Exhibit 10.30
VALLEY/DESERT CONTRIBUTION AGREEMENT
Table of Contents
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Page No.
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1. Contribution of Assets.............................................. 2
1.1 Creation of Subsidiaries; Agreement to Contribute;
and Merger..................................................... 2
1.2 Excluded Assets................................................ 4
1.3 Contract Assignments........................................... 5
1.4 Instruments of Conveyance...................................... 6
1.5 Consideration; Working Capital Shortage/Overage................ 6
1.6 Liabilities Assumed............................................ 8
1.7 Liabilities Not Assumed........................................ 8
1.8 Closing........................................................ 10
2. Representations and Warranties of Parties........................... 11
2.1 Existence; Good Standing; Corporate Authority.................. 11
2.2 Authorization; Validity and Effect of Agreements............... 11
2.3 Subsidiaries................................................... 12
2.4 Capitalization................................................. 13
2.5 Records........................................................ 13
2.6 Financial Statements........................................... 13
2.7 Absence of Undisclosed Liabilities............................. 14
2.8 Absence of Certain Changes or Events Since the
Date of the Balance Sheets..................................... 14
2.9 Taxes.......................................................... 16
2.10 Real Property.................................................. 16
2.11 Title to Property and Assets; Sufficiency of
Facilities Assets.............................................. 18
2.12 Condition of Property.......................................... 19
2.13 List of Contracts and Other Data............................... 19
2.14 No Breach or Default........................................... 21
2.15 Labor Controversies............................................ 21
2.16 Litigation..................................................... 21
2.17 Patents; Trademarks, Etc....................................... 22
2.18 Licenses; Permits; Authorizations.............................. 22
2.19 Compliance with Applicable Law;
Environmental Laws............................................. 22
2.20 Employee Benefit Plans; Employees and Employee
Relations...................................................... 25
2.21 Adverse Agreements; No Adverse Change.......................... 26
2.22 Trade Notes and Accounts Receivable; Trade
Accounts Payable; Prepaid Contracts............................ 26
2.23 Inventories and Supplies....................................... 27
2.24 Illegal Payments............................................... 27
2.25 Insurance Policies............................................. 27
2.26 Professional Staff, Medicare, Medicaid
and Other Health Care Programs................................. 28
2.27 Facility Surveys............................................... 29
2.28 Related Party Transactions..................................... 29
2.29 No Brokers..................................................... 29
2.30 No Misrepresentation or Omission............................... 29
3. [Intentionally Omitted]............................................. 30
4. Covenants of the Parties............................................ 30
4.1 Access to Facilities and Additional Information................ 30
4.2 Operations..................................................... 30
4.3 Negative Covenants............................................. 31
4.4 Governmental Approvals......................................... 32
4.5 Insurance Ratings.............................................. 32
4.6 Employees; Employee Benefit Plans.............................. 32
4.7 Further Acts and Assurances.................................... 33
4.8 ▇▇▇▇▇▇▇▇▇ Transaction.......................................... 33
4.9 Additional Properties and Assets............................... 34
5. Matters Pertaining to the Company................................... 34
5.1 Employee Matters............................................... 34
5.2 Further Acts and Assurances.................................... 34
6. Conditions of Closing............................................... 35
6.1 Conditions of Closing.......................................... 35
7. Nature and Survival of Representations and Warranties;
Indemnification..................................................... 38
7.1 Events of Default.............................................. 38
7.2 Survival of Representations, Etc............................... 38
7.3 Indemnification................................................ 38
7.4 Representation, Cooperation and Settlement..................... 39
8. Transactions Subsequent to the Closing Date......................... 40
8.1 Access to Records.............................................. 40
8.2 Litigation Cooperation......................................... 40
9. Termination......................................................... 41
9.1 Methods of Termination......................................... 41
9.2 Procedure Upon Termination..................................... 41
10. Miscellaneous....................................................... 41
10.1 Notice......................................................... 41
10.2 Execution of Additional Documents.............................. 43
10.3 Waivers and Amendment.......................................... 43
10.4 Expenses........................................................ 44
10.5 Occurrence of Conditions Precedent.............................. 44
10.6 Confidentiality Obligations; Public Announcements............... 44
10.7 Binding Effect; Benefits........................................ 45
10.8 Entire Agreement................................................ 45
10.9 Governing Law................................................... 45
10.10 Counterparts................................................... 45
10.11 Headings....................................................... 45
10.12 Incorporation of Exhibits and Schedules........................ 45
10.13 Severability................................................... 46
10.14 Assignability.................................................. 46
Joinder Agreement - Universal Health Services, Inc................... 48
Joinder Agreement - Quorum Health Group, Inc......................... 49
VALLEY/DESERT CONTRIBUTION AGREEMENT
This Agreement (the "Agreement") is dated this 30th day of January, 1998,
by and among VALLEY HOSPITAL MEDICAL CENTER, INC., a Nevada corporation
("Valley") and NC-DSH, INC., a Nevada corporation ("Desert Springs")(Valley and
Desert Springs are sometimes hereinafter referred to collectively as the
"Parties" and individually as a "Party").
WITNESSETH:
WHEREAS, Valley owns all of the right, title and interest in and to certain
assets used to operate Valley Hospital Medical Center and certain related
businesses operated by Valley in and around Las Vegas, Nevada (collectively, the
"UHS Facilities"); and
WHEREAS, Desert Springs owns all of the right, title and interest in and to
certain assets used to operate Desert Springs Hospital and certain related
businesses operated by Desert Springs in and around Las Vegas, Nevada
(collectively, the "Quorum Facilities"); and
WHEREAS, the Parties desire to combine the UHS Facilities and the Quorum
Facilities and operate such combined facilities as a limited liability company
pursuant to the Limited Liability Company Act as enacted in the State of
Delaware (the "LLC Act"); and
WHEREAS, pursuant to the terms of this Agreement Valley desires to
contribute the UHS Facilities in exchange for a seventy-two and one-half percent
(72.5%) membership interest in such limited liability company; and
WHEREAS, pursuant to the terms of this Agreement Desert Springs desires to
contribute the Quorum Facilities in exchange for a twenty-seven and one-half
percent (27.5%) membership interest in such limited liability company; and
WHEREAS, the Parties desire to enter into this Agreement for the purpose of
setting forth their respective rights and obligations as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the provisions and the
respective agreements hereinafter set forth, the Parties, intending to be
legally bound hereby, agree as follows:
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1. CONTRIBUTION OF ASSETS.
1.1 CREATION OF SUBSIDIARIES; AGREEMENT TO CONTRIBUTE; AND MERGER.
On or prior to the Closing Date (as hereinafter defined) Valley shall create
Valley Health System LLC, a wholly owned limited liability company ("Newco UHS-
1") pursuant to the LLC Act and Desert Springs shall create Newco Q LLC, a
wholly owned limited liability company ("Newco Q-1") pursuant to the LLC Act.
Upon the terms and subject to the conditions set forth in this Agreement, on the
Closing Date, Valley and Desert Springs shall contribute, convey, assign,
transfer and deliver to Newco UHS-1 and ▇▇▇▇▇ ▇-▇, respectively, all of their
respective right, title and interest in and to the Facilities Assets (as defined
below), except for the Excluded Assets (as hereinafter defined), free and clear
of all liens, charges, claims, pledges, security interests and encumbrances of
any nature whatsoever (collectively, "Liens"), except for Permitted Encumbrances
(as hereinafter defined). Immediately following the contribution, conveyance,
assignment, transfer and delivery of the Facilities Assets in accordance with
the preceding sentence, Newco Q-1 shall be merged with and into Newco UHS-1
pursuant to the Agreement of Merger ("Agreement and Plan of Merger") attached
hereto as Exhibit A (the "Merger"). Following the Merger, the separate
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corporate existence of ▇▇▇▇▇ ▇-▇ shall cease and Newco UHS-1 shall continue as
the surviving limited liability company (the "Company") with Valley owning a
seventy-two and one-half percent (72.5%) membership interest in the Company and
Desert Springs owning a twenty-seven and one-half percent (27.5%) membership
interest in the Company. The "Facilities Assets" shall mean and include all
those personal, tangible and intangible properties, and the real properties and
improvements of the Parties used in connection with the operation of the UHS
Facilities and the Quorum Facilities (collectively, the "Facilities") as set
forth below, other than the Excluded Assets, including, without limitation,(i)
the going concern value of the Facilities, if any, and (ii) the following:
(a) all fee or leasehold title to all real property, including the
real property described in Schedule 2.10, which Schedule identifies the property
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as fee or leasehold, together with all improvements, buildings and fixtures
located thereon or therein, including the Facilities and all construction in
progress (such real properties owned in fee are hereafter collectively, the
"Real Property");
(b) all equipment, computers, computer hardware and software (subject
to any restrictions by the licensor on the assignment thereof), tools, supplies,
furniture, vehicles and other tangible personal property and assets owned or
leased by the Parties related to the Facilities as of the date of this
Agreement, as such items may be modified prior to the Closing
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Date in the ordinary course of business, and including without limitation those
items set forth on Schedule 1.1(b);
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(c) all items of inventory listed on the Balance Sheets (as
hereinafter defined), as such items may be modified prior to the Closing Date in
the ordinary course of business;
(d) all patients accounts, notes and other receivables, whether or
not written off, or recorded or not recorded, exclusive of any third party cost
report payables or receivables, ▇▇▇▇▇ cash and those prepaid expenses usable by
the Company;
(e) all financial records located at the Facilities and all patient,
medical staff, research and development, and other records (including equipment
records, medical/ administrative libraries, medical records, documents,
production reports and records, personnel records, catalogs, books, records,
files, equipment logs and operating manuals) located at the Facilities or
necessary for the operation of the Facilities;
(f) all of the Parties' interest in the Assumed Contracts, as defined
in Section 1.3.1;
(g) all licenses, permits and other governmental approvals (including
certificates of need), to the extent assignable, held or used by any of the
Parties in connection with the ownership, development and operations of the
Facilities (including any pending or approved governmental approvals regarding
the Facilities);
(h) all marks, names, trademarks, service marks, patents, patent
rights, assumed names, logos and copyrights used in the business of the
Facilities;
(i) the interest in all property, real, personal or mixed, tangible
or, to the extent assignable, intangible, arising or acquired in the ordinary
and regular course of any of the Parties' business in connection with the
Facilities between the date hereof and the Closing Date;
(j) all insurance proceeds (including applicable deductibles,
copayments or self-insured requirements) arising in connection with damage to
the Facilities occurring prior to the Closing Date, to the extent not expended
for the repair or restoration of the Facilities;
(k) all assets included in the Balance Sheets generally as
"inventories", "property, plant or equipment", and "other assets";
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(l) all of the Parties' membership interests in Oasis Health System
LLC (25% of which is currently owned by Valley and 50% of which is currently
owned by Desert Springs); Desert Springs' 10.38% limited partnership interest in
Valley View Surgery Center, L.P.; and Desert Springs' 40% partnership interest
in Desert Surgery Center Limited Partnership;
(m) cash equal to the Working Capital Shortage (to be contributed by
either Valley or Desert Springs under the terms of Section 1.5); and
(n) all of Desert Springs' right title and interest in and to the
Plaza Surgery Center, Limited Partnership which is described in detail in
Schedule 1.1(n); and
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(o) all other property of every kind, character or description, to
the extent assignable, owned by any of the Parties and used or held for use in
the business of the Facilities, whether or not reflected on the Financial
Statements (as hereinafter defined), located at the Facilities or necessary for
the operation of the Facilities and whether or not similar to the things
specifically set forth above, including the "▇▇▇▇▇▇▇▇ Sublease" (as defined in
Section 6.1.14), except the Excluded Assets.
Except as expressly set forth in this Agreement, including the
Schedules and Exhibits hereto, all of the Facilities Assets contributed by the
Parties to Newco UHS-1 and Newco Q-1 shall be contributed on an "as is" basis.
1.2 EXCLUDED ASSETS. The following items are not part of the
contributions contemplated hereunder and are excluded from the Facilities Assets
(collectively, the "Excluded Assets");
(a) all of Valley's or any of its affiliates' right, title and
interest in and to the following: Goldring Surgery Center, Universal Health
Network, Nevada Radiation Oncology Center and the real estate located within a
fifty (50) mile radius of Las Vegas, Nevada, all of which is described in detail
on Schedule 1.2(a) hereof (collectively, the "UHS Excluded Businesses");
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(b) all of the Parties' respective deferred taxes, and intercompany
receivables;
(c) personnel records and any other records which either of the
Parties is required by law to retain in its possession, but only to the extent
such records are not necessary for the continued operation of the Facilities in
the manner in which they are currently being operated;
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(d) all claims for amounts due, or that may become due from Medicare,
Medicaid or any other health care payment intermediary resulting from cost
reports for periods through the Closing Date;
(e) all refunds relating to any federal, state, local or foreign
taxes paid by, or on behalf or for the benefit of a Party or, to the extent they
relate to the period prior to the Closing Date, the Facilities, whether received
prior to or after the Closing Date;
(f) any proprietary information contained in either Party's employee
or operation manuals;
(g) each Party's corporate and financial records;
(h) cash and cash equivalents; and
(i) any other assets expressly designated in Schedule 1.2(i) to this
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Agreement as Excluded Assets.
1.3 CONTRACT ASSIGNMENTS.
1.3.1 ASSIGNMENT OF INTEREST IN CONTRACTS. Except for intercompany
and non-physician employment contracts, on the Closing Date and upon and
subject to the terms and conditions set forth in this Agreement, the Parties
shall transfer or cause to be transferred and assign or cause to be assigned to
Newco UHS-1 and Newco Q-1, as the case may be, and Newco UHS-1 and ▇▇▇▇▇ ▇-▇
shall assume and perform all of the Parties' interest in (including all rights,
benefits and obligations) all commitments, contracts, leases, licenses,
agreements and understandings, and all outstanding offers or solicitations to
enter into any of the foregoing, including those described on Schedule 1.3.1
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hereto (the "Assumed Contracts").
1.3.2 CONSENTS TO ASSIGNMENTS. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall not constitute an agreement to
assign or transfer any of the Assumed Contracts or part thereof or right or
benefit arising thereunder or resulting therefrom if an attempted assignment or
transfer thereof, without the consent of a third party thereto, would constitute
a breach thereof or in any way affect the rights of the Company following the
Merger. If such consent is not obtained, or if an attempted assignment thereof
would be ineffective or would affect the rights of the Company following the
Merger, so that the Company would not in fact receive all such rights, Valley or
Desert Springs, as the case may be, (i) shall cooperate with the Company in its
request in endeavoring to obtain such consent promptly at no cost to the
Company, and (ii) if any such consent is unobtainable, shall cooperate with the
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Company in any reasonable arrangement (the "Assignment Substitute") designed to
provide the Company the benefits under any such Assumed Contract or part thereof
or any right or benefit arising thereunder or resulting therefrom, including
enforcement for the benefit of the Company of any and all rights of Valley or
Desert Springs against a third party arising out of the breach or cancellation
by such third party or otherwise. Valley and Desert Springs shall, to the extent
necessary, perform under the Assignment Substitute without a fee to the Company
except the consideration being tendered hereunder.
1.4 INSTRUMENTS OF CONVEYANCE.
On the Closing Date, Valley shall deliver to Newco UHS-1 and Desert
Springs shall deliver to Newco Q-1 such deeds (in the case of the real property
and the improvements thereon described in Schedules 2.10 hereto, a special
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warranty deed or the equivalent thereof in use in accordance with local
practice), bills of sale, endorsements, assignments and other good and
sufficient instruments of conveyance and assignment, including the ▇▇▇▇▇▇▇▇
Sublease as shall be effective to vest in Newco UHS-1 and Newco Q-1, as the case
may be, all of the Parties' respective right, title and interest in and to the
Facilities Assets, free and clear of all Liens except for the Permitted
Encumbrances. Simultaneously with such delivery, the Parties will take all
reasonable additional steps as may be necessary to put the Company, following
the Merger, in possession of the Facilities Assets. The Parties shall pay all
transfer costs, title insurance fees, recording fees and transfer or stamp taxes
or similar charges payable by each of them respectively by reason of the
contribution, conveyance, assignment, transfer and delivery hereunder of the
Facilities Assets.
1.5 CONSIDERATION; WORKING CAPITAL SHORTAGE/OVERAGE.
1.5.1 In consideration of the transfer and conveyance of the
Facilities Assets and the Merger, on the Closing Date the Parties acknowledge
and agree that the Company shall issue membership interests in the Company as
follows: (i) the Company shall issue a 72.5% membership interest in the Company
to Valley and (ii) the Company shall issue a 27.5% membership interest in the
Company to Desert Springs.
1.5.2 Within 45 days after the Closing Date, the Parties will
determine the Working Capital Shortage to be paid to the Company by either
Valley or Desert Springs or the Working Capital Overage to be retained by either
Valley or Desert Springs. The Working Capital Shortage or Overage will be the
amount necessary to make the Working Capital contributed by each Party equal
that Party's percentage membership interest in the
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Company. For example, if Valley contributed $7,250,000 in Working Capital to the
Company on the Closing Date and Desert Springs contributed $2,550,000 in Working
Capital to the Company on the Closing Date, then the Working Capital Shortage
would be $200,000 to be paid to the Company by Desert Springs or the Working
Capital Overage would be $527,272.72 which would be retained by Valley rather
than contributed. The Working Capital Shortage shall be calculated and used
unless Valley and Desert Springs shall agree to calculate and use the Working
Capital Overage. For the sole purpose of determining the Working Capital
Shortage or Overage, Working Capital will be defined as the sum of the following
items that have been contributed to or assumed by the Company, all valued in
accordance with generally accepted accounting principles, consistently applied
(unless otherwise specified):
(a) patient accounts receivable, net of allowances for contractual
adjustments and discounts and bad debts (computed on a basis consistent with
historical practice) except that the allowance for bad debts will be equal to
the amount of patient accounts receivable older than one hundred seventy-nine
(179) days from discharge for inpatients or date of services for outpatients;
(b) plus inventories, based on a physical count at the Closing Date,
priced at latest invoice cost, and including only those items and areas that
have historically been counted;
(c) plus prepaid expenses, but only to the extent that they are
usable by the Company;
(d) plus other receivables, net of allowances for uncollectibles;
(e) less trade accounts payable;
(f) less accrued compensation and related taxes thereon and related
liabilities, including accrued vacation, sick leave payable in cash for reasons
other than actual absence, paid time off, or the like;
(g) less other accrued liabilities and expenses;
(h) less the present value (computed using the prime rate as the
discount factor) of remaining payments due under any capitalized lease included
in the Assumed Contracts; and
(i) less any other liabilities assumed by the Company to the extent
such liabilities are to be included on the balance sheet under generally
accepted accounting principles.
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Each of the Parties will work together in good faith to agree on
adjustments to and the amount of Working Capital Shortage. No later than 45
days after the Closing Date, the Parties hereto shall prepare the "Final Closing
Statement" reflecting the items listed above determined as set forth above. Any
payment due on the Final Closing Statement shall be payable in cash, on or
before the tenth day following the day the Final Closing Statement is agreed
upon. If the Parties are unable to agree on the Final Closing Statement within
the 45 day period, they shall appoint Coopers & ▇▇▇▇▇▇▇, a firm of independent
certified public accountants of recognized national standing (the
"Accountants"), to make such determination, which determination shall be final
and binding on the Parties hereto for the purposes of this Agreement, and Valley
and Desert Springs shall each pay one-half of the fee. Each Party represents
that the Accountants are not its auditor.
1.6 LIABILITIES ASSUMED. In further consideration for the contribution of
the Facilities Assets, on and as of the Closing Date, subject to the exclusion
of liabilities described in Section 1.7 below, the Parties acknowledge and agree
that Newco UHS-1, Newco Q-1 and the Company, following the Merger, shall assume
and agree to pay, perform and discharge the following liabilities (collectively,
the "Assumed Liabilities"):
(a) all current liabilities of the Parties (except for the current
portion of long term debt, accrued interest, pension plan liabilities, employer
benefit plan liabilities, intercompany liabilities and self-insurance costs);
(b) all obligations under the Assumed Contracts and under Section 4.6
hereof; and
(c) such other liabilities of the Parties which the Company agrees in
writing at or prior to the Closing Date that the Company will assume, which
liabilities are listed on Schedule 1.6(c).
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1.7 LIABILITIES NOT ASSUMED. Newco UHS-1, Newco Q-1 and the Company,
following the Merger, shall assume only those liabilities and obligations
specified in Section 1.6 above. Without limiting the generality of the foregoing
sentence, neither ▇▇▇▇▇ ▇▇▇-▇, ▇▇▇▇▇ Q-1 nor the Company shall assume and each
Party shall retain and be responsible for the following obligations and
liabilities to the extent they relate to such Party (except to the extent
reflected in the calculation of the Working Capital Shortage) (each reference in
this Section 1.7 to a Party shall include such Party and its affiliates):
(a) any and all obligations for the payment of any long term debt
existing at the Closing Date (including the
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current portion thereof) relating to a Party and whether or not set forth on the
Balance Sheets;
(b) any and all accrued interest through the Closing Date;
(c) liabilities or obligations of a Party arising under Medicare,
Medicaid, Blue Cross or other comparable third party payor programs (the
"Government Reimbursement Programs") for periods through the Closing Date and as
a result of the consummation of the transactions contemplated herein, including
reimbursement recapture or any other adjustments;
(d) liabilities or obligations for Taxes (as hereinafter defined) of
a Party in respect of periods prior to the Closing Date or resulting from the
consummation of the transactions contemplated;
(e) liabilities under any Employee Benefit Plan (as hereinafter
defined) of a Party; and liabilities for any and all EEOC, wage and hour,
unemployment compensation, employee medical or workers' compensation claims
relating to periods prior to the Closing Date;
(f) except as provided in Section 4.6 below, liabilities or
obligations for any and all workers' compensation, health, disability or other
benefits due to or for the benefit of any employees of a Party (or their covered
dependents);
(g) liabilities arising out of or in connection with claims,
litigations or proceedings described in Section 2.16, and claims, litigations or
proceedings (whether instituted prior to or after the Closing Date) for acts or
omissions which allegedly occurred prior to or at the Closing Date;
(h) liabilities attributable to legal, accounting or brokerage fees,
and similar costs incurred by a Party related to the contribution of any of the
Facilities Assets;
(i) except as expressly set forth herein, liabilities arising from a
Party's assignment and the Company's assumption of the Assumed Liabilities;
(j) liabilities for the payment by a Party of any deductibles,
copayments or other self-insurance requirements relating to events occurring
prior to the Closing Date;
(k) any and all liabilities respecting any intercompany transactions
of the Parties, whether or not such transaction relates to the provision of
goods and services, tax
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sharing arrangements, payment arrangements, intercompany charges or balances, or
the like;
(l) except for Assumed Liabilities, any and all actual or contingent
liabilities or obligations of or demands upon a Party arising from acts or
omissions of either of the Parties (actual or alleged) prior to the Closing
Date;
(m) all liabilities arising out of or in connection with the
existence of Materials of Environmental Concern (as hereinafter defined) upon,
about, beneath or migrating to or from any of the Real Property on or before the
Closing Date or the existence on or before the Closing Date of any Environmental
Claim (as hereinafter defined) or any violation of any Environmental Laws (as
hereinafter defined) pertaining to such Real Property or the operation of the
Facilities by a Party or any other business operated therefrom;
(n) any liability which allegedly occurred out of any negligence,
medical malpractice or similar acts or omissions which allegedly occurred prior
to the Closing Date;
(o) sales, income, franchise, use and other taxes payable with
respect to the business or operations of a Party through the Closing Date or the
transactions contemplated hereby;
(p) except as expressly set forth herein, liabilities for rights or
remedies claimed by third parties under any of the Assumed Liabilities which
broaden or vary the rights and remedies such third parties would have had
against either Party if the contribution of the Facilities Assets were not to
occur; and
(q) liabilities on account of those liens or mortgages set forth on
Schedule 1.7(q).
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With respect to Subsection 1.7(m) above, for a period of five (5)
years from and after the Closing Date, in the event that it cannot be proven
that the event giving rise to a Subsection 1.7(m) liability occurred after the
Closing Date then it shall be presumed to have occurred on or before the Closing
Date and the Parties can rebut this presumption with a Phase I environmental
study. From and after five (5) years following the Closing Date, the presumption
shall shift and thereafter all events giving rise to a Subsection 1.7(m)
liability shall be presumed to have occurred from and after the Closing Date.
1.8 CLOSING. The closing of the transactions provided herein will be
accomplished by means of overnight courier delivery and facsimile transmission
or by such other method as may be agreed upon by the Parties. Upon contribution
of the Facilities Assets which shall be as of 11:59 p.m. Pacific Time on
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January 31, 1998, and consummation of the Merger, the closing shall be deemed to
be effective and shall be deemed to have occurred as of 12:01 a.m. Pacific Time
on February 1, 1998 which is as of the date and time specified in the Agreement
of Merger. Such date and time of effectiveness of the Merger is herein referred
to as the "Closing Date".
2. REPRESENTATIONS AND WARRANTIES OF PARTIES. Each of Valley and Desert
Springs hereby severally represent, warrant and agree as follows (it being
understood and agreed that Valley is making the following representations and
warranties solely with respect to the UHS Facilities and Newco UHS-1 and not
with respect to any other Party or for the other Party's Facilities, and that
Desert Springs is making the following representations and warranties solely
with respect to the Quorum Facilities and Newco Q-1 and not with respect to any
other Party or for the other Party's Facilities):
2.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Valley is a Nevada
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. Desert Springs is a Nevada corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Each of the Parties has all requisite corporate power and authority to own its
properties and carry on its business as now conducted. The copies provided to
the other Party of the Articles of Incorporation and Bylaws of each of the
Parties, all as amended to date, are complete and correct and presently in
effect. No Party has failed to qualify in any jurisdiction in which property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary and where the failure to so qualify would
have a material adverse effect on it. No Party is in default with respect to
any order of any court, governmental authority or arbitration board or tribunal
to which it is a party or is subject.
2.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENTS. The execution,
delivery and performance of this Agreement and all agreements and documents
contemplated hereby by such Party and the consummation by it of the transactions
contemplated hereby, have been duly and effectively authorized by all necessary
corporate action on its part. The execution, delivery and performance of the
Agreement and Plan of Merger by Newco UHS-1 or Newco Q-1, as the case may be,
and the consummation by it of the transactions contemplated thereby, have been
duly and effectively authorized by all necessary corporate action on its part.
This Agreement, and the Agreement and Plan of Merger, constitute, and all
agreements and documents contemplated hereby or thereby when executed and
delivered pursuant hereto will constitute the valid and legally binding
obligations of such Party or Newco UHS-1 or Newco Q-1, as the case may be,
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enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws of general application now or
hereafter in effect relating to the enforcement of creditors' rights generally
and except that remedies of specific performance, injunction and other forms of
equitable relief are subject to certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before which any proceeding therefor
may be brought. Except as set forth on Schedule 2.2 hereto, the execution and
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delivery of this Agreement by such Party, and the execution and delivery of the
Agreement and Plan of Merger by Newco UHS-1 or Newco Q-1 does not and the
consummation of the transactions contemplated hereby and thereby will not,
except to the extent the same would not have a material adverse effect on it:
(i) require the consent, approval or authorization of any person, corporation,
partnership, joint venture or other business association or any governmental,
public authority or accrediting body; (ii) violate, with or without the giving
of notice or the passage of time, or both, any provisions of law or statute or
any rule, regulation, order, award, judgment, or decree of any court or
governmental authority applicable to such Party or Newco UHS-1 or Newco Q-1;
(iii) result in the breach or termination of any term or provision of, or
constitute a default under, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or the lapse of time or
both) any obligation under, or result in the creation or imposition of any lien,
charge, pledge, security interest or other encumbrance upon any part of the
property of such Party or Newco UHS-1 or ▇▇▇▇▇ ▇-▇ pursuant to any provision of,
any order, judgment, arbitration award, injunction, decree, indenture, mortgage,
lease, license, lien, or other agreement or instrument to which such Party or
Newco UHS-1 or ▇▇▇▇▇ ▇-▇ is a party or by which it is bound, or violate any
provision of the Bylaws or Articles of Incorporation of such Party, or the
Certificate of Formation or Limited Liability Company Agreement of Newco UHS-1
or Newco Q-1 as amended to the date of this Agreement; or (iv) result in any
suspension, revocation, impairment, forfeiture or nonrenewal of any License (as
hereinafter defined) relating to the ownership and operation by such Party of
health care facilities which are the subject of the transactions contemplated
hereby, subject to the Company obtaining new Licenses for its operation of the
Facilities.
2.3 SUBSIDIARIES. Except as set forth on Schedule 2.3, none of
------------
Valley or Desert Springs owns, directly or indirectly, any debt or equity
securities issued by any other corporation, or any interest in any partnership,
joint venture or other business enterprise. During the period between the
effective time of its creation and the effective time of the contribution of
assets to it described in Section 1.1 above,
12
neither Newco UHS-1 nor Newco Q-1 shall have conducted any business or incurred
any liabilities.
2.4 CAPITALIZATION. The authorized capital stock of each of Valley
and Desert Springs is set forth on Schedule 2.4, together with a list of the
------------
number of shares issued and outstanding and owned of record and beneficially by
each of the shareholders. Except as set forth on Schedule 2.4, there are no
------------
outstanding or authorized rights, warrants, options, subscriptions, agreements
or commitments of any character giving anyone any right to require such Party to
sell or issue any capital stock or other securities, nor are there any voting
trusts or any other agreements or understandings with respect to the voting
common stock of such Party.
2.5 RECORDS. The books, records and work papers of such Party will
be made available to the other Party for inspection prior to the Closing Date
and will contain the minutes of all meetings of directors and of shareholders
and unanimous written consents reflecting all actions taken by the directors or
shareholders without a meeting, have been maintained in accordance with good
business practice and accurately reflect the basis for the financial condition
and results of operations of such Party set forth in the financial statements
referred to in Section 2.6 hereof except to the extent the same would not have a
material adverse effect on it.
2.6 FINANCIAL STATEMENTS. Such Party has furnished true, complete
and correct copies of: (i) with respect to Desert Springs: a) unaudited balance
sheets as of June 30, 1996 and 1997 and related statements of income and
operations for the two years then ended (the "Desert Springs Balance Sheets"),
and b) unaudited balance sheet as of September 30, 1997 and related statements
of income and operations for the three months then ended (the "Desert Springs
Interim Balance Sheet"); and (ii) with respect to Valley: a) unaudited balance
sheets as of December 31, 1995 and 1996 and related statements of income and
operations for the two years then ended (the "Valley Balance Sheets"), and b)
unaudited balance sheet as of September 30, 1997 and related statements of
income and operations for the nine months then ended (the "Valley Interim
Balance Sheet") (the Desert Springs Interim Balance Sheet and the Valley Interim
Balance Sheet are referred to herein as the "Balance Sheets" and the Desert
Springs Balance Sheets, the Desert Springs Interim Balance Sheet, the Valley
Balance Sheets and the Valley Interim Balance Sheet are referred to herein as
the "Financial Statements"). Copies of the Financial Statements are attached
hereto as Schedule 2.6. The Financial Statements of each such Party are in
------------
accordance with the books and records of such Party, are complete and correct in
all material respects, fully and fairly set forth the financial condition of
such Party as of the dates indicated, and the
13
results of its operations for the periods indicated, and have been prepared in
accordance with generally accepted accounting principles consistently applied,
except as otherwise stated therein and except for normal year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Such Party has no
liabilities or obligations of any nature, either accrued, absolute, contingent
or otherwise, which are not reflected or provided for in the Financial
Statements relating to it, except (i) those arising after the date of the
Balance Sheets which are in the ordinary course of business, in each case in
normal amounts and none of which is materially adverse, and (ii) as and to the
extent specifically described in Schedule 2.7 hereof. Except as set forth on
------------
Schedule 2.7, such Party does not know and has no reasonable grounds to know of
------------
any reasonable basis, as of the date hereof, for assertion against it of any
claim or liability of any nature in excess of $25,000 individually or $50,000 in
the aggregate not fully disclosed in the Balance Sheets.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS SINCE THE DATE OF THE
BALANCE SHEETS. Except as otherwise disclosed in Schedule 2.8, since the date
------------
of the Balance Sheets such Party has not, except to the extent the same would
not have a material adverse effect on it:
2.8.1 incurred any obligation or liability (fixed, contingent or
otherwise), except normal trade or business obligations incurred in the ordinary
course of business and consistent with past practice, none of which is
materially adverse, and except in connection with this Agreement and the
transactions contemplated hereby;
2.8.2 discharged or satisfied any lien, security interest or
encumbrance or paid any obligation or liability (fixed, contingent or
otherwise), including intercompany obligations and liabilities except in the
ordinary course of business;
2.8.3 mortgaged, pledged or subjected to any Lien any of its
assets or properties (other than mechanic's, materialman's and similar statutory
liens arising in the ordinary course of business and purchase money security
interests arising as a matter of law between the date of delivery and payment);
2.8.4 sold, assigned, conveyed, transferred, leased or otherwise
disposed of, or agreed to sell, assign, convey, transfer, lease or otherwise
dispose of any of its assets
14
or properties except for a fair consideration in the ordinary course of business
and consistent with past practice or, except in the ordinary course of business
and consistent with past practice, acquired any assets or properties;
2.8.5 canceled or compromised any debt or claim in excess of
$2,500 for any individual debt or claim or $10,000 in the aggregate except
patient account bad debt which is addressed in Section 2.8.14;
2.8.6 waived or released any rights of material value;
2.8.7 made or granted any wage or salary increase applicable to
any group or classification of employees generally except merit increases and
bonuses pursuant to prior personnel practices, entered into any employment
contract with, or made any loan to, or entered into any material transaction of
any other nature with any director, officer or employee, been the subject of any
material labor dispute or, to its knowledge, threat thereof;
2.8.8 entered into any transaction or contract (other than
Immaterial Contracts as defined in Section 2.13.4), except (i) contracts listed
on Schedule 2.8 and (ii) this Agreement and the transactions contemplated
hereby;
2.8.9 suffered any casualty loss or damage (whether or not such
loss or damage shall have been covered by insurance) which affects in any
material respect its ability to conduct business;
2.8.10 authorized or effected any amendment or restatement of its
articles of incorporation or bylaws, or taken any steps looking toward its
dissolution or liquidation;
2.8.11 suffered any material adverse change in its operations,
earnings, assets, liabilities, properties or business or in its condition,
financial or otherwise, other than changes in the general market conditions and
prospects for the Facilities;
2.8.12 made capital expenditures or entered into any commitment
therefore which, in the aggregate, exceed $500,000;
2.8.13 suffered any material adverse change in its relations
with, or any material loss or, to its knowledge, material adverse threatened
loss of any of its material
15
suppliers, managed care contracts, or Medicare or Medicaid contracts;
2.8.14 written off as uncollectible any accounts receivable or
trade notes in excess of reserves; or
2.8.15 introduced any material change with respect to the
operation of its business, including its method of accounting.
2.9 TAXES. Except as set forth in Schedule 2.9, such Party (i) has
------------
duly and timely filed or caused to be filed all federal, state, local and
foreign tax returns and reports of "Taxes" (as hereinafter defined) required to
be filed by it prior to the date of this Agreement which relate to it or with
respect to which it or its assets or properties are liable or otherwise in any
way subject, (ii) has paid or fully accrued for all Taxes, interest, penalties,
assessments and deficiencies shown to be due and payable on such returns and
reports (which Taxes, interest, penalties, assessments and deficiencies are all
the Taxes, interest, penalties, assessments and deficiencies due and payable
under the laws and regulations pursuant to which such returns were filed), and
(iii) has properly accrued for all such Taxes accrued in respect of it or its
assets and properties for periods subsequent to the periods covered by such
returns. Except as set forth in Schedule 2.9, no deficiency in payment of taxes
------------
for any period has been asserted by any taxing body and remains unsettled at the
date of this Agreement. Such Party has made all withholdings of Taxes required
to be made under all applicable United States, state and local tax regulations
and such withholdings have either been paid to the respective governmental
agencies or set aside in accounts for such purpose or accrued, reserved against
and entered upon the books of such Party. As used herein, the term "Tax" or
"Taxes" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Internal Revenue Code
("Code") Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum or estimated tax, assessment, charge, levy or fee
of any kind whatsoever, which are due or alleged to be due to any taxing
authority, whether disputed or not.
2.10 REAL PROPERTY. Except as set forth on Schedule 2.10:
-------------
(a) Schedule 2.10 hereto identifies all interests in real
-------------
property, including land and improvements held by such
16
Party as of the date hereof, together with the nature of such interest. Such
Party owns fee simple title to the tracts of Real Property set forth opposite
its respective name on Schedule 2.10. To the extent that any interest in real
-------------
property set forth thereon is leased or shared, Schedule 2.10 identifies the
-------------
property as leased and describes the lease agreement and sets forth the nature
and proportion of the sharing arrangement;
(b) the Real Property comprises all of the real property
associated with or employed or used in the business of each of the Facilities;
(c) except as set forth in Schedule 2.10(c), to the best
----------------
knowledge of such Party, no part of the Real Property contains, is located
within or abuts any navigable water or other body of water, tideland, wetland,
marshland or any other area which is subject to special state, federal or
municipal regulation, control or protection;
(d) such Real Property adjoins dedicated public roadways and
there is access for motor vehicles from the Real Property to such roadways by
valid public or private easements; and, to the best knowledge of such Party,
there are no conditions existing which could result in the termination or
reduction of the current access from the Real Property to existing roadways;
(e) all essential utilities (including water, sewer, electricity
and telephone service) are available to the Real Property;
(f) to the best knowledge of such Party, the Facilities and the
Real Property and the businesses conducted thereon are in material compliance
with all applicable planning, zoning, land use, public health, fire safety and
building codes and ordinances; the consummation of the transactions contemplated
herein will not result in a violation of any applicable planning, land use,
public health, fire safety, zoning or building code or ordinance, or the
termination of any applicable zoning variances, conditional use permits,
waivers, exemptions or "grandfathering" now existing; and final, permanent and
unconditional certificates of occupancy and/or use have been duly issued by the
applicable governmental authority having jurisdiction for all buildings located
on the Real Property;
(g) such Party has not received actual notice of a violation of
any ordinance or other law, order, regulation or requirement, and has not
received actual notice of condemnation or similar proceedings relating to any
part of the Real Property;
(h) the Real Property of such Party is subject only to the Liens
described in Schedule 2.10(h), and on
----------------
17
the Closing Date will be subject only to the Liens described on Schedule 2.10(h)
---------------
which are not designated therein as "excluded" and any other Liens approved by
the Company in writing on or after the effective date hereof (the "Permitted
Encumbrances");
(i) such Party has not created or may not assert any rights in
respect of any Liens which will interfere with the Company's use of the Real
Property after the Closing Date;
(j) except for those tenants in possession of the Real Property
under contracts described in Schedule 2.10(j), there are no parties in
----------------
possession of, or claiming any possession, adverse or not, to or other interest
in, any portion of Real Property as lessees, tenants at sufferance, trespassers
or otherwise;
(k) no tenant is entitled to any rebate, concession or free rent,
other than as set forth in the contract with such tenant; no commitments have
been made to any tenant for repairs or improvements other than for normal
repairs and maintenance in the future or as set forth in the contract with such
tenant; and no rents due under any of the tenant contracts have been assigned or
hypothecated to, or encumbered by, any person, other than pursuant to the
encumbrances relating to indebtedness to be satisfied on or prior to the Closing
Date, or Permitted Encumbrances, as additional security for the payment thereof;
(l) no part of the Real Property is currently subject to
condemnation, eminent domain or other proceedings for the taking thereof, and to
the best of such Party's knowledge, no condemnation or taking is threatened or
known by such Party to be contemplated; and
(m) the improvements to the Real Property are located entirely
within the boundaries of the Real Property and, to such Party's knowledge, do
not materially violate any building set back lines or materially encroach upon
any easements located on the Real Property.
2.11 TITLE TO PROPERTY AND ASSETS; SUFFICIENCY OF FACILITIES ASSETS.
(a) Such Party has good and marketable title to the Facilities
Assets owned by it (including, without limitation, the properties and assets
reflected in the Balance Sheets except any thereof since disposed of for value
in the ordinary course of business) except for the Permitted Encumbrances, and
none of such properties or assets is, except as disclosed in the Balance Sheets
or the Schedules hereto, subject to a contract of sale not
18
in the ordinary course of business, or, except for Permitted Encumbrances,
subject to any Liens.
(b) Except as described on Schedule 2.11, such Facilities Assets
-------------
constitute, in the aggregate, all the properties and assets necessary for the
operation of such Party's Facilities as currently conducted. The Facilities
Assets, together with the Excluded Assets, comprise all of the following: (i)
all assets owned by such Party, (ii) all assets used in connection with the
Facilities and their related businesses and (iii) all assets owned, used or
operated by any affiliate of such Party located within a fifty (50) mile radius
of Las Vegas, Nevada.
2.12 CONDITION OF PROPERTY. All buildings on the Real Property and
all items of tangible personal property, equipment, fixtures and inventories
included within the assets and properties of such Party or required to be used
in the ordinary course of its business are being contributed and transferred
pursuant to this Agreement on an "as is, where is" basis with no representations
or warranties express or implied as to their physical condition and WITHOUT ANY
WARRANTIES FROM ANY PARTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
2.13 LIST OF CONTRACTS AND OTHER DATA. Schedule 2.13 sets forth the
-------------
following information with respect to the properties and assets of such Party,
other than the Excluded Assets (indicating in each case, where appropriate,
whether or not consent by a third party is required for the transfer of such
properties and assets to the Company):
2.13.1 a description of all real property leased by such Party
and all leases of real property to which such Party is a party;
2.13.2 a list of all personal property owned of record or
beneficially by such Party having a value per item or group of items in excess
of $1,000 and all leases of personal property, licenses, permits, franchises,
concessions, certificates of public convenience or the like to which such Party
is a party;
2.13.3 a list of (i) all United States and foreign patents,
trademarks and trade names, trademark and trade name registrations, service
marks and service ▇▇▇▇ registrations, copyrights and copyright registrations,
unexpired as of the date hereof, all United States and foreign applications
pending on said date for patents, for trademark or trade name registrations, for
service ▇▇▇▇ registrations, or for copyright registrations, and all trademarks,
trade names, service marks, labels and other trade rights in use on said date,
all of the foregoing being
19
owned in whole or in part as noted thereon on said date by such Party, (ii) a
description of all action taken by such Party to protect all tradenames used by
it, and (iii) all licenses granted by or to such Party and all other agreements
to which such Party is a party, which relate in whole or in part to any items of
the categories mentioned in clause (i) above or to any other proprietary rights,
whether owned by such Party or otherwise;
2.13.4 a list of all existing contracts and commitments to which
such Party is a party or by which such Party or any of its respective properties
or assets is bound, except for Immaterial Contracts. "Immaterial Contracts"
shall mean contracts which (i) no party thereto is a physician, physician group
or other referral source to a Facility, and is not a third party payor contract
and is not a real estate lease and (ii) requires payment by any Party to such
---
contract of less than $100,000 per year; and
2.13.5 a list of (i) all collective bargaining agreements,
multi-employer pension plans, employment, consulting and separation agreements,
executive compensation plans, bonus plans, incentive compensation plans,
deferred compensation agreements, employee pension plans or retirement plans,
employee profit sharing plans, employee stock purchase and stock option plans
and hospitalization insurance or other plans or arrangements providing for
benefits for employees or former employees of such Party, and (ii) all
Multiemployer Plans (as defined in ERISA as hereinafter defined) which such
Party maintains or has maintained or to which such Party makes, is required to
make, has made or has been required to make a contribution.
All documents, rights, obligations and commitments referred to in this
Section 2.13 are, to the best knowledge of such Party, valid and enforceable in
accordance with their terms for the period stated therein and there is not under
any of them any existing breach, default, event of default or event which with
the giving of notice or lapse of time, or both, would constitute a default, by
such Party, or, to such Party's knowledge, by any other party thereto, nor,
except as set forth on Schedule 2.13, has any party thereto given notice of or
-------------
made a claim with respect to any breach or default. There are no existing laws,
regulations or decrees, nor to such Party's knowledge are there any proposed
laws, regulations or decrees, which adversely affect any of such documents,
rights, obligations or commitments. Except as set forth on Schedule 2.13, no
-------------
part of the business or operations of such Party is dependent to any material
extent on any patent, trademark, copyright, or license or any assignment thereof
or any secret processes or formulae. Except as set forth on Schedule 2.13, none
-------------
of the rights of such Party under such documents, rights, obligations or
commitments
20
is subject to termination or modification as a result of the transactions
contemplated hereby.
2.14 NO BREACH OR DEFAULT. Such Party is not in default under any
contract to which it is a party or by which it is bound, nor has any event
occurred which, after the giving of notice or the passage of time or both, would
constitute a default under any such contract except as set forth in Schedule
--------
2.14. Such Party has no reason to believe that the parties to such contracts
----
will not fulfill their obligations under such contracts in all material respects
or are threatened with insolvency.
2.15 LABOR CONTROVERSIES. Neither such Party, nor any of its
employees, is a party to any collective bargaining agreement except as included
in Schedule 2.13. There are not any controversies pending or, to the knowledge
-------------
of such Party, threatened between such Party and any of its employees which
might reasonably be expected to materially adversely affect the conduct of its
business, or any unresolved labor union grievances or unfair labor practice or
labor arbitration proceedings pending or, to the knowledge of such Party,
threatened relating to its business, and to the knowledge of such Party, there
are not any further organizational efforts presently being made or threatened
involving any of the employees of such Party. Except as set forth on Schedule
--------
2.15, such Party has not received any notice or claim that it has not complied
----
with any laws relating to the employment of labor, including any provisions
thereof relating to wages, hours, collective bargaining, the payment of social
security and similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that such Party is liable for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing.
No person or Party (including, but not limited to, any governmental
agency) has any claim or basis for any action or proceeding, against a Party,
arising out of any statute, ordinance or regulation relating to wages,
collective bargaining, discrimination in employment or employment practices or
occupational safety and health standards (including, but not limited to, the
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, as amended,
the Occupational Safety and Health Act, or the Age Discrimination in Employment
Act of 1967 or the Americans With Disabilities Act of 1990). Each Party has
complied with all laws and regulations with respect to the determining of
independent contractor or employee status.
2.16 LITIGATION. Except as set forth in Schedule 2.16, there are no
-------------
claims, actions, suits or proceedings or, to the knowledge of such Party,
investigations with respect to such Party, involving claims by or against such
Party which are pending or, to such Party's knowledge, threatened against such
Party, at law or in equity, or before or by any federal, state,
21
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or before the internal grievance mechanisms of such Party. To
such Party's knowledge, no basis for any action, suit or proceeding exists, and
there are no orders, judgments, injunctions or decrees of any court or
governmental agency with respect to which it has been named or to which it is a
party, which directly apply, in whole or in part, to the business of such Party,
or to any of its assets or properties, or which would result in any material
adverse change in its business.
2.17 PATENTS; TRADEMARKS, ETC. No patents, trademarks, trade names,
copyrights, registrations or applications are necessary for the conduct of the
business of such Party as now conducted, other than those listed in Schedule
--------
2.13 hereto. Except as described in Schedule 2.13 hereto, all such patents,
---- -------------
trademarks, trade names, copyrights and registrations are in good standing, are
valid and enforceable and are free from any default on the part of such Party.
Such Party is not a licensor in respect of any patents, trademarks, trade names,
copyrights or registrations or applications therefor. Such Party is not in
violation of any patent, patent license, trade name, trademark, or copyright of
others. No director, officer or employee of such Party owns, directly or
indirectly, in whole or in part, any patents, trademarks, trade names,
copyrights, registrations or applications therefor or interests therein which
such Party has used, is presently using, or the use of which is necessary for
its business as now conducted.
2.18 LICENSES; PERMITS; AUTHORIZATIONS. Schedule 2.18 hereto is a
-------------
schedule of all rights, approvals, authorizations, consents, licenses, orders,
accreditations, franchises, concessions, certificates and permits of all
governmental agencies, whether United States, state or local, and accrediting
bodies, (collectively, the "Licenses") required by the nature of the business
conducted by such Party to permit the continued operation of its business in the
manner in which it was conducted as of the date hereof (indicating in each case,
where appropriate, whether or not the consent by a third party to the transfer
to the Company is required). Such Party has all Licenses required to permit the
operation of its business as presently conducted; such Party's business is and
has been operated in all material respects in compliance therewith and all such
Licenses are in full force and effect and no action or claim is pending, nor to
the knowledge of such Party, is threatened to revoke, terminate or declare
invalid any of the foregoing.
2.19 COMPLIANCE WITH APPLICABLE LAW; ENVIRONMENTAL LAWS.
22
(a) Except as set forth on Schedule 2.19 hereto, the conduct of
-------------
the business of such Party does not (i) violate or infringe any domestic or
foreign laws, statutes, rules or regulations or any material ordinances,
including, without limitation, any of the foregoing that pertain to or regulate
the operation of a hospital, consumer protection, health and safety or
occupational safety matters, or (ii) violate or infringe any right or patent,
trademark, trade name, service ▇▇▇▇, copyright, know-how or other proprietary
right of third parties, the enforcement of which would adversely affect the
business of such Party or the value of its properties or assets.
(b) Neither such Party nor, to the knowledge of such Party, any
of its employees, officers and directors in their capacities as such, have
engaged in any activities which are prohibited under any federal laws, or the
regulations promulgated pursuant to such laws or related state or local laws,
statutes or regulations or which are prohibited by rules of professional
conduct, including but not limited to the following: (i) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (ii) knowingly and willfully
making or causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment; (iii) presenting
or causing to be presented a claim for reimbursement for services under
Medicare, Medicaid or other state health care programs that is for an item or
service that is known or should be known to be (a) not provided as claimed, or
(b) false or fraudulent; (iv) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment; (v) knowingly and willfully
offering, paying, soliciting, or receiving any remuneration (including any
kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in
cash or in kind (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare, Medicaid or other state
health care program, or (b) in return for purchasing, leasing, or ordering or
arranging for or recommending purchasing, leasing, or ordering any good,
facility, service, or item for which payment may be made in whole or in part by
Medicare, Medicaid or other state health care program; (vi) knowingly making a
payment, directly or indirectly, to a physician as an inducement to reduce or
limit necessary services to individuals who are under the direct care of the
physician and who are entitled to benefits under Medicare, Medicaid, or other
state health care programs; (vii) providing to any person information that is
known or should be known to be false or misleading that could reasonably be
expected to influence the decision when to discharge a patient
23
from a Facility; (viii) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a material fact required to be stated
therein or necessary to make the statement contained therein not misleading) of
a material fact with respect to (a) the conditions or operations of a Facility
in order that the Facility may qualify for Medicare, Medicaid or other state
health care program certification, or (b) information required to be provided
under (S) 1124A of the Social Security Act (42 U.S.C. (S) 1320a-3); or (ix)
knowingly and willfully (a) charging for any Medicaid service money or other
consideration at a rate in excess of the rates established by the state, or (b)
charging, soliciting, accepting or receiving, in addition to amounts paid by
Medicaid, any gift money, donation or other consideration (other than a
charitable, religious or other philanthropic contribution from an organization
or from a person unrelated to the patient) (1) as a precondition of admitting
the patient, or (2) as a requirement for the patient's continued stay in the
Facility.
(c) All Licenses currently held by such Party pursuant to the
Environmental Laws are identified in Schedule 2.18.
-------------
(d) Such Party is in compliance in all material respects with all
applicable Environmental Laws except as disclosed in Schedule 2.19.
-------------
(e) In regards to the Facilities and the Real Property, there is
no Environmental Claim pending or, to such Party's knowledge, threatened against
the Facilities or the Real Property or, to such Party's best knowledge after due
inquiry, any other person whose liability for any Environmental Claim such Party
has retained or assumed contractually; to such Party's knowledge, there are no
past or present actions, activities, circumstances, conditions, events or
incidents, including the release, emission, discharge or disposal of any
Materials of Environmental Concern, that could form the basis of any
Environmental Claim against such Party or against any person whose liability for
any Environmental Claim such Party has retained or assumed contractually; and
such Party has not received any written communication, whether from a
governmental authority or otherwise, that alleges that such Party is not in full
compliance with all applicable Environmental Laws.
(f) In regards to the Facilities and the Real Property, without
in any way limiting the generality of the foregoing, (i) all on-site and off-
site locations where such Party has stored, disposed or arranged for the
disposal of Materials of Environmental Concern are identified in Schedule 2.19,
-------------
(ii) all Contracts dealing with the removal, storage,
24
disposal and handling of Materials of Environmental Concern are with properly
licensed and registered vendors, (iii) all underground storage tanks, and the
capacity and contents of such tanks, located on the Real Property are identified
in Schedule 2.19, (iv) except as set forth on Schedule 2.19, there is no
------------- -------------
asbestos contained in or forming part of the Real Property, and (v) except as
set forth on Schedule 2.19, no polychlorinated biphenyls (PCBs) are used or
-------------
stored on the Real Property.
(g) As used herein: (i) "Environmental Claim" means any written
notice by a person alleging potential liability (including potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from, directly or indirectly, the presence, or release
into the environment, of any Materials of Environmental Concern (as defined
below); (ii) "Environmental Laws" means any and all federal, state, local and
foreign laws and regulations (including common law) relating to pollution or
protection of human health or the environment (including ground water, land
surface or subsurface strata), including laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, recycling, reporting
or handling of Materials of Environmental Concern; and (iii) "Materials of
Environmental Concern" means chemicals, pollutants, contaminants, wastes
(including medical waste), toxic substances, polychlorinated biphenyls (PCB's),
ureaformaldehyde, petroleum and petroleum products and such other substances,
materials and wastes which are defined or classified as hazardous or toxic under
any Environmental Laws.
2.20 EMPLOYEE BENEFIT PLANS; EMPLOYEES AND EMPLOYEE RELATIONS.
2.20.1 Attached hereto is an accurate list (Schedule 2.20.1) of
---------------
all "employee welfare benefit plans" and "employee pension benefit plans"
(collectively, "Qualified Plans"), as such terms are defined by the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), and any other
group employee benefit plan, agreement, arrangement or understanding maintained
for the benefit of such Party (the Qualified Plans, together with such other
plans, arrangements and understandings, collectively, the "Employee Benefit
Plans"). To the extent available, complete and genuine copies of the summary
plan descriptions have been provided to the other Party, which summary plan
descriptions accurately summarize the material provisions of the Employee
Benefit Plans. Neither such Party nor any other members of the Controlled Group
of Corporations (as defined in Section 1563 of the Code) that includes such
Party
25
contributes to, ever has contributed to, or ever has been required to contribute
to any Multiemployer Plan (as defined in Section 3(37) of ERISA) or has any
liability (including withdrawal liability) under any Multiemployer Plan. There
is no lien, encumbrance or claim of any type on the Facilities Assets or against
such Party with respect to the Employee Benefit Plans, and such Party has not
taken any action, or omitted to take any action, with respect to the Employee
Benefit Plans (or has any knowledge of the same) that would or could be expected
to result in a Lien on the Facilities Assets or against such Party.
2.20.2 Schedule 2.20.2 sets forth a complete list (as of the
---------------
date set forth therein) of names, positions, current annual salaries or wage
rates, and bonus and other compensation arrangements of all full-time and part-
time employees of such Party.
2.21 ADVERSE AGREEMENTS; NO ADVERSE CHANGE.
(a) Such Party is not a party to or subject to any agreement or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or rule specifically naming such Party
which adversely affects the business, operations, properties, assets or
conditions, financial or otherwise, of such Party.
(b) To the best of such Party's knowledge there has not been any
material adverse change in, or development materially adversely affecting the
business, assets, financial position or results of operations of any of such
Party since the Balance Sheet date.
2.22 TRADE NOTES AND ACCOUNTS RECEIVABLE; TRADE ACCOUNTS PAYABLE;
PREPAID CONTRACTS.
(a) Except as set forth on Schedule 2.22 hereto, the trade notes
-------------
and accounts receivable of such Party are reflected on the Balance Sheets and
all trade notes and accounts receivable arising thereafter and prior to the
Closing Date arose and will arise from bona fide transactions in the ordinary
course of business of such Party, and are (except for normal claims and
allowances which are consistent with past experience of such Party and which in
the aggregate are not material) current, arose in the usual and ordinary course
of business of such Party from arms-length transactions, are not subject to any
defenses, counterclaims or set-offs which would materially adversely affect such
trade notes and accounts receivable, and, to such Party's knowledge, are fully
collectible, less the applicable allowance for doubtful accounts. Such Party has
fully performed all obligations with respect to such trade notes and accounts
26
receivable which it was obligated to perform prior to the date hereof and
Schedule 2.22 sets forth an aging schedule, as of December 31, 1997, or
-------------
thereafter, for all such trade notes and accounts receivable.
(b) The trade accounts payable of such Party reflected on the
Balance Sheets and all trade accounts payable arising thereafter and prior to
the Closing Date arose and will arise from bona fide transactions in the
ordinary course of business of such Party and were paid or are not yet due and
payable.
(c) Schedule 2.22 hereto sets forth the amounts and dates of all
-------------
payments (the "Prepayments") received by such Party which relate to services to
be performed by such Party subsequent to the Closing Date, including, without
limitation, all such payments expressly authorized to be made in advance by any
of the terms of any contract or agreement with such Party.
2.23 INVENTORIES AND SUPPLIES. All inventories and supplies of such
Party, whether or not reflected in the Balance Sheets, consist of a quality and
quantity useable and salable in the ordinary course of business, without
discount or reduction, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Balance Sheets. All inventories and supplies not written off are
valued at the lower of cost (applied on a first in, first out basis) or market
in accordance with generally accepted accounting principles. The present
quantities of inventory and supplies are not excessive and are reasonable and
consistent with the past inventory and supply practices of such Party.
2.24 ILLEGAL PAYMENTS. Such Party has not, nor to the knowledge of
such Party, has any of its respective directors or officers, in their capacity
as such, either directly or indirectly, made any illegal payments to, or
provided any illegal benefit or inducement for, any person pursuant to an action
illegal under any federal, state or local law.
2.25 INSURANCE POLICIES. (a) Schedule 2.25 contains a correct and
-------------
complete description of all insurance policies of such Party covering such Party
and its employees, agents and assets. Each such policy is in full force and
effect and, to the knowledge of such Party, is reasonably adequate in coverage
and amount to insure against customarily insured risks to which such Party and
its employees, businesses, properties and other assets may likely be exposed in
the operation of its business. All premiums with respect to such insurance
policies have been paid on a timely basis, and no notice of cancellation or
termination has been received with respect to any such policy. To the knowledge
of such Party, and except as set forth on Schedule
--------
27
2.25, there are no pending claims against such insurance by such Party as to
----
which the insurers have denied coverage or otherwise reserved rights. Since
January 1, 1994, such Party has not been refused any insurance with respect to
its assets or operations, nor has its coverage been limited by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance.
(b) Schedule 2.25 contains a correct and complete description of
-------------
all insurance policies of such Party covering the Real Property. Each such
policy is in full force and effect and, to the knowledge of such Party, is
reasonably adequate in coverage and amount to insure against customarily insured
risks with respect to property of this type. All premiums with respect to such
insurance policies have been paid on a timely basis, and no notice of
cancellation or termination has been received with respect to any such policy.
Except as set forth on Schedule 2.25, there are no pending claims against such
-------------
insurance by such Party as to which the insurers have denied coverage or
otherwise reserved rights.
2.26 PROFESSIONAL STAFF, MEDICARE, MEDICAID AND OTHER HEALTH CARE
PROGRAMS.
(a) The professional licensed provider staff of each of the
Facilities consists of the persons whose names and status are set forth on
Schedule 2.26(a) hereto.
---------------
(b) Except as set forth on Schedule 2.26(b) hereto, such Party
----------------
is certified for participation in the Medicare and Nevada Medical Assistance
("Medicaid") programs, and has a current and valid provider contract with such
programs.
(c) Except as set forth on Schedule 2.26(c) hereto, such Party
----------------
has timely filed or caused to be timely filed all cost reports and other reports
of every kind whatsoever required by any governmental or other entity to be made
by it with respect to the purchase of services by third-party purchasers,
including but not limited to Medicare and Medicaid programs and other insurance
carriers, and all such reports are complete and accurate in all material
respects. Such Party has paid or caused to be paid all refunds, discounts or
adjustments which have become due in accordance with said reports as filed and,
except as set forth on Schedule 2.26(c), have not been notified that there is
----------------
any further liability now due (whether or not disclosed in any report heretofore
or hereafter made) for any such refund, discount or adjustment, or any interest
or penalties accruing with respect thereto. Such Party has delivered to the
other Party complete copies of all of its Medicare and Medicaid cost reports
submitted by such Party for the two most recent fiscal years.
28
(d) To the knowledge of such Party, such Party and its officers,
directors, employees or agents (acting in their capacities as such), have not
engaged in any activities which (i) could subject such Party or person to
sanctions under 42 U.S.C. (S) 1320a-7 (other than subparagraph (b)(7) thereof)
or (ii) at the time such activities were engaged in were known or reasonably
could have been known to be prohibited under Federal Medicare and Medicaid
statutes, 42 U.S.C. (S) (S) 1320a-7a and 1320a-7b, or the regulations
promulgated pursuant to such statutes or related state or local statutes or
regulations or which are prohibited by rules of professional conduct.
2.27 FACILITY SURVEYS. True and complete copies of any and all
licensure survey reports and any and all Medicare and/or Medicaid and JCAHO or
other accreditation survey reports issued within the 24-month period preceding
the execution of this Agreement with respect to each Facility for which surveys
are conducted by the appropriate state or Federal agencies having jurisdiction
thereof and JCAHO or accreditation bodies have been furnished to the other
Party, along with true and complete copies of any and all plans of correction
which the agencies required to be submitted in response to said survey reports.
2.28 RELATED PARTY TRANSACTIONS. To the knowledge of such Party,
except as set forth in Schedule 2.28, and except for compensation to employees
-------------
for services rendered, no current director or officer of such Party or any
affiliate thereof is presently, or during the last fiscal year has been, (a) a
party to any material transaction with such Facility (including, but not limited
to, any contract or other arrangement providing for the furnishing of service
by, or rental of real or personal property from, or otherwise requiring payments
to, any such director, officer, or shareholder, or (b) the direct or indirect
owner of any interest in any person which is a present competitor, supplier or
customer of such Party with respect to the business, nor does any such person
receive income from any source other than such Party which should properly
accrue to such Party.
2.29 NO BROKERS. Such Party has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company following the Merger or any other Party to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby, and such Party is not aware of any
claim or basis for any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
29
2.30 NO MISREPRESENTATION OR OMISSION. No representation or warranty
by such Party in this Article 2 or in any other Article or Section of this
Agreement, or in any certificate or other document furnished or to be furnished
by or on behalf of such Party pursuant hereto, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained therein not misleading.
3. [ARTICLE 3 INTENTIONALLY OMITTED.]
4. COVENANTS OF THE PARTIES.
4.1 ACCESS TO FACILITIES AND ADDITIONAL INFORMATION.
4.1.1 From the date hereof until the Closing Date, the Parties
shall provide, and cause their respective agents (including counsel and
accountants) to provide to one another reasonable access to and the right to
inspect the Facilities Assets and their respective books and records pertaining
to the Facilities Assets, and will furnish and cause to be furnished to one
another all material information concerning their respective businesses not
otherwise disclosed pursuant to this Agreement, and such additional financial,
operating and other data and information regarding themselves, their respective
businesses and the Facilities Assets as either of them may from time to time
reasonably request, without regard to where such information may be located.
4.1.2 Promptly after the execution of this Agreement, each Party
shall deliver to one another, to the extent not already delivered, copies of all
title insurance policies and binders in the possession of either Party for any
of the Real Property and copies of all surveys of any of the Real Property in
the possession of either Party.
4.2 OPERATIONS. From the date hereof until the Closing Date and
except as otherwise expressly provided in this Agreement, each of Desert Springs
and Valley will:
(a) carry on its business in substantially the same manner as
heretofore and not make any material change in its personnel, operations,
finances, accounting policies, or real or personal property;
(b) maintain the Facilities Assets and all parts thereof in their
current condition, ordinary wear and tear excepted;
30
(c) perform all of its obligations relating to or affecting the
Facilities Assets or the business of its Facility;
(d) use their reasonable efforts to obtain appropriate releases,
consents, estoppels and other instruments as the other Party may reasonably
request;
(e) keep in full force and effect present insurance policies or
other comparable insurance and maintain sufficient liquid reserves to meet all
deductible, self-insurance and copayment requirements under present insurance
policies;
(f) maintain and preserve its business organizations and
operations intact, deal with the present employees at its Facility in a manner
consistent with its existing personnel policies; maintain its relationships with
physicians, suppliers and other persons having business relations with it; and
cooperate with the other Party by taking such actions as are reasonably
necessary to facilitate the smooth, efficient and successful transition to the
Company following the Merger of such business organizations and operations and
employee and other relations; and
(g) permit and allow reasonable access by the other Party to
discuss post-closing employment with any of its personnel and to establish
relationships with physicians, suppliers and others having business relations
with it.
4.3 NEGATIVE COVENANTS. From the date hereof until the Closing Date,
except as otherwise expressly permitted by this Agreement or without the prior
written consent of one another, none of Desert Springs or Valley will:
(a) amend or terminate any of the Assumed Contracts, enter into
any contract or agreement or incur or agree to incur any liability, except in
the ordinary and regular course of business, and in no event that requires the
payment by such entity prior to the Closing Date or the Company following the
Merger of an amount greater than twenty-five thousand dollars ($25,000) per
contract or agreement, or that is not terminable without cause or penalty within
thirty (30) days following the Closing Date;
(b) make offers to any of its employees for employment with it
after the Closing Date;
(c) increase compensation payable or to become payable to, make
a bonus payment to, or otherwise enter into one or more bonus agreements with,
any of its employees or agents, except in the ordinary and regular course of
business in accordance with existing personnel policies;
31
(d) create, assume or permit to exist any new Lien upon any of
the Facilities Assets other than purchase money liens arising in the ordinary
course of business;
(e) sell, assign, transfer, distribute or otherwise dispose of
any property, plant or equipment, except in the ordinary and regular business of
the Facilities with comparable replacement thereof;
(f) take any action outside the ordinary and regular course of
business;
(g) take any action relating to its liquidation or dissolution;
or
(h) create, incur, assume, guarantee or otherwise become liable
for, cancel, pay, agree to cancel or pay, provide for a complete or partial
discharge in advance of a scheduled payment date with respect to, or waive any
right to receive any direct or indirect payment or other benefit under, any
liability except in the ordinary and regular course of business and in an amount
not exceeding $25,000 individually or $50,000 in the aggregate.
4.4 GOVERNMENTAL APPROVALS. From the date hereof until the Closing
Date, each Party shall (a) promptly apply for and use its reasonable best
efforts to obtain prior to the Closing Date all consents, approvals,
authorizations and clearances of governmental and regulatory authorities
required of it to consummate the transactions contemplated hereby, (b) provide
such information and communications to governmental and regulatory authorities
as such authorities may reasonably request, and (c) assist and cooperate with
the other Party to obtain all consents, licenses, permits, approvals,
authorizations and clearances of governmental and regulatory authorities that
the other Party reasonably deems necessary or appropriate, and to prepare any
document or other information required of the Company following the Merger by
any such authorities, in order to consummate the transactions contemplated
herein.
4.5 INSURANCE RATINGS. From the date hereof until the Closing Date,
each Party will take all action reasonably requested by the other Party to
enable the Company following the Merger to succeed to the worker's compensation
and unemployment insurance ratings of each Party with respect to its Facility
for insurance purposes. The Company shall not be obligated to succeed to any
such rating except as it may elect to do so.
4.6 EMPLOYEES; EMPLOYEE BENEFIT PLANS. Each Party shall retain all
liabilities and obligations for all benefits
32
under the Employee Benefit Plans, regardless of whether any such liabilities and
obligations are disclosed on the Balance Sheets (including, without limitation,
any and all workers' compensation, health, disability or other benefits due to
or for the benefit of any employees of such Party or their covered dependents)
with the exception of vacation, sick leave, paid time off and the like, and
COBRA, all of which will be assumed by the Company. As of the Closing Date, each
Party shall terminate the participation of all employees in any Employee Pension
Benefit Plan in which any of such Party's employees participates, and provide
for distributions pursuant to the terms of the plans, ERISA and the Code.
4.7 FURTHER ACTS AND ASSURANCES. At any time and from time to time
at and after the Closing, upon request of the Company, each Party shall do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged
and delivered, such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, confirmations and assurances as the Company may reasonably
request to more effectively convey, assign and transfer to and vest in the
Company, full legal right, title and interest in and actual possession of the
Facilities Assets and the business of the Parties, to confirm each Party's
capacity and ability to perform its post-closing covenants and agreements under
this Agreement, and to generally carry out the purposes and intent of this
Agreement. Each Party shall also furnish the Company with such information and
documents in its possession or under its control, or which such Party can
execute or cause to be executed, as will enable the Company to prosecute any and
all petitions, applications, claims and demands by or against third parties
relating to or constituting a part of the Facilities Assets and the business of
the Parties. After the Closing Date, the Parties shall promptly remit to the
Company any payments received by such Party with respect to any accounts
receivable or other amounts sold to the Company; and similarly, after the
Closing Date the Company shall promptly remit to a Party any payments received
by the Company with respect to accounts receivable or other amounts retained by
such Party. Any funds so collected will be remitted within five (5) days
following receipt of such payment.
4.8 ▇▇▇▇▇▇▇▇▇ TRANSACTION. Simultaneous with the contribution of the
Facilities Assets to Newco UHS-1 pursuant to this Agreement, (i) ▇▇▇▇▇▇▇▇▇
Hospital Medical Center, L.P. ("▇▇▇▇▇▇▇▇▇") shall contribute, convey, assign,
transfer and deliver to ▇▇▇▇▇▇▇▇▇ Hospital Medical Center LLC, a limited
liability company ("Newco UHS-2") created by ▇▇▇▇▇▇▇▇▇ pursuant to the LLC Act
those assets and properties of ▇▇▇▇▇▇▇▇▇ which are in the nature of the
Facilities Assets (but excluding its assets and properties which are in the
nature of Excluded Assets) and (ii) Newco UHS-2 shall assume and agree to pay,
perform and
33
discharge the liabilities and obligations of ▇▇▇▇▇▇▇▇▇ which are in the nature
of Assumed Liabilities. Simultaneous with the consummation of the Merger,
▇▇▇▇▇▇▇▇▇ shall sell to Desert Springs and Desert Springs shall acquire a
twenty-six and 115/1000 percent (26.115%) interest in Newco UHS-2 upon terms and
conditions mutually acceptable to Valley, ▇▇▇▇▇▇▇▇▇ and Desert Springs, and
▇▇▇▇▇▇▇▇▇ thereafter shall own a seventy-three and 885/1000 percent (73.885%)
interest in Newco UHS-2.
4.9 ADDITIONAL PROPERTIES AND ASSETS. On or prior to the Closing
Date, Valley shall cause the entities listed on Schedule 4.9, all of which
------------
Valley represents are its affiliates, to convey to Valley or Newco UHS-1, or
contribute to the Company, the properties and assets listed on Schedule 4.9. If
------------
such properties and assets are conveyed to Valley such properties and assets
shall constitute UHS Facilities and shall be contributed by Valley to Newco UHS-
1 pursuant to the terms of this Agreement as if they had been contributed prior
to execution hereof. Any representations, warranties, and covenants (including
liabilities not assumed) which reference knowledge, receipt of notice, or a
phrase of similar import, shall also include knowledge, notice or phrase of
similar import of such affiliate of Valley and any references in Section 1.7 and
Sections 2.7 to 2.30 to Valley as a Party shall include such affiliate of
Valley.
5. MATTERS PERTAINING TO THE COMPANY.
5.1 EMPLOYEE MATTERS. Subject to the exclusions set forth in this
Section, the Parties will cause the Company to offer to employ as of the Closing
Date, on an at-will basis (subject to any existing union contracts), all
employees working at the Facilities immediately prior to the Closing Date
(including those on leave) so that the Parties may avoid the imposition of any
liability under the WARN Act and the Company shall pay all liability of the
Parties under the WARN Act resulting from the Company's failure to do so. For
the employees who accept the Company's offer of employment, the Company shall
recognize the employee's length of service with the Parties for vesting and
benefits eligibility purposes under the Company's employee benefit programs.
Notwithstanding the foregoing, the Company shall have no obligation to offer
employment to, except as required under any union contract, (i) those employees
who are "part-time employees" (as defined in the WARN Act) and (ii) those
employees who voluntarily elect to leave the employment of any Party.
5.2 FURTHER ACTS AND ASSURANCES. At any time and from time to time
at and after the Closing Date, the Parties shall cause the Company to execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered such further
34
acts, deeds, assignments, transfers, conveyances, powers of attorney,
confirmations and assurances as the Parties may reasonably request to confirm
the capacity and ability of the Company to perform those acts relating to the
post-closing covenants and agreements of the Parties (with respect to causing
the Company to perform such acts) under this Agreement, and to generally carry
out the purposes and intent of this Agreement. The Parties shall cause the
Company to furnish the Parties with such information and documents in its
possession or under its control, or which it can execute or cause to be
executed, as will enable the Parties to prosecute any and all petitions,
applications, claims and demands by or against third parties relating to or
constituting a part of the Facilities Assets and the business of the Facilities
for which any Party is liable hereunder or relating to Government Reimbursement
Programs.
6. CONDITIONS OF CLOSING.
6.1 CONDITIONS OF CLOSING. The obligations of the Parties to
contribute the Facilities Assets and cause the Merger to be consummated shall be
subject to and conditioned upon the satisfaction at the Closing Date of each of
the following conditions (it being understood and agreed that (i) the conditions
to the benefit of Valley are solely with respect to Quorum Facilities and Desert
Springs and not with respect to itself or its Facilities and (ii) the conditions
to the benefit of Desert Springs are solely with respect to UHS Facilities and
Valley and not with respect to itself or its Facilities):
6.1.1 All representations and warranties of the Parties
contained in this Agreement and the Schedules hereto shall be true and correct
in all material respects at and as of the Closing Date, the Parties shall have
performed in all material respects all agreements and covenants and satisfied
all conditions on their part to be performed or satisfied by the Closing Date
pursuant to the terms of this Agreement, and each Party shall have received a
certificate of the other Party dated the Closing Date to such effect.
6.1.2 Except as caused solely by any change in the relevant
market conditions and prospects, for which the other Party shall assume all
risk, there shall have been no material adverse change since the date of the
Balance Sheets in the financial condition, business or affairs of each Party;
and each Party shall not have suffered any material loss (whether or not
insured) by reason of physical damage caused by fire, earthquake, accident or
other calamity which substantially affects the value of its assets, properties
or business the insurance proceeds related to which are not, in the reasonable
opinion of the other Party, adequate to repair such damage and compensate for
any lost
35
business related thereto. Each Party shall have received a certificate of the
other Party dated the Closing Date that the statements set forth in this Section
6.1.2 are true and correct.
6.1.3 Each Party shall have delivered to the other Party a
Certificate of the Secretary of State (or other authorized officer) of the State
of its jurisdiction of incorporation, and certifying as of a date reasonably
close to the Closing Date that such Party has filed all required reports, paid
all required fees and taxes, and is, as of such date, in good standing and
authorized to transact business as a domestic corporation.
6.1.4 Each Party shall have delivered to the other Party a
certificate of its corporate Secretary certifying:
(i) The Resolutions of its Board of Directors
authorizing the execution, performance and delivery of this Agreement and the
execution, performance and delivery of all agreements, documents and
transactions contemplated hereby;
(ii) The incumbency of its officers executing this
Agreement and all agreements and documents contemplated hereby; and
(iii) That the Articles of Incorporation and Bylaws of
such Party attached to such certificate are complete and correct and in effect
as of the date of such certification.
6.1.5 Each Party shall have received from counsel for the other
Party (which may be house counsel), an opinion, dated the Closing Date,
satisfactory to such party in the form attached hereto as Exhibit B.
---------
6.1.6 All material authorizations, consents, waivers, approvals,
orders, registrations, qualifications, designations, declarations, filings or
other actions required with or from any governmental entity (including without
limitation receipt of licenses (or commitments to issue licenses) to own and
operate the Facilities and for the Company following the Merger to conduct the
businesses of the Parties as currently conducted) in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly obtained and shall be
reasonably satisfactory to the Parties, and copies thereof shall be delivered to
the Parties prior to the Closing Date.
6.1.7 On the Closing Date, no injunction or order shall be in
effect prohibiting consummation of the transactions contemplated hereby or which
would make the consummation of such
36
transactions unlawful and no action or proceeding shall have been instituted and
remain pending before a governmental entity to restrain or prohibit the
transactions contemplated by this Agreement and no adverse decision shall have
been made by any such governmental entity which is reasonably likely to
materially adversely affect the Company, the Parties, Newco UHS-1, Newco Q-1 or
the Facilities Assets. No federal, state or local statute, rule or regulation
shall have been enacted the effect of which would be to prohibit, materially
restrict, impair or delay the consummation of the transactions contemplated
hereby or materially restrict or impair the ability of the Company following the
Merger to own the Facilities Assets or to conduct the businesses relating
thereto.
6.1.8 The Parties' receipt of standard ALTA or CLTA fee owner's
title insurance policies using the current ALTA or CLTA form(the "Title
Policies") insuring title (at standard market rates for fee simple or leasehold
title) to each parcel of Real Property in the Company, as fee owner, or with
respect to the ▇▇▇▇▇ Property and the Capstone Property identified on Schedule
--------
2.13, as leasehold owner, as the case may be, subject only to the Permitted
----
Encumbrances, in the aggregate amount of $50,000,000 for Valley and $44,300,000
for Desert Springs, and issued by a national title insurance company (the "Title
Company"). The Title Policies shall be issued with all standard or general
printed exceptions (other than the survey exceptions) deleted and will contain a
so-called "non-imputation" endorsement and such additional endorsements as the
Parties may reasonably require.
6.1.9 Execution and delivery by the Parties of the Instruments
of Conveyance set forth in Section 1.4.
6.1.10 Execution and delivery by the Company and the parties
thereto of the Management Agreement in substantially the form attached hereto as
Exhibit C (the "Management Agreement").
---------
6.1.12 Execution and delivery by the Company and the Parties of
the Operating Agreement in substantially the form attached hereto as Exhibit D
---------
(the "Operating Agreement").
37
6.1.13 The Company's receipt of current as-built surveys of
the Real Property, and the ▇▇▇▇▇ Property and the Capstone Property described on
Schedule 2.13, prepared and certified by a registered surveyor licensed in the
-------------
State of Nevada (the "Surveys"). The Surveys shall be in form and substance
mutually satisfactory to the Parties.
6.1.14 Execution and delivery by Valley, Universal Health
Services, Inc. and the Company of the ▇▇▇▇▇▇▇▇ Sublease in substantially the
form attached hereto as Exhibit E (the "▇▇▇▇▇▇▇▇ Sublease").
6.1.15 Execution and delivery by Valley, ▇▇▇▇▇▇▇▇▇ and
Universal Health Services, Inc. of the Survey Agreement in substantially the
form attached hereto as Exhibit F (the "Survey Agreement").
7. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
7.1 EVENTS OF DEFAULT. A breach as a result of the failure of a Party
to perform any of its agreements, covenants and obligations under this
Agreement, shall be considered a default hereunder giving rise to the
indemnification set forth in Section 7.3 hereof.
7.2 SURVIVAL OF REPRESENTATIONS, ETC. All representations and
warranties made by the Parties in this Agreement or in any exhibit, schedules or
certificates hereof or in connection with the transactions contemplated hereby
shall terminate at the Closing Date, and thereafter be of no further force or
effect and no action or cause of action on account thereof shall survive. All
other agreements, covenants and obligations of the Parties in this Agreement or
in any exhibit,
38
schedules, certificate, document or instrument delivered pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
and the remedies of the Parties with respect thereto, shall survive the closing
of the transactions contemplated by this Agreement.
7.3 INDEMNIFICATION. From and after the Closing Date, each Party, as
the case may be (an "Indemnifying Party"), severally and not jointly, shall
indemnify and hold the other Party and the Company, as the case may be, and
their respective affiliates, agents and representatives (an "Indemnified
Party"), harmless from and against any and all claims, losses, expenses, damages
or liabilities arising out of or relating to any of the following: (i) any
breach, violation or nonperformance of a covenant, agreement or obligation to be
performed hereunder on the part of any Indemnifying Party; (ii) any claims
against, or liabilities or obligations of an Indemnifying Party not specifically
assumed by an Indemnified Party pursuant to this Agreement; or (iii) any
actions, judgments, costs and expenses (including reasonable attorneys' fees and
all other expenses incurred in investigating, preparing or defending any
litigation or proceedings, commenced or threatened) incident to any of the
foregoing or the enforcement of this Section. In addition to the foregoing,
following the Merger the Parties shall cause the Company to indemnify and hold
the Parties and their affiliates harmless from and against any and all claims,
losses, expenses, damages or liabilities arising out of or relating to the
Company's assumption of the Assumed Liabilities and any actions, judgments,
39
costs and expenses (including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing or defending any litigation or proceedings,
commenced or threatened) incident to the foregoing. Any indemnification payment
pursuant to the foregoing shall include interest at a floating rate equal to the
prime rate of Citibank N.A., from time to time, from the date the Indemnified
Party provides the Indemnifying Party notice of the loss, cost, expenses or
damages until the date of payment.
7.4 REPRESENTATION, COOPERATION AND SETTLEMENT. (a) An Indemnified
Party agrees to give prompt written notice to an Indemnifying Party of any claim
against it which might give rise to a claim by such Indemnified Party based on
the indemnity agreement contained in Section 7.3 hereof, stating the nature and
basis of the first-mentioned claim and the amount thereof; provided, that the
failure of the Indemnified Party to give the Indemnifying Party prompt notice
shall not relieve the Indemnifying Party of any of its obligations hereunder,
but may create a cause of action for breach for damages directly attributable to
such delay.
(b) The Indemnifying Party shall have full responsibility and
authority with respect to the payment, settlement, compromise or other
disposition of any third party dispute, action, suit or proceeding subject to
indemnification by such Indemnifying Party hereunder, including, without
limitation, the right to conduct and control all negotiations with respect to
the settlement, compromise or other disposition thereof, and the Indemnified
Party agrees to cooperate with the Indemnifying Party in any reasonable manner
requested by the Indemnifying Party in connection with any such negotiations.
The Indemnified Party shall have the right, without prejudice to the
Indemnifying Party's rights under this Agreement, at the Indemnified Party's
sole expense, to be represented by counsel of its own choosing and with whom
counsel for the Indemnifying Party shall confer in connection with the defense
of any such action, suit or proceeding. The Parties agree to render to each
other such assistance as may reasonably be requested in order to insure the
proper and adequate defense of any such action, suit or proceeding.
Notwithstanding the foregoing, the Indemnifying Party may compromise and settle
any claim, action, or suit to which it must indemnify an Indemnified Party
hereunder, provided that it gives the Indemnified Party advance notice of any
proposed compromise or settlement and shall obtain the consent of the
Indemnified Party to such proposed compromise or settlement, which consent shall
not be unreasonably withheld.
8. TRANSACTIONS SUBSEQUENT TO THE CLOSING DATE
8.1 ACCESS TO RECORDS. From time to time after the Closing Date,
upon the request of the Company, each Party will provide the Company with
reasonable access to any records, documents and data relating to the Facilities
Assets or any of the Parties
40
retained by any of the Parties wherever located. From time to time after the
Closing Date, upon the request of either Party, the other Party shall cause the
Company to make available to the requesting Party any records, documents and
data relating to the Facilities Assets acquired by the Company as needed for any
lawful purpose (including such Party's inspection and copying of the same), and
each Party shall have the same rights of access to inspect and copy that such
Party had prior to the Closing Date; provided, however, that any records,
documents and data pertaining to a particular Facility delivered to or made
available to such Party and its representatives will be treated as strictly
confidential by such Party and its representatives, will not be directly or
indirectly divulged, disclosed or communicated to any other person other than
such Party and its representatives who are reasonably required to have access to
such information (unless such Party is compelled to disclose the same by
judicial or administrative process), and will be returned to the Company when
such Party's use therefor has terminated. The Parties shall cause the Company to
instruct the appropriate employees of the Facilities to cooperate in providing
access to such records to the Parties and their authorized representatives as
contemplated herein. Access to such records shall be, wherever reasonably
possible, during normal business hours, with reasonable prior written notice to
the Company of the time when such access shall be needed. The Parties shall
cause the Company to provide sufficient office space to such requesting Party
without charge to conduct the activities described herein. The Parties'
employees, representatives and agents shall conduct themselves in such a manner
so that the Company's normal business activities shall not be unduly or
unnecessarily disrupted. For a period of seven (7) years following the Closing
Date, neither of the Parties shall, and each of the Parties shall cause the
Company not to, discard, destroy or otherwise dispose of records, documents and
data relating to the Facilities Assets or the Parties without first making such
records, documents and data available to the other Party for inspection and
copying. The Parties shall cause the Company to retain the records, documents
and data pertaining to a particular Facility at such Facility (or at such other
locations as the Company and the Parties shall determine by their mutual
agreement from time to time) at the Company's cost, until the expiration of
seven (7) years from the Closing Date.
8.2 LITIGATION COOPERATION. After the Closing Date, upon prior
reasonable written request, each Party shall cooperate with the other and with
the Company, at the requesting Party's expense (but including only out-of-pocket
expenses to third parties and not the costs incurred by any Party for the wages
or other benefits paid to its officers, directors or employees), in furnishing
information, testimony and other assistance in connection with any actions, tax
or cost report audits, proceedings, arrangements or disputes involving any of
the Parties hereto (other than in connection with disputes between the Parties
hereto) and based upon contracts,
41
arrangements or acts of any Party or any of their respective affiliates which
were in effect or occurred on or prior to the Closing Date and which related to
the Facilities Assets, including, without limitation, arranging discussions
with, and the calling as witnesses of, officers, directors, employees, agents
and representatives of the Company.
9. TERMINATION.
9.1 METHODS OF TERMINATION. The transactions contemplated herein may
be terminated at any time before or after approval thereof by the Parties, but
not later than the Closing Date:
(i) By mutual consent of the Parties; or
(ii) by a Party after March 1, 1998 if any of the conditions in
Section 6.1 to the benefit of such Party shall not have been met or waived in
writing prior to such date.
9.2 PROCEDURE UPON TERMINATION. In the event of termination pursuant
to Section 9.1 hereof, written notice thereof shall forthwith be given to the
other Party and the transactions contemplated by this Agreement shall be
terminated, without further action by any party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(i) Each Party will redeliver all documents, work papers and
other material of the other Party relating to the transactions contemplated
hereby, whether so obtained before or after the execution of this Agreement, to
the Party furnishing the same; and
(ii) No Party shall have any liability or further obligation to
the other Party to this Agreement other than the confidentiality obligations set
forth in Section 10.6 hereof.
10. MISCELLANEOUS.
10.1 NOTICE. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or mailed by
certified or registered mail, return receipt requested, addressed as follows:
IF TO VALLEY: Universal Health Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Vice President
42
COPIES TO: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
General Counsel
Universal Health Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
AND
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
A Professional Corporation
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
IF TO DESERT SPRINGS:
Quorum Health Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President/General Counsel
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
COPIES TO: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇, Esquire
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ & Manner, P.C.
1800 First American Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
IF TO THE
COMPANY: Valley Health System LLC
c/o Quorum Health Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President/General Counsel
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
and
Valley Health System LLC
c/o Universal Health Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Box 61558
King of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. Vice President
43
(or to such other address as any Party or the Company,
as the case may be, shall specify by written notice so given), and shall be
deemed to have been duly delivered: (a) if delivered personally or sent by
facsimile, on the date received and (b) if delivered by overnight courier, on
the day after mailing.
10.2 EXECUTION OF ADDITIONAL DOCUMENTS. The Parties will at any
time, and from time to time after the Closing Date, upon request of the other
Party, execute, acknowledge and deliver all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may be
required to carry out the intent of this Agreement and to transfer and vest
title to any Facilities Assets being transferred hereunder, and to protect the
right, title and interest in and enjoyment of all of the Facilities Assets
granted, assigned, transferred, delivered and conveyed pursuant to this
Agreement with all costs being borne by the Company; provided, however, that
this Agreement shall be effective regardless of whether any such additional
documents are executed.
10.3 WAIVERS AND AMENDMENT.
(a) Each Party may, by written notice to each other Party
executed by a properly authorized officer, (i) extend the time for the
performance of any of the obligations or other actions of the other; (ii) waive
any inaccuracies in the representations or warranties of the other contained in
this Agreement; (iii) waive compliance with any of the covenants of the other
contained in this Agreement; and (iv) waive or modify performance of any of the
obligations of the other.
(b) This Agreement may be amended, modified or supplemented only
by a written instrument executed by all the Parties. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any Party, shall be
deemed to constitute a waiver by the Party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. The
waiver by any Party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
10.4 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, each Party shall pay the fees and expenses of their
respective counsel, accountants, other experts and all other expenses incurred
by them incident to the negotiation, preparation and execution of this Agreement
and the performance by them of their obligations hereunder.
44
10.5 OCCURRENCE OF CONDITIONS PRECEDENT. Each of the Parties agrees
to use its reasonable efforts to cause all conditions precedent to its
obligations under this Agreement to be satisfied.
10.6 CONFIDENTIALITY OBLIGATIONS; PUBLIC ANNOUNCEMENTS.
(a) Each Party agrees that it will treat in confidence all
documents, materials and other information which it shall have obtained
regarding the other Party during the course of the negotiations leading to the
consummation of the transactions contemplated hereby (whether obtained before or
after the date of this Agreement), the investigation provided for herein and the
preparation of this Agreement and other related documents, and, in the event the
transactions contemplated hereby shall not be consummated, each Party will
return to the other Party all copies of non-public documents and materials which
have been furnished in connection therewith. The obligation of each Party to
treat such documents, materials and other information in confidence shall not
apply to any information which (i) such Party can demonstrate was already
lawfully in its possession prior to the disclosure thereof by the other Party,
(ii) is known to the public and did not become so known through any violation of
a legal obligation, (iii) became known to the public through no fault of such
Party or (iv) is later lawfully acquired by such Party from other sources.
Except as required by law and except for disclosures to its advisors, who shall
be advised of the confidentiality requirements herein, no Party shall disclose
to any person the identity of the other Party, the terms or provisions of this
Agreement or the content of any discussions or communications between any of the
Parties.
(b) Any public announcement or similar publicity with respect to
this Agreement or the transactions contemplated hereby will be issued, if at
all, at such time and in such manner as the Parties determine. Unless consented
to by each Party in advance or required by law, prior to the Closing Date, each
Party shall keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any person. The Parties will consult with each
other concerning the means by which their respective employees, customers, and
suppliers and others having dealings with them will be informed of the
transactions contemplated by this Agreement.
10.7 BINDING EFFECT; BENEFITS. Subject to Section 10.14, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors, executors, administrators and
assigns. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the Parties or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
45
10.8 ENTIRE AGREEMENT. This Agreement, together with the Exhibits,
Schedules and other documents contemplated hereby, constitute the final written
expression of all of the agreements between the Parties, and is a complete and
exclusive statement of those terms. It supersedes all prior understandings and
negotiations (written and oral) concerning the matters specified herein. Any
representations, promises, warranties or statements made by a Party that differ
in any way from the terms of this written Agreement and the Exhibits, Schedules
and other documents contemplated hereby, shall be given no force or effect. The
Parties specifically represent, each to the other, that there are no additional
or supplemental agreements between them related in any way to the matters herein
contained unless specifically included or referred to herein. No addition to or
modification of any provision of this Agreement shall be binding upon any party
unless made in writing and signed by all Parties.
10.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada exclusive of the
conflict of law provisions thereof.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
10.11 HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the Parties only, and shall be given no
substantive or interpretive effect whatsoever.
10.12 INCORPORATION OF EXHIBITS AND SCHEDULES. All Exhibits and
Schedules attached hereto are by this reference incorporated herein and made a
part hereof for all purposes as if fully set forth herein.
10.13 SEVERABILITY. If for any reason whatsoever, any one or more of
the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases, such
circumstances shall not have the effect of rendering such provision invalid in
any other case or of rendering any of the other provisions of this Agreement
inoperative, unenforceable or invalid.
10.14 ASSIGNABILITY. Neither this Agreement nor any of the Parties'
rights hereunder shall be assignable by any Party hereto without the prior
written consent of the other Party.
[SIGNATURES ARE ON THE NEXT FOLLOWING PAGES]
46
IN WITNESS WHEREOF, the Parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year
hereinabove first set forth.
VALLEY MEDICAL CENTER, INC.
By:________________________
Title:_____________________
NC-DSH, INC.
By:________________________
Title:_____________________
47
JOINDER AGREEMENT
The undersigned hereby agrees to become a party to that certain
Contribution Agreement (the "Contribution Agreement") by and between Valley
Hospital Medical Center, Inc., a Nevada corporation ("Valley") and NC-DSH, Inc.,
a Nevada corporation ("Desert Springs") for the sole purpose of unconditionally
guaranteeing the performance of the obligations of and payments by Valley under
Section 7.3 of the Contribution Agreement and for no other purpose. By executing
this Joinder Agreement the undersigned hereby guarantees the due and punctual
payment and performance by Valley of its obligations under Section 7.3 of the
Contribution Agreement. This Joinder Agreement may not be terminated by the
undersigned until such time as all amounts due and obligations owing or to be
owed by Valley under such Section shall have been fully paid and performed. In
the event of breach under Section 7.3, the parties thereto shall have the right
to proceed against the undersigned or Valley separately, jointly, or against the
undersigned without first proceeding against Valley. Bankruptcy or the like of
Valley shall be no defense to the undersigned.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned has executed this Joinder Agreement this 30th day of January, 1998.
UNIVERSAL HEALTH SERVICES, INC.
By:________________________________
Title:_____________________________
48
JOINDER AGREEMENT
The undersigned hereby agrees to become a party to that certain
Contribution Agreement (the "Contribution Agreement") by and between Valley
Hospital Medical Center, Inc., a Nevada corporation ("Valley") and NC-DSH, Inc.,
a Nevada corporation ("Desert Springs") for the sole purpose of unconditionally
guaranteeing the performance of the obligations of and payments by Desert
Springs under Section 7.3 of the Contribution Agreement and for no other
purpose. By executing this Joinder Agreement the undersigned hereby guarantees
the due and punctual payment and performance by Desert Springs of its
obligations under Section 7.3 of the Contribution Agreement. This Joinder
Agreement may not be terminated by the undersigned until such time as all
amounts due and obligations owing or to be owed by Desert Springs under such
Section shall have been fully paid and performed. In the event of breach under
Section 7.3, the parties thereto shall have the right to proceed against the
undersigned or Desert Springs separately, jointly, or against the undersigned
without first proceeding against Desert Springs. Bankruptcy or the like of
Desert Springs shall be no defense to the undersigned.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned has executed this Joinder Agreement this 30th day of January, 1998.
QUORUM HEALTH GROUP, INC.
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
-----------------------------
49
SCHEDULES, EXHIBITS AND APPENDICES
TO CONTRIBUTION AGREEMENT
Schedule
--------
1.1(b) Tangible Personal Property
1.1(n) Plaza Surgery Center
1.2(a) UHS Excluded Businesses and Real Estate
1.2(i) Other Excluded Assets
1.3.1 Assumed Contracts
1.6(c) List of Additional Assumed Liabilities
1.7(q) Liens and Mortgages Not Released at Closing
2.2 Authorization; Validity and Effect of Agreements
2.3 Subsidiaries; Debt and Equity Securities
2.4 Capitalization of Parties; Outstanding Rights, Warrants, etc.
2.6 Financial Statements
2.7 Absence of Undisclosed Liabilities
2.8 Absence of Certain Changes or Events
2.9 Taxes
2.10 Real Property
2.10(c) Navigable Water
2.10(h) Liens on Real Property
2.10(j) Leases of Real Property
2.11 Exceptions to Sufficiency of Facilities Assets
2.13 List of Contracts and Other Data
2.14 Exceptions to No Breach or Default
2.15 Labor Controversies
2.16 Litigation
2.18 Licenses; Permits; Authorizations
2.19 Compliance with Applicable Law; Environmental Laws
2.20.1 Employee Benefit Plans
2.20.2 Employees
2.22 Trade Notes and Accounts Receivable; Aging Schedule; Prepayments
2.25 Insurance Policies; Pending Insurance Claims
2.26(a) Professional Staff
2.26(b) Medicare and Medicaid Participation
2.26(c) Cost Reports
2.28 Related Party Transactions
4.9 Additional Properties and Assets
ii
Exhibit
-------
A Agreement and of Merger
B Form of Opinion of Parties' Counsel
C Form of Management Agreement
D Form of Operating Agreement
E Form of ▇▇▇▇▇▇▇▇ Sublease
F Form of Survey Agreement
iii
