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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): April 15, 1999
THE COOPER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-8597 94-2657368
(State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation)
</TABLE>
6140 Stoneridge Mall Road, Suite 590, Pleasanton, California 94588
(Address of principal executive offices)
(925) 460-3600
(Registrant's telephone number, including area code)
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ITEM 2. Acquisition or Disposition of Assets.
Statements in this report that are not based on historical fact may be
"forward-looking statements" as defined by the Private Securities Litigation
Reform Act of 1995. They include words like "may," "will," "expect," "estimate,"
"anticipate," "continue" or similar terms and reflect The Cooper Companies,
Inc.'s ("Cooper") current analysis of existing trends. Actual results could
differ materially from those indicated due to: major changes in business
conditions and the economy, loss of key senior Management, major disruptions in
the operations of Cooper's manufacturing facilities, new competitors or
technologies, significant disruptions caused by the failure of third parties to
address the Year 2000 issue or by unforeseen delays in completing Cooper's Year
2000 compliance program, acquisition integration costs, foreign currency
exchange exposure including the potential impact of the Euro, investments in
research and development and other start-up projects, dilution to earnings per
share from acquisitions or issuing stock, regulatory issues, significant
environmental clean-up costs above those already accrued, litigation costs,
costs of business divestitures, and items listed in the Company's SEC reports,
including the section entitled "Business " in its Annual Report on Form 10-K for
the year ended October 31, 1998.
On April 15, 1999, Hospital Group of America, Inc., a Delaware corporation
("HGA") and wholly owned subsidiary of The Cooper Companies, Inc., a Delaware
corporation (the "Company"), sold (the "Disposition") substantially all of its
assets to Universal Health Services, Inc., a Delaware corporation ("UHS") and
certain subsidiaries of UHS (collectively with UHS, the "UHS Group"). The assets
were sold pursuant to an Asset Purchase Agreement dated March 12, 1999 by and
among the Company, HGA and certain of its subsidiaries and the UHS Group (the
"Asset Purchase Agreement") and consist of behavioral health facilities and
related contracts and other assets. A press release announcing the Disposition
is attached as Exhibit 99.1 hereto and incorporated herein by reference.
The Company received approximately $27 million in cash at the closing and may
receive up to an additional $3 million if certain contingencies are met. These
amounts were determined through arms-length negotiations. The Company has used
approximately $25 million of the proceeds from the Disposition to repay a
portion of its debt carrying an average interest rate of approximately 7% and
intends to use the balance to make further debt repayments or other investments
that meet its rate of return targets.
The description of the Asset Purchase Agreement set forth herein does not
purport to be complete and is qualified in its entirety by the provisions of the
Asset Purchase Agreement, a copy of which his attached as Exhibit 2.1 hereto and
incorporated herein by reference. The schedules, exhibits and appendices (the
"Attachments") to the Asset Purchase Agreement, listed below, do not contain
information which is material to an investment decision and have, therefore, not
been attached to this filing, pursuant to Item 601 of Regulation S-K. The
Company will supplementally furnish the Commission with a copy of any such
Attachments upon request. The following list identifies the contents of the
Attachments:
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<S> <C>
Schedule 1.1(b) Tangible Personal Property
Schedule 1.1(e) Contractual Obligations Relating to Records
Schedule 1.1(f) Assumed Contracts
</TABLE>
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<TABLE>
<S> <C>
Schedule 1.1(j) Investments
Schedule 1.1(p) Contracts Related to Employee Benefit Plans
Schedule 1.2(a) Rejected Investments
Schedule 1.2(e) Excluded Contracts
Schedule 1.7(d) Employment Contracts
Schedule 2.2 Authorization; Validity and Effect of Agreements
Schedule 2.3 Subsidiaries; Debt and Equity Securities
Schedule 2.4 Capitalization; Outstanding Rights, Warrants, etc.
Schedule 2.6 Officers and Directors
Schedule 2.7 Financial Statements
Schedule 2.8 Absence of Undisclosed Liabilities
Schedule 2.9 Absence of Certain Changes or Events
Schedule 2.10 Taxes
Schedule 2.11 Real Property
Schedule 2.11(a) Interests in Real Property
Schedule 2.11(g) Zoning Endorsement
Schedule 2.12(a) Title to Property and Assets
Schedule 2.12(b) Exceptions to Sufficiency of Purchase Assets
Schedule 2.14 List of Contracts and Other Data
Schedule 2.15 Exceptions to No Breach or Default
Schedule 2.16 Labor Controversies
Schedule 2.17 Litigation
Schedule 2.19 Licenses; Permits; Authorizations
Schedule 2.20(a) Compliance with Applicable Law; Environmental Laws
Schedule 2.20(b) Prohibited Activities
Schedule 2.21.1 Employee Benefit Plans
Schedule 2.21.2 Employees
Schedule 2.21.3 Employee Relations
Schedule 2.23 Trade Receivables; Trade Notes and Accounts
Payable; Prepaid Contracts
Schedule 2.26 Insurance Policies; Pending Insurance Claims
Schedule 2.27 Professional Staff; Medicare, Medicaid and Other
Health Care Programs
Schedule 2.29 Suppliers and Providers of Services
Schedule 2.30 Related Party Transactions
Schedule 2.31 Management Contracts and Related Agreements
Schedule 3.2 Authorization; Validity and Effect of Agreements
Schedule 4.2 Releases, Consents and Estoppels
Schedule 4.3(c) Compensation Increases
Schedule 5.3(a) Excluded Employees
Schedule 6.3 Allocation of Purchase Price
Schedule 8.1 Contractual Obligations Relating to Records
Exhibit A List of Facility Locations
Exhibit B List of Management Contracts
Exhibit C Accounting Procedures
Exhibit D Form of Opinion of Sellers' Counsel
</TABLE>
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<TABLE>
<S> <C>
Exhibit E Form of Opinion of UHS Group's Counsel
Appendix I Forms of Warranty Deed, Bill of Sale and Assignment
Appendix II Form of Assumption Agreement
</TABLE>
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses acquired. Not applicable.
(b) Pro Forma Financial Information.
The following unaudited pro forma consolidated condensed financial statements
are filed with this report:
<TABLE>
<CAPTION>
Page
<S> <C>
Pro Forma Consolidated Condensed Statements of Income:
Year Ended October 31, 1998 F-1
Three Months Ended January 31, 1999 F-2
Pro Forma Consolidated Condensed Balance Sheet as at January 31, 1999 F-3
</TABLE>
The Pro Forma Consolidated Condensed Balance Sheet as at January 31, 1999
reflects the Company's financial position after giving effect to the Disposition
discussed in Item 2 and assumes the Disposition occurred on January 31, 1999.
The Pro Forma Consolidated Condensed Statements of Income for the fiscal year
ended October 31, 1998 and the three months ended January 31, 1999 assume that
the Disposition occurred on November 1, 1997 and are based on the continuing
operations of the Company for each of the aforementioned periods.
The unaudited pro forma consolidated condensed financial statements included in
this report ("Pro Formas") have been prepared by and include assumptions deemed
appropriate by the Company's Management. The Pro Formas are presented for
illustrative purposes only and are not necessarily indicative of future results
or of the actual results that may have occurred if the Disposition had occurred
on the dates presented. The Pro Formas should be read in conjunction with the
Company's historical financial statements and related notes. Note that these
historical financial statements will reflect the Disposition beginning on the
closing date of April 15, 1999.
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(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------ --------------
<S> <C>
2.1 Asset Purchase Agreement Between The Cooper Companies, Inc. and
Universal
99.1 Press Release dated April 15, 1999 of The Cooper Companies, Inc.
</TABLE>
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SIGNATURE
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.
THE COOPER COMPANIES, INC.
By /s/ Stephen C. Whiteford
----------------------------------
Stephen C. Whiteford
Vice President and
Corporate Controller
(Principal Accounting Officer)
Dated: April 30, 1999
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Pro Forma Consolidated Condensed Statements of Income
(In thousands, except per share figures)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended
October 31, 1998
------------------------------------------
Pro forma
Historical Adjustments Pro forma
------------- ----------- ---------
<S> <C> <C> <C>
Net sales $ 147,192 $ -- $147,192
Cost of sales 55,764 -- 55,764
--------- ---------- -------
Gross profit 91,428 -- 91,428
Selling, general and administrative expense 56,226 -- 56,226
Research and development expense 1,944 -- 1,944
Amortization of intangibles 3,558 -- 3,558
--------- ---------- -------
Income from operations 29,700 -- 29,700
--------- ---------- -------
Interest expense 6,253 (2,386) (1) 3,867
Settlement of disputes, net 1,250 -- 1,250
Other income, net 890 -- 890
--------- ---------- -------
Income from continuing operations before income
taxes 23,087 2,386 25,473
(Benefit of) provision for income taxes (34,723) 797 (2) (33,926)
--------- ----------- --------
Income from continuing operations $ 57,810 $ 1,589 $ 59,399
========= =========== ========
Earnings per share from continuing operations:
Basic $ 3.90 $ 4.01
Diluted $ 3.79 $ 3.89
Number of shares used to compute earnings per share:
Basic 14,828 -- 14,828
Diluted 15,269 -- 15,269
</TABLE>
(1) To reflect reduction of interest expense assuming repayment of debt using
all of the proceeds from the disposition.
(2) To record the tax impact on reduced interest expense at a weighted average
tax rate of 33.4%.
F1
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Pro Forma Consolidated Condensed Statements of Income
(In thousands, except per share figures)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
January 31, 1999
---------------------------------------------
Pro forma
Historical Adjustments Pro forma
---------- ----------- ---------
<S> <C> <C> <C>
Net sales $ 34,959 $ -- $ 34,959
Cost of sales 13,416 -- 13,416
--------- ------------ --------
Gross profit 21,543 -- 21,543
Selling, general and administrative expense 14,222 -- 14,222
Research and development expense 461 -- 461
Amortization of intangibles 957 -- 957
--------- ------------ --------
Income from operations 5,903 -- 5,903
--------- ------------ --------
Interest expense 1,849 (614) (1) 1,235
Settlement of disputes, net - -- --
Other income, net 34 -- 34
--------- ------------ --------
Income from continuing operations before
income taxes 4,088 614 4,702
Provision for income taxes 1,447 217 (2) 1,664
--------- ------------ --------
Income from continuing operations $ 2,641 $ 397 $ 3,038
========= ============ ========
Earnings per share from continuing operations:
Basic $ 0.18 $ 0.21
Diluted $ 0.18 $ 0.21
Number of shares used to compute earnings per
share:
Basic 14,427 -- 14,427
Diluted 14,668 -- 14,668
</TABLE>
(1) To reflect reduction of interest expense assuming repayment of debt using
all of the proceeds from the disposition.
(2) To record the tax impact on reduced interest expense at the Company's
estimated full year effective tax rate of 35.4%
F2
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THE COOPER COMPANIES, INC. AND SUBSIDIARIES
Pro Forma Consolidated Condensed Balance Sheet
January 31, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Forma Pro
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,774 $ -- $ 5,774
Trade receivables, net 23,707 -- 23,707
Inventories 34,557 -- 34,557
Deferred tax asset 15,082 -- 15,082
Net assets of discontinued operations 26,524 (26,524) --
Other current assets 4,678 2,393 (1) 7,071
-------- -------- --------
Total Current Assets 110,322 (24,131) 86,191
Property, plant and equipment, net 35,438 -- 35,438
Goodwill and other intangibles, net 83,419 -- 83,419
Deferred tax asset 52,292 4,793 (4) 57,085
Other assets 8,157 -- 8,157
--------- --------- ---------
$ 289,628 $ (19,338) $ 270,290
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and notes payable $ 14,452 $ -- $ 14,452
Current portion of long-term debt 3,271 -- 3,271
Accrued income taxes 8,805 -- 8,805
Other current liabilities 15,620 4,045 (2) 19,665
--------- --------- ---------
Total current liabilities 42,148 4,045 46,193
Long-term debt 77,659 (27,000)(3) 50,659
Other noncurrent liabilities 22,511 -- 22,511
--------- --------- ---------
Total Liabilities 142,318 (22,955) 119,363
--------- --------- ---------
Stockholders' equity:
Common stock, $.10 par value 1,492 -- 1,492
Additional paid-in capital 251,230 -- 251,230
Accumulated other comprehensive loss (899) -- (899)
Accumulated deficit (94,684) 3,617 (91,067)
Less, treasury stock at cost (9,829) -- (9,829)
--------- --------- ---------
Total stockholders' equity 147,310 3,617 150,927
--------- --------- ---------
$ 289,628 $ (19,338) $ 270,290
========= ========= =========
</TABLE>
(1) Reclassification of net receivables retained following disposition
(2) Provision for disposition costs
(3) Reflects the use of all of the proceeds from the disposition to repay debt
(4) To reverse net deferred tax liabilities associated with disposition.
F3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
No. Description Numbered Page
- ------ ----------- -------------
<S> <C> <C>
2.1 Asset Purchase Agreement Between The Cooper
Companies, Inc. and Universal
99.1 Press Release dated April 15, 1999 of The Cooper
Companies, Inc.
</TABLE>
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is dated this
12th day of March, 1999, by and among UHS OF HARTGROVE, INC., an Illinois
corporation ("UHS-Hartgrove"), UHS OF HAMPTON, INC., a New Jersey corporation
("UHS-Hampton"), UHS OF HAMPTON LEARNING CENTER, INC., a New Jersey corporation
("UHS-HLC"), UHS MIDWEST CENTER FOR YOUTH AND FAMILIES, INC., an Indiana
corporation ("UHS-Indiana"), UHS OF DELAWARE, INC., a Delaware corporation
("UHS-DEL") and UNIVERSAL HEALTH SERVICES, INC., a Delaware corporation ("UHS"),
and THE COOPER COMPANIES, INC., a Delaware corporation ("Cooper"), HOSPITAL
GROUP OF AMERICA, INC., a Delaware corporation ("HGA") and subsidiary of Cooper,
HOSPITAL GROUP OF NEW JERSEY, INC., a New Jersey corporation ("HGA-NJ") and
subsidiary of HGA, HAMPTON LEARNING CENTER, INC., a New Jersey corporation
("Hampton") and subsidiary of HGA-NJ, HOSPITAL GROUP OF ILLINOIS, INC., an
Illinois corporation ("HGI") and subsidiary of HGA, RESIDENTIAL CENTERS OF
INDIANA, INC., a Delaware corporation ("Midwest") and subsidiary of HGA and HGA
MANAGEMENT SERVICES, INC., a Delaware corporation ("HGA-MSI") and subsidiary of
HGA (UHS-Hartgrove, UHS-Hampton, UHS-HLC, UHS-Indiana and UHS-DEL are sometimes
hereinafter referred to individually as a "Buyer" and collectively as "Buyers";
Buyers and UHS are sometimes hereinafter referred to collectively as the "UHS
Group;" HGA, Hampton, HGI, HGA-NJ, Midwest and HGA-MSI are sometimes hereinafter
referred to individually as an "HGA Affiliate" and collectively as the "HGA
Affiliates;" and Cooper and the HGA Affiliates are sometimes hereinafter
referred to individually as a "Seller" and collectively as the "Sellers").
WHEREAS, Cooper owns all of the issued and outstanding shares of
the common stock of HGA; and
WHEREAS, HGA owns all of the issued and outstanding shares of the
common stock of each of HGI, HGA-NJ, HGA-MSI and Midwest and HGA-NJ owns all of
the issued and outstanding shares of the common stock of Hampton; and
WHEREAS, each of HGA-NJ, HGI and Midwest owns and operates a
licensed behavioral health facility at the locations listed on Exhibit A hereto,
and each of HGA-NJ, HGI and Hampton leases and operates a licensed behavioral
health facility at the locations listed on Exhibit A hereto (such owned and
leased facilities, individually, a "Facility" and collectively, the
"Facilities"); and
WHEREAS, HGA, either directly or through its subsidiaries,
manages Riveredge Hospital ("Riveredge") and certain other behavioral and mental
health facilities through the
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management contracts listed on Exhibit B hereto and more fully described below
(the "Management Contracts"); and
WHEREAS, (i) the HGA Affiliates, with the consent of Cooper,
desire to sell and assign and Buyers (other than UHS-DEL) desire to purchase and
to assume, substantially all of the assets used by the HGA Affiliates in the
operation of the Facilities and certain liabilities in connection therewith; and
(ii) HGA and HGA-MSI, with the consent of Cooper, desire to sell and assign and
UHS-DEL desires to purchase and assume certain rights and obligations with
respect to the Management Contracts, all for the consideration and upon the
terms and subject to the conditions hereafter set forth.
NOW, THEREFORE, in consideration of the premises, the provisions
and the respective agreements hereinafter set forth, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 AGREEMENT TO PURCHASE AND SELL FACILITIES ASSETS. Upon
the terms and subject to the conditions set forth in this Agreement and upon the
representations and warranties made herein by each of the parties to the other,
on the Closing Date (as such term is hereinafter defined), each of the HGA
Affiliates shall sell, grant, convey, assign, transfer and deliver to the
applicable Buyer, and such Buyer shall purchase and acquire from each of the HGA
Affiliates, all of such HGA Affiliate's right, title and interest in and to the
Facilities Assets (as such term is defined below), free and clear of all liens,
charges, claims, pledges, security interests and encumbrances of any nature
whatsoever (collectively, "Liens"), except for Permitted Encumbrances (as such
term is defined in Section 1.10 below). The "Facilities Assets" shall mean and
include all of those personal, tangible and intangible properties, and the real
properties and improvements of the HGA Affiliates, used in connection with the
operation of the Facilities as set forth below, other than the Excluded Assets
as provided in Section 1.2, including, without limitation, the following: (i)
those assets more particularly described on the Schedules to this Section 1.1,
(ii) the going concern value of the HGA Affiliates relating to the Facilities,
if any, and (iii) the following (unless excluded pursuant to Section 1.2):
(a) all real property owned by any HGA Affiliate in fee simple, and
all leasehold and subleasehold interests in real property held by
any HGA Affiliate, including the real property described in
Schedule 2.11(a), together with all improvements, buildings and
fixtures located thereon or therein, including the Facilities and
all construction in progress (such owned real property,
collectively, the "Owned Facilities Real Property," and such
leasehold or subleasehold interests in real property,
collectively, the "Leasehold Facilities Real Property", the Owned
Facilities Real Property and the Leasehold Facilities Real
Property being sometimes hereinafter referred to collectively as
the "Facilities Real Property");
2
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(b) all equipment, computers, computer hardware and software, other
than the Med-Net software (the "Med-Net Software") licensed to
HGA by Keane Incorporated and used by the HGA Affiliates for
accounts payable and general ledger accounting (subject to any
restrictions by the licensor on the assignment thereof), tools,
supplies, furniture, vehicles and other tangible personal
property and assets owned or leased by the HGA Affiliates related
to the Facilities as of the date of this Agreement, as such items
may be modified prior to Closing in the ordinary course of
business, and including without limitation those items set forth
on Schedule 1.1(b) as such items may be modified prior to Closing
in the ordinary course of business;
(c) all items of inventory relating to the Facilities, as such items
may be modified prior to Closing in the ordinary course of
business;
(d) those prepaid expenses relating to the Facilities;
(e) to the extent assignable under applicable state and federal laws
and regulations, and subject to any such applicable contractual
obligations as are acceptable to Buyer, each of which contractual
obligations is set forth on Schedule 1.1(e), all financial,
patient, medical staff, research and development, personnel
records and other records (including equipment records,
medical/administrative libraries, medical records, documents,
production reports and records, catalogs, books, records, files,
equipment logs and operating manuals) located at the Facilities
or necessary for the operation of the Facilities, except for (i)
records with respect to any litigation as to which the applicable
HGA Affiliate will retain liability as provided in Section 1.8(i)
below (provided that copies of all such records as are requested
by any Buyer shall be provided to such Buyer upon an HGA
Affiliate's receipt of any such request), (ii) personnel records
of employees of the HGA Affiliates who are not Hired Employees
and (iii) all documents and records relating to the American
Arbitration Association arbitration proceeding relating to the
Contract identified at item 1 set forth on Schedule 1.1(e)
involving Hampton Medical Group and HGA-NJ, including, but not
limited to, all related billing slips, contracts with physicians'
groups and correspondence with Blue Cross (provided that copies
of all such documents and records as are requested by any Buyer
shall be provided to such Buyer upon an HGA Affiliate's receipt
of any such request); notwithstanding the foregoing, all patient
records shall be assigned to the applicable Buyer and the
applicable Buyer shall not release any such records relating to
time periods before the Closing Date to any governmental entity
or other party unless required by law or court order or the
applicable Buyer obtains the prior written consent of the
Sellers, which consent shall not be unreasonably withheld;
3
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(f) all of the Sellers' interest in all Medicare provider agreements
and Medicaid agreements (to the extent assignable), all
commitments, contracts, leases, subleases, licenses (other than
Licenses, as defined in Section 2.19 below), other agreements and
understandings relating to the Facilities (other than Contracts
(as defined below) under any Employee Benefit Plan that are not
identified on Schedule 1.1(p) and Contracts that are listed on
Schedule 1.2(e)), and all outstanding offers or solicitations to
enter into any of the foregoing, written or oral (the
"Contracts");
(g) all Licenses, to the extent assignable under applicable state and
federal laws and regulations, held or used by any of the HGA
Affiliates in connection with the ownership, development and
operations of the Facilities (including any pending or approved
governmental approvals regarding the Facilities);
(h) to the extent of the HGA Affiliates' interests therein, all
marks, names (including the names of the HGA Affiliates listed in
the first paragraph of this Agreement and the following d/b/a
names: "Hampton Behavioral Health Center", "Hampton Hospital",
"Hampton Behavioral Center", "Hampton Health System", "Hampton
Psychiatric Center", "Hampton", "Hartgrove Hospital", "HGI
Behavioral Health Center", "HGI Behavioral Health System",
"Ridgeway Hospital", "The Midwest Center for Youth and Families",
"RTC of Indiana, Inc.", "Residential Treatment Centers of
Indiana, Inc.", "Hampton Counseling Center", "HGI Behavioral
Center", "Hampton Academy", "Gloucester County Outpatient
Center", "Northwest Chicago Treatment Center", "HGI Behavioral
Treatment Center", "Austin Family Counseling Center", "Hyde Park
Treatment Center", "Tinley Park Treatment Center" and any
variants thereof), trademarks, service marks, patents, patent
rights, assumed names, logos and copyrights, including variants
thereof and applications therefor (collectively, "Intellectual
Properties"), used in the business of the Facilities;
(i) the interest in all property, real, personal or mixed, tangible
or, to the extent assignable, intangible, arising or acquired in
the ordinary and regular course of any of the HGA Affiliates'
business in connection with the Facilities between the date
hereof and the Closing Date;
(j) all of the HGA Affiliates' ownership or other interests, to the
extent transferable or assignable by them, in and to any shares
of capital stock of any corporation, partnership interests in
general or limited partnerships, interests in joint ventures, or
other equity or debt instruments in any Persons (as defined in
Section 1.10 below), all as described on Schedule 1.1(j) (the
4
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"Investments"), other than those Investments (the "Rejected
Investments") which are listed on Schedule 1.2(a) hereto as
Excluded Assets;
(k) all insurance benefits, including proceeds, arising from or
relating to the Purchase Assets or Assumed Liabilities (as
defined in Section 1.7 below) prior to the Closing Date, unless
expended in accordance with this Agreement or described in
Section 1.2;
(l) any claims of the HGA Affiliates against third parties relating
to the Facilities Assets, known or unknown, contingent or
otherwise, unless otherwise provided in this Agreement and except
for claims (i) relating to unassumed liabilities, (ii) arising
under this Agreement and any related agreements or (iii) relating
to Excluded Assets;
(m) all patient accounts and other accounts and notes receivable
(including, without limitation, any claims, remedies and other
rights related thereto but excluding intercompany receivables and
Cost Report Receivables, as such term is defined in Section
1.1(n)) and rights to payment for services rendered through the
Closing Date in connection with the operation of the Facilities
(collectively, "Trade Receivables");
(n) all claims for amounts due, or that may become due, from
Medicare, Medicaid, Blue Cross or any other health care payment
intermediary or third party payor program (collectively, the
"Government Reimbursement Programs") resulting from the
consummation of the transactions contemplated hereby or arising
in connection with the filing of any cost reports relating to the
operation of the Facilities (collectively, "Cost Report
Receivables"), including, without limitation, final cost reports,
with third party payors;
(o) all other property of every kind, character or description, to
the extent assignable in the case of items of property of a
character described in subparagraphs (b), (e), (f), (g), (i) and
(j) above as being subject to possible restrictions on
assignment, owned or leased by any of the HGA Affiliates and used
or held for use in the business of the Facilities or with respect
to the Management Contracts, whether or not reflected on the
Financial Statements (as defined in Section 2.7), located at the
Facilities or necessary for the operation of the Facilities and
whether or not similar to the things specifically set forth
above; and
(p) to the extent specifically identified by name, date and relevant
parties on Schedule 1.1(p), those Contracts under an Employee
Benefit Plan (as defined in Section 2.21) of any Seller providing
health and welfare benefits to
5
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employees of any HGA Affiliate employed in the business or
operations of the Facilities (and the covered dependents of such
employees).
1.2 EXCLUDED ASSETS. The following items are not part of
the sale and purchase contemplated hereunder and are excluded from the
Facilities Assets (collectively, the "Excluded Assets");
(a) short term investments listed on Schedule 1.2(a) hereto, as such
items may be modified prior to the Closing in the ordinary course
of business, and cash and cash equivalents;
(b) inventory and supplies disposed of or exhausted after the date
hereof and prior to the Closing Date in the ordinary course of
business, and any other assets transferred or disposed of in the
ordinary course of business;
(c) insurance benefits, including proceeds, paid in connection with
claims arising out of liabilities and obligations retained by the
Sellers pursuant to Section 1.8 and, to the extent such benefits
constitute payments of funds received by any HGA Affiliate
through the Closing Date from any Government Reimbursement
Program or other insurer in respect of services rendered through
the Closing Date to patients of any of the Facilities, such
payments of funds;
(d) personnel records and any other records which any of the HGA
Affiliates is required by law to retain in its possession
(provided that the HGA Affiliates will deliver copies of such
personnel records to Buyers as provided in Section 1.1(e));
(e) all Contracts listed on Schedule 1.2(e) hereto;
(f) records with respect to any litigation as to which an HGA
Affiliate will retain liability as provided in Section 1.8(i)
(provided that the HGA Affiliates will deliver copies of such
records to Buyers as provided in Section 1.1(e)), all documents
and records relating to the American Arbitration Association
proceeding relating to the Contract identified at item 1 set
forth on Schedule 1.1(e) involving Hampton Medical Group and
HGA-NJ, including, but not limited to, all related billing slips,
contracts with physician's groups and correspondence with Blue
Cross (provided that the HGA Affiliates will deliver copies of
such documents and records to Buyers as provided in Section
1.1(e)), and internal records maintained by Cooper with respect
to any of the HGA Affiliates, but only to the extent such records
are not necessary for the
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continued operation of the Facilities in the manner in which they
are currently being operated;
(g) any other assets expressly designated in the Schedules to this
Agreement as Excluded Assets;
(h) all of the shares of capital stock of Hospital Group of Delaware,
Inc. ("HGD") and any interest in MeadowWood Health Services, LLC
("MeadowWood") and all of the working capital and other assets
owned or otherwise used exclusively by any HGA Affiliate or by
HGD or MeadowWood in connection with the operation of the
business of HGD or MeadowWood;
(i) any and all other assets agreed to by Buyers and Sellers as
excluded prior to the Closing; and
(j) except for the Contracts described in Section 1.1(p), any
Employee Benefit Plan of any Seller, and any Contract or other
asset relating to any such Employee Benefit Plan, including,
without limitation, The Cooper Companies, Inc. 401(k) Savings
Plan and any Contracts or assets relating thereto.
1.3 CONTRACT ASSIGNMENTS.
1.3.1 ASSIGNMENT OF INTEREST IN MANAGEMENT
CONTRACTS. At Closing and upon and subject to the terms and conditions set forth
in this Agreement, the applicable HGA Affiliate shall transfer and assign to
UHS-DEL and UHS-DEL shall assume and perform the Management Contracts described
on Exhibit B hereto.
1.3.2 CONSENTS TO ASSIGNMENTS. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign or transfer any of the Assumed Contracts or Management
Contracts or part thereof or right or benefit arising thereunder or resulting
therefrom if an attempted assignment or transfer thereof, without the consent of
a third party thereto, would constitute a breach thereof or in any way affect
the rights of any of the Buyers or the HGA Affiliates thereunder. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights of any of the Buyers or the HGA
Affiliates so that such Buyer would not in fact receive all such rights, the HGA
Affiliates (i) shall cooperate with Buyers in their request in endeavoring to
obtain such consent promptly at no cost to Buyers and (ii) if any such consent
is unobtainable, shall cooperate with Buyers in any reasonable arrangement (the
"Assignment Substitute") designed to provide Buyers the benefits, obligations
and expenses under any such Assumed Contract or Management Contract or part
thereof or any right or benefit arising thereunder or resulting therefrom,
including enforcement for the benefit of Buyers of any and all rights of the HGA
Affiliates against a third party arising out of the breach or cancellation by
such third party or otherwise. The HGA Affiliates shall, to the extent
necessary, perform under the Assignment Substitute without a fee to Buyers
except the consideration being paid hereunder.
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1.3.3 ALLOCATION OF PROFIT AND LOSS. With respect
to any Assignment Substitute, and to the extent allowable under applicable
federal or state law, Buyers shall be entitled to receive 100% of the profits
attributable to such Contract and shall be responsible for 100% of the losses
attributable to such Contract from and after the Closing Date, other than such
losses as may arise from the negligence or willful misconduct or omission of the
applicable HGA Affiliate.
1.4 INSTRUMENTS OF CONVEYANCE.
(a) On the Closing Date, each of the Sellers shall
deliver to the applicable Buyer such deeds (in the case of the Owned Facilities
Real Property, a recordable special warranty deed or the equivalent thereof in
use in accordance with local practice), bills of sale, endorsements, assignments
and other good and sufficient instruments of conveyance and assignment in the
forms attached hereto as Appendix I, as shall be effective to vest in such Buyer
all of the Sellers' right, title and interest in and to the Purchase Assets (as
defined in Section 1.10), free and clear of all Liens except for the Permitted
Encumbrances. Simultaneously with such delivery, the Sellers will take all
additional steps as may be necessary to put the applicable Buyer in possession
of the Purchase Assets, including all assets which are not located at the
Facilities at the time of Closing. Buyers and the Sellers shall each pay
one-half of all transfer costs, title insurance fees (including fees for all
endorsements), recording fees and transfer, sales, use or stamp taxes or similar
charges (such transfer, sales, use and stamp taxes and similar charges,
collectively, "Transfer Taxes") arising by reason of the sale, assignment,
transfer and delivery hereunder of the Purchase Assets.
(b) At the Closing, and except as may otherwise be
provided for herein, each of the Sellers shall use all reasonable efforts to
deliver to Buyers all written consents required under any Assumed Contract being
assigned to any Buyer hereunder or any Management Contract being assigned to
UHS-DEL hereunder. Buyer shall cooperate with Sellers in procuring such consents
to the extent reasonably necessary.
1.5 DOC AGREEMENTS.
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1.5.1 In the event that, prior to the Closing Date,
an HGA Affiliate has not leased Hartgrove Hospital to Aunt Martha's Youth
Services Center, Inc. ("Aunt Martha's") on terms acceptable to Buyers or entered
into another arrangement with Aunt Martha's on terms acceptable to Buyers for
purposes of providing services for the Illinois State Department of Corrections
(the "DOC"), Buyers shall use reasonable efforts, for a period of twelve (12)
months following the later of (a) the Closing Date or (b) the earlier of August
31, 1999 or the date upon which one or more of the Buyers owns both Hartgrove
Hospital and Riveredge, to enter into such lease or another arrangement with
Aunt Martha's for purposes of providing services to the DOC on terms acceptable
to Buyers. Any such lease or other arrangement with Aunt Martha's for purposes
of providing services to the DOC which is entered into by an HGA Affiliate prior
to the Closing Date will be deemed to be acceptable to Buyers if Buyers do not
object to the proposed terms thereof within ten (10) days after such terms are
presented in writing by the applicable HGA Affiliate to Buyers. If an HGA
Affiliate enters into such a lease or other arrangement with Aunt Martha's for
purposes of providing services to the DOC prior to the Closing Date and such
lease or other arrangement is an Assumed Contract or is deemed to be acceptable
to Buyers as provided herein, Buyers shall pay to Sellers TWO MILLION DOLLARS
($2,000,000) on the Closing Date. If within twelve (12) months following the
later of (a) the Closing Date or (b) the earlier of August 31, 1999 or the date
upon which one or more of the Buyers owns both Hartgrove Hospital and Riveredge,
Buyer leases Hartgrove Hospital to Aunt Martha's or enters into another
arrangement with Aunt Martha's for purposes of providing services to the DOC,
then Buyers shall pay Sellers TWO MILLION DOLLARS ($2,000,000) upon the
execution and delivery of such lease or other arrangement, and such execution
and delivery shall mean that the lease or other arrangement is acceptable to
Buyers. Nothing contained herein shall require Buyers to acquire Riveredge on
terms which are not acceptable to Buyers.
1.5.2 In the event that, prior to the Closing Date,
an HGA Affiliate has not entered into an administrative services organization
contract or similar arrangement (an "ASO Agreement") with the DOC on terms
acceptable to Buyers, Buyers shall use reasonable efforts, for a period of
twelve (12) months following the later of (a) the Closing Date or (b) the
earlier of August 31, 1999 or the date upon which one or more of the Buyers owns
both Hartgrove Hospital and Riveredge, to enter into an ASO Agreement with the
DOC on terms acceptable to Buyers. Any such ASO Agreement which is entered into
by an HGA Affiliate prior to the Closing Date will be deemed to be acceptable to
Buyers if Buyers do not object to the proposed terms thereof within ten (10)
days after such terms are presented in writing by the applicable HGA Affiliate
to Buyers. If an HGA Affiliate enters into such an ASO Agreement with the DOC
prior to the Closing Date and the ASO Agreement is an Assumed Contract or is
deemed to be acceptable to Buyers as provided herein, Buyers shall pay to
Sellers FIVE HUNDRED THOUSAND DOLLARS ($500,000) on the Closing Date. If a Buyer
enters into an ASO Agreement with the DOC within twelve (12) months following
the later of (a) the Closing Date or (b) the earlier of August 31, 1999 or the
date upon which one or more of the Buyers owns both Hartgrove Hospital and
Riveredge, then Buyers shall pay Sellers FIVE HUNDRED THOUSAND DOLLARS
($500,000) upon the execution and delivery of such ASO Agreement, and such
execution and delivery shall mean that the ASO Agreement is acceptable
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to Buyers. Nothing contained herein shall require Buyers to acquire Riveredge on
terms which are not acceptable to Buyers.
1.6 CONSIDERATION.
1.6.1 PURCHASE PRICE. In reliance upon the
representations, warranties, covenants and agreements of the Sellers contained
herein, and in exchange for the Purchase Assets and the respective covenants of
Sellers against competition set forth in this Agreement, UHS shall pay or cause
to be paid to the Sellers the purchase price (the "Purchase Price") of
TWENTY-SEVEN MILLION DOLLARS ($27,000,000), subject to adjustment as set forth
in Section 1.6.2, payable on the Closing Date by wired Federal funds to such
account or accounts as shall be designated in writing by the Sellers no later
than three business days prior to the Closing Date, plus the assumption of the
Assumed Liabilities.
1.6.2 WORKING CAPITAL ADJUSTMENT.
(a) In the event there is a Working Capital Deficit
as (defined in Section 1.10), the Purchase Price will be reduced by the amount
of the Working Capital Deficit. Working Capital as of the Closing Date shall be
estimated on the Closing Date and a preliminary adjustment to the Purchase Price
shall be made on the basis of such estimate of Working Capital as of the Closing
Date.
(b) Working Capital as of the Closing Date shall be
determined by mutual agreement within sixty (60) days following the Closing and
the Purchase Price adjusted accordingly. In the event Buyers and Sellers are
unable to agree on the adjustment to the Purchase Price relating to any Working
Capital Deficit, Buyers and HGA shall mutually engage a firm of independent
public accountants of recognized national standing (the "Independent Auditor")
who, using the accounting procedures set forth on Exhibit C hereto, shall make a
determination of any adjustment to the Purchase Price within sixty (60) days of
its engagement and shall deliver its written report thereon to Buyers and
Sellers within such time period. In the event Buyers and HGA are unable to agree
upon the selection of the Independent Auditor, each shall select a firm of
independent public accountants of national standing and these two firms shall
jointly select a third independent firm of public accountants to serve as the
Independent Auditor. The written report of the Independent Auditor shall be
binding upon the parties and the fees and expenses of the Independent Auditor
shall be equally shared by Buyers and Sellers.
(c) Payment on account of any adjustment to the
Purchase Price relating to any Working Capital Deficit shall be made within ten
(10) days after the earlier of the determination of the adjustment by the
parties under Section 1.6.2(b) above, or the Independent Auditor's delivery of
its written report under Section 1.6.2(b) above.
1.6.3 ASSUMPTION AGREEMENT. In reliance upon the
representations, warranties, covenants and agreements of the Sellers contained
herein, and in exchange for the Purchase Assets, on the Closing Date Buyers
shall deliver an undertaking in the form attached hereto
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as Appendix II (the "Assumption Agreement"), whereby Buyers assume to pay,
perform and discharge the Assumed Liabilities when due.
1.6.4 PRORATIONS. Within thirty (30) days following
the Closing Date, Sellers and Buyers shall pro rate as of the Closing Date, ad
valorem taxes, if any, on the Purchase Assets, utility charges and similar
expenses.
1.6.5 COST REPORTS PAYMENTS.
(a) Within thirty (30) days following the fifth
anniversary of the Closing Date (the "Cost Report Anniversary Date"), Buyers
shall determine and advise Sellers in writing (the "Cost Report Notice") of
their good faith calculation (the "Buyer Proposed Actual Amount") of the actual
amount (the "Actual Amount") of the net of the amounts received and amounts paid
as of the Cost Report Anniversary Date with respect to the cost reports of the
HGA Affiliates in respect of the Facilities that relate to periods prior to the
Closing Date and either remain open as of the Closing Date or are filed after
the Closing Date (the "Open Cost Reports"), and shall provide Sellers with the
records and other documentation that Sellers shall reasonably request pertaining
to such calculation. If Sellers do not object to Buyers' calculation of the
Buyer Proposed Actual Amount within thirty (30) days of the delivery of such
information to Sellers (the "Objection Period"), the Buyer Proposed Actual
Amount shall be deemed to be the Actual Amount. If Sellers object to Buyers'
calculation of the Buyer Proposed Actual Amount within the Objection Period,
Buyers and Sellers shall use good faith efforts to attempt to reach an agreement
with respect to the Actual Amount for a period of thirty (30) days after the
Objection Period. If Sellers and Buyers are unable to agree on the Actual Amount
within such thirty (30) day period, Buyers and Sellers shall mutually employ a
firm of independent public accountants of recognized standing (the "Cost Reports
Independent Auditor") to determine the Actual Amount. In the event Buyers and
Sellers are unable to agree upon the selection of the Cost Reports Independent
Auditor, each shall select a firm of independent public accountants of national
standing and these two firms shall jointly select a third independent firm of
public accountants to serve as the Cost Reports Independent Auditor. The
determination of the Cost Reports Independent Auditor as to the Actual Amount
shall be binding on Buyers and Sellers and the fees and expenses of the Cost
Reports Independent Auditor shall be shared equally by Buyers and Sellers.
(b) In the event the Actual Amount is equal to or
greater than the Target Amount (as such term in defined in Section 1.10 below),
Buyers shall pay Sellers FIVE HUNDRED THOUSAND DOLLARS ($500,000) as additional
purchase price within thirty (30) days after Sellers notify Buyers in writing of
their agreement with the Buyer Proposed Actual Amount or the Cost Reports
Independent Auditor notifies Buyers and Sellers in writing of its calculation of
the Actual Amount, as applicable. In the event that the Target Amount exceeds
the Actual Amount by an amount (the "Deficiency") greater than $0.01 and less
than $500,000, Buyers shall pay Sellers within thirty (30) days after Sellers
notify Buyers in writing of their agreement with the Buyer Proposed Actual
Amount or the Cost Reports Independent Auditor notifies Buyers and
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Sellers in writing of its calculation of the Actual Amount, as applicable, an
amount equal to $500,000 minus the Deficiency as additional purchase price. In
the event that the Target Amount exceeds the Actual Amount by an amount (the
"Excess Deficiency") greater than $500,000, Sellers shall pay Buyers within
thirty (30) days after Sellers notify Buyers in writing of their agreement with
the Buyer Proposed Actual Amount or the Cost Reports Independent Auditor
notifies Buyers and Sellers in writing of its calculation of the Actual Amount,
as applicable, an amount equal to the Excess Deficiency minus $500,000. For
purposes of this Section 1.6.5, all fees and expenses of outside legal counsel,
accountants and consultants incurred by Buyers in the pursuit of any appeals or
litigation with respect to Open Cost Reports shall be deducted from the amounts
received when calculating the Actual Amount.
(c) From the Closing Date through the Cost Report
Anniversary Date, the UHS Group shall use the same efforts to collect all
amounts due under Open Cost Reports that are uncollected as of the Closing Date
as are used by the UHS Group with respect to the collection of amounts due under
cost reports filed by other facilities owned by the UHS Group.
1.7 LIABILITIES ASSUMED BY BUYERS. In further
consideration for the sale of the Purchase Assets, on and as of the Closing
Date, the applicable Buyer shall assume and agree to pay, perform and discharge
the following liabilities (collectively, the "Assumed Liabilities"):
(a) all current liabilities of the HGA Affiliates relating
to the Facilities and reflected on the Interim Balance Sheets (as defined in
Section 2.7) (except for the current portion of long term debt, accrued
interest, pension plan liabilities (other than those expressly assumed by Buyers
pursuant to Section 1.7(d)), Federal, state and local tax based on income
("Income Taxes"), employee benefit plan liabilities (other than those expressly
assumed by Buyers pursuant to Section 1.7(d)), intercompany liabilities and any
liabilities relating to HGD or MeadowWood or arising out of or related to torts,
including, without limitation, any malpractice claims, or arising out of or
relating to any pending or threatened litigation other than any litigation
relating to cost reports filed with third party payors in respect of the
operation of the Facilities);
(b) all liabilities and obligations of the HGA Affiliates
relating to the Facilities incurred by the HGA Affiliates in the ordinary course
of business since the Interim Balance Sheets to and including the Closing Date,
except for long term debt, accrued interest, pension plan liabilities (other
than those expressly assumed by Buyers pursuant to Section 1.7(d)), Income
Taxes, employee benefit plan liabilities (other than those expressly assumed by
Buyers pursuant to Section 1.7(d)), intercompany liabilities and any liabilities
relating to HGD or MeadowWood or arising out of or related to torts, including,
without limitation, any malpractice claims, or arising out of or relating to any
pending or threatened litigation other than any litigation relating to cost
reports filed with third party payors in respect of the operation of the
Facilities;
(c) all obligations arising from and after the Closing
Date under the Assumed Contracts and the Management Contracts;
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(d) with respect to the employees of any HGA Affiliate
employed in the business or operations of the Facilities (other than Excluded
Employees, as defined in Section 5.3(a), and other than Non-Excluded Employees
(as defined in Section 5.3(a) who do not accept a Buyer's offer of employment
under Section 5.3(a)), all liabilities and obligations of such HGA Affiliate
under the contracts of employment described in Schedule 1.7(d) hereof and for
(i) accrued and unpaid employee salaries and bonuses, (ii) accrued or
accumulated unpaid employee vacation, sick pay or PTO days, and related Taxes
(as defined in Section 2.10) thereon, (iii) accrued and unpaid employer matching
contributions under The Cooper Companies, Inc. 401(k) Savings Plan (which
contributions shall be made by Cooper, and upon receiving evidence of such
contributions, Buyer shall pay Cooper an amount equal to the amount of such
contributions), each to the extent attributable to the period prior to the
Closing Date, and (iv) with respect only to those Contracts described in Section
1.1(p), those liabilities under any Employee Benefit Plan of any Seller that are
insured or otherwise covered under any such Contract or other amounts due under
any such Contract;
(e) all liabilities and obligations for amounts due, or
that may become due, to any Government Reimbursement Program as a result of the
consummation of the transactions contemplated hereby or arising in connection
with the filing of any cost reports relating to the operation of the Facilities,
including, without limitation, final cost reports, with third party payors; and
(f) such other liabilities of the HGA Affiliates with
respect to the Facilities which Buyers agree in writing at or prior to the
Closing that Buyers will assume.
1.8 LIABILITIES NOT ASSUMED. Buyers shall assume only
those liabilities and obligations specified in Section 1.7 above. Without
limiting the generality of the foregoing sentence, none of the Buyers shall
assume and the applicable HGA Affiliate, as the case may be, shall retain and be
responsible for the following obligations and liabilities:
(a) any and all obligations for the payment of any long
term debt existing at the Closing Date (including the current portion thereof)
relating to any of the HGA Affiliates and whether or not set forth on the
Interim Balance Sheets;
(b) any and all accrued interest through the Closing Date;
(c) any and all liabilities and obligations with respect
to any of the Excluded Employees;
(d) [intentionally omitted]
(e) any and all liabilities or obligations for Income
Taxes of any of the Sellers in respect of periods ending prior to or after the
Closing Date;
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(f) except as set forth in Section 1.7(d) of this
Agreement, any and all liabilities or obligations (including, without
limitation, any liabilities or obligations for continued health benefit coverage
under COBRA) under any Employee Benefit Plan of any Seller, and any and all
liabilities or obligations of any Seller for health, disability or other
benefits (i) relating to periods ending prior to the Closing Date with respect
to Hired Employees (as defined in Section 5.3(a) hereof) or their covered
dependents and (ii) relating to periods ending prior to or after the Closing
Date with respect to Excluded Employees (or their covered dependents) and to
Non-Excluded Employees (as defined in Section 5.3(a)) or their covered
dependents who do not accept a Buyer's offer of employment under Section 5.3(a);
and liabilities for any and all EEOC, wage and hour, unemployment compensation
or workers' compensation claims (i) relating to periods ending prior to the
Closing Date with respect to Hired Employees (or their covered dependents) and
(ii) relating to periods ending prior to or after the Closing Date with respect
to Excluded Employees and to Non-Excluded Employees (or their respective covered
dependents) who do not accept a Buyer's offer of employment under Section
5.3(a);
(g) [intentionally omitted]
(h) any and all liabilities or obligations arising as a
result of a breach or default by any Seller of any Contract, any Management
Contract or any other contract, lease, sublease, license, agreement, commitment
or understanding prior to the Closing Date;
(i) other than with respect to claims, litigations and
proceedings relating to cost report disallowances, any and all liabilities
arising out of or in connection with claims, litigations or proceedings
described in Section 2.17, and claims, litigations or proceedings (whether
instituted prior to or after Closing) for acts or omissions which allegedly
occurred prior to the Closing Date;
(j) any and all debts, expenses, obligations or other
liabilities of any Seller arising out of or incurred solely as a result of (i)
any transaction of any Seller occurring on or after the Closing Date or (ii) any
violation by any Seller of any law, regulation or ordinance at any time,
including, without limitation, those violations relating to Government
Reimbursement Programs but excluding any such violations relating to cost report
disallowances;
(k) except as expressly set forth in the Assumption
Agreement or Section 1.3.3 above, any and all liabilities arising out of any
amendment, modification or alteration of the terms of any Assumed Contract or
Management Contract entered into on or after the date hereof, and any fees or
other charges that may be imposed by any party thereto, in connection with the
assignment at Closing of any Assumed Contract or Management Contract;
(l) any and all liabilities attributable to legal,
accounting or brokerage fees, and similar costs incurred by any Seller related
to the sale of any of the Purchase Assets;
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(m) except as expressly set forth in the Assumption
Agreement or Section 1.3.3 above, any and all liabilities arising from any
Seller's assignment and any Buyer's assumption of the Assumed Liabilities;
(n) any and all liabilities for the payment by any Seller
of any deductibles, copayments or other self-insurance requirements relating to
events occurring prior to the Closing Date;
(o) any and all liabilities arising from uncured defaults
in performance of the Assumed Liabilities during periods prior to the Closing
Date;
(p) any and all liabilities respecting any intercompany
transactions among the Sellers or any affiliate of any of the Sellers, whether
or not such transaction relates to the provision of goods and services, tax
sharing arrangements, payment arrangements, intercompany charges or balances, or
the like;
(q) except for Assumed Liabilities, any and all actual or
contingent liabilities or obligations of or demands upon any of the Sellers
arising from acts or omissions of any of the Sellers (actual or alleged) prior
to the Closing Date;
(r) any and all liabilities or obligations arising out of
the release prior to the Closing Date of petroleum or petroleum products from or
in the area of any underground storage tanks that may be located on any of the
Facilities Real Property;
(s) any and all liabilities arising out of or in
connection with the existence of Materials of Environmental Concern (as defined
in Section 2.20) upon, about, beneath or migrating to or from any of the
Facilities Real Property on or before the Closing Date or the existence on or
before the Closing Date of any Environmental Claim (as defined in Section 2.20)
or any violation of any Environmental Laws (as defined in Section 2.20)
pertaining to such Facilities Real Property or the operation of the Facilities
or any other business operated therefrom;
(t) any and all liability allegedly arising out of any
negligence, medical malpractice or similar acts or omissions which allegedly
occurred prior to the Closing Date; and
(u) except as expressly set forth in the Assumption
Agreement, liabilities for rights or remedies claimed by third parties under any
of the Assumed Liabilities which broaden or vary the rights and remedies such
third parties would have had against any Seller if the sale and purchase of the
Purchase Assets were not to occur, including, by way of example only, any
acceleration or right of acceleration with respect to any liability or
obligation, the creation or imposition of any Lien, or any termination,
suspension, revocation, impairment or forfeiture of any right of any of the HGA
Affiliates prior to the Closing Date or of any Buyer on or after the Closing
Date.
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1.9 CLOSING. The closing of the purchase and sale of the
Purchase Assets provided herein (the "Closing") will be at the office of Latham
& Watkins, 505 Montgomery Street, Suite 1900, San Francisco, California 94111 at
10:00 a.m., local time, on April 30, 1999, or at such other place or at such
other date and time as Sellers and the UHS Group may mutually agree. Such date
and time of Closing is herein referred to as the "Closing Date".
1.10 DEFINITIONS. In this Agreement, unless the context
otherwise requires:
"Assumed Contracts" shall mean
(i) all Contracts that (a) are freely terminable by any
HGA Affiliate upon thirty (30) days notice without penalty or charge or (b) do
not give rise to any liability or obligation, individually or in the aggregate,
for payment by any HGA Affiliate equal to or in excess of $10,000; and
(ii) those Contracts listed on Schedule 2.14 other than
any such Contracts also listed on Schedule 1.2(e) and marked on Schedule 2.14 as
"Excluded Contracts"; and
(iii) those Contracts listed on Schedule 1.1(p).
"Basket Amount" shall mean $150,000, plus an amount equal
to the amount of the Working Capital Surplus less the amount (up to the amount
of the Working Capital Surplus) to be paid by Sellers to Buyers pursuant to
Section 1.12.
"Permitted Encumbrances" shall mean:
(i) any Lien for Taxes (A) not yet delinquent or (B) being
contested in good faith by appropriate proceedings and, in each case,
fully reserved against on the Financial Statements (as defined in
Section 2.7 below);
(ii) all easements, covenants, conditions, assignments, defects,
restrictions, exceptions, reservations and other encumbrances, whether
recorded or unrecorded, which in Buyers' sole reasonable discretion do
not interfere with the use or operation of the Facilities Assets as the
same are currently being used and operated, or which in Buyers' sole
reasonable discretion do not render title to any portion of the
Facilities Real Property unmarketable;
(iii) any leases, any subleases, any memoranda thereof and any
non-disturbance agreements with tenants, subtenants, licensees or other
occupants of the Facilities whether or not recorded against the
Facilities Real Property (to the extent listed on Schedule 2.14);
(iv) all mechanics', materialmen's and other similar Liens,
levies and charges against the Facilities Real Property, whether
existing now or at the time of Closing, which
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are the obligation of any of the tenants, subtenants, licensees or
occupants of the Facilities or a portion thereof to discharge;
(v) any Liens, exceptions, objections or other matters which are
caused or created by or on behalf of any Buyer or anyone acting by,
through or under any Buyer;
(vi) any state of facts, encroachments, overlaps or title defects
consisting of survey exceptions which would be disclosed by an accurate
and current survey of the Facilities Real Property and which in Buyers'
sole reasonable discretion do not interfere with the use or operation of
any Facility Asset as the same is currently being used and operated or
which in Buyers' sole reasonable discretion do not render title to any
portion of the Facilities Real Property unmarketable;
(vii) any Lien arising in connection with the Assumed
Liabilities;
(viii) with respect to the Owned Facilities Real Property only,
and except to the extent that prior to the Closing Date Buyers have
designated such matters in writing as excluded, all matters reflected on
the existing title insurance policies covering the Owned Facilities Real
Property (individually, an "Existing Title Insurance Policy", and
collectively, the "Existing Title Insurance Policies"), which policies
have been delivered to Buyers by Sellers;
(ix) with respect to the Leasehold Facilities Real Property only,
any lien, easement, defect, restriction, exception, reservation or other
encumbrance which is a matter of record; and
(x) any Lien created or imposed on any parcel (or portion
thereof) of the Facilities Real Property subsequent to the date of the
Existing Title Insurance Policy that pertains to such parcel of the
Facilities Real Property, which Lien does not otherwise fall within the
definition of Permitted Encumbrances but which Buyers accept in writing
prior to the Closing Date.
"Person" shall mean any individual, company, body
corporate, association, partnership, firm, joint venture, trust and governmental
agency.
"Purchase Assets" shall mean the Facilities Assets and the
Management Contracts.
"Target Amount" shall mean an amount equal to $2,136,949
(which is the amount Sellers and Buyers have agreed is the net of receivables
and payables with respect to Open Cost Reports as of December 31, 1998), plus
the following: (a) an amount equal to the aggregate of all receivables generated
by the HGA Affiliates from January 1, 1999 through the Closing Date with respect
to the Open Cost Reports and (b) an amount equal to the aggregate of all
payables paid by
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the HGA Affiliates from January 1, 1999 through the Closing Date with respect to
Open Cost Reports, and minus the following: (a) an amount equal to the aggregate
of all payables generated by the HGA Affiliates from January 1, 1999 through the
Closing Date with respect to Open Cost Reports and (b) an amount equal to the
aggregate of all payments received on receivables with respect to Open Cost
Reports by all HGA Affiliates from January 1, 1999 through the Closing Date, all
as reflected in Working Capital as of the Closing Date as determined pursuant to
Section 1.6.2(b).
"Working Capital as of the Closing Date" shall mean, with
respect to the HGA Affiliates, the following items of the HGA Affiliates
exclusive of any such items relating to HGD or MeadowWood or, with respect to
clauses (i) through (iv) below, any such items relating to liabilities or
obligations not assumed or paid by Buyers: all accounts receivable (excluding
intercompany receivables) net of all accounts receivable reserves (calculated in
accordance with past practice and excluding reserves on account of intercompany
receivables), plus inventory, plus prepaid expenses, less (i) accrued payroll
and other accrued expenses, less (ii) accounts payable (excluding intercompany
payables), less (iii) credit balances for patient accounts (to the extent not
already netted against accounts receivable reserves as provided above), less
(iv) other current liabilities, all computed as of the Closing Date in
accordance with the accounting procedures set forth on Exhibit C hereto.
"Working Capital Deficit" shall mean the amount, if any,
by which working capital as of September 30, 1998 (i.e., $11,709,000) ("Target
Working Capital") exceeds Working Capital as of the Closing Date.
"Working Capital Surplus" shall mean the amount, if any,
by which Working Capital as of the Closing Date exceeds Target Working Capital.
1.11 DESIGNATION OF PURCHASERS. At Closing, any Buyer
shall have the right to designate one or more subsidiaries or affiliates of such
Buyer or UHS to take title to all or a portion of the Purchase Assets and assume
all or a portion of the Assumed Liabilities. No such designation shall have the
effect of relieving any Buyer of any of its obligations under this Agreement.
1.12 UNCOLLECTED RECEIVABLES. From the Closing Date
through the first anniversary of the Closing Date (the "Anniversary Date"), the
UHS Group shall use the same efforts to collect all Trade Receivables that are
uncollected ("Uncollected Receivables") as of the Closing Date as are used by
the UHS Group with respect to the collection of receivables generated by other
behavioral health facilities owned by the UHS Group. In addition thereto, from
the Closing Date through the Anniversary Date, the UHS Group shall file cost
reports reflecting uncollected Medicare and Medicaid patient copayments
(collectively, the "Uncollected Medicare/Medicaid Copayments"). To the extent
that then current law entitles the UHS Group to reimbursement with respect to
such Uncollected Medicare/Medicaid Copayments, the aggregate amount of such
entitlement to reimbursements (hereinafter, the "Submitted Patient Receivables")
shall be deemed collected for purposes of this Section 1.12 only. Within ten
(10) days following the Anniversary Date, Buyers
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shall determine and advise Sellers in writing (the "Uncollected Receivables
Notice") of the amount (the "Receivables Payment Amount") (x) by which the sum
of all Uncollected Receivables as of the Anniversary Date (less the account
receivable reserve used in calculating Working Capital as of the Closing Date
and the amount of Submitted Patient Receivables) plus the amount of all
unrecorded current liabilities that were incurred before the Closing Date but
paid by Buyers after the Closing Date exceeds (y) the Working Capital Surplus.
Within ten (10) days following delivery of the Uncollected Receivables Notice,
Sellers shall pay the Receivables Payment Amount to Buyers. Notwithstanding any
provision of this Agreement to the contrary, the payment of the Receivables
Payment Amount shall not be subject to the Basket Amount.
2. REPRESENTATIONS AND WARRANTIES OF SELLERS. In order to induce
the UHS Group to enter into and perform its obligations under this Agreement,
Sellers hereby jointly and severally represent and warrant and agree (except as
otherwise disclosed on a Schedule hereto) as follows, as of the date hereof
(unless, in the case of any particular representation or warranty, another date
is specified, in which case, as of such date):
2.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of
the Sellers is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Sellers has all requisite corporate power and authority to own its properties
and carry on its business as now conducted. The copies of the Certificate or
Articles of Incorporation and Bylaws of each of the Sellers, all as amended to
date, which have been delivered to Buyers are complete and correct and presently
in effect. None of the Sellers has failed to qualify in any jurisdiction in
which property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary and where the failure to so
qualify would have a material adverse effect on it. None of the Sellers is in
default with respect to any order of any court, governmental authority or
arbitration board or tribunal to which it is a party or is subject.
2.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENTS. The
execution, delivery and performance of this Agreement and all agreements and
documents contemplated hereby by each of the Sellers, and the consummation by
them of the transactions contemplated hereby and thereby, have been duly and
effectively authorized by all necessary corporate action on their part. This
Agreement has been duly executed and delivered by each of the Sellers. This
Agreement constitutes, and all agreements and documents contemplated hereby when
executed and delivered pursuant hereto will constitute, the valid and legally
binding obligations of each of the Sellers enforceable in accordance with their
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws of general application now or hereafter in effect relating to the
enforcement of creditors' rights generally and except that remedies of specific
performance, injunction and other forms of equitable relief are subject to
certain tests of equity jurisdiction, equitable defenses and the discretion of
the court before which any proceeding therefor may be brought. Except as set
forth on Schedule 2.2 hereto, and except as would not have a material adverse
effect on the business of any HGA Affiliate or on the ability of the parties to
consummate the transactions contemplated by this Agreement, the
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execution and delivery of this Agreement by each of the Sellers does not and the
consummation of the transactions contemplated hereby will not (i) require the
consent, approval or authorization of any person, corporation, partnership,
joint venture or other business association or governmental, public authority or
accrediting body (except for compliance with the HSR Act (as defined in Section
4.5)); (ii) violate, with or without the giving of notice or the passage of
time, or both, any provisions of law or statute or any rule, regulation, order,
award, judgment, or decree of any court or governmental authority applicable to
any of the Sellers or any of the Facilities; (iii) result in the breach or
termination of any term or provision of, or constitute a default under, or
result in the acceleration of or entitle any party to accelerate (whether after
the giving of notice or the lapse of time or both) any obligation under, or
result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance (other than a Permitted Encumbrance) upon any part
of the property of any of the Sellers pursuant to any provision of, any order,
judgment, arbitration award, injunction, decree, indenture, mortgage, lease,
license, lien, or other agreement or instrument to which any of the Sellers is a
party or by which any of them is bound, or violate any provision of the Bylaws
or Certificate or Articles of Incorporation of any of the Sellers as amended to
the date of this Agreement; or (iv) result in any suspension, revocation,
impairment, forfeiture or nonrenewal of any License relating to the Assumed
Liabilities or to the ownership and operation of the Facilities or the Purchase
Assets, subject to Buyers obtaining new Licenses for their ownership and
operation of the Facilities and the Purchase Assets and their performance of the
Assumed Liabilities.
2.3 SUBSIDIARIES. Except as set forth on Schedule 2.3,
none of the HGA Affiliates owns, directly or indirectly, any debt or equity
securities issued by any other corporation, or any interest in any partnership,
joint venture or other business enterprise.
2.4 CAPITALIZATION. The authorized capital stock of each
of the HGA Affiliates is set forth on Schedule 2.4, together with a list of the
number of shares issued and outstanding and owned of record and beneficially by
the each of the shareholders of the HGA Affiliates. Except as set forth on
Schedule 2.4, there are no outstanding or authorized rights, warrants, options,
subscriptions, agreements or commitments of any character giving anyone any
right to require any of the HGA Affiliates to sell or issue, or Cooper to sell,
any capital stock or other securities, nor are there any voting trusts or any
other agreements or understandings with respect to the voting common stock, of
any of the HGA Affiliates.
2.5 RECORDS. The books, records and work papers of each of
the HGA Affiliates relating to the Facilities will be made available to Buyers
for inspection prior to the Closing Date. Such books, records and work papers of
the HGA Affiliates contain the minutes of all meetings of directors and of
shareholders and unanimous written consents reflecting all actions taken by the
directors or shareholders without a meeting. All of such books, records and work
papers of the HGA Affiliates have been maintained in accordance with good
business practice and in all material respects accurately reflect the basis for
the financial condition and results of operations of each of the HGA Affiliates
in respect of the Facilities set forth in the financial statements referred to
in Section 2.7 hereof.
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2.6 OFFICERS AND DIRECTORS. The officers and directors of
each of the HGA Affiliates are as set forth in Schedule 2.6.
2.7 FINANCIAL STATEMENTS. The HGA Affiliates have
furnished to Buyers true, complete and correct copies of (i) individual
unaudited balance sheets of each of the HGA Affiliates as of October 31, 1998
and related individual statements of income and operations for the year then
ended (the "October 31, 1998 Balance Sheets"); and (ii) the individual unaudited
balance sheets of each of the HGA Affiliates as of January 31, 1999 and related
individual statements of income and operations for the three (3) months then
ended (the "Interim Balance Sheets"), copies of which are attached hereto as
Schedule 2.7 (the October 31, 1998 Balance Sheets and the Interim Balance
Sheets, collectively, the "Financial Statements"). The Financial Statements are
in accordance with the books and records of the HGA Affiliates, are complete and
correct in all material respects, fairly set forth the financial condition of
the HGA Affiliates, as of the dates indicated, and the results of their
respective operations for the periods indicated, and have been prepared in
accordance with generally accepted accounting principles consistently applied,
except as otherwise stated therein and except for normal year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes.
2.8 ABSENCE OF UNDISCLOSED LIABILITIES. None of the HGA
Affiliates has any liabilities or obligations of any nature, either accrued,
absolute, contingent or otherwise, which individually or in the aggregate are
material to the applicable HGA Affiliate other than as reflected or provided for
in the Financial Statements relating to such HGA Affiliate in respect of the
Facilities except (i) those arising after the date of the Interim Balance Sheets
which are in the ordinary course of business, none of which is materially
adverse, (ii) those incurred in accordance with the terms of this Agreement and
the transactions contemplated hereby or any contracts or agreements listed in or
referred to in any Schedule to this Agreement or (iii) as and to the extent
specifically described in Schedule 2.8 hereof. Except as set forth on the
Schedules hereto, the Sellers do not know and have no reasonable grounds to know
of any reasonable basis, as of the date hereof, for assertion against any of the
HGA Affiliates in respect of the Facilities of any claim or liability of any
nature in excess of $25,000 individually or $50,000 in the aggregate not fully
disclosed in the October 31, 1998 Balance Sheets or the Interim Balance Sheets.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS SINCE THE DATE OF
THE INTERIM BALANCE SHEETS. Except as otherwise disclosed in Schedule 2.9, since
the date of the Interim Balance Sheets no HGA Affiliate has with respect to the
facilities:
2.9.1 incurred any obligation or liability (fixed,
contingent or otherwise), except normal trade or business obligations incurred
in the ordinary course of business and consistent with past practice, none of
which is materially adverse, and except in connection with this Agreement and
the transactions contemplated hereby;
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2.9.2 discharged or satisfied any Lien or paid any
obligation or liability (fixed, contingent or otherwise), including intercompany
obligations and liabilities except in the ordinary course of business;
2.9.3 mortgaged, pledged or subjected to any Lien
any of its assets or properties (other than mechanic's, materialman's and
similar statutory liens arising in the ordinary course of business and purchase
money security interests arising as a matter of law between the date of delivery
and payment);
2.9.4 sold, assigned, conveyed, transferred, leased
or otherwise disposed of, or agreed to sell, assign, convey, transfer, lease or
otherwise dispose of any of its assets or properties except for a fair
consideration in the ordinary course of business and consistent with past
practice (other than assets related to HGD or MeadowWood) or, except in the
ordinary course of business and consistent with past practice, acquired any
assets or properties;
2.9.5 canceled or compromised any debt or claim in
excess of $10,000 for any individual debt or claim or $25,000 in the aggregate;
2.9.6 waived or released any rights of material
value;
2.9.7 made or granted any wage or salary increase
applicable to any group or classification of employees generally except merit
increases and bonuses pursuant to prior personnel practices (all of which have
been disclosed to the UHS Group), entered into any employment contract with, or
made any loan to, or entered into any material transaction of any other nature
with any director, officer, shareholder or employee of such HGA Affiliate, or
been the subject of any material labor dispute or, to its knowledge, threat
thereof;
2.9.8 entered into any transaction, commitment,
lease, sublease, license or other agreement or understanding, except (i) any of
the foregoing that are entered into by an HGA Affiliate in the ordinary course
of business, (ii) Contracts listed on Schedule 2.14 and (iii) this Agreement and
the transactions contemplated hereby;
2.9.9 suffered any casualty loss or damage (whether
or not such loss or damage shall have been covered by insurance) which affects
in any material respect its ability to conduct business;
2.9.10 authorized or effected any amendment or
restatement of its certificate or articles of incorporation or bylaws, or taken
any steps looking toward the dissolution or liquidation of any HGA Affiliate;
2.9.11 suffered any material adverse change in its
operations, earnings, assets, liabilities, properties or business or in its
condition, financial or otherwise, other than changes in the general market
conditions and prospects for the Facilities;
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2.9.12 made capital expenditures or entered into
any commitment therefore which, in the aggregate, exceed $500,000;
2.9.13 suffered any material adverse change in its
relations with, or any material loss or, to its knowledge, material adverse
threatened loss of any of its material suppliers, managed care contracts, or
Medicare or Medicaid contracts; or
2.9.14 introduced any material change with respect
to the operation of its business, including its method of accounting.
2.10 TAXES. Except as set forth in Schedule 2.10, each of
the HGA Affiliates (i) has duly and timely filed or caused to be filed all
federal, state, local and foreign tax returns and reports of Taxes required to
be filed by it prior to the date of this Agreement which relate to it or with
respect to which it or the assets or properties of such HGA Affiliate are liable
or otherwise in any way subject, (ii) has paid or fully accrued for all Taxes,
interest, penalties, assessments and deficiencies shown to be due and payable on
such returns and reports (which Taxes, interest, penalties, assessments and
deficiencies are all the Taxes, interest, penalties, assessments and
deficiencies due and payable under the laws and regulations pursuant to which
such returns were filed), and (iii) has properly accrued for all such Taxes
accrued in respect of such HGA Affiliate or the assets and properties of such
HGA Affiliate for periods subsequent to the periods covered by such returns.
Except as set forth in Schedule 2.10, no deficiency in payment of Taxes of any
of the HGA Affiliates for any period has been asserted by any taxing body and
remains unsettled at the date of this Agreement. Each of the HGA Affiliates has
made all withholdings of Taxes required to be made under all applicable United
States, state and local tax regulations and such withholdings have either been
paid to the respective governmental agencies or set aside in accounts for such
purpose, or accrued, reserved against and entered upon the books of such HGA
Affiliate. Notwithstanding the foregoing, the representations and warranties set
forth in this Section 2.10 are made only to the extent that (i) Taxes are or may
become Liens on the Purchase Assets or (ii) any Buyer is or may become liable
for all or any portion of such Taxes. Copies of all federal, state, local and
foreign tax returns of each of the HGA Affiliates have been made available for
inspection by Buyers. As used in this Agreement, the term "Tax" or "Taxes" means
any federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Internal Revenue Code ("Code") Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum or
estimated tax, assessment, charge, levy or fee of any kind whatsoever, which are
due or alleged to be due to any taxing authority, whether disputed or not.
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2.11 REAL PROPERTY. Except as set forth on Schedule 2.11:
(a) Schedule 2.11(a) hereto identifies all interests in
the Facilities Real Property held by the HGA Affiliates as of the date hereof,
together with the nature of such interest. Each of the HGA Affiliates owns fee
simple title to, or a valid leasehold interest in, the tracts of Facilities Real
Property set forth opposite the name of the respective HGA Affiliates on
Schedule 2.11(a). To the extent that any interest in real property set forth
thereon is shared by or among two or more HGA Affiliates, Schedule 2.11(a) sets
forth the nature and proportion of the sharing arrangement;
(b) the Facilities Real Property comprises all of the real
property associated with or employed in the business of the Facilities;
(c) intentionally omitted;
(d) to the knowledge of the Sellers, no part of the
Leasehold Facilities Real Property contains, is located within or abuts any
navigable water or other body of water, tideland, wetland, marshland or any
other area which is subject to special state, federal or municipal regulation,
control or protection;
(e) to the knowledge of the Sellers, the Leasehold
Facilities Real Property adjoins dedicated public roadways and there is access
for motor vehicles from the Leasehold Facilities Real Property to such roadways
by valid public or private easements; and, to the best knowledge of the Sellers,
there are no conditions existing which could result in the termination or
reduction of the current access from the Leasehold Facilities Real Property to
existing roadways;
(f) all essential utilities (including water, sewer,
electricity and telephone service) are available to the Facilities Real
Property;
(g) In the event the Title Policies (as defined in Section
6.1.12) do not include such standard endorsements with respect to planning,
zoning and building codes and ordinances and the compliance therewith of the
Facilities and the Owned Facilities Real Property as are required by the
applicable Buyer, all of which endorsements shall be in the form attached hereto
as Schedule 2.11(g), the Sellers represent and warrant to the UHS Group that the
Facilities and the Facilities Real Property, and the businesses conducted
thereon, are in material compliance with all applicable planning, zoning and
building codes and ordinances; the consummation of the transactions contemplated
herein will not result in a violation of any applicable planning, zoning or
building code or ordinance, or the termination of any applicable zoning
variances or "grandfathering" now existing;
(h) none of the Sellers has received written notice of a
violation of any ordinance or other law, order, regulation or requirement
relating to or affecting all or any part of the
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Facilities Real Property, and none has received written notice of condemnation
or similar proceedings relating to any part of the Facilities Real Property;
(i) the Facilities Real Property is subject only to the
Permitted Encumbrances and at Closing will be subject only to the Permitted
Encumbrances and any other Liens approved by Buyer in writing on or after the
effective date hereof;
(j) [intentionally omitted];
(k) to the knowledge of Sellers, except for parties
claiming by, through or under the owners of the Leasehold Facilities Real
Property, the HGA Affiliates, patients and residents of the Facilities and those
tenants or subtenants in possession of the Facilities Real Property under
Contracts described in Schedule 2.14, there are no parties in possession of, or
claiming any possession, adverse or not, to or other interest in, any portion of
the Facilities Real Property as lessees, tenants or subtenants at sufferance,
trespassers or otherwise;
(l) no tenant or subtenant of any HGA Affiliate with
respect to any portion of the Facilities Real Property is entitled to any
rebate, concession or free rent, other than as set forth in the Contract with
such tenant or subtenant; no commitments have been made by any HGA Affiliate to
any tenant or subtenant of any such HGA Affiliate with respect to any portion of
the Facilities Real Property for repairs or improvements other than for normal
repairs and maintenance or as set forth in the Contract with such tenant or
subtenant; and no rents due under any of the aforementioned tenant or subtenant
Contracts with respect to the Facilities Real Property have been assigned or
hypothecated to, or encumbered by, any Person, other than pursuant to the
encumbrances relating to indebtedness to be satisfied at closing, or Permitted
Encumbrances, as additional security for the payment thereof; and
(m) all material painting, repairs, alterations and other
work required to be performed prior to the Closing Date by any Seller as
landlord or sublessor under each of the tenant or subtenant Contracts with
respect to the Facilities Real Property and all of the other material
obligations of any Seller as landlord or sublessor required to be performed
thereunder prior to the Closing Date, will be fully performed and paid for on or
before the Closing Date.
2.12 TITLE TO PROPERTY AND ASSETS; SUFFICIENCY OF PURCHASE
ASSETS.
(a) Except as provided on Schedule 2.12(a), each of the
HGA Affiliates has good and marketable title to the Purchase Assets owned by it
(including, without limitation, the properties and assets reflected in the
Interim Balance Sheets except any thereof since disposed of in the ordinary
course of business) except for the Permitted Encumbrances and none of such
properties or assets is, except as disclosed in the Interim Balance Sheets or
the Schedules hereto, subject to a contract of sale not in the ordinary course
of business, or, except for Permitted Encumbrances, subject to any Liens.
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(b) Except as described on Schedule 2.12(b), the
Facilities Assets constitute, in the aggregate, all the properties and assets
necessary for the operation of the Facilities as currently conducted. All the
material properties and assets of each HGA Affiliate necessary or useful in the
conduct of the Facilities are located on the Facilities Real Property except for
motor vehicles.
(c) Copies of the fixed asset registers of each of the HGA
Affiliates relating to the Facilities have been delivered to Buyers and each
such register sets forth a true, correct and complete listing of such HGA
Affiliate's material fixed assets relating to the Facilities as of the date
specified.
2.13 CONDITION OF PROPERTY. All buildings on the
Facilities Real Property and all items of tangible personal property, equipment,
fixtures and inventories included within the Purchase Assets are, taken as a
whole, in good operating condition, reasonable wear and tear excepted.
2.14 LIST OF CONTRACTS AND OTHER DATA. Schedule 2.14 sets
forth the following information with respect to all of the properties and assets
of each of the HGA Affiliates relating to the Facilities (indicating in each
case, where appropriate, where consent by a third party is required for the
transfer to the applicable Buyer):
2.14.1 a description of all real property owned of
record or leased by any of the HGA Affiliates and all leases and subleases of
real property to which any of the HGA Affiliates is a party, any memoranda
thereof and any non-disturbance agreements with tenants, subtenants, licensees
or other occupants of the Facilities to which any of the HGA Facilities is a
party;
2.14.2 a list of all personal property owned of
record or beneficially by any of the HGA Affiliates having a value per item or
group of items in excess of $500 and all leases of personal property, licenses,
permits, franchises, concessions, certificates of public convenience or the like
to which any of the HGA Affiliates is a party;
2.14.3 a list of (i) all United States and foreign
patents, trademarks and trade names, trademark and trade name registrations,
service marks and service mark registrations, copyrights and copyright
registrations, unexpired as of the date hereof, all United States and foreign
applications pending on said date for patents, for trademark or trade name
registrations, for service mark registrations, or for copyright registrations,
and all trademarks, trade names, service marks, labels and other trade rights in
use on said date, all of the foregoing being owned in whole or in part as noted
thereon on said date by an HGA Affiliate, (ii) a description of all action taken
by each of the HGA Affiliates to protect all tradenames used by any of them, and
(iii) all licenses granted by or to any of the HGA Affiliates and all other
agreements to which any of the HGA Affiliates is a party, which relate in whole
or in part to any items of the categories mentioned in clause (i) above or to
any other proprietary rights, whether owned by any of the HGA Affiliates or
otherwise;
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2.14.4 other than the Employee Benefit Plans, all
of which are listed on Schedule 2.21.1 hereto, a list of all existing contracts
and commitments to which any of the HGA Affiliates is a party or by which any of
the HGA Affiliates or any of their respective properties or assets is bound,
except for contracts or commitments which are not material to the business of
the Facilities and (a) involve the payment by or to any of the HGA Affiliates of
less than $10,000 with respect to any one contract or commitment, or $25,000
with respect to any group of related contracts or commitments, or (b) contracts
or commitments which are freely terminable by any HGA Affiliate upon thirty (30)
days notice without penalty or charge; and
2.14.5 other than the Employee Benefit Plans, all
of which are listed on Schedule 2.21.1 hereto, a list of all employment,
consulting and separation agreements, executive compensation plans, bonus plans,
incentive compensation plans, deferred compensation agreements, employee pension
plans or retirement plans, employee profit sharing plans, employee stock
purchase and stock option plans and hospitalization insurance or other plans or
arrangements providing for benefits for employees or former employees of any of
the HGA Affiliates.
True and complete copies of all documents,
including all amendments thereto, referred to in this Section 2.14 have been
made available to Buyers. Except as set forth on Schedule 2.14, all documents,
rights, obligations and commitments referred to in this Section 2.14 are valid
and enforceable in accordance with their terms for the period stated therein and
there is not under any of them any existing breach, default, event of default or
event which with the giving of notice or lapse of time, or both, would
constitute a default by any of the HGA Affiliates or to the Sellers' knowledge
by any other party thereto, nor, except as set forth on Schedule 2.14, has any
party thereto given notice of or made a claim with respect to any breach or
default. To the Sellers' knowledge, there are no existing laws, regulations or
decrees which adversely affect any of such documents, rights, obligations or
commitments other than laws, regulations or decrees which generally affect
entities conducting businesses substantially similar to the businesses conducted
by the HGA Affiliates. Except as set forth on Schedule 2.14, no part of the
business or operations of any of the HGA Affiliates with respect to the
Facilities is dependent to any material extent on any patent, trademark,
copyright, or license or any assignment thereof or any secret processes or
formulae. Except as set forth on Schedule 2.14, none of the rights of any HGA
Affiliate under such documents, rights, obligations or commitments is subject to
termination or modification as a result of the transactions contemplated hereby.
2.15 NO BREACH OR DEFAULT. None of the Sellers is in default
under any Contract pertaining to the Facilities or the Management Contracts to
which it is a party or by which it is bound, nor has any event occurred which,
after the giving of notice or the passage of time or both, would constitute a
default under any such Contract except as set forth in Schedule 2.15. None of
the Sellers have any reason to believe that the parties to any of such Contracts
will not fulfill their obligations under such Contracts in all material respects
or are threatened with insolvency.
2.16 LABOR CONTROVERSIES. None of the HGA Affiliates nor any of
their respective employees at the Facilities is a party to any collective
bargaining agreement. There are not any
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controversies pending or, to the Sellers' knowledge, threatened between any of
the HGA Affiliates and any of their respective employees engaged in the conduct
of business or operation of the Facilities which might reasonably be expected to
materially adversely affect the conduct of their respective businesses at the
Facilities, or any unresolved labor union grievances or unfair labor practice or
labor arbitration proceedings pending or, to the Sellers' knowledge, threatened
relating to their respective businesses at the Facilities, and to the Sellers'
knowledge, there are not any organizational efforts presently being made or
threatened involving any of the employees of any of the HGA Affiliates engaged
in the conduct of business or operation of the Facilities. Except as set forth
on Schedule 2.16, none of the HGA Affiliates has received notice with respect to
any Facility of any claim that it has not complied with any laws relating to the
employment of labor, including any provisions thereof relating to wages, hours,
collective bargaining, the payment of social security and similar taxes, equal
employment opportunity, employment discrimination and employment safety, or that
any of the HGA Affiliates is liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
2.17 LITIGATION. Except as set forth in Schedule 2.17, there are
no claims, actions, suits or proceedings or, to the Sellers' knowledge,
investigations with respect to any of the HGA Affiliates involving claims by or
against any of the HGA Affiliates which are pending or, to the Sellers'
knowledge, threatened against any of the HGA Affiliates, at law or in equity, or
before any arbitration panel, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or before the internal grievance mechanisms of any of the HGA
Affiliates. To the Sellers' knowledge, no basis for any action, suit or
proceeding exists, and there are no orders, judgments, injunctions or decrees of
any court or governmental agency with respect to which any of the HGA Affiliates
has been named or to which any of the HGA Affiliates is a party, which directly
apply, in whole or in part, to the business of any of the HGA Affiliates or to
any of the assets or properties of any of the HGA Affiliates or which would
result in any material adverse change in the business of any of the HGA
Affiliates.
2.18 PATENTS; TRADEMARKS, ETC. No patents, trademarks, trade
names, copyrights, registrations or applications are necessary for the conduct
of the business of the HGA Affiliates relating to the Facilities as now
conducted, other than those listed in Schedule 2.14 hereto. Except as described
in Schedule 2.14 hereto, all such patents, trademarks, trade names, copyrights
and registrations are in good standing, are valid and enforceable and are free
from any default on the part of any of the HGA Affiliates. None of the HGA
Affiliates is a licensor in respect of any patents, trademarks, trade names,
copyrights or registrations or applications therefor relating to the Facilities.
None of the HGA Affiliates is in violation of any patent, patent license, trade
name, trademark, or copyright of others relating to the Facilities. No director,
officer or employee of any of the Sellers owns, directly or indirectly, in whole
or in part, any patents, trademarks, trade names, copyrights, registrations or
applications therefor or interests therein which any HGA Affiliate has used, is
presently using, or the use of which is necessary for the business of the
Facilities as now conducted.
2.19 LICENSES; PERMITS; AUTHORIZATIONS. Schedule 2.19 hereto is a
list of all rights, approvals, authorizations, consents, licenses, certificates
of need, orders, accreditations, franchises,
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concessions, certificates and permits of all governmental agencies, whether
United States, state or local, and accrediting bodies (collectively, the
"Licenses") that are in any manner material to the Facilities or any of the
Purchase Assets or are required by the nature of the business conducted by each
of the HGA Affiliates with respect to the Facilities to permit the continued
operation of such business in the manner in which it was conducted as of the
date hereof (indicating in each case, where appropriate, where the consent by a
third party to the transfer to the applicable Buyer is required). Each of the
HGA Affiliates has all Licenses required to permit the operation of its business
of the Facilities as presently conducted, each of the HGA Affiliates' businesses
with respect to the Facilities is and has been operated in all material respects
in compliance therewith and all such Licenses are in full force and effect and
no action or claim is pending, nor to the knowledge of Sellers, is threatened,
to revoke, terminate or declare invalid any of the foregoing.
2.20 COMPLIANCE WITH APPLICABLE LAW; ENVIRONMENTAL LAWS.
(a) Except as set forth on Schedule 2.20(a) hereto, the
conduct of the business of each of the HGA Affiliates does not (i) violate or,
to the Sellers' knowledge, infringe any domestic laws, statutes, rules or
regulations or any material ordinances, including, without limitation, any of
the foregoing that pertain to or regulate the operation of a hospital, mental
health facility or licensed behavioral health facility or consumer protection,
health and safety or occupational safety matters, or (ii) violate or infringe
any right or patent, trademark, trade name, service mark, copyright, know-how or
other proprietary right of third parties, the enforcement of which would
adversely affect the business of any of the HGA Affiliates or the value of the
Facilities Assets.
(b) Other than as disclosed on Schedule 2.20(b), none of
the HGA Affiliates or any of their respective officers and directors in their
capacities as such, or, to the knowledge of the Sellers, any employee or agent
of an HGA Affiliate acting in his or its capacity as such, have engaged in any
activities which are prohibited under any federal laws, or the regulations
promulgated pursuant to such laws or related state or local laws, statutes or
regulations or which are prohibited by rules of professional conduct, including
but not limited to the following: (i) knowingly and willfully making or causing
to be made a false statement or representation of a material fact in any
application for any benefit or payment; (ii) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment; (iii) presenting or causing
to be presented a claim for reimbursement for services under Medicare, Medicaid
or other state health care programs that is for an item or service that is known
or should be known to be (a) not provided as claimed, or (b) false or
fraudulent; (iv) failing to disclose knowledge by a claimant of the occurrence
of any event affecting the initial or continued right to any benefit or payment
on its own behalf on or behalf of another, with intent to fraudulently secure
such benefit or payment; (v) knowingly and willfully offering, paying,
soliciting, or receiving any remuneration (including any kickback, bribe, or
rebate), directly or indirectly, overtly or covertly, in cash or in kind (a) in
return for referring an individual to a person for the furnishing or arranging
for the furnishing of any item or service for which payment may be made in whole
or in part by Medicare, Medicaid or other state health care program, or (b) in
return for purchasing,
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leasing, or ordering or arranging for or recommending purchasing, leasing, or
ordering any good, facility, service, or item for which payment may be made in
whole or in part by Medicare, Medicaid or other state health care program; (vi)
knowingly making a payment, directly or indirectly, to a physician as an
inducement to reduce or limit necessary services to individuals who are under
the direct care of the physician and who are entitled to benefits under
Medicare, Medicaid, or other state health care programs; (vii) providing to any
person information that is known or should be known to be false or misleading
that could reasonably be expected to influence the decision when to discharge a
patient from a Facility; (viii) knowingly and willfully making or causing to be
made or inducing or seeking to induce the making of any false statement or
representation (or omitting to state a material fact required to be stated
therein or necessary to make the statement contained therein not misleading) of
a material fact with respect to (a) the conditions or operations of a Facility
in order that the Facility may qualify for Medicare, Medicaid or other state
health care program certification, or (b) information required to be provided
under ss. 1124A of the Social Security Act (42 U.S.C. ss. 1320a-3); or (ix)
knowingly and willfully (a) charging for any Medicaid service money or other
consideration at a rate in excess of the rates established by the state, or (b)
charging, soliciting, accepting or receiving, in addition to amounts paid by
Medicaid, any gift money, donation or other consideration (other than a
charitable, religious or other philanthropic contribution from an organization
or from a person unrelated to the patient) (1) as a precondition of admitting
the patient, or (2) as a requirement for the patient's continued stay in the
Facility.
(c) Each of the Sellers is in compliance in all material
respects with all applicable Environmental Laws except as disclosed in Schedule
2.20(a).
(d) In regards to the Facilities and the Facilities Real
Property, (i) there is no Environmental Claim pending or, to the Sellers'
knowledge, threatened against any of the Sellers or, to the Sellers' knowledge
after due inquiry, any other Person whose liability for any Environmental Claim
any of the Sellers has retained or assumed contractually; (ii) to the Sellers'
knowledge there are no past or present actions, activities, circumstances,
conditions, events or incidents, including the release, emission, discharge or
disposal of any Materials of Environmental Concern, that is likely to form the
basis of any Environmental Claim against any of the Sellers or against any
Person whose liability for any Environmental Claim any of the Sellers has
retained or assumed contractually; and (iii) none of the Sellers has received
any written communication, whether from a governmental authority or otherwise,
that alleges that any of the Sellers is not in full compliance with all
applicable Environmental Laws.
(e) In regards to the Facilities and the Facilities Real
Property, without in any way limiting the generality of the foregoing, (i) all
on-site and off-site locations where any of the Sellers has stored, disposed or
arranged for the disposal of Materials of Environmental Concern are identified
in Schedule 2.20(a), (ii) all Contracts dealing with the removal, storage,
disposal and handling of Materials of Environmental Concern are with properly
licensed and registered vendors, (iii) to the Sellers' knowledge, all
underground storage tanks, and the capacity and contents of such tanks, located
on the Facilities Real Property are identified in Schedule 2.20(a), (iv) to the
Sellers' knowledge, except as set forth on Schedule 2.20(a), there is no
asbestos contained in or forming part
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of the Facilities Real Property, and (v) except as set forth on Schedule
2.20(a), no polychlorinated biphenyls (PCBs) are used or stored on the
Facilities Real Property.
(f) As used herein: (i) "Environmental Claim" means any
written notice by a Person alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from, directly or indirectly, the
presence, or release into the environment, of any Materials of Environmental
Concern (as defined below); (ii) "Environmental Laws" means any and all federal,
state and local laws and regulations (including common law) relating to
pollution or protection of human health or the environment (including ground
water, land surface or subsurface strata), including laws and regulations
relating to emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, recycling, reporting
or handling of Materials of Environmental Concern; and (iii) "Materials of
Environmental Concern" means chemicals, pollutants, contaminants, wastes
(including medical waste), toxic substances, petroleum and petroleum products.
2.21 EMPLOYEE BENEFIT PLANS; EMPLOYEES AND EMPLOYEE
RELATIONS.
2.21.1 Attached hereto is an accurate list
(Schedule 2.21.1) of all "employee welfare benefit plans" and "employee pension
benefit plans" (collectively, "ERISA Plans"), as such terms are defined by the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), all
Multiemployer Plans (as such term is defined in ERISA), and any other group
employee benefit plan, group insurance policy, agreement or arrangement
maintained for the benefit of any of the employees of any of the HGA Affiliates
(the ERISA Plans, together with such Multiemployer Plans and other group plans,
policies, agreements and arrangements, collectively, the "Employee Benefit
Plans"). To the extent available, materially accurate, complete and genuine
copies of the summary plan descriptions pertaining to the Employee Benefit Plans
have been provided to Buyers. None of the Sellers or any other members of the
Controlled Group of Corporations (as defined in Section 1563 of the Code) that
includes Cooper maintains or ever has maintained or contributes to, ever has
contributed to, or ever has been required to contribute to any Multiemployer
Plan or has any liability (including withdrawal liability) under any
Multiemployer Plan. There is no Lien of any type on the Purchase Assets or
against any of the Sellers with respect to the Employee Benefit Plans, and none
of the Sellers nor any affiliate of any of the Sellers has taken any action, or
omitted to take any action, with respect to the Employee Benefit Plans (or has
any knowledge of the same) that would or could be expected to result in a Lien
on the Purchase Assets or against any of the Sellers or any affiliates of any of
the Sellers.
2.21.2 Schedule 2.21.2 sets forth a complete list
(as of the date set forth therein) of names, positions, current annual salaries
or wage rates, and bonus and other compensation arrangements of all full-time
and part-time employees of each of the HGA Affiliates employed in the conduct of
the business of the Facilities (indicating in each case whether each employee is
part-time or full-time). Schedule 2.21.2 also sets forth a complete list of
employees
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whose employment with any of the HGA Affiliates in connection with the business
of the Facilities has terminated for any reason at any time during the 90 day
period ending on (and including) the date hereof.
2.21.3 Except as disclosed on Schedule 2.21.3 and
as accrues in the ordinary course prior to the Closing Date, no present or
former employee of any of the HGA Affiliates employed in connection with the
operation of the Facilities has any claim against any of the HGA Affiliates on
the account of or for (i) overtime pay for any period on or before the Closing
Date, (ii) wages, salary, bonuses or amounts accruing under any Employee Benefit
Plan, or (iii) sick pay, severance pay, claim for unlawful discharge, holiday or
vacation pay or paid time off.
2.22 ADVERSE AGREEMENTS. None of the Sellers is a party to
or subject to any agreement or instrument or subject to any charter or other
corporate or entity restriction or any judgment, order, writ, injunction, decree
or rule specifically naming such Seller which materially adversely affects the
business, operations, properties, assets or conditions, financial or otherwise,
of any of the Facilities.
2.23 TRADE RECEIVABLES; TRADE NOTES AND ACCOUNTS PAYABLE;
PREPAID CONTRACTS.
(a) Except as set forth on Schedule 2.23 hereto, the Trade
Receivables of each of the HGA Affiliates relating to the Facilities that are
reflected on the Interim Balance Sheets and all Trade Receivables relating to
the Facilities arising thereafter and prior to the Closing Date arose and will
arise from bona fide transactions in the ordinary course of business of the HGA
Affiliates and are (except for normal claims and allowances which are consistent
with past experience of the HGA Affiliates and which in the aggregate are not
material) current, arose in the usual and ordinary course of business of the HGA
Affiliates from arms-length transactions, are not subject to any defenses,
counterclaims or set-offs which would materially adversely affect such Trade
Receivables, and, to the Sellers' knowledge, are fully collectible, less the
applicable allowance for doubtful accounts. Each of the HGA Affiliates have
fully performed all obligations with respect to such Trade Receivables which
they were obligated to perform prior to the date hereof and Schedule 2.23 sets
forth an aging schedule, as of November 30, 1998, for all such Trade
Receivables.
(b) The trade notes and accounts payable of the HGA
Affiliates relating to the Facilities reflected on the Interim Balance Sheets
and all trade notes and accounts payable relating to the Facilities arising
thereafter and prior to the Closing Date arose and will arise from bona fide
transactions in the ordinary course of business of the HGA Affiliates and were
paid or are not yet due and payable.
(c) Schedule 2.23 hereto sets forth the amounts and dates
of all payments in excess of $25,000 in the aggregate (the "Prepayments")
received by any of the HGA Affiliates which relate to services to be performed
by any of the HGA Affiliates subsequent to the Closing Date under any of the
Contracts relating to the Facilities or Management Contracts, including, without
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limitation, all such payments expressly authorized to be made in advance by any
of the terms of such Contracts or Management Contracts.
2.24 INVENTORIES AND SUPPLIES. In all material respects,
the inventories and supplies of the HGA Affiliates relating to the Facilities,
whether or not reflected in the Interim Balance Sheets, consist of a quality and
quantity useable and salable in the ordinary course of business, without
discount or reduction, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Interim Balance Sheets. All inventories and supplies not written
off are valued at the lower of cost (applied on a first in, first out basis) or
market in accordance with generally accepted accounting principles. The present
quantities of inventory and supplies are not excessive and are reasonable and
consistent with the past inventory and supply practices of each of the HGA
Affiliates with respect to the Facilities.
2.25 ILLEGAL PAYMENTS. None of the Sellers have, nor to
the knowledge of the Sellers, have any of their respective directors or
officers, in their capacity as such, either directly or indirectly made any
illegal payments to, or provided any illegal benefit or inducement for, any
Person pursuant to an action illegal under any federal, state or local law.
2.26 INSURANCE POLICIES. Schedule 2.26 contains a complete
list of all insurance policies of the HGA Affiliates with respect to the
Facilities covering the HGA Affiliates and their respective employees, agents
and assets, other than those relating to Employee Benefit Plans. Each such
policy, and each such policy relating to the Employee Benefit Plans, is in full
force and effect and, to the knowledge of the Sellers, is reasonably adequate in
coverage and amount to insure against customarily insured risks to which the HGA
Affiliates, their employees, businesses, properties and other assets are
reasonably likely to be exposed in the operation of the Facilities. All premiums
with respect to such insurance policies (and those policies relating to the
Employee Benefit Plans) have been paid on a timely basis, and no notice of
cancellation or termination has been received with respect to any such policy.
To the knowledge of the Sellers, none of the HGA Affiliates has failed to give
any notice or present any claim thereunder in due and timely fashion. To the
knowledge of the Sellers, and except as set forth on Schedule 2.26, there are no
pending claims against such insurance by any HGA Affiliate as to which the
insurers have denied coverage or otherwise reserved rights. Since January 1,
1996, none of the HGA Affiliates has been refused any insurance with respect to
its assets or the operation of the Facilities, nor has its coverage been
limited, by any insurance carrier to which it has applied for any such insurance
or with which it has carried insurance.
2.27 PROFESSIONAL STAFF, MEDICARE, MEDICAID AND OTHER
HEALTH CARE PROGRAMS.
(a) The professional licensed provider staff of each of
the Facilities consists of the persons whose names and status are set forth on
Schedule 2.27 hereto.
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(b) Except as set forth on Schedule 2.27 hereto, each of
HGA-NJ, Hampton, HGI and Midwest is certified for participation in the Medicare
and Medical Assistance ("Medicaid") programs, and has a current and valid
provider contract with such programs.
(c) Except as set forth on Schedule 2.27 hereto, each of
HGA-NJ, Hampton, HGI and Midwest have timely filed or caused to be timely filed
all cost reports and other reports of every kind whatsoever required by any
governmental or other entity to be made by them with respect to the purchase of
services by third-party purchasers, including but not limited to Medicare and
Medicaid programs and other insurance carriers, and all such reports are
complete and accurate in all material respects. Each of HGA-NJ, Hampton, HGI and
Midwest have paid or caused to be paid all refunds, discounts or adjustments
which have become due in accordance with said reports as filed and, except as
set forth on Schedule 2.27, have not been notified that there is any further
liability now due (whether or not disclosed in any report heretofore or
hereafter made) for any such refund, discount or adjustment, or any interest or
penalties accruing with respect thereto. The HGA Affiliates have delivered to
the Buyers complete copies of all of their Medicare and Medicaid Cost Reports
submitted by HGA-NJ, Hampton, HGI and Midwest for the two most recent fiscal
years.
(d) To the knowledge of the Sellers, none of HGA-NJ,
Hampton, HGI and Midwest, nor any of their respective officers, directors,
employees or agents (acting in their capacities as such), have engaged in any
activities which (i) could subject such person to sanctions under 42 U.S.C. ss.
1320a-7 (other than subparagraph (b)(7) thereof) or (ii) at the time such
activities were engaged in were known or reasonably could have been known to be
prohibited under Federal Medicare and Medicaid statutes, 42 U.S.C. ss.ss.
1320a-7a and 1320a-7b, or the regulations promulgated pursuant to such statutes
or related state or local statutes or regulations or which are prohibited by
rules of professional conduct.
2.28 FACILITY SURVEYS. True and complete copies of any and
all licensure survey reports and any and all Medicare and/or Medicaid and JCAHO
or other accreditation survey reports issued within the 24-month period
preceding the execution of this Agreement with respect to each Facility for
which surveys are conducted by the appropriate state or Federal agencies having
jurisdiction thereof and JCAHO or accreditation bodies have been furnished to
the Buyers, along with true and complete copies of any and all plans of
correction which the agencies required to be submitted in response to said
survey reports.
2.29 SUPPLIERS AND PROVIDERS OF SERVICES.
(a) Schedule 2.29 lists all suppliers of goods to, and
providers of services to, any of the HGA Affiliates with respect to the
Facilities to which an HGA Affiliate made payments during the fiscal year ended
October 31, 1998, in excess of five percent of such HGA Affiliate's operating
expenses relating to the Facilities as reflected on its statement of operations
for such year (collectively, "Suppliers").
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(b) Except as set forth on Schedule 2.29, no HGA Affiliate
has any information which might reasonably indicate that any of the Suppliers
listed on Schedule 2.29 intends to cease selling or rendering services to, or
dealing with, any of the HGA Affiliates nor has any information been brought to
their attention which might reasonably lead them to believe any such Supplier
intends to alter in any material respect the amount of sales or service or the
extent of dealings with any of the Buyers, or would alter in any material
respect the sales or service or dealings in the event of the consummation of the
transactions contemplated hereby.
(c) Except as set forth at Schedule 2.29, no HGA Affiliate
or any entity controlled by any of the Sellers nor, to the knowledge of the
Sellers, any of their respective executive officers or directors (or any entity
controlled by any executive officer or director) owns, directly or indirectly,
any interest in (excepting less than 2% stock holdings for investment purposes
in securities of publicly held and traded companies), or is an officer,
director, employee, partner or consultant of, any Person which is, or is engaged
in business as, a competitor, lessor, lessee or Supplier of any of the HGA
Affiliates with respect to the Facilities or Management Contracts.
2.30 RELATED PARTY TRANSACTIONS. To the knowledge of the
Sellers, except as set forth in Schedule 2.30, and except for compensation to
employees for services rendered, no current director, officer or shareholder of
any HGA Affiliate is presently, or during the last fiscal year has been, (a) a
party to any material transaction with any Facility (including, but not limited
to, any Contract or other arrangement) providing for the furnishing of service
by, or rental of real or personal property from, or otherwise requiring payments
to, any such director, officer or shareholder other than in his, her or its
capacity as a director, officer or shareholder and other than intercompany
transactions, or (b) the direct or indirect owner of any interest in any Person
which is a present competitor, supplier or customer of such HGA Affiliate with
respect to the business of any Facility, nor does any such person receive income
from any source other than such HGA Affiliate which should properly accrue to
such HGA Affiliate.
2.31 MANAGEMENT CONTRACTS AND RELATED AGREEMENTS. Schedule
2.31 lists all Contracts pertaining to the Management Contracts (the "Related
Contracts"). HGA and HGA-MSI have made available to UHS-DEL copies of all of the
Management Contracts and all such Related Contracts, including all amendments
thereto. All of the Management Contracts and Related Contracts are valid,
binding and in full force and effect and, except as set forth on Schedule 2.31,
have not been amended or modified. Neither HGA nor HGA-MSI is in default, and no
notice of alleged default has been received by HGA or HGA-MSI, under any of the
Management Contracts or Related Contracts. To the best of the Sellers'
knowledge, no party to any such contract is in default or alleged to be in
default thereunder, and no condition or event has occurred that, after notice or
lapse of time or both, would constitute a default by any party thereto. The
rights of HGA and HGA-MSI under all of the Management Contracts and Related
Contracts are owned by HGA or HGA-MSI free and clear of all Liens except as set
forth on Schedule 2.31. Except as set forth in Schedule 2.31, there has been no
cancellation, or threat to cancel any of the Management Contracts or Related
Contracts by any other party thereto. Except as set forth on Schedule 2.31
hereto, none of the rights
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of HGA or HGA-MSI under any of the Management Contracts or Related Contracts is
subject to termination or modification as a result of the transactions
contemplated hereby.
2.32 NO BROKERS. Except for their retention of Cronus
Partners, Inc., none of the Sellers has entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
any member of the UHS Group or any of the Sellers to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, and none of the Sellers is aware of any claim or basis for
any claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments to any Person, other than Cronus Partners, Inc., in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby. The Sellers, and not the UHS Group,
shall be responsible for the full payment of any finder's fees, brokerage or
agent's commissions and other like payments payable or alleged to be payable by
any of the Sellers to Cronus Partners, Inc. in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
2.33 INTENTIONALLY OMITTED.
2.34 NO MISREPRESENTATION OR OMISSION. No representation
or warranty by any of the Sellers in this Agreement, or in any certificate
furnished or to be furnished by or on behalf of any of the Sellers pursuant
hereto, contains or will contain, as of the date such representation or warranty
is made, any untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained therein not
misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE UHS GROUP. In order to
induce the Sellers to enter into and perform their obligations under this
Agreement, the UHS Group, jointly and severally, represent and warrant and agree
(except as otherwise disclosed on a Schedule hereto) as follows, as of the date
hereof (unless, in the case of any particular representation or warranty,
another date is specified, in which case, as of such date):
3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each
member of the UHS Group is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each
member of the UHS Group is duly licensed or qualified to do business as a
foreign corporation and is in good standing under the laws of all other
jurisdictions in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where such failure to qualify would not have a material
adverse effect on such member of the UHS Group. Each member of the UHS Group has
all requisite corporate power and authority to own its properties and carry on
its business as now conducted. No member of the UHS Group is in default with
respect to any order of any court, governmental authority or arbitration board
or tribunal to which it is a party or is subject. The copies of the Certificate
or Articles of Incorporation and Bylaws of each member of the UHS Group, all as
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amended to date, which have been delivered to Sellers are complete and correct
and presently in effect.
3.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENTS. The
execution, delivery and performance of this Agreement and all agreements and
documents contemplated hereby by each member of the UHS Group, and the
consummation by them of the transactions contemplated hereby and thereby, have
been duly authorized by all requisite corporate action on their part. This
Agreement has been duly executed and delivered by each member of the UHS Group.
This Agreement constitutes, and all agreements and documents contemplated hereby
when executed and delivered pursuant hereto will constitute, the valid and
legally binding obligations of each member of the UHS Group enforceable in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws of general application now or hereafter in
effect relating to the enforcement of creditors' rights generally and except
that remedies of specific performance, injunction and other forms of equitable
relief are subject to certain tests of equity jurisdiction, equitable defenses
and the discretion of the court before which any proceeding therefor may be
brought. Except as set forth on Schedule 3.2 hereto, and except as would not
have a material adverse effect on the business of any member of the UHS Group,
or on the ability of the parties to consummate the transactions contemplated by
this Agreement, the execution and delivery of this Agreement by each member of
the UHS Group does not and the consummation of the transactions contemplated
hereby will not (i) require the consent, approval or authorization of any
person, corporation, partnership, joint venture or other business association or
governmental, public authority or accrediting body (except for compliance with
the HSR Act), (ii) violate, with or without the giving of notice or the passage
of time, or both, any provisions of law or statute or any rule, regulation,
order, award, judgment, or decree of any court or governmental authority
applicable to any member of the UHS Group, or (iii) result in the breach or
termination of any term or provision of, or constitute a default under, or
result in the acceleration of or entitle any party to accelerate (whether after
the giving of notice or the lapse of time or both) any obligation under, or
result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any part of the property of any member of the
UHS Group pursuant to any provision of, any order, judgment, arbitration award,
injunction, decree, indenture, mortgage, lease, license, lien, or other
agreement or instrument to which any member of the UHS Group is a party or by
which any of them is bound, or violate any provision of the Bylaws or
Certificate or Articles of Incorporation of any member of the UHS Group as
amended to the date of this Agreement.
3.3 NO BROKERS. No member of the UHS Group has entered
into any contract, arrangement or understanding with any person or firm which
may result in the obligation of any member of the UHS Group or any of the
Sellers to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby and no member of the UHS
Group is aware of any claim or basis for any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments to any Person,
other than Cronus Partners, Inc., in connection with the negotiations leading to
this Agreement or the consummation of the transactions
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contemplated hereby. The Sellers, and not the UHS Group, shall be responsible
for the full payment of any finder's fees, brokerage or agent's commissions and
other like payments payable or alleged to be payable by any of the Sellers to
Cronus Partners, Inc. in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
3.4 NO MISREPRESENTATION OR OMISSION. No representation or
warranty by any member of the UHS Group in this Agreement, or in any certificate
furnished or to be furnished by or on behalf of any member of the UHS Group
pursuant hereto, contains or will contain, as of the date such representation or
warranty is made, any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained therein not
misleading.
4. COVENANTS OF THE SELLERS.
4.1 ACCESS TO FACILITIES AND ADDITIONAL INFORMATION.
4.1.1 From the date hereof until the Closing Date,
the Sellers shall provide, and cause their respective agents (including counsel
and accountants) to provide, to the officers and agents of Buyers reasonable
access to and the right to inspect the Purchase Assets and books and records of
the HGA Affiliates and the books and records of Cooper pertaining to the
Purchase Assets, and will furnish and cause to be furnished to Buyers such
additional financial, operating and other data and information regarding the HGA
Affiliates, the business of the HGA Affiliates and the Purchase Assets as any of
the Buyers may from time to time reasonably request, without regard to where
such information may be located.
4.1.2 Within 20 days following the end of each
calendar month prior to the Closing Date, and within 30 days following the end
of each calendar quarter prior to the Closing Date, the HGA Affiliates will
deliver to Buyers true and complete copies of the unaudited balance sheet and
the related unaudited statements of income and operations of the HGA Affiliates
for each such month or quarter then ended, together with any notes thereto.
4.1.3 From the date hereof until the Closing Date,
each of the HGA Affiliates shall cause its officers, partners and employees to
keep Buyers reasonably informed of operational matters in respect of the
business of the Facilities, the Management Contracts and the general status of
on-going operations. Each of the HGA Affiliates shall notify Buyers in writing
and keep Buyers informed of the status of any material changes in the
operations, financial condition or business of the Facilities, the Management
Contracts, or any HGA Affiliate and, to the extent they receive notice thereof,
of any complaints, investigations, hearings or adjudicatory proceedings (or
communications indicating that the same may be contemplated).
4.1.4 Each of the Sellers will cooperate and cause
their respective independent accountants to cooperate (a) in assisting the UHS
Group to prepare an audit of the Facilities' financial statements and the
Management Contracts and (b) with UHS in filing such
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financial statements with UHS's filings with the Securities and Exchange
Commission, if requested by the UHS Group. The costs of such audit shall be the
responsibility of the UHS Group.
4.1.5 Promptly after the execution of this
Agreement, the Sellers shall deliver to Buyers, to the extent not already
delivered to Buyers, copies of all title insurance policies and binders in the
possession of any Seller for any of the Facilities Real Property and copies of
all surveys of any of the Facilities Real Property in the possession of any
Seller.
4.2 OPERATIONS. From the date hereof until the Closing
Date and except as otherwise expressly provided in this Agreement, each HGA
Affiliate will:
(a) carry on its business with respect to the Facilities,
and cause all hospitals and other facilities under Management Contracts to carry
on their business, in substantially the same manner as heretofore and not make
any material change in its personnel, operations, finances, accounting policies,
or real or personal property relating to the Facilities or, to the extent within
the control of such HGA Affiliate, in the personnel, operations, finances,
accounting policies, or real or personal properties of the hospitals and other
facilities under Management Contracts;
(b) use reasonable efforts to maintain the Purchase Assets
and all parts thereof in their current condition, ordinary wear and tear
excepted;
(c) perform all of its obligations under Contracts
relating to or affecting the Purchase Assets or the business of the Facilities;
(d) use its reasonable efforts to obtain appropriate
releases, consents, estoppels and other instruments listed on Schedule 4.2;
(e) keep in full force and effect present insurance
policies or other comparable insurance with respect to the Facilities and
maintain sufficient liquid reserves to meet all deductible, self-insurance and
copayment requirements under present insurance policies;
(f) use reasonable efforts to (i) maintain and preserve
its business organizations and operations intact; (ii) deal with the present
employees at the Facilities in a manner consistent with its existing personnel
policies; (iii) maintain its relationships with physicians, suppliers and other
Persons having business relations with it; and (iv) cooperate with Buyers by
taking such actions as are reasonably requested by any Buyer to facilitate the
smooth, efficient and successful transition to the applicable Buyer of such
business organizations and operations and employee and other relations at
Closing; and
(g) permit and allow reasonable access by Buyers to
discuss post-closing employment with any of its personnel and to establish
relationships with physicians, suppliers and others having business relations
with the Facilities.
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4.3 NEGATIVE COVENANTS. From the date hereof until the
Closing Date, except as otherwise expressly provided in this Agreement or
without the prior written consent of Buyers, none of the HGA Affiliates will:
(a) terminate any of the Assumed Contracts or Management
Contracts other than those that expire in accordance with their terms, amend any
of the Assumed Contracts or Management Contracts, enter into any Contract
relating to the Facilities, or incur or agree to incur any liability with
respect to any Facility except in the ordinary and regular course of business,
and in no event that requires the payment by such entity prior to Closing or any
Buyer after Closing of an amount greater than TWENTY-FIVE THOUSAND DOLLARS
($25,000) per Contract, or that is not terminable without cause or penalty
within thirty (30) days following the Closing Date;
(b) make offers to any of its employees for employment
with it, Cooper, any other HGA Affiliate or any other affiliate of any of the
Sellers after the Closing, except for the Excluded Employees;
(c) other than as set forth on Schedule 4.3(c), increase
compensation payable or to become payable to, make a bonus payment to, or
otherwise enter into one or more bonus agreements with, any of its employees or
agents working or retained in connection with the Facilities, except in the
ordinary and regular course of business in accordance with existing personnel
policies;
(d) other than Permitted Encumbrances, create, assume or
permit to exist any new Lien upon any of the Purchase Assets other than purchase
money liens arising in the ordinary course of business;
(e) sell, assign, transfer, distribute or otherwise
dispose of any property, plant or equipment relating to the Facilities, except
in the ordinary course of business of the Facilities with comparable replacement
thereof in the case of inventory;
(f) take any action with respect to the Facilities outside
the ordinary and regular course of business;
(g) take any action relating to its liquidation or
dissolution;
(h) create, incur, assume, guarantee or otherwise become
liable for, cancel, pay, agree to cancel or pay, provide for a complete or
partial discharge in advance of a scheduled payment date with respect to, or
waive any right to receive any direct or indirect payment or other benefit
under, any liability with respect to the Facilities except in the ordinary
course of business; or
(i) declare or pay any dividend or other distribution of
assets or property (other than Excluded Assets) to any of its shareholders or
any affiliates of its shareholders, except in the ordinary and regular course of
business consistent with past practices.
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4.4 GOVERNMENTAL APPROVALS. From the date hereof until the
Closing Date, the Sellers shall (a) promptly apply for and use their reasonable
efforts to obtain prior to Closing all consents, approvals, authorizations and
clearances of governmental and regulatory authorities required of them to
consummate the transactions contemplated hereby, (b) provide such information
and communications to governmental and regulatory authorities as the UHS Group
or such authorities may reasonably request, and (c) assist and cooperate with
the UHS Group to obtain all consents, licenses, permits, approvals,
authorizations and clearances of governmental and regulatory authorities that
the UHS Group reasonably deems necessary or appropriate, and to prepare any
document or other information required of any Seller by any such authorities, in
order to consummate the transactions contemplated herein.
4.5 HSR NOTIFICATION. Prior to the execution of this
Agreement, the Sellers have filed with the Federal Trade Commission ("FTC") and
the United States Department of Justice ("Justice Department") the Notification
and Report Form required by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"). The Sellers shall comply promptly with any
requests for additional information by the FTC or Justice Department under the
HSR Act concerning such transactions. Sellers shall take such other steps as
they reasonably believe to be necessary in order for the waiting period
specified in the HSR Act to expire as soon as practicable after the effective
date of this Agreement. The Sellers shall furnish to the UHS Group such
information concerning the Sellers as the UHS Group needs to perform their
obligations under Section 5.1. All filing fees under the HSR Act shall be shared
equally by the UHS Group and the Sellers.
4.6 NO-SHOP CLAUSE AND TERMINATION FEES.
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(a) From the date hereof until the earlier of the
termination of this Agreement or April 30, 1999 (unless the Closing Date is
extended beyond such date by the parties) and except as permitted by Section
4.3(e), the HGA Affiliates shall not, and will not permit any Person acting for
or on behalf of any of the HGA Affiliates to, without the prior written consent
of the UHS Group, directly or indirectly: (i) offer for sale the Purchase
Assets, or any portion thereof, or any capital stock or other ownership
interests in any of the HGA Affiliates, (ii) solicit offers to buy the Purchase
Assets, or any portion thereof, or any capital stock or other ownership
interests in any of the HGA Affiliates, (iii) hold discussions with any Person
looking toward such an offer or solicitation, or looking toward a merger,
consolidation or other combination with any of the HGA Affiliates, (iv) enter
into any contract with any Person with respect to the sale of the Purchase
Assets, or any portion thereof, or any capital stock or other ownership
interests in any of the HGA Affiliates or with respect to any merger,
consolidation, or other combination with any of the HGA Affiliates, or (v)
furnish or permit or cause to be furnished any information to any Person that
the HGA Affiliates know or have reason to believe is in the process of
considering any one of the transactions described above. If any of the HGA
Affiliates or any Person acting for or on behalf of any of the foregoing,
receives from any Person (other than any of the Buyers or a representative
thereof) any offer, inquiry or informational request referred to above, the HGA
Affiliates will promptly (x) advise such Person, by written notice, of the
substantive terms of this Section, (y) advise Buyers of such offer, inquiry or
request, and (z) deliver to Buyers a copy of such notice together with a copy of
all documents that constitute, relate or refer to any and all responses to such
offer, inquiry or request.
(b) If the UHS Group is unable to acquire any of the
Purchase Assets as a result, either directly or indirectly, of the shopping of
the Purchase Assets or any capital stock or other ownership interests in any of
the HGA Affiliates by the HGA Affiliates in violation of Section 4.6(a), which
occurs prior to March 31, 1999, the Sellers shall pay Buyers ONE MILLION DOLLARS
($1,000,000) upon the earlier of March 31, 1999 or the close of the sale of the
Purchase Assets (or the sale of any capital stock or other ownership interests
in any of the HGA Affiliates) to a third party. The parties acknowledge and
agree that the foregoing $1,000,000 payment shall be a transaction termination
fee (the "Termination Fee"). The payment by the Sellers to Buyers of the
Termination Fee shall terminate all obligations of the parties under this
Agreement other than those set forth in Section 10.6 below.
4.7 INTENTIONALLY OMITTED.
4.8 EMPLOYEES; EMPLOYEE BENEFIT PLANS. Sellers shall
retain all liabilities and obligations for all benefits under the Employee
Benefit Plans except as expressly set forth in Section 1.7(d) above, regardless
of whether any such liabilities and obligations are disclosed on the Interim
Balance Sheets (including, without limitation, any and all workers'
compensation, COBRA, health, disability or other benefits due to or for the
benefit of any eligible employees of any of the Sellers or their covered
dependents). Except as set forth in this Section 4.8, Buyers shall assume all
liabilities under the Worker Adjustment and Retraining Act, 29 U.S.C. Sec.
2101-2109 (the "WARN Act"), in connection with the transactions contemplated by
this Agreement. None of the HGA
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Affiliates shall terminate the employment of any of its employees (other than
"part-time" employees (as defined in the WARN Act), employees who voluntarily
elect to leave the employment of any HGA Affiliate and Hired Employees) during a
period of not less than 90 days after the Closing Date without prior written
notice given to the Buyers at least ten days prior to such termination. If
Buyers notify such HGA Affiliate within such ten-day period that the termination
by such HGA Affiliate of one or more of its employees may constitute a "mass
layoff" or "plant closing" under the WARN Act the HGA Affiliates shall pay all
liability of the HGA Affiliates and Buyers under the WARN Act resulting from the
termination of such employees. From and after the Closing, the HGA Affiliates
shall take all such actions as are necessary to comply with their obligations
under COBRA and to make distributions as soon as practicable after the Closing
to the Non-Excluded Employees under The Cooper Companies, Inc. 401(k) Plan (the
"Cooper 401(k) Plan") to the extent such distributions are permitted by ERISA
and the Code; provided, however, that the HGA Affiliates shall have no
obligation to terminate the Cooper 401(k) Plan.
4.9 FURTHER ACTS AND ASSURANCES. At any time and from time
to time at and after the Closing, upon request of the UHS Group, each of the
Sellers shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, confirmations and assurances as the
UHS Group may reasonably request to more effectively convey, assign and transfer
to and vest in Buyers or their respective successors and assigns, full legal
right, title and interest in and actual possession of the Purchase Assets and
the business of the HGA Affiliates with respect to the Facilities, to confirm
each Seller's capacity and ability to perform its post-closing covenants and
agreements under this Agreement, and to generally carry out the purposes and
intent of this Agreement. Each Seller shall also reasonably cooperate with and
cause its employees to reasonably cooperate with the UHS Group in order to
enable the applicable Buyer to prosecute or defend any and all petitions,
applications, claims and demands by or against third parties relating to or
constituting a part of the Purchase Assets and the business of the HGA
Affiliates with respect to the Facilities, any Government Reimbursement Programs
or any other third party payor programs, and each Seller shall also furnish the
UHS Group with such information and documents in its possession or under its
control, or which such Seller can execute or cause to be executed, as will
enable the applicable Buyer to prosecute or defend any and all such matters.
5. COVENANTS OF THE UHS GROUP.
5.1 HSR NOTIFICATION. Prior to the execution of this
Agreement, the UHS Group has filed with the FTC and the Justice Department the
Notification and Report Form required by the HSR Act. The UHS Group shall comply
promptly with any requests for additional information by the FTC or Justice
Department under the HSR Act concerning such transactions. The UHS Group shall
take such other steps as they reasonably believe to be necessary in order for
the waiting period specified in the HSR Act to expire as soon as reasonably
practicable after the effective date of this Agreement. The UHS Group shall
furnish to the Sellers such information concerning the UHS Group as the Sellers
need to perform their obligations under Section 4.5. All filing fees under the
HSR Act shall be shared equally by the UHS Group and the Sellers.
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5.2 REGULATORY APPROVALS. From the effective date hereof
until the Closing Date, each member of the UHS Group shall (a) promptly apply
for and use its reasonable efforts to obtain prior to Closing all consents,
licenses, permits, approvals (including planning approvals), authorizations and
clearances of governmental and regulatory authorities required of it to
consummate the transactions contemplated hereby, (b) provide such information
and communications to governmental and regulatory authorities as the Sellers or
such authorities may reasonably request, and (c) assist and cooperate with the
Sellers to obtain all consents, approvals, authorizations and clearances of
government and regulatory authorities that the Sellers reasonably deem necessary
or appropriate, and to prepare any document or other information required of any
member of the UHS Group by any such authorities, in order to consummate the
transactions contemplated hereby.
5.3 EMPLOYEE MATTERS.
(a) Subject to the exclusions set forth in this
Section, and in reliance upon the representations and warranties of Sellers made
in Section 2.21 and the fulfillment of the covenants of the HGA Affiliates made
in Section 4.8, Buyers will offer to employ, as of the Closing Date, a
sufficient number of employees working at the Facilities immediately prior to
the Closing Date so that liability under the WARN Act in connection with the
transactions contemplated hereby will be avoided. The employees who are
identified on Schedule 5.3(a) shall be referred to herein collectively as the
"Excluded Employees". The applicable Buyer will offer to employ, as of the
Closing Date, each employee who is actively employed (being all but those on
approved leave of absence, including medical leave, workers compensation,
disability, family leave or personal leave, provided that the applicable Buyer
will offer to employ such employees to the extent required by the Family and
Medical Leave Act or other applicable federal or state law at such time as they
are willing and able to return to active employment) by any HGA Affiliate at a
Facility on the Closing Date and who is not an Excluded Employee (collectively
the "Non-Excluded Employees"). A Non-Excluded Employee who accepts an offer of
employment as of the Closing with a Buyer shall be referred to herein as a
"Hired Employee". Notwithstanding the foregoing, Buyers shall have no obligation
to offer employment to any employee within the following classes of employees:
(i) those employees who are "part-time employees" (as defined in the WARN Act),
(ii) those employees who voluntarily elect to leave the employment of any HGA
Affiliate or (iii) any of the Excluded Employees, whether or not such Excluded
Employees accept an offer of retained employment with any HGA Affiliate, Seller,
or any affiliate of any Seller. Buyers shall not terminate the employment of any
of the Hired Employees (other than "part-time employees" (as defined in the WARN
Act) and employees who voluntarily elect to leave the employment of any of the
Buyers) during a period of not less than ninety (90) days after the Closing
Date, and in the event any Buyer terminates the employment of any such Hired
Employee during such ninety (90) day period, Buyers shall pay all liabilities of
the HGA Affiliates under COBRA and the WARN Act resulting from such termination.
(b) [intentionally omitted]
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5.4 FURTHER ACTS AND ASSURANCES. At any time and from time
to time at and after the Closing, upon request of the Sellers, each member of
the UHS Group shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, confirmations and assurances as the
Sellers may reasonably request to confirm the capacity and ability of each
member of the UHS Group to perform its post-closing covenants and agreements
under this Agreement, and to generally carry out the purposes and intent of this
Agreement. Each member of the UHS Group shall also reasonably cooperate with and
cause its employees to reasonably cooperate with the Sellers in order to enable
the Sellers to prosecute or defend any and all petitions, applications, claims
and demands by or against third parties relating to or constituting a part of
the Purchase Assets and the business of the Facilities for which any Seller is
liable hereunder or relating to Government Reimbursement Programs or any other
third party payor programs, and each member of the UHS Group shall also furnish
the Sellers with such information and documents in its possession or under its
control, or which it can execute or cause to be executed, as will enable the
Sellers to prosecute or defend any and all such matters.
6. CONDITIONS OF CLOSING; ALLOCATION OF PURCHASE PRICE.
6.1 UHS GROUP'S CONDITIONS OF CLOSING. The obligation of
the UHS Group to purchase and pay for the Purchase Assets shall be subject to
and conditioned upon the satisfaction at the Closing of each of the following
conditions:
6.1.1 All representations and warranties of the
Sellers contained in this Agreement and the Schedules hereto shall be true and
correct in all material respects at and as of the Closing Date (in each case
except where such representation or warranty is expressly made only as of
another specific date), except as may be specified on any such amendments to the
Schedules as may be provided by the Sellers at the Closing (a) which, in order
to render the Schedules true and correct, are required by (i) actions undertaken
by the Sellers prior to the Closing Date in the ordinary course of business of
the Facilities or (ii) events occurring prior to the Closing Date in the
ordinary course of business of the Facilities and (b) which do not reflect any
material adverse change in any of the Purchase Assets or in the operations or
business of any of the Facilities; the Sellers shall have performed in all
material respects all agreements and covenants and satisfied all conditions on
their part to be performed or satisfied by the Closing Date pursuant to the
terms of this Agreement; and the UHS Group shall have received a certificate of
each Seller dated the Closing Date to such effect.
6.1.2 There shall have been no material adverse
change since the date of the Interim Balance Sheets in the financial condition,
business or affairs of each HGA Affiliate with respect to the Facilities and
each hospital or other facility under a Management Contract; and each HGA
Affiliate with respect to the Facilities and each hospital or other facility
under a Management Contract shall not have suffered any material loss (whether
or not insured) by reason of physical damage caused by fire, earthquake,
accident or other calamity which substantially affects the value of its assets,
properties or business the insurance proceeds related to which are not, in the
reasonable opinion of Buyers, adequate to repair such damage and compensate for
any lost business
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related thereto. The UHS Group shall have received a certificate of each HGA
Affiliate dated the Closing Date that the statements set forth in this Section
6.1.2 are true and correct.
6.1.3 The Sellers shall have delivered to the UHS
Group (i) a Certificate of the Secretary of State (or other authorized officer)
of the State of Illinois certifying as of a date reasonably close to the Closing
Date that HGI has filed all required reports, has paid all required fees and
taxes, and is, as of such date, in good standing and authorized to transact
business as a domestic corporation in such state, (ii) a Certificate of the
Secretary of State (or other authorized officer) of the State of New Jersey
certifying as of a date reasonably close to the Closing Date that each of HGA-NJ
and Hampton has filed all required reports, each has paid all required fees and
taxes, and each is, as of such date, in good standing and authorized to transact
business as a domestic corporation in such state and (iii) a Certificate of the
Secretary of State (or other authorized officer) of the State of Delaware
certifying as of a date reasonably close to the Closing Date that each of
Cooper, HGA, Midwest and HGA-MSI has filed all required reports, each has paid
all required fees and taxes, and each is, as of such date, in good standing and
authorized to transact business as a domestic corporation in such state.
6.1.4 (a) The Secretary of Cooper shall have
delivered to the UHS Group a certificate certifying:
(i) The Resolutions of its Board
of Directors authorizing execution, performance and delivery of this Agreement
and the execution, performance and delivery of all agreements, documents and
transactions contemplated hereby;
(ii) The incumbency of its
officers executing this Agreement and all agreements and documents contemplated
hereby; and
(iii) That the Certificate or
Articles of Incorporation and Bylaws of Cooper attached to such certificate are
complete and correct and in effect as of the date of such certification.
(b) The Secretary of each of the HGA Affiliates
shall have delivered to the UHS Group a certificate certifying:
(i) The Resolutions of its Board
of Directors authorizing execution, performance and delivery of this Agreement
and the execution, performance and delivery of all agreements, documents and
transactions contemplated hereby;
(ii) The incumbency of its
officers executing this Agreement and all agreements and documents contemplated
hereby; and
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(iii) That the Certificate or
Articles of Incorporation and Bylaws of such HGA Affiliate attached to such
certificate are complete and correct and in effect as of the date of such
certification.
6.1.5 The UHS Group shall have received from
counsel for the Sellers (which may be in-house counsel), an opinion (which may
be given by more than one counsel), dated the Closing Date, substantially in the
form attached hereto as Exhibit D.
6.1.6 The waiting period under the HSR Act shall
have (a) expired without objection from the FTC or the Justice Department, or
(b) been terminated, and all material authorizations, consents, waivers,
approvals, orders, registrations, qualifications, designations, declarations,
filings or other actions required with or from any governmental entity
(including without limitation receipt of licenses (or commitments to issue
licenses) to own and operate the Facilities in the States of Illinois, Indiana
and New Jersey, as applicable, and for Buyers to conduct the business of the HGA
Affiliates with respect to the Facilities as currently conducted, approvals of
the state agencies responsible for mental or behavioral health hospital/facility
licensure and certificates of need or nonaction) in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly obtained and shall be
reasonably satisfactory to the UHS Group and its counsel, and copies thereof
shall be delivered to the UHS Group no later than three (3) business days prior
to the Closing. No such consent or approval (a) shall be conditioned on the
material modification, cancellation or termination of any material Assumed
Contract or Management Contract, or (b) shall impose on any Buyer any condition
or provision or requirement with respect to the Facilities or their operation or
the Management Contracts that is more restrictive in any material respect than
or different in any material respect from the conditions imposed upon such
operation or the Management Contracts prior to Closing, unless such Buyer gives
its prior written approval.
6.1.7 On the Closing Date, no injunction or order
shall be in effect prohibiting consummation of the transactions contemplated
hereby or which would make the consummation of such transactions unlawful and no
action or proceeding shall have been instituted and remain pending before a
governmental entity to restrain or prohibit the transactions contemplated by
this Agreement, and no adverse decision shall have been made by any such
governmental entity which is reasonably likely to materially adversely affect
any of the HGA Affiliates or the Purchase Assets. No federal, state or local
statute, rule or regulation shall have been enacted the effect of which would be
to prohibit, materially restrict, impair or delay the consummation of the
transactions contemplated hereby or materially restrict or impair the ability of
the UHS Group to own the Purchase Assets or to conduct the businesses relating
thereto.
6.1.8 Buyers shall have received such property tax
records in the possession of the HGA Affiliates as they shall have reasonably
requested, and the UHS Group shall have obtained an appraisal of the Purchase
Assets (including all portions of the Facilities Real Property owned by any of
the Sellers but not any leased real property) solely for the purpose of
allocating the agreed Purchase Price by a qualified appraiser, reasonably
satisfactory to the HGA
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Affiliates and to the UHS Group, which records and appraisal shall have been
used in arriving at and supporting the allocation of the Purchase Price for the
Purchase Assets referred to in Section 6.3 hereof. The cost of the appraisal
shall be the responsibility of Buyers.
6.1.9 With respect to the Assumed Contracts and
Management Contracts requiring consent by the other party to an assignment by
the HGA Affiliates, Buyers shall have received each of those consents they deem
necessary to allow them to conduct business with the Purchase Assets after the
Closing Date in substantially the same manner as such business was conducted by
the HGA Affiliates on the date hereof, all such consents being set forth on
Schedule 4.2.
6.1.10 [Intentionally Omitted]
6.1.11 At the Closing, the HGA Affiliates shall
execute and deliver to Buyers affidavits complying in all respects with Section
1445(b)(2) of the Code and Buyers agree that, except as otherwise provided in
Section 1445(b)(7) of the Code and the Treasury Regulations promulgated pursuant
thereto, upon the execution and delivery of such affidavits to Buyers, no
deduction shall be made or claimed against the Purchase Price by reason of the
requirements of Section 1445 of the Code.
6.1.12 Buyers' receipt of standard ALTA fee owner's
title insurance policies (the "Title Policies") insuring title (at standard
market rates for fee simple title) to each parcel of Owned Facilities Real
Property in the applicable Buyer, subject only to the Permitted Encumbrances, in
the aggregate amount of no more than the Purchase Price, and issued by a
national title insurance company (the "Title Company").
6.1.13 Execution and delivery by the Sellers to the
UHS Group of the Instruments of Conveyance set forth in Section 1.4.
6.2 THE SELLERS' CONDITIONS OF CLOSING. The obligation of
the Sellers to sell the Purchase Assets and consummate the other transactions
contemplated by this Agreement shall be subject to and conditioned upon the
satisfaction at the Closing of each of the following conditions:
6.2.1 All representations and warranties of the UHS
Group contained in this Agreement and the Schedules hereto shall be true and
correct in all material respects at and as of the Closing Date except as may be
specified on any such amendments to the Schedules as may be provided by the UHS
Group at the Closing (a) which, in order to render the Schedules true and
correct, are required by (i) actions undertaken by the UHS Group in the ordinary
course of business of its facilities or (ii) events occurring prior to the
Closing Date in the ordinary course of business of its facilities and (b) which
do not reflect any material adverse change in the business of the UHS Group or
the ability of the UHS Group to consummate the transactions contemplated hereby;
the UHS Group shall have performed in all material respects all agreements and
covenants and satisfied all conditions on their respective parts to be performed
or satisfied by the Closing Date pursuant to
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the terms of this Agreement; and the Sellers shall have received a certificate
of the UHS Group dated the Closing Date to such effect.
6.2.2 Each of the UHS Group shall have delivered to
the Sellers a certificate of their respective corporate secretaries certifying:
(a) The Resolutions of its Board of Directors
authorizing execution, performance and delivery of this Agreement and the
execution, performance and delivery of all agreements, documents and
transactions contemplated hereby;
(b) The incumbency of its officers executing this
Agreement and all agreements and documents contemplated hereby; and
(c) That the articles of incorporation and bylaws
of such entity attached to such certificate are complete and correct and in
effect as of the date of such certificate.
6.2.3 The Sellers shall have received from counsel
for the UHS Group (which may be in-house counsel), an opinion, dated the Closing
Date, substantially in the form attached hereto as Exhibit E.
6.2.4 No suit, action, investigation, inquiry or
other proceeding by any governmental entity or other person or legal or
administrative proceeding shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby. On
the Closing Date, no injunction or order shall be in effect prohibiting
consummation of the transactions contemplated hereby or which would make the
consummation of such transactions unlawful and no action or proceeding shall
have been instituted and remain pending before a governmental entity to restrain
or prohibit the transactions contemplated by this Agreement and no adverse
decision shall have been made by any such governmental entity which is
reasonably likely to materially adversely affect the HGA Affiliates and the
Facilities. No federal, state or local statute, rule or regulation shall have
been enacted the effect of which would be to prohibit, materially restrict,
impair or delay the consummation of the transactions contemplated hereby or
materially restrict or impair the ability of Buyers to own the Purchase Assets
or conduct the business of the HGA Affiliates.
6.2.5 The execution and delivery at Closing of the
Assumption Agreement.
6.2.6 The payment of the Purchase Price by the UHS
Group to the Sellers in the form of TWENTY-SEVEN MILLION DOLLARS ($27,000,000)
in wired federal funds.
6.2.7 The UHS Group shall have delivered to the
Sellers (i) a Certificate of the Secretary of State (or other authorized
officer) of the State of Illinois certifying as of a date reasonably close to
the Closing Date that UHS-Hartgrove has filed all reports, has paid all
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required fees and taxes, and is, as of such date, in good standing and
authorized to transact business as a domestic corporation in such state; (ii) a
Certificate of the Secretary of State (or other authorized officer) of the State
of New Jersey certifying as of a date reasonably close to the Closing Date that
each of UHS-Hampton and UHS-HLC has filed all required reports, each has paid
all required fees and taxes, and each is, as of such date, in good standing and
authorized to transact business as a domestic corporation in such state; (iii) a
Certificate of the Secretary of State (or other authorized officer) of the State
of Delaware certifying as of a date reasonably close to the Closing Date that
each of UHS and UHS-DEL has filed all required reports, each has paid all
required fees and taxes, and each is, as of such date, in good standing and
authorized to transact business as a domestic corporation in such state; and
(iv) a Certificate of the Secretary of State (or other authorized officer) of
the State of Indiana certifying as of a date reasonably close to the Closing
Date that UHS-Indiana has filed all required reports, has paid all required fees
and taxes, and is, as of such date, in good standing and authorized to transact
business as a domestic corporation in such state.
6.2.8 The waiting period under the HSR Act shall
have (a) expired without objection from the FTC or the Justice Department, or
(b) been terminated, and all material authorizations, consents, waivers,
approvals, orders, registrations, qualifications, designations, declarations,
filings or other actions required with or from any governmental entity
(including without limitation receipt of licenses or commitments to issue
licenses) for Buyers to own and operate the Facilities in the States of
Illinois, Indiana and New Jersey, as applicable, and for Buyers to conduct the
business of the HGA Affiliates with respect to the Facilities as currently
conducted, approvals of the state agencies responsible for mental or behavioral
health hospital/facility licensure and certificates of need or nonaction) in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby shall have been duly
obtained.
6.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall
be allocated in its entirety among the Purchase Assets and the Non-competition
Agreement in Section 8.2 in accordance with Schedule 6.3 hereto and as required
by Section 1060 of the Code and Treasury Regulations promulgated thereunder. The
Sellers and the UHS Group shall file all information and tax returns (and any
amendments thereto) in a manner consistent with this Section 6.3 and comply with
the applicable information reporting requirements of Section 1060 of the Code
and Treasury Regulations promulgated thereunder.
7. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
7.1 EVENTS OF DEFAULT -- SELLERS. A breach of any
representation or warranty by the Sellers or a breach as a result of the failure
of the Sellers to perform any of their respective agreements, covenants and
obligations under this Agreement, shall be considered a default hereunder giving
rise to the indemnification set forth in Section 7.3 hereof.
7.2 SURVIVAL OF REPRESENTATIONS, ETC. All representations
and warranties made by the Sellers in this Agreement or in any exhibit,
schedule, certificate, document or
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instrument delivered pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, and the remedies of the UHS Group with respect
thereto, shall survive the Closing hereunder for the following periods:
(a) With respect to the representations and warranties of
the Sellers (other than those representations and warranties in Sections 2.1,
2.2, 2.10, 2.20, 2.21, 2.25, 2.27 and 2.32 and all related exhibits, schedules,
certificates, documents and instruments), any claim arising thereunder must be
brought within a period of twenty-four (24) months following the Closing Date.
(b) With respect to the representations and warranties of
the Sellers contained in Sections 2.10, 2.20, 2.21, 2.25, 2.27 and 2.32 and all
related exhibits, schedules, certificates, documents and instruments, any claim
arising thereunder must be brought within the period of the applicable statutes
of limitations, including any extensions thereof.
(c) With respect to the representations and warranties of
the Sellers contained in Sections 2.1 and 2.2 and all related exhibits,
schedules, certificates, documents and instruments, such representations and
warranties shall survive the Closing and any claim arising thereunder may be
brought at any time.
7.3 INDEMNIFICATION TO THE UHS GROUP. From and after the
Closing Date, the Sellers jointly and severally shall, up to a maximum aggregate
payment equal to the Purchase Price, indemnify and hold the UHS Group and their
respective affiliates, agents and representatives, harmless from and against any
and all claims, losses, expenses, damages or liabilities arising out of or
relating to any of the following: (i) the representations and warranties set
forth in this Agreement (including the Schedules hereto) or in any certificate
furnished to the UHS Group by or on behalf of any of the Sellers in connection
herewith not being true and correct, as modified by any such amendments to the
Schedules as may be delivered by the Sellers in accordance with Section 6.1.1,
in all respects on the Closing Date (in each case except where such
representation or warranty is expressly made only as of another specific date);
(ii) any breach, violation or nonperformance of a covenant, agreement or
obligation to be performed hereunder on the part of any of the Sellers; (iii)
any claims against, or liabilities or obligations of any of the Sellers not
specifically assumed by any of the UHS Group pursuant to this Agreement; or (iv)
any actions, judgments, costs and expenses (including reasonable attorneys' fees
and all other expenses incurred in investigating, preparing or defending any
litigation or proceedings, commenced or threatened) incident to any of the
foregoing or the enforcement of this Section. Notwithstanding the foregoing, the
Sellers shall not be liable for any claims, losses, expenses, damages or
liabilities under clause (i), and the corresponding costs and expenses under
clause (iv), of the preceding sentence until the amount thereof exceeds the
Basket Amount in the aggregate and then the Sellers shall be liable for the
entire excess. However, the Sellers shall be liable for the full amount of all
claims, losses, expenses, damages and liabilities pursuant to clauses (ii) and
(iii), and corresponding costs and expenses under clause (iv), of the first
sentence of this Section 7.3. The indemnity provisions of this Section 7.3 shall
be the only remedy available to the UHS Group under this Agreement with respect
to the matters set forth in subsections (i), (ii) and (iii) of this Section 7.3.
With respect to claims under Section 7.3(i), no claim may be
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brought after the applicable survival period, as provided in Section 7.2.
Notwithstanding anything herein to the contrary, to the extent that (A) an
adjustment is made to the Purchase Price pursuant to Section 1.6.2(a), (B) a
payment in respect of the Receivables Payment Amount is made to Buyers pursuant
to Section 1.12 hereof or (C) full payment is made with respect to an
indemnification claim pursuant to this Section 7.3 (each, an "Adjustment"), the
item giving rise to the Adjustment may not be used to make another Adjustment,
it being understood and agreed that Sellers shall not be obligated to pay the
UHS Group with respect to the same underlying matter more than once.
7.4 REPRESENTATION, COOPERATION AND SETTLEMENT.
(a) The UHS Group agrees to give prompt written notice to
the Sellers of any claim against the UHS Group which might give rise to a claim
by the UHS Group against the Sellers based on the indemnity agreement contained
in Section 7.3 hereof, stating the nature and basis of the first-mentioned claim
and the amount thereof.
(b) The Sellers shall have full responsibility and
authority with respect to the payment, settlement, compromise or other
Disposition of any third party dispute, action, suit or proceeding in excess of
the Basket Amount subject to indemnification by the Sellers hereunder,
including, without limitation, the right to conduct and control all negotiations
with respect to the settlement, compromise or other Disposition thereof, and the
UHS Group agrees to cooperate with the Sellers in any reasonable manner
requested by the Sellers in connection with any such negotiations. The UHS Group
shall have the right, without prejudice to the Sellers' rights under this
Agreement, at the UHS Groups' sole expense, to be represented by counsel of
their own choosing and with whom counsel for the Sellers shall confer in
connection with the defense of any such action, suit or proceeding. The parties
agree to render to each other such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any such action, suit or
proceeding. Notwithstanding the foregoing, the Sellers may compromise and settle
any claim, action, or suit to which they must indemnify the UHS Group hereunder,
provided that they give the UHS Group advance notice of any proposed compromise
or settlement and shall obtain the consent of the UHS Group to such proposed
compromise or settlement, which consent shall not be unreasonably withheld.
7.5 EVENTS OF DEFAULT -- UHS GROUP. A breach of any
representation or warranty by any of the UHS Group or a breach as a result of
the failure of any of the UHS Group to perform any of its agreements, covenants
and obligations under this Agreement, shall be considered a default hereunder
giving rise to the indemnification set forth in Section 7.7 hereof.
7.6 SURVIVAL OF REPRESENTATIONS, ETC. All representations
and warranties made by any member of the UHS Group in this Agreement or in any
exhibit, schedule, certificate, document or instrument delivered pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
and the remedies of the Sellers with respect thereto, shall survive the Closing
for the following periods:
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(a) With respect to the representations and warranties of
the UHS Group (other than those representations and warranties in Sections 3.1,
3.2 and 3.3 and all related exhibits, schedules certificates, documents and
instruments), any claim arising thereunder must be brought within a period of
twenty-four (24) months following the Closing Date.
(b) With respect to the representations and warranties of
the UHS Group contained in Section 3.3 and all related exhibits, schedules,
certificates, documents and instruments, any claim arising thereunder must be
brought within the period of the applicable statutes of limitations, including
any extensions thereof.
(c) With respect to the representations and warranties of
the UHS Group contained in Sections 3.1 and 3.2 and all related exhibits,
schedules, certificates, documents and instruments, such representations and
warranties shall survive the Closing and any claim arising thereunder may be
brought at any time.
7.7 INDEMNIFICATION TO SELLERS. From and after the Closing
Date, the UHS Group jointly and severally shall, up to a maximum aggregate equal
to the Purchase Price, indemnify and hold the Sellers, and their respective
affiliates, agents and representatives, harmless from and against any and all
claims, losses, expenses, damages or liabilities arising out of or relating to
any of the following: (i) the Assumed Liabilities; (ii) the representations and
warranties set forth in this Agreement (including the Schedules hereto) or in
any certificate furnished to the Sellers by or on behalf of any member of the
UHS Group in connection herewith not being true and correct, as modified by any
such amendments to the Schedules as may be delivered by the UHS Group in
accordance with Section 6.2.1, in all respects on the Closing Date (in each case
except where such representation or warranty is expressly made only as of
another specific date); (iii) any breach, violation or nonperformance of a
covenant, agreement or obligation to be performed hereunder or in connection
herewith on the part of any member of the UHS Group, including, but not limited
to, any breach of the Assumption Agreement; (iv) any act or omission in the
operations or use of the Facilities Assets or the performance of the Assumed
Contracts, including without limitation the Management Contracts, following the
Closing so long as such act or omission is not, directly or indirectly,
attributable to or the responsibility of any Seller (except that in regards to
the assignment of the Management Contracts or performance under any Assignment
Substitute, this proviso regarding attribution of any act or omission to any
Seller shall not apply and Section 1.3.3 shall control); or (v) any actions,
judgments, costs and expenses (including reasonable attorneys' fees and all
other expenses incurred in investigating, preparing or defending any litigation
or proceedings, commenced or threatened) incident to any of the foregoing or the
enforcement of this Section. Notwithstanding the foregoing, the UHS Group shall
not be liable for any claims, losses, expenses, damages or liabilities under
clause (i), and the corresponding costs and expenses under clause (v), of the
preceding sentence until the amount thereof exceeds $150,000 in the aggregate
and then the UHS Group shall be liable for the entire excess. However, the UHS
Group shall be liable for the full amount of all claims, losses, expenses,
damages and liabilities pursuant to clauses (ii), (iii) and (iv), and
corresponding costs and expenses under clause (v), of the first sentence of this
Section 7.7. The indemnity provisions of this Section 7.7 shall be the only
remedy available to the Sellers under this
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Agreement with respect to the matters set forth in subsections (i), (ii), (iii)
and (iv) of this Section 7.7. With respect to claims under Section 7.7(ii), no
claim may be brought after the applicable survival period, as provided in
Section 7.6. Notwithstanding anything herein to the contrary, to the extent that
the indemnification provisions of this Section 7.7 are applied (each, a "UHS
Adjustment"), the item giving rise to the UHS Adjustment may not be used to make
another UHS Adjustment, it being understood and agreed that the UHS Group shall
not be obligated to pay the Sellers with respect to the same underlying matter
more than once.
7.8 REPRESENTATION, COOPERATION AND SETTLEMENT.
(a) The Sellers agree to give prompt written notice to the
UHS Group of any claim against the Sellers which might give rise to a claim by
the Sellers against the UHS Group based on the indemnity agreement contained in
Section 7.7 hereof, stating the nature and basis of the first-mentioned claim
and the amount thereof.
(b) The UHS Group shall have full responsibility and
authority with respect to the payment, settlement, compromise or other
Disposition of any dispute, action, suit or proceeding subject to
indemnification by the UHS Group hereunder, including, without limitation, the
right to conduct and control all negotiations with respect to the settlement,
compromise or other Disposition thereof, and the Sellers agree to cooperate with
the UHS Group in any reasonable manner requested by the UHS Group in connection
with any such negotiations. The Sellers shall have the right, without prejudice
to the UHS Group's rights under this Agreement, at the Sellers' sole expense, to
be represented by counsel of their own choosing and with whom counsel for the
UHS Group shall confer in connection with the defense of any such action, suit
or proceeding. The parties agree to render to each other such assistance as may
reasonably be requested in order to insure the proper and adequate defense of
any such action, suit or proceeding. Notwithstanding the foregoing, the UHS
Group may compromise and settle any claim, action, or suit to which it must
indemnify the Sellers hereunder, provided that it gives the Sellers advance
notice of any proposed compromise or settlement and shall obtain the consent of
the Sellers to such proposed compromise or settlement, which consent shall not
be unreasonably withheld.
8. TRANSACTIONS SUBSEQUENT TO THE CLOSING DATE.
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8.1 ACCESS TO RECORDS. From time to time after the Closing
Date, upon the request of the UHS Group, the Sellers will promptly make
available to the UHS Group any records, documents and data relating to the
Purchase Assets, or any of the HGA Affiliates retained by any of the Sellers
whether located at any corporate headquarters or any other location. From time
to time after the Closing Date, upon the request of the Sellers, the UHS Group
will during normal business hours promptly provide the Sellers with reasonable
access to, and the right at the Sellers' expense to make copies of, any records,
documents and data relating to the Purchase Assets acquired by the UHS Group
hereunder. From time to time after the Closing Date, upon the UHS Group's
receipt of a written request of any party to whom a Seller is contractually
required, as described on Schedule 8.1, to cooperate with or to provide access
or copies (a "Third Party Requestor"), the UHS Group will reasonably cooperate
with such Third Party Requestor and will during normal business hours and upon
reasonable notice promptly provide such Third Party Requestor with reasonable
access to and the right, at the Sellers' or such Third Party Requestor's
expense, to make copies of any records, documents and data relating to the
Purchase Assets acquired by the UHS Group hereunder. For a period of seven (7)
years following the Closing Date or for such longer period as records are
required to be retained by law or by such contractual provision of which a party
is specifically notified in writing by any other party, neither the Sellers nor
the UHS Group shall discard, destroy or otherwise dispose of records, documents
and data relating to Purchase Assets or the HGA Affiliates without first making
such records, documents and data available to the other party for inspection and
copying. Within thirty (30) days following its receipt of the same, the UHS
Group, on the one hand, and Sellers, on the other hand, agree to provide the
other with a copy of any written request to provide any records, documents or
data relating to the Purchase Assets which the UHS Group or the Sellers receives
from any governmental entity or other third party within seven (7) years
following the Closing.
8.2 NON-COMPETITION. Each of the Sellers agrees that,
except with respect to the operations of HGA or MeadowWood in effect on the date
of this Agreement, neither it nor any of its affiliated entities will for a
period of five (5) years from the Closing Date directly or indirectly (i) own,
build, invest in, assist in the development of, or have any management,
administrative or operational role in, any psychiatric hospital or mental or
behavioral health facility, or any firm, corporation, business or other
organization or enterprise, which is engaged, directly or indirectly, in the
provision of mental or behavioral health care services, outpatient counseling
services or management services within fifty (50) miles of the respective
locations of, HGI, Hampton, Midwest, Riveredge and any hospital or other
facility which is the subject of a Management Contract, (ii) except for the
Excluded Employees, solicit for employment any employee of the Facilities
purchased by Buyers pursuant to the terms of this Agreement or any hospital or
other facility under a Management Contract, or (iii) interfere with, disrupt or
attempt to disrupt the relationship between any of the Buyers or any of their
affiliates and any of their respective lessors, lessees, contractors, licensors,
licensees, customers or suppliers pertaining to the Facilities or any hospital
or other facility under a Management Contract.
If any court determines that any of the restrictive
covenants set forth in this Section 8.2, or any part of such covenants, is
unenforceable because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the duration or area
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of such provision and, in its reduced form, such provisions shall then be
enforceable and shall be enforced. Each of the Sellers acknowledges that the
remedy at law for any breach or threatened breach of the provisions of this
Section by any of them will be inadequate, and that, accordingly, the UHS Group
shall, in addition to all other available remedies, be entitled to injunctive
relief, without being required to post bond or other security and without having
to prove the inadequacy of the available remedies at law. Each of the Sellers
agrees not to plead or defend on any grounds of adequate remedy at law or any
similar defense in any action by any of the UHS Group against any of them for
injunctive relief or for specific performance of any of its obligations under
this Section. Nothing contained herein shall be construed as prohibiting any of
the UHS Group from pursuing any other remedies for such breach or threatened
breach.
8.3 TRANSITION COVENANTS. For a period of one hundred
eighty (180) days following the Closing Date, the Sellers shall permit the UHS
Group to utilize the Med-Net Software free of all costs other than external,
out-of-pocket costs incurred by the Sellers and payable to Keane Incorporated to
the extent the same arise out of the UHS Group's use of the Med-Net Software.
9. TERMINATION.
9.1 METHODS OF TERMINATION. The transactions contemplated
herein may be terminated at any time before or after approval thereof by the
Sellers and the UHS Group, but not later than the Closing:
(i) By mutual consent of the UHS Group
and the Sellers; or
(ii) By the UHS Group after April 30,
1999, if any of the conditions provided for in Section 6.1 hereof shall not have
been met or waived in writing by the UHS Group prior to such date; or
(iii) By the Sellers after April 30, 1999,
if any of the conditions provided for in Section 6.2 hereof shall not have been
met or waived in writing by the Sellers prior to such date.
9.2 PROCEDURE UPON TERMINATION. In the event of
termination by the UHS Group or the Sellers, or both, pursuant to Section 9.1
hereof, written notice thereof shall forthwith be given to the other parties and
the transactions contemplated by this Agreement shall be terminated, without
further action by the UHS Group or the Sellers. If the transactions contemplated
by this Agreement are terminated as provided herein:
(i) Each party will redeliver all
documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution of this Agreement, to the party furnishing the same; and
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(ii) No party hereto shall have any
liability or further obligation to any other party to this Agreement other than
the confidentiality obligations set forth in Section 10.6 hereof.
10. MISCELLANEOUS.
10.1 NOTICE. Any notice required or permitted hereunder
shall be in writing and shall be sufficiently given if personally delivered or
mailed by certified or registered mail, return receipt requested, addressed as
follows:
IF TO THE Thomas J. Bender
UHS GROUP: Vice President
Universal Health Services, Inc.
367 South Gulph Road
Box 61558
King of Prussia, Pennsylvania 19406
COPIES TO: Bruce R. Gilbert, Esq.
General Counsel
Universal Health Services, Inc.
367 South Gulph Road
Box 61558
King of Prussia, Pennsylvania 19406
AND
Klett Lieber Rooney & Schorling
A Professional Corporation
40th Floor, One Oxford Centre
Pittsburgh, Pennsylvania 15219
Attention: Robert T. Harper, Esq.
IF TO THE SELLERS: Robert S. Weiss
Executive Vice President and Chief Financial Officer
The Cooper Companies, Inc.
6140 Stoneridge Mall Road, Suite 590
Pleasanton, California 94588
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AND
Carol R. Kaufman
Vice President of Legal Affairs,
Secretary & Chief Administrative Officer
The Cooper Companies, Inc.
6140 Stoneridge Mall Rd., Suite 590
Pleasanton, CA 94588
COPIES TO: Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022
Attention: Samuel A. Fishman, Esq.
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Attention: Laura Gabriel, Esq.
(or to such other address as any party shall specify by written notice so
given), and shall be deemed to have been delivered as of the date so personally
delivered or mailed.
10.2 EXECUTION OF ADDITIONAL DOCUMENTS. The parties hereto
will at any time, and from time to time after the Closing Date, upon request of
the other party, execute, acknowledge and deliver all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may be
required to carry out the intent of this Agreement and to transfer and vest
title to any Purchase Assets being transferred hereunder, and to protect the
right, title and interest in and enjoyment of all of the Purchase Assets sold,
granted, assigned, transferred, delivered and conveyed pursuant to this
Agreement; provided, however, that this Agreement shall be effective regardless
of whether any such additional documents are executed.
10.3 WAIVERS AND AMENDMENT.
(a) The Sellers or the UHS Group may, by written
notice to the other executed by a properly authorized officer, (i) extend the
time for the performance of any of the obligations or other actions of the
other; (ii) waive any inaccuracies in the representations or warranties of the
other contained in this Agreement; (iii) waive compliance with any of the
covenants of the other contained in this Agreement; and (iv) waive or modify
performance of any of the obligations of the other.
(b) This Agreement may be amended, modified or
supplemented only by a written instrument executed by all the parties hereto.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained herein. The
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waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
10.4 EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, the UHS Group shall pay the fees
and expenses of their counsel, accountants, other experts and all other expenses
incurred by them incident to the negotiation, preparation and execution of this
Agreement, and the Sellers shall pay any and all such fees and expenses incurred
by them incident to the negotiation, preparation and execution of this Agreement
and the performance by them of their obligations hereunder. The Sellers shall
pay all finder's fees, brokerage or agent's commissions and other like payments
of Cronus Partners, Inc. in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
10.5 FACILITIES MANAGEMENT. In the event the parties
desire to provide for the management of the Facilities by Buyer prior to the
Closing, they shall meet and, in good faith, endeavor to negotiate a mutually
satisfactory agreement for such management.
10.6 CONFIDENTIALITY OBLIGATIONS; PUBLIC ANNOUNCEMENTS.
(a) Each party agrees that it will treat in confidence all
documents, materials and other information which it shall have obtained
regarding the other parties during the course of the negotiations leading to the
consummation of the transactions contemplated hereby (whether obtained before or
after the date of this Agreement), the investigation provided for herein and the
preparation of this Agreement and other related documents, and, in the event the
transactions contemplated hereby shall not be consummated, each party will
return to the other party all copies of non-public documents and materials which
have been furnished in connection therewith. The obligation of each party to
treat such documents, materials and other information in confidence shall not
apply to any information which (i) such party can demonstrate was already
lawfully in its possession prior to the disclosure thereof by the other party,
(ii) is known to the public and did not become so known through any violation of
a legal obligation, (iii) became known to the public through no fault of such
party or (iv) is later lawfully acquired by such party from other sources.
Except as required by law or deemed advisable under applicable law in the
reasonable opinion of counsel, and except for disclosures to its directors,
officers, employees, counsel, accountants and other advisors involved in the
negotiations leading to the consummation of the transactions contemplated
hereby, who shall be advised of the confidentiality requirements herein, no
party hereto shall disclose to any Person the Purchase Price, the terms or
provisions of this Agreement or the content of any discussions or communications
between the Sellers and the UHS Group. The terms and provisions of the
Confidentiality Agreement between Cooper and UHS, made as of the 28th day of
August, 1998 (the "Confidentiality Agreement"), shall remain in full force and
effect and shall not be superseded by this Agreement.
(b) The parties acknowledge that UHS and Sellers have each
issued a press release and may have made filings with the Securities and
Exchange Commission (the "SEC") with respect to the letter of intent entered
into prior to the date hereof. The parties further acknowledge
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that the UHS Group and Sellers may issue additional press releases and make
additional SEC filings, including in connection with the signing of this
Agreement and the closing of the transactions contemplated hereby. The parties
agree to give, to the extent reasonably possible, not less than two (2) calendar
days prior notice to the other party of any such press release or SEC filing,
and the parties further agree to attempt, to the extent reasonably possible, to
clear any such press release or SEC filing with the other party. Each party
hereto agrees that it will not unreasonably withhold any such consent or
clearance. The Sellers and the UHS Group will consult with each other concerning
the means by which the HGA Affiliates' employees, customers, and suppliers and
others having dealings with the Sellers will be informed of the transactions
contemplated by this Agreement and the UHS Group will have the right to be
present for any such communication.
10.7 BINDING EFFECT; BENEFITS. Subject to Section 10.14,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors, executors, administrators
and assigns. Notwithstanding anything contained in this Agreement to the
contrary, nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
10.8 ENTIRE AGREEMENT. This Agreement and the
Confidentiality Agreement, together with the Exhibits, Schedules and other
documents contemplated hereby, constitute the final written expression of all of
the agreements between the parties, and is a complete and exclusive statement of
those terms. This Agreement supersedes all prior understandings and negotiations
(written and oral) concerning the matters specified herein other than those
contained in the Confidentiality Agreement. Any representations, promises,
warranties or statements made by either party that differ in any way from the
terms of this written Agreement and the Exhibits, Schedules and other documents
contemplated hereby, shall be given no force or effect. The parties specifically
represent, each to the other, that there are no additional or supplemental
agreements between them related in any way to the matters herein contained
unless specifically included or referred to herein. No addition to or
modification of any provision of this Agreement shall be binding upon any party
unless made in writing and signed by all parties.
10.9 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania
exclusive of the conflict of law provisions thereof.
10.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
10.11 HEADINGS. Headings of the Articles and Sections of
this Agreement are for the convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
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10.12 INCORPORATION OF EXHIBITS AND SCHEDULES. All
Exhibits and Schedules attached hereto are by this reference incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
10.13 SEVERABILITY. If for any reason whatsoever, any one
or more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid as applied to any particular case or in
all cases, such circumstances shall not have the effect of rendering such
provision invalid in any other case or of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid.
10.14 ASSIGNABILITY. Except with respect to an assignment
by any Buyer to any subsidiary or affiliate of such Buyer or UHS as provided in
Section 1.11, neither this Agreement nor any of the parties' rights hereunder
shall be assignable by any party hereto without the prior written consent of the
other parties hereto.
[SIGNATURES ARE ON THE NEXT FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year
hereinabove first set forth.
SELLERS:
THE COOPER COMPANIES, INC.
By: /s/ Robert S. Weiss
_________________________________
Title: Executive Vice President
______________________________
HOSPITAL GROUP OF AMERICA, INC.
By: /s/ Robert S. Weiss
_________________________________
Title: Vice President
______________________________
HOSPITAL GROUP OF NEW JERSEY, INC.
By: /s/ Robert S. Weiss
_________________________________
Title: Vice President
______________________________
HAMPTON LEARNING CENTER, INC.
By: /s/ Robert S. Weiss
_________________________________
Title: Vice President
______________________________
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HOSPITAL GROUP OF ILLINOIS, INC.
By: /s/ Robert S. Weiss
_________________________________
Title: Vice President
______________________________
RESIDENTIAL CENTERS OF INDIANA, INC.
By: /s/ Robert S. Weiss
_________________________________
Title: Vice President
______________________________
HGA MANAGEMENT SERVICES, INC.
By: /s/ Robert S. Weiss
_________________________________
Title: Vice President
______________________________
BUYERS:
UHS OF HARTGROVE, INC.
By: /s/ Tom Bender
_________________________________
Title: Vice President
______________________________
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UHS OF DELAWARE, INC.
By: /s/ Tom Bender
_________________________________
Title: Vice President
______________________________
UHS OF HAMPTON, INC.
By: /s/ Tom Bender
_________________________________
Title: Vice President
______________________________
UHS OF HAMPTON LEARNING CENTER, INC.
By: /s/ Tom Bender
_________________________________
Title: Vice President
______________________________
UHS MIDWEST CENTER FOR YOUTH AND
FAMILIES, INC.
By: /s/ Tom Bender
_________________________________
Title: Vice President
______________________________
UNIVERSAL HEALTH SERVICES, INC.
By: /s/ Tom Bender
_________________________________
Title: Vice President
______________________________
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
1. Purchase and Sale of Assets.........................................................2
1.1 Agreement to Purchase and Sell Facilities Assets...........................2
1.2 Excluded Assets............................................................6
1.3 Contract Assignments.......................................................7
1.3.1 Assignment of Interest in Management Contracts...................7
1.3.2 Consents to Assignments..........................................7
1.3.3 Allocation of Profit and Loss....................................8
1.4 Instruments of Conveyance..................................................8
1.5 DOC Agreements.............................................................8
1.6 Consideration.............................................................10
1.6.1 Purchase Price..................................................10
1.6.2 Working Capital Adjustment......................................10
1.6.3 Assumption Agreement............................................10
1.6.4 Prorations......................................................11
1.6.5 Cost Reports Payments...........................................11
1.7 Liabilities Assumed by Buyers.............................................12
1.8 Liabilities Not Assumed...................................................13
1.9 Closing ................................................................16
1.10 Definitions...............................................................16
1.11 Designation of Purchasers.................................................18
1.12 Uncollected Receivables...................................................18
2. Representations and Warranties of Sellers............................................19
2.1 Existence; Good Standing; Corporate Authority.............................19
2.2 Authorization; Validity and Effect of Agreements..........................19
2.3 Subsidiaries..............................................................20
2.4 Capitalization............................................................20
2.5 Records...................................................................20
2.6 Officers and Directors....................................................21
2.7 Financial Statements......................................................21
2.8 Absence of Undisclosed Liabilities........................................21
2.9 Absence of Certain Changes or Events Since the Date of the Interim
Balance Sheets.........................................................21
2.10 Taxes.....................................................................23
2.11 Real Property.............................................................24
2.12 Title to Property and Assets; Sufficiency of Purchase Assets..............25
2.13 Condition of Property.....................................................26
2.14 List of Contracts and Other Data..........................................26
2.15 No Breach or Default......................................................27
2.16 Labor Controversies.......................................................27
</TABLE>
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<S> <C>
2.17 Litigation................................................................28
2.18 Patents; Trademarks, Etc..................................................28
2.19 Licenses; Permits; Authorizations.........................................28
2.20 Compliance with Applicable Law; Environmental Laws........................29
2.21 Employee Benefit Plans; Employees and Employee Relations..................31
2.22 Adverse Agreements........................................................32
2.23 Trade Receivables; Trade Notes and Accounts Payable; Prepaid Contracts....32
2.24 Inventories and Supplies..................................................33
2.25 Illegal Payments..........................................................33
2.26 Insurance Policies........................................................33
2.27 Professional Staff, Medicare, Medicaid and Other Health Care Programs.....33
2.28 Facility Surveys..........................................................34
2.29 Suppliers and Providers of Services.......................................34
2.30 Related Party Transactions................................................35
2.31 Management Contracts and Related Agreements...............................35
2.32 No Brokers................................................................36
2.33 Intentionally Omitted.....................................................36
2.34 No Misrepresentation or Omission..........................................36
3. Representations and Warranties of the UHS Group......................................36
3.1 Existence; Good Standing; Corporate Authority.............................36
3.2 Authorization; Validity and Effect of Agreements..........................37
3.3 No Brokers................................................................37
3.4 No Misrepresentation or Omission..........................................38
4. Covenants of the Sellers.............................................................38
4.1 Access to Facilities and Additional Information...........................38
4.2 Operations................................................................39
4.3 Negative Covenants........................................................40
4.4 Governmental Approvals....................................................41
4.5 HSR Notification..........................................................41
4.6 No-Shop Clause and Termination Fees.......................................41
4.7 Intentionally Omitted.....................................................42
4.8 Employees; Employee Benefit Plans.........................................42
4.9 Further Acts and Assurances...............................................43
5. Covenants of the UHS Group...........................................................43
5.1 HSR Notification..........................................................43
5.2 Regulatory Approvals......................................................44
5.3 Employee Matters..........................................................44
5.4 Further Acts and Assurances...............................................45
</TABLE>
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<S> <C>
6. Conditions of Closing; Allocation of Purchase Price..................................45
6.1 UHS Group's Conditions of Closing.........................................45
6.2 The Sellers' Conditions of Closing........................................48
6.3 Allocation of Purchase Price..............................................50
7. Nature and Survival of Representations and Warranties; Indemnification...............50
7.1 Events of Default - Sellers...............................................50
7.2 Survival of Representations, Etc..........................................50
7.3 Indemnification to the UHS Group..........................................51
7.4 Representation, Cooperation and Settlement................................52
7.5 Events of Default - UHS Group.............................................52
7.6 Survival of Representations, Etc..........................................52
7.7 Indemnification to Sellers................................................53
7.8 Representation, Cooperation and Settlement................................54
8. Transactions Subsequent to the Closing Date..........................................54
8.1 Access to Records.........................................................55
8.2 Non-Competition...........................................................55
8.3 Transition Covenants......................................................56
9. Termination..........................................................................56
9.1 Methods of Termination....................................................56
9.2 Procedure Upon Termination................................................56
10. Miscellaneous........................................................................57
10.1 Notice....................................................................57
10.2 Execution of Additional Documents.........................................58
10.3 Waivers and Amendment.....................................................58
10.4 Expenses..................................................................59
10.5 Facilities Management.....................................................59
10.6 Confidentiality Obligations; Public Announcements.........................59
10.7 Binding Effect; Benefits..................................................60
10.8 Entire Agreement..........................................................60
10.9 Governing Law.............................................................60
10.10 Counterparts..............................................................60
10.11 Headings..................................................................60
10.12 Incorporation of Exhibits and Schedules...................................61
10.13 Severability..............................................................61
10.14 Assignability.............................................................61
</TABLE>
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SCHEDULES, EXHIBITS AND APPENDICES
TO ASSET PURCHASE AGREEMENT
<TABLE>
<CAPTION>
Schedule
- --------
<S> <C>
1.1(b) Tangible Personal Property
1.1(e) Contractual Obligations Relating to Records
1.1(f) Assumed Contracts
1.1(j) Investments
1.1(p) Contracts Related to Employee Benefit Plans
1.2(a) Rejected Investments
1.2(e) Excluded Contracts
1.7(d) Employment Contracts
2.2 Authorization; Validity and Effect of Agreements
2.3 Subsidiaries; Debt and Equity Securities
2.4 Capitalization; Outstanding Rights, Warrants, etc.
2.6 Officers and Directors
2.7 Financial Statements
2.8 Absence of Undisclosed Liabilities
2.9 Absence of Certain Changes or Events
2.10 Taxes
2.11 Real Property
2.11(a) Interests in Real Property
2.11(g) Zoning Endorsement
</TABLE>
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<S> <C>
2.12(a) Title to Property and Assets
2.12(b) Exceptions to Sufficiency of Purchase Assets
2.14 List of Contracts and Other Data
2.15 Exceptions to No Breach or Default
2.16 Labor Controversies
2.17 Litigation
2.19 Licenses; Permits; Authorizations
2.20(a) Compliance with Applicable Law; Environmental Laws
2.20(b) Prohibited Activities
2.21.1 Employee Benefit Plans
2.21.2 Employees
2.21.3 Employee Relations
2.23 Trade Receivables; Trade Notes and Accounts Payable; Prepaid Contracts
2.26 Insurance Policies; Pending Insurance Claims
2.27 Professional Staff; Medicare, Medicaid and Other Health Care Programs
2.29 Suppliers and Providers of Services
2.30 Related Party Transactions
2.31 Management Contracts and Related Agreements
3.2 Authorization; Validity and Effect of Agreements (UHS Group)
4.2 Releases, Consents and Estoppels
4.3(c) Compensation Increases
5.3(a) Excluded Employees
</TABLE>
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<S> <C>
6.3 Allocation of Purchase Price
8.1 Contractual Obligations Relating to Records
</TABLE>
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<CAPTION>
Exhibit Source
- ------- ------
<S> <C> <C>
A Page 1 List of Facility Locations
B Page 2 & List of Management Contracts
Section 1.3.1
C Section 1.6.2(b) Accounting Procedures
D Section 6.1.5 Form of Opinion of Sellers' Counsel
E Section 6.2.3 Form of Opinion of UHS Group's Counsel
<CAPTION>
Appendix Source
- -------- ------
<S> <C> <C>
I Section 1.4(a) Forms of Warranty Deed, Bill of Sale and Assignment
II Section 1.6.3 Form of Assumption Agreement
</TABLE>
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Exhibit 99.1
CONTACT:
Norris Battin
[email protected]
FOR IMMEDIATE RELEASE
COOPER COMPLETES DIVESTITURE OF HOSPITAL GROUP OF AMERICA
IRVINE, Calif., April 15, 1999 -The Cooper Companies, Inc., (NYSE/PCX: COO) said
today that it had completed the sale of the remaining properties of its Hospital
Group of America (HGA) psychiatric services business to Universal Health
Services, Inc. (NYSE: UHS). Universal paid Cooper $27 million in cash at
closing, and may pay up to an additional $3 million in the future if certain
contingencies are met.
Commenting on the use of proceeds, A. Thomas Bender, Cooper's Chief Executive
Officer said, "We will use the cash to repay debt, make other investments that
meet our rate of return targets, or both. If all the proceeds were used to
reduce debt, we would add, at a minimum, $1.8 million in pretax profit to
continuing operations going forward--about $.08 per share to after tax
earnings."
The closing completes the divestiture of HGA. Cooper now competes only in the
medical device market with businesses in vision care and women's healthcare.
CooperVision, Inc., headquartered in Irvine, Calif., with manufacturing
facilities in Huntington Beach, Calif., Rochester, N.Y., Toronto Canada and
Southampton, England, markets a broad range of contact lenses. CooperSurgical,
Inc., headquartered in Shelton, Conn., markets diagnostic products, surgical
instruments and accessories for the women's healthcare market, particularly for
procedures performed in the physician's office. Cooper's corporate offices are
located in Irvine and Pleasanton, Calif.
FORWARD-LOOKING STATEMENTS
Statements in this report that are not based on historical fact may be
"forward-looking statements" as defined by the Private Securities Litigation
Reform Act of 1995. They include words like "may," "will," "expect," "estimate,"
"anticipate," "continue" or similar terms and reflect Cooper's current analysis
of existing trends. Actual results could differ materially from those indicated
due to: major changes in business conditions and the economy, loss of key senior
Management, major disruptions in the operations of Cooper's manufacturing
facilities, new competitors or technologies, significant disruptions caused by
the failure of third parties to address the Year 2000 issue or by unforeseen
delays in completing Cooper's Year 2000 compliance program, acquisition
integration costs, foreign currency
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exchange exposure including the potential impact of the Euro, investments in
research and development and other start-up projects, dilution to earnings per
share from acquisitions or issuing stock, regulatory issues, significant
environmental clean-up costs above those already accrued, litigation costs,
costs of business divestitures, and items listed in the Company's SEC reports,
including the section entitled "Business " in its Annual Report on Form 10-K for
the year ended October 31, 1998.
NOTE: A toll free interactive telephone system at 1-800-334-1986 provides stock
quotes, recent press releases and financial data. Cooper's Internet address is
www.coopercos.com.
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