated
with, or constituting any part of, the Champion Assets. Since the Balance
Sheet Date, Champion have not sold or otherwise disposed of any item of
equipment having a value in excess of $5,000 associated with, or constituting
any part of, the Champion Assets.
4.13 REAL PROPERTY. Champion owns fee or leasehold title to the
Champion Real Property described in Schedule 4.13 hereto, together with all
buildings, improvements and fixtures thereon and all appurtenances and rights
thereto, and there exist no mortgages, liens, restrictions, agreements, claims
or other encumbrances which causes title to the Champion Real Property to be
unmarketable or which will materially interfere with WJHC's use of the Champion
Assets in a manner consistent with the current use thereof by Champion.
Champion has indicated on Schedule 4.13 which of the properties listed thereon
are owned by Champion and which are leased by Champion. The Champion Real
Property will be conveyed to WJHC subject only to current taxes not yet due and
payable, liens securing any indebtedness assumed by WJHC, any lease
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obligations assumed by WJHC and easements and other restrictions of record as
more particularly described in Schedule 4.13 hereto and approved by WJHC (the
"Champion Permitted Encumbrances"). The Champion Real Property comprises all of
the real property owned or leased by Champion or affiliates of Champion (all of
which Champion Real Property shall be conveyed to WJHC as of Closing) and
associated with or employed in the operation of the Champion Business, and:
(a) If any lien or liens, including, without limitation,
deed of trust liens, mechanics and materialmen's liens and judgment
liens, is asserted against the Champion Real Property, other than the
Champion Permitted Encumbrances, Champion shall obtain the release of
such liens(s);
(b) Champion has not received notice of a violation of
any applicable ordinance or other law, order, regulation or
requirement, and has not received notice of condemnation, lien,
assessment or the like, relating to any part of the Champion Real
Property or the operation thereof; and
(c) At Closing, Champion shall convey with special
warranty to WJHC good and marketable fee title to the Champion Real
Property, and as to leases, conveyance shall be by assignment of
lease, free and clear of any mortgage, lien, restriction, agreement,
claim or other encumbrance, except for the Champion Permitted
Encumbrances.
4.14 TITLE. As of Closing and except as provided in Section 4.13
hereof in respect of title to the Champion Real Property, Champion shall own
and hold good and marketable title to all tangible assets, real, personal or
mixed and valid title to all intangible assets associated with or employed in
the operation of the Champion Business or located on the Champion Real
Property, all of which shall be a part of the Champion Assets, and, except as
provided in Section 4.13 hereof in respect of title to the Champion Real
Property, at Closing Champion will convey to WJHC good and marketable title to
all properties, assets and leasehold estates, real, personal and mixed,
tangible and intangible, constituting or associated with the Champion Assets or
any part thereof, subject to no mortgage, lien, pledge, security interest,
conditional sales agreement, right of first refusal, option, restriction,
liability, encumbrance or charge, except those disclosed to WJHC and pertaining
to the Champion Contracts.
4.15 QUALITY AND CONDITION OF ASSETS. Other than with respect to
warranties of title and other representations and warranties as herein
provided, Champion shall transfer the Champion Assets to WJHC and WJHC shall
accept the Champion Assets from Champion on an "as is, where is" basis.
4.16 INSURANCE. Champion has delivered to WJHC an accurate
schedule (Schedule 4.16) disclosing the insurance policies covering the
ownership and operations of the Champion Assets, which Schedule reflects the
policies' numbers, terms, identity of insurers, amounts and coverage. All of
such policies are now and will be until Closing in full force and effect on a
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claims made basis with no premium arrearages. True and correct copies of all
such policies and any endorsements thereto have been or will be delivered to
WJHC prior to Closing.
4.17 EMPLOYEE BENEFIT PLANS.
4.17.1 DEFINITIONS. Where the following words and phrases
appear in this Agreement, they shall have the respective meanings set forth
below:
(1) Champion Plan. Each "employee benefit plan," as such
term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), including, but not limited
to, employee benefit plans which are not subject to some or all of the
provisions of ERISA, which is sponsored, maintained, or contributed to
by Champion or has been sponsored, maintained, or contributed to by
Champion within six years prior to the Closing Date; and
(2) Champion Benefit Program or Agreement. Each
personnel policy, stock option plan, collective bargaining agreement,
bonus plan or arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or agreement, deferred
compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment
agreement, and each other employee benefit plan, agreement,
arrangement, program, practice, or understanding which is not
described in Section 4.17.1(1), which is sponsored, maintained, or
contributed to by Champion or has been sponsored, maintained, or
contributed to by Champion within six years prior to the Closing Date.
4.17.2 EMPLOYEE BENEFIT PLAN COMPLIANCE. Except as
otherwise set forth on Schedule 4.17.2,
(1) Champion does not contribute to or have an obligation
to contribute to, nor has Champion had at any time within six years
prior to the Closing Date contributed to or had an obligation to
contribute to, a multiemployer plan within the meaning of Section
3(37) of ERISA;
(2) Champion has performed in all material respects all
obligations, whether arising by operation of law or by contract,
required to be performed by Champion in connection with each one of
the Champion Plans and the Champion Benefit Programs and Agreements,
and there have been no material defaults or violations by any party to
the Plans or Benefit Programs and Agreements;
(3) Each Champion Plan that is intended to be qualified
under Section 401 of the Code (i) satisfies the requirements of such
Section, (ii) has received a favorable determination letter from the
IRS regarding such qualified status and covering amendments required
under the Unemployment Compensation amendments of 1992, the Omnibus
Budget Reconciliation Act of 1993, and the final nondiscrimination
regulations under
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Section 401(a)(4) of the Code (or such amendments to such Champion
Plan have been timely made and filed with the IRS for such a
determination letter), and (iii) has not, since receipt of the most
recent favorable determination letter, been amended or operated in a
way which would adversely affect such qualified status;
(4) As to any Champion Plan subject to Title IV of ERISA,
there has been no event or condition which presents the material risk
of Champion Plan termination, no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred, no reportable event within
the meaning of Section 4043 of ERISA (for which the disclosure
requirements of Regulation Section 2615.3 promulgated by the Pension
Benefit Guaranty Corporation ("PBGC") have not been waived) has
occurred, no notice of intent to terminate the Plan has been given
under Section 4041 of ERISA, no proceeding has been instituted under
Section 4042 of ERISA to terminate the Champion Plan, no liability to
the PBGC has been incurred, and the assets of the Champion Plan equal
or exceed the actuarial present value of the benefit liabilities,
within the meaning of Section 4041 of ERISA, under the Champion Plan,
based upon reasonable actuarial assumptions and the asset valuation
principles established by the PBGC;
(5) Each trust that is a part of a Champion Plan, which
trust is intended to be exempt from federal income taxation pursuant
to Section 501(c)(9) of the Code, satisfies the requirements of such
Section and has received a favorable determination letter from the
Internal Revenue Service regarding such exempt status and has not,
since receipt of the most recent favorable determination letter, been
amended or operated in a way which would adversely affect such exempt
status; and
(6) With respect to any employee benefit plan that is not
a Champion Plan or Champion Agreement within the meaning of Section
3(3) of ERISA, which is sponsored, maintained, or contributed to, or
has been sponsored, maintained, or contributed to within six years
prior to the Closing Date, by any corporation, trade, business, or
entity under common control with Champion within the meaning of
Section 414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA
("Commonly Controlled Entity"), (a) no withdrawal liability, within
the meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied, (b) no liability to the
PBGC has been incurred by any Commonly Controlled Entity, which
liability has not been satisfied, (c) no accumulated funding
deficiency, whether or not waived, within the meaning of Section 302
of ERISA or Section 412 of the Code has been incurred, and (d) all
contributions (including installments) to such plan required by
Section 302 of ERISA and Section 412 of the Code have been timely
made.
4.18 EMPLOYEE RELATIONS. There is no pending or, to the best of
Champion's knowledge, threatened employee strike, work stoppage or labor
dispute. No union representation question exists respecting any employees of
the Champion Business, no collective bargaining agreement exists or is
currently being negotiated by Champion, no demand has been made for
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recognition by a labor organization by or with respect to any employees of the
Champion Business, no union organizing activities by or with respect to any
employees of the Champion Business are taking place, and none of the employees
of the Champion Business is represented by any labor union or organization.
There is no unfair practice claim against the Champion Business before the
National Labor Relations Board, or any strike, dispute, slowdown, or stoppage
pending or threatened against or involving the Champion Business and none has
occurred. The Champion Business is in compliance with all federal and state
laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours. Champion is not engaged in any unfair labor
practices. Except as set forth on Schedule 4.18, there are no pending or, to
the best of Champion's knowledge, threatened EEOC claims, sexual harassment,
wage and hour claims, unemployment compensation claims, workers' compensation
claims or the like.
4.19 LITIGATION OR PROCEEDINGS. Champion has delivered to WJHC an
accurate list and summary description (Schedule 4.19) of all litigation or
proceedings with respect to the Champion Business and the Champion Assets to
which Champion is a party. Champion is not in default under any law or
regulation material to the operation of the Champion Business, or under any
order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality wherever
located. Except to the extent set forth on Schedule 4.19, there are no claims,
actions, suits, proceedings or investigations pending, or to the best of
Champion's knowledge after due inquiry, threatened against or affecting
Champion with respect to the Champion Business or the Champion Assets, at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
wherever located.
4.20 SPECIAL FUNDS. None of the Champion Assets are subject to,
and Champion shall indemnify and hold WJHC harmless from and against, any
liability in respect of amounts received by Champion or others for the purchase
or improvement of the Champion Assets or any part thereof under restricted or
conditioned grants or donations, including, without limitation, monies received
under the Public Health Service Act, 42 U.S.C. Section 291 et seq.
4.21 MEDICAL STAFF MATTERS. Champion has delivered to WJHC true,
correct, and complete copies of the bylaws and rules and regulations of the
medical staff of the Champion Facilities. With regard to the medical staff of
the Champion Facilities and except as set forth on Schedule 4.21 hereto, there
are no pending or, to the best of Champion's knowledge, threatened disputes
with applicants, staff members or health professional affiliates and all appeal
periods in respect of any medical staff member or applicant against whom an
adverse action has been taken have expired.
4.22 TAX LIABILITIES. Champion has not taken and will not take any
action, and Champion has not failed to take and will not fail to take any
action, in respect of any federal, state or local taxes (including, without
limitation, any withholdings required to be made in respect of employees) which
may have an adverse effect upon the Champion Assets as of or subsequent to
Closing.
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4.23 POST-BALANCE SHEET RESULTS. Since the Balance Sheet Date
there has not been:
(a) any material adverse change in the financial
position, assets, liabilities (contingent or otherwise), income or
business of the Champion Business;
(b) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the Champion
Assets;
(c) any labor dispute, law or regulation or any event or
condition of any character materially adversely affecting the business
of the Champion Business;
(d) any sale, assignment, transfer or disposition of any
item of plant, property or equipment of the Champion Business having a
value in excess of Five Thousand Dollars ($5,000), except in the
ordinary course of business with comparable replacement thereof; or
(e) any transaction by Champion outside the ordinary
course of business which may cause a liability or obligation in excess
of Five Thousand Dollars ($5,000) relating to the Champion Business.
4.24 ENVIRONMENTAL MATTERS.
4.24.1
(a) For purposes of this Section, the term "Environmental
Laws" shall mean any and all laws, statutes, ordinances, rules, regulations,
orders or determinations of any Governmental Authority pertaining to health or
the environment, whether now in existence or hereafter enacted and in effect at
the time of Closing, in any and all jurisdictions in which the Champion Real
Property is located.
(b) For purposes of this Section, the terms "hazardous
substances" and "release" (or "threatened release") have the meanings specified
in the federal Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"); and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in the federal Resource Conservation
Recovery Act ("RCRA"); provided, however, that to the extent the applicable
laws, ordinances, rules, regulations or common law of the state in which the
Champion Real Property is located establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" that is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply, except
that for purposes of this Section such defined terms shall not include
non-friable asbestos.
(c) For purposes of this Section, the term "Governmental
Authority" includes the United States, the state, county, city, and political
subdivisions in which the Champion Real Property is located or that exercise
jurisdiction over the Champion Real Property, and any agency,
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▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, commission, board, bureau or instrumentality or any of them
that exercises jurisdiction over the Champion Real Property.
(d) For purposes of this Section, the term "Environmental
Condition" shall mean (a) any release or threatened release of a hazardous
substance from, in, on, under, or onto the Champion Real Property in violation
of any Environmental Law; (b) any releases or threatened release of a hazardous
substance from the Champion Real Property in, on, under, or onto any other
property that results in any damages, loss, cost, expenses, or other liability;
(c) any violation of any Environmental Law relating to the manufacture,
processing, distribution, transportation, storage, use, discharge, handling,
emission, or disposal of hazardous substances by or in connection with the
Champion Business; or (d) any release or threatened release of a hazardous
substance from, in, on, under, or onto the Champion Real Property resulting in
liability to nongovernmental third parties in tort.
4.24.2 Except as disclosed in Schedule 4.24.2, Champion
represents to its actual knowledge the following:
(a) Champion is in compliance with all applicable
Environmental Laws, except where the failure to be in compliance would
not have a material adverse effect on any of the Champion Businesses;
(b) there are not any Environmental Conditions resulting
from Champion', or any of Champion's affiliates' operations of the
Champion Real Property that may give rise to any on-site or off-site
remedial obligations, except for Environmental Conditions that do not
require a clean up obligation and will not have a material adverse
effect on any of the Champion Businesses;
(c) there are not any Environmental Conditions existing
on or resulting from operations of the Champion Real Property by
Persons other than Champion or any of Champion's affiliates that may
give rise to any on-site or off-site remedial obligations;
(d) the Champion Real Property is not subject to any
existing, pending or threatened action, suit, investigation, inquiry
or proceeding by or before any Governmental Authority under any
Environmental Law;
(e) all notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed by Champion
under any Environmental Law in connection with the Champion Real
Property, including without limitation those relating to the
treatment, storage, disposal or release of a hazardous substance or
solid waste into the environment, have been duly obtained or filed and
Champion is in compliance with the terms and conditions of all such
notices, permits licenses and similar authorizations, except where the
failure to obtain such authorizations would not have a material
adverse effect on any of the Champion Businesses;
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(f) without limiting the foregoing, there is no liability
to any nongovernmental third party in tort in connection with any
release or threatened release of any hazardous substances, solid
wastes, petroleum, petroleum products, asbestos, or poly-chlorinated
biphenyls ("PCBs") by Champion or any of Champion's affiliates, and by
any other Person, into the environment as a result of or with respect
to the Champion Real Property, except for releases that do not require
a clean up obligation and will not have a material adverse effect on
any of the Champion Businesses; and
(g) Champion has not: (a) entered into or been subject
to any consent decree, compliance order, or administrative order with
respect to the Champion Real Property or any facilities or operations
thereon; (b) received notice under the citizen suit provision of any
Environmental Law in connection with the Champion Real Property or any
facilities or operations thereon; (c) received any request for
information, notice, demand letter, administrative inquiry, or formal
or informal complaint or claim or suit with respect to any
Environmental Condition relating to the Champion Real Property or any
facilities or operations thereon; or (d) been subject to or threatened
with any governmental or citizen action with respect to the Champion
Real Property or any facilities or operations thereon; and Champion
has no reason to believe that any of the above will be forthcoming.
4.25 ASBESTOS. Except as set forth in Schedule 4.25, to the best
knowledge of Champion after engaging an outside consultant neither the Champion
Facilities nor any of the Champion Assets' physical plants contain any friable
asbestos in any form.
4.26 STATUTORY MERGER. As of the Closing Date, CHCP and CHCN shall
have merged into CHCJV with CHCJV as the surviving entity and CHCJV shall hold
good and marketable title to all of the SNF Assets and the Hospital Assets.
4.27 FULL DISCLOSURE. This Agreement and Schedules hereto and all
other documents and information furnished to WJHC and WJHC's representatives by
Champion pursuant hereto do not and will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made and to be made not misleading.
5. REPRESENTATIONS AND WARRANTIES OF WJHC
As of the date hereof and as of the Closing Date, except as disclosed
in the Schedules, WJHC represents and warrants to Champion the following:
5.1 CORPORATE CAPACITY. WJHC is a corporation duly organized and
validly existing and in good standing under the laws of the state in which it
is incorporated. WJHC has the requisite corporate power and authority to enter
into this Agreement, perform its obligations hereunder and to conduct its
businesses as now being conducted.
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5.2 CORPORATE POWERS; CONSENTS; ABSENCE OF CONFLICTS WITH OTHER
AGREEMENTS, ETC. The execution, delivery and performance of this Agreement by
WJHC and all other agreements referenced in or ancillary hereto to which it is
a party and the consummation of the transactions contemplated herein by WJHC:
(a) are within WJHC's corporate powers, are not in
contravention of law or of the terms of its Articles of Incorporation,
Bylaws or any amendments thereto and have been duly authorized by all
appropriate corporate action;
(b) to the best of WJHC's knowledge after due inquiry and
except for the Order and as otherwise expressly herein provided, do
not require any approval or consent of, or filing with, any
governmental agency or authority bearing on the validity of this
Agreement which is required by law or the regulations of any such
agency or authority;
(c) will neither conflict with nor result in any material
breach or contravention of, nor permit the acceleration of the
maturity of the WJHC Assumed Liabilities, or the creation of any lien,
charge or encumbrance affecting any WJHC Assets, individually or in
the aggregate, having a value in excess of Five Thousand Dollars
($5,000);
(d) will not violate any statute, law, rule or regulation
of any governmental authority to which WJHC or the WJHC Assets may be
subject and which may have an effect on the WJHC Assets causing
liability in excess of Five Thousand Dollars ($5,000); and
(e) will not violate any judgment of any court or
governmental authority to which WJHC or the WJHC Assets may be subject
and which may have an effect on the WJHC Assets causing liability in
excess of Five Thousand Dollars ($5,000).
5.3 BINDING AGREEMENT. This Agreement and all agreements to which
WJHC will become a party hereunder are and will constitute the valid and
legally binding obligation of WJHC, and are and will be enforceable against it
in accordance with the respective terms hereof or thereof.
5.4 FINANCIAL STATEMENTS. WJHC has delivered to Champion copies
of the following financial statements of WJHC on an accrual-basis (Schedule
5.4) (the "WJHC Financial Statements"):
(a) Unaudited Balances Sheet dated as of September 30,
1995 (the "Balance Sheet Date");
(b) Unaudited Income Statements for the nine-month period
ended on the Balance Sheet Date; and
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(c) Unaudited Balance Sheets, Income Statements and
Statements of Cash Flows for the four month period of the WJHC
Business ended on December 31, 1994.
Such unaudited WJHC Financial Statements materially conform to
generally accepted accounting principles and practices consistently applied,
except as set forth in Schedule 5.4. Such WJHC Balance Sheets present fairly
the financial condition of WJHC and the WJHC Business as of the dates indicated
thereon, and such WJHC Income Statements and Statements of Cash Flows present
fairly the results of operations and cash flows of WJHC and the WJHC Business
for the periods indicated thereon. Since the Balance Sheet Date, there have
occurred no material adverse changes in the financial condition or business of
the WJHC Business as reflected in such WJHC Financial Statements.
5.5 EXTRAORDINARY LIABILITIES. WJHC has delivered to Champion an
accurate list (Schedule 5.5) of all liabilities of WJHC relating to the WJHC
Business not included within Schedule 5.4, which are of the kind and character
required in financial statements prepared in accordance with generally accepted
accounting principles and which were incurred other than in the ordinary course
of business, whether accrued, absolute, contingent or otherwise, together with,
in the case of those liabilities as to which the liabilities are not fixed, a
reasonable estimate of the maximum amount which may be payable in respect
thereof. Except as disclosed in Schedules 5.4, 5.5, or 5.9, and to the best of
WJHC's knowledge, WJHC has no liabilities of any nature, whether accrued,
absolute, contingent or otherwise. To the best of WJHC's knowledge, there are
no facts in existence on the date hereof known or which should be known to WJHC
which might reasonably serve as the basis for any liability or obligation of
WJHC relating to the WJHC Business which is not fully disclosed in Schedule
5.4, 5.5 or 5.19.
5.6 LICENSES AND CERTIFICATE OF NEED. The WJHC Hospital is duly
licensed by the Utah Department of Health as a 50-bed acute care hospital. The
WJHC Hospital's pharmacies, laboratories and all other ancillary departments
located at the WJHC Hospital or operated for the benefit of the WJHC Hospital,
which are required to be specially licensed, are licensed by the appropriate
licensing agency. WJHC has all other licenses, permits, and approvals which
are needed or required by law to operate the WJHC Business and to use its
assets as those assets are currently used, except where the failure to obtain
and maintain any such licenses, permits or approvals would not have material
adverse effect on the operations or financial condition of the WJHC Hospital.
The WJHC Hospital and each of such ancillary departments is in compliance with
all such licensing requirements. WJHC has delivered to Champion all such
licenses and permits, owned or held by WJHC relating to the ownership,
development or operations of the WJHC Business or WJHC Assets all of which are
now and immediately prior to Closing shall be, to the best of WJHC's knowledge
after due inquiry, in good standing. To the best of WJHC's knowledge,
immediately prior to Closing there will be no, provisions in, or agreements
relating to, any such licenses or permits which would preclude or limit WJHC
from operating the WJHC Business and using all the beds of the WJHC Hospital as
they are currently classified. WJHC has no knowledge of any fire code
violations in the WJHC Hospital. WJHC has delivered to Champion the WJHC
Hospital's most recent state licensing report and list of deficiencies, if any,
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and the WJHC Hospital's most recent fire ▇▇▇▇▇▇▇▇ survey and list of
deficiencies, if any. Except as provided in Schedule 5.6, WJHC has cured all
deficiencies noted therein. [ADDITIONAL LICENSES?]
5.7 MEDICARE PARTICIPATION/ACCREDITATION. WJHC is eligible to
receive payment under Titles XVIII and XIX of the Social Security Act and is a
"provider" under existing provider agreements with the Programs through the
applicable intermediaries. The WJHC Hospital is in compliance with the
conditions of participation of the Programs and have received all approvals or
qualifications necessary for capital reimbursement on the WJHC Assets. There
is not pending, nor to the best of WJHC's knowledge threatened, any proceeding
or investigation under the Programs involving the WJHC Hospital or any of the
WJHC Assets. The cost reports of the WJHC Hospital for the Programs and for
reimbursement of any other WJHC Agency Receivables for the fiscal years through
August 31, 1994, have been filed and are complete and correct in all material
respects. The cost reports of the WJHC Hospital were filed when due. True and
correct copies of all such reports for the three (3) most recent fiscal years
of the WJHC Hospital have been furnished to Champion There are no claims,
actions or appeals pending (and WJHC has not filed any claims or reports which
should result in any such claims, actions or appeals) before any commission,
board or agency, including, without limitation, any intermediary or carrier,
the Provider Reimbursement Review Board or the Administrator of the Health Care
Financing Administration, with respect to any state or Federal Medicare or
Medicaid cost reports or claims filed by WJHC on or before the date hereof, or
any disallowances by any commission, board or agency in connection with any
audit of such cost reports, except as specifically described and set forth on
Schedule 5.7. No validation review or program integrity review related to the
WJHC Hospital, the operation thereof, or the consummation of the transactions
contemplated herein, or related to the WJHC Assets has been conducted by any
commission, board or agency in connection with the Programs, and to the best
knowledge of WJHC, no such reviews are scheduled, pending or threatened against
or affecting the WJHC Hospital, or any of the Assets, or the consummation of
the transactions contemplated hereby. The WJHC Hospital is in full compliance
in all material respects with all rules, regulations and requirements of all
governmental agencies having jurisdiction over the WJHC Hospital or its
operations. WJHC has delivered to Champion true and complete copies of the
WJHC Hospital's most recent JCAHO accreditation survey report and deficiency
list, if any and the WJHC Hospital most recent Statement of Deficiencies and
Plan of Correction. Except as provided in Schedule 5.7, WJHC has cured all
deficiencies noted thereon.
5.8 REGULATORY COMPLIANCE. Except as set forth on Schedule 5.8
hereto, WJHC is in compliance in all material respects with all applicable
rules, regulations and requirements of all federal, state and local
commissions, boards, bureaus and agencies having jurisdiction over the WJHC
Business and the operations of the WJHC Business, including, without
limitation, the appropriate state licensing agencies and the Internal Revenue
Service, and WJHC has timely filed all reports, data and other information
required to be filed with such commissions, boards, bureaus and agencies where
a failure to file timely would have a material adverse effect on the WJHC
Assets.
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5.9 AGREEMENTS AND COMMITMENTS. WJHC has delivered to Champion an
accurate list (Schedule 5.9) (the "Scheduled WJHC Contracts") of all
commitments, contracts, leases and agreements which do or may materially affect
the WJHC Business, the WJHC Assets or the operation thereof, to which WJHC is a
party or by which WJHC or any of the WJHC Assets are bound (including, without
limitation, provider based physician agreements, agreements with health
maintenance organizations, preferred provider organizations or other
alternative delivery systems, joint venture or partnership agreements,
employment agreements, contracts, tenant leases, equipment leases, equipment
maintenance agreements, agreements with municipalities and labor organizations,
loan agreements, bonds, mortgages, liens or other security agreements). WJHC
has delivered true and correct copies of such agreements to Champion Except
for commitments, contracts, leases and agreements listed on Schedule 5.9, there
are not:
(a) any contracts or commitments involving any material
obligation which materially affects the WJHC Assets and which cannot,
or in reasonable probability will not, be performed or terminated
before ninety (90) days after the Closing Date without payment of
penalty or equivalent thereof;
(b) any contracts or commitments materially affecting
ownership of, title to, use of, or any interest in real estate used or
proposed to be used in connection with the WJHC Assets;
(c) any patent licensing agreements or any other
agreements, licenses or commitments with respect to patents, patent
applications, trademarks, trade names, technical assistance,
copyrights or other like terms affecting the WJHC Assets;
(d) any contract, license or commitment relating to data
processing programs, software or source codes utilized in connection
with the WJHC Assets;
(e) any collective bargaining agreements or other
contracts or commitments to or with any labor unions or other employee
representatives or groups of employees affecting or which could affect
the WJHC Assets;
(f) any employment contracts or any other contracts,
agreements or commitments to or with individual employees or agents
affecting or which could affect the WJHC Assets;
(g) any contracts or commitments providing for payments
based in any manner on the revenues or profits of the WJHC Assets; or
(h) any contract or commitment, whether in the ordinary
course of business or not, which involves future payments, performance
or services or delivery of goods or materials, to or by WJHC of any
amount or value in excess
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of Five Thousand Dollars ($5,000) in the aggregate affecting or which
could affect the WJHC Assets.
5.10 THE SCHEDULED WJHC CONTRACTS. Except as expressly set forth
on Schedule 5.9,
(a) The Scheduled WJHC Contracts constitute valid and
legally binding obligations of WJHC and to the knowledge of WJHC the
Scheduled WJHC Contracts constitute valid an legally binding
obligations of the other parties thereto and are enforceable in
accordance with their terms;
(b) Each Scheduled WJHC Contract constitutes the entire
agreement by and between the respective parties thereto;
(c) In all material respects, all obligations required to
be performed under the terms of the Scheduled WJHC Contracts have been
performed, no act or omission has occurred or failed to occur which,
with the giving of notice, the lapse of time or both would constitute
a default under the WJHC Contracts and each of such WJHC Contracts is
now and will be upon and after the Closing Date in full force and
effect without default on the part of the parties thereto; and
(d) WJHC will use its best efforts to obtain assignments
by the other party thereto in respect of the Scheduled WJHC Contracts.
5.11 SUPPLIES. Inventory and supplies are carried at cost on a
first-in, first-out basis and are properly stated in the unaudited WJHC
Business Balance Sheet as of the Balance Sheet Date.
5.12 EQUIPMENT. WJHC has delivered to Champion a depreciation
schedule as of February 1, 1995 (Schedule 5.12) which, to the best of WJHC's
knowledge, takes into consideration all the equipment associated with, or
constituting any part of, the WJHC Assets. Since the Balance Sheet Date, WJHC
has not sold or otherwise disposed of any item of equipment having a value in
excess of $5,000 associated with, or constituting any part of, the WJHC Assets.
5.13 REAL PROPERTY. WJHC owns fee or leasehold title to the WJHC
Real Property described in Schedule 5.13 hereto, together with all buildings,
improvements and fixtures thereon and all appurtenances and rights thereto, and
there exist no mortgages, liens, restrictions, agreements, claims or other
encumbrances which causes title to the WJHC Real Property to be unmarketable or
which will materially interfere with Champion's use of the WJHC Assets in a
manner consistent with the current use thereof by WJHC. WJHC has indicated on
Schedule 5.13 which of the properties listed thereon are owned by WJHC and
which are leased by WJHC. The WJHC Real Property will be conveyed to Champion
subject only to current taxes not yet due and payable, liens securing any
indebtedness assumed by Champion, any lease obligations assumed by Champion and
easements and other restrictions of record as more particularly described in
Schedule 5.13 hereto and approved by Champion (the "WJHC Permitted
Encumbrances"). The WJHC Real Property comprises all of the real property
owned or leased by WJHC or affiliates
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of WJHC (all of which WJHC Real Property shall be conveyed to Champion as of
Closing) and associated with or employed in the operation of the WJHC Business,
and:
(a) If any lien or liens, including, without limitation,
deed of trust liens, mechanics and materialmen's liens and judgment
liens, is asserted against the WJHC Real Property, other than the WJHC
Permitted Encumbrances, WJHC shall obtain the release of such
liens(s);
(b) WJHC has not received notice of a violation of any
applicable ordinance or other law, order, regulation or requirement,
and has not received notice of condemnation, lien, assessment or the
like, relating to any part of the WJHC Real Property or the operation
thereof; and
(c) At Closing, WJHC shall convey with special warranty
to Champion good and marketable fee title to the WJHC Real Property,
and as to leases conveyance shall be by assignment of lease, free and
clear of any mortgage, lien, restriction, agreement, claim or other
encumbrance, except for the WJHC Permitted Encumbrances.
5.14 TITLE. As of Closing and except as provided in Section 5.13
hereof in respect of title to the WJHC Real Property, WJHC shall own and hold
good and marketable title to all tangible assets, real, personal or mixed and
valid title to all intangible assets associated with or employed in the
operation of the WJHC Business or located on the WJHC Real Property, all of
which shall be a part of the WJHC Assets, and, except as provided in Section
5.13 hereof in respect of title to the WJHC Real Property, at Closing WJHC will
convey to Champion good and marketable title to all properties, assets and
leasehold estates, real, personal and mixed, tangible and intangible,
constituting or associated with WJHC Assets or any part thereof, subject to no
mortgage, lien, pledge, security interest, conditional sales agreement, right
of first refusal, option, restriction, liability, encumbrance or charge, except
those disclosed to Champion and pertaining to the WJHC Contracts.
5.15 QUALITY AND CONDITION OF ASSETS. Other than with respect to
warranties of title and other representations and warranties as herein
provided, WJHC shall transfer the WJHC Assets to Champion and Champion shall
accept the WJHC Assets from WJHC on an "as is, where is" basis.
5.16 INSURANCE. WJHC has delivered to Champion an accurate
schedule (Schedule 5.16) disclosing the insurance policies covering the
ownership and operations of the WJHC Assets, which Schedule reflects the
policies' numbers, terms, identity of insurers, amounts and coverage. All of
such policies are now and will be until Closing in full force and effect on a
claims made basis with no premium arrearages. True and correct copies of all
such policies and any endorsements thereto have been or will be delivered to
Champion prior to Closing.
5.17 EMPLOYEE BENEFIT PLANS.
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5.17.1 DEFINITIONS. Where the following words and phrases
appear in this Agreement, they shall have the respective meanings set forth
below:
(1) WJHC Plan. Each "employee benefit plan," as such
term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), including, but not limited
to, employee benefit plans which are not subject to some or all of the
provisions of ERISA, which is sponsored, maintained, or contributed to
by WJHC or has been sponsored, maintained, or contributed to by WJHC
within six years prior to the Closing Date; and
(2) WJHC Benefit Program or Agreement. Each personnel
policy, stock option plan, collective bargaining agreement, bonus plan
or arrangement, incentive award plan or arrangement, vacation policy,
severance pay plan, policy or agreement, deferred compensation
agreement or arrangement, executive compensation or supplemental
income arrangement, consulting agreement, employment agreement, and
each other employee benefit plan, agreement, arrangement, program,
practice, or understanding which is not described in Section
5.17.1(1), which is sponsored, maintained, or contributed to by WJHC
or has been sponsored, maintained, or contributed to by WJHC within
six years prior to the Closing Date.
5.17.2 EMPLOYEE BENEFIT PLAN COMPLIANCE. Except as
otherwise set forth on Schedule 5.17.2,
(1) WJHC does not contribute to or have an obligation to
contribute to, nor has WJHC had at any time within six years prior to
the Closing Date contributed to or had an obligation to contribute to,
a multiemployer plan within the meaning of Section 3(37) of ERISA;
(2) WJHC has performed in all material respects all
obligations, whether arising by operation of law or by contract,
required to be performed by WJHC in connection with each one of the
WJHC Plans and the WJHC Benefit Programs and Agreements, and there
have been no material defaults or violations by any party to the Plans
or Benefit Programs and Agreements;
(3) Each WJHC Plan that is intended to be qualified under
Section 401 of the Code (i) satisfies the requirements of such
Section, (ii) has received a favorable determination letter from the
IRS regarding such qualified status and covering amendments required
under the Unemployment Compensation amendments of 1992, the Omnibus
Budget Reconciliation Act of 1993, and the final nondiscrimination
regulations under Section 401(a)(4) of the Code (or such amendments to
such WJHC Plan have been timely made and filed with the IRS for such a
determination letter), and (iii) has not, since receipt of the most
recent favorable determination letter, been amended or operated in a
way which would adversely affect such qualified status;
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(4) As to any WJHC Plan subject to Title IV of ERISA,
there has been no event or condition which presents the material risk
of WJHC Plan termination, no accumulated funding deficiency, whether
or not waived, within the meaning of Section 302 of ERISA or Section
412 of the Code has been incurred, no reportable event within the
meaning of Section 4043 of ERISA (for which the disclosure
requirements of Regulation Section 2615.3 promulgated by the PBGC have
not been waived) has occurred, no notice of intent to terminate the
Plan has been given under Section 4041 of ERISA, no proceeding has
been instituted under Section 4042 of ERISA to terminate the WJHC
Plan, no liability to the PBGC has been incurred, and the assets of
the WJHC Plan equal or exceed the actuarial present value of the
benefit liabilities, within the meaning of Section 4041 of ERISA,
under the WJHC Plan, based upon reasonable actuarial assumptions and
the asset valuation principles established by the PBGC;
(5) With respect to any employee benefit plan, which is
not a WJHC Plan or WJHC Agreement, within the meaning of Section 3(3)
of ERISA, which is sponsored, maintained, or contributed to, or has
been sponsored, maintained, or contributed to within six years prior
to the Closing Date, by any corporation, trade, business, or entity
under common control with WJHC within the meaning of Section 414(b),
(c), (m), or (o) of the Code or Section 4001 of ERISA ("Commonly
Controlled Entity"), (a) no withdrawal liability, within the meaning
of Section 4201 of ERISA, has been incurred, which withdrawal
liability has not been satisfied, (b) no liability to the PBGC has
been incurred by any Commonly Controlled Entity, which liability has
not been satisfied, (c) no accumulated funding deficiency, whether or
not waived, within the meaning of Section 302 of ERISA or Section 412
of the Code has been incurred, and (d) all contributions (including
installments) to such plan required by Section 302 of ERISA and
Section 412 of the Code have been timely made.
5.18 EMPLOYEE RELATIONS. There is no pending or, to the best of
WJHC's knowledge, threatened employee strike, work stoppage or labor dispute.
No union representation question exists respecting any employees of the WJHC
Business, no collective bargaining agreement exists or is currently being
negotiated by WJHC, no demand has been made for recognition by a labor
organization by or with respect to any employees of the WJHC Business, no union
organizing activities by or with respect to any employees of the WJHC Business
are taking place, and none of the employees of the WJHC Business is represented
by any labor union or organization. There is no unfair practice claim against
WJHC before the National Labor Relations Board, or any strike, dispute,
slowdown, or stoppage pending or threatened against or involving the WJHC
Business and none has occurred. WJHC is in compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment, and wages and hours. WJHC is not engaged in any unfair labor
practices. Except as set forth on Schedule 5.18, there are no pending or, to
the best of WJHC's knowledge, threatened EEOC claims, sexual harassment, wage
and hour claims, unemployment compensation claims, workers' compensation claims
or the like.
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5.19 LITIGATION OR PROCEEDINGS. WJHC has delivered to Champion an
accurate list and summary description (Schedule 5.19) of all litigation or
proceedings with respect to the WJHC Business and the WJHC Assets to which WJHC
is a party. WJHC is not in default under any law or regulation material to the
operation of the WJHC Business, or under any order of any court or federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality wherever located. Except to the extent set forth on
Schedule 5.19, there are no claims, actions, suits, proceedings or
investigations pending, or to the best of WJHC's knowledge after due inquiry,
threatened against or affecting WJHC with respect to the WJHC Business or the
WJHC Assets, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality wherever located.
5.20 SPECIAL FUNDS. None of the WJHC Assets are subject to, and
WJHC shall indemnify and hold Champion harmless from and against, any liability
in respect of amounts received by WJHC or others for the purchase or
improvement of the WJHC Assets or any part thereof under restricted or
conditioned grants or donations, including, without limitation, monies received
under the Public Health Service Act, 42 U.S.C. Section 291 et seq.
5.21 MEDICAL STAFF MATTERS. WJHC has delivered to Champion true,
correct, and complete copies of the bylaws and rules and regulations of the
medical staff of the WJHC Hospital. With regard to the medical staff of the
WJHC Hospital and except as set forth on Schedule 5.21 hereto, there are no
pending or, to the best of WJHC's knowledge, threatened disputes with
applicants, staff members or health professional affiliates and all appeal
periods in respect of any medical staff member or applicant against whom an
adverse action has been taken have expired.
5.22 TAX LIABILITIES. WJHC has not taken and will not take any
action, and WJHC has not failed to take and will not fail to take any action,
in respect of any federal, state or local taxes (including, without limitation,
any withholdings required to be made in respect of employees) which may have an
adverse effect upon the WJHC Assets as of or subsequent to Closing.
5.23 POST-BALANCE SHEET RESULTS. Since the Balance Sheet Date
there has not been:
(a) any material adverse change in the financial
position, assets, liabilities (contingent or otherwise), income or
business of the WJHC Business;
(b) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the WJHC Assets;
(c) any labor dispute, law or regulation or any event or
condition of any character materially adversely affecting the business
of the WJHC Business;
(d) any sale, assignment, transfer or disposition of any
item of plant, property or equipment of the WJHC Business having a
value in excess of Five
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Thousand Dollars ($5,000), except in the ordinary course of business
with comparable replacement thereof; or
(e) any transaction by WJHC outside the ordinary course
of business which may cause a liability or obligation in excess of
Five Thousand Dollars ($5,000) relating to the WJHC Business.
5.24 ENVIRONMENTAL MATTERS.
5.24.1
(a) For purposes of this Section, the term "Environmental
Laws" shall mean any and all laws, statutes, ordinances, rules, regulations,
orders or determinations of any Governmental Authority pertaining to health or
the environment, whether now in existence or hereafter enacted and in effect at
the time of Closing, in any and all jurisdictions in which the WJHC Real
Property is located.
(b) For purposes of this Section, the terms "hazardous
substances" and "release" (or "threatened release") have the meanings specified
in the federal Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"); and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in the federal Resource Conservation
Recovery Act ("RCRA"); provided, however, that to the extent the applicable
laws, ordinances, rules, regulations or common law of the state in which the
WJHC Real Property is located establish a meaning for "hazardous substance,"
"release," "solid waste," or "disposal" that is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply, except that for
purposes of this Section such defined terms shall not include non-friable
asbestos.
(c) For purposes of this Section, the term "Governmental
Authority" includes the United States, the state, county, city, and political
subdivisions in which the WJHC Real Property is located or that exercise
jurisdiction over the WJHC Real Property, and any agency, court, department,
commission, board, bureau or instrumentality or any of them that exercises
jurisdiction over the WJHC Real Property.
(d) For purposes of this Section, the term "Environmental
Condition" shall mean (a) any release or threatened release of a hazardous
substance from, in, on, under, or onto the WJHC Real Property in violation of
any Environmental Law; (b) any releases or threatened release of a hazardous
substance from the WJHC Real Property in, on, under, or onto any other property
that results in any damages, loss, cost, expenses, or other liability; (c) any
violation of any Environmental Law relating to the manufacture, processing,
distribution, transportation, storage, use, discharge, handling, emission, or
disposal of hazardous substances by or in connection with the WJHC Business; or
(d) any release or threatened release of a hazardous substance from, in, on,
under, or onto the WJHC Real Property resulting in liability to nongovernmental
third parties in tort.
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5.24.2 Except as disclosed in Schedule 5.24.2, WJHC
represents to its actual knowledge the following:
(a) WJHC is in compliance with all applicable
Environmental Laws, except where the failure to be in compliance would
not have a material adverse effect on any of the WJHC Business;
(b) there are not any Environmental Conditions resulting
from WJHC's, or any of WJHC's affiliates' operations of the WJHC Real
Property that may give rise to any on-site or off-site remedial
obligations;
(c) there are not any Environmental Conditions existing
on or resulting from operations of the WJHC Real Property by Persons
other than WJHC or any of WJHC's affiliates that may give rise to any
on-site or off-site remedial obligations, except for Environmental
Conditions that do not require a clean up obligation and will not have
a material adverse effect on any of the WJHC Businesses;
(d) the WJHC Real Property is not subject to any
existing, pending or threatened action, suit, investigation, inquiry
or proceeding by or before any Governmental Authority under any
Environmental Law;
(e) all notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed by WJHC under
any Environmental Law in connection with the WJHC Real Property,
including without limitation those relating to the treatment, storage,
disposal or release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed and WJHC is in
compliance with the terms and conditions of all such notices, permits
licenses and similar authorizations, except where the failure to
obtain such authorizations would not have a material adverse effect on
any of the WJHC Businesses;
(f) without limiting the foregoing, there is no liability
to any nongovernmental third party in tort in connection with any
release or threatened release of any hazardous substances, solid
wastes, petroleum, petroleum products, asbestos, or poly-chlorinated
biphenyls ("PCBs") by WJHC or any of WJHC's affiliates, and by any
other Person, into the environment as a result of or with respect to
the WJHC Real Property, except for releases that do not require a
clean up obligation and will not have a material adverse effect on any
of the WJHC Businesses; and
(g) WJHC has not: (a) entered into or been subject to
any consent decree, compliance order, or administrative order with
respect to the WJHC Real Property or any facilities or operations
thereon; (b) received notice under the citizen suit provision of any
Environmental Law in connection with the WJHC
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Real Property or any facilities or operations thereon; (c) received any
request for information, notice, demand letter, administrative
inquiry, or formal or informal complaint or claim or suit with respect
to any Environmental Condition relating to the WJHC Real Property or
any facilities or operations thereon; or (d) been subject to or
threatened with any governmental or citizen action with respect to the
WJHC Real Property or any facilities or operations thereon; and WJHC
has no reason to believe that any of the above will be forthcoming.
5.25 ASBESTOS. Except as set forth in Schedule 5.25, to the best
knowledge of WJHC after engaging an outside consultant, neither the WJHC
Hospital nor any of the WJHC Assets' physical plants contain any friable
asbestos in any form.
5.26 FULL DISCLOSURE. This Agreement and Schedules hereto and all
other documents and information furnished to Champion and Champion's
representatives by WJHC pursuant hereto do not and will not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made and to be made not misleading.
6. COVENANTS OF CHAMPION
6.1 INFORMATION. Between the date of this Agreement and the
Closing Date, Champion shall afford to the officers and authorized
representatives and agents of WJHC full and complete access to and the right to
inspect the plants, properties, books and records of Champion relating to the
Champion Assets, and will furnish WJHC with such additional financial and
operating data and other information as to the business and properties of
Champion relating to the Champion Assets as WJHC may from time to time
reasonably request without regard to where such information may be located.
WJHC's right of access and inspection shall be made in such a manner as not to
interfere unreasonably with the operations of the Champion Assets.
6.2 OPERATIONS. From the date hereof until the Closing Date,
Champion will in respect of the Champion Business use its best efforts to:
(a) carry on the Champion Business in substantially the
same manner as Champion has heretofore and not make any material
change in personnel, operations, finance, accounting policies, or real
or personal property of the Champion Business;
(b) maintain the Champion Assets and all parts thereof in
as good working order and condition as at present, ordinary wear and
tear excepted;
(c) perform all of Champion's obligations under
agreements relating to or affecting the Champion Assets, the Champion
Business or the Champion Business' operations;
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(d) endeavor to take all actions necessary and
appropriate to render title to the Champion Assets free and clear of
all liens, security agreements, claims, charges and encumbrances
(except for the Champion Permitted Encumbrances) and to obtain
appropriate releases, consents, estoppels and other instruments as
WJHC may reasonably request;
(e) keep in full force and effect present insurance
policies or other comparable insurance;
(f) maintain and preserve the Champion Business
organization intact, retain the Champion Business' present employees
and maintain the Champion Business' relationship with physicians,
suppliers, customers and others having business relations with the
Champion Business and to take such actions as are necessary to cause
the smooth, efficient and successful transition of such business
operations and employee and other relations to WJHC as of Closing; and
(g) permit and allow reasonable access by WJHC to make
offers of post-Closing employment to any of the Champion Business'
personnel, which personnel shall be allowed to accept such offers
without penalty, competing offer or interference, and to establish
relationships with physicians and others having business relations
with the Champion Business.
6.3 NEGATIVE COVENANTS. From the date hereof to the Closing Date,
Champion in respect of the Champion Business will not, without the prior
written consent of WJHC:
(a) amend or terminate any of the Champion Contracts,
enter into any contract or commitment, or incur or agree to incur any
liability, except in the ordinary course of business and in no event
greater than Ten Thousand Dollars ($10,000) per item or which is not
terminable without cause or penalty within ninety (90) days following
Closing;
(b) make offers of employment to any employees of
Champion at the Champion Business for employment with Champion or any
affiliate of Champion for periods subsequent to Closing, other than
those employees who do not accept offers of post-Closing employment
from WJHC;
(c) increase compensation payable or to become payable or
make a bonus payment to or otherwise enter into one or more bonus
agreements with any employee or agent, except in the ordinary course
of business in accordance with existing personnel policies;
(d) create, assume or permit to exist any new mortgage,
pledge or other lien or encumbrance upon any of the Champion Assets,
whether now owned or hereafter acquired;
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(e) sell, assign or otherwise transfer or dispose of any
property, plant or equipment (other than supplies), except in the
normal course of business with comparable replacement thereof; or
(f) take any action outside the ordinary course of
business.
6.4 GOVERNMENTAL APPROVALS. Champion shall assist and cooperate
with WJHC and WJHC's representatives and counsel in obtaining all governmental
consents, approvals and licenses which WJHC reasonably deems necessary or
appropriate and in the preparation of any document or other material which may
be required by any governmental agency as a predicate to or result of the
transactions contemplated herein, including, but not limited to, information
required by the United States Department of Justice (the "Justice Department")
and/or the FTC in order to obtain all necessary governmental consents to the
consummation of this transaction as required by the Order.
6.5 FTC NOTIFICATION. Champion shall, if and to the extent
required by law, file all reports or other documents required or requested by
the Justice Department or the FTC under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), and all regulations promulgated
thereunder, or in order to comply with the Order concerning the transactions
contemplated hereby, and comply promptly with any requests by the FTC or
Justice Department for additional information concerning such transactions, so
that the waiting period specified in the HSR Act will expire as soon as
reasonably possible after the execution and delivery of this Agreement.
Champion agrees to furnish to WJHC such information concerning Champion as WJHC
needs to perform its obligations under Section 7.5 of this Agreement. In
addition, at the request of WJHC, Champion shall make such filings or submit
such information to the FTC to comply with the Order.
6.6 ADDITIONAL FINANCIAL INFORMATION. Within forty-five (45) days
following the end of each calendar month prior to the Closing Date, Champion
will deliver to WJHC true and complete copies of (i) the unaudited balance
sheets and the related unaudited statements of income of, or relating to, the
Champion Business for each month then ended, together with the notes, if any,
related thereto, which presentation shall be true, correct and complete in all
material respects, shall have been prepared from and in accordance with the
books and records of the Champion Business and which shall fairly present the
financial position and results of operations of the Champion Business as of the
date and for the period indicated.
6.7 CLOSING CONDITIONS. Champion will use its best efforts to
cause the conditions specified in Sections 8 and 9 hereof over which Champion
has control to be satisfied as soon as reasonably practicable, but in all
events before the Closing Date.
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6.8 CHAMPION TITLE AND SURVEY MATTERS.
(a) CHAMPION TITLE COMMITMENT. Prior to the date hereof
Champion furnished to WJHC a current title commitment (the "Champion Title
Commitment") issued by Statewide Title Service, Inc., as agent for Lawyers
Title Insurance Company (the "Title Company"), together with legible copies of
all exceptions to title referenced therein. The Champion Title Commitment sets
forth the state of title to the Champion Real Property owned in fee simple by
Champion, together with all exceptions or conditions to such title, including,
without limitation, all easements, restrictions, rights-of-way, covenants,
reservations, and all other encumbrances affecting the Champion Real Property
which would appear in an owner's title policy, if issued. The Champion Title
Commitment contains the express commitment of the Title Company to issue an
owners' title insurance policy (the "Champion Title Policy") to WJHC in an
amount equal to the appraised value of the Champion Real Property as determined
by Valuation Counselors insuring such title to the Champion Real Property as is
specified in the Champion Title Commitment. WJHC will have up until thirty
(30) days prior to the Closing Date to notify Champion in writing of any
objections to Champion's title reflected by the Champion Title Commitment;
provided, however, that WJHC may not object to any of the Champion Permitted
Encumbrances. Champion agrees to use Champion's reasonable best efforts, which
for purposes of this Section 6.8(a) shall include the payment of money to cure
or remove, at or before Closing, any objection (including objections to the
Champion Survey (as hereinafter defined) timely and properly raised by WJHC)
which is properly and timely raised by WJHC in accordance with the provisions
of this Agreement. If, despite its best efforts, Champion does not remove any
such objection, prior to the Closing, WJHC, at WJHC's sole option, may: (a)
acquire Champion Real Property in its then existing condition; or (b) terminate
this Agreement by written notice to Champion, whereupon this Agreement will be
null and void and the parties hereto will have no further rights or obligations
hereunder (except for such rights and obligations that survive the termination
of this Agreement pursuant to the terms hereof). The cost of the Champion
Title Policy shall be borne by Champion.
(b) CHAMPION SURVEY. Prior to the date hereof, Champion
delivered, at its sole cost and expense, to WJHC an as-built survey (the
"Champion Survey") of the Champion Real Property acceptable to the Title
Company for purposes of deleting standard survey exceptions as provided above
and reflecting all improvements visible on the grounds and all easements,
rights of way, means of ingress or egress encroachments and drainage ditches,
whether abutting or interior, of record or on the grounds. The survey reflects
whether and to the extent any portion of such Champion Real Property lies
within the 100-year flood plain and shall otherwise be in a form satisfactory
to WJHC. The survey certifies to the Title Company and WJHC in a form
satisfactory to the Title Company and WJHC.
(c) CHAMPION TITLE POLICY. Within thirty (30) days after
the Closing, Champion shall cause, at its sole cost and expense, the Champion
Title Policy to be furnished to WJHC. The Champion Title Policy shall be
issued in the amount specified in the Title Commitment and shall insure good
and marketable fee simple title to the Champion Real Property.
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The Champion Title Policy may contain the Champion Permitted Encumbrances, but
shall contain no additional exceptions to title to the Champion Real Property
other than the standard exceptions contained in an ALTA owners policy
prescribed for use in the state where each parcel of the Champion Real Property
is located, with the standard exception as to taxes limited to taxes for the
current and subsequent years "not yet due and payable," with the standard
exception for parties in possession limited to "tenants in possession, as
tenants only, under unrecorded leases," with the standard exception as to
unrecorded easements, visible and apparent easements, or other matters which
would be disclosed by an inspection of the Champion Real Property deleted, with
the standard exception as to mechanics', materialmen's or other matters
relating to the completion of construction and payment of bills with respect
thereto deleted, to the extent reasonably obtainable, with the standard
exception as to areas, boundaries, discrepancies, encroachments, and other
matters which would be disclosed by a survey of the Champion Real Property
deleted, and with such additional deletions or modifications to the standard
policy form and/or endorsements thereto as WJHC may reasonably require in
connection with its review of the Champion Title Commitment and Champion
Survey.
6.9 NO-SHOP CLAUSE. From and after the date of the execution and
delivery of this Agreement by Champion until the termination of this Agreement,
Champion shall not (and, to the extent possible, will not permit any affiliate
or any other Person acting for or on behalf of Champion or of any affiliate of
Champion), without the prior written consent of WJHC: (i) offer for sale the
Champion Assets (or any material portion thereof) or any ownership interest of
any entity owning any of the Champion Assets; (ii) solicit offers to buy all or
any material portion of the Champion Assets or any ownership interest of any
entity owning any of the Champion Assets; (iii) hold discussions with any party
(other than WJHC) looking toward such an offer or solicitation or looking
toward a merger or consolidation of any entity owning any of the Champion
Assets; (iv) enter into any agreement with any party (other than WJHC) with
respect to the sale or other disposition of the Champion Assets (or any
material portion thereof) or any ownership interest in any entity owning any of
the Champion Assets or with respect to any merger, consolidation, or similar
transaction involving any entity owning any of the Champion Assets (other than
as provided in Section 6.10 below), or (v) furnish or cause to be furnished any
information with respect to Champion or the Champion Assets to any Person that
Champion or such affiliate or any such Person acting for or on their behalf
knows or has reason to believe is in the process of considering any such
acquisition, merger, consolidation, combination or reorganization. If Champion
or any such affiliate or any such Person acting for or on their behalf receives
from any Person (other than from WJHC or a representative thereof) any offer,
inquiry or informational request referred to above, Champion will promptly
advise such Person, by written notice, of the terms of this Section 6.9 and
will promptly advise WJHC of such offer, inquiry or request and deliver a copy
of such notice to WJHC together with a copy of all documents that constitute,
relate or refer to any and all responses to such offer, inquiry or request.
6.10 MERGER. Prior to the Closing Date, CHCP and CHCN shall merge
into CHCJV with CHCJV as the surviving corporation.
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6.11 SOUTHRIDGE, L.L.C. Champion shall use its reasonable best
efforts to assist WJHC in obtaining the consents referenced in Section 7.10
hereof.
7. COVENANTS OF WJHC
7.1 INFORMATION. Between the date of this Agreement and the
Closing Date, WJHC shall afford to the officers and authorized representatives
and agents of Champion full and complete access to and the right to inspect the
plants, properties, books and records of WJHC relating to the WJHC Assets, and
will furnish Champion with such additional financial and operating data and
other information as to the business and properties of WJHC relating to the
WJHC Assets as Champion may from time to time reasonably request without regard
to where such information may be located. Champion's right of access and
inspection shall be made in such a manner as not to interfere unreasonably with
the operations of the WJHC Assets.
7.2 OPERATIONS. From the date hereof until the Closing Date, WJHC
will in respect of the WJHC Business use its best efforts to:
(a) carry on the WJHC Business in substantially the same
manner as WJHC has heretofore and not make any material change in
personnel, operations, finance, accounting policies, or real or
personal property of the WJHC Business;
(b) maintain the WJHC Assets and all parts thereof in as
good working order and condition as at present, ordinary wear and tear
excepted;
(c) perform all of WJHC's obligations under agreements
relating to or affecting the WJHC Assets, the WJHC Business or the
WJHC Business' operations;
(d) endeavor to take all actions necessary and
appropriate to render title to the WJHC Assets free and clear of all
liens, security agreements, claims, charges and encumbrances (except
for the WJHC Permitted Encumbrances) and to obtain appropriate
releases, consents, estoppels and other instruments as Champion may
reasonably request;
(e) keep in full force and effect present insurance
policies or other comparable insurance;
(f) maintain and preserve the WJHC Business organization
intact, retain the WJHC Business' present employees and maintain the
WJHC Business' relationship with physicians, suppliers, customers and
others having business relations with the WJHC Business and to take
such actions as are necessary to cause the smooth, efficient and
successful transition of such business operations and employee and
other relations to Champion as of Closing; and
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(g) permit and allow reasonable access by Champion to
make offers of post-Closing employment to any of the WJHC Business'
personnel, which personnel shall be allowed to accept such offers
without penalty, competing offer or interference, and to establish
relationships with physicians and others having business relations
with the WJHC Business.
7.3 NEGATIVE COVENANTS. From the date hereof to the Closing Date,
WJHC in respect of the WJHC Business will not, without the prior written
consent of Champion:
(a) amend or terminate any of the WJHC Contracts, enter
into any contract or commitment, or incur or agree to incur any
liability, except in the ordinary course of business and in no event
greater than Ten Thousand Dollars ($10,000) per item or which is not
terminable without cause or penalty within ninety (90) days following
Closing;
(b) make offers of employment to any employees of WJHC at
the WJHC Business for employment with WJHC or any affiliate of WJHC
for periods subsequent to Closing, other than those employees who do
not accept offers of post-Closing employment from Champion;
(c) increase compensation payable or to become payable or
make a bonus payment to or otherwise enter into one or more bonus
agreements with any employee or agent, except in the ordinary course
of business in accordance with existing personnel policies;
(d) create, assume or permit to exist any new mortgage,
pledge or other lien or encumbrance upon any of the WJHC Assets,
whether now owned or hereafter acquired;
(e) sell, assign or otherwise transfer or dispose of any
property, plant or equipment (other than supplies), except in the
normal course of business with comparable replacement thereof; or
(f) take any action outside the ordinary course of
business.
7.4 GOVERNMENTAL APPROVALS. WJHC shall assist and cooperate with
Champion and Champion's representatives and counsel in obtaining all
governmental consents, approvals and licenses which Champion reasonably deems
necessary or appropriate and in the preparation of any document or other
material which may be required by any governmental agency as a predicate to or
result of the transactions contemplated herein.
7.5 FTC NOTIFICATION. WJHC shall, if and to the extent required
by law, file all reports or other documents required or requested by the
Justice Department or the FTC under the HSR Act, and all regulations
promulgated thereunder, or in order to comply with the Order
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concerning the transactions contemplated hereby, and comply promptly with any
requests by the FTC or Justice Department for additional information concerning
such transactions, so that the waiting period specified in the HSR Act will
expire as soon as reasonably possible after the execution and delivery of this
Agreement. WJHC agrees to furnish to Champion such information concerning WJHC
as Champion needs to perform its obligations under Section 6.5 of this
Agreement.
7.6 ADDITIONAL FINANCIAL INFORMATION. Within thirty (30) days
following the end of each calendar month prior to the Closing Date, WJHC will
deliver to Champion true and complete copies of (i) the unaudited balance
sheets and the related unaudited statements of income of, or relating to, the
WJHC Business for each month then ended, together with the notes, if any,
related thereto, which presentation shall be true, correct and complete in all
material respects, shall have been prepared from and in accordance with the
books and records of the WJHC Business and which shall fairly present the
financial position and results of operations of the WJHC Business as of the
date and for the period indicated.
7.7 CLOSING CONDITIONS. WJHC will use its best efforts to cause
the conditions specified in Sections 8 and 9 hereof over which WJHC has control
to be satisfied as soon as reasonably practicable, but in all events before the
Closing Date.
7.8 TITLE AND WJHC SURVEY MATTERS.
(a) WJHC TITLE COMMITMENT. Prior to the date hereof,
WJHC furnished to Champion a current title commitment (the "WJHC Title
Commitment") issued by First American Title Insurance Co. (the "Title
Company"), together with legible copies of all exceptions to title referenced
therein. The WJHC Title Commitment sets forth the state of title to the WJHC
Real Property owned in fee simple by WJHC, together with all exceptions or
conditions to such title, including, without limitation, all easements,
restrictions, rights-of-way, covenants, reservations, and all other
encumbrances affecting the WJHC Real Property which would appear in an owner's
title policy, if issued. The WJHC Title Commitment contains the express
commitment of the Title Company to issue an owners' title insurance policy (the
"WJHC Title Policy") to Champion in an amount equal to the appraised value of
the WJHC Real Property as determined by Valuation Counselors insuring such
title to the WJHC Real Property as is specified in the WJHC Title Commitment.
Champion will have up until thirty (30) days prior to the Closing Date to
notify WJHC in writing of any objections to WJHC's title reflected by the WJHC
Title Commitment; provided, however, that Champion may not object to any of the
WJHC Permitted Encumbrances. WJHC agrees to use WJHC's reasonable best
efforts, which for purposes of this Section 7.8(a) shall include the payment of
money, to cure or remove, at or before Closing, any objection (including
objections to the WJHC Survey (as hereinafter defined) timely and properly
raised by Champion) which is properly and timely raised by Champion in
accordance with the provisions of this Agreement. If, despite its best
efforts, WJHC does not remove any such objection, prior to the Closing,
Champion, at Champion's sole option, may: (a) acquire WJHC Real Property in
its then existing condition; or (b) terminate this Agreement by written notice
to WJHC, whereupon this Agreement will be null and void and the parties hereto
will have no further rights
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or obligations hereunder (except for such rights and obligations that survive
the termination of this Agreement pursuant to the terms hereof). The cost of
the WJHC Title Policy shall be borne by WJHC.
(b) WJHC SURVEY. Prior to the date hereof, WJHC
delivered, at its sole cost and expense, to Champion an as-built survey (the
"WJHC Survey") of the WJHC Real Property acceptable to the Title Company for
purposes of deleting standard survey exceptions as provided above and
reflecting all improvements visible on the grounds and all easements, rights of
way, means of ingress or egress encroachments and drainage ditches, whether
abutting or interior, of record or on the grounds. The survey reflects whether
and to the extent any portion of such WJHC Real Property lies within the
100-year flood plain and shall otherwise be in a form satisfactory to Champion.
The survey certifies to the Title Company and Champion in a form satisfactory
to the Title Company and Champion.
(c) WJHC TITLE POLICY. Within thirty (30) days after the
Closing, WJHC shall cause, at its sole cost and expense, the WJHC Title Policy
to be furnished to Champion. The WJHC Title Policy shall be issued in the
amount specified in the Title Commitment and shall insure good and marketable
fee simple title to the WJHC Real Property. The WJHC Title Policy may contain
the WJHC Permitted Encumbrances, but shall contain no additional exceptions to
title to the WJHC Real Property other than the standard exceptions contained in
an ALTA owners policy prescribed for use in the state where each parcel of the
WJHC Real Property is located, with the standard exception as to taxes limited
to taxes for the current and subsequent years "not yet due and payable," with
the standard exception for parties in possession limited to "tenants in
possession, as tenants only, under unrecorded leases," with the standard
exception as to unrecorded easements, visible and apparent easements, or other
matters which would be disclosed by an inspection of the WJHC Real Property
deleted, with the standard exception as to mechanics', materialmen's or other
matters relating to the completion of construction and payment of bills with
respect thereto deleted, to the extent reasonably obtainable, with the standard
exception as to areas, boundaries, discrepancies, encroachments, and other
matters which would be disclosed by a survey of the WJHC Real Property deleted,
and with such additional deletions or modifications to the standard policy form
and/or endorsements thereto as Champion may reasonably require in connection
with its review of the WJHC Title Commitment and WJHC Survey.
7.9 NO-SHOP CLAUSE. From and after the date of the execution and
delivery of this Agreement by WJHC until the termination of this Agreement,
WJHC shall not (and, to the extent possible, will not permit any affiliate or
any other Person acting for or on behalf of WJHC or of any affiliate of WJHC),
without the prior written consent of Champion: (i) offer for sale the WJHC
Assets (or any material portion thereof) or any ownership interest of any
entity owning any of the WJHC Assets; (ii) solicit offers to buy all or any
material portion of the WJHC Assets or any ownership interest of any entity
owning any of the WJHC Assets; (iii) hold discussions with any party (other
than Champion) looking toward such an offer or solicitation or looking toward a
merger or consolidation of any entity owning any of the WJHC Assets; (iv) enter
into any agreement with any party (other than Champion) with respect to the
sale or other disposition of
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the WJHC Assets (or any material portion thereof) or any ownership interest in
any entity owning any of the WJHC Assets or with respect to any merger,
consolidation, or similar transaction involving any entity owning any of the
WJHC Assets, or (v) furnish or cause to be furnished any information with
respect to WJHC or the WJHC Assets to any Person that WJHC or such affiliate or
any such Person acting for or on their behalf knows or has reason to believe is
in the process of considering any such acquisition, merger, consolidation,
combination or reorganization. If WJHC or any such affiliate or any such
Person acting for or on their behalf receives from any Person (other than from
Champion or a representative thereof) any offer, inquiry or informational
request referred to above, WJHC will promptly advise such Person, by written
notice, of the terms of this Section 7.9 and will promptly advise Champion of
such offer, inquiry or request and deliver a copy of such notice to Champion
together with a copy of all documents that constitute, relate or refer to any
and all responses to such offer, inquiry or request.
7.10 SOUTHRIDGE PROFESSIONAL PLAZA, L.L.C.. WJHC shall use its
reasonable best efforts to obtain the consent of Business Men's Assurance
Company of America (or its successor in interest under that certain Deed of
Trust, Assignment of Leases and Rents, Security Agreement and Financing
Statement) with respect to the transfer to Champion of WJHC's membership
interest in the Southridge, L.L.C. (the "LLC Interest") and with respect to the
assignment to Champion of the lease by WJHC of 4,620 square feet of the
Southridge Professional Plaza Office Building as required by the lease
agreement dated July 1, 1993 (the "Southridge Lease Assignment").
7.11 DATA PROCESSING SERVICES AGREEMENT. WJHC shall cause
Columbia/HCA Information System, Inc. to negotiate the terms of the Data
Processing Services Agreement with Champion.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF WJHC
The obligations of WJHC hereunder are, at the option of WJHC, subject
to the satisfaction, on or prior to the Closing Date, of the following
conditions unless waived in writing by WJHC:
8.1 REPRESENTATIONS/WARRANTIES. The representations and
warranties of Champion contained in this Agreement shall be true when made and
on and as of the Closing Date as though such representations and warranties had
been made on and as of such Closing Date; and each and all of the terms,
covenants and conditions of this Agreement to be complied with or performed by
Champion on or before the Closing Date pursuant to the terms hereof shall have
been duly complied with and performed.
8.2 OPINION OF CHAMPION'S COUNSEL. WJHC shall have received an
opinion from the general counsel or an assistant general counsel to CHC dated
as of the Closing Date and addressed to WJHC, in form and substance
satisfactory to WJHC to the effect that: (i) Champion is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation; (ii) Champion is duly authorized, qualified and licensed
under all applicable
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laws, regulations, ordinances or orders of public authorities to carry on their
business in the places and in the manner as now conducted; (iii) Champion has
full power and authority to make, execute, deliver and perform this Agreement,
and all corporate and other proceedings required to be taken by Champion to
authorize the execution, delivery and performance of this Agreement, and to
sell, convey, assign, transfer and deliver the Champion Assets as herein
contemplated have all been duly and properly taken; (iv) neither the execution
and delivery of this Agreement, nor the consummation of the transactions herein
contemplated, nor the compliance and fulfillment of the terms and conditions
hereof will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under the Articles of Incorporation or
Bylaws of Champion, (v) no ungiven notice to, or unobtained consent,
authorization, approval or order of any court or governmental agency or body
required to be obtained by Champion is required for the consummation of the
transactions described herein by Champion; (vi) there are no claims, actions,
suits or proceedings pending, or, to the best of such counsel's knowledge after
due inquiry, threatened against or affecting the Champion Business or the
Champion Assets, at law or in equity, before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality wherever located except as disclosed on Schedule 4.19
hereto. Such opinion shall include any other matters incident to the matters
herein contemplated as WJHC or WJHC's counsel may reasonably request. In
rendering such opinion, such counsel may rely upon certificates of governmental
officials and may place reasonable reliance upon certificates of officers of
Champion.
8.3 PRE-CLOSING CONFIRMATIONS. WJHC shall have obtained
documentation or other evidence reasonably satisfactory to WJHC that WJHC has:
(a) Received approval from all governmental agencies
whose approval is required to complete the transactions herein
contemplated, including, without limitation, any planning approvals,
approvals under the HSR Act and any approvals required by the Order;
(b) Received confirmation from the appropriate state
agencies as to hospital licensure and certificate of need matters and
reasonable confirmation from all other applicable licensure agencies
that upon Closing all licenses required by law to operate the Champion
Business as currently operated will be transferred to, or reissued in
the name of WJHC;
(c) Obtained reasonable assurances that Medicare and
Medicaid certification of the Champion Facilities for their operation
by WJHC will be effective as of Closing and that WJHC may participate
in and receive reimbursement from such programs effective as of
Closing;
(d) Obtained reasonable assurances that a provider
contract with Blue Cross in respect of the Champion Business for its
operation by WJHC will be entered into effective as of Closing; and
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(e) Obtained such other consents and approvals as may be
legally or contractually required for WJHC's consummation of the
transactions described herein.
8.4 ACTION/PROCEEDING. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions herein contemplated, and no
governmental agency or body shall have taken any other action or made any
request of Champion, or WJHC as a result of which WJHC reasonably and in good
▇▇▇▇▇ ▇▇▇▇▇ it inadvisable to proceed with the transactions hereunder.
8.5 ADVERSE CHANGE. No material adverse change in the results of
operations, financial condition or businesses of the Champion Business shall
have occurred, and Champion shall not have suffered any material change, loss
or damage to the Champion Assets, whether or not covered by insurance.
8.6 EXTRAORDINARY LIABILITIES/OBLIGATIONS. Champion shall not
have incurred any liability or obligation outside the ordinary course of
business since the date hereof which materially effects the Champion Assets.
Champion shall not (a) be in receivership or dissolution, (b) have made any
assignment for the benefit of creditors, (c) admitted in writing its inability
to pay its debts as they mature, (d) have been adjudicated a bankrupt or (e)
have filed a petition in voluntary bankruptcy, a petition or answer seeking
reorganization, or an arrangement with creditors under the federal bankruptcy
law or any other similar law or statute of the United States or any state, nor
shall any such petition have been filed against any of them.
8.7 VESTING/RECORDATION. Champion shall have furnished to WJHC in
form reasonably acceptable to WJHC and approved by WJHC's counsel, deeds, bills
of sale, assignments or other instruments of transfer and (except in minor
instances) consents and waivers by others, necessary or appropriate to transfer
to and effectively vest in WJHC all of Champion's right, title and interest in
and to the Champion Assets, in proper statutory form for recording if such
recording is necessary or appropriate.
8.8 TITLE POLICY AND SURVEY. WJHC shall have received the
Champion Title Commitment and Champion Survey.
8.9 PROPERTY TAXES. Champion shall have paid all property taxes
and assessments on the Champion Assets for all calendar years prior to Closing.
Any taxes for the calendar year in which Closing occurs shall be prorated to
the Closing Date. Because the Champion Assets have not been rendered for
taxation for ▇▇▇▇, ▇▇▇▇ and Champion shall prorate property taxes on the
Champion Assets based upon the 1994 tax amounts. When the actual tax amounts
are determined for ▇▇▇▇, ▇▇▇▇ and Champion agree to adjust and reprorate such
actual tax amounts to the Closing Date.
8.10 RECENT AGREEMENTS AND COMMITMENTS. Champion shall have
delivered to WJHC an accurate list and substantially complete description
(Schedule 8.10), as of the Closing Date,
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showing all material contracts and commitments relating to the Champion Assets
entered into by Champion since the date hereof, which agreements WJHC may
assume at its option.
8.11 WAGES AND SALARIES. Champion shall have paid or made
arrangements satisfactory to WJHC for the payment of all wages, salaries,
holiday and vacation pay and associated taxes, accrued to all of the Champion
Business' employees in respect of the Champion Assets as of Closing. In
addition, Champion shall have made arrangements according to the provisions of
Champion's pension and retirement plans and in accordance with ERISA for the
payment of all amounts distributable to the Champion Business' employees in
respect of pension and retirement plans and shall have delivered to WJHC a form
of the letter which Champion shall distribute to the Champion Business'
employees notifying such employees of their rights in respect of such pension
and retirement plans. Champion shall be responsible for wage information
reports (Form W-2 and 1099 reports) for wages paid by Champion to its
employees.
8.12 ENVIRONMENTAL REPORT. ▇▇▇▇▇ Environmental, Inc., an
environmental engineering firm, shall have delivered a Phase I Environmental
Site Assessment which includes a report regarding the existence of asbestos to
WJHC with respect to the Champion Assets, including the Champion Real Property
which in part comprises the Champion Assets, and the scope, findings and
conclusions of such report shall have been reasonably satisfactory to WJHC.
All costs and expenses of obtaining this report shall be borne by Champion.
8.13 MERGER. CHCP and CHCN shall have merged into CHCJV with CHCJV
as the surviving entity.
8.14 CHC GUARANTY. CHC shall have executed and delivered to WJHC a
guaranty, in form and substance satisfactory to WJHC, guaranteeing the
obligations and covenants of Champion hereunder, including, but not limited to
those under Article 12 hereof.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF CHAMPION
The obligations of Champion hereunder are, at the option of Champion,
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions unless waived in writing by Champion:
9.1 REPRESENTATIONS/WARRANTIES. The representations and
warranties of WJHC contained in this Agreement shall be true when made and on
and as of the Closing Date as though such representations and warranties had
been made on and as of such Closing Date; and each and all of the terms,
covenants and conditions of this Agreement to be complied with or performed by
WJHC on or before the Closing Date pursuant to the terms hereof shall have been
duly complied with and performed.
9.2 OPINION OF WJHC'S COUNSEL. Champion shall have received an
opinion from an in-house counsel to Columbia/HCA Healthcare Corporation dated
as of the Closing Date and addressed to Champion, in form and substance
satisfactory to Champion to the effect that: (i)
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WJHC is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation; (ii) WJHC is duly authorized,
qualified and licensed under all applicable laws, regulations, ordinances or
orders of public authorities to carry on its business in the places and in the
manner as now conducted; (iii) WJHC has full corporate power and authority to
make, execute, deliver and perform this Agreement, and all corporate and other
proceedings required to be taken by WJHC to authorize the execution, delivery
and performance of this Agreement, and to sell, convey, assign, transfer and
deliver the WJHC Assets as herein contemplated have all been duly and properly
taken; (iv) neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor the compliance and
fulfillment of the terms and conditions hereof will conflict with, or result in
a breach of the terms, conditions or provisions of, or constitute a default
under the Articles of Incorporation or Bylaws of WJHC; (v) no ungiven notice
to, or unobtained consent, authorization, approval or order of any court or
governmental agency or body required to be obtained by WJHC is required for the
consummation of the transactions described herein by the WJHC; and (vi) there
are no claims, actions, suits or proceedings pending, or, to the best of such
counsel's knowledge after due inquiry, threatened against or affecting the WJHC
Business or the WJHC Assets, at law or in equity, before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality wherever located except as disclosed on Schedule 5.19
hereto. Such opinion shall include any other matters incident to the matters
herein contemplated as Champion or Champion's counsel may reasonably request.
In rendering such opinion, such counsel may rely upon certificates of
governmental officials and may place reasonable reliance upon certificates of
officers of WJHC.
9.3 PRE-CLOSING CONFIRMATIONS. Champion shall have obtained
documentation or other evidence reasonably satisfactory to Champion that
Champion has:
(a) Received approval from all governmental agencies
whose approval is required to complete the transactions herein
contemplated, including, without limitation, any planning approvals
and approvals under the HSR Act;
(b) Received confirmation from the appropriate state
agencies as to hospital licensure and certificate of need matters and
reasonable confirmation from all other applicable licensure agencies
that upon Closing all licenses required by law to operate the WJHC
Business as currently operated will be transferred to, or reissued in
the name of Champion;
(c) Obtained reasonable assurances that Medicare and
Medicaid certification of the WJHC Hospital for its operation by
Champion will be effective as of Closing and that Champion may
participate in and receive reimbursement from such programs effective
as of Closing;
(d) Obtained reasonable assurances that a provider
contract with Blue Cross in respect of the WJHC Business for their
operation by Champion will be entered into effective as of Closing;
and
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(e) Obtained such other consents and approvals as may be
legally or contractually required for Champion's consummation of the
transactions described herein.
9.4 ACTION/PROCEEDING. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transactions herein contemplated, and no
governmental agency or body shall have taken any other action or made any
request of WJHC or Champion as a result of which Champion reasonably and in
good ▇▇▇▇▇ ▇▇▇▇▇ it inadvisable to proceed with the transactions hereunder.
9.5 ADVERSE CHANGE. No material adverse change in the results of
operations, financial condition or businesses of the WJHC Business shall have
occurred, and WJHC shall not have suffered any material change, loss or damage
to the WJHC Assets, whether or not covered by insurance.
9.6 EXTRAORDINARY LIABILITIES/OBLIGATIONS. WJHC shall not have
incurred any liability or obligation outside the ordinary course of business
since the date hereof which materially effects the WJHC Assets. WJHC shall not
(a) be in receivership or dissolution, (b) have made any assignment for the
benefit of creditors, (c) admitted in writing its inability to pay its debts as
they mature, (d) have been adjudicated a bankrupt or (e) have filed a petition
in voluntary bankruptcy, a petition or answer seeking reorganization, or an
arrangement with creditors under the federal bankruptcy law or any other
similar law or statute of the United States or any state, nor shall any such
petition have been filed against any of them.
9.7 VESTING/RECORDATION. WJHC shall have furnished to Champion in
form reasonably acceptable to Champion and approved by Champion's counsel,
deeds, bills of sale, assignments or other instruments of transfer and (except
in minor instances) consents and waivers by others, necessary or appropriate to
transfer to and effectively vest in Champion all of WJHC's right, title and
interest in and to the WJHC Assets, in proper statutory form for recording if
such recording is necessary or appropriate.
9.8 TITLE POLICY AND SURVEY. Champion shall have received the
WJHC Title Commitment and the WJHC Survey.
9.9 PROPERTY TAXES. WJHC shall have paid all property taxes and
assessments on the WJHC Assets for all calendar years prior to Closing. Any
taxes for the calendar year in which Closing occurs shall be prorated to the
Closing Date. Because the WJHC Assets have not been rendered for taxation for
1995, Champion and WJHC shall prorate property taxes on the WJHC Assets based
upon the 1994 tax amounts. When the actual tax amounts are determined for
1995, Champion and WJHC agree to adjust and reprorate such actual tax amounts
to the Closing Date.
9.10 RECENT AGREEMENTS AND COMMITMENTS. WJHC shall have delivered
to Champion an accurate list and substantially complete description (Schedule
9.10), as of the
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Closing Date, showing all material contracts and commitments
relating to the WJHC Assets entered into by WJHC since the date hereof, which
agreements Champion may assume at its option.
9.11 WAGES AND SALARIES. WJHC shall have paid or made arrangements
satisfactory to Champion for the payment of all wages, salaries, holiday and
vacation pay and associated taxes, accrued to all of the WJHC Business'
employees in respect of the WJHC Assets as of Closing. In addition, WJHC shall
have made arrangements according to the provisions of WJHC's pension and
retirement plans and in accordance with ERISA for the payment of all amounts
distributable to the WJHC Business' employees in respect of pension and
retirement plans and shall have delivered to Champion a form of the letter
which WJHC shall distribute to the WJHC Business' employees notifying such
employees of their rights in respect of such pension and retirement plans.
WJHC shall be responsible for wage information reports (Form W-2 and 1099
reports) for wages paid by WJHC to its employees.
9.12 DATA PROCESSING SERVICES AGREEMENT. WJHC shall have caused
Columbia/HCA Information Services, Inc. to execute and deliver to Champion the
Data Processing Services Agreement more particularly described in Section 11.1
hereof.
9.13 ENVIRONMENTAL REPORT. ERM-Rocky Mountain, Inc., an
environmental engineering firm, shall have delivered a Phase I Environmental
Site Assessment and a report regarding the existence of asbestos to Champion
with respect to the WJHC Assets, including the WJHC Real Property which in part
comprises the WJHC Assets, and the scope, findings and conclusions of such
report shall have been reasonably satisfactory to Champion. All cost and
expenses of obtaining this report shall be borne by WJHC.
9.14 HTI GUARANTY. HTI shall have executed and delivered to
Champion a guaranty, in form and substance satisfactory to Champion,
guaranteeing the obligations and covenants of WJHC hereunder, including, but
not limited to, those under Article 12 hereof.
9.15 L.L.C. CONSENT. Any rights of the members of the Southridge,
L.L.C. to purchase the interest held by WJHC (the "LLC Interest") under the
operating agreement shall have been waived in writing or shall have expired
pursuant to the terms of the operating agreement which establishes such
members' right to purchase the LLC Interest and at least 75% of the members of
the Southridge, L.L.C. shall have consented to the transfer of the LLC Interest
to Champion.
10. TRANSITIONAL ARRANGEMENTS
10.1 CHAMPION EMPLOYEES. WJHC and Champion shall, as of the
Closing Date, undertake the following commitment in connection with the
operation of the Champion Facilities. Schedule 10.1 sets forth a list of all
employees of the Champion Facilities and their job descriptions. As of the
Closing Date, Champion shall terminate all employees of Champion at the
Champion Facilities, and WJHC agrees that as of the Closing Date WJHC shall
offer
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employment to all employees of the Champion Facilities (except the Chief
Executive Officer ("CEO") Chief Operating Officer ("COO") and the Chief Nurse
Officer ("CNO") at each one of the Champion Facilities for which WJHC is
permitted but not required to offer employment) and shall retain for a period
of ninety (90) days following the Closing Date such number of Champion's
employees at the Champion Facilities as shall be necessary to avoid any
potential liability by Champion for a violation of the Workers Adjustment
Retraining and Notification Act (the "Warn Act") attendant to Champion's
failure to notify such employees of a "mass layoff" or "plant closing" as
defined in the Warn Act. For purposes of determining WJHC's compliance with
the foregoing provision, employees terminated by Champion during the period of
ninety (90) days immediately prior to the Closing Date, all of whom are listed
in Schedule 10.1, shall not be taken into consideration and WJHC's
indemnification shall not extend to any Warn Act violations resulting from the
aggregation of pre-Closing and Closing Date terminations of employment by
Champion. WJHC agrees to indemnify and hold the Champion harmless from and
against any liability asserted against Champion under the Warn Act as a result
of WJHC's failure to comply with the provisions of the Warn Act as of or after
the Closing Date or WJHC's failure to comply with the provisions of this
Section 10.1. The term "New WJHC Employee" as used in this Agreement shall
mean all employees of Champion who are offered and accept employment with WJHC
as of the Closing Date. Nothing herein shall be deemed either to affect or to
limit in any way the management prerogatives of WJHC with respect to employees,
or to create or to grant to such employees any third party beneficiary rights
or claims or causes of action of any kind or nature.
10.1.1 CASH COMPENSATION. Effective as of the Closing Date,
WJHC shall employ each New WJHC Employee at the same or greater cash
compensation as that provided immediately prior to the Closing Date to each New
WJHC Employee by Champion.
10.1.2 BENEFITS.
(1) In General. Effective as of the Closing
Date: (i) Champion shall cause each New WJHC Employee to
cease to participate in each Champion Plan and Benefit Program
or Agreement, and (ii) WJHC shall cause each New WJHC Employee
to be provided with benefits on a basis consistent with WJHC's
normal practice, including, but not limited to, qualified and
nonqualified retirement plans, welfare plans, and all other
employee benefit arrangements and personnel policies, but only
under the terms and conditions of such plans, arrangements,
and policies, as modified by this Agreement. Notwithstanding
the foregoing, except as otherwise provided in this Section
10.1, WJHC expressly reserves the right to modify or terminate
any of its benefit plans or programs, with WJHC to assume all
responsibility and liability for any such action.
(2) Welfare Plans. Effective as of the Closing
Date: (i) Champion shall cause each New WJHC Employee to
cease to participate in each of Champion's welfare plans (as
such term is defined in section 3(1) of ERISA ("Champion Prior
Welfare Plans"), and (ii) WJHC shall cause each New WJHC
Employee to be
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covered by each of the welfare plans (as such term is defined
in section 3(1) of ERISA that provides medical, mental health,
dental, vision, life, or disability benefits maintained by
WJHC ("WJHC's Welfare Plans"). To the extent not prohibited
by any applicable insurance policy or insurer, WJHC shall
cause there to be waived any preexisting condition
restrictions and service requirements under WJHC's Welfare
Plans to provide immediate and unrestricted coverage of the
New WJHC Employees under WJHC's Welfare Plans, but only to the
extent that each such New WJHC Employee has satisfied such
preexisting condition restrictions and service requirements
under the terms of either (i) the applicable Champion Prior
Welfare Plan or (ii) the applicable WJHC Welfare Plan when
considering service with Champion prior to the Closing Date.
WJHC shall cause each New WJHC Employee to be granted credit
under WJHC's Welfare Plans providing medical and dental
coverages for the calendar year during which the Closing Date
occurs for any and all amounts credited as deductibles as of
the Closing Date for each such New WJHC Employee for such year
under Champion Prior Welfare Plans that provide medical and
dental coverage. Effective as of the Closing Date: (i)
Champion Prior Welfare Plans shall be liable for any and all
claims for benefits by New WJHC Employees for covered expenses
incurred, prior to the Closing Date and with respect to any
insured Champion Prior Welfare Plans that provides life,
long-term disability or accidental death and dismemberment
benefits, such Plans shall be liable for any and all claims
for benefits that are attributable to events that occurred
prior to the Closing Date, and (ii) WJHC's Welfare Plans shall
be liable for any and all claims for benefits by New WJHC
Employees for covered expenses incurred on or after the
Closing Date but with respect to any insured WJHC Welfare
Plans that provides life, long-term disability, or accidental
death and dismemberment benefits only to the extent such
expenses are attributable to events that occurred after the
Closing Date. Notwithstanding the foregoing, Champion shall
be responsible for all costs and expenses, whether incurred
before or after the Closing Date, of providing medical
benefits to a person, covered under Champion's Welfare Plans,
that is confined to a hospital on the Closing Date, with
respect to such admission.
(3) Vacation and Sick Leave. Effective as of the
Closing Date: (i) Champion shall cause each New WJHC Employee
to cease to participate in Champion's vacation, and sick leave
programs (collectively "Champion's PTO Plan"), and (ii) WJHC
shall cause each New WJHC Employee to be covered by the
program of vacation, sick leave, and paid time off benefits
maintained by WJHC ("WJHC's PTO Plan"). Each New WJHC
Employee shall be credited under WJHC's PTO Plan with all
accrued vacation, sick leave and paid time off under
Champion's PTO Plan as of the Closing Date, but only to the
extent of each such New WJHC Employee's pro rata share of the
amount credited to WJHC in the Champion Working Capital for
such vacation, sick leave and paid time off. The preceding
notwithstanding, WJHC shall not assume any liability arising
out
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of law or contract for failure of Champion to cash-out
vacation, sick leave, or paid time off of any New WJHC
Employee as of the Closing Date.
(4) Qualified Retirement Plans. Effective as of
the Closing Date, Champion shall (i) cause to be made any
contributions that are required to be made under all
retirement plans maintained by Champion that are qualified
under Section 401(a) of the Code whose trust is intended to be
exempt from tax under Section 501(a) of the Code ("Champion
Prior Qualified Plans") for the period prior to the Closing
Date and (ii) cause each New WJHC Employee to cease to
participate in and accrue benefits under Champion Prior
Qualified Plans. As soon as practicable after, but effective
as of the Closing Date, WJHC shall take all action necessary
and appropriate to extend coverage to each eligible New WJHC
Employee under the retirement plans intended to be qualified
under Section 401(a) of the Code whose trust is intended to be
tax exempt under Section 501(a) of the Code maintained by WJHC
("WJHC's Qualified Plans") under the terms of WJHC's Qualified
Plans. For purposes of WJHC's Qualified Plans, the eligible
New WJHC Employees shall be credited with all service with
Champion for eligibility and vesting purposes.
(5) Workers' Compensation. Effective as of the
Closing Date: (i) Champion shall cause each New WJHC Employee
to cease to participate in any program of workers'
compensation subscribed to or maintained by Champion
("Champion's Workers' Compensation"), and (ii) WJHC shall
cause each New WJHC Employee to be covered by a program of
workers' compensation, if any, maintained by WJHC ("WJHC's
Workers' Compensation"). Effective as of the Closing Date:
(i) Champion's Workers' Compensation shall be liable for any
and all covered claims for workers' compensation benefits by
New WJHC Employees to the extent such claims are for injuries
or diseases which occurred prior to the Closing Date, and (ii)
WJHC's Workers' Compensation shall be liable for any and all
covered claims for workers' compensation benefits by New WJHC
Employees to the extent such claims are for injuries or
diseases which occurred on or after the Closing Date.
10.1.3 COBRA. Champion shall provide to all employees or
former employees of Champion who do not become New WJHC Employees sufficient
medical, mental health, vision, dental, and other group health plan benefits to
satisfy the obligations, if any, of Champion, any Commonly Controlled Entity,
and WJHC under the continuation of coverage provisions described in Section
4980B of the Code and Sections 601 through 608 of ERISA and any similar
continuation of health coverage provisions under applicable state law. WJHC
shall be responsible for such obligations with respect to New WJHC Employees
for qualifying events occurring after the Closing Date.
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10.1.4 INDEMNITY. Champion shall retain and assume all
past, present, and future obligations of Champion with respect to each Champion
Plan and Champion Benefit Program or Agreement.
10.1.5 W-2 INFORMATION REPORTING. Champion shall be
responsible for wage information reporting (Form W-2 and 1099 Reports) for all
persons employed or under contract with Champion.
10.2 WJHC EMPLOYEES. Champion and WJHC shall, as of the Closing
Date, undertake the following commitment in connection with the operation of
WJHC Hospital. Schedule 10.2 sets forth a list of all employees of the WJHC
Hospital and their job descriptions. As of the Closing Date, WJHC shall
terminate all employees of WJHC at the WJHC Hospital, and Champion agrees that
as of the Closing Date Champion shall offer employment to all employees of the
WJHC Hospital (except the CEO, COO and CNO at the WJHC Hospital for which
Champion is permitted but not required to offer employment) and shall retain
for a period of ninety (90) days following the Closing Date such number of
WJHC's employees at the WJHC Hospital as shall be necessary to avoid any
potential liability by WJHC for a violation of the Warn Act attendant to WJHC's
failure to notify such employees of a "mass layoff" or "plant closing" as
defined in the Warn Act. For purposes of determining Champion's compliance
with the foregoing provision, employees terminated by WJHC during the period of
ninety (90) days immediately prior to the Closing Date, all of whom are listed
in Schedule 10.2, shall not be taken into consideration and Champion's
indemnification shall not extend to any Warn Act violations resulting from the
aggregation of pre-Closing and Closing Date terminations of employment by WJHC.
Champion agrees to indemnify and hold WJHC harmless from and against any
liability asserted against WJHC under the Warn Act as a result of Champion's
failure to comply with the provision of the Warn Act as of or after the Closing
Date or Champion's failure to comply with the provisions of this Section 10.2.
The term "New Champion Employee" as used in this Agreement shall mean all
employees of WJHC who are offered and accept employment with Champion as of the
Closing Date. Nothing herein shall be deemed either to affect or to limit in
any way the management prerogatives of Champion with respect to employees, or
to create or to grant to such employees any third party beneficiary rights or
claims or causes of action of any kind or nature.
10.2.1 CASH COMPENSATION. Effective as of the Closing Date,
Champion shall employ each New Champion Employee at the same or greater cash
compensation as that provided immediately prior to the Closing Date to each New
Champion Employee by WJHC.
10.2.2 BENEFITS.
(1) In General. Effective as of the Closing
Date: (i) WJHC shall cause each New Champion Employee to
cease to participate in each WJHC Plan and Benefit Program or
Agreement, and (ii) Champion shall cause each New Champion
Employee to be provided with benefits on a basis consistent
with Champion's normal practice, including, but not limited
to, qualified and nonqualified retirement
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plans, welfare plans, and all other employee benefit
arrangements and personnel policies, but only under the terms
and conditions of such plans, arrangements, and policies, as
modified by this Agreement. Notwithstanding the foregoing,
except as otherwise provided in this Section 10.2, Champion
expressly reserves the right to modify or terminate any of its
benefit plans or programs, with Champion to assume all
responsibility and liability for any such action.
(2) Welfare Plans. Effective as of the Closing
Date: (i) WJHC shall cause each New Champion Employee to
cease to participate in each of WJHC's welfare plans (as such
term is defined in section 3(1) of ERISA ("WJHC Prior Welfare
Plans"), and (ii) Champion shall cause each New Champion
Employee to be covered by each of the welfare plans (as such
term is defined in section 3(1) of ERISA that provides
medical, mental health, dental, vision, life, or disability
benefits maintained by Champion (or caused by Champion to be
newly established by Newco) ("Champion's Welfare Plans"). To
the extent not prohibited by any applicable insurance policy
or insurer, Champion shall cause there to be waived any
preexisting condition restrictions and service requirements
under Champion's Welfare Plans to provide immediate and
unrestricted coverage of the New Champion Employees under
Champion's Welfare Plans, but only to the extent that each
such New Champion Employee has satisfied such preexisting
condition restrictions and service requirements under the
terms of either (i) the applicable WJHC Prior Welfare Plan or
(ii) the applicable Champion Welfare Plan when considering
service with Target prior to the Closing Date. Champion shall
cause each New Champion Employee to be granted credit under
Champion's Welfare Plans providing medical and dental
coverages for the calendar year during which the Closing Date
occurs for any and all amounts credited as deductibles as of
the Closing Date for each such New Champion Employee for such
year under WJHC Prior Welfare Plans that provide medical and
dental coverages. Effective as of the Closing Date: (i)
WJHC Prior Welfare Plans shall be liable for any and all
claims for benefits by New Champion Employees for covered
expenses incurred prior to the Closing Date and with respect
to any insured WJHC Prior Welfare Plans that provides life,
long-term disability or accidental death and dismemberment
benefits, such Plans shall be liable for any and all claims
for benefits that are attributable to events that occurred
prior to the Closing Date, and (ii) Champion's Welfare Plans
shall be liable for any and all claims for benefits by New
Champion Employees for covered expenses incurred on or after
the Closing Date but with respect to any insured Champion
Welfare Plans and provides life, long-term disability, or
accidental death and dismemberment benefits only to the extent
such expenses are attributable to events that occurred after
the Closing Date. Notwithstanding the foregoing, WJHC shall
be responsible for all costs and expenses, whether incurred
before or after the Closing Date, of providing medical
benefits to a person, covered under WJHC's Welfare Plans, that
is confined to a hospital on the Closing Date, with respect to
such admission.
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(3) Vacation and Sick Leave. Effective as of the
Closing Date: (i) WJHC shall cause each New Champion Employee
to cease to participate in WJHC's paid time off program
("WJHC's PTO Plan"), and (ii) Champion shall cause each New
Champion Employee to be covered by the program of vacation,
sick leave, and paid time off benefits maintained by Champion
("Champion's PTO Plan"). Each New Champion Employee shall
receive an accrual under Champion's PTO Plan with all accrued
vacation, sick leave and paid time off under WJHC's PTO Plan
as of the Closing Date, but only to the extent of each such
New Champion Employee's pro rata share of the amount credited
to Champion in WJHC's Working Capital for such vacation, sick
leave and paid time off. The preceding notwithstanding,
Champion shall not assume any liability arising out of law or
contract for failure of WJHC to cash-out paid time off of any
New Champion Employee as of the Closing Date.
(4) Qualified Retirement Plans. Effective as of
the Closing Date, WJHC shall (i) cause to be made any
contributions that are required to be made under all
retirement plans maintained by WJHC that are qualified under
Section 401(a) of the Code whose trust is intended to be
exempt from tax under Section 501(a) of the Code ("WJHC Prior
Qualified Plans") for the period prior to the Closing Date and
(ii) cause each New Champion Employee to cease to participate
in and accrue benefits under WJHC Prior Qualified Plans. As
soon as practicable after, but effective as of the Closing
Date, Champion shall take all action necessary and appropriate
to extend coverage to each eligible New Champion Employee
under the retirement plans intended to be qualified under
Section 401(a) of the Code whose trust is intended to be tax
exempt under Section 501(a) of the Code maintained by Champion
("Champion's Qualified Plans") under the terms of Champion's
Qualified Plans. For purposes of Champion's Qualified Plans,
the eligible New Champion Employees shall be credited with all
service with WJHC for eligibility and vesting purposes.
(5) Workers' Compensation. Effective as of the
Closing Date: (i) WJHC shall cause each New Champion Employee
to cease to participate in any program of workers'
compensation subscribed to or maintained by WJHC ("WJHC's
Workers' Compensation"), and (ii) Champion shall cause each
New Champion Employee to be covered by a program of workers'
compensation, if any, maintained by Champion ("Champion's
Workers' Compensation"). Effective as of the Closing Date:
(i) WJHC's Workers' Compensation shall be liable for any and
all covered claims for workers' compensation benefits by New
Champion Employees to the extent such claims are for injuries
or diseases which occurred prior to the Closing Date, and (ii)
Champion's Workers' Compensation shall be liable for any and
all covered claims for workers' compensation benefits by New
Champion Employees to the extent such claims are for injuries
or diseases which occurred on or after the Closing Date.
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10.1.3 COBRA. WJHC shall provide to all employees or former
employees of WJHC who do not become New Champion Employees sufficient medical,
mental health, vision, dental, and other group health plan benefits to satisfy
the obligations, if any, of WJHC, any Commonly Controlled Entity, and Champion
under the continuation of coverage provisions described in Section 4980B of the
Code and Sections 601 through 608 of ERISA and any similar continuation of
health coverage provisions under applicable state law. Champion shall be
responsible for such obligations with respect to New Champion Employees for
qualifying events occurring after the Closing Date.
10.1.4 INDEMNITY. WJHC shall retain and assume all past,
present, and future obligations of WJHC with respect to each WJHC Plan and WJHC
Benefit Program or Agreement.
10.1.5 W-2 INFORMATION REPORTING. WJHC shall be responsible
for wage information reporting (Form W-2 and 1099 Reports) for all persons
employed or under contract with WJHC.
10.3 ALLOCATION TO EXCHANGE GROUPS. Champion and WJHC shall use
American Appraisal Associates (or another appraisal firm mutually agreeable to
Champion and WJHC) to appraise the Champion Assets and the WJHC Assets, or any
portion thereof, for purposes of allocating the respective fair market values
of the various Champion Assets and the WJHC Assets to the extent (and in the
manner) necessary to compute gain recognition (if any) resulting from the
exchange and the basis of property received in accordance with Section 1031 of
the Code and applicable Treasury Regulations (including Treasury Regulation
Section 1.1031(j)-1). The parties shall cooperate fully in determining the
appropriate exchange groups to which each of the exchanged properties should be
assigned (the "Exchange Allocation") in accordance with the Code and applicable
Treasury Regulations, for use in connection with or support of any Federal,
state, or local income, property or other tax returns or information statements
filed in connection with the reporting of any tax or other liability which
relate to the transaction contemplated by this Agreement. Champion and WJHC
agree to report and file any such Federal, state or local income, property or
other tax return or information statement consistent with the Exchange
Allocation and the appraisal described in this Section 10.3.
10.4 SECTION 1060 ALLOCATION. With respect to the Champion Assets
and the WJHC Assets, which constitute property that is not exchanged for
like-kind property under Section 1031 of the Code, Champion and WJHC shall
agree prior to the Closing Date to an allocation of such portion of the
Champion Assets and the WJHC Assets among the various classes of assets in
accordance with the provisions of Section 1060 of the Code and applicable
Treasury Regulations and as set forth on Schedule 10.4 hereto subject to any
appropriate subsequent adjustments. The parties agree that any tax returns, or
other tax information they may file or cause to be filed with any governmental
agency shall be prepared and filed consistent with such agreed upon allocation.
In this regard, the parties agree that, to the extent required, they will each
properly prepare and timely file Form 8594 in accordance with Section 1060 of
the Code.
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10.5 CHAMPION'S COST REPORTS. Champion will timely prepare all
cost reports relating to Champion for periods ending on or prior to the Closing
Date or required as a result of the consummation of the transactions set forth
herein, including, without limitation, terminating cost reports for the
Medicare and Medicaid programs and cost reports to be filed with the Agency
(the "Champion Cost Reports"). Champion shall deliver Champion Cost Reports to
WJHC for WJHC's review prior to filing any of Champion Cost Reports. WJHC
shall use its reasonable efforts to forward to Champion any and all
correspondence relating to the Champion Cost Reports within ten (10) business
days after receipt by WJHC. WJHC will remit any receipts of funds relating to
Champion Cost Reports promptly after receipt by WJHC and will use its
reasonable efforts to forward any demand for payments within ten (10) business
days after receipt by WJHC. Champion shall retain all rights to the Champion
Agency Settlements and to Champion Cost Reports including any payables
resulting from such reports or reserves relating to such reports. Such rights
shall include, without limitation, the right to appeal any Medicare
determinations relating to the Champion Agency Settlements and Champion Cost
Reports. Champion shall retain the originals of Champion Cost Reports,
correspondence, work papers and other documents relating to Champion Cost
Reports and the Champion Agency Settlements.
10.6 WJHC'S COST REPORTS. WJHC will timely prepare all cost
reports relating to WJHC for periods ending on or prior to the Closing Date or
required as a result of the consummation of the transactions set forth herein,
including, without limitation, terminating cost reports for the Medicare and
Medicaid programs and cost reports to be filed with the Agency (the "WJHC Cost
Reports"). WJHC shall deliver WJHC Cost Reports to Champion for Champion's
review prior to filing any of WJHC Cost Reports. Champion shall use its
reasonable efforts to forward to WJHC any and all correspondence relating to
the WJHC Cost Reports within ten (10) business days after receipt by Champion.
Champion will remit any receipts of funds relating to WJHC Cost Reports
promptly after receipt by Champion or Newco and will use its reasonable efforts
to forward any demand for payments within ten (10) business days after receipt
by Champion or Newco. WJHC shall retain all rights to the WJHC Agency
Settlements and to WJHC Cost Reports including any payables resulting from such
reports or reserves relating to such reports. Such rights shall include,
without limitation, the right to appeal any Medicare determinations relating to
the WJHC Agency Settlements and WJHC Cost Reports. WJHC shall retain the
originals of WJHC Cost Reports, correspondence, work papers and other documents
relating to WJHC Cost Reports and the WJHC Agency Settlements.
11. ADDITIONAL AGREEMENTS
11.1 DATA PROCESSING SERVICES AGREEMENT. In consideration of the
exchange, Champion, for a period of up to twelve (12) months from and after the
Closing Date, Champion shall have the right to use the data processing services
of Columbia/HCA Information Systems, Inc. currently used by WJHC in connection
with the operation of the WJHC Assets upon such terms and conditions as the
parties shall mutually agree (the "Data Processing Services Agreement").
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11.2 TERMINATION PRIOR TO CLOSING. Notwithstanding anything herein
to the contrary, this Agreement may be terminated at any time: (i) on or prior
to the Closing Date by mutual consent of Champion and WJHC; (ii) on or prior to
the Closing Date by Champion, if there has been a material and adverse change
in the financial condition or prospects for future results of operations of the
WJHC Assets since the date hereof; (iii) on or prior to the Closing Date by
WJHC, if there has been a material and adverse change in the financial
condition or prospects for future results of operations of the Champion Assets
since the date hereof; (iv) by Champion if on the Closing Date any of the
conditions specified in Section 9 of this Agreement have not been satisfied and
shall not have been waived by Champion; (v) by WJHC if on the Closing Date any
of the conditions specified in Section 8 of this Agreement have not been
satisfied and shall not have been waived by WJHC; and (vi) by Champion or WJHC
if the Closing shall not have taken place on or before 11:59 p.m. (Nashville,
Tennessee time) on December 31, 1995 (which date may be extended by mutual
agreement of Champion and WJHC), unless the party desiring to terminate as
above provided is in default hereunder.
11.3 POST-CLOSING ACCESS TO INFORMATION. Champion and WJHC
acknowledge that subsequent to Closing each party may need access to
information or documents in the control or possession of the other party for
the purposes of concluding the transactions herein contemplated, audits,
compliance with governmental requirements and regulations, and the prosecution
or defense of third party claims. Accordingly, Champion and WJHC agree that
for a period of seven (7) years after Closing each will make reasonably
available to the other's agents, independent auditors and/or governmental
agencies upon written request and at the expense of the requesting party such
documents and information as may be available relating to the Champion Assets
and the WJHC Assets, respectively, for periods prior and subsequent to Closing
to the extent necessary to facilitate concluding the transactions herein
contemplated, audits, compliance with governmental requirements and regulations
and the prosecution or defense of claims.
11.4 PRESERVATION AND ACCESS TO RECORDS AFTER THE CLOSING.
(a) After the Closing, WJHC shall, in the ordinary course
of business and as required by law keep and preserve all medical
records and other records of the Champion Facilities existing as of
the Closing and which constitute a part of the Champion Assets
delivered to WJHC at Closing. WJHC acknowledges that as a result of
entering into this Agreement and operating the Champion Facilities
they will gain access to patient and other information which is
subject to rules and regulations concerning confidentiality. WJHC
agrees to abide by any such rules and regulations relating to the
confidential information it acquires. WJHC agrees to maintain the
patient records delivered to WJHC at Closing at the Champion
Facilities after Closing in accordance with applicable law (including,
if applicable, Section 1861(v)(i)(l) of the Social Security Act (42
U.S.C. Section 1395(v)(1)(l)), and requirements of relevant insurance
carriers, all in a manner consistent with the maintenance of patient
records generated at the Champion Facilities after Closing. Upon
reasonable notice, during normal business hours, at the sole cost and
expense of Champion and upon the WJHC's receipt of appropriate
consents and
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authorizations, WJHC will afford to the representatives of Champion,
including its counsel and accountants, full and complete access to,
and copies of, the records transferred to WJHC at the Closing
(including, without limitation, access to patient records in respect
of patients treated by Champion at the Champion Business). Upon
reasonable notice, during normal business hours and at the sole cost
and expense of Champion, WJHC shall also make their officers and
employees available to Champion at reasonable times and places after
the Closing. In addition, Champion shall be entitled, at Champion's
sole risk, to remove from the Champion Facilities any such patient
records, but only for purposes of pending litigation involving a
patient to whom such records refer, as certified in writing prior to
removal by counsel retained by Champion in connection with such
litigation and only upon WJHC's receipt of appropriate consents and
authorizations. Any patient records so removed from the Champion
Facilities shall be promptly returned to WJHC following its use by
Champion. Any access to the Champion Facilities, its records or
WJHC's personnel granted to Champion in this Agreement shall be upon
the condition that any such access not materially interfere with the
business operations of WJHC.
(b) After the Closing, Champion shall, in the ordinary
course of business and as required by law keep and preserve all
medical records and other records of WJHC existing as of the Closing
and which constitute a part of WJHC Assets delivered to Champion at
Closing. Champion acknowledges that as a result of entering into this
Agreement and operating the WJHC Business they will gain access to
patient and other information which is subject to rules and
regulations concerning confidentiality. Champion agrees to abide by
any such rules and regulations relating to the confidential
information it acquires. Champion agrees to maintain the patient
records delivered to Champion at Closing at the WJHC Hospital after
Closing in accordance with applicable law (including, if applicable,
Section 1861(v)(i)(l) of the Social Security Act (42 U.S.C. Section
1395(v)(1)(l)), and requirements of relevant insurance carriers, all
in a manner consistent with the maintenance of patient records
generated at the WJHC Hospital after Closing. Upon reasonable notice,
during normal business hours, at the sole cost and expense of WJHC and
upon Champion's receipt of appropriate consents and authorizations,
Champion will afford to the representatives of WJHC, including its
counsel and accountants, full and complete access to, and copies of,
the records transferred to Champion at the Closing (including, without
limitation, access to patient records in respect of patients treated
by WJHC at the WJHC Hospital). Upon reasonable notice, during normal
business hours and at the sole cost and expense of WJHC, Champion
shall also make their officers and employees available to WJHC at
reasonable times and places after the Closing. In addition, WJHC
shall be entitled, at WJHC's sole risk, to remove from the WJHC
Hospital such patient records, but only for purposes of pending
litigation involving a patient to whom such records refer, as
certified in writing prior to removal by counsel retained by WJHC in
connection with such litigation and only upon Champion's receipt of
appropriate
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consents and authorizations. Any patient records so removed from the
WJHC Hospital shall be promptly returned to Champion following its use
by WJHC. Any access to the WJHC Hospital, its records or Champion's
personnel granted to WJHC in this Agreement shall be upon the
condition that any such access not materially interfere with the
business operations of Champion.
(c) After the Closing, Champion and WJHC agree to
promptly forward to the other party any of the Excluded Assets that is
retained at the transferred facility, including, but not limited to,
proprietary operations and employee manuals.
11.5 REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) the documents delivered at
the Closing, and (c) financial statements, certificates and other information
previously or hereafter furnished to Champion or to WJHC, may, subject to the
provisions of Section 13.10 hereof, be reproduced by Champion and by WJHC by
any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and Champion and WJHC may destroy any original documents
so reproduced. Champion and WJHC agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial, arbitral or administrative proceeding (whether or not the original is
in existence and whether or not such reproduction was made by Champion or WJHC
in the regular course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
11.6 RESTRICTION ON DISPOSITION. For a period of ten (10) years
following Closing without the prior consent of the FTC, Champion will not sell,
transfer or convey the WJHC Hospital to any Person who operates any other acute
care hospital in the Utah Restricted Market (defined herein). As used herein,
"Utah Restricted Market" shall mean the geographic area encompassing Ogden
Metropolitan Statistical Area, encompassing three contiguous counties in north
Utah: ▇▇▇▇▇ County, ▇▇▇▇▇ County and Salt Lake County.
11.7 CHAMPION EXCLUDED CONTRACTS. WJHC shall not assume or be
liable for and under no circumstances shall WJHC be obligated to pay or assume
any liability or obligation under the contracts, commitments, leases or
agreements listed on Schedule 11.7 (the "Champion Excluded Contracts").
11.8 WJHC EXCLUDED CONTRACTS. Champion shall not assume or be
liable for and under no circumstances shall Champion be obligated to pay or
assume any liability or obligation under the contracts, commitments, leases or
agreements listed on Schedule 11.8 (the "WJHC Excluded Contracts").
11.9 COVENANTS OF WJHC. WJHC and HTI agree that neither it nor any
of its affiliates will, for a period of two (2) years from the Closing Date
directly or indirectly (i) own, build, invest in, assist in the development of,
or have any management role in, any firm, corporation,
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business or other organization or enterprise engaged, directly or indirectly,
in the provision of acute care services as provided at the WJHC Hospital
immediately prior to Closing within twenty (20) miles of the WJHC Hospital (the
"WJHC Restricted Area"), except that this covenant shall not apply to health
care services at the locations, in the manner and to the extent currently
provided by WJHC or its affiliates other than the WJHC Hospital in the WJHC
Restricted Area or to the health care services described on Schedule 11.9, (ii)
solicit for employment any employee of Champion or any of their affiliates who
work at the WJHC Hospital after the Closing Date, or (iii) interfere with,
disrupt or attempt to disrupt the relationship between Champion and any of the
lessors, lessees, licensors, licensees, customers or suppliers to the WJHC
Hospital. If any court determines that any of the restrictive covenants set
forth in this Section 11.9, or any part of such covenants, is unenforceable
because of the duration of such provision or the area covered thereby, such
court shall have the power to reduce the duration or area of such provision
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
11.10 COVENANTS OF CHAMPION. Champion and CHC agree that neither it
nor any of its affiliates will, for a period of two (2) years from the Closing
Date directly or indirectly (i) own, build, invest in, assist in the
development of, or have any management role in, any firm, corporation, business
or other organization or enterprise engaged, directly or indirectly, in the
provision of acute care services provided at the Champion Facilities
immediately prior to closing within twenty (20) miles of the Champion
Facilities (the "Champion Restricted Area"), except that this covenant shall
not apply to health care services currently provided by Champion or its
affiliates in the Champion Restricted Area the health care services described
on Schedule 11.10, (ii) solicit for employment any employee of WJHC or any of
their affiliates who work at the Champion Facilities after the Closing Date, or
(iii) interfere with, disrupt or attempt to disrupt the relationship between
WJHC and any of the lessors, lessees, licensors, licensees, customers or
suppliers to the Champion Facilities. The covenants of Champion set forth in
this Section 11.10 shall apply independently to each one of the Champion
Facilities. If any court determines that any of the restrictive covenants set
forth in this Section 11.10, or any part of such covenants, is unenforceable
because of the duration of such provision or the area covered thereby, such
court shall have the power to reduce the duration or area of such provision
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
11.11 COOPERATION ON TAX MATTERS. Following the Closing, the
parties shall cooperate fully with each other and shall make available to the
other, as reasonably requested and at the expense of the requesting party, and
to any taxing authority, all information, records or documents relating to tax
liabilities or potential tax liabilities of such parties for all periods on or
prior to the Closing, and shall preserve all such information, records and
documents (to the extent a part of the exchanged assets delivered by the
parties at Closing) at least until the expiration of any applicable statute of
limitations or extensions thereof.
11.12 ALLOCATION. Champion and WJHC agree that the transactions
contemplated by this Agreement are an exchange of assets in accordance with
Medicare Regulation 413.134(f)(4) and that as such neither Champion nor WJHC is
permitted to recognize a gain or loss on such transactions. Champion and WJHC
agree that (i) neither party shall claim or recognize any gain
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or loss on such transactions under the Medicare or Medicaid programs, and (ii)
neither shall take any position inconsistent with the treatment of such
transactions as an exchange of assets. The Champion and WJHC Medicare and
Medicaid cost reports will fully disclose the exchange of assets and no gain or
loss in the terminating Champion and WJHC terminating cost reports.
11.13 UTAH PROVIDER AGREEMENT. As permitted by the FTC,
Columbia/HCA Healthcare Corporation and CHC shall enter in a Utah Provider
Agreement substantially similar in form and content to that certain Utah
Provider Agreement entered into by and between CHC and Healthtrust, Inc.-The
Hospital Company with respect to Salt Lake Regional Medical Center.
11.14 SCHEDULES. The parties hereto acknowledge that the Schedules
hereto are substantially complete. Champion and WJHC agree to supplement and
complete each one of the Schedules to the extent necessary, on or before
November 17, 1995. Each supplemental schedule shall be reasonably satisfactory
to the other party before it may be incorporated herewith.
12. INDEMNIFICATION
12.1 INDEMNIFICATION BY CHAMPION Subject to and to the extent
provided in this Article 12, Champion shall indemnify and hold harmless WJHC
from and after Closing from and against any damages, claims, costs,
liabilities, expenses or obligations (including, without limitation, reasonable
attorneys' fees and associated expenses) incurred or suffered by WJHC as a
result of or arising from:
(a) any breach, misrepresentation or failure to perform
any covenant or agreement under this Agreement on the part of
Champion;
(b) the Champion Excluded Liabilities;
(c) the WJHC Assumed Liabilities; or
(d) the failure of Champion to timely file any cost
report required as a result of the consummation of the transactions
described herein, including, without limitation, those required by the
Medicare and Medicaid programs.
12.1.1 INDEMNITY REGARDING EMPLOYEES, PLANS, AND BENEFIT
PROGRAMS OR AGREEMENTS. In addition, Champion agrees to indemnify WJHC with
respect to any loss, liability, assessment, withdrawal liability assessment,
funding deficiency assessment, taxes, interest, penalties, judgments, employee
benefit claims, and PBGC liability assessments (including any and all costs and
fees related to proceedings establishing such loss, liability, assessment,
withdrawal liability assessment,funding deficiency assessment, taxes, interest,
penalties, judgments, employee benefit claims, or PBGC liability assessment),
with respect to (i) each Champion Plan and Champion Benefit Program or
Agreement and (ii) each employee benefit plan, as such term is described in
Section 3(3) of ERISA (including, but not limited to, any such employee benefit
plan that is not subject to some or all of the provisions of ERISA), which was
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not sponsored, maintained, or contributed to by Champion, but which was
sponsored, maintained, or contributed to by any corporation, trade, business,
or entity under common control with Champion, either presently or at any time
since 1974, within the meaning of Section 414(b), (c), (m), or (o) of the Code
or Section 4001(b) of ERISA.
12.2 LIMITATIONS/CHAMPION. (A) Champion shall not be under any
liability or claim under Section 12.1 of this Agreement that shall:
(i) accrue to WJHC against Champion under Section 12.1(a)
hereof (i) unless and except to the extent that the
liability of Champion would in respect of any single
claim under Section 12.1(a) hereof exceed $10,000 (a
"Relevant Claim") or (ii) unless and to the extent
the total liability of Champion in respect of all
claims under Section 12.1(a) hereof exceeds $50,000
in the aggregate (including Relevant Claims) in which
case Champion shall thereafter be liable for all
claims in excess of such amount;
(ii) be made unless notice thereof shall have been given
by or on behalf of WJHC to Champion in the manner
provided in Section 12.7; and
(iii) be made to the extent that any loss may be recovered
under a policy of insurance in force on the date of
loss, except that Champion shall be liable to the
extent of any deductibles or to the extent such
recovery causes an increase in applicable premiums.
(b) Champion shall not be liable for such claims as may arise
after the date hereof which arise solely as a result of a voluntary and knowing
act, omission or transaction carried out after the date hereof by WJHC (or
persons deriving title under WJHC).
(c) Only WJHC or an entity controlled by WJHC, under common
control with WJHC or controlling WJHC may bring an action against Champion
under this Article 12.
12.3 RECOVERY FROM THIRD PARTIES/CHAMPION
(a) In the event that WJHC is entitled to recover any sum
(whether by payment, discount, credit or otherwise) from any third
party in respect of any matter for which a claim could be made against
Champion, WJHC shall use, or procure that the relevant company shall
use, its reasonable best efforts to recover such sum from such third
party and any sum actually recovered by WJHC (less any reasonable
costs and expenses incurred by WJHC in recovering such sum) will
reduce the amount of the claim and if Champion pays to WJHC an amount
in respect of, and WJHC subsequently receives from a third party a sum
which is referable to that payment, WJHC shall forthwith repay to
Champion so much of the amount paid by it as does not exceed the sum
recovered by WJHC from the
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third party less all reasonable costs, charges and expenses incurred
by WJHC in obtaining that payment and in recovering that sum from the
third party.
(b) If, after Champion has paid in full any claim
hereunder in respect of a tax liability, the company subject to such a
claim (the "Subject Company") receives a payment in respect of such
tax liability, WJHC undertakes to procure that the Subject Company
shall repay to Champion a sum corresponding to the amount of such
refund after deduction from such repayment of an amount equal to any
reasonable costs incurred by the Subject Company in obtaining it and
any tax liability incurred by the Subject Company in respect of the
receipt of payment. Any such repayment due shall be increased to
include interest as the Subject Company shall have received in respect
of the relevant tax liability.
12.4 INDEMNIFICATION BY WJHC. Subject to and to the extent
provided in this Article 12, WJHC shall indemnify and hold harmless Champion
from and after Closing from and against any damages, claims, costs,
liabilities, expenses or obligations (including, without limitation, reasonable
attorneys' fees and associated expenses) incurred or suffered by Champion as a
result of or arising from:
(a) any breach, misrepresentation or failure to perform
any covenant or agreement under this Agreement on the part of WJHC;
(b) the WJHC Excluded Liabilities;
(c) the Champion Assumed Liabilities; or
(d) the failure of WJHC to timely file any cost report
required as a result of the consummation of the transactions described
herein, including, without limitation, those required by the Medicare
and Medicaid programs.
12.4.1 INDEMNITY REGARDING EMPLOYEES, PLANS, AND BENEFIT
PROGRAMS OR AGREEMENTS. In addition, WJHC agrees to indemnify Champion with
respect to any loss, liability, assessment, withdrawal liability assessment,
funding deficiency assessment, taxes, interest, penalties, judgments, employee
benefit claims, and PBGC liability assessments (including any and all costs and
fees related to proceedings establishing such loss, liability, assessment,
withdrawal liability assessment,funding deficiency assessment, taxes, interest,
penalties, judgments, employee benefit claims, or PBGC liability assessment),
with respect to (i) each WJHC Plan and WJHC Benefit Program or Agreement and
(ii) each employee benefit plan, as such term is described in Section 3(3) of
ERISA (including, but not limited to, any such employee benefit plan that is
not subject to some or all of the provisions of ERISA), which was not
sponsored, maintained, or contributed to by WJHC, but which was sponsored,
maintained, or contributed to by any corporation, trade, business, or entity
under common control with WJHC, either presently or at any time since 1974,
within the meaning of Section 414(b), (c), (m), or (o) of the Code or Section
4001(b) of ▇▇▇▇▇.
-▇▇-
▇▇
▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇/▇▇▇▇. (▇) ▇▇▇▇ shall not be under any liability
or claim under Section 12.4 of this Agreement that shall:
(i) accrue to Champion against WJHC under Section 12.4(a)
hereof (i) unless and except to the extent that the
liability of WJHC would in respect of any single
claim under Section 12.4(a) hereof exceed $10,000 (a
"Relevant Claim") or (ii) unless and to the extent
the total liability of WJHC in respect of all claims
under Section 12.4(a) hereof exceeds $50,000 in the
aggregate (including Relevant Claims) in which case
WJHC shall thereafter be liable for all claims in
excess of such amount;
(ii) be made unless notice thereof shall have been given
by or on behalf of Champion to WJHC in the manner
provided in Section 12.7; and
(iii) be made to the extent that any loss may be recovered
under a policy of insurance in force on the date of
loss, except that WJHC shall be liable to the extent
of any deductibles or to the extent such recovery
causes an increase in applicable premiums.
(b) WJHC shall not be liable for such claims as may arise after
the date hereof which arise solely as a result of a voluntary and knowing act,
omission or transaction carried out after the date hereof by Champion (or
persons deriving title under Champion).
(c) Only Champion or an entity controlled by Champion, under
common control with Champion or controlling Champion may bring an action
against WJHC under this Article 12.
12.6 RECOVERY FROM THIRD PARTIES/WJHC.
(a) In the event that Champion is entitled to recover any
sum (whether by payment, discount, credit or otherwise) from any third
party in respect of any matter for which a claim could be made against
WJHC, Champion shall use, or procure that the relevant company shall
use, its reasonable best efforts to recover such sum from such third
party and any sum actually recovered by Champion (less any reasonable
costs and expenses incurred by Champion in recovering such sum) will
reduce the amount of the claim and if WJHC pays to Champion an amount
in respect of, and Champion subsequently receives from a third party a
sum which is referable to that payment, Champion shall forthwith repay
to WJHC so much of the amount paid by it as does not exceed the sum
recovered by Champion from the third party less all reasonable costs,
charges and expenses incurred by Champion in obtaining that payment
and in recovering that sum from the third party.
(b) If, after WJHC has paid in full any claim hereunder
in respect of a tax liability, the company subject to such a claim
(the "Subject Company") receives
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a payment in respect of such tax liability, Champion undertakes to
procure that the Subject Company shall repay to WJHC a sum
corresponding to the amount of such refund after deduction from such
repayment of an amount equal to any reasonable costs incurred by the
Subject Company in obtaining it and any tax liability incurred by the
Subject Company in respect of the receipt of payment. Any such
repayment due shall be increased to include interest as the Subject
Company shall have received in respect of the relevant tax liability.
12.7 NOTICE AND PROCEDURE. (a) Any person seeking indemnity under
any provision of this Agreement which provides for indemnification from claims
by third parties (the "Indemnitee") shall promptly notify the party from whom
indemnity is sought (the "Indemnitor") as to (i) the nature of any claims,
damages, losses or liabilities asserted against the Indemnitee for which the
Indemnitee intends to seek indemnity hereunder ("Claims") and (ii) the
commencement of any suit or proceeding brought to enforce any Claims. The
Indemnitor shall assume the defense of any such suit or other proceeding and
the Indemnitee shall cooperate fully, at the Indemnitor's sole cost and
expense, and shall be entitled reasonably to consult with the Indemnitor with
respect to such defense.
(b) Indemnitee, at the sole cost and expense of Indemnitor, shall
assist and cooperate with Indemnitor in the conduct of litigation, the making
of settlements and the enforcement of any right of contribution to which the
Indemnitee may be entitled from any person or entity in connection with the
subject matter of any litigation subject to indemnification hereunder. In
addition, Indemnitee shall, upon request by Indemnitor or counsel selected by
Indemnitor and at the sole cost and expense of Indemnitor, attend hearings and
trials, assist in the securing and giving of evidence, assist in obtaining the
presence or cooperation of witnesses, make available its own personnel, and
effect settlements; and shall do whatever else is reasonably necessary and
appropriate in connection with such litigation. Indemnitee shall not make any
demand upon Indemnitor or counsel for Indemnitor in connection with any
litigation subject to indemnification hereunder, except a general demand for
indemnification as provided hereunder. Indemnitee shall not, except at its own
cost, voluntarily make any payment, assume any obligation, incur any expense,
or settle or compromise any claim without the express approval of Indemnitor,
in connection with any litigation subject to indemnification hereunder.
(c) If the Indemnitee shall fail to notify promptly the Indemnitor
as to (i) the nature of any Claims or (ii) the commencement of any suit or
proceeding brought to enforce any Claims, or the Indemnitee shall fail to
perform its obligations as Indemnitee hereunder or to cooperate fully with
Indemnitor in Indemnitor's defense of any suit or proceeding, such cooperation
to include, with limitation, attendance at all depositions and the provision of
all documents relevant, in the Indemnitor's sole discretion, to the defense of
any Claim, all of which shall be at the sole cost and expense of Indemnitor,
then, except where such failure does not have a materially adverse effect on
Indemnitor's defense of such Claims, Indemnitor shall be released from all of
its obligations under this Agreement with respect to that particular suit or
proceeding and any other Claims which had been raised in such suit or
proceeding.
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12.8 PAYMENTS AND DISPUTES. (A) Payment of any amounts due an
Indemnitee hereunder shall be made by Indemnitor in cash no later than the 30th
day after the date notice in respect of such claim is received by Indemnitor,
unless Indemnitor timely rejects such rights to indemnification pursuant to the
provisions of Section 12.8(b) below.
(b) If an Indemnitor shall reject any right to indemnification
hereunder as to which notice has been sent, such Indemnitor shall give written
notice of such rejection to Indemnitee within 15 days after the date of receipt
of such notice by Indemnitor. If no such rejection of a notice shall be so
sent within such 15-day period, Indemnitor shall be deemed to acknowledge the
correctness of such Claim for the full amount thereof.
12.9 INDEMNITY PERIOD. Subject to the other provisions hereof, the
period of indemnity of loss hereunder (the "Indemnity Period") shall begin on
the date of Closing and (except with respect to matters relating to title to
the Champion Assets or the WJHC Assets, taxes, Medicare representations and
warranties set forth in Sections 4.17 and 5.17 (and the indemnification set
forth in Sections 12.1.1 and 12.4.1), in respect of which the Indemnity Period
shall survive Closing indefinitely) end on the earlier of:
(a) the second anniversary of the date of Closing; and
(b) the expiration of the applicable statute of
limitations (or similar applicable statutory or regulatory limitations
upon actions or investigations), including any extensions or waivers
thereof;
provided, however, that if there is an outstanding notice of Claim at the end
of the applicable Indemnity Period, such period shall not end in respect of
such Claim until each such outstanding Claim of an indemnified party is
resolved.
13. GENERAL
13.1 CONSENTED ASSIGNMENT. Anything contained herein to the
contrary, this Agreement shall not constitute an agreement to assign any claim,
right, contract, license, lease, commitment, sales order or purchase order if
an attempted assignment thereof without the consent of another party thereto
would constitute a breach thereof or in any material way affect the rights of
the assigning party thereunder, an attempted assignment would be ineffective or
would materially affect the assigning party's rights thereunder so that the
assignee would not in fact receive all such rights. The assigning party shall
cooperate in any reasonable arrangement designed to provide for the assignee
the benefits under any such claim, right, contract, license, lease, commitment,
sales order or purchase order, including, without limitation, enforcement of
any and all rights of the assigning party against the other party or parties
thereto arising out of the breach or cancellation by such other party or
otherwise.
13.2 CONSENTS, APPROVALS AND DISCRETION. Except as herein
expressly provided to the contrary, whenever this Agreement requires any
consent or approval to be given by either party
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or either party must or may exercise discretion, the parties agree that such
consent or approval shall not be unreasonably withheld or delayed and such
discretion shall be reasonably exercised.
13.3 LEGAL FEES AND COSTS. In the event either party elects to
incur legal expenses to enforce or interpret any provision of this Agreement,
the prevailing party will be entitled to recover such legal expenses,
including, without limitation, attorney's fees, costs and necessary
disbursements, in addition to any other relief to which such party shall be
entitled.
13.4 CHOICE OF LAW. The parties agree that this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas,
excluding any conflict-of-laws rule or principle that might refer the
governance or the construction of this Agreement to the laws of another
jurisdiction.
13.5 BENEFIT/ASSIGNMENT. Subject to provisions herein to the
contrary including without limitation, the provisions of Section 13.6, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective legal representatives, successors and assigns and no
others; provided, however, that no party may assign this Agreement without the
prior written consent of the other party, which consent shall be not
unreasonably withheld; provided, further, however, that WJHC may, without the
prior written consent of Champion, assign their rights and delegate their
duties hereunder to Columbia/HCA Healthcare Corporation or any entity
controlled thereby.
13.6 ASSIGNMENT TO QUALIFIED INTERMEDIARY. Notwithstanding
anything contained herein to the contrary, either party shall have the right
without the written consent of the other party to assign all or a portion of
its rights and obligations under this Agreement to a person that will serve as
a "qualified intermediary" as that term is defined in Treasury regulation
Section 1.1031(k)-1(g)(4) and that will facilitate the exchange in accordance
with section 1031 of the Code and the Treasury Regulations thereunder.
13.7 ACCOUNTING DATE. The transactions contemplated hereby shall
be effective for accounting purposes as of 12:01 a.m. on the day immediately
following the Closing Date, unless otherwise agreed in writing by Champion and
WJHC.
13.8 NO BROKERAGE. Champion and WJHC represent to each other that
no broker has in any way been contracted in connection with the transactions
contemplated hereby. Champion and WJHC agree to indemnify the other party from
and against all loss, cost, damage or expense arising out of claims for fees or
commissions of brokers employed or alleged to have been employed by such
indemnifying party.
13.9 COST OF TRANSACTION. Whether or not the transactions
contemplated hereby shall be consummated and except as otherwise provided
herein, the parties agrees as follows: (i) Champion shall pay the fees,
expenses, and disbursements of Champion and its agents, representatives,
accountants, and counsel incurred in connection with the subject matter hereof
and any amendments hereto and shall pay for the cost of the Champion Title
Policy, Survey and environmental assessment report for the Champion Facilities
(ii) WJHC shall pay the fees,
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expenses and disbursements of WJHC and its agents, representatives,
accountants, and counsel incurred in connection with the subject matter hereof
and any amendments hereto and shall pay for the cost of the WJHC Title Policy,
Survey and environmental assessment report for the WJHC Hospital, and (iii) the
parties shall share equally the costs of the HSR filing fee, appraisals with
respect to the Champion Assets and the WJHC Assets and the cost of transferring
(transfer taxes and recording costs) associated with the Champion Assets and
the WJHC Assets.
13.10 CONFIDENTIALITY. It is understood by the parties hereto that
the information, documents and instruments delivered to WJHC by Champion or
Champion's agents and the information, including, but not limited to this
Agreement and all documents delivered hereunder and documents and instruments
delivered to Champion by WJHC or WJHC's agents are of a confidential and
proprietary nature. Each of the parties hereto agrees that both prior and
subsequent to Closing it will maintain the confidentiality of all such
confidential information, documents or instruments delivered to it by each of
the other parties hereto or their agents in connection with the negotiation of
this Agreement or in compliance with the terms, conditions and covenants hereof
and only disclose such information, documents and instruments to its duly
authorized officers, directors, representatives and agents. Each of the
parties hereto further agrees that if the transactions contemplated hereby are
not consummated, it will return all such documents and instruments and all
copies thereof in its possession to the other party to this Agreement. Each of
the parties hereto recognizes that any breach of this Section would result in
irreparable harm to the other parties to this Agreement and their affiliates
and that therefore either Champion or WJHC shall be entitled to an injunction
to prohibit any such breach or anticipated breach, without the necessity of
posting a bond, cash or otherwise, in addition to all of their other legal and
equitable remedies. Nothing in this Section, however, shall prohibit the use
of such confidential information, documents or information for such
governmental filings as in the mutual opinion of WJHC's counsel and Champion's
counsel are (i) required by law or governmental regulations or (ii) otherwise
appropriate. Champion shall have the right to file this Agreement and the WJHC
Financial Statements in such manner as may be required under the federal
securities laws, provided, however, Champion shall provide the General Counsel
of Columbia/HCA Healthcare Corporation with reasonable notice of any such
filings.
13.11 WAIVER OF BREACH. The waiver by either party of breach or
violation of any provision of this Agreement shall not operate as, or be
construed to constitute, a waiver of any subsequent breach of the same or other
provision hereof.
13.12 NOTICE. Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
when personally delivered, when received by telegraphic or other electronic
means (including telecopy and telex) or overnight courier, or five (5) days
after being deposited in the United States mail, with postage prepaid thereon,
certified or registered mail, return receipt requested, addressed as follows:
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CHAMPION: Champion Healthcare Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
with a copy to:
Champion Healthcare Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
3500 City Center Tower II
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
WJHC: Columbia/HCA Healthcare Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Development
with a copy to:
Columbia/HCA Healthcare Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
or to such other address, and to the attention of such other person or officer
as any party may designate.
13.13 SEVERABILITY. In the event any provision of this Agreement is
held to be invalid, illegal or unenforceable for any reason and in any respect,
such invalidity, illegality, or unenforceability shall in no event affect,
prejudice or disturb the validity of the remainder of this Agreement, which
shall be and remain in full force and effect, enforceable in accordance with
its terms.
13.14 GENDER AND NUMBER. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine
and neuter, and the number of all words herein shall include the singular and
plural.
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13.15 DIVISIONS AND HEADINGS. The division of this Agreement into
sections and subsections and the use of captions and headings in connection
therewith are solely for convenience and shall have no legal effect in
construing the provisions of this Agreement.
13.16 NO THIRD PARTY BENEFICIARIES. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention
of the parties hereto to confer third-party beneficiary rights upon any other
Person.
13.17 ENTIRE AGREEMENT/AMENDMENT. This Agreement supersedes all
previous contracts, and constitutes the entire agreement of whatsoever kind or
nature existing between or among the parties representing the within subject
matter and no party shall be entitled to benefits other than those specified
herein. As between or among the parties, no oral statements or prior written
material not specifically incorporated herein shall be of any force and effect.
The parties specifically acknowledge that in entering into and executing this
Agreement, the parties rely solely upon the representations and agreements
contained in this Agreement and no others. All prior representations or
agreements, whether written or verbal, not expressly incorporated herein are
superseded and no changes in or additions to this Agreement shall be recognized
unless and until made in writing and signed by all parties hereto. The
representations and warranties set forth in this Agreement shall survive the
Closing and remain of full force and effect until the expiration of the
applicable Indemnity Period set forth in Article 12 hereof, and shall survive
the execution and delivery of all other agreements described, referenced or
contemplated herein and shall not be merged herewith or therewith. This
Agreement may be executed in two or more counterparts, each and all of which
shall be deemed an original and all of which together shall constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed in multiple originals by their authorized officers, all as of the
date and year first above written.
CHCH: CHAMPION HEALTHCARE HOLDINGS, INC.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
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CHCP: CHC-PRATTVILLE, INC.
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
CHCN: CHC-NURSING CENTER, INC.
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
WJHC: WEST JORDAN HOSPITAL CORPORATION
By:
-----------------------------------
V. ▇▇▇▇ ▇▇▇▇▇▇
Vice President
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