EXHIBIT 10.31
▇▇▇▇▇▇▇▇▇ CONTRIBUTION AGREEMENT
Table of Contents
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Page No.
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1. Contribution of Assets; Purchase and Sale of
Membership Interest ................................................... 2
1.1 Creation of Subsidiary; Agreement to Contribute;
Purchase and Sale of Membership Interest.......................... 2
1.2 Excluded Assets................................................... 4
1.3 Contract Assignments.............................................. 5
1.4 Instruments of Conveyance......................................... 6
1.5 Issuance of Membership Interest to Desert Springs;
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 ▇▇▇▇▇▇▇▇▇............................ 11
2.1 Existence; Good Standing; Partnership Authority................... 11
2.2 Authorization; Validity and Effect of Agreements.................. 11
2.3 Subsidiaries...................................................... 12
2.4 Capitalization.................................................... 12
2.5 Records........................................................... 13
2.6 Financial Statements.............................................. 13
2.7 Absence of Undisclosed Liabilities................................ 13
2.8 Absence of Certain Changes or Events Since the
Date of the ▇▇▇▇▇▇▇▇▇ Balance Sheet............................... 13
2.9 Taxes............................................................. 15
2.10 Real Property..................................................... 16
2.11 Title to Property and Assets; Sufficiency of
Facilities Assets................................................. 18
2.12 Condition of Property............................................. 18
2.13 List of Contracts and Other Data.................................. 19
2.14 No Breach or Default.............................................. 20
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 Employment 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 UHS Facility Surveys.............................................. 39
2.28 Related Party Transactions........................................ 39
2.29 No Brokers........................................................ 30
2.30 No Misrepresentation or Omission.................................. 30
3. Representations and Warranties of Desert Springs....................... 39
3.1 Existence; Good Standing; Corporate Authority..................... 39
3.2 Authorization; Validity and Effect of Agreements.................. 39
3.3 No Brokers........................................................ 31
4. Covenants of the ▇▇▇▇▇▇▇▇▇ and Desert Springs.......................... 33
4.1 Access to UHS Facilities and Additional
Information....................................................... 32
4.2 Operations........................................................ 332
4.3 Negative Covenants................................................ 33
4.4 Governmental Approvals............................................ 34
4.5 Insurance Ratings................................................. 34
4.6 Employees; Employee Benefit Plans................................. 35
4.7 Further Acts and Assurances....................................... 35
4.8 Valley Transaction................................................ 35
4.9 Additional Properties and Assets
[Intentionally Omitted]........................................... 36
5. Matters Pertaining to the Company...................................... 36
5.1 Employee Matters.................................................. 36
5.2 Further Acts and Assurances....................................... 37
6. Conditions of Closing.................................................. 37
6.1 Conditions of Closing............................................. 37
7. Nature and Survival of Representations
and Warranties; Indemnification........................................ 40
7.1 Events of Default................................................. 40
7.2 Survival of Representations, Etc.................................. 41
7.3 Indemnification................................................... 41
7.4 Representation, Cooperation and Settlement........................ 42
8. Transactions Subsequent to the Closing Date............................ 42
8.1 Access to Records................................................. 42
8.2 Litigation Cooperation............................................ 43
9. Termination............................................................ 44
9.1 Methods of Termination............................................ 44
9.2 Procedure Upon Termination........................................ 44
10. Miscellaneous.......................................................... 44
10.1 Notice.......................................................... 44
10.2 Execution of Additional Documents............................... 46
10.3 Waivers and Amendment........................................... 46
10.4 Expenses........................................................ 47
10.5 Occurrence of Conditions Precedent.............................. 47
10.6 Confidentiality Obligations; Public Announcements............... 47
10.7 Binding Effect; Benefits........................................ 48
10.8 Entire Agreement................................................ 48
10.9 Governing Law................................................... 48
10.10 Counterparts.................................................... 48
10.11 Headings........................................................ 48
10.12 Incorporation of Exhibits and Schedules......................... 49
10.13 Severability.................................................... 49
10.14 Assignability................................................... 49
Joinder Agreement - Universal Health Services, Inc..................... 51
Joinder Agreement - Quorum Health Group, Inc........................... 52
▇▇▇▇▇▇▇▇▇ CONTRIBUTION AGREEMENT
This Agreement (the "Agreement") is dated this 30th day of January, 1998,
by and among ▇▇▇▇▇▇▇▇▇ HOSPITAL MEDICAL CENTER, L.P.,a Delaware limited
partnership formerly known as ▇▇▇▇▇▇▇▇▇ Medical Center, L.P. ("▇▇▇▇▇▇▇▇▇") and
NC-DSH, INC., a Nevada corporation ("Desert Springs")(▇▇▇▇▇▇▇▇▇ and Desert
Springs are sometimes hereinafter referred to collectively as the "Parties" and
individually as a "Party").
WITNESSETH:
WHEREAS, ▇▇▇▇▇▇▇▇▇ owns all of the right, title and interest in and to
certain assets used to operate ▇▇▇▇▇▇▇▇▇ Hospital Medical Center and certain
related businesses operated by ▇▇▇▇▇▇▇▇▇ in and around Las Vegas, Nevada
(collectively, the "UHS Facilities"); and
WHEREAS, ▇▇▇▇▇▇▇▇▇ desires to operate the UHS 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 ▇▇▇▇▇▇▇▇▇ desires to
contribute the UHS Facilities in exchange for a 100% membership interest in such
limited liability company, such membership interest to be subsequently reduced
to a 73.885% membership interest pursuant to the terms of this Agreement; and
WHEREAS, Desert Springs desires to acquire from ▇▇▇▇▇▇▇▇▇, subsequent to
the formation of such limited liability company and the contribution of the UHS
Facilities by ▇▇▇▇▇▇▇▇▇, a 26.115% membership interest in such limited liability
company in exchange for the payment of $23,078,619 to ▇▇▇▇▇▇▇▇▇; 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:
1. CONTRIBUTION OF ASSETS; PURCHASE AND SALE OF MEMBERSHIP INTEREST.
1.1 CREATION OF SUBSIDIARY; AGREEMENT TO CONTRIBUTE; PURCHASE AND
SALE OF MEMBERSHIP INTEREST. On or prior to the Closing Date (as hereinafter
defined) ▇▇▇▇▇▇▇▇▇ shall create ▇▇▇▇▇▇▇▇▇ Hospital Medical Center LLC, a wholly
owned limited liability company (the "Company") pursuant to the LLC Act. Upon
the terms and subject to the conditions set forth in this Agreement, on the
Closing Date, ▇▇▇▇▇▇▇▇▇ shall contribute, convey, assign, transfer and deliver
to the Company all of ▇▇▇▇▇▇▇▇▇'▇ 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,
Desert Springs shall purchase from ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇▇ shall sell and
transfer to Desert Springs, a 26.115% membership interest in the Company, and in
exchange therefore, Desert Springs shall pay and deliver to ▇▇▇▇▇▇▇▇▇, by wire
transfer of immediately available funds to an account or accounts designated by
▇▇▇▇▇▇▇▇▇, the sum of $23,078,619 (the "Desert Springs Payment"). Following the
contribution, conveyance, assignment, transfer and delivery of the Facilities
Assets and the payment and delivery of the Desert Springs Payment as provided in
this Section 1.1, ▇▇▇▇▇▇▇▇▇ shall own a 73.885% membership interest in the
Company and Desert Springs shall own a 26.115% 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
▇▇▇▇▇▇▇▇▇ used in connection with the operation of the UHS Facilities as set
forth below, other than the Excluded Assets, including, without limitation,(i)
the going concern value of the UHS 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 UHS 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
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assignment thereof), tools, supplies, furniture, vehicles and other tangible
personal property and assets owned or leased by ▇▇▇▇▇▇▇▇▇ related to the UHS
Facilities as of the date of this Agreement, as such items may be modified prior
to the Closing 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 Sheet (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 UHS 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 UHS
Facilities or necessary for the operation of the UHS Facilities;
(f) all of ▇▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇▇ in
connection with the ownership, development and operations of the UHS Facilities
(including any pending or approved governmental approvals regarding the UHS
Facilities);
(h) all marks, names, trademarks, service marks, patents, patent
rights, assumed names, logos and copyrights used in the business of the UHS
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 ▇▇▇▇▇▇▇▇▇'▇ business in connection with the UHS Facilities
between the date hereof and the Closing Date;
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(j) all insurance proceeds (including applicable deductibles,
copayments or self-insured requirements) arising in connection with damage to
the UHS Facilities occurring prior to the Closing Date, to the extent not
expended for the repair or restoration of the UHS Facilities;
(k) all assets included in the ▇▇▇▇▇▇▇▇▇ Balance Sheet generally as
"inventories", "property, plant or equipment", and "other assets";
(l) all of ▇▇▇▇▇▇▇▇▇'▇ membership interest in Oasis Health System LLC
(25% of which is owned by ▇▇▇▇▇▇▇▇▇); and
(m) all other property of every kind, character or description, to
the extent assignable, owned by ▇▇▇▇▇▇▇▇▇ and used or held for use in the
business of the UHS Facilities, whether or not reflected on the Financial
Statements (as hereinafter defined) of ▇▇▇▇▇▇▇▇▇, located at the UHS Facilities
or necessary for the operation of the UHS Facilities and whether or not similar
to the things specifically set forth above, 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
▇▇▇▇▇▇▇▇▇ to the Company 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 ▇▇▇▇▇▇▇▇▇'▇ deferred taxes and intercompany receivables;
(b) personnel records and any other records which ▇▇▇▇▇▇▇▇▇ 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 UHS Facilities in the
manner in which they are currently being operated;
(c) 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;
(d) all refunds relating to any federal, state, local or foreign
taxes paid by, or on behalf or for the benefit of ▇▇▇▇▇▇▇▇▇ or, to the extent
they relate to the period prior to
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the Closing Date, the UHS Facilities, whether received prior to or after the
Closing Date;
(e) any proprietary information contained in ▇▇▇▇▇▇▇▇▇'▇ employee or
operation manuals;
(f) ▇▇▇▇▇▇▇▇▇'▇ corporate and financial records; and
(g) cash and cash equivalents.
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,
▇▇▇▇▇▇▇▇▇ shall transfer or cause to be transferred and assign or cause to be
assigned to the Company, and the Company shall assume and perform all of
▇▇▇▇▇▇▇▇▇'▇ 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 hereto (the "Assumed Contracts").
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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
Closing Date. 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 Closing Date so that the Company would not in fact receive all such rights,
▇▇▇▇▇▇▇▇▇ (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 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 ▇▇▇▇▇▇▇▇▇ against a third party arising
out of the breach or cancellation by such third party or otherwise. ▇▇▇▇▇▇▇▇▇
shall, to the extent necessary, perform under the Assignment Substitute without
a fee to the Company except the consideration being tendered hereunder.
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1.4 INSTRUMENTS OF CONVEYANCE.
On the Closing Date, ▇▇▇▇▇▇▇▇▇ shall deliver to the Company such deeds
(in the case of the real property and the improvements thereon described in
Schedules 2.10 hereto, a special warranty deed or the equivalent thereof in use
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in accordance with local practice), bills of sale, endorsements, assignments and
other good and sufficient instruments of conveyance and assignment as shall be
effective to vest in the Company all of ▇▇▇▇▇▇▇▇▇'▇ 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, ▇▇▇▇▇▇▇▇▇ will take
all reasonable additional steps as may be necessary to put the Company in
possession of the Facilities Assets. ▇▇▇▇▇▇▇▇▇ shall pay all transfer costs,
title insurance fees, recording fees and transfer or stamp taxes or similar
charges payable by reason of the contribution, conveyance, assignment, transfer
and delivery hereunder of the Facilities Assets.
1.5 ISSUANCE OF MEMBERSHIP INTEREST TO DESERT SPRINGS; WORKING
CAPITAL SHORTAGE/OVERAGE.
1.5.1 On the Closing Date, immediately following the issuance of
the ▇▇▇▇▇▇▇▇▇ membership interest to ▇▇▇▇▇▇▇▇▇ in accordance with Section 1.1
hereof, ▇▇▇▇▇▇▇▇▇ shall sell, transfer and deliver to Desert Springs, and Desert
Springs shall purchase and acquire from ▇▇▇▇▇▇▇▇▇, a 26.115% membership interest
in the Company. Accordingly, in consideration of and subject to the payment of
the Desert Springs Payment by Desert Springs and the receipt by ▇▇▇▇▇▇▇▇▇ of the
full amount of such Desert Springs Payment in immediately available funds as
provided in Section 1.1 hereof, on the Closing Date ▇▇▇▇▇▇▇▇▇ shall cause the
Company to issue a 26.115% membership interest in the Company to Desert Springs,
which 26.115% membership interest in the Company shall be free and clear of all
Liens except for those listed or described on Schedule 1.5 (the "Permissible
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Liens").
1.5.2 Within 45 days after the Closing Date, the Parties will
determine the amount of Working Capital (as defined below) contributed to the
Company by ▇▇▇▇▇▇▇▇▇ as of the Closing Date. Desert Springs will pay to
▇▇▇▇▇▇▇▇▇ in cash 26.115% of the amount of the Working Capital. For the sole
purpose of determining the amount to be paid by Desert Springs to ▇▇▇▇▇▇▇▇▇ on
account of Working Capital, 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
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accepted accounting principles, consistently applied (unless otherwise
specified):
(a) patient accounts receivable, net of allowances for contractual
adjustments and discounts and bad debts;
(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.
Each of the Parties will work together in good faith to agree on the
amount of Working Capital and the amount to be paid by Desert Springs to
▇▇▇▇▇▇▇▇▇ pursuant to this Section 1.5.2. 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. 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
accounts 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 ▇▇▇▇▇▇▇▇▇ and Desert Springs
shall each pay one-half of the fee. Each Party represents that the Accountants
are not its auditor. Upon determination of the Final Closing Statement, whether
by
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agreement of the Parties or by determination of the Accountants, Desert Springs
shall immediately pay to ▇▇▇▇▇▇▇▇▇ in cash 26.115% of the amount of the Working
Capital.
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 the Company, following the contribution of the
Facilities Assets, shall assume and agree to pay, perform and discharge the
following liabilities (collectively, the "Assumed Liabilities"):
(a) all current liabilities of ▇▇▇▇▇▇▇▇▇ (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 Section 4.6
hereof; and
(c) such other liabilities of ▇▇▇▇▇▇▇▇▇ 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. The Company, following the contribution
of the Facilities Assets, shall assume only those liabilities and obligations
specified in Section 1.6 above. Without limiting the generality of the foregoing
sentence, the Company shall not assume and ▇▇▇▇▇▇▇▇▇ shall retain and be
responsible for the following obligations and liabilities to the extent they
relate to ▇▇▇▇▇▇▇▇▇ (each reference in this Section 1.7 to ▇▇▇▇▇▇▇▇▇ shall
include ▇▇▇▇▇▇▇▇▇ and its affiliates):
(a) any and all obligations for the payment of any long term debt
existing at the Closing Date (including the current portion thereof) relating to
▇▇▇▇▇▇▇▇▇ and whether or not set forth on the ▇▇▇▇▇▇▇▇▇ Balance Sheet;
(b) any and all accrued interest payable by ▇▇▇▇▇▇▇▇▇ in respect of
periods through the Closing Date;
(c) liabilities or obligations of ▇▇▇▇▇▇▇▇▇ 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;
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(d) liabilities or obligations for Taxes (as hereinafter defined) of
▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇; 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 ▇▇▇▇▇▇▇▇▇ (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 ▇▇▇▇▇▇▇▇▇ related to the contribution of any of
the Facilities Assets;
(i) except as expressly set forth herein, liabilities arising from
▇▇▇▇▇▇▇▇▇'▇ assignment and the Company's assumption of the Assumed Liabilities;
(j) liabilities for the payment by ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇, whether or not such transaction relates to the provision of goods
and services, tax 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 ▇▇▇▇▇▇▇▇▇ arising from acts or
omissions of ▇▇▇▇▇▇▇▇▇ (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
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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 UHS Facilities by ▇▇▇▇▇▇▇▇▇ or any other
business operated therefrom;
(n) any liability of ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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(g).
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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 ▇▇▇▇▇▇▇▇▇ 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 effective as of 11:59 p.m. Pacific Time
on January 31, 1998, payment of the Desert Springs Payment and the issuance of
membership interests to Desert Springs in accordance with Section 1.5 hereof,
the closing shall be deemed to be effective as of 12:01 a.m. Pacific Time on
February 1, 1998. Such date of effectiveness of closing is herein referred to
as the "Closing Date". On the date of
10
effectiveness of the Closing, ▇▇▇▇▇▇▇▇▇ shall receive good funds in the amount
of the Desert Springs Payment if a business day, otherwise the parties shall
agree on whether it shall be prior or after such effectiveness. The parties have
agreed that if the Closing is to be effective February 1, 1998, the parties
shall use their best efforts to close the transaction sufficiently so that the
funds shall be wired on January 30, 1998. In the event that the Desert Springs
Payment is received by ▇▇▇▇▇▇▇▇▇ before or after the date of the effectiveness
of the Closing, the Desert Springs Payment shall be reduced or increased on a
per diem basis, based on the prime rate as reported in The Wall Street Journal
-----------------------
five (5) business days before the actual date of closing.
2. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ hereby
represents, warrants and agrees as follows:
2.1 EXISTENCE; GOOD STANDING; PARTNERSHIP AUTHORITY. ▇▇▇▇▇▇▇▇▇ is a
Delaware limited partnership duly formed, validly existing and in good standing
under the laws of the State of Delaware. ▇▇▇▇▇▇▇▇▇ has all requisite partnership
power and authority to own its properties and carry on its business as now
conducted. The copies provided to Desert Springs of the Agreement of Limited
Partnership of ▇▇▇▇▇▇▇▇▇, as amended to date, are complete and correct and
presently in effect. ▇▇▇▇▇▇▇▇▇ has not 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. ▇▇▇▇▇▇▇▇▇ is not 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 ▇▇▇▇▇▇▇▇▇ and the consummation by it of the transactions
contemplated hereby, have been duly and effectively authorized by all necessary
partnership action on its part. This Agreement constitutes, and all agreements
and documents contemplated hereby when executed and delivered pursuant hereto
will constitute, the valid and legally binding obligations of ▇▇▇▇▇▇▇▇▇,
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
11
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 delivery of this Agreement by ▇▇▇▇▇▇▇▇▇ does not, and
the consummation of the transactions contemplated hereby 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;(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 ▇▇▇▇▇▇▇▇▇ pursuant to any provision
of, any order, judgment, arbitration award, injunction, decree, indenture,
mortgage, lease, license, lien, or other agreement or instrument to which
▇▇▇▇▇▇▇▇▇ is a party or by which it is bound, or violate any provision of the
Agreement of Limited Partnership of ▇▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇▇ 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 UHS Facilities.
2.3 SUBSIDIARIES. Except as set forth on Schedule 2.3, ▇▇▇▇▇▇▇▇▇
------------
does not own, directly or indirectly, any debt or equity securities issued by
any other partnership or 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 transactions described in
Section 1.1 above, the Company shall not have conducted any business or incurred
any liabilities.
2.4 CAPITALIZATION. Schedule 2.4 sets forth a list of the general
------------
and limited partnership interests issued and outstanding and owned of record and
beneficially by each of the partners in ▇▇▇▇▇▇▇▇▇. 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 ▇▇▇▇▇▇▇▇▇ to sell or issue any
12
partnership interests or other securities, nor are there any voting trusts or
other agreements or understandings with respect to the partnership interests in
▇▇▇▇▇▇▇▇▇. On and as of the date of payment of the Desert Springs Payment,
▇▇▇▇▇▇▇▇▇ shall be the owner of 100% of the outstanding membership interests in
the Company, free and clear of all Liens other than the Permissible Liens.
2.5 RECORDS. The books, records and work papers of ▇▇▇▇▇▇▇▇▇ will be
made available to Desert Springs for inspection prior to the Closing Date and
(a) will contain the minutes of all meetings of partners and actions taken by
partners, (b) have been maintained in accordance with good business practice and
(c) accurately reflect the basis for the financial condition and results of
operations of ▇▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇▇ has furnished true, complete and
correct copies of its unaudited balance sheet as of December 31, 1997 and
related statements of income and operations for the period then ended (the
"▇▇▇▇▇▇▇▇▇ Balance Sheet, or sometimes the "Financial Statements"). Copies of
the Financial Statements are attached hereto as Schedule 2.6. The Financial
------------
Statements of ▇▇▇▇▇▇▇▇▇ are in accordance with its books and records, are
complete and correct in all material respects, fully and fairly set forth the
financial condition of ▇▇▇▇▇▇▇▇▇ as of the dates indicated, and the 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. ▇▇▇▇▇▇▇▇▇ 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, except (i)
those arising after the date of the ▇▇▇▇▇▇▇▇▇ Balance Sheet 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, ▇▇▇▇▇▇▇▇▇ 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
13
$50,000 in the aggregate not fully disclosed in the ▇▇▇▇▇▇▇▇▇ Balance Sheet.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS SINCE THE DATE OF THE
▇▇▇▇▇▇▇▇▇ BALANCE SHEET. Except as otherwise disclosed in Schedule 2.8, since
------------
the date of the ▇▇▇▇▇▇▇▇▇ Balance Sheet ▇▇▇▇▇▇▇▇▇ 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 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
14
loan to, or entered into any material transaction of any other nature with any
partner, 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
Agreement of Limited Partnership, 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 UHS 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 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, ▇▇▇▇▇▇▇▇▇ (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,
15
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 ▇▇▇▇▇▇▇▇▇ as of the date
hereof, together with the nature of such interest. ▇▇▇▇▇▇▇▇▇ owns fee simple
title to the tracts of Real Property. To the extent that any interest in Real
Property set forth thereon is shared, Schedule 2.10 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 the UHS Facilities;
(c) except as set forth in Schedule 2.10(c), to the best
----------------
knowledge of ▇▇▇▇▇▇▇▇▇, 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
16
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 ▇▇▇▇▇▇▇▇▇,
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 ▇▇▇▇▇▇▇▇▇, the UHS 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 with respect to the Real
Property; 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) ▇▇▇▇▇▇▇▇▇ 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 is subject only to the Liens described in
Schedule 2.10(h), and on 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) ▇▇▇▇▇▇▇▇▇ 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
17
possession, adverse or not, to or other interest in, any portion of the Real
Property as lessees, tenants at sufferance, trespassers or otherwise;
(k) with respect to the Real Property, 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 ▇▇▇▇▇▇▇▇▇'▇ knowledge, no condemnation or taking is threatened or
known by ▇▇▇▇▇▇▇▇▇ to be contemplated; and
(m) the improvements to the Real Property are located entirely
within the boundaries of the Real Property and, to ▇▇▇▇▇▇▇▇▇'▇ 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) ▇▇▇▇▇▇▇▇▇ has good and marketable title to the Facilities
Assets (including, without limitation, the properties and assets reflected in
the ▇▇▇▇▇▇▇▇▇ Balance Sheet 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
Sheet or the Schedules hereto, subject to a contract of sale not in the ordinary
course of business, or, except for Permitted Encumbrances, subject to any Liens.
(b) Except as described on Schedule 2.11, the Facilities Assets
-------------
constitute, in the aggregate, all the properties and assets necessary for the
operation of the UHS Facilities as currently conducted. The Facilities Assets,
together with the Excluded Assets, comprise all of the following: (i) all assets
owned by ▇▇▇▇▇▇▇▇▇, (ii) all assets used in connection with the UHS Facilities
and their related businesses
18
and (iii) all assets owned, used or operated by any affiliate of ▇▇▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇,
other than the Excluded Assets (indicating in each case, where appropriate,
whether or not consent by a third party is required for the transfer by
▇▇▇▇▇▇▇▇▇ of such properties and assets to the Company):
2.13.1 a description of all real property leased by ▇▇▇▇▇▇▇▇▇
and all leases of real property to which ▇▇▇▇▇▇▇▇▇ is a party;
2.13.2 a list of all personal property owned of record or
beneficially by ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇
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 owned in whole or in part as noted thereon on said
date by ▇▇▇▇▇▇▇▇▇, (ii) a description of all action taken by ▇▇▇▇▇▇▇▇▇ to
protect all tradenames used by it, and (iii) all licenses granted by or to
▇▇▇▇▇▇▇▇▇ and all other agreements to which ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ or otherwise;
19
2.13.4 a list of all existing contracts and commitments to
which ▇▇▇▇▇▇▇▇▇ is a party or by which ▇▇▇▇▇▇▇▇▇ 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 UHS Facility, and is not a third
party payor contract and is not a real estate lease and (ii) requires payment by
---
▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇, and (ii) all
Multiemployer Plans (as defined in ERISA as hereinafter defined) which ▇▇▇▇▇▇▇▇▇
maintains or has maintained or to which ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇, 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
▇▇▇▇▇▇▇▇▇, or, to ▇▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ under such documents, rights, obligations or
commitments is subject to termination or modification as a result of the
transactions contemplated hereby.
20
2.14 NO BREACH OR DEFAULT. ▇▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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
----
▇▇▇▇▇▇▇▇▇, threatened between ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇,
threatened relating to its business, and to the knowledge of ▇▇▇▇▇▇▇▇▇, there
are not any further organizational efforts presently being made or threatened
involving any of the employees of ▇▇▇▇▇▇▇▇▇. Except as set forth on Schedule
--------
2.15, ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇,
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). ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇,
investigations with respect to ▇▇▇▇▇▇▇▇▇, involving claims by or against
▇▇▇▇▇▇▇▇▇ which are pending or, to ▇▇▇▇▇▇▇▇▇'▇ knowledge, threatened against
▇▇▇▇▇▇▇▇▇, at law or in equity, or before or by any federal,
21
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, or before the internal grievance mechanisms of
▇▇▇▇▇▇▇▇▇. To ▇▇▇▇▇▇▇▇▇'▇ 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
▇▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇▇ is not a licensor in respect of any patents, trademarks, trade names,
copyrights or registrations or applications therefor. ▇▇▇▇▇▇▇▇▇ is not in
violation of any patent, patent license, trade name, trademark, or copyright of
others. No officer, partner or employee of ▇▇▇▇▇▇▇▇▇ owns, directly or
indirectly, in whole or in part, any patents, trademarks, trade names,
copyrights, registrations or applications therefor or interests therein which
▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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
of a License held by ▇▇▇▇▇▇▇▇▇, where appropriate, whether or not the consent by
a third party to the transfer to the Company of such License is required).
▇▇▇▇▇▇▇▇▇ has all Licenses required to permit the operation of its business as
presently conducted; ▇▇▇▇▇▇▇▇▇'▇ 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
▇▇▇▇▇▇▇▇▇, is threatened to revoke, terminate or declare invalid any of the
foregoing.
22
2.19 COMPLIANCE WITH APPLICABLE LAW; ENVIRONMENTAL LAWS.
(a) Except as set forth on Schedule 2.19 hereto, the conduct of
-------------
the business of ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ or the value of its properties or assets.
(b) Neither ▇▇▇▇▇▇▇▇▇ nor, to the knowledge of ▇▇▇▇▇▇▇▇▇, any of
its employees, partners and officers 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
23
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 from a UHS
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 UHS
Facility in order that the UHS 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 UHS
Facility.
(c) All Licenses currently held by ▇▇▇▇▇▇▇▇▇ pursuant to the
Environmental Laws are identified in Schedule 2.18.
-------------
(d) ▇▇▇▇▇▇▇▇▇ is in compliance in all material respects with all
applicable Environmental Laws except as disclosed in Schedule 2.19.
-------------
(e) In regards to the UHS Facilities and the Real Property, there
is no Environmental Claim pending or, to such Party's knowledge, threatened
against the UHS Facilities or the Real Property, or, to ▇▇▇▇▇▇▇▇▇'▇ best
knowledge after due inquiry, any other person whose liability for any
Environmental Claim ▇▇▇▇▇▇▇▇▇ has retained or assumed contractually; to
▇▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇▇ or against any person
whose liability for any Environmental Claim ▇▇▇▇▇▇▇▇▇ has retained or assumed
contractually; and ▇▇▇▇▇▇▇▇▇ has not received any written communication, whether
from a governmental authority
24
or otherwise, that alleges that ▇▇▇▇▇▇▇▇▇ is not in full compliance with all
applicable Environmental Laws.
(f) In regards to the UHS Facilities and the Real Property,
without in any way limiting the generality of the foregoing, (i) all on-site and
off-site locations where ▇▇▇▇▇▇▇▇▇ 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, 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 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
25
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 ▇▇▇▇▇▇▇▇▇
(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 Desert Springs, which summary plan descriptions accurately
summarize the material provisions of the Employee Benefit Plans. Neither
▇▇▇▇▇▇▇▇▇ nor any other members of the Controlled Group of Corporations (as
defined in Section 1563 of the Code) that includes ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇
with respect to the Employee Benefit Plans, and ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇.
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 ▇▇▇▇▇▇▇▇▇.
2.21 ADVERSE AGREEMENTS; NO ADVERSE CHANGE.
(a) ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇
which adversely affects the business, operations, properties, assets or
conditions, financial or otherwise, of ▇▇▇▇▇▇▇▇▇.
(b) To the best of ▇▇▇▇▇▇▇▇▇'▇ 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
▇▇▇▇▇▇▇▇▇ since the ▇▇▇▇▇▇▇▇▇ Balance Sheet date.
2.22 TRADE NOTES AND ACCOUNTS RECEIVABLE; TRADE ACCOUNTS PAYABLE;
PREPAID CONTRACTS.
26
(a) Except as set forth on Schedule 2.22 hereto, the trade notes
-------------
and accounts receivable of ▇▇▇▇▇▇▇▇▇ are reflected on the ▇▇▇▇▇▇▇▇▇ Balance
Sheet 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 ▇▇▇▇▇▇▇▇▇, and are (except for normal claims and
allowances which are consistent with past experience of ▇▇▇▇▇▇▇▇▇ and which in
the aggregate are not material) current, arose in the usual and ordinary course
of business of ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇'▇ knowledge, are fully
collectible, less the applicable allowance for doubtful accounts. ▇▇▇▇▇▇▇▇▇ has
fully performed all obligations with respect to such trade notes and accounts
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, for all
-------------
such trade notes and accounts receivable.
(b) The trade accounts payable of ▇▇▇▇▇▇▇▇▇ reflected on the
▇▇▇▇▇▇▇▇▇ Balance Sheet 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ which relate to services to
be performed by ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇.
2.23 INVENTORIES AND SUPPLIES. All inventories and supplies of
▇▇▇▇▇▇▇▇▇, whether or not reflected in the ▇▇▇▇▇▇▇▇▇ Balance Sheet, 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 Sheet. 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 ▇▇▇▇▇▇▇▇▇.
27
2.24 ILLEGAL PAYMENTS. ▇▇▇▇▇▇▇▇▇ has not, nor to the knowledge of
▇▇▇▇▇▇▇▇▇, has any of its respective partners, 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 ▇▇▇▇▇▇▇▇▇ covering ▇▇▇▇▇▇▇▇▇
and its employees, agents and assets. Each such policy is in full force and
effect and, to the knowledge of ▇▇▇▇▇▇▇▇▇, is reasonably adequate in coverage
and amount to insure against customarily insured risks to which ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇, and except as set forth on Schedule 2.25, there are no pending
-------------
claims against such insurance by ▇▇▇▇▇▇▇▇▇ as to which the insurers have denied
coverage or otherwise reserved rights. Since January 1, 1994, ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ covering the Real Property. Each such policy
is in full force and effect and, to the knowledge of ▇▇▇▇▇▇▇▇▇, 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
-------------
▇▇▇▇▇▇▇▇▇ 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 the UHS
Facilities consists of the persons whose names and status are set forth on
Schedule 2.26(a) hereto.
----------------
28
(b) Except as set forth on Schedule 2.26(b) hereto, ▇▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇▇ 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.
▇▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇▇ has delivered to Desert
Springs complete copies of all of its Medicare and Medicaid cost reports
submitted by ▇▇▇▇▇▇▇▇▇ for the two most recent fiscal years.
(d) To the knowledge of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and its partners,
officers, employees or agents (acting in their capacities as such), have not
engaged in any activities which (i) could subject ▇▇▇▇▇▇▇▇▇ or such 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 UHS 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 UHS 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
Desert Springs, 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.
29
2.28 RELATED PARTY TRANSACTIONS. To the knowledge of ▇▇▇▇▇▇▇▇▇,
except as set forth in Schedule 2.28, and except for compensation to employees
-------------
for services rendered, no current partner or officer of ▇▇▇▇▇▇▇▇▇ or any
affiliate thereof is presently, or during the last fiscal year has been, (a) a
party to any material transaction with ▇▇▇▇▇▇▇▇▇ (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 partner or officer, or (b) the direct or indirect owner of any interest
in any person which is a present competitor, supplier or customer of ▇▇▇▇▇▇▇▇▇
with respect to the business, nor does any such person receive income from any
source other than ▇▇▇▇▇▇▇▇▇ which should properly accrue to ▇▇▇▇▇▇▇▇▇.
2.29 NO BROKERS. ▇▇▇▇▇▇▇▇▇ has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or the 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 ▇▇▇▇▇▇▇▇▇ 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.
2.30 NO MISREPRESENTATION OR OMISSION. No representation or warranty
by ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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. REPRESENTATIONS AND WARRANTIES OF DESERT SPRINGS. Desert Springs
hereby represents, warrants and agrees as follows:
3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Desert Springs is
a Nevada corporation duly organized, validly existing and in good standing under
the laws of the State of Nevada. Desert Springs has all requisite corporate
power and authority to own its properties and carry on its business as now
conducted. The copies provided to ▇▇▇▇▇▇▇▇▇ of the Articles of Incorporation
and Bylaws of Desert Springs, as amended to date, are complete and correct and
presently in effect. Desert Springs has not failed to qualify in any
jurisdiction in which property
30
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. Desert Springs is not 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.
3.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENTS. The execution,
delivery and performance of this Agreement and all agreements and documents
contemplated hereby by Desert Springs and the consummation by it of the
transactions contemplated hereby, have been duly and effectively authorized by
all necessary corporate action on its part. This Agreement constitutes, and all
agreements and documents contemplated hereby when executed and delivered
pursuant hereto will constitute, the valid and legally binding obligations of
Desert Springs, 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 3.2
------------
hereto, the execution and delivery of this Agreement by Desert Springs does not,
and the consummation of the transactions contemplated hereby 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 (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 Desert Springs pursuant to any
provision of, any order, judgment, arbitration award, injunction, decree,
indenture, mortgage, lease, license, lien, or other agreement or instrument to
which Desert Springs is a party or by which it is bound, or violate any
provision of the Articles of Incorporation
31
or Bylaws of Desert Springs, as amended to the date of this Agreement.
3.3 NO BROKERS. Desert Springs has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or the 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 Desert Springs 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.
4. COVENANTS OF ▇▇▇▇▇▇▇▇▇ AND DESERT SPRINGS.
4.1 ACCESS TO UHS FACILITIES AND ADDITIONAL INFORMATION.
4.1.1 From the date hereof until the Closing Date, ▇▇▇▇▇▇▇▇▇
shall provide, and cause its agents (including counsel and accountants) to
provide to Desert Springs reasonable access to and the right to inspect the
Facilities Assets and the books and records pertaining to the Facilities Assets,
and ▇▇▇▇▇▇▇▇▇ will furnish and cause to be furnished to Desert Springs all
material information concerning its businesses not otherwise disclosed pursuant
to this Agreement, and such additional financial, operating and other data and
information regarding ▇▇▇▇▇▇▇▇▇ and its businesses and the Facilities Assets, as
Desert Springs 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, ▇▇▇▇▇▇▇▇▇
shall deliver to Desert Springs, to the extent not already delivered, copies of
all title insurance policies and binders in the possession of ▇▇▇▇▇▇▇▇▇ for any
of the Real Property and copies of all surveys of any of the Real Property in
the possession of ▇▇▇▇▇▇▇▇▇.
4.2 OPERATIONS. From the date hereof until the Closing Date and
except as otherwise expressly provided in this Agreement:
(a) each of ▇▇▇▇▇▇▇▇▇ and Desert Springs will carry on its
business in substantially the same manner as heretofore and not make any
material change in its personnel,
32
operations, finances, accounting policies, or real or personal property;
(b) ▇▇▇▇▇▇▇▇▇ will maintain the Facilities Assets and all parts
thereof in their current condition, ordinary wear and tear excepted;
(c) ▇▇▇▇▇▇▇▇▇ will perform all of its obligations relating to or
affecting the Facilities Assets or the business of the UHS Facilities;
(d) ▇▇▇▇▇▇▇▇▇ will use its reasonable efforts to obtain
appropriate releases, consents, estoppels and other instruments as Desert
Springs may reasonably request;
(e) ▇▇▇▇▇▇▇▇▇ will 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) ▇▇▇▇▇▇▇▇▇ will maintain and preserve its business
organizations and operations intact, and deal with its present employees at the
UHS Facilities in a manner consistent with its existing personnel policies;
▇▇▇▇▇▇▇▇▇ will maintain its relationships with physicians, suppliers and other
persons having business relations with it; and ▇▇▇▇▇▇▇▇▇ will take such actions
as are reasonably necessary to facilitate the smooth, efficient and successful
transition to the Company following the Closing Date of the business
organizations and operations and employee and other relations of ▇▇▇▇▇▇▇▇▇; and
(g) ▇▇▇▇▇▇▇▇▇ will permit and allow reasonable access by the
Company 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 Desert Springs:
(a) ▇▇▇▇▇▇▇▇▇ will not 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 ▇▇▇▇▇▇▇▇▇ prior to the Closing Date or the
Company following the Closing Date of an amount greater than twenty-five
thousand dollars ($25,000) per contract or agreement, or that is
33
not terminable without cause or penalty within thirty (30) days following the
Closing Date;
(b) ▇▇▇▇▇▇▇▇▇ will not make offers to any of its employees for
employment with it after the Closing Date;
(c) ▇▇▇▇▇▇▇▇▇ will not 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;
(d) ▇▇▇▇▇▇▇▇▇ will not 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) ▇▇▇▇▇▇▇▇▇ will not sell, assign, transfer, distribute or
otherwise dispose of any property, plant or equipment, except in the ordinary
and regular business of the UHS Facilities with comparable replacement thereof;
(f) ▇▇▇▇▇▇▇▇▇ will not take any action outside the ordinary and
regular course of business;
(g) ▇▇▇▇▇▇▇▇▇ will not take any action relating to its
liquidation or dissolution; and
(h) ▇▇▇▇▇▇▇▇▇ will not 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 ex ceeding $25,000 individually or $50,000 in the
aggregate.
4.4 GOVERNMENTAL APPROVALS. From the date hereof until the Closing
Date, ▇▇▇▇▇▇▇▇▇ 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 such other
Party to obtain all consents, licenses, permits, approvals, authorizations
34
and clearances of governmental and regulatory authorities that such other Party
reasonably deems necessary or appropriate, and to prepare any document or other
information required of the Company following the Closing by any such
authorities, in order to consummate the transactions contemplated herein.
4.5 INSURANCE RATINGS. From the date hereof until the Closing Date,
▇▇▇▇▇▇▇▇▇ will take all action it deems reasonably necessary to enable the
Company following the Closing Date to succeed to the worker's compensation and
unemployment insurance ratings of ▇▇▇▇▇▇▇▇▇ with respect to the UHS Facilities
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. ▇▇▇▇▇▇▇▇▇ shall retain all
liabilities and obligations for all benefits under its Employee Benefit Plans,
regardless of whether any such liabilities and obligations are disclosed on the
▇▇▇▇▇▇▇▇▇ Balance Sheet (including, without limitation, any and all workers'
compensation, health, disability or other benefits due to or for the benefit of
any employees of ▇▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇▇ shall terminate
the participation of all employees in any Employee Pension Benefit Plan in which
any of ▇▇▇▇▇▇▇▇▇'▇ 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 Date, upon request of the Company, ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇, 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. ▇▇▇▇▇▇▇▇▇ shall also furnish the Company with such information and
documents in its possession or under its control, or which ▇▇▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇▇▇. After the Closing Date,
35
▇▇▇▇▇▇▇▇▇ shall promptly remit to the Company any payments received by ▇▇▇▇▇▇▇▇▇
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
▇▇▇▇▇▇▇▇▇ any payments received by the Company with respect to accounts
receivable or other amounts retained by ▇▇▇▇▇▇▇▇▇. Any funds so collected will
be remitted within five (5) days following receipt of such payment.
4.8 VALLEY TRANSACTION. Simultaneous with the contribution of the
Facilities Assets and the payment of the Desert Springs Payment to ▇▇▇▇▇▇▇▇▇
pursuant to this Agreement, (i) Valley Hospital Medical Center, Inc., a Nevada
corporation ("Valley"), shall contribute, convey, assign, transfer and deliver
to Valley Health System LLC, a limited liability company ("Newco UHS-1") created
by Valley pursuant to the LLC Act, and Desert Springs shall contribute, convey,
assign, transfer and deliver to Newco Q LLC, a limited liability company ("Newco
Q-1") created by Desert Springs pursuant to the LLC Act, those assets and
properties of Valley, in the case of Newco UHS-1, and those assets and
properties of Desert Springs, in the case of ▇▇▇▇▇ ▇-▇, which are in the nature
of the Facilities Assets (but excluding those assets and properties which are in
the nature of Excluded Assets), (ii) Newco UHS-1 shall assume and agree to pay,
perform and discharge the liabilities and obligations of Valley which are in the
nature of Assumed Liabilities, and (iii) Newco Q-1 shall assume and agree to
pay, perform and discharge the liabilities and obligations of Desert Springs
which are in the nature of Assumed Liabilities. Immediately following the
consummation of such transactions in accordance with the preceding sentence,
Newco Q-1 shall be merged with and into Newco UHS-1 pursuant to an agreement of
merger on such terms and conditions as are mutually acceptable to Valley,
▇▇▇▇▇▇▇▇▇ and Desert Springs (the "Merger"). Following the Merger, the separate
legal existence of Newco Q-1 shall cease and Newco UHS-1 shall continue as the
entity surviving the Merger (the "Valley Company"), with Valley thereafter
owning a 72.5% membership interest in the Valley Company and Desert Springs
thereafter owning a 27.5% membership interest in the Valley Company.
4.9 ADDITIONAL PROPERTIES AND ASSETS. [INTENTIONALLY OMITTED.]
5. MATTERS PERTAINING TO THE COMPANY.
5.1 EMPLOYEE MATTERS. Subject to the exclusions set forth in this
Section, ▇▇▇▇▇▇▇▇▇ and Desert Springs will cause the Company to offer to employ
as of the Closing Date, on an at-
36
will basis (subject to any existing union contracts), all employees working at
the UHS Facilities immediately prior to the Closing Date (including those on
leave) so that ▇▇▇▇▇▇▇▇▇ may avoid the imposition of any liability under the
WARN Act and the Company shall pay all liability of ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇.
5.2 FURTHER ACTS AND ASSURANCES. At any time and from time to time
at and after the Closing Date, ▇▇▇▇▇▇▇▇▇ and Desert Springs shall cause the
Company to 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 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. ▇▇▇▇▇▇▇▇▇
and Desert Springs shall cause the Company to furnish ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 UHS Facilities for which ▇▇▇▇▇▇▇▇▇ is liable hereunder or relating to
Government Reimbursement Programs.
6. CONDITIONS OF CLOSING.
6.1 CONDITIONS OF CLOSING. The obligations of ▇▇▇▇▇▇▇▇▇ to
contribute the Facilities Assets and of Desert Springs to make the Desert
Springs Payment, the obligation of ▇▇▇▇▇▇▇▇▇ to sell and deliver to Desert
Springs a 26.115% membership interest in the Company, and the obligations of the
Parties to otherwise cause the consummation of the transactions contemplated by
this Agreement, 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)
37
the conditions to the benefit of ▇▇▇▇▇▇▇▇▇ are solely with respect to the Desert
Springs Payment and Desert Springs and not with respect to itself or the UHS
Facilities, and (ii) the conditions to the benefit of Desert Springs are solely
with respect to the UHS Facilities and ▇▇▇▇▇▇▇▇▇ and not with respect to itself
or the Desert Springs Payment):
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 such Party shall assume all
risk, there shall have been no material adverse change since September 30, 1997
in the financial condition, business or affairs of ▇▇▇▇▇▇▇▇▇ or Desert Springs;
and neither ▇▇▇▇▇▇▇▇▇ nor Desert Springs shall 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 such other Party, adequate to repair such
damage and compensate for any lost business related thereto. ▇▇▇▇▇▇▇▇▇ and
Desert Springs each shall have received a certificate of the other such 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 or formation, 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 or
limited partnership, as the case may be.
6.1.4 Each Party shall have delivered to the other Parties a
certificate of its corporate or partnership Secretary certifying:
38
(i) The Resolutions of its Board of Directors or its
general partner 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 or the officers of
its general partner executing this Agreement and all agreements and documents
contemplated hereby; and
(iii) That the Articles of Incorporation and Bylaws of
Desert Springs, or the Agreement of Limited Partnership of ▇▇▇▇▇▇▇▇▇, as the
case may be, 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 A.
---------
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 UHS Facilities and for the Company following the Closing Date to
conduct the businesses of ▇▇▇▇▇▇▇▇▇ 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 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 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
39
the ability of the Company following the Closing Date to own the Facilities
Assets or to conduct the businesses relating thereto.
6.1.8 The receipt by ▇▇▇▇▇▇▇▇▇ and Desert Springs 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, subject only to the Permitted Encumbrances, in the aggregate amount
of $60,000,000, 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
40
contain a so-called "non-imputation" endorsement and such additional
endorsements as the Parties may reasonably require.
6.1.9 Execution and delivery by ▇▇▇▇▇▇▇▇▇ 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 B (the "Management Agreement").
---------
6.1.11 Execution and delivery by the Company, ▇▇▇▇▇▇▇▇▇ and
Desert Springs of the Operating Agreement in substantially the form attached
hereto as Exhibit C (the "Operating Agreement").
---------
6.1.12 The Company's receipt of current as-built surveys of the
Real Property, 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 ▇▇▇▇▇▇▇▇▇ and Desert Springs.
6.1.13 ▇▇▇▇▇▇▇▇▇'▇ receipt of the membership interest in the
Company to be distributed to it in accordance with Section 1.1 hereof.
6.1.14 ▇▇▇▇▇▇▇▇▇'▇ receipt of the Desert Springs Payment in
immediately available funds in accordance with Sections 1.1 and 1.5 hereof.
6.1.15 Desert Springs' receipt from ▇▇▇▇▇▇▇▇▇ of a 26.115%
membership interest in the Company free and clear of all Liens other than
Permissible Liens.
6.1.16 Execution and delivery by the parties thereto of the
Survey Agreement substantially in the form attached hereto as Exhibit D.
---------
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.
41
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, 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; (iii) any claims
against, or liabilities or obligations relating to the ▇▇▇▇▇▇▇▇▇ Limited
Partnership Agreement, or the partnership actions involved in accomplishing this
transaction; or (iv) 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 Closing Date 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, 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 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.
42
(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, ▇▇▇▇▇▇▇▇▇ will provide the Company with
reasonable access to any records, documents and data relating to the Facilities
Assets retained by ▇▇▇▇▇▇▇▇▇ wherever located. From time to time after the
Closing Date, upon the request of either ▇▇▇▇▇▇▇▇▇ or Desert Springs, the other
such 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
43
same), and ▇▇▇▇▇▇▇▇▇ shall have the same rights of access to inspect and copy
that ▇▇▇▇▇▇▇▇▇ had prior to the Closing Date; provided, however, that any
records, documents and data 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. ▇▇▇▇▇▇▇▇▇ and Desert Springs shall cause the Company to instruct the
appropriate employees of the Company to cooperate in providing access to such
records to such 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. ▇▇▇▇▇▇▇▇▇ and Desert Springs shall
cause the Company to provide sufficient office space to such requesting Party
without charge to conduct the activities described herein. The employees,
representatives and agents of ▇▇▇▇▇▇▇▇▇ and Desert Springs 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 ▇▇▇▇▇▇▇▇▇ nor Desert Springs shall, and each
of such Parties shall cause the Company not to, discard, destroy or otherwise
dispose of records, documents and data relating to the Facilities Assets or such
Parties without first making such records, documents and data available to the
other such Party for inspection and copying. ▇▇▇▇▇▇▇▇▇ and Desert Springs shall
cause the Company to retain the records, documents and data pertaining to the
UHS Facility at the UHS Facility (or at such other locations as the Company and
such 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 partners, 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, 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
44
related to the Facilities Assets, including, without limitation, arranging
discussions with, and the calling as witnesses of, officers, directors,
managers, 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 Parties 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 Parties 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 Parties 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 ▇▇▇▇▇▇▇▇▇: Universal Health Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
45
Senior Vice President
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: ▇▇▇▇▇▇▇▇▇ Hospital Medical Center LLC
c/o Universal Health Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Box 61558
King of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Senior Vice President
and
▇▇▇▇▇▇▇▇▇ Hospital Medical Center LLC
c/o Quorum Health Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President/General Counsel
46
(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 any 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 or membership interests being transferred
hereunder, and to protect the right, title and interest in and enjoyment of such
membership interests and 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 of the other
Parties executed by a properly authorized officer, in the case of Desert
Springs, or its general partner, in the case of ▇▇▇▇▇▇▇▇▇, (i) extend the time
for the performance of any of the obligations or other actions of another Party;
(ii) waive any inaccuracies in the representations or warranties of another
Party contained in this Agreement; (iii) waive compliance with any of the
covenants of another Party contained in this Agreement; and (iv) waive or modify
performance of any of the obligations of another Party.
(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,
47
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.
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 Parties 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 any 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 any 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. ▇▇▇▇▇▇▇▇▇ will consult with Desert
Springs concerning the means by which the employees, customers, and suppliers of
▇▇▇▇▇▇▇▇▇ and others having dealings with it will be informed of the
transactions contemplated by this Agreement.
48
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
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.
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
49
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 without the prior written
consent of the other Parties.
[SIGNATURES ARE ON THE NEXT FOLLOWING PAGES]
50
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.
▇▇▇▇▇▇▇▇▇ HOSPITAL MEDICAL CENTER, L.P.
BY: UHS HOLDING COMPANY, INC., ITS GENERAL
PARTNER
By:________________________
Title:_____________________
NC-DSH, INC.
By:________________________
Title:_____________________
51
JOINDER AGREEMENT
The undersigned hereby agrees to become a party to that certain
Contribution Agreement (the "Contribution Agreement") by and among ▇▇▇▇▇▇▇▇▇
Hospital Medical Center, L.P., a Delaware limited partnership ("▇▇▇▇▇▇▇▇▇") and
NC-DSH, Inc., a Nevada corporation ("Desert Springs"), for the sole purpose of
unconditionally guaranteeing the performance of the obligations of and the
payments by ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ separately, jointly, or against the undersigned without first
proceeding against ▇▇▇▇▇▇▇▇▇. Bankruptcy or the like of ▇▇▇▇▇▇▇▇▇ 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:_____________________________
52
JOINDER AGREEMENT
The undersigned hereby agrees to become a party to that certain
Contribution Agreement (the "Contribution Agreement") by and among ▇▇▇▇▇▇▇▇▇
Hospital Medical Center, L.P., a Delaware limited partnership ("▇▇▇▇▇▇▇▇▇") 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:_____________________________
53
SCHEDULES, EXHIBITS AND APPENDICES
TO CONTRIBUTION AGREEMENT
Schedule
--------
1.1(b) Tangible Personal Property
1.3.1 Assumed Contracts
1.5 Permissible Liens
1.6(c) List of Additional Assumed Liabilities
1.7(g) Liens and Mortgages Not Released at Closing
2.2 Authorization; Validity and Effect of Agreements
2.3 Subsidiaries; Debt and Equity Securities
2.4 Partnership Interests; 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
3.2 Authorization; Validity and Effect of Agreements
ii
Exhibit
-------
A Form of Opinion of Parties' Counsel
B Form of Management Agreement
C Form of Operating Agreement
D Form of Survey Agreement
iii
