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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 18, 1999
(October 1, 1999)
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PROVINCE HEALTHCARE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 0-23639 62-1710772
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification
Number)
105 Westwood Place
Suite 400
Brentwood, Tennessee 37027
(Address of principal executive offices) (Zip Code)
(615) 370-1377
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As of October 1, 1999, Province Healthcare Company (the "Company"),
through certain limited partnerships that are subsidiaries of the Company,
acquired Trinity Valley Medical Center in Palestine, Texas and Minden Medical
Center in Minden, Louisiana, from Tenet Healthcare Corporation ("Tenet").
Palestine Principal Healthcare Limited Partnership and PHC-Minden, L.P. acquired
Trinity Valley Medical Center and Minden Medical Center, respectively, from S.C.
Cal, Inc. and AHM Minden Hospital, Inc., each a subsidiary of Tenet. The
aggregate purchase price for the hospitals was approximately $77.0 million, with
anticipated subsequent post-closing adjustments for net working capital, capital
lease obligations assumed by the Company and certain employee benefit
obligations. Trinity Valley Medical Center and Minden Medical Center reported
net revenues of $35.1 million and $25.6 million, respectively, as of May 31,
1999.
Pursuant to the terms of the Asset Sale Agreement, as amended (the
"Asset Sale Agreement"), Palestine Principal Healthcare Limited Partnership
acquired substantially all of the assets of Trinity Valley Medical Center. These
assets included the 153-bed general acute care hospital facility, the real
property on which the hospital is located and related facilities. Also, pursuant
to the terms of the Asset Sale Agreement, PHC-Minden, L.P. acquired
substantially all of the assets of Minden Medical Center. These assets included
the 121-bed general acute care hospital facility, the real property on which the
hospital is located and related facilities. The Company intends to continue
operating Trinity Valley Medical Center and Minden Medical Center as general
acute care hospital facilities.
To finance the acquisition of both facilities, the Company borrowed
approximately $77.3 million pursuant to the terms of its Amended and Restated
Credit Facility with a syndicate of banks led by First Union National Bank, as
Agent.
As a result of the acquisition of these two facilities, the Company now
owns or leases 15 general acute care hospitals in eight states with a total of
1,284 licensed beds. The Company also provides management services to 49
primarily non-urban hospitals in 17 states and Puerto Rico, with a total of
3,526 licensed beds.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The Company anticipates that the audited combined financial
statements of Trinity Valley Medical Center and Minden Medical
Center as of and for the fiscal year ended May 31, 1999, will
be filed by amendment within sixty days of October 18, 1999.
(b) Pro Forma Financial Information.
The Company anticipates that pro forma financial statements,
giving effect to the asset purchase of Trinity Valley Medical
Center and Minden Medical Center as if such transaction had
occurred on September 30, 1999, as to the balance sheet, and
on January 1, 1998, as to the income statement, will be filed
by amendment within sixty days of October 18, 1999.
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(c) Exhibits:
2.1 Asset Sale Agreement, dated July 23, 1999, between Tenet
Healthcare Corporation and Province Healthcare Company.
2.2 Amendment No. 1 to Asset Sale Agreement, dated September
29, 1999, between Tenet Healthcare Corporation and Province Healthcare Company.
99.1 Copy of the press release, dated October 1, 1999,
relating to the completion of the acquisition of Trinity Valley Medical Center
and Minden Medical Center.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROVINCE HEALTHCARE COMPANY
By: /s/ Brenda B. Rector
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Brenda B. Rector
Vice President and Controller
Date: October 18, 1999
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EXHIBIT 2.1
ASSET SALE AGREEMENT
between
TENET HEALTHCARE CORPORATION,
a Nevada corporation
and
PROVINCE HEALTHCARE COMPANY,
a Delaware corporation
DATED: July 23, 1999
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LIST OF SCHEDULES
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
<S> <C>
A-1 Subsidiaries
A-2 Acute Care Hospitals
A-3 MOBs
A-4 Other Businesses
1.2 Interim Balance Sheet
1.9(a) Owned Real Property
1.9(b) Leased Real Property
1.9(c) Personal Property
1.9(d) Licenses
1.9(e) Leases
1.9(f) Contracts
1.9(g) Prepaids
1.9(m) Names of Hospitals
1.10(d) Non-Operating Proprietary Assets - Computer
1.10(o) Other Non-Operating Assets
1.11(c) Capital Leases
1.11(i) Other Assumed Obligations
1.14 Material Structural Defects
2.6(a) Compliance with Law
2.7(b) Real Property Encumbrances
2.8(b) JCAHO Accreditation Periods
</TABLE>
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<TABLE>
<S> <C>
2.8(d) Audit Periods
2.8(g) Medical Staff Matters
2.8(h) Terminated Employees
2.10 Financial Statements
2.12 Employee Benefits
2.12(c) Seller Plans Audits
2.14 Personnel List
2.15 Insurance
3.4 Third Party Consents - Purchaser
3.5 Brokers - Purchaser
3.7 Legal Proceedings - Purchaser
7.10 Permitted Title Exceptions
11.1(b) Allocation of Purchase Price
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
<S> <C>
1.6.1 Bills of Sale
1.6.2 Real Estate Assignments
1.6.3 Limited Warranty Deeds
1.6.8 Transitional Services Agreements
1.6.9 Business Services Agreement
4.13 Environmental Survey
6.5 Opinion of Purchaser's Counsel
7.8 Opinion of Seller's In-House Counsel
12.2 Guarantee
</TABLE>
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ASSET SALE AGREEMENT
This Asset Sale Agreement (the "Agreement") is made and entered into as
of the 23rd day of July, 1999 (the "Effective Date") by and between Tenet
Healthcare Corporation, a Nevada corporation ("Seller"), and Province Healthcare
Company, a Delaware corporation ("Purchaser").
RECITALS:
A. Through the wholly-owned subsidiary corporations and wholly-owned
partnerships identified on Schedule A-1 (the "Subsidiaries"), Seller (I) engages
in the business of delivering acute care services to the public through the
acute care hospitals identified on Schedule A-2 (the "Acute Care Hospitals"),
(II) owns and operates certain medical office buildings incident to the
operation of the Acute Care Hospitals as specifically identified on Schedule A-3
(the "MOBs"), and (III) owns and operates other healthcare businesses incident
to the operation of the Acute Care Hospitals as specifically identified on
Schedule A-4 (the "Other Businesses") (the Acute Care Hospitals, MOBs and the
Other Businesses are referred to herein collectively as the "Hospitals").
B. Purchaser desires to purchase, indirectly through wholly-owned
limited partnerships (the "Purchaser Partnerships"), from the Subsidiaries, and
Seller desires to cause the Subsidiaries to sell to Purchaser, substantially all
of the assets with respect to the operation of the Hospitals, for the
consideration and upon the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants contained in this Agreement, and for their mutual
reliance, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS; SALE AND TRANSFER OF ASSETS;
CONSIDERATION; CLOSING
1.1 Definitions. The terms listed below are defined elsewhere in this
Agreement and, for ease of reference, the section containing the definition of
each such term is set forth opposite such term.
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Accounts Receivable............................................................ss.1.10(l)
Acute Care Hospital............................................................Recitals
Agency Settlement..............................................................ss.11.2(a)
</TABLE>
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<TABLE>
<S> <C>
Aggregate Amount...............................................................ss.10.2.2(viii)
Agreement......................................................................Preamble
Assets.........................................................................ss.1.9
Assumed Obligations............................................................ss.1.11
Audit Periods..................................................................ss.2.8(d)
Bills of Sale..................................................................ss.1.6.1
Breaching Party................................................................ss.8.1(b)
Cash Purchase Price............................................................ss.1.2
CEO............................................................................ss.2.10
CFO............................................................................ss.2.10
Claim Notice...................................................................ss.10.4(a)
Closing Date...................................................................ss.1.5
Closing........................................................................ss.1.5
Code...........................................................................ss.2.12(b)
Competing Business.............................................................ss.4.14
Confidentiality Agreement......................................................ss.5.6
Consultant.....................................................................ss.4.13
Contracts......................................................................ss.1.9(f)
COO............................................................................ss.2.10
Damages........................................................................ss.10.2.1
Disclosure Schedule............................................................ss.2
Document Retention Period......................................................ss.9.2(a)
DOJ............................................................................ss.4.12
DON............................................................................ss.2.10
Effected Hospital..............................................................ss.1.5
Effective Date.................................................................Preamble
Effective Time.................................................................ss.1.5
Environmental Laws.............................................................ss.2.6(c)
Environmental Permits..........................................................ss.2.6(b)
Environmental Survey...........................................................ss.4.13
Excluded Liabilities...........................................................ss.1.12
Final Balance Sheet............................................................ss.1.4
Financial Statements...........................................................ss.2.10
Fraction.......................................................................ss.11.3(a)
FTC............................................................................ss.4.12
Governmental Program Transition Payments.......................................ss.11.3
Hospitals......................................................................Recitals
Hospitals' Employees...........................................................ss.5.3(a)
HSR Act........................................................................ss.2.3(b)
Indemnified Party..............................................................ss.10.4
Indemnifying Party.............................................................ss.10.4(a)
Indemnity Notice...............................................................ss.10.4(b)
Independent Auditor............................................................ss.1.4
Independent Real Property Auditor..............................................ss.1.13(b)
</TABLE>
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<TABLE>
<S> <C>
Interim Balance Sheet..........................................................ss.1.2
Inventory......................................................................ss.1.9(h)
Leased Real Property...........................................................ss.1.9(b)
Leases.........................................................................ss.1.9(e)
Licenses.......................................................................ss.1.9(d)
MOBs...........................................................................Recitals
Nondefaulting Party............................................................ss.8.1(b)
Non-Operating Assets...........................................................ss.1.10
Notice Period..................................................................ss.10.4(a)
Omitted Liabilities............................................................ss.2.10
Other Businesses...............................................................Recitals
Owned Real Property............................................................ss.1.9(a)
Permitted Exceptions...........................................................ss.7.10
Personal Property..............................................................ss.1.9(c)
Post-Closing Adjustment Date...................................................ss.1.4
Prepaids.......................................................................ss.1.9(g)
Purchaser Indemnitees..........................................................ss.10.2.1
Purchaser Partnerships.........................................................Recitals
Purchase Price.................................................................ss.1.2
Purchaser......................................................................Preamble
Purchaser's Plan...............................................................ss.5.3(d)
Real Estate Assignments........................................................ss.1.6.2
Real Property..................................................................ss.1.9(b)
Receivable Records.............................................................ss.1.10(m)
Reconciliation.................................................................ss.11.3(a)
Relevant Claim.................................................................ss.10.2.2(viii)
Retained Management Employees..................................................ss.5.3(a)
Seller.........................................................................Preamble
Seller Business Service Area...................................................ss.4.14
Seller Tax Claims..............................................................ss.10.2.1
Subsidiaries' Cost Reports.....................................................ss.11.2(a)
Subsidiaries...................................................................Recitals
Surveys........................................................................ss.4.9
Termination Date...............................................................ss.8.1(f)
Third Party Claim..............................................................ss.10.4(a)
Title Commitment...............................................................ss.4.9
Title Company..................................................................ss.4.9
Title Instruments..............................................................ss.4.9
Title Policy...................................................................ss.4.9
Transition Services............................................................ss.11.3
Transitional Services Agreement................................................ss.1.6.8
WARN...........................................................................ss.1.11(d)
</TABLE>
1.2 Purchase Price. Subject to the terms and conditions of this
Agreement, the aggregate purchase price to be paid by Purchaser to Seller for
the purchase of
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the Assets shall be (a) Seventy-Seven Million Dollars ($77,000,000) (the
"Purchase Price"), plus or minus (b) the amount of Net Working Capital (as
defined below) on the Closing Date, minus (c) the amount of Seller's capital
lease obligations with respect to the Hospitals, if any, that are assumed by
Purchaser pursuant to Section 1.11 of this Agreement, minus (d) twenty-nine and
forty-four one hundredths percent (29.44%) of the Sick Pay Amount (the sum of
(a), (b), (c) and (d) being referred to for purposes of this Agreement as the
"Cash Purchase Price").
For purposes of this Agreement, "Net Working Capital" shall be defined
as an amount equal to the difference between the (i) current assets of the
Subsidiaries with respect to the operation of the Hospitals, which for purposes
of this calculation shall include only (a) the value of the Prepaids, (b) the
value of the Inventory, and (c) other current assets associated with the
Hospitals to the extent they have value, and (ii) the current liabilities of the
Subsidiaries with respect to the operation of the Hospitals, which for purposes
of this calculation shall only include, to the extent assumed, (a) Accounts
Payable, (b) Accrued Expenses, (c) Accrued Payroll, (d) Accrued Paid Time Off,
and (e) Other Current Liabilities (as such terms are utilized on the Interim
Balance Sheet).
For purposes of this Agreement, "Sick Pay Amount" shall be defined as
the amount of accumulated sick pay and extended sick pay obligations of the
Subsidiaries and any affiliate of Seller to the Hired Employees.
At least three (3) calendar days but no more than ten (10) calendar
days prior to the Closing Date, Seller shall prepare and deliver to Purchaser
the latest available unaudited balance sheet of the Subsidiaries with respect to
the operation of the Hospitals (the "Interim Balance Sheet"). The Interim
Balance Sheet shall include a calculation of Net Working Capital and the Sick
Pay Amount and shall be attached hereto as Schedule 1.2. The amounts set forth
in the Interim Balance Sheet shall be subject to adjustment as provided in
Sections 1.3 and 1.4 below. The Cash Purchase Price shall be payable by wire
transfer of immediately available funds to Seller to the account(s) specified by
Seller to Purchaser in writing, subject to the terms of Section 1.7.1 below.
1.3 Inventory. Seller shall cause an inventory to be taken of the
Inventory by employees or representatives of Seller or its affiliates, with said
inventory to be taken in accordance with the Subsidiaries' respective policies
and procedures, as near in time as possible to the Closing Date and with the
results extended and adjusted through the Closing Date. Seller shall permit
representatives or employees of Purchaser to observe such inventory process. The
cost of conducting the inventory shall be borne by Seller. All inventory items
shall be valued at the lesser of cost or current market value. The parties
acknowledge that the inventory to be taken pursuant to this Section 1.3 will not
be conducted until immediately prior to the Closing Date and, as such, the
results of such inventory will not be available until some time after the
Closing Date. Accordingly, the parties agree
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that for purposes of the Interim Balance Sheet, Net Working Capital shall
include the value of the Inventory with respect to the operation of the
Hospitals as reflected by the latest available unaudited balance sheet of the
applicable Subsidiary. For purposes of the Final Balance Sheet, the portion of
Net Working Capital attributable to the Inventory shall be the value of the
Inventory as determined pursuant to this Section 1.3.
1.4 Post-Closing Adjustment to Purchase Price. Within ninety (90)
calendar days after the Closing Date, the final unaudited balance sheet of the
Hospitals as of the Closing Date (the "Final Balance Sheet"), which shall
include a calculation of Net Working Capital and the Sick Pay Amount as of the
Closing Date, shall be prepared by Seller and delivered to Purchaser. The
Interim Balance Sheet and the Final Balance Sheet shall be prepared in a manner
consistent with the terms of Section 2.10. If Purchaser disputes any entry on
the Final Balance Sheet that affects the calculation of Net Working Capital,
Purchaser shall notify Seller in writing (which writing shall contain
Purchaser's determination of the amount of the disputed entry) within twenty
(20) business days after Purchaser's receipt of the Final Balance Sheet from
Seller. If the difference between Seller's and Purchaser's respective
calculations of Net Working Capital is equal to or less than one percent (1%) of
the amount of Seller's calculation, Seller's calculation shall be conclusive and
binding as between Purchaser and Seller. If the difference between Seller's and
Purchaser's respective calculations is greater than one percent (1%) of Seller's
calculation, and Purchaser and Seller cannot resolve such dispute within thirty
(30) business days after Purchaser notifies Seller in writing of such dispute,
then KPMG Peat Marwick, independent certified public accountants (the
"Independent Auditor"), shall review the matter in dispute and, acting as
experts and not as arbitrators, shall promptly decide the proper amounts of such
disputed entries (which decision shall also include a final recalculation of the
Purchase Price). Such decision of the Independent Auditor shall be conclusive
and binding as between Purchaser and Seller, and the costs of such review shall
be borne by both Seller and Purchaser in proportion to the relevant amount each
party's determination has been modified.
Within twenty-five (25) business days after Purchaser's receipt of the
Final Balance Sheet from Seller or, if disputed by Purchaser, within five (5)
business days after the earlier of (a) the date Purchaser and Seller finally
resolve such dispute and recalculate the Purchase Price accordingly, or (b) the
date of receipt of a decision from the Independent Auditor (the "Post-Closing
Adjustment Date"), either (i) Seller shall pay Purchaser in cash or in other
immediately available funds the amount of any decrease in the Purchase Price, or
(ii) Purchaser shall pay Seller in cash or in other immediately available funds
the amount of any increase in the Purchase Price. If Purchaser or Seller, as the
case may be, shall fail to make such payment to the other on the Post-Closing
Adjustment Date, then the party failing to receive such amount due to it shall
be entitled to receive interest on such unpaid amount at a per annum rate equal
to the prime rate reported by the Wall Street Journal under
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"Money Rates" on the Post-Closing Adjustment Date plus two percent (2%) (or the
maximum rate allowed by law, whichever is less) from such defaulting party, such
interest accruing on each calendar day after the Post-Closing Adjustment Date
until payment of such amount and all interest thereon is made.
1.5 Closing Date. The consummation of the transactions contemplated by
this Agreement ("Closing") shall take place at 9:00 a.m. on September 30, 1999,
at the offices of Tenet HealthSystem, 14001 Dallas Parkway, Dallas, Texas 75420
or such other date, time and place as the parties shall mutually agree ("Closing
Date"); provided that all conditions precedent and other matters required to be
completed as of the Closing Date have been or will be completed on such date.
The date set forth in the preceding sentence shall be extended to a date no
later than May 31, 2000 with respect to the Closing of any Hospital (an
"Effected Hospital") with respect to which it is reasonably anticipated that the
Closing will be delayed due to any notice received by Purchaser or Seller from,
or any action initiated by, a governmental party. The Closing with respect to
each Hospital, shall be deemed to have occurred and to be effective as between
the parties as of 12:01 a.m. (determined by reference to the local time zone in
which such Hospital is located) on the next day after the Closing Date (the
"Effective Time"). The parties acknowledge and agree that, as contemplated by
Articles 6 and 7 hereof, there may be one or two Closings. To the extent a first
Closing occurs which does not include an Effected Hospital, such first Closing
shall be conducted and the provisions of this Agreement shall be construed to
take into account the omission of the Effected Hospital, including, without
limitation, (a) the Cash Purchase Price paid at the first Closing shall be
reduced by the amount of the Purchase Price allocated to the Effected Hospital
pursuant to Section 11.1(b) and (b) any references in the Agreement to the
"Closing Date" shall be a reference to such first date of Closing with respect
to the Hospital which is the subject of such first Closing. Any such second
Closing shall be conducted and the provisions of this Agreement shall be
construed to take into account the fact that the first Closing has occurred,
including, without limitation, (x) the Cash Purchase Price paid at the second
Closing shall take into account the amount of the Purchase Price allocated to
the Effected Hospital pursuant to Section 11.1(b) and (y) any references in the
Agreement to the "Closing Date" shall also be a reference to the date of the
second Closing with respect to the Effected Hospital. Any other actions required
by this Agreement to be taken in connection with a Closing shall be construed to
be required to be taken both in connection with the first Closing and the second
Closing.
1.6 Items to be Delivered by Seller at Closing. At or before the
Closing, Seller shall cause each Subsidiary to deliver to Purchaser the
following, duly executed by Seller and such Subsidiary where appropriate:
1.6.1 General Assignment, Bill of Sale and Assumption of
Liabilities in the form of Exhibit 1.6.1 attached hereto (the "Bills of Sale");
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1.6.2 Assignment and Assumption of Real Estate Leases in the form
of Exhibit 1.6.2 attached hereto (the "Real Estate Assignments");
1.6.3 Limited Warranty Deed(s) (or such other deed comparable to
limited warranty deed(s) as is applicable to the jurisdiction at issue) in the
form of Exhibit 1.6.3 attached hereto;
1.6.4 favorable original certificates of good standing, or
comparable status, of Seller and the Subsidiary, issued by the State of Nevada
with respect to Seller and the respective states of incorporation and
organization of such Subsidiary, dated no earlier than a date which is seven (7)
calendar days prior to the Closing Date;
1.6.5 an opinion of Seller's in-house counsel in substantially the
form attached hereto as Exhibit 7.8;
1.6.6 a certificate of the President or any Vice President of
Seller certifying to Purchaser (i) the accuracy in all material respects of the
representations and warranties set forth in Article 2 hereof and compliance with
Seller's covenants set forth in this Agreement, (ii) that all material consents
and approvals that are required from any person, entity, governmental body or
regulatory agency in connection with the consummation of the transactions
contemplated by this Agreement by Seller and the Subsidiaries have been
obtained, and (iii) that all of the conditions contained in Article 6 have been
satisfied or waived;
1.6.7 a certificate of the corporate Secretary of Seller (and of
the corporate Secretary of each Subsidiary and the corporate Secretary of each
general partner of any Subsidiary which is a partnership) certifying to
Purchaser (i) the incumbency of the officers of Seller (and of each Subsidiary
and of each such general partner) on the Effective Date and on the Closing Date
and bearing the authentic signatures of all such officers who shall execute this
Agreement and any additional documents contemplated by this Agreement and (ii)
the due adoption and text of the resolutions of the Board of Directors of
Seller, the sole director of each corporate Subsidiary, the sole director of the
general partner(s) of each partnership Subsidiary and of the shareholder(s)
and/or partners, as applicable of each Subsidiary authorizing (a) the transfer
of the Assets and Assumed Obligations by each Subsidiary to Purchaser and (b)
the execution, delivery and performance of this Agreement and all ancillary
documents and instruments by Seller and each Subsidiary, and that such
resolutions have not been amended or rescinded and remain in full force and
effect on the Closing Date;
1.6.8 if requested by Purchaser, the Transitional Services
Agreements, which shall be in the form of Exhibit 1.6.8 attached hereto (the
"Transitional Services Agreements");
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1.6.9 the Business Services Agreement, which shall be in the form
of Exhibit 1.6.9 attached hereto (the "Business Services Agreement"), pursuant
to which Purchaser will bill and collect Seller's accounts receivable for sixty
(60) days following the Closing Date;
1.6.10 UCC termination statements for any and all financing
statements (which do not correspond to an Assumed Obligation) filed with respect
to the Assets; and
1.6.11 such other instruments, certificates, consents or other
documents as may be reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
1.7 Items to be Delivered by Purchaser at Closing. At or before the
Closing, Purchaser shall execute and deliver or cause to be delivered to Seller
the following, duly executed by Purchaser where appropriate:
1.7.1 payment of the Cash Purchase Price based upon the Interim
Balance Sheet (subject to adjustment as described in Section 1.4), plus any
amount which Purchaser is required to reimburse Seller pursuant to Section
1.11(e), as adjusted to reflect the prorations provided in Section 1.8 of this
Agreement.
1.7.2 a certificate of the President or any Vice President of
Purchaser certifying to Seller (i) the accuracy in all material respects of the
representations and warranties set forth in Article 3 hereof and compliance with
Purchaser's covenants set forth in this Agreement, (ii) that all material
consents and approvals that are required from any person, entity, governmental
body or regulatory agency in connection with the consummation of the
transactions contemplated by this Agreement by Purchaser have been obtained, and
(iii) that all of the conditions contained in Article 7 have been satisfied or
waived, and a similar certificate from each of the Purchaser Partnerships;
1.7.3 a certificate of the corporate Secretary of Purchaser
certifying to Seller (i) the incumbency of the officers of Purchaser on the
Effective Date and on the Closing Date and bearing the authentic signatures of
all such officers who shall execute this Agreement and any additional documents
contemplated by this Agreement and (ii) the due adoption and text of the
resolutions of the Board of Directors of Purchaser authorizing the execution,
delivery and performance of this Agreement and all ancillary documents and
instruments by Purchaser, and that such resolutions have not been amended or
rescinded and remain in full force and effect on the Closing Date, and a similar
certificate from each of the Purchaser Partnerships;
1.7.4 an opinion of Purchaser's counsel in substantially the form
attached hereto as Exhibit 6.5;
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1.7.5 favorable original certificate of good standing, or
comparable status, of Purchaser, issued by the Delaware Secretary of State dated
no earlier than a date which is seven (7) calendar days prior to the Closing
Date, and a similar certificate with respect to each of the Purchaser
Partnerships from its respective state of organization;
1.7.6 if requested by Purchaser, the Transitional Services
Agreements;
1.7.7 the Business Services Agreement, and
1.7.8 such other instruments, certificates, consents or other
documents as may be reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
1.8 Prorations and Utilities. To the extent not otherwise prorated
pursuant to this Agreement, or as reflected in Net Working Capital on the
Interim Balance Sheet or the Final Balance Sheet, Purchaser and Seller shall
prorate (as of the Effective Time), if applicable, current real estate and
personal property lease payments, current real estate and personal property
taxes, current assessments and other similar charges against real estate, plus
all other income and expenses which are normally prorated upon the sale of
assets of a going concern. As to power and utility charges, "final readings" as
of the Closing Date shall be ordered from the utilities; the cost of obtaining
such "final readings," if any to be paid for equally by Seller and Purchaser.
1.9 Transfer of Seller Assets. On the Closing Date, Seller shall cause
each Subsidiary to assign, transfer, convey and deliver to Purchaser, and
Purchaser shall acquire, all of each Subsidiary's right, title and interest in
and to the following assets and properties, as such assets shall exist on the
Closing Date with respect to the operation of any Hospital, such transfer being
deemed to be effective at the Effective Time (collectively, the "Assets"):
(a) all of the real property that is owned by such Subsidiary and
used with respect to the operation of any Hospital, including, without
limitation, the real property described in Schedule 1.9(a) (such
description to include a legal description and address), together with
all buildings, improvements and fixtures located thereupon and all
construction in progress (collectively, the "Owned Real Property");
(b) all of the real property that is leased by such Subsidiary and
used with respect to the operation of any Hospital, including, without
limitation, the leased real property described in Schedule 1.9(b) (the
"Leased Real Property") (the Owned Real Property and the Leased Real
Property are collectively referred to herein as the "Real Property");
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(c) all of the tangible personal property owned by such Subsidiary
with respect to the operation of any Hospital, including all equipment,
furniture, fixtures, machinery, vehicles, office furnishings, and
leasehold improvements (the "Personal Property"), including, without
limitation, the Personal Property described in Schedule 1.9(c);
(d) all of such Subsidiary's rights, to the extent assignable or
transferable, to all licenses, permits, approvals, certificates of
need, certificates of exemption, franchises, accreditations and
registrations and other governmental licenses, permits or approvals
issued to such Subsidiary with respect to the operation of any Hospital
(the "Licenses"), including, without limitation, the Licenses described
in Schedule 1.9(d);
(e) all of such Subsidiary's interest, to the extent assignable or
transferable, in and to all real property and personal property leases
with respect to the operation of any Hospital (the "Leases"),
including, without limitation, those leases described in Schedule
1.9(e);
(f) all of such Subsidiary's interest in and to all contracts and
agreements (including, but not limited to, purchase orders) with
respect to the operation of any Hospital (the "Contracts"), including,
without limitation, those Contracts described in Schedule 1.9(f);
(g) all of those advance payments, prepayments, prepaid expenses,
deposits and the like which exist as of the Closing Date, subject to
the prorations provided in Section 1.8 of this Agreement, which were
made with respect to the operation of any Hospital and with respect to
which Purchaser will receive the benefit after the Closing Date (the
"Prepaids"), the current categories and amounts of which are set forth
on Schedule 1.9(g);
(h) except as excluded by Sections 1.10(e) and 1.10(j), all
inventories of supplies, drugs, food, janitorial and office supplies
and other disposables and consumables located at any of the Hospitals,
or used with respect to the operation of any of the Hospitals (the
"Inventory");
(i) all documents, records, operating manuals, files and computer
software with respect to the operation of any of the Hospitals,
including, without limitation, all patient records, medical records,
employee records, financial records with respect to the operation of
any of the Hospitals, equipment records, construction plans and
specifications, and medical and administrative libraries;
(j) to the extent assignable, all rights in all warranties of any
manufacturer or vendor in connection with the Personal Property;
(k) all goodwill of the businesses evidenced by the Assets;
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(l) all insurance proceeds arising in connection with property
damage to the Assets occurring after the Effective Date and on or prior
to the Closing Date, to the extent not expended on the repair or
restoration of the Assets;
(m) the names, symbols and telephone numbers used with respect to
the operation of any of the Hospitals, including, without limitation,
the names of the Hospitals set forth on Schedule 1.9(m) and all
variants thereof; and
(n) any current assets of the Subsidiaries with respect to the
operation of any of the Hospitals (which are not otherwise specifically
described above in this Section 1.9) which are included in Net Working
Capital, as determined pursuant to Sections 1.2 and 1.4;
PROVIDED, HOWEVER, that the Assets shall not include the Non-Operating Assets as
defined in Section 1.10. Except as set forth below in Section 1.10, the Assets
comprise substantially all of the property and assets used in the conduct of the
businesses and operation of the Hospitals, including without limitation, all of
the tangible personal property of the Subsidiaries used in the conduct and
operation of the Hospitals.
1.10 Non-Operating Assets. Notwithstanding anything to the contrary in
Section 1.9, Seller and the Subsidiaries shall retain all assets owned directly
or indirectly by them (or any of their respective affiliates) which are not
among the Assets, including, without limitation, the following assets of Seller
or any Subsidiary (collectively, the "Non-Operating Assets"):
(a) cash and short-term investments;
(b) all intercompany receivables of Seller or any Subsidiary with
any of their affiliates;
(c) any current assets of the Subsidiaries with respect to the
operation of any of the Hospitals which are not included in Net Working
Capital, as determined pursuant to Sections 1.2 and 1.4;
(d) computer software, programs and hardware which is proprietary
to Seller and/or its respective affiliates, data processing system
manuals and licensed software materials, as more particularly described
in Schedule 1.10(d);
(e) all of Seller's or any affiliate of Seller's proprietary
manuals, marketing materials, policy and procedure manuals, standard
operating procedures and marketing brochures, data and studies or
analyses;
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(f) any asset which would revert to the employer upon the
termination of any Seller Plan, including assets representing a surplus
or overfunding of any Seller Plan;
(g) all national or regional contracts of Seller or any affiliate
thereof which are made available to any of the Hospitals by virtue of
the Hospitals being an affiliate of Seller;
(h) the names "Tenet Healthcare Corporation", "Tenet", "Tenet
HealthSystem", "OrNda HealthCorp", and any other names or symbols not
used exclusively at any of the Hospitals, all abbreviations and
variations thereof and service marks, symbols and logos related
thereto, together with any promotional material, stationery, supplies
or other items of inventory bearing such names or symbols or
abbreviations or variations thereof;
(i) all current contracts between any Subsidiary and any affiliate
of Seller with respect to the operation of any Hospital, except those
approved in writing by Seller and Purchaser to be assigned to Purchaser
after the Closing Date;
(j) the portions of Inventory, Prepaids and other Assets disposed
of, expended or canceled, as the case may be, by any Subsidiary after
the Effective Date and on or prior to the Closing Date in the ordinary
course of business;
(k) assets owned and provided by vendors of services or goods to
any of the Hospitals;
(l) all accounts, notes, interest and other receivables of Seller
and any Subsidiary, and all claims, rights, interests and proceeds
related thereto, including all accounts and other receivables, and cost
report settlements related thereto, arising from the rendering of
services to inpatients and outpatients at any Hospital, billed and
unbilled, recorded and unrecorded, for services provided by Seller or
any Subsidiary while owner of the Assets whether payable by private pay
patients, private insurance, third party payors, Medicare, Medicaid,
CHAMPUS, Blue Cross, or by any other source ("Accounts Receivable");
(m) all documents, records, correspondence, work papers and other
documents relating to the Accounts Receivable, the Subsidiaries' Cost
Reports or Subsidiaries' Agency Settlements (the "Receivable Records");
(n) all claims, rights, interests and proceeds with respect to
state or local tax refunds (including but not limited to property tax)
resulting from periods ending on or before the Closing Date, and the
right to pursue appeals of same; and
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(o) any assets identified in Schedule 1.10(o).
1.11 Assumed Obligations. On the Closing Date, Seller and the
Subsidiaries shall assign, and Purchaser shall assume and agree to discharge
after the Closing, the following liabilities and obligations of Seller and/or
any Subsidiary and only the following liabilities and obligations (collectively,
the "Assumed Obligations"):
(a) all current liabilities of the Subsidiaries with respect to the
operation of any of the Hospitals on or prior to the Closing Date which
are included in Net Working Capital, as determined pursuant to Sections
1.2 and 1.4;
(b) the Contracts, but only to the extent of the obligations
arising thereunder with respect to events or periods after the Closing
Date including, without limitation, any Contract not disclosed on
Schedule 1.9(f) which requires payment by any Subsidiary during the
remaining term of such instrument equal to or less than $10,000 (a
"Minor Contract"), provided that the existence of such Minor Contract
comes to Purchaser's attention no later than the date which is one year
after the Closing Date.
(c) the Leases, including the capital lease obligations of Seller
with respect to the Hospitals listed on Schedule 1.11(c), but only to
the extent of the obligations arising thereunder with respect to events
or periods after the Closing Date including, without limitation, any
Lease not disclosed on Schedule 1.9(e) which requires payment by any
Subsidiary during the remaining term of such Lease equal to or less
than $10,000 (a "Minor Lease"), provided that the existence of such
Minor Lease comes to Purchaser's attention no later than the date which
is one year after the Closing Date.
(d) any and all obligations of Seller and the Subsidiaries under
the Worker Adjustment and Retraining Notification Act ("WARN") with
respect to the operation of the Hospitals as a result of (i) the
consummation of the transaction contemplated by this Agreement
(provided that Seller and the Subsidiaries have, with respect to the
operation of the Hospitals, complied with WARN on or prior to the
Closing Date), (ii) the acts of Purchaser or any affiliate of Purchaser
after the Closing Date or (iii) Purchaser's breach of its covenant with
respect to the Hired Employees as set forth in Section 5.3;
(e) the Sick Pay Amount and all accrued vacation and holiday pay
liabilities of the Subsidiaries (and their respective affiliates) with
respect to the Hired Employees; provided, however, if Seller or any
Subsidiary satisfies any portion of such obligations and liabilities
existing at the Closing by payment to a Hired Employee, then Purchaser
shall reimburse Seller in the amount of such payment at Closing;
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(f) all unpaid real and personal property taxes, if any, that are
attributable to the Assets on or prior to the Closing Date, subject to
the prorations provided in Section 1.8;
(g) all utilities being furnished to the Assets, subject to the
prorations provided in Section 1.8;
(h) any tax liability of Seller or any Subsidiary (other than for
income taxes) incurred as a result of the consummation of the
transaction contemplated by this Agreement; and
(i) any other obligations and liabilities identified in Schedule
1.11(i).
1.12 Excluded Liabilities. Notwithstanding anything to the contrary in
Section 1.11, Purchaser shall not assume or become responsible for any of
Seller's or the Subsidiaries' duties, obligations or liabilities that are not
assumed by Purchaser pursuant to the terms of this Agreement, the Bills of Sale
or the Real Estate Assignment(s), regardless of whether such obligation or
liability is known or unknown, fixed or contingent, and regardless of whether
such liability arises from contract, tort or otherwise (the "Excluded
Liabilities"), and Seller and the Subsidiaries shall remain fully and solely
responsible for all debts, liabilities, contract obligations, expenses,
obligations and claims of any nature whatsoever related to the Assets or the
Hospitals unless assumed by Purchaser under this Agreement, in the Bills of Sale
or in the Real Estate Assignment(s). The Excluded Liabilities shall include,
without limitation:
(a) any current liabilities of the Subsidiaries with respect to the
operation of any of the Hospitals on or prior to the Closing Date (i)
which are not included in Net Working Capital, as determined pursuant
to Sections 1.2 and 1.4 and (ii) which are not otherwise specifically
included in the Assumed Obligations;
(b) all liabilities arising out of or relating to any act,
omission, event or occurrence connected with the use, ownership or
operation of any of the Hospitals or any of the Assets on or prior to
the Closing Date, other than as specifically included in the Assumed
Obligations;
(c) all liabilities arising out of or relating to any act,
omission, event or occurrence connected with Seller, the Subsidiaries
or the operations or activities of Seller or any of the Subsidiaries,
other than as specifically included in the Assumed Obligations;
(d) all liabilities of Seller or any of the Subsidiaries in
connection with claims of professional malpractice to the extent
arising out of or relating to acts, omissions, events or occurrences on
or prior to the Closing Date;
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(e) all liabilities of Seller or any of the Subsidiaries with
respect to its or their 401(k) plans, Section 125 plans and other
Seller Plans and all administrative costs associated with such welfare
benefit plans arising on or prior to the Closing Date;
(f) all liabilities of Seller and/or any Subsidiary relating to the
Subsidiaries' Cost Reports with respect to periods ending on or prior
to the Closing Date, including, without limitation, recapture of
previously reimbursed expenses and depreciation;
(g) all liabilities of Seller or any of the Subsidiaries for
violations of any law, regulation or rule to the extent arising from
acts or omissions on or prior to the Closing Date, including, without
limitation, those pertaining to Medicare and Medicaid fraud or abuse;
and
(h) all liabilities of Seller or any of the Subsidiaries for
commissions or fees owed to any finder or broker in connection with the
transactions contemplated hereunder.
1.13 Risk of Loss.
(a) The risk of loss or damage to any of the tangible property,
transfer of which is contemplated in this Agreement, shall remain with
Seller or any Subsidiary until the Closing and Seller and any
Subsidiary shall maintain its insurance policies covering the Assets,
Personal Property, Owned Real Property and the Hospitals through the
Closing.
(b) With respect to the Real Property, if prior to the Closing, all
or any part of the Owned Real Property is destroyed or damaged by fire
or the elements or by any other cause where such damage in or
destruction is less than $5,000,000, the parties' duties and
obligations under this Agreement shall not be affected and the Closing
shall proceed as scheduled; provided, however, Seller or any Subsidiary
shall assign, transfer and set over to Purchaser all of Seller's or
such Subsidiary's right, title and interest in and to insurance
proceeds on account of such damage or destruction and, if such
insurance policy proceeds are insufficient to repair, restore and/or
replace the Owned Real Property, the difference between the cost to
repair, restore and/or replace and the amount of such proceeds shall be
deducted from the Purchase Price. If prior to the Closing, all or any
part of the Owned Real Property for a Hospital is destroyed or damaged
by fire or the elements or by other cause in an amount exceeding
$5,000,000, Purchaser may elect (i) to purchase such Owned Real
Property and the Closing shall proceed as scheduled (provided, however,
at the Closing Seller shall assign, transfer and set over to Purchaser
all of Seller's right, title and interest in and to any insurance
proceeds on account of such damage or destruction loss plus the
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amount of any deductibles under such insurance policies), (ii) if the
casualty occurs with respect to Owned Real Property not located on a
main campus of a Hospital, Purchaser may elect not to purchase the
Owned Real Property for such Hospital and, in such event, an
appropriate adjustment to the Purchase Price shall be made by Purchaser
and Seller or (iii) if the casualty occurs with respect to Owned Real
Property located on the main campus of a Hospital, Purchaser may elect
to not purchase such Hospital. If Purchaser and Seller are unable to
agree upon the amount of the adjustment described in Section
1.13(b)(ii) within ten (10) business days after Purchaser notifies
Seller in writing of its election to choose the option set forth in
Section 1.13(b)(ii), then Ernst & Young, LLP, independent certified
public accountants (the "Independent Real Property Auditor") shall
review the matter in dispute, and acting as experts and not as
arbitrators, shall promptly decide the proper amount of the adjustment
to the Purchase Price. Such decision of the Independent Real Property
Auditor shall be conclusive and binding as between Purchaser and
Seller, and the costs of such review shall be borne by both Seller and
Purchaser in proportion to the relevant amount each party's
determination of the adjustment contemplated by Section 1.13(b)(ii) has
been modified.
With respect to any Assets other than Owned Real Property which are
destroyed or damaged by fire or the elements or by any other cause prior to the
Closing, Seller shall assign, transfer and set over to Purchaser all of Seller's
or any Subsidiary's right, title and interest to any insurance proceeds on
account of such damage or destruction and shall reimburse Purchaser for any
deductible Purchaser is required to pay in connection with the receipt of such
insurance proceeds.
1.14 Disclaimer of Warranties. Except as expressly set forth in Article
2 hereof, the Assets transferred to Purchaser will be sold by Seller and the
Subsidiaries and purchased by Purchaser in their physical condition on the
Closing Date, "AS IS," WITH NO WARRANTY OF HABITABILITY OR FITNESS FOR
HABITATION, with respect to the Real Property, land, buildings and improvements,
and WITH NO WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, with respect to the
physical condition of the Personal Property and Inventory, any and all of which
warranties (both express and implied) Seller hereby disclaims. All of the
foregoing real and personal property shall be further subject to normal wear and
tear on the land, buildings, improvements and equipment and normal and customary
use of the inventory and supplies in the ordinary course of business up to the
Closing. Notwithstanding the foregoing, except as disclosed in Schedule 1.14, to
Seller's knowledge there are no material structural defects in the Assets.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Seller hereby
represents, warrants and covenants to Purchaser as to the following matters,
except as disclosed in the disclosure schedule as of the Effective Date, as may
be amended pursuant to the terms of this Agreement (the "Disclosure Schedule")
hereby delivered by Seller to Purchaser. Except as otherwise provided herein,
Seller shall be deemed to remake all of the following representations,
warranties and covenants as of the Closing:
2.1 Authorization. Seller has full corporate power and authority to
enter into this Agreement, and Seller and each Subsidiary has, or will have
prior to the Closing, full power and authority to carry out the transactions
contemplated hereby.
2.2 Binding Agreement. All corporate and other actions required to be
taken by Seller and each Subsidiary to authorize their respective execution,
delivery and performance of this Agreement, all documents executed by each of
Seller and any Subsidiary which are necessary to give effect to this Agreement,
and all transactions contemplated hereby, have been duly and properly taken or
obtained, or will be duly and properly taken or obtained, by Seller and each
Subsidiary, as applicable, prior to the Closing Date. No other corporate or
other action on the part of the Seller or any Subsidiary, as applicable, is
necessary to authorize the execution, delivery and performance of this
Agreement, all documents necessary to give effect to this Agreement and all
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and, assuming due and valid execution by
Purchaser, this Agreement constitutes, or will constitute prior to Closing, a
valid and binding obligation of Seller enforceable in accordance with its terms.
2.3 Organization and Good Standing; No Violation.
(a) Except with respect to the Subsidiaries which are partnerships,
each of Seller and the Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada with respect to Seller and in the state of its incorporation
(which is indicated in Schedule A-1) with respect to each Subsidiary.
Each Subsidiary which is a partnership is duly organized and validly
existing under the laws of the state of its organization (which is
indicated in Schedule A-1). Each of Seller and the Subsidiaries has
full power and authority to own, operate and lease its properties and
to carry on its businesses as now conducted.
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(b) Neither the execution and delivery by Seller of this Agreement
nor the consummation of the transactions contemplated hereby by Seller
or any of the Subsidiaries nor compliance with any of the provisions
hereof by Seller or any of the Subsidiaries, will (i) violate, conflict
with or result in a breach of any provision of Seller's or any of the
Subsidiaries' articles of incorporation or bylaws, respectively or
other organizational documents with respect to Subsidiaries which are
partnerships, (ii) violate any order, writ, injunction, ruling or law
of any court or governmental authority, United States or foreign, or
cause the suspension or revocation of any governmental license or
authorization applicable to or binding upon or affecting Seller, any of
the Subsidiaries, any of the Assets or the operation of the businesses
of the Hospitals or (iii) except for the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (the "HSR Act"), and as otherwise
described in Section 2.3(b) of the Disclosure Schedule, require any
consent, approval or authorization of, or notice to, or declaration,
filing or registration with, any governmental or regulatory authority.
2.4 Contracts and Leases.
(a) Schedule 1.9(e) includes a list of all Leases in respect of
Real Property and Personal Property with respect to the operation of
any Hospital (i) which (A) require lease payments by any Subsidiary
during the remaining term of such Lease in excess of $10,000, or (B)
either have a remaining term in excess of twelve (12) months or cannot
be terminated by the applicable Subsidiary upon notice of ninety (90)
calendar days or less, or (ii) to which any physician or other health
care provider (other than Seller or any Subsidiary) is a party.
(b) Schedule 1.9(f) includes a list of all Contracts with respect
to the operation of any Hospital (i) which (A) require the payment by
any Subsidiary during the remaining term of such instrument in excess
of $10,000, or (B) either have a remaining term in excess of twelve
(12) months or cannot be terminated by the applicable Subsidiary upon
notice of ninety (90) calendar days or less, or (ii) to which any
physician or other health care provider (other than Seller or any
Subsidiary) is a party. With respect to the operation of the Hospitals,
neither Seller nor any affiliate of Seller, including the Subsidiaries,
is a party to any agreement with any physician or other health care
provider which has not been evidenced in writing or disclosed in
writing or electronic media to Purchaser prior to the Effective Date.
(c) True and correct copies of the Leases and the Contracts
described in Schedules 1.9(e) and 1.9(f) have previously been furnished
to Purchaser.
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2.5 Required Consents. Neither Seller nor any Subsidiary is a party to
or bound by, nor are any of the Assets subject to, any mortgage, lien, deed of
trust, or any lease, agreement or instrument, or any order, judgment or decree
which (a) requires the consent of another to the execution of this Agreement,
(b) requires the consent of another to consummate the transactions contemplated
by this Agreement, or (c) makes unduly burdensome the consummation of the
transactions contemplated by this Agreement. The consummation of the
transactions contemplated by this Agreement will not result in a breach of any
term or provision of, or constitute (with or without notice or lapse of time or
both) a default under, any agreement or instrument to which Seller or any
Subsidiary is a party, or which is binding on Seller or any Subsidiary, or to
which the Assets are subject. The consummation of the transactions contemplated
by this Agreement will not give any other party to any such agreement or
instrument a right to cancel or terminate the same, a right to modify or amend
the terms thereof, or result in an acceleration of the maturity or performance
of any obligation under any such agreement or instrument. No such breach,
default, cancellation, termination, modification or amendment or acceleration
described in this Section 2.5 would prevent Seller or any Subsidiary from
consummating the transactions contemplated by this Agreement, or would result in
the creation of any lien, security interest, encumbrance, charge, loss or
liability on any assets of Seller or any Subsidiary, including without
limitation the Assets.
2.6 Compliance With Laws and Contracts.
(a) Except as set forth in Schedule 2.6(a), Seller and each
Subsidiary, with respect to the operation of the Hospitals, are in
compliance with all applicable laws, statutes, ordinances, orders,
rules, regulations, policies, guidelines, licenses, certificates,
certificates of need, judgments or decrees of all judicial or
governmental authorities (federal, state, local, foreign or otherwise),
except where the failure to be in such compliance would not have a
material adverse effect on the Assets or the business of any particular
Hospital. Neither Seller nor any Subsidiary, with respect to the
operation of the Hospitals, has been charged with or given notice of,
and to the best knowledge of Seller, neither Seller nor any Subsidiary,
with respect to the operation of the Hospitals, is under investigation
with respect to, any violation of, or any obligation to take remedial
action under, any applicable (i) law, statute, ordinance, rule,
regulation, policy or guideline promulgated, (ii) license, certificate
or certificate of need issued, or (iii) order, judgment or decree
entered, by any federal, state, local or foreign court or governmental
authority relating to any Hospital or the business of any particular
Hospital.
(b) To Seller's knowledge, Seller's and each Subsidiary's ownership
and operation of the respective Hospitals and the Assets are and have
been in compliance with all Environmental Laws (as defined in Section
2.6(c)), except where the failure to be in such compliance would not
have a material adverse
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effect on the Assets or the business of any particular Hospital. Each
Subsidiary has obtained all licenses, permits and approvals necessary
or required under all applicable Environmental Laws (the "Environmental
Permits") for the ownership and operation of its respective Hospitals
and the Assets. All such Environmental Permits are in effect and, to
Seller's knowledge, no action to revoke or modify any of such
Environmental Permits is pending. There is not now pending or, to
Seller's knowledge, threatened, any claim, investigation or enforcement
action by any governmental authority (whether judicial, executive or
administrative) concerning Seller's or any Subsidiary's potential
liability under Environmental Laws in connection with the ownership or
operation of the Hospitals or the Assets. To Seller's knowledge, there
has not been a release or threatened release of any Hazardous Substance
at, upon, in, under or from the Hospitals or the Assets at any time. At
no time during each Subsidiary's ownership of its respective Real
Property, and to Seller's knowledge at no time during others' ownership
of the Real Property, have any Hazardous Substances been present on the
Real Property except as may be utilized as a matter of course in
hospital operations and in accordance with applicable Environmental
Laws.
(c) For the purposes of this Agreement, the term "Environmental
Laws" shall mean all state, federal or local laws, ordinances, codes or
regulations relating to Hazardous Substances or to the protection of
the environment, including, without limitation, laws and regulations
relating to the storage, treatment and disposal of medical and
biological waste. For purposes of this Agreement, the term "Hazardous
Substances" shall mean (i) any hazardous or toxic waste, substance, or
material defined as such in (or for the purposes of) any Environmental
Laws, (ii) asbestos-containing material, (iii) medical and biological
waste, (iv) polychlorinated biphenyls, (v) petroleum products,
including gasoline, fuel oil, crude oil and other various constituents
of such products, and (vi) any other chemicals, materials or
substances, exposure to which is prohibited, limited or regulated by
any Environmental Laws.
(d) Seller and each Subsidiary have performed all obligations
relating to the Assets and the business of the Hospitals, and are not
in breach or default, nor do any circumstances exist which with or
without notice or lapse of time, or both, would result in breach or
default, nor is there any claim of such breach or default with respect
to any obligation to be performed, under any contract, lease, guaranty,
indenture, loan agreement, document or other agreement or arrangement
relating to the Assets or the business of the Hospitals, including the
Leases and Contracts.
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2.7 Title; Sufficiency.
(a) Each Subsidiary has good and marketable fee simple or leasehold
title, as the case may be, to its respective Real Property. Each
Subsidiary has good and valid title to its respective Personal
Property.
(b) The Real Property and the Personal Property is held by each
respective Subsidiary free and clear of all liens, pledges, claims,
charges, security interests or other encumbrances and is not, in the
case of the Real Property, subject to any rights-of-way, building or
use restrictions, exceptions, variances, reservations or limitations of
any nature whatsoever except, with respect to such properties, (i)
liens for current real property taxes and assessments, (ii) mechanics',
carriers', workmen's, repairmen's and other statutory liens, rights of
way, building or use restrictions, exceptions, easements, covenants,
variances, reservations and other limitations of any kind, if any,
which do not materially impair or interfere with the ordinary business
operations of any particular Hospital or for which, in respect of
matters affecting title to the Real Property, title insurance coverage
has been obtained and in respect of liens are either not in default or
Seller has taken action to bond over same to the extent required to
preclude such Real Property, or any portion thereof, being subject to
foreclosure or sale in satisfaction of the claim secured by such lien,
and (iii) other such encumbrances as are set forth in Schedule 2.7(b).
None of the Real Property is subject to a pending, or to Seller's
knowledge threatened, condemnation or similar proceeding.
(c) The Inventory with respect to each Hospital is, and at the
Closing will be, maintained in such quantities as is consistent with
such Hospital's historical practices.
(d) The Assets and the Non-Operating Assets comprise substantially
all of the property and assets used in the conduct of the businesses
and operation of the Hospitals.
2.8 Certain Representations With Respect to the Hospitals.
(a) All licenses, certifications, certificates of need and
contracts which are necessary to operate the business of each
respective Hospital by each respective Subsidiary are valid and in good
standing.
(b) The Hospitals are duly accredited by the Joint Commission on
Accreditation of Healthcare Organizations ("JCAHO") for the periods set
forth in Schedule 2.8(b). With respect to each Hospital, Seller has
previously delivered to Purchaser or will deliver prior to Closing a
true and complete copy of the most recent JCAHO accreditation survey
report and deficiency list, if any; the most recent Statement and
Deficiencies and Plan of
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Correction on Form HCFA-2567; the most recent state licensing report
and list of deficiencies, if any; the most recent fire marshall's
survey and deficiency list, if any, and the corresponding plans of
correction or other responses.
(c) The Hospitals are certified for participation in the Medicare,
Medicaid and CHAMPUS programs, have current and valid provider
contracts with each of such programs, are in substantial compliance
with the conditions of participation of each of such programs and have
received all approvals or qualifications necessary for capital
reimbursement of the Assets. Neither Seller nor any of the Subsidiaries
have received notices from the regulatory authorities which enforce the
statutory or regulatory provisions in respect of any of the Medicare,
Medicaid or CHAMPUS programs of any pending or threatened
investigations with respect to the operation of the Hospitals.
(d) Notices of Program Reimbursement have been issued by the
applicable fiscal intermediary with respect to the cost reports of the
Hospitals for Medicare, Medicaid (if required) and Blue Cross (if
required) through the periods set forth in Schedule 2.8(d)(the "Audit
Periods"). Each of such reports was timely filed. To the knowledge of
Seller, (i) neither Seller nor any Subsidiary has received notice of
any dispute between any Hospital and the applicable governmental agency
or private entity, or their intermediaries or representatives,
regarding such cost reports for periods subsequent to the periods
specified in Schedule 2.8(d), and (ii) there are no pending or
threatened claims by any of such programs against any Hospital with
respect to the Audit Periods or any period thereafter.
(e) With respect to the operation of the Hospitals, neither Seller
nor any Subsidiary has any outstanding loan, grant, loan guarantee or
other financial obligation pursuant to the Hill-Burton Act (42 USC
Section 291a, et seq.).
(f) Seller has previously delivered to Purchaser, with respect to
each Hospital, a copy of the blank forms generally used with respect to
medical staff privilege and membership application or delineation or
privilege; all current medical staff bylaws, rules and regulations and
amendments thereto; and all written contracts with physicians,
physicians groups, or other members of the medical staff of each
Hospital.
(g) Except as set forth in a writing delivered by Seller to
Purchaser which specifically makes reference to this Section, there are
no pending or threatened disciplinary or corrective actions or appeals
with respect to the medical or other staff members of any Hospital.
Schedule 2.8(g) sets forth a complete and accurate list of (a) the name
of each member of the medical
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staff of the Hospitals as of the Effective Date, and (b) the specialty,
if any, of each medical staff member. Notwithstanding the foregoing
provisions of this Section 2.8(g), Seller shall not be required to
disclose any information pursuant to this Section 2.8(g) where such
disclosure is prohibited by state law.
(h) Schedule 2.8(h) sets forth a complete and accurate list of the
name of each employee at each of the Hospitals whose employment has
been terminated since April 22, 1999 except for those employees whose
employment has been terminated for cause or who have voluntarily
resigned or retired.
2.9 Brokers and Finders. Other than Merrill Lynch, neither Seller, any
Subsidiary, nor any affiliate thereof, nor any officer or director thereof, has
engaged any finder or broker in connection with the transactions contemplated
hereunder.
2.10 Financial Statements. The unaudited financial statements of each
Subsidiary with respect to the operation of the Hospitals dated May 31, 1999
attached as Schedule 2.10, the Interim Balance Sheet and the Final Balance Sheet
(collectively the "Financial Statements") have been or will be prepared from the
books and records of each Subsidiary. The balance sheets included in the
Financial Statements fairly present, or will fairly present, the financial
position of each Subsidiary with respect to the operation of the Hospitals as of
the respective dates thereof and the other financial statements included therein
present or will present fairly the results of operations for the periods
indicated, in each case in conformity with generally accepted accounting
principles consistently applied during such periods, except that the Financial
Statements (a) are subject to cost report and other year-end audit adjustments,
(b) do not contain footnotes, (c) were prepared without physical inventories
except for the Final Balance Sheet for which a physical inventory will be taken
in accordance with Section 1.3, (d) do not contain an unaudited statement of
cash flow, (e) are not restated for subsequent events, (f) do not contain a
statement of construction in process, and (g) may not fully reflect the
following liabilities (the "Omitted Liabilities"): (i) vacation, holiday and
similar accruals and accruals in respect of Seller's and the Subsidiaries'
self-insured employee health benefits, (ii) liabilities payable in connection
with workers' compensation claims, (iii) liabilities payable pursuant to any
employee welfare benefit plan (within the meaning of Section 3(1) of the
Employee Retirement Security Act of 1974, as amended ("ERISA")), maintained by
Seller or its affiliates on account of any of the Hospitals' employees, the
chief executive officers of the Hospitals ("CEOs"), the chief financial officers
of the Hospital ("CFOs"), the chief operating officers of the Hospitals ("COOs")
and the directors of nursing of the Hospitals ("DONs"), (iv) federal, state and
local income or franchise taxes and (v) bonuses payable to the CEOs, CFOs, COOs
and DONs.
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2.11 Legal Proceedings. There are no claims, proceedings or
investigations pending or, to the best knowledge of Seller, threatened relating
to or affecting Seller with respect to the operation of the Hospitals, any
Subsidiary or any of the Assets before any court or governmental body (whether
judicial, executive or administrative) in which an adverse determination would
have a material adverse effect on the Assets or the business condition of any
particular Hospital. Neither Seller with respect to the operation of the
Hospitals nor any Subsidiary is subject to any judgment, order, decree or other
governmental restriction specifically (as distinct from generically) applicable
to it or its assets, including the Assets, which would have a material adverse
effect on the Assets or the business condition (financial or otherwise) of any
particular Hospital.
2.12 Employee Benefits.
(a) Schedule 2.12 contains a list of (i) each pension, profit
sharing, bonus, deferred compensation, or other retirement plan or
arrangement of Seller or any Subsidiary with respect to the operation
of the Hospitals, whether oral or written, which constitutes an
"employee pension benefit plan" as defined in Section 3(2) of ERISA,
(ii) each medical, health, disability, insurance or other plan or
arrangement of Seller or any Subsidiary with respect to the operation
of the Hospitals, whether oral or written, which constitutes an
"employee welfare benefit plan" as defined in Section 3(1) of ERISA,
and (iii) each other employee benefit or perquisite provided by Seller
or any Subsidiary with respect to the operation of the Hospitals, in
which any employee of Seller or any Subsidiary participates in his
capacity as such (collectively, the "Seller Plans"). Copies of the
summary plan descriptions and brochures with respect to the Seller
Plans have previously been furnished to Purchaser.
(b) With respect to each Seller Plan, to Seller's knowledge,
neither Seller nor any Subsidiary has any direct or indirect, actual or
contingent liability, other than to make payments for contributions,
premiums or benefits when due in the ordinary course, all of which
payments that are due having been made. Neither the Hospitals nor any
of the Assets are subject to any lien under ERISA or the Internal
Revenue Code of 1986, as amended (the "Code").
(c) All of the Seller Plans have been administered in material
compliance with ERISA and the applicable provisions of the Code. There
are no "accumulated funding deficiencies" within the meaning of ERISA
or the Code or any federal excise tax or other liability on account of
any deficient fundings in respect of the Seller Plans. No reportable
event(s) (within the meaning of ERISA) or prohibited transaction(s)
(within the meaning of the Code), has occurred in respect of any of the
Seller Plans that would result in any material liability to Seller or
any Subsidiary. Other than claims for
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benefits, there are not pending or, to Seller's knowledge, threatened
any claims relating to the Seller Plans by any employee of Seller or
any Subsidiary with respect to the operation of the Hospitals, alleging
a breach or breaches of fiduciary duties or violations of other
applicable state or federal law which could result in liability on the
part of Seller, any Subsidiary or any of the Seller Plans under ERISA
or any other law that would have a material adverse effect on Seller or
any Subsidiary. To Seller's knowledge, none of the Seller Plans
discriminates in operation in favor of employees who are officers or
who are highly compensated, except as permitted under the Code and
ERISA. To Seller's knowledge, all returns, reports, disclosure
statements and premium payments required to be made under ERISA and the
Code with respect to any of the Seller Plans have been timely filed or
delivered, except where any such failure to file or deliver would not
have a material adverse effect on Seller. Except as disclosed in
Schedule 2.12(c), none of the Seller Plans have been audited or
investigated by either the Internal Revenue Service, the Department of
Labor or the Pension Benefit Guaranty Corporation within the last five
(5) years, and there are no outstanding issues with reference to any of
the Seller Plans pending before such governmental agencies.
(d) The American Medical International, Inc. Pension Plan is fully
funded as calculated in accordance with Financial Accounting Standard
Board requirements.
2.13 Taxes and Tax Returns. The Subsidiaries have duly filed all
federal, state and local tax returns required to be filed by them (all of which
are true and correct in all material respects) and have duly paid or made
provision for the payment of all taxes (including any interest or penalties)
which are due and payable, whether or not in connection with such returns.
Seller (with respect to the operation of the Hospitals) and the Subsidiaries
have withheld proper and accurate amounts from their employees' compensation,
and made deposits of all such withholdings, in material compliance with all
withholding and similar provisions of the Code and any and all other applicable
laws.
2.14 Personnel.
(a) Schedule 2.14 sets forth a complete list (as of the date set
forth therein) of names, positions and current annual salaries or wage
rates, bonus and other compensation and/or benefit arrangements,
accrued sick and vacation days, and period of service credited for
vesting as of the date thereof of all full-time and part-time employees
of Seller and the Subsidiaries with respect to the operation of the
Hospitals and indicating whether such employee is a part-time or
full-time employee.
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(b) There are no labor union or collective bargaining
agreements in effect with respect to the employees of Seller or any of
the Subsidiaries with respect to the operation of the Hospitals. There
is no unfair labor practice complaint against Seller or any of the
Subsidiaries pending, or to the best knowledge of Seller threatened,
before the National Labor Relations Board with respect to the operation
of the Hospitals. There is no labor strike, arbitration, dispute,
slowdown or stoppage, and no union organizing campaign, pending, or to
the best knowledge of Seller threatened, by or involving the employees
of Seller or any of the Subsidiaries with respect to the operation of
the Hospitals.
2.15 Insurance. Seller and the Subsidiaries maintain, and have
maintained, without interruption, at all times during the Subsidiaries'
respective ownership of the Hospitals, self-insurance or policies or binders of
insurance covering such risks and events, including personal injury, property
damage, malpractice and general liability, to provide adequate and sufficient
insurance coverage for all the assets and operations of the Hospitals. Schedule
2.15 contains a list of all such insurance maintained by Seller and the
Subsidiaries with respect to the operation of the Hospitals as of the Effective
Date.
2.16 Solvency. Neither Seller nor any Subsidiary is insolvent and
neither Seller nor any Subsidiary will be rendered insolvent as a result of any
of the transactions contemplated by this Agreement. For purposes hereof, the
term "solvency" means that: (i) the fair salable value of Seller's and each
Subsidiary's tangible assets is in excess of the total amount of its respective
liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with generally
accepted accounting principles, and whether direct or indirect, fixed or
contingent, secured or unsecured, and disputed or undisputed); (ii) Seller and
each Subsidiary is able to pay its respective debts or obligations in the
ordinary course as they mature; and (iii) Seller and each Subsidiary has capital
sufficient to carry on its respective businesses and all businesses which it is
respectively about to engage.
2.17 No Untrue or Inaccurate Representations or Warranties. The
representations and warranties of Seller contained in this Agreement, and each
exhibit, schedule, certificate or other written statement delivered pursuant to
this Agreement or in connection with the transactions contemplated hereby, are
accurate, correct and complete, and in the aggregate do not contain any untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements and information contained therein not misleading.
References in this Agreement to "knowledge of Seller", the "best knowledge of
Seller", "known to Seller" or "upon Seller knowing" mean the actual knowledge of
the CEOs, CFOs, DONs, physical plant managers of the Hospitals and business
office managers of the Hospitals without independent investigation.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Purchaser hereby
represents, warrants and covenants to Seller as to the following matters as of
the Effective Date and, except as otherwise provided herein, shall be deemed to
remake all of the following representations, warranties and covenants as of the
Closing:
3.1 Authorization. Purchaser has full corporate power and authority to
enter into this Agreement and has, or will have prior to the Closing, full
corporate power and authority to carry out the transactions contemplated hereby.
3.2 Binding Agreement. All corporate and other actions required to be
taken by Purchaser to authorize the execution, delivery and performance of this
Agreement, all documents executed by Purchaser which are necessary to give
effect to this Agreement, and all transactions contemplated hereby, have been
duly and properly taken or obtained or will be duly and properly taken or
obtained by Purchaser prior to the Closing Date. No other corporate or other
action on the part of Purchaser is necessary to authorize the execution,
delivery and performance of this Agreement, all documents necessary to give
effect to this Agreement and all transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Purchaser and,
assuming due and valid execution by Seller, this Agreement constitutes, or will
constitute prior to Closing, a valid and binding obligation of Purchaser
enforceable in accordance with its terms.
3.3 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has full corporate power and authority to own, operate and lease
its properties and to carry on its business as now conducted.
3.4 No Violation. Neither the execution and delivery by Purchaser of
this Agreement nor the consummation of the transactions contemplated hereby nor
compliance with any of the provisions hereof by Purchaser will (i) violate,
conflict with or result in a breach of any provision of the Articles of
Incorporation, Bylaws or other organizational documents of Purchaser, (ii)
violate any order, writ, injunction, ruling or law of any court or governmental
authority, United States or foreign, applicable to Purchaser, or cause the
suspension or revocation of any governmental license or authorization applicable
to or binding upon or affecting Purchaser, or (iii) except for the applicable
requirements of the HSR Act, and as otherwise described on Schedule 3.4 attached
hereto, require any consent, approval or authorization of, or notice to, or
declaration, filing or registration with, any governmental or regulatory
authority.
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3.5 Brokers and Finders. Except as described on Schedule 3.5, neither
Purchaser nor any affiliate thereof nor any officer or director thereof has
engaged any finder or broker in connection with the transactions contemplated
hereunder.
3.6 Representations of Seller. Purchaser acknowledges that it is
purchasing the Assets on as "AS IS" basis (as more particularly described in
Section 1.14), and that Purchaser is not relying on any representation or
warranty (expressed or implied, oral or otherwise) made on behalf of Seller
other than as expressly set forth herein.
3.7 Legal Proceedings. Except as described on Schedule 3.7, there are
no claims, proceedings or investigations pending or, to the best knowledge of
Purchaser, threatened relating to or affecting Purchaser or any affiliate of
Purchaser before any court or governmental body (whether judicial, executive or
administrative) in which an adverse determination would materially adversely
affect the properties, business condition (financial or otherwise) of Purchaser
or any affiliate of Purchaser. Neither Purchaser nor any affiliate of Purchaser
is subject to any judgment, order, decree or other governmental restriction
specifically (as distinct from generically) applicable to Purchaser or any
affiliate of Purchaser which materially adversely affects the condition
(financial or otherwise), operations or business of Purchaser or any affiliate
of Purchaser.
3.8 Solvency. Purchaser is not insolvent and will not be rendered
insolvent as a result of any of the transactions contemplated by this Agreement.
For purposes hereof, the term "solvency" means that: (i) the fair salable value
of Purchaser's tangible assets is in excess of the total amount of its
liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with generally
accepted accounting principles, and whether direct or indirect, fixed or
contingent, secured or unsecured, and disputed or undisputed); (ii) Purchaser is
able to pay its debts or obligations in the ordinary course as they mature; and
(iii) Purchaser has capital sufficient to carry on its businesses and all
businesses which it is about to engage.
3.9 No Knowledge of Seller's Breach. Neither Purchaser nor any of its
affiliates has knowledge of any breach of any representation or warranty by
Seller or of any other condition or circumstance that would excuse Purchaser
from its timely performance of its obligations hereunder. If information comes
to Purchaser's attention on or before the Closing Date (whether through Seller
or otherwise and whether before or after the Effective Date) which indicates
that Seller has breached any of its representations and warranties under this
Agreement, Purchaser must immediately notify Seller of such information, and
Purchaser's failure to so notify Seller shall constitute a waiver by Purchaser
of Seller's breach, if any, of any representation or warranty. If information
comes to Purchaser's attention on or before the Closing Date (whether through
Seller or otherwise and whether before or after the Effective Date) which would
excuse
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Purchaser from its timely performance of its obligations hereunder, Purchaser
must immediately notify Seller if any such information comes to its attention on
or before the Closing Date, and Purchaser's failure to so notify Seller shall
constitute a waiver of such condition or circumstances insofar as it would
excuse Purchaser from its timely performance of its obligations hereunder.
3.10 Ability to Perform. Purchaser has the ability to obtain funds in
cash in amounts equal to the Purchase Price by means of credit facilities or
otherwise and will at the Closing have immediately available funds in cash,
which are sufficient to pay the Purchase Price and to pay any other amounts
payable pursuant to this Agreement and to consummate the transactions
contemplated by this Agreement.
3.11 No Untrue or Inaccurate Representations or Warranties. The
representations and warranties of Purchaser contained in this Agreement, and
each exhibit, schedule, certificate or other written statement delivered
pursuant to this Agreement, or in connection with the transactions contemplated
hereby, are accurate, correct and complete, and in the aggregate do not contain
any untrue statement of material fact or omit to state a material fact necessary
in order to make the statements and information contained therein not
misleading. References in this Agreement to "knowledge of Purchaser", the "best
knowledge of Purchaser", "known to Purchaser" or "upon Purchaser knowing" mean
the actual knowledge of the Chief Executive Officer, Chief Financial Officer and
Chief Operating Officer of Purchaser, without independent investigation.
ARTICLE 4
COVENANTS OF SELLER
4.1 Access and Information; Inspections. From the Effective Date until
Closing, Seller shall, and shall cause the Subsidiaries to, afford to the
officers and agents of Purchaser (which shall include accountants, attorneys,
bankers and other consultants and agents of Purchaser) full and complete access
during normal business hours to and the right to inspect the plants, properties,
books, accounts, records and all other relevant documents and information with
respect to the assets, liabilities and business of the Hospitals. From the
Effective Date until Closing, Seller shall, and shall cause the Subsidiaries to,
furnish Purchaser with such additional financial and operating data and other
information in Seller's or any Subsidiary's possession as to businesses and
properties of the Hospitals as Purchaser or its representatives may from time to
time reasonably request, without regard to where such information may be
located. Purchaser's right of access and inspection shall be exercised in such a
manner as not to interfere unreasonably with the operations of the Hospitals.
Such access may include consultations with the personnel of Seller or the
Subsidiaries provided, however, that Purchaser shall not consult with or contact
in any manner any physicians on the medical staff at any of
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the Hospitals without Seller's prior written consent. Further, Purchaser may, at
its sole cost and expense (except as otherwise provided in Section 12.12),
undertake environmental, mechanical and structural surveys of the Hospitals.
Purchaser acknowledges that it shall coordinate its inspection activities
contemplated by this Section 4.1 through David R. Mayeux or his designee.
4.2 Preserve Accuracy of Representations and Warranties. Seller shall,
and shall cause the Subsidiaries to, refrain from any action or inaction that
would render any representation or warranty contained in Article 2 of this
Agreement inaccurate as of the Closing Date.
4.3 Conduct of Business. On and after the Effective Date and prior to
the Closing, and except as otherwise consented to or approved by an authorized
officer of Purchaser or required by this Agreement, Seller shall, and shall
cause each Subsidiary to, with respect to the operation of the Hospitals:
(a) carry on its respective businesses with respect to the
operation of the Hospitals in substantially the same manner as
presently conducted and not make any material change in personnel,
operations, finance, accounting policies, or real or personal property;
(b) maintain each Hospital and all parts thereof and all other
Assets in operating condition in a manner consistent with past
practices, ordinary wear and tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting each Hospital, its respective operations or the Assets;
(d) keep in full force and effect present insurance policies or
other comparable self-insurance; and
(e) use its reasonable commercial efforts to maintain and preserve
its respective business organizations intact, retain its respective
present employees at each Hospital and maintain its respective
relationships with physicians, suppliers, customers and others having
business relationships with each Hospital and take such actions as are
necessary and use its reasonable commercial efforts to cause the
smooth, efficient and successful transition of business operations and
employee and other relations to the Purchaser as of Closing.
4.4 Negative Covenants. From the Effective Date until Closing, with
respect to the operation of the Hospitals, Seller shall not, and Seller shall
cause each Subsidiary to not, without the prior written consent of Purchaser or
except as may be required by law:
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(a) amend or terminate any of the Contracts, enter into any new
contract or commitment, or incur or agree to incur any liability,
except in the ordinary course of business (which ordinary course of
business shall include renewals of any Contract), and in no event with
respect to any such contract, commitment or liability as to which the
total to be paid in the future under the contract, commitment or
liability exceeds $50,000;
(b) increase compensation payable or to become payable or make any
bonus payment to or otherwise enter into one or more bonus agreements
with any employee, except in the ordinary course of business in
accordance with Seller's and any Subsidiary's customary personnel
policies;
(c) create, assume or permit to exist any new debt, mortgage, deed
of trust, pledge or other lien or encumbrance upon any of the Assets;
(d) acquire (whether by purchase or lease) or sell, assign, lease,
or otherwise transfer or dispose of any property, plant or equipment,
except in the ordinary course of business with comparable replacement
thereof;
(e) except with respect to previously budgeted expenditures,
purchase capital assets or incur costs in respect of construction in
progress;
(f) take any action outside the ordinary course of business; or
(g) reduce Inventory except in the ordinary course of business.
4.5 Required Approvals. Seller shall reasonably cooperate with
Purchaser and its representatives and attorneys: (i) in obtaining all consents,
approvals, authorizations, clearances, certificates of need and licenses
required to carry out the transactions contemplated by this Agreement
(including, without limitation, those of governmental and regulatory
authorities) or which Purchaser reasonably deems necessary or appropriate, and
(ii) in the preparation of any document or other material which may be required
by any governmental agency as a predicate to or result of the transactions
contemplated herein; provided, however, that it shall be Purchaser's
responsibility to obtain the certificates of need and licenses required to carry
out the transactions contemplated by this Agreement. As soon as practicable
after the Effective Date, Seller will make all governmental filings required to
be made by it in order to consummate the transactions contemplated herein
(including all filings under the Hart-Scott-Rodino Act, as more particularly
described below).
4.6 Additional Financial Information. Within thirty (30) calendar days
following the end of each calendar month prior to Closing, Seller shall deliver
to Purchaser complete copies of the unaudited balance sheet and related
unaudited statements of income relating to each Subsidiary with respect to the
operation of the Hospitals for each month then ended, together with a
year-to-date compilation
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and the notes, if any, related thereto, which presentation shall be consistent
with the provisions of Section 2.10 which are applicable to the Financial
Statements.
4.7 No-Shop.
(a) From and after the Effective Date until the earlier of the
Closing or the termination of this Agreement, Seller shall not, and
shall cause the Subsidiaries to not, without the prior written consent
of Purchaser: (i) offer for sale or lease the assets of the Hospitals
or the Assets or of any stock or other securities or other interest
owned by Seller or its affiliates in any Subsidiary; (ii) solicit
offers to buy all or any portion of any of the Hospitals or the Assets,
or any stock or other securities or other interest owned by Seller or
its affiliates in any Subsidiary; (iii) hold discussions with any party
(other than Purchaser) looking toward such an offer or solicitation or
looking toward a merger or consolidation of any Subsidiary; or (iv)
enter into any agreement with any party (other than Purchaser) with
respect to the sale or other disposition of any of the Hospitals or the
Assets or of any stock or other securities or other interest owned by
Seller or its affiliates in any Subsidiary, or with respect to any
merger, consolidation, or similar transaction involving any Subsidiary.
Seller shall promptly advise Purchaser of any inquiry, proposal,
solicitation or communication of any kind relating to, or contemplating
any of the foregoing. Notwithstanding the foregoing, this Section 4.7
shall not be construed to prohibit Seller from engaging in discussions
regarding corporate transactions involving its or its affiliates' stock
or securities, including macro-level mergers, reorganizations or other
transactions, so long as the terms thereof do not contemplate the sale
or lease or other disposition of the Hospitals or the Assets.
(b) Any reference in this Agreement to an "affiliate" shall mean
any Person directly or indirectly controlling, controlled by or under
common control with a second Person; provided, however, an "affiliate"
shall not include the stockholders of Seller or any officer or director
of any Person. The term "control" (including the terms "controlled by"
and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise. A "Person" shall mean any
natural person, partnership, corporation, limited liability company,
association, trust or other legal entity.
4.8 Seller's Efforts to Close. Seller shall use its reasonable
commercial efforts to satisfy all of the conditions precedent set forth in
Articles 6 and 7 to its or Purchaser's obligations under this Agreement to the
extent that Seller's action or inaction can control or influence the
satisfaction of such conditions.
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4.9 Title Matters. Prior to the Closing Date, Seller shall deliver to
Purchaser (a) a preliminary binder or title commitment(s) (the "Title
Commitment") sufficient for the issuance of an A.L.T.A. Extended Coverage
Owner's Title Insurance Policy with respect to the Owned Real Property (the
"Title Policy"), issued by Chicago Title Insurance Company (the "Title
Company"), together with true, correct and legible copies of all instruments
referred to therein as conditions or exceptions to title (the "Title
Instruments") and (b) A.L.T.A. surveys of the Owned Real Property complying with
the Minimum Standard Detail Requirements for ALTA/ASCM Land Title Surveys for
the Owned Real Property (the "Surveys"). Section 12.12 shall govern which party
or parties hereto shall bear the costs and expenses of the Title Commitment, the
Title Policy and the Surveys.
4.10 Termination of Hospitals' Employees. Upon the Effective Time, the
Hospitals' Employees (other than the Retained Management Employees) shall cease
to be employees of Seller and Seller's affiliates including the Subsidiaries,
and shall be removed from such entities' respective payrolls. Seller shall, and
shall cause the Subsidiaries to, terminate effective as of the Effective Time
the active participation of all of the Hospitals' Employees (other than the
Retained Management Employees) in all of the Seller Plans, and shall cause each
Seller Plan to comply with all applicable laws. After the Effective Time, Seller
shall, and shall cause the Subsidiaries to, timely make or cause to be made by
their affiliates appropriate distributions to, or for the benefit of, all of the
Hospitals' Employees (other than the Retained Management Employees) prior to the
Effective Time in respect of the Seller Plans which are in force and effect with
respect to the Hospitals' Employees (other than the Retained Management
Employees) at the Hospitals immediately prior to the Effective Time in
accordance with ERISA, the Code and the terms and conditions of the Seller
Plans; provided, however, no such distribution shall be required to the extent
it is among the Assumed Obligations.
4.11 Termination Cost Reports. Seller shall, and shall cause the
Subsidiaries to, file all Medicare, Medicaid, CHAMPUS, Blue Cross and any other
termination cost reports required to be filed as a result of the consummation of
(a) the transfer of the Assets to Purchaser and (b) the transactions
contemplated by this Agreement. All such termination cost reports shall be filed
by Seller or the applicable Subsidiary in a manner that is consistent with
current laws, rules and regulations.
4.12 Hart-Scott-Rodino Act Filings. Seller will (a) take promptly all
actions necessary to make the filings required of Seller or its affiliates under
the HSR Act on July 30, 1999 or as soon thereafter as practicable, (b) comply at
the earliest practicable date with any request for additional information
received by Seller or its affiliates from the Federal Trade Commission (the
"FTC") or Antitrust Division of the Department of Justice (the "DOJ") pursuant
to the HSR Act, and (c) cooperate with Purchaser in connection with Purchaser's
filings under the HSR Act and in connection with resolving any investigation or
other regulatory inquiry concerning
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the transactions contemplated by this Agreement commenced by either the FTC or
the DOJ. All fees and expenses of Seller incurred in connection with Seller's
filing under the HSR Act shall be borne by Seller.
4.13 Environmental Survey. Seller shall promptly obtain from an
environmental consulting firm (the "Consultant") a written environmental survey
of the Owned Real Property (the "Environmental Survey") and shall deliver the
Environmental Survey to Purchaser, which survey shall be identified on Exhibit
4.13 hereto. Section 12.12 shall govern which party or parties hereto shall bear
the costs and expenses of the Environmental Survey.
4.14 Noncompetition. As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, neither
Seller, any Subsidiary, nor any of their affiliates, nor any of their
successors, shall, for a period of two (2) years following the Closing Date,
without the prior written consent of Purchaser, directly or indirectly, invest
in, own, manage, operate, control or participate in the ownership, management,
operation or control of, or serve as a consultant or lender to, any Competing
Business within the Seller Business Service Area. For purposes of this
Agreement, the term "Competing Business" means the business of owning and
operating general acute care hospitals, and the term "Seller Business Service
Area" means the area within a thirty (30) mile radius of Trinity Valley Medical
Center and a twenty-five (25) mile radius of Minden Medical Center.
Notwithstanding the foregoing, the following shall be excluded from the
foregoing provisions of this Section 4.14: (a) the general acute care hospital
activities of Seller and its affiliates as of the Closing Date (other than the
activities of the Hospitals) and (b) Seller's or any affiliate of Seller's
acquisition and operation of a general acute care hospital within the Seller
Business Service Area after the Closing Date so long as such hospital was
acquired in a transaction in which the amount of consideration allocated to such
hospital is less than ten percent (10%) of the total consideration necessary to
consummate such transaction; provided, however, nothing in this Section 4.14
shall prevent Seller from acquiring, operating or managing East Texas Medical
Center Regional Healthcare System and its affiliated hospitals, as a whole.
Seller shall cause each of its affiliates, and any successors to its affiliates,
to comply with the obligations imposed by this Section 4.14. In the event that
the provisions contained in this Section 4.14 shall ever be deemed to exceed the
time or geographic limits or any other limitations permitted by applicable law
in any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum extent permitted by applicable law.
4.15 Enforceability. Seller hereby acknowledges that the covenant
contained in Section 4.14 above is a condition precedent to Purchaser's entering
into this Agreement, and that such restrictions are reasonable and necessary to
protect the legitimate interests of Purchaser following the Closing. Seller also
hereby acknowledges that any violation of Section 4.14 would result in
irreparable injury to Purchaser and the remedy at law for any breach of Section
4.14 would be
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inadequate. Seller specifically acknowledges and agrees that Purchaser shall be
entitled to an equitable accounting of all earnings, profits and other benefits
arising from such breach and further agrees to pay the reasonable fees and
expenses, including attorneys' fees, incurred by Purchaser in enforcing the
restrictions contained in Section 4.14.
4.16 Cooperation. After the Effective Date, Seller's human
resources department will give reasonable assistance to Purchaser's (and its
affiliates') human resources department with respect to the transition of the
Hospitals' Employees from the Seller Plans to Purchaser's (and its affiliates')
employee pension benefit plans and employee health or welfare benefit plans.
ARTICLE 5
COVENANTS OF PURCHASER
5.1 Purchaser's Efforts to Close. Purchaser shall use its
reasonable commercial efforts to satisfy all of the conditions precedent set
forth in Articles 6 and 7 to Purchaser's or Seller's obligations under this
Agreement to the extent that Purchaser's action or inaction can control or
influence the satisfaction of such conditions.
5.2 Required Approvals. Purchaser (a) shall use its reasonable
best efforts to secure, as promptly as practicable, before the Closing Date,
all consents, approvals, authorizations, clearances, certificates of need and
licenses required to carry out the transactions contemplated by this Agreement
(including, without limitation, those of governmental and regulatory
authorities) and to cause all of its covenants and agreements to be performed,
satisfied and fulfilled; and (b) will provide such other information and
communications to governmental and regulatory authorities as Seller or such
authorities may reasonably request.
5.3 Certain Employee Matters.
(a) Purchaser covenants and agrees that it shall make
offers of employment (in substantially equivalent positions) to all of
the persons who are employees of (i) the Subsidiaries with respect to
the operation of the Hospitals or (ii) any affiliate of Seller which
employs individuals at any of the Hospitals, (whether such employees
are full time employees, part-time employees, on short-term disability
or on leave of absence pursuant to Seller's policies, the Family and
Medical Leave Act of 1993 or other similar local law, but excluding
those employees who have been granted long-term disability benefits)
as of the Closing Date (the "Hospitals' Employees"). Notwithstanding
the foregoing, Purchaser acknowledges that Seller has the right, but
is not required, to retain any management-level Hospital Employee who
does not accept Purchaser's employment offer made under this Section
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5.3(a), which individuals will remain employed by Seller or its
applicable affiliate as of the Effective Time (the "Retained
Management Employees"). Any of the Hospitals' Employees who accept an
offer of employment with Purchaser as of or after the Effective Time
shall be referred to herein as the "Hired Employees". Purchaser
covenants and agrees that it shall continue to employ in comparable
positions that number of the Hired Employees as shall be necessary to
avoid any liability of Seller under WARN. Purchaser shall ensure that
the terms and conditions of employment (including level of
compensation and benefits, including without limitation health
insurance plans containing a waiver of pre-existing conditions clause)
of each of the Hired Employees after the Closing Date are
substantially equivalent to that provided the Hospitals' Employees as
of the Effective Date.
(b) Purchaser shall give all Hired Employees full credit
for accumulated sick pay as reflected by the Sick Pay Amount and for
all of the accrued vacation and holiday pay of such employees, either
by (i) crediting such employees the accrued time off reflected in the
employment records of Seller as of the Closing Date or (ii) by making
full payments to such employees of the amounts which such employees
would have received had they taken their accrued or accumulated
holiday or vacation time, provided, however, that no payment to such
employees shall be required with respect to accumulated sick time
except to the extent required by Seller's policies with respect to
accumulated sick time.
(c) After the Closing Date, Hired Employees shall be
eligible for a medical and hospital plan sponsored by Purchaser. Hired
Employees shall be given credit for periods of employment with the
Subsidiaries and Seller's affiliates, as applicable, on or prior to
the Closing Date for purposes of determining eligibility to
participate and amount of benefits (including without limitation
vesting of benefits), and preexisting condition limitations will be
waived with respect to Hired Employees and their covered dependents
unless such preexisting condition limitations were applicable on or
prior to the Closing Date. In addition, if on or prior to the Closing
Date a Hired Employee or his covered dependents paid any amounts
towards a deductible or out-of-pocket maximum in Seller's (or its
affiliate's) medical and health plan's current fiscal year, such
amounts shall be applied toward satisfaction of the deductible or
out-of-pocket maximum in the current fiscal year of Purchaser's
medical and health plan that covers Hired Employees following the
Closing Date.
(d) Within two (2) years after Closing, Purchaser's Plan
shall (i) be amended to provide for a plan-to-plan transfer from
Seller's (or its affiliate's) plan with respect to the Hospitals'
Employees (other than the Retained Management Employees) that is
qualified under Section 401(a) and 401(k) of the Code, (ii) accept a
transfer of assets from the above plan, (iii) file any
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required returns relating to the transfer with the Internal Revenue
Service, and (iv) be amended to provide protected withdrawal and
distribution rights relating to the transferred assets in accordance
with Section 411(d)(6) of the Code. For purposes of this Agreement,
"Purchaser's Plan" shall mean a retirement plan qualified under
Section 401(a) of the Code that is sponsored by Purchaser or one of
its controlled group or affiliated service group members, as defined
in Section 414 of the Code.
(e) Any applicable employee of Seller or any Subsidiary
with respect to the operation of the Hospitals who is identified as a
current or former participant (and any eligible dependent thereof) of
the Seller Plans who is eligible to receive continuation coverage
(within the meaning of Section 4980B of the Code and Part 6 of
Subtitle B of Title 1 of ERISA) will remain covered through Seller's
and its affiliates' COBRA provider. Immediately following the Closing
Date and as a result of the transactions contemplated by this
Agreement, Seller, its affiliates and the Subsidiaries shall not offer
COBRA benefits with respect to any of the Seller Plans to former
employees (and their dependents) who are employed by Purchaser at any
Hospital as of the date such employees become eligible for Purchaser's
medical and dental plans. Seller, its affiliates and the Subsidiaries
will thereby be released of COBRA responsibility and liability for
such employees.
(f) After the Closing, Purchaser's human resources
department will give reasonable assistance to Seller's (and its
affiliates') human resources department with respect to Seller's,
Seller's affiliates' and the Subsidiaries' post-Closing administration
of Seller's, Seller's affiliates' and the Subsidiaries' pre-Closing
employee pension benefit plans and employee health or welfare benefit
plans for the Hospitals' Employees (other than the Retained Management
Employees).
5.4 Use of Business Names. Purchaser covenants that it and its
affiliates shall not use in their respective trades or businesses the names
"Tenet Healthcare Corporation", "Tenet", "Tenet HealthSystem", "OrNda
HealthCorp", and any other names or symbols not used exclusively at any of the
Hospitals on or prior to Closing, any abbreviations or variations thereof or
service marks, symbols or logos related thereto, nor any promotional material,
stationery, supplies or other items of inventory bearing either such names,
symbols or abbreviations or variations thereof.
5.5 Non-Operating Assets. As soon as practicable after the
Closing, Purchaser shall deliver to Seller or Seller's designee any
Non-Operating Assets found at any of the Hospitals after the Closing Date,
without imposing any charge on Seller for Purchaser's storage or holding of
same after the Closing Date.
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5.6 Confidentiality. Purchaser shall, and shall cause its
employees, representatives and agents to, hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of Purchaser's counsel, by other requirements of law, all Confidential
Information (as hereinafter defined), and Purchaser shall not disclose the
Confidential Information to any person, except as otherwise may be reasonably
necessary to carry out the transactions contemplated by this Agreement,
including any business or diligence review by or on behalf of Purchaser. For
the purposes hereof, "Confidential Information" shall mean all information of
any kind concerning Seller, any Subsidiary or the business of the Hospitals, in
connection with the transactions contemplated by this Agreement except
information (i) ascertainable or obtained from public or published information,
(ii) received from a third party not known by Purchaser to be under an
obligation to Seller or any Subsidiary to keep such information confidential,
(iii) which is or becomes known to the public (other than through a breach of
this Agreement), or (iv) which was in Purchaser's possession prior to
disclosure thereof to Purchaser in connection herewith. The rights of Seller
under this Section 5.6 shall be in addition and not in substitution for the
rights of Seller under that certain Confidentiality Agreement between Seller
and Purchaser, dated February 18, 1999 (the "Confidentiality Agreement"), which
Confidentiality Agreement shall survive Closing.
5.7 Enforceability. Purchaser hereby acknowledges that the
covenant contained in Section 5.6 above is a condition precedent to Seller's
entering into this Agreement, and that such restrictions are reasonable and
necessary to protect the legitimate interests of Seller following the Closing.
Purchaser also hereby acknowledges that any violation of Section 5.6 would
result in irreparable injury to Seller and the remedy at law for any breach of
Section 5.6 would be inadequate. Purchaser specifically acknowledges and agrees
that Seller shall be entitled to an equitable accounting of all earnings,
profits and other benefits arising from such breach and further agrees to pay
the reasonable fees and expenses, including attorneys' fees, incurred by Seller
in enforcing the restrictions contained in Section 5.6.
5.8 Hart-Scott-Rodino Act Filings. Purchaser shall (a) take
promptly all actions necessary to make the filings required of Purchaser or its
affiliates under the HSR Act on July 30, 1999 or as soon thereafter as
practicable, (b) comply at the earliest practicable date with any request for
additional information received by Purchaser or its affiliates from the FTC or
the DOJ pursuant to the HSR Act, and (c) cooperate with Seller in connection
with Seller's or its affiliates' filings under the HSR Act and in connection
with resolving any investigation or other regulatory inquiry concerning the
transactions contemplated by this Agreement commenced by either the FTC or the
DOJ. All filing fees imposed in connection with Purchaser's filings under the
HSR Act shall be borne by Purchaser.
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5.9 Acknowledgement Regarding Year 2000 Compliance. Purchaser
acknowledges that (i) all Year 2000 compliance efforts of Seller and the
Subsidiaries with respect to the Assets will terminate on the Closing Date,
(ii) notwithstanding anything to the contrary contained herein, Seller makes no
representation or warranty regarding Year 2000 compliance with respect to any
of the Assets and (iii) Purchaser releases Seller and the Subsidiaries from all
liability with respect to Year 2000 compliance relating to the Assets. As used
herein, the term "Year 2000 compliance" includes the ability to perform any of
the following functions: (i) to consistently handle date information before, at
and after January 1, 2000, including accepting date input, providing date
output, and performing calculations on dates or portions of dates; (ii) to
function accurately without interruption (or disruption of other software or
systems) before, at and after January 1, 2000, without any change in operations
associated with the advent of the new century; (iii) to respond to two-digit
date input in a way that resolves any ambiguity as to century; and (iv) to
store and provide output of date information in ways that are unambiguous as to
century.
5.10 Waiver of Bulk Sales Law Compliance. Purchaser hereby waives
compliance by Seller and the Subsidiaries with the requirements, if any, of
Article 6 of the Uniform Commercial Code as in force in any state in which the
Assets are located and all other similar laws applicable to bulk sales and
transfers.
5.11 Preserve Accuracy of Representations and Warranties.
Purchaser shall refrain from any action or inaction that would render any
representation or warranty contained in Article 3 inaccurate as of the Closing
Date.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Seller's and the Subsidiaries' obligation to sell the Assets and to
close the transactions as contemplated by this Agreement shall be subject to
the satisfaction of each of the following conditions on or prior to the Closing
Date unless specifically waived in writing by Seller in whole or in part at or
prior to the Closing. Notwithstanding the foregoing, the conditions precedent
to the obligations of Seller contained in this Article 6 shall operate on a
Hospital by Hospital basis. In the event all conditions precedent to the
obligations of Seller contained in this Article 6 have been met, performed or
fulfilled in respect of either of the Hospitals, then Seller shall be obligated
to go forward to consummate the sale of such Hospital irrespective of the
absence of such obligation in respect of the other Hospital. Accordingly, a
failure to satisfy a condition precedent set forth in this Article 6 that is
specific to one or more Hospital(s)to be sold by Seller under this Agreement
shall not automatically constitute a failure to satisfy such condition
precedent as to other Hospitals to be sold by Seller hereunder to which such
condition does not apply.
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6.1 Warranties True and Correct. Each of the representations and
warranties made by Purchaser and set forth in this Agreement and in the
exhibits and schedules attached hereto shall be true and correct in all
material respects when made and as of the Closing Date.
6.2 Signing and Delivery of Instruments. Purchaser shall have
executed and delivered all documents, instruments and certificates required to
be executed and delivered pursuant to the provisions of this Agreement.
Purchaser acknowledges that Purchaser shall not satisfy the condition precedent
set forth in this Section 6.2 (as it relates to the delivery of the Purchase
Price) unless Purchaser initiates the wire transfer of the Cash Purchase Price
to Seller, and provides to Seller a Federal Reserve wire reference number with
respect thereto, on or before 12:00 noon (Pacific time) on the Closing Date.
6.3 Unfavorable Action or Proceeding. On the Closing Date, no
orders, decrees, judgments or injunctions of any court or governmental body
shall be in effect, and no claims, actions, suits, proceedings, arbitrations or
investigations shall be pending or threatened, which challenge or seek to
challenge, or which could prevent or cause the rescission of, the consummation
of the transactions contemplated in this Agreement.
6.4 Performance of Covenants. Purchaser shall have in all
material respects performed or complied with each and all of the obligations,
covenants, agreements and conditions required to be performed or complied with
by it on or prior to Closing.
6.5 Opinion of Counsel for Purchaser. Seller shall have received
the favorable opinion of Purchaser's counsel, dated the Closing Date, in
substantially the form set forth in Exhibit 6.5 attached to this Agreement.
6.6 Hart-Scott-Rodino Filings. All filings required to be made
and notices required to be given pursuant to the HSR Act shall have been made,
all approvals or consents required thereby shall have been obtained and the
waiting periods required thereby, if any, shall have expired or terminated.
6.7 Consents, Approvals and Authorizations. The parties shall
have obtained all material consents, licenses, approvals, permits, certificates
of need, waivers and authorizations from governmental agencies or bodies and
third parties that are necessary or required for completion of the transactions
contemplated by this Agreement.
6.8 Exhibits and Schedules. The provisions of all exhibits and
schedules attached to this Agreement that were not attached at the Effective
Date or to the extent updated after the Effective Date, shall be acceptable to
Seller in its reasonable discretion.
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ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
Purchaser's obligation to purchase the Assets and to close the
transactions contemplated by this Agreement shall be subject to the
satisfaction of each of the following conditions on or prior to the Closing
Date unless specifically waived in writing by Purchaser in whole or in part at
or prior to the Closing. Notwithstanding the foregoing, the conditions
precedent to the obligations of Purchaser contained in this Article 7 shall
operate on a Hospital by Hospital basis. In the event all conditions precedent
to the obligations of Purchaser contained in this Article 7 have been met,
performed or fulfilled in respect of either of the Hospitals, then Purchaser
shall be obligated to go forward to consummate the purchase of such Hospital
irrespective of the absence of such obligation in respect of the other
Hospital. Accordingly, a failure to satisfy a condition precedent set forth in
this Article 7 that is specific to one or more Hospital(s)to be sold to
Purchaser under this Agreement shall not automatically constitute a failure to
satisfy such condition precedent as to other Hospitals to be sold to Purchaser
hereunder to which such condition does not apply.
7.1 Warranties True. Each of the representations and warranties
made by Seller and set forth in this Agreement and in the Disclosure Schedule,
exhibits and schedules attached hereto shall be true and correct in all
material respects when made and as of the Closing Date.
7.2 Consents, Approvals and Authorizations. The parties shall
have obtained all material consents, licenses, approvals, permits, certificates
of need, waivers and authorizations from governmental agencies or bodies and
third parties that are necessary or required for completion of the transactions
contemplated by this Agreement or the operation of the business of the
Hospitals.
7.3 Signing and Delivery of Instruments. Seller and the
Subsidiaries shall have executed and delivered all documents, instruments and
certificates required to be executed and delivered pursuant to all of the
provisions of this Agreement.
7.4 Performance of Covenants. Seller and the Subsidiaries shall
have in all material respects performed or complied with each and all of the
obligations, covenants, agreements and conditions required to be performed or
complied with by Seller and the Subsidiaries on or prior to Closing.
7.5 Unfavorable Action or Proceeding. On the Closing Date, no
orders, decrees, judgments or injunctions of any court or governmental body
shall be in effect, and no claims, actions, suits, proceedings, arbitrations or
investigations shall be pending or threatened, which challenge or seek to
challenge, or which could
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prevent or cause the rescission of, the consummation of the transactions
contemplated in this Agreement.
7.6 Hart-Scott-Rodino Filings. All filings required to be made
and notices required to be given pursuant to the HSR Act shall have been made,
all approvals or consents required thereby shall have been obtained and the
waiting periods required thereby, if any, shall have expired or terminated.
7.7 Governmental Concurrences. Purchaser shall have obtained
assurances from all of the necessary governmental authorities, in form and
substance reasonably satisfactory to Purchaser, that Purchaser will be granted
all material governmental approvals, licenses, clearances, certifications
and/or provider numbers necessary or appropriate for the continued,
uninterrupted operation of the Hospitals following the Closing, except for any
such assurance, approval, license, clearance or certification which would not
have a material adverse effect on the operation of any particular Hospital
following the Closing. Purchaser shall have received approvals, consents or
commitments from Medicare, Medicaid, and the fiscal intermediary with respect
to each Hospital, to the extent any such approvals, consents or commitments are
reasonably needed, for Purchaser's continued participation in each program and
providing satisfactory assurances that there shall be no material interruptions
in program payments.
7.8 Opinion of Counsel. Purchaser shall have received the
favorable opinion of Seller's in-house counsel dated the Closing Date, in
substantially the form attached hereto as Exhibit 7.8.
7.9 Exhibits and Schedules. The provisions of the Disclosure
Schedule and all exhibits and schedules attached to this Agreement that were
not attached at the Effective Date or to the extent updated after the Effective
Date, shall be acceptable to Purchaser in its reasonable discretion.
7.10 Title Insurance Policy. Purchaser shall have received a fully
effective Title Policy issued to Purchaser by the Title Company covering the
Owned Real Property in the amount of the full insurable value of the Owned Real
Property (which amount shall be set forth in Schedule 11.1(b)). The Title
Policy shall show fee simple title to the Owned Real Property vested in
Purchaser, subject only to: (i) current real estate taxes not yet due and
payable; and (ii) the permitted title exceptions listed in Schedule 7.10 hereto
(the "Permitted Exceptions"). The Title Policy shall have all standard and
general exceptions deleted so as to afford full "extended form coverage."
7.11 Environmental Survey. Purchaser shall have received the
Environmental Survey referred to in Section 4.13.
7.12 Real Estate Surveys. Purchaser shall have received the
Surveys referred to in Section 4.9.
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ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to
Closing:
(a) by the mutual written consent of the parties;
(b) by either Purchaser or Seller (the "Nondefaulting Party")
if a material breach of any provision of this Agreement has been
committed by the other party (the "Breaching Party") and such breach
has not been (i) waived in writing by the Nondefaulting Party or (ii)
cured by the Breaching Party to the reasonable satisfaction of the
Nondefaulting Party within fifteen (15) business days after service by
the Nondefaulting Party upon the Breaching Party of a written notice
which describes the nature of such breach;
(c) by Purchaser if any of the conditions in Article 7
have not been satisfied as of the Closing Date or if satisfaction of
any such condition is or becomes impossible (other than through the
failure of Purchaser to comply with its obligations under this
Agreement) and Purchaser has not waived such condition in writing on
or before the Closing Date;
(d) by Seller if any of the conditions in Article 6 have
not been satisfied as of the Closing Date or if satisfaction of any
such condition is or becomes impossible (other than through the
failure of Seller to comply with its obligations under this Agreement)
and Seller has not waived such condition in writing on or before the
Closing Date;
(e) by the mutual written consent of the parties if it
is reasonably anticipated that the Closing will be delayed due to any
notice received by Purchaser or Seller from, or any action initiated
by, a governmental party;
(f) by either Purchaser or Seller if the Closing has not
occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before October 31, 1999 (the "Termination
Date"); provided, however, if the Closing is delayed as a result of
any notice received by Purchaser or Seller from, or any action
initiated by, a governmental party, then the Termination Date shall be
May 31, 2000.
8.2 Termination Consequences. If this Agreement is terminated
pursuant to Section 8.1, all further obligations of the parties under this
Agreement shall terminate, except that the obligations in Sections 5.6, 12.3,
12.8, and 12.12 shall survive.
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8.3 Costs. In the event of a termination of this Agreement
pursuant to Section 8.1 hereof, (a) each party shall pay the costs and expenses
incurred by it in connection with this Agreement, except as provided in Section
12.12, and (b) nothing shall prevent either party from pursuing any of its
legal rights or remedies that may be granted to any such party by law against
any other party to this Agreement.
ARTICLE 9
POST-CLOSING MATTERS
9.1 Non-Operating Assets and Excluded Liabilities. Subject to
Section 11.2 hereof, any asset (including Accounts Receivable) or any
liability, all other remittances and all mail and other communications that are
determined by the parties' agreement, or, absent such agreement, determined by
litigation, to be or otherwise relate to an Excluded Asset or an Excluded
Liability and that is or comes into the possession, custody or control of
Purchaser (or its successors in interest or assigns, or its respective
affiliates) shall forthwith be transferred, assigned or conveyed by Purchaser
(or its respective successors in interest or assigns and its respective
affiliates) to Seller at Seller's cost. Until such transfer, assignment and
conveyance, Purchaser (and its respective successors in interest and assigns
and its respective affiliates) shall not have any right, title or interest in
or obligation or responsibility with respect to such asset or liability except
that Purchaser shall hold such asset in trust for the benefit of Seller.
Purchaser (and its respective successors in interest and assigns and its
respective affiliates) shall have neither the right to offset amounts payable
to Seller under this Section 9.1 against, nor the right to contest its
obligation to transfer, assign and convey to Seller because of, outstanding
claims, liabilities or obligations asserted by Purchaser against Seller
including but not limited to pursuant to the post-Closing Purchase Price
adjustment of Section 1.4 and the indemnification provisions of Section 10.2.
The terms of this Article 9 shall not be subject to the time limitations
contained in Section 10.1 of this Agreement.
9.2 Preservation and Access to Records After the Closing.
(a) From the Closing Date until seven (7) years after
the Closing or such longer period as required by law (the "Document
Retention Period"), Purchaser shall keep and preserve all medical
records, patient records, medical staff records and other books and
records of the Subsidiaries and the Hospitals existing as of the
Closing relating to tax or other liabilities of Seller prior to the
Closing, but excluding any records which are among the Non-Operating
Assets. Purchaser will afford to the representatives of Seller,
including its counsel and accountants, full and complete access to,
and copies of, such records with respect to time periods on or prior
to the Closing Date
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(including, without limitation, access to records of patients treated
at the Hospitals on or prior to the Closing Date) during normal
business hours after the Closing Date, to the extent reasonably needed
by Seller (or its affiliates) for business purposes. Purchaser
acknowledges that, as a result of entering into this Agreement and
operating the Hospitals, it will gain access to patient records and
other information which are subject to rules and regulations
concerning confidentiality. Purchaser shall abide by any such rules
and regulations relating to the confidential information it acquires.
Purchaser shall maintain the patient and medical staff records at the
Hospitals in accordance with applicable law and the requirements of
relevant insurance carriers. After the expiration of the Document
Retention Period, if Purchaser intends to destroy or otherwise dispose
of any of the documents described in this Section 9.2(a), Purchaser
shall provide written notice to Seller of Purchaser's intention no
later than thirty (30) calendar days prior to the date of such
intended destruction or disposal. Seller shall have the right, at its
sole cost, to take possession of such documents during such forty-five
(45) calendar day period. If Seller does not take possession of such
documents during such forty-five (45) calendar day period, Purchaser
shall be free to destroy or otherwise dispose of such documentation
upon the expiration of such forty-five (45) day period.
(b) Purchaser shall give full cooperation to Seller and
its affiliates and its insurance carriers in respect of the defense of
claims by third parties against Seller or any Subsidiary, in respect
of events occurring on or prior to the Closing with respect to the
operation of the Hospitals. Such cooperation shall include, without
limitation, making the Hired Employees available for interviews,
depositions, hearings and trials. Such cooperation shall also include
making all of its employees available to assist in the securing and
giving of evidence and in obtaining the presence and cooperation of
witnesses (all of which shall be done without payment of any fees or
expenses to Purchaser or to such employees). In addition, Seller and
its affiliates shall be entitled to remove from the Hospitals
originals of any such records, but only for purposes of pending
litigation involving the persons to whom such records refer, as
certified in writing prior to removal by counsel retained by Seller or
any of its affiliates in connection with such litigation. Any records
so removed from the Hospitals shall be promptly returned to Purchaser
following Seller's (or its applicable affiliate's) use of such
records.
(c) In connection with (i) the transition of the
Hospitals pursuant to the transaction contemplated by this Agreement,
(ii) Seller's and the Subsidiaries' rights to the Non-Operating
Assets, (iii) Seller's and the Subsidiaries' obligations under the
Excluded Liabilities and (iv) Seller's preparation of the Final
Balance Sheet pursuant to Section 1.4, Purchaser shall after the
Closing Date give Seller, Seller's affiliates and their respective
representatives access during normal business hours to Purchaser's
books,
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accounts and records and all other relevant documents and information
with respect to the assets, liabilities and business of the Hospitals
as representatives of Seller and Seller's affiliates may from time to
time reasonably request, all in such manner as not to unreasonably
interfere with the operations of the Hospitals. Seller acknowledges
that it shall coordinate its activities contemplated by this Section
9.2(c) through Brenda Rector, or her designee.
(d) Purchaser and its representatives shall be given
access by Seller during normal business hours to the extent reasonably
needed by Purchaser for business purposes to all documents, records,
correspondence, work papers and other documents retained by Seller or
any Subsidiary pertaining to any of the Assets or with respect to the
operation of the Hospitals on or prior to the Closing Date, all in
such manner as to not interfere unreasonably with Seller's and each
Subsidiary's business. Such documents and other materials shall be, at
Seller's option, either (i) copied by Seller for Purchaser at
Purchaser's expense, or (ii) removed by Purchaser from the premises,
copied by Purchaser and promptly returned to Seller.
ARTICLE 10
SURVIVAL AND INDEMNIFICATION
10.1 Survival. Except as expressly set forth in this Agreement to
the contrary, all representations, warranties, covenants, agreements and
indemnifications of Purchaser and Seller, respectively, contained in this
Agreement or in any document delivered pursuant hereto shall be deemed to be
material and to have been relied upon by Purchaser and Seller, respectively,
and shall continue to be fully effective and enforceable following the Closing
Date for two years and shall thereafter be of no further force and effect,
except that the indemnifications contained in Sections 10.2.1(iii), 10.2.1(iv),
10.2.1(vii) and 10.3.1(iv) shall continue to be fully effective and enforceable
following the Closing Date without any time limitation; provided, however, that
if there is an outstanding notice of a claim at the end of such two year period
in compliance with the terms of Section 10.4, such applicable period shall not
end in respect of such claim until such claim is resolved.
10.2 Indemnification of Purchaser by Seller.
10.2.1 Indemnification. Seller shall keep and save
Purchaser, and its directors, officers, employees, agents and other
representatives (collectively, "Purchaser Indemnitees"), forever harmless from
and shall indemnify and defend Purchaser against any and all obligations,
judgments, liabilities, penalties, violations, fees, fines, claims, losses,
costs, demands, damages, liens, encumbrances and expenses including reasonable
attorneys' fees (collectively, "Damages"),
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whether direct or consequential and no matter how arising, to the extent,
connected with or arising or resulting from (i) any breach of any
representation or warranty of Seller under this Agreement, (ii) any breach or
default by Seller of any covenant or agreement of Seller under this Agreement,
(iii) the Excluded Liabilities, (iv) the Non-Operating Assets, (v) other than
Purchaser's obligations under Section 1.11(h), all federal, state and local
income, franchise or excise taxes relating to Seller or any Subsidiary ("Seller
Tax Claims"), (vi) any professional or general liability claim arising out of
the business operations of the Hospitals on or prior to the Closing Date, (vii)
any claim, proceeding, investigation, judgment, order, decree or governmental
restriction of the type described in Section 2.11, whether or not material to
the Assets or any of the Hospitals, and which arises from acts or omissions
prior to the Closing Date; and (viii) any act, conduct or omission of Seller or
any Subsidiary, or any event or circumstance pertaining to Seller or any
Subsidiary, that has accrued, arisen, occurred or come into existence at any
time on or prior to the Closing Date. No provision in this Agreement shall
prevent Seller from pursuing any of its legal rights or remedies that may be
granted to Seller by law against any person or legal entity other than
Purchaser. To receive the benefit of indemnification from Seller pursuant to
this Section 10.2, any Purchaser Indemnitee (other than Purchaser) must direct
its claim to Purchaser so that Purchaser can tender such claim to Seller in
accordance with Section 10.4.
10.2.2 Indemnification Limitations.
(a) Seller shall be under no liability to indemnify
Purchaser under Section 10.2.1 and no claim under Section 10.2.1 of
this Agreement shall:
(i) be made unless notice thereof shall have
been given by or on behalf of Purchaser to Seller in the
manner provided in Section 10.4;
(ii) be made to the extent that any loss may be
recovered under a policy of insurance in force on the date of
loss; provided, however, that this Section 10.2.2(ii) shall
not apply to the extent that coverage under the applicable
policy of insurance is denied by or otherwise cannot be
recovered from the applicable insurance carrier after the use
of commercially reasonable efforts to effect such recovery;
(iii) be made to the extent that such claim
relates to a liability arising out of or relating to any act,
omission, event or occurrence connected with:
(A) the use, ownership or operation of
any of the Hospitals, or
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(B) the use, ownership or operation of
any of the Assets, after the Closing Date; other
than as specifically included in the Excluded
Liabilities;
(iv) be made to the extent that such claim (or
the basis therefor) is set forth in the Disclosure Schedule,
any Exhibit or Schedule to this Agreement;
(v) be made to the extent that Purchaser had
knowledge of (A) any breach of a representation and warranty
by Seller (as contemplated by Section 3.9) or (B) other
indemnifiable event, on or prior to the Closing Date, and did
not notify Seller of such knowledge as contemplated by this
Agreement;
(vi) be made to the extent such claim relates to
an obligation or liability for which Purchaser has agreed to
indemnify Seller pursuant to Section 10.3;
(vii) be made to the extent that such claim would
not have arisen but for a voluntary act, omission or
transaction carried out by Purchaser or its affiliates after
the Effective Date; and
(viii) accrue to Purchaser unless and only to the
extent that (A) the actual liability of Seller in respect of
any single claim under Section 10.2.1 exceeds Five Thousand
Dollars ($5,000) (a "Relevant Claim") and (B) the total
actual liability of Seller in respect of all Relevant Claims
with respect to any particular Hospital in the aggregate
exceeds one-half percent (0.5%) of the portion of the
Purchase Price attributable to any such particular Hospital
pursuant to Schedule 11.1(b) (the "Aggregate Amount"), in
which event Purchaser shall be entitled to seek
indemnification under Section 10.2.1 for all Relevant Claims
with respect to such particular Hospital, including those
Relevant Claims comprising the Aggregate Amount.
Notwithstanding the foregoing, the limitation set forth in
this subsection 10.2.2(a)(viii) shall not apply to claims for
indemnification pursuant to (A) Section 10.2.1(iii) which are
based upon liabilities described in Section 1.12(a), (e), (f)
or (h), and (B) Section 10.2.1(i) which are based upon a
breach of the representations and warranties made in Section
2.13.
(b) Notwithstanding any other provision of this Agreement to
the contrary, the maximum aggregate liability of Seller to Purchaser
under this Agreement shall not exceed the Purchase Price.
(c) If Purchaser is entitled to recover any sum (whether by
payment, discount, credit or otherwise) from any third party in
respect of any
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matter for which a claim of indemnity could be made against Seller
hereunder, Purchaser shall use its reasonable endeavors to recover
such sum from such third party and any sum recovered will reduce the
amount of the claim. If Seller pays to Purchaser an amount in respect
of a claim, and Purchaser subsequently recovers from a third party a
sum which is referable to that claim, Purchaser shall forthwith repay
to Seller so much of the amount paid by it as does not exceed the sum
recovered from the third party less all reasonable costs, charges and
expenses incurred by Purchaser in obtaining payment in respect of that
claim and in recovering that sum from the third party.
10.3 Indemnification of Seller by Purchaser.
10.3.1 Indemnification. Purchaser shall keep and save
Seller and the Subsidiaries, and their respective directors, officers,
employees, agents and other representatives (collectively, "Seller
Indemnitees"), forever harmless from and shall indemnify and defend Seller and
the Subsidiaries against any and all Damages, whether direct or consequential
and no matter how arising, in any way related to, connected with or arising or
resulting from (i) any breach of any representation or warranty of Purchaser
under this Agreement, (ii) any breach or default by Purchaser under any
covenant or agreement of Purchaser under this Agreement, (iii) cost reports
(and all claims with respect thereto) relating to Purchaser with respect to
Medicare, Medicaid, CHAMPUS or Blue Cross programs or any other third-party
payor for all periods beginning after the Closing Date, (iv) the Assumed
Obligations, (v) any professional or general liability claim arising out of the
business operations of the Hospitals after the Closing Date, (vi) any other
obligation or liability specifically assumed by Purchaser in this Agreement,
(vii) liabilities to the Hired Employees arising out of actions of Purchaser
based wholly or in part upon the contents of the personnel records of such
employees, (viii) involuntary termination of the Hired Employees after the
Closing Date, which termination would constitute a "mass layoff" or a "plant
closing" within the meaning of WARN, and (ix) any act, conduct or omission of
Purchaser, or any event or circumstance pertaining to Purchaser, that has
accrued, arisen, occurred or come into existence at any time. No provision in
this Agreement shall prevent Purchaser from pursuing any of its legal rights or
remedies that may be granted to Purchaser by law against any person or legal
entity other than Seller or any affiliate of Seller. To receive the benefit of
indemnification from Purchaser pursuant to this Section 10.3, any Seller
Indemnitee (other than Seller or a Subsidiary) must direct its claim to Seller
so that Seller can tender such claim to Purchaser in accordance with Section
10.4.
10.3.2 Indemnification Limitations.
(a) Purchaser shall be under no liability to indemnify
Seller under 10.3.1 and no claim under Section 10.3.1 of this
Agreement shall:
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(i) be made unless notice thereof shall have
been given by or on behalf of Seller to Purchaser in the
manner provided in Section 10.4;
(ii) be made to the extent that any loss may be
recovered under a policy of insurance in force on the date of
loss; provided, however, that this Section 10.3.2(ii) shall
not apply to the extent that coverage under the applicable
policy of insurance is denied by or otherwise cannot be
recovered from the applicable insurance carrier after the use
of commercially reasonable efforts to effect such recovery;
(iii) be made to the extent that such claim
relates to a liability arising out of or relating to any act,
omission, event or occurrence connected with:
(A) the use, ownership or operation of
any of the Hospitals, or
(B) the use, operation or ownership of
any of the Assets, on or prior to the Closing Date,
other than as specifically included in the Assumed
Obligations; and
(iv) be made to the extent such claim relates to
an obligation or liability for which Seller has agreed to
indemnify Purchaser pursuant to Section 10.2.
(b) If Seller or any Subsidiary is entitled to recover
any sum (whether by payment, discount, credit or otherwise) from any
third party in respect of any matter for which a claim of indemnity
could be made against Purchaser hereunder, Seller shall, and shall
cause the applicable Subsidiary to, use its reasonable endeavors to
recover such sum from such third party and any sum recovered will
reduce the amount of the claim. If Purchaser pays to Seller an amount
in respect of a claim, and Seller or any Subsidiary subsequently
recovers from a third party a sum which is referable to that claim,
Seller shall forthwith repay to Purchaser so much of the amount paid
by it as does not exceed the sum recovered from the third party less
all reasonable costs, charges and expenses incurred by Seller or any
Subsidiary in obtaining payment in respect of that claim and in
recovering that sum from the third party.
10.4 Method of Asserting Claims. All claims for indemnification by
any person entitled to indemnification hereunder (the "Indemnified Party")
under this Article 10 will be asserted and resolved as follows:
(a) In the event any claim or demand, for which a party
hereto (an "Indemnifying Party") would be liable for the Damages to an
Indemnified
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Party, is asserted against or sought to be collected from such Indemnified
Party by a person other than Seller, Purchaser or their affiliates (a "Third
Party Claim"), the Indemnified Party shall deliver a notice of its claim (a
"Claim Notice") to the Indemnifying Party within thirty (30) calendar days after
the Indemnified Party receives notice of such Third Party Claim; provided,
however, that notice shall be provided to the Indemnifying Party within fifteen
(15) calendar days after receipt by the Indemnified Party of a complaint,
petition or institution of other formal legal action. If the Indemnified Party
fails to provide the Claim Notice within such applicable time period after the
Indemnified Party receives notice of such Third Party Claim, the Indemnifying
Party will not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim to the extent that the Indemnifying Party demonstrates
that it has been prejudiced thereby; but in no event will the Indemnified Party
be entitled to indemnification from the Indemnifying Party if the Indemnified
Party does not provide notice of a Third Party Claim within ninety (90) days
after the Indemnified Party receives notice of such Third Party Claim. The
Indemnifying Party will notify the Indemnified Party within thirty (30) calendar
days after receipt of the Claim Notice (the "Notice Period") whether the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Notice Period that the
Indemnifying Party desires to defend the Indemnified Party
with respect to the Third Party Claim pursuant to this
Section 10.4(a), then the Indemnifying Party will have the
right to defend, at its sole cost and expense, such Third
Party Claim by all appropriate proceedings, which proceedings
will be prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the
Indemnifying Party. The Indemnifying Party will have full
control of such defense and proceedings, including any
compromise or settlement thereof. Notwithstanding the
foregoing, the Indemnified Party may, at its sole cost and
expense, file during the Notice Period any motion, answer or
other pleadings that the Indemnified Party may deem necessary
or appropriate to protect its interests or those of the
Indemnifying Party and which is not prejudicial, in the
reasonable judgment of the Indemnifying Party, to the
Indemnifying Party. Except as provided in Section 10.4(a)(ii)
hereof, if an Indemnified Party takes any such action that is
prejudicial and causes a final adjudication that is adverse
to the Indemnifying Party, the Indemnifying Party will be
relieved of its obligations hereunder with respect to the
portion of such Third Party Claim prejudiced by the
Indemnified Party's action. If requested by the Indemnifying
Party, the Indemnified Party agrees, at the sole cost and
expense of the Indemnifying Party, to cooperate with the
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Indemnifying Party and its counsel in contesting any Third
Party Claim that the Indemnifying Party elects to contest,
or, if appropriate and related to the Third Party Claim in
question, in making any counterclaim against the person
asserting the Third Party Claim, or any cross-complaint
against any person (other than the Indemnified Party or any
of its affiliates). The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party pursuant to this
Section 10.4(a)(i), and except as specifically provided in
this Section 10.4(a)(i), the Indemnified Party will bear its
own costs and expenses with respect to such participation.
The Indemnifying Party shall give sufficient prior notice to
the Indemnified Party of the initiation of any discussions
relating to the settlement of a Third Party Claim to allow
the Indemnified Party to participate therein.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Notice Period that the
Indemnifying Party desires to defend the Indemnified Party
pursuant to this Section 10.4(a), or if the Indemnifying
Party gives such notice but fails to prosecute diligently or
settle the Third Party Claim, or if the Indemnifying Party
fails to give any notice whatsoever within the Notice Period,
then the Indemnified Party will have the right to defend, at
the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which
proceedings will be promptly and reasonably prosecuted by the
Indemnified Party to a final conclusion or will be settled at
the discretion of the Indemnified Party. The Indemnified
Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided,
however, that if requested by the Indemnified Party, the
Indemnifying Party agrees, at the sole cost and expense of
the Indemnifying Party, to cooperate with the Indemnified
Party and its counsel in contesting any Third Party Claim
which the Indemnified Party is contesting, or, if appropriate
and related to the Third Party Claim in question, in making
any counterclaim against the person asserting the Third Party
Claim, or any cross-complaint against any person (other than
the Indemnifying Party or any of its affiliates).
Notwithstanding the foregoing provisions of this Section
10.4(a)(ii), if the Indemnifying Party has notified the
Indemnified Party with reasonable promptness that the
Indemnifying Party disputes its liability to the Indemnified
Party with respect to such Third Party Claim and if such
dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party will not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this
Section 10.4(a)(ii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and
the Indemnified Party will reimburse the Indemnifying
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Party in full for all reasonable costs and expenses incurred
by the Indemnifying Party in connection with such litigation.
Subject to the above terms of this Section 10.4(a)(ii), the
Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party
pursuant to this Section 10.4(a)(ii), and the Indemnifying
Party will bear its own costs and expenses with respect to
such participation. The Indemnified Party shall give
sufficient prior notice to the Indemnifying Party of the
initiation of any discussions relating to the settlement of a
Third Party Claim to allow the Indemnifying Party to
participate therein.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that either (i) does not
involve a Third Party Claim being asserted against or sought to be
collected from the Indemnified Party or (ii) is a Seller Tax Claim,
the Indemnified Party shall deliver an Indemnity Notice (as
hereinafter defined) to the Indemnifying Party. (The term "Indemnity
Notice" shall mean written notification of a claim for indemnity under
Article 10 hereof (which claim does not involve a Third Party Claim or
is a Seller Tax Claim) by an Indemnified Party to an Indemnifying
Party pursuant to this Section 10.4, specifying the nature of and
specific basis for such claim and the amount or the estimated amount
of such claim.) The failure by any Indemnified Party to give the
Indemnity Notice shall not impair such party's rights hereunder except
to the extent that an Indemnifying Party demonstrates that it has been
prejudiced thereby.
(c) If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) calendar days following its
receipt of a Claim Notice or an Indemnity Notice that the Indemnifying
Party disputes its liability to the Indemnified Party hereunder, such
claim specified by the Indemnified Party will be conclusively deemed a
liability of the Indemnifying Party hereunder and the Indemnifying
Party shall pay the amount of such liability to the Indemnified Party
on demand, or on such later date (i) in the case of a Third Party
Claim, as the Indemnified Party suffers the Damages in respect of such
Third Party Claim, (ii) in the case of an Indemnity Notice in which
the amount of the claim is estimated, when the amount of such claim
becomes finally determined or (iii) in the case of a Seller Tax Claim,
within fifteen (15) calendar days following final determination of the
item giving rise to the claim for indemnity. If the Indemnifying Party
has timely disputed its liability with respect to such claim, as
provided above, the Indemnifying Party and the Indemnified Party agree
to proceed in good faith to negotiate a resolution of such dispute,
and if not resolved through negotiations within sixty (60) days, such
dispute will be resolved pursuant to Section 12.17 hereof.
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(d) The Indemnified Party agrees to give the Indemnifying
Party reasonable access to the books and records and employees of the
Indemnified Party in connection with the matters for which
indemnification is sought hereunder, to the extent the Indemnifying
Party reasonably deems necessary in connection with its rights and
obligations hereunder.
(e) The Indemnified Party shall assist and cooperate with
the Indemnifying Party, in any reasonable manner requested by the
Indemnifying Party, in the conduct of litigation, the making of
settlements and the enforcement of any right of contribution to which
the Indemnified Party may be entitled from any person or entity in
connection with the subject matter of any litigation subject to
indemnification hereunder. In addition, the Indemnified Party shall,
upon request by the Indemnifying Party or counsel selected by the
Indemnifying Party (without payment of any fees or expenses to the
Indemnified Party or an employee thereof, other than reasonable
out-of-pocket expenses), attend hearings and trials, assist in the
securing and giving of evidence, assist in obtaining the presence or
cooperation of witnesses, and make available its own personnel; and
shall do whatever else is necessary and appropriate in connection with
such litigation. The Indemnified Party shall not make any demand upon
the Indemnifying Party or counsel for the Indemnifying Party in
connection with any litigation subject to indemnification hereunder,
except a general demand for indemnification as provided hereunder,
unless to fail to do so would materially prejudice the Indemnified
Party's rights in respect of such claim for indemnification. If the
Indemnified Party shall fail to perform such obligations as
Indemnified Party hereunder or to cooperate fully with the
Indemnifying Party in Indemnifying Party's defense of any suit or
proceeding, such cooperation to include, without limitation,
attendance at all depositions and the provision of all documents
relevant to the defense of any claim, then the Indemnifying Party
shall be released from its obligations under this Agreement with
respect to that suit or proceeding and any other claims which had been
raised in such suit or proceeding to the extent the Indemnifying Party
can demonstrate it has been prejudiced thereby.
(f) Following indemnification as provided for hereunder,
the Indemnifying Party shall be subrogated to all rights of the
Indemnified Party with respect to all persons or entities relating to
the matter for which indemnification has been made.
10.5 Exclusive. Any dispute arising under this Agreement or in
connection with or as a result of the transactions contemplated by this
Agreement or any Damages or injury alleged to be suffered by either party as a
result of the actions or failure to act by any other party shall, unless
otherwise specifically stated in this Agreement, be governed solely and
exclusively by the provisions of this Article 10.
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10.6 Reduction of the Purchase Price. If Seller pays any sum to
Purchaser in respect of a claim under Article 10, the Purchase Price and total
consideration received by Seller for the sale of the Assets shall be deemed to
be reduced by the amount of such payment.
ARTICLE 11
TAX AND COST REPORT MATTERS
11.1 Tax Matters; Allocation of Purchase Price.
(a) After the Closing, the parties shall cooperate fully with
each other and shall make available to each other, as reasonably
requested, all information, records or documents relating to tax
liabilities or potential tax liabilities attributable to Seller or any
Subsidiary with respect to the operation of the Hospitals for all
periods on or prior to the Closing Date and shall preserve all such
information, records and documents at least until the expiration of
any applicable statute of limitations or extensions thereof. The
parties shall also make available to each other as reasonably
required, and at the reasonable cost of the requesting party (for
out-of-pocket costs and expenses only), personnel responsible for
preparing or maintaining information, records and documents in
connection with tax matters.
(b) The Purchase Price shall be allocated among the various
classes of the Assets and between each of the Hospitals in accordance
with Schedule 11.1(b) which shall be agreed upon by the parties no
later than the Closing Date, and provided further the Purchase Price
allocated to Trinity Valley Medical Center in the aggregate shall be
$44,000,000, and to Minden Medical Center in the aggregate shall be
$33,000,000. Seller and Purchaser hereby agree to allocate the
Purchase Price in accordance with Schedule 11.1(b), to be bound by
such allocations for all purposes, to account for and report the
purchase and sale of the Assets contemplated hereby for all purposes
(including, without limitation, financial reporting, accounting and
federal and state tax purposes) in accordance with such allocations,
and not to take any position (whether in financial statements, tax
returns, cost report or tax audits, or otherwise), which is
inconsistent with such allocations without the prior written consent
of the other party. In this regard, the parties agree that, to the
extent required, they will each properly prepare and timely file Form
8594 in accordance with Section 1060 of the Code.
11.2 Cost Report Matters.
(a) Seller shall, and shall cause the Subsidiaries to, prepare
and timely file all cost reports relating to the periods ending on or
prior to the Closing Date or required as a result of the consummation
of the transactions
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described herein, including, without limitation, those relating to
Medicare, Medicaid, Blue Cross and other third party payors which
settle on a cost report basis (the "Subsidiaries' Cost Reports").
Purchaser shall forward to Seller any and all correspondence relating
to the Accounts Receivable, the Subsidiaries' Cost Reports or rights
to settlements and retroactive adjustments on the Subsidiaries' Cost
Reports ("Agency Settlements") within five (5) business days of
receipt by Purchaser. Purchaser shall not reply to any such
correspondence without Seller's written approval. Purchaser shall
remit any receipts relating to the Accounts Receivable, the
Subsidiaries' Cost Reports or the Agency Settlements within five (5)
business days after receipt by Purchaser (except those receipts to be
retained by Purchaser pursuant to Section 11.3) and will forward any
demand for payments within five (5) business days. Purchaser (and its
respective successors in interest and assigns and its respective
affiliates) shall have neither the right to offset amounts payable to
Seller under this Section 11.2 against, nor the right to contest its
obligation to transfer, assign and convey to Seller because of,
outstanding claims, liabilities or obligations asserted by Purchaser
against Seller including but not limited to pursuant to the
post-closing Purchase Price adjustment of Section 1.4 and the
indemnification provisions of Section 10.2. Seller shall retain all
rights to the Subsidiaries' Cost Reports and to the Accounts
Receivable including, without limitation, any payables resulting
therefrom or receivables relating thereto and the right to appeal any
Medicare determinations relating to the Agency Settlements and the
Subsidiaries' Cost Reports. Seller will furnish copies of the
Receivables Records to Purchaser upon request and allow Purchaser and
its representatives reasonable access to such documents.
(b) Upon reasonable notice and during normal business office
hours, Purchaser will cooperate with Seller and the Subsidiaries in
regard to the preparation, filing, handling, and appeals of the
Subsidiaries' Cost Reports. Upon reasonable notice and during normal
business office hours, Purchaser will cooperate with Seller and the
Subsidiaries in connection with any cost report disputes and/or other
claim adjudication matters relative to governmental program
reimbursement. Such cooperation shall include the providing of
statistics and obtaining files at the Hospitals and the coordination
with Seller and the Subsidiaries pursuant to adequate notice of
Medicare and Medicaid exit conferences or meetings. Purchaser will,
upon reasonable notice, during normal business office hours and at the
sole cost and expense of Seller, and subject to applicable law
regarding confidentiality of patient records, provide Seller and the
Subsidiaries reasonable access to all records of the Hospitals and
will allow Seller, the Subsidiaries and their respective
representatives to copy any documents relating to the Subsidiaries'
Cost Reports and appeals thereof.
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11.3 Transition Services. To compensate Seller and the Subsidiaries
for services rendered and medicine, drugs, and supplies provided on or before
the Closing Date at any of the Hospitals (the "Transition Services") with
respect to patients whose medical care is paid for, in whole or in part, by
Medicare, Medicaid, CHAMPUS, Blue Cross or any other third party payor who pays
on a DRG, case rate or other similar arrangement, and who are admitted to any
of the Hospitals on or before the Closing Date but who are not discharged until
after the Closing Date ("Governmental Program Transition Patients"), the
parties shall take the following action:
(a) As soon as practicable after the Closing Date, Seller
shall deliver to Purchaser a statement itemizing the inpatient
hospital Transition Services provided by the Subsidiaries with respect
to the operation of the Hospitals on or prior to the Closing Date to
Governmental Program Transition Patients. For the Transition Services,
Purchaser shall pay to Seller an amount equal to the DRG and outlier
payments, the case rate payment or other similar payment received by
Purchaser on behalf of a Governmental Program Transition Patient,
multiplied by a fraction (the "Fraction"), the numerator of which
shall be the total charges for the Transition Services provided to
such Governmental Program Transition Patient by Seller and the
Subsidiaries and the denominator of which shall be the sum of the
total charges for the Transition Services provided to such
Governmental Program Transition Patient by Seller and the Subsidiaries
plus the total charges for the Transition Services provided to such
Governmental Program Transition Patient by Purchaser after the Closing
Date. The parties shall reconcile the payments within ninety (90)
calendar days after both the tentative and final Medicare cost report
settlement and any other payor settlement affecting the Governmental
Program Transition Patients (the "Reconciliation").
(b) Subject to Section 11.3(d), payments made pursuant to
Section 11.3(a) shall be made to Seller monthly, on the twenty-fifth
(25th) day of each month, for payments received by Purchaser during
the previous month, accompanied by copies of remittances and other
supporting documentation as is reasonably requested by Seller. Any
other payments required to be made by Seller to Purchaser, or by
Purchaser to Seller, as the case may be, as a result of (i) the
Reconciliation, (ii) a notice of program reimbursement with respect to
the operations of any Hospital or (iii) other notice from a
governmental agency or third party payor with respect to Transition
Services shall be made within thirty (30) calendar days after the
Reconciliation or the receipt of any such notice, as applicable. In
the event that Purchaser and Seller are unable to agree on the amount
to be paid to Seller or Purchaser, as the case may be, under this
Section 11.3, then such amount shall be determined by the Independent
Auditor at their joint expense.
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(c) The parties acknowledge that all charges for outpatient
and other cost-based services shall be made (i) by Seller and the
Subsidiaries for all periods on or prior to the Closing Date and (ii)
by Purchaser for all periods after the Closing Date.
(d) Notwithstanding the first sentence of Section 11.3(b),
Purchaser shall make a distribution to Seller within three (3)
business days if at any time during the applicable calendar month the
funds to be distributed to Seller pursuant to Section 11.3(a) exceed
One Hundred Fifty Thousand Dollars ($150,000). The amount of such
distribution shall be all amounts payable to Seller pursuant to
Section 11.3(a) which have not been previously distributed to Seller.
All such distributions shall be made by wire transfer of immediately
available funds to Seller to the account(s) specified by Seller to
Purchaser in writing from time to time.
(e) Purchaser (and its respective successors in interest and
assigns and its respective affiliates) shall have neither the right to
offset amounts payable to Seller under this Section 11.3 against, nor
the right to contest its obligation to transfer, assign and convey to
Seller because of, outstanding claims, liabilities or obligations
asserted by Purchaser against Seller including but not limited to
pursuant to the post-closing Purchase Price adjustment of Section 1.4
and the indemnification provisions of Section 10.2.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Further Assurances and Cooperation. Seller shall, and shall
cause the Subsidiaries to, execute, acknowledge and deliver to Purchaser any
and all other assignments, consents, approvals, conveyances, assurances,
documents and instruments reasonably requested by Purchaser at any time and
shall take any and all other actions reasonably requested by Purchaser at any
time for the purpose of more effectively assigning, transferring, granting,
conveying and confirming to Purchaser, the Assets. After consummation of the
transaction contemplated herein, the parties agree to reasonably cooperate with
each other in regards to all matters arising from the transition of ownership
of the Assets and the business of the Hospitals from Seller and the
Subsidiaries to Purchaser.
12.2 Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto;
provided, however, that no party hereto may assign any of its rights or
delegate any of its duties
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under this Agreement without the prior written consent of the other party,
except that Purchaser may assign any of its rights or delegate any of its
duties under this Agreement to any Purchaser Partnership upon Seller's receipt
of Purchaser's guarantee of such Purchaser Partnership's obligations, in the
form set forth as Exhibit 12.2.
12.3 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York as applied to
contracts made and performed within the State of New York.
12.4 Amendments. This Agreement may not be amended other than by
written instrument signed by the parties hereto.
12.5 Exhibits, Schedules and Disclosure Schedule. Subject to Section
7.9, final copies of the Disclosure Schedule and all exhibits and schedules
referred to in this Agreement shall be provided to Purchaser by Seller no later
than July 30, 1999; provided, however, if Purchaser does not provide Seller
with written notice that such Disclosure Schedule, exhibits or schedules are
not acceptable to Purchaser in its reasonable discretion by August 6, 1999,
Purchaser shall be deemed to have waived its rights under Section 7.9 with
regard to such Disclosure Schedule, exhibit or schedules. Such Disclosure
Schedule, exhibits and schedules shall be incorporated by reference herein.
From the Effective Date until the Closing, the parties agree that Seller may
update the Disclosure Schedule and either party may update the schedules as
necessary, subject to the terms of Sections 6.8 and 7.9 of this Agreement. Any
matter disclosed in this Agreement or in the Disclosure Schedule with reference
to any Section of this Agreement shall be deemed a disclosure in respect of all
sections to which such disclosure may apply.
12.6 Notices. Any notice, demand or communication required,
permitted, or desired to be given hereunder shall be deemed effectively given
when personally delivered, when received by telegraphic or other electronic
means (including facsimile) or overnight courier, or five (5) calendar days
after being deposited in the United States mail, with postage prepaid thereon,
certified or registered mail, return receipt requested, addressed as follows:
If to Seller: Tenet Healthcare Corporation
c/o Tenet HealthSystem
14001 Dallas Parkway
Dallas, Texas 75240
Attention: David R. Mayeux
Facsimile No.: (972) 789-2385
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With a copy to: Tenet Healthcare Corporation
c/o Tenet HealthSystem
14001 Dallas Parkway
Dallas, Texas 75240
Attention: William A. Barrett, Esq.
Facsimile No.: (972) 789-6164
With a copy to: McDermott, Will & Emery
2049 Century Park East
Suite 3400
Los Angeles, California 90067
Attention: Ira J. Rappeport, Esq.
Facsimile No.: (310) 277-4730
If to Purchaser: Province Healthcare Company
105 Westwood Place, Suite 400
Brentwood, Tennessee 37027
Attention: General Counsel
Facsimile No.: (615) 370-4710
With a copy to: Waller Lansden Dortch & Davis, PLLC
511 Union Street, Suite 2100
Nashville, Tennessee 37219
Attention: George W. Bishop III, Esq.
Facsimile No.: (615) 244-6804
or at such other address as one party may designate by notice hereunder to the
other parties.
12.7 Headings. The section and other headings contained in this
Agreement and in the Disclosure Schedule, exhibits and schedules to this
Agreement, and the terms defined in this Agreement are included for the purpose
of convenient reference only and shall not restrict, amplify, modify or
otherwise affect in any way the meaning or interpretation of this Agreement or
the Disclosure Schedule, exhibits and schedules hereto.
12.8 Confidentiality and Publicity. The parties hereto shall hold in
confidence the information contained in this Agreement, and all information
related to this Agreement, which is not otherwise known to the public, shall be
held by each party hereto as confidential and proprietary information and shall
not be disclosed without the prior written consent of the other party.
Accordingly, Purchaser and Seller shall not discuss with, or provide nonpublic
information to, any third party (except for such party's attorneys,
accountants, directors, officers and employees, the directors, officers and
employees of any affiliate of any party hereto, and other consultants and
professional advisors) concerning this transaction prior to the
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Closing, except: (i) as required in governmental filings or judicial,
administrative or arbitration proceedings, including without limitation the
filings to be made by the parties with respect to the HSR Act; (ii) pursuant to
public announcements made with the prior written approval of Seller and
Purchaser; or (iii) as otherwise required by applicable law. The rights of
Seller under this Section 12.8 shall be in addition and not in substitution for
the rights of Seller under the Confidentiality Agreement, which shall survive
Closing.
12.9 Fair Meaning. This Agreement shall be construed according to its
fair meaning and as if prepared by all parties hereto.
12.10 Gender and Number; Construction. All references to the neuter
gender shall include the feminine or masculine gender and vice versa, where
applicable, and all references to the singular shall include the plural and
vice versa, where applicable. Unless otherwise expressly provided, the word
"including" followed by a listing does not limit the preceding words or terms
and shall mean "including, without limitation."
12.11 Third Party Beneficiary. None of the provisions herein contained
are intended by the parties, nor shall they be deemed, to confer any benefit on
any person not a party to this Agreement.
12.12 Expenses and Attorneys' Fees. Except as otherwise provided in
this Agreement, each party shall bear and pay its own costs and expenses
relating to the preparation of this Agreement and to the transactions
contemplated by, or the performance of or compliance with any condition or
covenant set forth in, this Agreement, including without limitation, the
disbursements and fees of their respective attorneys, accountants, advisors,
agents and other representatives, incidental to the preparation and carrying
out of this Agreement, whether or not the transactions contemplated hereby are
consummated. The parties expressly agree that: (a) all costs of the Title
Commitment and the Title Policy shall be paid by Seller up to an amount equal
to the amount that would have been incurred if the Title Policy were a standard
coverage owner's policy of title insurance (which policy does not provide
insurance for title exceptions which would be disclosed by a physical
inspection or survey of the land in question), and the remaining costs of the
Title Policy, if any, shall be borne by Purchaser; (b) all costs of the Surveys
shall be borne by Purchaser; (c) all costs of the Environmental Survey shall be
borne by Purchaser; and (d) all documentary transfer taxes and recording
charges in connection with the conveyance of the Assets to Purchaser shall be
borne by Seller. If any action is brought by any party to enforce any provision
of this Agreement, the prevailing party shall be entitled to recover its court
costs, arbitration expenses and reasonable attorneys' fees.
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12.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement, binding on all of the
parties hereto.
12.14 Entire Agreement. This Agreement, the Disclosure Schedule, the
exhibits and schedules, and the documents referred to herein contain the entire
understanding between the parties with respect to the transactions contemplated
hereby and supersede all prior or contemporaneous agreements, understandings,
representations and statements, oral or written, between the parties on the
subject matter hereof, and shall be of no further force or effect.
12.15 No Waiver. Any term, covenant or condition of this Agreement may
be waived at any time by the party which is entitled to the benefit thereof but
only by a written notice signed by the party expressly waiving such term or
condition. The subsequent acceptance of performance hereunder by a party shall
not be deemed to be a waiver of any preceding breach by the other party of any
term, covenant or condition of this Agreement, other than the failure of such
party to perform the particular duties so accepted, regardless of such party's
knowledge of such preceding breach at the time of acceptance of such
performance. The waiver of any term, covenant or condition shall not be
construed as a waiver of any other term, covenant or condition of this
Agreement.
12.16 Severability. If any term, provision, condition or covenant of
this Agreement or the application thereof to any party or circumstance shall be
held to be invalid or unenforceable to any extent in any jurisdiction, then the
remainder of this Agreement and the application of such term, provision,
condition or covenant in any other jurisdiction or to persons or circumstances
other than those as to whom or which it is held to be invalid or unenforceable,
shall not be affected thereby, and each term, provision, condition and covenant
of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
12.17 Arbitration. Any disagreement, dispute or claim arising out of
or relating to this Agreement which cannot be settled by the parties hereto
shall be settled by arbitration in accordance with the following provisions:
12.17.1 Forum. Forum for arbitration shall be New York, New
York.
12.17.2 Law. Governing law shall be the law of the State of New
York.
12.17.3 Selection. The number of arbitrators shall be three
(3), unless the parties hereto are able to agree on a single arbitrator. In the
absence of such agreement within ten (10) business days after the initiation of
an arbitration proceeding, Seller shall select one (1) arbitrator and Purchaser
shall select one (1) arbitrator, and those two arbitrators shall then select
within ten (10) business days a third arbitrator. If those two (2) arbitrators
are unable to select a third arbitrator
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<PAGE> 67
within such ten (10) business day period, a third arbitrator shall be appointed
by the commercial panel of the American Arbitration Association. The decision
in writing of at least two (2) of the three (3) arbitrators shall be final and
binding upon the parties.
12.17.4 Administration. Arbitration shall be administered by
the American Arbitration Association.
12.17.5 Rules. Rules of arbitration shall be the Commercial
Arbitration Rules of the American Arbitration Association, as modified by any
other instructions that the parties hereto may agree upon at the time, except
that each party hereto shall have the right to conduct discovery in any manner
and to the extent authorized by the Federal Rules of Civil Procedure as
interpreted by the federal courts in New York. The arbitrators shall not modify
the terms of this Agreement.
12.17.6 Award. The award rendered by arbitration shall be final
and binding upon the parties hereto, and judgment upon the award may be entered
in any court of competent jurisdiction in the United States.
12.18 Time is of the Essence. Time is of the essence for all dates and
time periods set forth in this Agreement and each performance called for in
this Agreement.
12.19 Unemployment Experience. Seller and Purchaser agree that the
unemployment experience of Seller will be transferred to Purchaser if such a
transfer of unemployment experience is allowed by law and elected by Purchaser.
If the payroll of the transferred facility is reported in an unemployment
insurance account with other payroll prior to the date of transfer the portion
of the unemployment experience transferred to Purchaser shall be the same
portion as the transferred facility's state unemployment taxable payroll bears
to the total state unemployment taxable payroll of Seller's unemployment
insurance account. Funds which are in group accounts for the purpose of paying
reimbursable unemployment benefits will be transferred to Purchaser if
Purchaser elects such transfer, provided such funds are included in Net Working
Capital. Seller agrees to make available to Purchaser the records of individual
wages of all employees, as well as copies of state unemployment tax returns, to
the extent necessary for Purchase to verify future unemployment tax rates and
to calculate the correct taxable payroll for the remainder of the calendar year
in which the transaction occurs.
///
THIS SECTION INTENTIONALLY LEFT BLANK
SIGNATURE PAGE IS NEXT PAGE
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IN WITNESS WHEREOF, this Agreement has been entered into as of the day
and year first above written.
PURCHASER:
PROVINCE HEALTHCARE COMPANY,
a Delaware corporation
By:/s/ Howard T. Wall
----------------------------------
Name: Howard T. Wall
-------------------------------
Its: Senior Vice President
--------------------------------
SELLER:
TENET HEALTHCARE CORPORATION,
a Nevada corporation
By: /s/ David R. Mayeux
---------------------------------
Name: David R. Mayeux
-------------------------------
Its: Executive Vice President
--------------------------------
64
<PAGE> 1
EXHIBIT 2.2
AMENDMENT NO. 1 TO ASSET SALE AGREEMENT
This Amendment No. 1 to Asset Sale Agreement (the "Amendment") is made
and entered into as of September 29, 1999, by and between Tenet Healthcare
Corporation, a Nevada corporation ("Seller") and Province Healthcare Company, a
Delaware corporation ("Purchaser").
RECITALS
A. Seller and Purchaser have entered into that certain Asset
Sale Agreement dated as of July 23, 1999 (the "Agreement") pursuant to which
Purchaser is acquiring substantially all of the assets with respect to the
operation of the Hospitals from the Subsidiaries.
B. Seller and Purchaser desire to amend the Agreement to address
certain matters that have arisen since the Effective Date of the Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants contained in this Agreement, and for their mutual
reliance, the parties hereto agree as follows:
1. Defined Terms. Except to the extent it is specifically
indicated to the contrary in this Amendment, defined terms used in this
Amendment shall have the same meanings as in the Agreement.
2. Purchase Price. The first portion of Section 1.2 of the
Agreement shall be deleted in its entirety up to item (a) and replaced with the
following: "Subject to the terms and conditions of this Agreement, the
aggregate purchase price to be paid by Purchaser to Seller for the purchase of
the Assets, including the purchase of a fee interest in the Birthing Center (as
hereinafter defined), shall be".
3. Items to be Delivered by Seller at Closing. A new Section
1.6.12 of the Agreement shall read as follows: "the Employee Leasing
Agreements, which shall be in the form of Exhibit 1.6.12 attached hereto (the
"Employee Leasing Agreements"), pursuant to which Seller, one of the
Subsidiaries or an affiliate of Seller shall lease the Hospital Employees to
Purchaser, as contemplated by Section 5.3(a) of this Agreement".
4. Items to be Delivered by Purchaser at Closing. A new Section
1.7.9 of the Agreement shall read as follows: "the Employee Leasing
Agreements."
5. Transfer of Seller Assets. Section 1.9 of the Agreement shall
be amended by adding the following to the end of paragraph (b): ", except that
Seller shall sublease that certain Leased Real Property more commonly known as
the Birthing Center (the "Birthing Center"), 2900 South Loop 256, Palestine,
Texas, as
<PAGE> 2
more fully described at Exhibit 1.9(b)-1 hereto, to Purchaser or its designated
affiliate in accordance with that certain Sublease Agreement, substantially in
the form attached hereto as Exhibit 1.9(b)-2 (the "Sublease Agreement"), until
such time as Seller (a) shall acquire fee title to the Birthing Center and
shall transfer such fee interest to Purchaser or its designated subsidiary, or
(b) shall cause the owner of the Birthing Center to convey the Birthing Center
to Purchaser or Purchaser's designated affiliate, subsequent to the Closing
Date as set forth more fully herein at Section 1.9.1. Seller and Purchaser
shall use commercially reasonable efforts to act expeditiously to enter into
the Sublease Agreement as soon after the Closing Date as practicable and until
the Sublease Agreement is so executed shall be entitled to the material
benefits and subject to the material obligations contemplated in Exhibit
1.9(b)-2. If the owner of the Birthing Center refuses to execute the Sublease
Agreement based on any provision of the Sublease Agreement, Seller and
Purchaser shall modify the Sublease Agreement as required by the owner provided
such modifications do not materially alter Seller's or Purchaser's rights or
obligations under the Sublease Agreement.
6. Transfer of the Birthing Center. A new Section 1.9.1 shall be
added to the Agreement as follows: "Seller shall use commercially reasonable
efforts to act expeditiously in (a) acquiring fee title to the Birthing Center
or (b) causing the owner of the Birthing Center to convey fee title of the
Birthing Center to Purchaser or Purchaser's designated affiliate. In either
event, Purchaser will succeed to fee simple ownership of the Birthing Center at
no additional cost or expense to Purchaser. If Seller acquires fee title to the
Birthing Center, within thirty (30) days of acquiring such title, or as
otherwise agreed to by the parties to this Agreement, Seller shall transfer fee
title to the Birthing Center to Purchaser. This transfer, or a conveyance by
the current owner, shall occur in accordance with the terms and conditions of
the Agreement, as though the Birthing Center were Owned Real Property prior to
the original Closing Date except that the Closing Date shall be defined, for
purposes of the sale of the Birthing Center, as the date of Purchaser's or
Purchaser's designated affiliate's acquisition of fee title to the Birthing
Center, or as otherwise agreed to by the parties. Any and all representations
and warranties as to Owned Real Property under this Agreement shall pertain to
the Birthing Center upon such transfer or conveyance. Any and all prorations
pertaining to such transfer or conveyance shall be calculated using the new
Closing Date".
7. Assumed Obligations. Section 1.11(d) of the Agreement shall
be amended by deleting subsections (i), (ii) and (iii) in their entirety and
replacing them with the following: "(i) the acts of Purchaser or any affiliate
of Purchaser after the Transition Date or (ii) Purchaser's breach of its
covenant with respect to the Hired Employees as set forth in Section 5.3".
2
<PAGE> 3
8. Excluded Liabilities.
(a) Section 1.12(e) of the Agreement shall be deleted in
its entirety and replaced with the following: "subject to
reimbursement by Purchaser to the extent contemplated by the Employee
Leasing Agreement, all liabilities of Seller or any of the
Subsidiaries with respect to its or their 401(k) plans, Section 125
plans and other Seller Plans and all administrative costs associated
with such welfare benefit plans arising on or prior to the Transition
Date;".
(b) A new Section 1.12(i) of the Agreement shall be
added as follows: "any financial impact on Seller's Subsidiaries',
Purchaser's or either of Purchaser's Partnerships' Disproportionate
Share payments from Medicare resulting from the failure to maintain a
minimum number of beds at Minden Medical Center prior to the Effective
Time".
9. Termination of Hospitals' Employees.
(a) The phrase "Upon the Effective Time" contained in
the first sentence of Section 4.10 of the Agreement shall be replaced
in its entirety with the phrase "Upon 12:01 a.m. (determined by
reference to the local time zone in which the Hospital is located) on
January 1, 2000 (the "Transition Time")".
(b) The phrase "the Effective Time" shall be replaced
with the phrase "the Transition Time" each time it appears in the
second and third sentences of Section 4.10 of the Agreement.
10. Certain Employee Matters. Section 5.3 of the Agreement shall
be deleted in its entirety and replaced with the following:
"5.3 Certain Employee Matters.
(a) During the period (the "Transition Period")
commencing at the Effective Time and ending immediately prior
to January 1, 2000 (such date being the "Transition Date"),
each Hospital Employee (as defined in paragraph (b) of this
Section 5.3) shall remain an employee of its employer as of
the Effective Time (whether such employer is Seller, one of
the Subsidiaries or an affiliate of Seller), subject to
normal personnel actions occurring in the ordinary course of
business. During the Transition Period, or until such earlier
time as any such Hospital Employee ceases to be an employee
of such employer, each such Hospital Employee shall be leased
to Purchaser from Seller or the employing Subsidiary or
affiliate, on substantially the terms and conditions as are
set forth in the Employee Leasing Agreements. During the
Transition Period, each leased Hospital Employee shall
3
<PAGE> 4
continue to participate in all Seller Plans on the same basis
as in effect immediately prior to the Effective Time, subject
to the terms of the Employee Leasing Agreements.
(b) Purchaser covenants and agrees that it
shall make offers of employment effective as of the
Transition Date (in substantially equivalent positions) to
all of the persons who are employees of (i) the Subsidiaries
with respect to the operation of the Hospitals or (ii) any
affiliate of Seller which employs individuals at any of the
Hospitals as of the Transition Time (whether such employees
are full time employees, part-time employees, on short-term
disability or on leave of absence pursuant to Seller's
policies, the Family and Medical Leave Act of 1993 or other
similar local law, but excluding those employees who have
been granted long-term disability benefits as of the Closing)
(the "Hospitals' Employees"). Notwithstanding the foregoing,
Purchaser acknowledges that Seller has the right, but is not
required, to retain any management-level Hospital Employee
who does not accept Purchaser's employment offer made under
this Section 5.3(b), which individuals will remain employed
by Seller or its applicable affiliate as of the Transition
Time (the "Retained Management Employees"). Any of the
Hospitals' Employees who accept an offer of employment with
Purchaser as of or after the Transition Time shall be
referred to herein as the "Hired Employees." Purchaser
covenants and agrees that it shall continue to employ in
comparable positions that number of the Hired Employees as
shall be necessary to avoid any liability of Seller or any of
its affiliates under WARN. Purchaser shall ensure that the
terms and conditions of employment (including level of
compensation and benefits, including without limitation
health insurance plans containing a waiver of pre-existing
conditions clause) of each of the Hired Employees on and
after the Transition Date are substantially equivalent to
that provided the Hospitals' Employees as of the Effective
Date.
(c) Purchaser shall give all Hired Employees
full credit for accumulated sick pay as reflected by the Sick
Pay Amount and for all of the accrued vacation and holiday
pay of such employees, either by (i) crediting such employees
the accrued time off reflected in the employment records of
Seller as of day immediately prior to the Transition Date or
(ii) by making full payments to such employees of the amounts
which such employees would have received had they taken their
accrued or accumulated holiday or vacation time, provided,
however, that no payment to such employees shall be required
with respect to accumulated sick time except to the extent
required by Seller's policies with respect to accumulated
sick time.
4
<PAGE> 5
(d) On and after the Transition Date, Hired
Employees shall be eligible for a medical and hospital plan
sponsored by Purchaser. Hired Employees shall be given credit
for periods of employment with the Subsidiaries and Seller's
affiliates, as applicable, on or prior to the Transition Date
for purposes of determining eligibility to participate and
amount of benefits (including without limitation vesting of
benefits), and preexisting condition limitations will be
waived with respect to Hired Employees and their covered
dependents unless such preexisting condition limitations were
applicable prior to the Transition Date. In addition, if
prior to the Transition Date a Hired Employee or his covered
dependents paid any amounts towards a deductible or
out-of-pocket maximum in Seller's (or its affiliate's)
medical and health plan's current fiscal year, such amounts
shall be applied toward satisfaction of the deductible or
out-of-pocket maximum in the current fiscal year of
Purchaser's medical and health plan that covers Hired
Employees on and following the Transition Date.
(e) Within two (2) years after Closing,
Purchaser's Plan shall (i) be amended to provide for a
plan-to-plan transfer from Seller's (or its affiliate's) plan
with respect to the Hospitals' Employees (other than the
Retained Management Employees) that is qualified under
Section 401(a) and 401(k) of the Code, (ii) accept a transfer
of assets from the above plan, (iii) file any required
returns relating to the transfer with the Internal Revenue
Service, and (iv) be amended to provide protected withdrawal
and distribution rights relating to the transferred assets in
accordance with Section 411(d)(6) of the Code. For purposes
of this Agreement, "Purchaser's Plan" shall mean a retirement
plan qualified under Section 401(a) of the Code that is
sponsored by Purchaser or one of its controlled group or
affiliated service group members, as defined in Section 414
of the Code.
(f) Any applicable employee of Seller or any
Subsidiary with respect to the operation of the Hospitals who
is identified as a current or former participant (and any
eligible dependent thereof) of the Seller Plans who is
eligible to receive continuation coverage (within the meaning
of Section 4980B of the Code and Part 6 of Subtitle B of
Title 1 of ERISA) will remain covered through Seller's and
its affiliates' COBRA provider. On and immediately following
the Transition Date and as a result of the transactions
contemplated by this Agreement, Seller, its affiliates and
the Subsidiaries shall not offer COBRA benefits with respect
to any of the Seller Plans to former employees (and their
dependents) who are employed by Purchaser at any Hospital as
of the date such Hired Employees become eligible for
Purchaser's medical and dental plans. Seller, its affiliates
and the Subsidiaries
5
<PAGE> 6
will thereby be released of COBRA responsibility and
liability for such employees.
(g) On and after the Transition Date,
Purchaser's human resources department will give reasonable
assistance to Seller's (and its affiliates') human resources
department with respect to Seller's, Seller's affiliates' and
the Subsidiaries' post-Transition Date administration of
Seller's, Seller's affiliates' and the Subsidiaries'
pre-Transition Date employee pension benefit plans and
employee health or welfare benefit plans for the Hospitals'
Employees (other than the Retained Management Employees)."
11. Indemnification of Purchaser by Seller.
(a) Section 10.2.1 of the Agreement shall be amended by
adding the following after the phrase "attorneys' fees" in the first
sentence of the Agreement: "and, only for the purposes of any
indemnification claim triggered by Section 1.12(i), interest actually
paid on any indebtedness incurred directly in connection with an event
triggering indemnification."
(b) The phrase "Section 1.12(a), (e), (f) or (h)"
contained in Section 10.2.2(a)(viii) of the Agreement shall be
replaced in its entirety with the phrase "Section 1.12(a), (e), (f),
(h) or (i)".
12. Indemnification of Seller by Purchaser. Section 10.3.1 of the
Agreement shall be amended by changing the term "Closing Date" in subsection
(viii) to the term "Transition Date".
13. Governing Law. Section 12.3 of the Agreement shall be
amended by changing the phrase "New York" to "California" throughout.
14. Arbitration. Section 12.17 of the Agreement shall be amended
by changing the phrase "New York" to "California" throughout, except that the
first phrase "New York" in Section 12.17.1 shall be changed to "Los Angeles".
15. Effect on Agreement; General Provisions. Except as set forth
in this Amendment, the terms and provisions of the Agreement are hereby
ratified and declared to be in full force and effect. This Amendment shall be
governed by the provisions of the Agreement regarding choice of law, attorneys'
fees, and successors and assigns. This Amendment shall become effective upon
its execution, which may occur in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. Captions and paragraph headings are used herein for
convenience only, are not a part of this Amendment or the Agreement as amended
by this Amendment and shall not be used in construing either document. Other
than the reference to the Agreement contained in the first recital of this
Amendment, each reference to the Agreement
6
<PAGE> 7
and any agreement contemplated thereby or executed in connection therewith,
whether or not accompanied by reference to this Amendment, shall be deemed a
reference to the Agreement as amended by this Amendment.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed in multiple originals by their authorized officers, all as of the day
and year first above written.
PURCHASER:
PROVINCE HEALTHCARE COMPANY,
a Delaware corporation
By: /s/ Howard T. Wall, III
-------------------------------
Name: Howard T. Wall, III
Title: Vice President
SELLER:
TENET HEALTHCARE
CORPORATION, a Nevada corporation
By: /s/ Paul O'Neill
-------------------------------
Name: Paul O'Neill
Title: Vice President
7
<PAGE> 1
EXHIBIT 99.1
PROVINCE LOGO
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: MERILYN H. HERBERT
VICE PRESIDENT, INVESTOR RELATIONS
(615)370-1377
PROVINCE HEALTHCARE PURCHASES TWO HOSPITALS
Brentwood, TN, October 1, 1999 - Province Healthcare Company (Nasdaq:
PRHC) announced today that it has acquired Trinity Valley Medical Center in
Palestine, Texas and Minden Medical Center in Minden, Louisiana from Tenet
Healthcare Corporation.
Trinity Valley Medical Center is a 153-bed facility with revenues of
approximately $35.1 million and Minden Medical Center is a 121-bed hospital with
revenues of approximately $25.6 million, both as of May 31, 1999. Province
purchased the hospitals from Tenet Healthcare Corporation for approximately $77
million.
Martin S. Rash, President and Chief Executive Officer of Province
Healthcare, commented, "Trinity Valley Medical Center is located in Palestine,
Texas where we own the other hospital in the community. By serving as the sole
provider in the market we will be able to add services currently unavailable but
badly needed by the community. The Palestine market has a service area
population in excess of 100,000."
Minden Medical Center is a full-service hospital serving northwest
Louisiana. Located approximately 30 minutes east of Shreveport, this facility is
the only hospital in a service area population of approximately 64,000. Rash
added, "These acquisitions reaffirm our commitment to providing high quality
healthcare to attractive non-urban communities."
Province Healthcare is a provider of health care services in attractive
non-urban markets in the United States. The Company owns or leases 15 general
acute care hospitals in eight states with a total of 1,284 licensed beds. The
Company also provides management services to 49 primarily non-urban hospitals in
17 states and Puerto Rico with a total of 3,526 licensed beds.
CONTACT: MERILYN H. HERBERT, PROVINCE HEALTHCARE COMPANY (PRHC) AT (615)370-1377
-MORE-
<PAGE> 2
PROVINCE HEALTHCARE PURCHASES TWO HOSPITALS 2
Except for historical information contained herein, the statements in
this release are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and
uncertainties which may cause the Company's actual results in future periods to
differ materially from forecasted results. Those risks include, among others,
risks associated with general economic and business conditions, the effect of
future governmental regulations, including the recently enacted Balanced Budget
Act of 1997, changes in Medicare and Medicaid reimbursement levels, and the
Company's ability to implement successfully its acquisition and development
strategy and to obtain financing therefor. Those and other risks are described
in the Company's filings with the Securities and Exchange Commission (SEC),
copies of which are available from the SEC or may be obtained upon request from
the Company.
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