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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): September 28, 1998
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RAMSAY HEALTH CARE, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-13849 63-087532
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
Columbus Center 33134
One Alhambra Plaza, Suite 750 -----
Coral Gables, Florida (Zip Code)
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (305) 569-6993
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(Not applicable)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 28, 1998 the Registrant, Michigan Psychiatric Services,
Inc., a Michigan corporation and wholly-owned subsidiary of the Registrant
("Michigan"), and Havenwyck Hospital, Inc., a Michigan corporation and
wholly-owned subsidiary of Michigan ("Havenwyck"), consummated a sale/leaseback
transaction whereby the Registrant and Michigan sold the land, buildings and
fixed equipment of Havenwyck located in Auburn Hills, Michigan (the "Havenwyck
Facility"), to Capstone Capital Corporation, a Maryland corporation
("Capstone"), for the land, buildings and fixed equipment of the Registrant's
leased Desert Vista Hospital facility located in Mesa, Arizona and $1,300,000
in cash. In connection with the sale/leaseback, the Registrant has agreed to
lease the Havenwyck Facility over a term of approximately twelve (12) years,
with current annual minimum lease payments of $1,263,000. No material
relationships exist between Capstone, its affiliates, officers or directors,
and the Registrant, its affiliates, officers or directors.
The determination of the consideration for the sale/leaseback was
based on arms length negotiations between the Registrant and Capstone.
On September 28, 1998, (i) Carolina Treatment Center, Inc., a South
Carolina corporation, Houma Psychiatric Hospital, Inc., a Louisiana
corporation, Mesa Psychiatric Hospital, Inc., an Arizona corporation, The Haven
Hospital, Inc., a Delaware corporation,
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Transitional Care Ventures (Arizona), Inc., a Delaware corporation, and
Transitional Care Ventures (North Texas), Inc., a Delaware corporation, each a
direct or indirect wholly-owned subsidiary of the Registrant (collectively, the
"Sellers"), completed the sale of substantially all of the assets and business
of each of the Sellers (collectively, the "Facilities") to Charter Behavioral
Health System, LLC, a Delaware limited liability company and its affiliates
("Charter"), and Crescent Real Estate Equities Limited Partnership, a Delaware
limited partnership ("Crescent"; together with Charter, the "Purchasers") and
(ii) the Registrant completed the sale of all of the issued and outstanding
shares of common stock, $.01 par value per share (the "Shares") of Ramsay
Contract Services, Inc., a Delaware corporation and wholly-owned subsidiary of
the Registrant, to Charter. No material relationships exist between the
Purchasers, their respective affiliates, officers or members, and the
Registrant, its affiliates, officers or directors.
The purchase price for the Facilities and the Shares was $13,500,000,
in cash, subject to certain post-closing adjustments. Further information
concerning the sale of the Facilities and the Shares is contained in the
Registrant's press release dated September 30, 1998 (see Exhibit 99.1 hereto),
which press release is incorporated herein by reference.
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4
The determination of the consideration for the sale of the Facilities
and the Shares was based on arms length negotiations between the Registrant and
the Purchasers.
On September 30, 1998, Psychiatric Institute of West Virginia, Inc., a
Virginia corporation and indirect wholly-owned subsidiary of the Registrant
("PIWV"), completed the sale of substantially all of the assets and business of
PIWV (the "Chestnut Ridge Facility") to West Virginia University Hospitals,
Inc., a West Virginia private non-stock, non profit corporation ("WVUH"). The
Chestnut Ridge Facility was engaged in the operation of Chestnut Ridge
Hospital. No material relationships exist between WVUH, its affiliates,
officers or members, and the Registrant, its affiliates, officers or directors.
The purchase price for the Chestnut Ridge Facility was $14,800,000, in
cash, subject to certain post-closing adjustments. Further information
concerning the sale of the Chestnut Ridge Facility is contained in the
Registrant's press release dated October 2, 1998 (see Exhibit 99.2 hereto),
which press release is incorporated herein by reference.
The determination of the consideration for the sale of the Chestnut
Ridge Facility was based on arms length negotiations between the Registrant and
WVUH.
The net proceeds from these sales were used by the Registrant to
prepay a portion of its outstanding indebtedness.
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5
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information:
The required pro forma financial information will be filed as
soon as practicable, but not later than 60 days after the date by which this
report must filed.
(c) Exhibit Index:
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2.9 Purchase Agreement dated as of June 24, 1998 among Charter
Behavioral Health Systems, LLC, the Company, Carolina Treatment
Center, Inc., Houma Psychiatric Hospital, Inc., Mesa Psychiatric
Hospital, Inc., RHCI San Antonio, Inc., The Haven Hospital, Inc.,
Transitional Care Ventures (Arizona), Inc., Transitional Care Ventures
(North Texas), Inc. and Transitional Care Ventures (Texas), Inc.
Pursuant to Reg. S- K, Item 601(b)(2), the Company agrees to furnish a
copy of the Disclosure Schedules and attachments to such Agreement to
the Commission upon request............................................
2.10 Purchase and Sale Contract dated as of June 25, 1998 among
Charter Behavioral Health Systems, LLC, Carolina Treatment Canter,
Inc. and Mesa Psychiatric Hospital, Inc. Pursuant to Reg. S- K, Item
601(b)(2), the Company agrees to furnish a copy of the Disclosure
Schedules and attachments to such Agreement to the Commission upon
request................................................................
2.11 Purchase and Sale Contract dated as of June 26, 1998 among
Crescent Real Estate Equities Limited Partnership and The Haven
Hospital, Inc. Pursuant to Reg. S- K, Item 601(b)(2), the Company
agrees to furnish a copy of the Disclosure Schedules and attachments
to such Agreement to the Commission upon request.......................
2.12 Asset Purchase Agreement dated as of July 2, 1998 among West
Virginia University Hospitals, Inc., Psychiatric Institute of West
Virginia, Inc. and the Company. Pursuant to Reg. S- K, Item 601(b)(2),
the Company agrees to furnish a copy of the Disclosure Schedules and
attachments to such Agreement to the Commission upon request...........
2.13 Amendment No. 1 dated as of September 28, 1998 Purchase Agreement
dated as of June 24, 1998 among Charter Behavioral Health Systems,
LLC, the Company, Carolina Treatment Canter, Inc., Houma Psychiatric
Hospital, Inc., Mesa Psychiatric Hospital, Inc., RHCI San Antonio,
Inc., The Haven Hospital, Inc., Transitional Care Ventures (Arizona),
Inc., Transitional Care Ventures (North Texas), Inc. and Transitional
Care Ventures (Texas), Inc.............................................
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2.14 Agreement of Sale and Purchase dated as of September 28, 1998 by
and among Havenwyck Hospital, Inc., Michigan Psychiatric Services,
Inc. and Capstone Capital Corporation. Pursuant to Reg. S- K, Item
601(b)(2), the Company agrees to furnish a copy of the Disclosure
Schedules and attachments to such Agreement to the Commission upon
request...............................................................
10.116 Lease Agreement dated as of September 28, 1998 between Capstone
Capital Corporation and Havenwyck Hospital, Inc.......................
10.117 Guaranty of Obligations Pursuant to Lease Agreement described
in Exhibit 10.116 above dated as of September 28, 1998 by the Company
in favor of Capstone Capital Corporation..............................
99.1 Press Release of Registrant dated September 30, 1998 .................
99.2 Press Release of Registrant dated October 2, 1998 ....................
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7
SIGNATURES
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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.
RAMSAY HEALTH CARE, INC.
Date: October 9, 1998 By /s/ Marcio C. Cabrera
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Name: Marcio C. Cabrera
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT 2.9
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PURCHASE AGREEMENT
among
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC,
CAROLINA TREATMENT CENTER, INC.,
HOUMA PSYCHIATRIC HOSPITAL, INC.,
MESA PSYCHIATRIC HOSPITAL, INC.,
RHCI SAN ANTONIO, INC.,
THE HAVEN HOSPITAL, INC.,
TRANSITIONAL CARE VENTURES (ARIZONA), INC.,
TRANSITIONAL CARE VENTURES (NORTH TEXAS), INC.,
TRANSITIONAL CARE VENTURES (TEXAS), INC.,
and
RAMSAY HEALTH CARE, INC.
June 24, 1998
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TABLE OF CONTENTS
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1. DEFINED TERMS ............................................................. -1-
2. COVENANTS AND UNDERTAKINGS ................................................ -11-
2.1 PURCHASE AND SALE OF ASSETS ........................................ -11-
2.2 EXCLUDED ASSETS .................................................... -13-
2.3 CONSIDERATION ...................................................... -14-
2.4 ALLOCATION OF CONSIDERATION ........................................ -14-
2.5 ASSUMPTION OF LIABILITIES AND OBLIGATIONS .......................... -14-
2.6 WORKING CAPITAL ADJUSTMENT ......................................... -15-
2.7 PATIENT BILLINGS ................................................... -17-
2.8 RIGHT OF FIRST REFUSAL ............................................. -17-
2.9 PURCHASE AND SALE OF STOCK ......................................... -18-
2.10 TAXES .............................................................. -19-
2.11 HSR ACT REQUIREMENTS ............................................... -23-
2.12 TERMINATION OF CERTAIN AGREEMENTS .................................. -23-
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE SHAREHOLDER.......... -23-
3.1 ORGANIZATION, STANDING AND AUTHORITY; CAPITALIZATION ............... -23-
3.2 AUTHORIZATION AND BINDING OBLIGATION ............................... -25-
3.3 ABSENCE OF CONFLICTING AGREEMENTS .................................. -25-
3.4 TITLE TO AND CONDITION OF REAL PROPERTY ............................ -25-
3.5 TITLE TO AND CONDITION OF PERSONALTY ............................... -27-
3.6 CONTRACTS .......................................................... -27-
3.7 CONSENTS ........................................................... -28-
3.8 TRADEMARKS, TRADE NAMES AND COPYRIGHTS ............................. -28-
3.9 LICENSES ........................................................... -28-
3.10 COMPLIANCE WITH LAWS ............................................... -28-
3.11 FINANCIAL STATEMENTS ............................................... -29-
3.12 INSURANCE .......................................................... -29-
3.13 EMPLOYEE BENEFIT PLANS ............................................. -30-
3.14 LABOR RELATIONS .................................................... -31-
3.15 TAXES .............................................................. -31-
3.16 CLAIMS AND LEGAL ACTIONS ........................................... -32-
3.17 ENVIRONMENTAL MATTERS .............................................. -32-
3.18 REPORTS ............................................................ -34-
3.19 CONDUCT OF BUSINESS IN ORDINARY COURSE ............................. -34-
3.20 COST REPORTS ....................................................... -34-
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3.21 MEDICAL STAFF .................................................. -35-
3.22 MEDICARE/MEDICAID PARTICIPATION AND ACCREDITATION INVESTIGATIONS -35-
3.23 HILL-BURTON CARE ............................................... -35-
3.24 U.S. PERSON .................................................... -35-
3.25 BANK ACCOUNTS .................................................. -35-
3.26 FULL DISCLOSURE ................................................ -35-
3.27 ASSETS ......................................................... -36-
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ....................... -36-
4.1 ORGANIZATION, STANDING AND AUTHORITY ........................... -36-
4.2 AUTHORIZATION AND BINDING OBLIGATION ........................... -36-
4.3 ABSENCE OF CONFLICTING AGREEMENTS .............................. -36-
4.4 CONSENTS ....................................................... -37-
4.5 LITIGATION; DISPUTES ........................................... -37-
4.6 FULL DISCLOSURE ................................................ -37-
5. PRE-CLOSING COVENANTS OF THE SELLERS .................................. -37-
5.1 NEGATIVE COVENANTS ............................................. -37-
5.2 AFFIRMATIVE COVENANTS .......................................... -38-
6. ADDITIONAL COVENANTS .................................................. -40-
6.1 CONSENTS ....................................................... -40-
6.2 COOPERATION .................................................... -41-
6.3 TAXES, FEES AND EXPENSES ....................................... -41-
6.4 BROKERS ........................................................ -41-
6.5 BULK SALES LAW ................................................. -41-
6.6 CONFIDENTIALITY ................................................ -41-
6.7 RISK OF LOSS ................................................... -41-
6.8 EMPLOYEE BENEFIT MATTERS ....................................... -42-
6.9 FILING OF COST REPORTS ......................................... -45-
6.10 POST-CLOSING INSURANCE ......................................... -45-
6.11 ACCESS TO INFORMATION .......................................... -46-
6.12 ENVIRONMENTAL REPORTS .......................................... -46-
6.13 NONCOMPETITION COVENANT ........................................ -46-
6.14 INFORMATION SYSTEMS ............................................ -48-
6.15 AUDITED FINANCIAL STATEMENTS ................................... -48-
6.16 AGREEMENT BY THE PURCHASER REGARDING NO OTHER REPRESENTATIONS
OR WARRANTIES BY THE SHAREHOLDER OR THE SELLERS ................ -49-
6.17 BRYNN MARR ..................................................... -49-
6.18 CERTAIN TAX MATTERS REGARDING ACQUIRED COMPANY ................. -50-
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7. ADDITIONAL COVENANTS OF THE PURCHASER ..................................... -50-
7.1 RESALE CERTIFICATE ................................................. -50-
7.2 RECORDS RELATING TO COST REPORTS ................................... -50-
7.3 BOOKS AND RECORDS OF THE SELLERS ................................... -50-
7.4 NO INCONSISTENT ACTION ............................................. -51-
7.5 ACKNOWLEDGMENTS REGARDING CERTAIN PHYSICIAN CONTRACTS .............. -51-
7.6 RENEGOTIATION OF ASSUMED CONTRACTS AFTER CLOSING ................... -51-
8. CONDITIONS TO CLOSING ..................................................... -51-
8.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO CLOSE ................ -51-
8.2 CONDITIONS TO OBLIGATIONS OF THE SELLERS TO CLOSE .................. -53-
9. CLOSING AND CLOSING DELIVERIES ............................................ -54-
9.1 CLOSING ............................................................ -54-
9.2 DELIVERIES BY THE SELLERS AND THE SHAREHOLDER ...................... -54-
9.3 DELIVERIES BY THE PURCHASER ........................................ -55-
10. TERMINATION ............................................................... -56-
10.1 METHOD OF TERMINATION ............................................. -56-
10.2 RIGHTS UPON TERMINATION ........................................... -57-
10.3 EXCLUSIVE REMEDY UPON TERMINATION ................................. -57-
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION ........................................................... -58-
11.1 REPRESENTATIONS AND WARRANTIES .................................... -58-
11.2 INDEMNIFICATION OF THE PURCHASER BY THE SELLERS AND THE SHAREHOLDER -58-
11.3 INDEMNIFICATION OF THE SELLERS AND THE SHAREHOLDER BY THE PURCHASER -60-
11.4 PROCEDURE FOR INDEMNIFICATION ..................................... -61-
11.5 INVESTIGATION ..................................................... -62-
11.6 LIMITATION ON INDEMNIFICATION OBLIGATIONS ......................... -62-
11.7 EXCLUSIVE REMEDY .................................................. -62-
12. MISCELLANEOUS ............................................................. -63-
12.1 FURTHER ASSURANCES ................................................ -63-
12.2 NOTICES ........................................................... -63-
12.3 WAIVER ............................................................ -63-
12.4 CAPTIONS; PARTIAL INVALIDITY ...................................... -63-
12.5 COUNTERPARTS ...................................................... -63-
12.6 VARIATIONS OF PRONOUNS; NUMBER; GENDER ............................ -63-
12.7 GOVERNING LAW; CONSTRUCTION ....................................... -64-
12.8 THIRD PARTIES ..................................................... -64-
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12.9 ENTIRE AGREEMENT .................................................. -64-
12.10 REMEDIES .......................................................... -64-
12.11 BENEFIT AND BINDING EFFECT ........................................ -64-
12.12 DISPUTE RESOLUTION ................................................ -64-
12.13 CONTACT WITH CERTAIN PERSONS ...................................... -65-
12.14 SCHEDULES AND EXHIBITS ............................................ -65-
12.15 BEST EFFORTS ...................................................... -65-
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LIST OF EXHIBITS
2.4 Allocation of Consideration
2.6-1 Base Adjusted Working Capital
2.6-2 Adjusted Working Capital Methodology
7.5 List of Physicians to execute Acknowledgment
7.5-1 Form of Physician Acknowledgment
8.1.10 Form of Summit Amendments
10.1.5 Form of Real Property Purchase and Sale Agreement (REIT)
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LIST OF SCHEDULES
2.2.3 Description of Group Home Facility in South Carolina
2.2.14 Certain Excluded Assets
2.5 Certain Assumed Liabilities
2.10.2.1 Tax Return Exceptions
3.1.1-1 Jurisdiction of Incorporation of each Seller and the
Acquired Company
3.1.1-2 Equity Interests in the Acquired Company
3.1.2 Restrictions on Voting Stock
3.1.3 Equity Interests
3.1.4 Ownership of Capital Stock
3.3 List of Violations
3.4.2 Real Property Leases
3.4.3 Condition of Real Property, Etc.
3.4.4 Real Property Construction, Etc. Agreements
3.5.1 Title to Assets (Other than Real Property)
3.5.2 Condition of Assets (Other than Real Property)
3.6.1 Assumed Contracts
3.6.2 Excluded Contracts and Contracts to be Automatically
Terminated at Closing
3.7 Consents of Sellers
3.8 Trademarks, Trade Names and Copyrights
3.9 Licenses
3.10 Violations
3.11 Financial Statements
3.12 Insurance Policies
3.13 Employee Plans and Compensation Arrangements
3.14 Labor Relations
3.15.4 Tax Jurisdictions
3.16 Claims and Legal Actions
3.17 Environmental Matters
3.17-1 Certain Environmental Matters
3.19 Changes in Conduct of Business
3.20 Cost Report Audits
3.21 Medical Staff
3.22 Medicare Participation and Accreditation
Investigations
3.25 Bank Accounts
4.4 Consents of Purchaser
5.1.5 Certain Construction Contracts
6.4 Brokers
6.8.2 Description of Severance Terms
6.8.3 Incidents of Loss of Employment
6.13.1 List of Purchaser's Facilities
6.13.2 DESCRIPTION OF PERMITTED ACTIVITIES
8.1.5 CERTAIN CHANGES
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, entered into as of this 24th day of June,
1998, between Charter Behavioral Health Systems, LLC, a Delaware limited
liability company (the "PURCHASER"), Carolina Treatment Center, Inc., a South
Carolina corporation ("Carolina"), Houma Psychiatric Hospital, Inc., a Louisiana
corporation, Mesa Psychiatric Hospital, Inc., an Arizona corporation ("MESA"),
RHCI San Antonio, Inc., a Delaware corporation, The Haven Hospital, Inc., a
Delaware corporation ("HAVEN"), Transitional Care Ventures (Arizona), Inc., a
Delaware corporation, Transitional Care Ventures (North Texas), Inc., a Delaware
corporation, Transitional Care Ventures (Texas), Inc., a Delaware corporation
(individually a "SELLER" and collectively, the "SELLERS"), Ramsay Health Care,
Inc., a Delaware corporation (the "SHAREHOLDER"), and solely for purposes of
Section 2.8, Psychiatric Institute of West Virginia, Inc., a Virginia
corporation ("PIWV"),
W I T N E S S E T H:
WHEREAS, the Shareholder, through the Sellers, owns or leases and
operates behavioral health care facilities in Conway, South Carolina; Houma,
Louisiana; Mesa, Arizona; DeSoto, Texas; and San Antonio, Texas;
WHEREAS, the Sellers desire to sell to the Purchaser and the Purchaser
desires to purchase from the Sellers, as their interests may appear,
substantially all of the assets used and useful in the operation of said
facilities upon the terms and conditions set forth below; and
WHEREAS, the Shareholder desires to sell to the Purchaser and the
Purchaser desires to purchase from the Shareholder all of the issued and
outstanding capital stock in Ramsay Contract Services, Inc.;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. DEFINED TERMS
The following terms shall have the following meanings in this Agreement
(terms defined in the singular to have the same meanings when used in the plural
and VICE VERSA):
"ACCOUNTS RECEIVABLE" means all accounts receivable of each
Seller as of the Closing Date, including, without limitation, accounts
receivable from each Seller's employees, physicians or other representatives,
and all rights of each Seller to payment for goods or services rendered by such
Seller prior to the Closing Date, excluding (i) any and all Cost Report
Adjustments and any and all other rights to payment relating to Cost Report
Settlements for
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periods ending on or prior to the Closing Date, (ii) any and all
Intercompany Receivables and (iii) any and all receivables relating to the South
Carolina Group Home. Except for purposes of Sections 2.1, 2.4, 3.7 and 3.11, the
term "Accounts Receivable" shall include the Accounts Receivable of the Acquired
Company.
"ACQUIRED BUSINESS" shall have the meaning set forth in
Section 6.13.3.
"ACQUIRED COMPANY" shall mean Ramsay Contract Services, Inc.,
a Delaware corporation, and its subsidiary, Ramsay Management Services of Texas,
Inc.
"ACQUIRED FACILITY" shall have the meaning set forth in
Section 6.13.3.
"ADJUSTED WORKING CAPITAL" shall have the meaning set forth in
Section 2.6.
"AGREEMENT" means this Purchase Agreement, as it may be
amended, modified, or supplemented from time to time in accordance with its
terms.
"ASSETS" means the tangible and intangible assets owned or
held by each of the Sellers which are to be sold to and purchased by the
Purchaser pursuant to Section 2.1. Except for purposes of Sections 2.1, 2.4, 3.7
and 3.11, the term "Assets" shall include the tangible and intangible assets
owned or held by the Acquired Company.
"ASSUMED CONTRACTS" means the Contracts which are to be
assigned to and assumed by the Purchaser and which are identified on SCHEDULE
3.6.1 or which do not provide for annual payments in excess of $5,000 by any
Seller (other than agreements with providers and agreements of any Seller or the
Acquired Company which include restrictive covenants which would bind the
Purchaser or the Acquired Company from and after the Closing, all of which are
identified on SCHEDULE 3.6.1) and no others except those entered into in the
ordinary course and with the consent of the Purchaser, as applicable, as
contemplated in Section 5.1.2. Except for purposes of Section 2.1, the term
"Assumed Contracts" shall include the Contracts of the Acquired Company.
"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 2.1.
"AUDITED FINANCIAL STATEMENTS" has the meaning set forth in
Section 6.15.
"BASE ADJUSTED WORKING CAPITAL" shall have the meaning set
forth in Section 2.6.
"BOOKED TAXES" shall have the meaning set forth in Section
2.10.
"BRYNN MARR" shall mean the facility located in Jacksonville,
North Carolina which is owned by a subsidiary of the Shareholder.
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"CLAIMANT" has the meaning set forth in Section 11.4.1.
"CLOSING" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Section 9.
"CLOSING DATE" means the date of the Closing specified in
Section 9.1.
"CLOSING DATE ADJUSTED WORKING CAPITAL" shall have the meaning
set forth in Section 2.6.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder, or any subsequent legislative enactment thereof,
as in effect from time to time.
"COMPENSATION ARRANGEMENT" means any plan or compensation
arrangement other than an Employee Plan, whether written or unwritten, which
provides to employees, former employees, officers, independent contractors,
directors and/or shareholders of any Seller, the Acquired Company or any entity
related to any of them (under the terms of Sections 414(b), (c), (m) or (o) of
the Code) any compensation or other benefits, whether deferred or not, in excess
of base salary or wages and excluding overtime pay, including, but not limited
to, any bonus or incentive plan, stock rights plan, deferred compensation
arrangement, life insurance, stock purchase plan, severance pay plan and any
other perquisites and employee fringe benefit plan.
"CONSENTS" means all of the consents or approvals of
government authorities and other third parties necessary to sell, transfer and
assign the Assets to the Purchaser and to otherwise consummate the transactions
contemplated hereby in compliance with all applicable laws, regulations, orders
and decrees.
"CONTRACTS" means all (i) agreements with physicians or
physician groups or other health care professionals, (ii) agreements with
Payors, (iii) leases, (iv) health, liability, theft, fidelity, fire and other
forms of insurance policies or commitments, (v) software licenses, (vi)
employment agreements, collective bargaining and trade agreements, (vii) barter
agreements and (viii) other agreements, written or oral (including any
amendments and other modifications thereto), relating to any Facility to which a
Seller is a party or which are binding upon any Seller or affect the Assets or
the business or operations of any Seller relating to a Facility, together with
all advances, deposits and prepaid items related thereto, which are in effect on
the date hereof or are entered into by a Seller in the ordinary course of
business between the date hereof and the Closing Date. Except for purposes of
Section 2.1, the term "Contracts" shall include the contracts and agreements
contemplated by this definition of the Acquired Company.
"CONWAY FACILITY" shall mean the behavioral health care
facility owned and operated by Carolina Treatment Center, Inc. located in
Conway, South Carolina.
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"COST REPORT" means the cost report required to be filed, as
of the end of a provider cost year or for any other required period, including,
without limitation, a terminating cost report, with cost-based Payors with
respect to cost reimbursement.
"COST REPORT ADJUSTMENTS" shall have the meaning set forth in
Section 6.9.
"COST REPORT SETTLEMENTS" means the right, title and interest
of any Seller in amounts due from Medicare, any state under any state cost-based
programs or from any fiscal intermediary or other Payor in connection with the
resolution of disputes or adjustments relating to Cost Reports filed for periods
ending on or prior to the Closing Date, including initial settlements as well as
reopenings of previously settled Cost Reports, but does not include any amounts
included in Accounts Receivable.
"COVERED LIVES" has the meaning set forth in Section 2.7.1.
"DEFICIENCIES" has the meaning set forth in Section 3.22.
"DESOTO FACILITY" shall mean the behavioral health care
facility owned and operated by The Haven Hospital, Inc. located in DeSoto,
Texas.
"EMPLOYEE PLAN" means any pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus, incentive, medical, vision,
dental, disability, life insurance or any other employee benefit plan as defined
in Section 3(3) of ERISA to which the Acquired Company or any Seller or any
entity related to any of them (under the terms of Sections 414(b), (c), (m) or
(o) of the Code) contributes or otherwise is bound or which the Acquired Company
or any Seller or any entity related to any of them (under the terms of Sections
414(b), (c), (m) or (o) of the Code) sponsors or maintains.
"ENVIRONMENTAL CLAIMS" means any claim, action, cause of
action, investigation or notice by any person or entity alleging potential
liability (including, without limitation, 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, in part or in whole, (i) the presence, or release into the
environment, of any Materials of Environmental Concern at any location, whether
or not owned or operated by a Seller or the Acquired Company or (ii)
circumstances forming the basis of any violation, or alleged violation, of the
Environmental Laws or the Medical Waste Laws.
"ENVIRONMENTAL LAWS" means the federal, state, regional,
county, parish, municipal and local environmental, health or safety laws,
regulations, ordinances, rules and policies and the common law relating to the
use, refinement, recycling, handling, treatment, removal, storage, production,
manufacture, transportation, disposal, emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise relating
to protection of the environment (including, without limitation, ambient air,
surface water, ground
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water, land surface or subsurface strata), as the same may be amended or
modified until the date of closing, including, without limitation, the following
statutes: Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901, et seq.; Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, 42 U.S.C. Section 9601, et seq.; Air Pollution Prevention and
Control Act, 42 U.S.C. Section 7401, et seq.; Water Pollution Control Act, 33
Section U.S.C. 1251, et seq.; Federal Insecticide, Fungicide, and Rodenticide
Act, Federal Pesticide Act of 1978, 7 U.S.C. Section 136, et seq.; Hazardous
Materials Transportation Act, 49 U.S.C. Section 1471, 1472, 1655 and 1801, et
seq.; Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq.; Safe
Drinking Water Act, 42 U.S.C. Section 300f, et seq.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder, as in effect from time to
time.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"EXCLUDED CONTRACTS" means those Contracts which are not to be
assigned to and assumed by the Purchaser, including, without limitation, those
identified on SCHEDULE 3.6.2.
"EXECUTORY PERIOD" shall have the meaning set forth in Section
5.
"FACILITIES" means the Conway Facility, the DeSoto Facility,
the Houma Facility, the Mesa Facility and the San Antonio Facility, together
with any Subacute Care Unit operated at such Facility.
"FINANCIAL STATEMENTS" has the meaning set forth in Section
3.11.1.
"HIRED EMPLOYEES" has the meaning set forth in Section 6.8.2.
"HIRED EMPLOYEES RECORDS" has the meaning set forth in Section
2.2.4.
"HOSPITAL SUBSIDIARIES" has the meaning set forth in Section
6.8.2.
"HOUMA FACILITY" shall mean the behavioral health care
facility leased and operated by Houma Psychiatric Hospital, Inc. located in
Houma, Louisiana.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder, or any
subsequent legislative enactment thereof, as in effect from time to time.
"INDEMNIFIABLE TAX DAMAGES" has the meaning set forth in
Section 2.10.2.2
"INDEMNIFYING PARTY" has the meaning set forth in Section
11.4.1.
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"INFORMATION SYSTEM" has the meaning set forth in Section
6.14.
"INTERCOMPANY RECEIVABLES" means all accounts receivable or
other amounts due from the Acquired Company or a Seller to the Shareholder or to
another subsidiary of the Shareholder, and all receivables or other amounts due
from the Shareholder or any subsidiary of the Shareholder to any Seller or the
Acquired Company.
"INVENTORY" means the following items of personal property
owned by any Seller relating to a Facility: (i) supplies (office, medical, food
or otherwise), (ii) inventory (office, medical, food, drug or otherwise) and
(iii) other items of tangible personal property typically consumed or sold by a
Seller at a Facility in the ordinary course of business, plus such additions
thereto and less such deletions therefrom arising in the ordinary course of
business between the date hereof and the Closing Date. Except for purposes of
Section 2.1, the term "Inventory" shall include the inventory of the Acquired
Company.
"JCAHO" means the Joint Commission on the Accreditation of
Healthcare Organizations.
"LICENSES" means all of the certificates of need,
accreditations, registrations, licenses, permits, certificates and other
authorizations issued by any federal, state or local governmental authorities or
accreditation organizations to the Acquired Company or any Seller and required
in connection with the conduct of the business or operations of its business or
a Facility.
"LIEN" means any claim, easement, encumbrance, mortgage,
lease, covenant, security interest, lien, option, right of first refusal,
pledge, conditional sales contract, levy, exception, encroachment, limitation,
charge or other restriction of any kind or nature whatsoever.
"LOSSES" means any cost, damage, disbursement, expense,
liability, loss, deficiency, interest, penalty, fine, judgment or settlement of
any kind or nature whatsoever, including, without limitation, reasonable legal,
accounting and other professional fees, expenses and disbursements that may be
imposed on or otherwise incurred or suffered by the Claimant.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any toxic or
hazardous waste, pollutants or substances, including, without limitation,
asbestos, urea formaldehyde, radioactive substances, materials or wastes, PCBs,
petroleum products and byproducts defined or listed as "hazardous substances",
"hazardous waste", "toxic substances", "toxic pollutant", "medical waste", "air
pollutants", "hazardous air pollutants" or similarly identified substances or
mixtures, in or pursuant to the Environmental Laws or the Medical Waste Laws.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, operations, properties, financial condition, results of operations
or Assets of the Sellers, taken as a whole.
"MEDICAL WASTE" means any substance, pollutant, materials or
contaminant listed or regulated under the Medical Waste Laws.
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"MEDICAL WASTE LAWS" means the following, including
regulations promulgated and orders issued thereunder, to the extent such laws
regulate Medical Waste, all as may be amended or modified until the date of
closing: Medical Waste Tracking Act of 1988, 42 U.S.C. Section 6992, et seq.
("MWTA"), 42 CFR Part 72 and 49 CFR Part 173, 386; Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 et seq.; Air Pollution Prevention
and Control Act, 42 U.S.C. Section 7401 et seq.; Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; Marine Protection, Research and Sanctuaries Act of
1972, 33 U.S.C. Section 1401 et seq.; Nuclear Regulatory Commission regulations
contained in 10 CFR Parts 20 and 61; Occupational Safety and Health Act, 29
U.S.C. Section 651 et seq.; Public Health Service regulations contained in 42
CFR Part 72; Food and Drug Administration regulations contained in 21 CFR Parts
58 and 211; U.S. Department of Transportation regulations contained in 49 CFR
Parts 171-179; The Act to Prevent Pollution from Ships, 33 U.S.C. Section U.S.
Department of Agriculture regulations contained in 9 CFR Parts 50-56; U.S.
Postal Service regulations contained in 39 CFR Part 111; local environmental and
safety laws, rules, regulations and other legally binding requirements and any
other federal, state, regional, county, municipal or other local laws,
regulations and ordinances insofar as they purport to regulate Medical Waste or
impose requirements relating to Medical Waste.
"MESA FACILITY" shall mean the behavioral health care facility
currently leased and operated by Mesa located in Mesa, Arizona and which, at the
time of Closing and subject to Mesa acquiring such Facility from the owner of
the Mesa Facility, will be owned and operated by Mesa.
"MORGANTOWN FACILITY" shall mean the behavioral health care
facility owned (subject to a ground lease) and operated by PIWV located in
Morgantown, West Virginia.
"MULTI-EMPLOYER PLAN" means a plan, as defined in ERISA
Section 3(37), to which the Acquired Company or any Seller or any entity related
to any Seller (under the terms of Sections 414(b), (c), (m) or (o) of the Code)
contributes or is required to contribute.
"NONCOMPETITION COVENANT" has the meaning set forth in Section
6.13.
"OFFER" has the meaning set forth in Section 2.8.
"OTHER HEALTH AGENCIES" has the meaning set forth in Section
3.22.
"PATIENT RECORDS" has the meaning set forth in Section 2.1.11.
"PAYOR" shall mean Medicare, Medicaid, CHAMPUS and Medically
Indigent Assistance programs, Blue Cross/Blue Shield or any other third-party
payor (including an insurance company and self-insured employer), or any health
care provider (such as a health
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<PAGE> 15
maintenance organization, preferred provider organization, peer review
organization or any other managed care program).
"PERMITTED ACTIVITIES" has the meaning set forth in Section
6.13.2.
"PERMITTED LIENS" shall mean:
(a) Liens for Taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect to contested Taxes are maintained;
(b) pledges or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(c) easements, rights-of-way, restrictions and other
similar encumbrances previously incurred in the ordinary course of
business which are not material, and which do not materially detract
from the value of any such properties or assets or materially interfere
with any present use of such properties or assets;
(d) carriers, warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business which are not overdue for a period of more than 90
days or which are being contested in good faith by appropriate
proceedings;
(e) Liens for which deposits have been made to secure
the performance of bids, contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(f) statutory and contractual Liens in favor of
landlords securing leases; and
(g) those Liens with an asterisk next to them on
SCHEDULE 3.5.1.
"PERSONALTY" means all items of personal property, other than
Inventory, including, without limitation, all medical and diagnostic equipment,
computer equipment, computer software, furniture, fixtures, office and other
equipment and other tangible personal property, which is owned or leased by any
Seller and used or useful as of the date hereof in the conduct of the business
or operations of a Facility, plus such additions thereto and less such deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date. Except for purposes of Section 2.1, the term "Personalty"
shall include the personalty of the Acquired Company.
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<PAGE> 16
"PRIMARY RESTRICTED PERIOD" has the meaning set forth in
Section 6.13.1.
"PRIMARY TERRITORY" has the meaning set forth in Section
6.13.1.
"PRIOR RIGHT OF FIRST REFUSAL" has the meaning set forth in
Section 2.8.
"PROFESSIONAL LIABILITY CLAIM" means any professional
liability claim for damages for tort, including, without limitation, bodily
injury, infliction of emotional distress or property damage, to the extent
arising out of the businesses or operations of the Acquired Company or any of
the Facilities on or before the Closing Date.
"PURCHASE PRICE" has the meaning set forth in Section 2.3.
"PURCHASED REAL PROPERTY" shall mean the real property and all
other assets purchased pursuant to the Real Property Purchase and Sale
Agreement.
"PURCHASER CONSOLIDATED GROUP" shall have the meaning set
forth in Section 2.10.2.2.
"PURCHASER'S WCA STATEMENT" has the meaning set forth in
Section 2.6.
"RCSI" shall mean Ramsay Contract Services, Inc., a Delaware
corporation, a wholly-owned subsidiary of the Shareholder.
"REAL PROPERTY" means any and all real property interests,
including, without limitation, fee simple ownership interests, leasehold
interests, easements, licenses, rights to access, rights-of-way, all building
and other improvements located thereon and any and all other real property
interests of any of the Sellers which are used as of the date hereof in the
business or operations of a Facility, other than the Purchased Real Property.
"REAL PROPERTY PURCHASE AND SALE AGREEMENT (CHARTER)" shall
mean that certain Purchase and Sale Contract of even date herewith, among the
Purchaser, as the buyer, and Carolina and Mesa, as the sellers, as it may be
amended, modified, or supplemented from time to time in accordance with its
terms, pursuant to which the Purchaser will acquire the owned real property and
certain other related assets comprising the Conway Facility and the Mesa
Facility.
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<PAGE> 17
"REAL PROPERTY PURCHASE AND SALE AGREEMENT (REIT)" shall mean
the Purchase and Sale Contract between Crescent Real Estate Funding VII, L.P., a
Delaware limited partnership, as the buyer, and Haven, as the seller, as it may
be amended, modified, or supplemented from time to time in accordance with its
terms, pursuant to which Crescent Real Estate Funding VII, L.P. will acquire the
owned real property and certain related assets comprising the DeSoto Facility.
"REAL PROPERTY PURCHASE AND SALE AGREEMENT" shall mean the
Real Property Purchase and Sale Agreement (Charter) and the Real Property
Purchase and Sale Agreement (REIT), collectively.
"REAL PROPERTY LEASES" has the meaning set forth in Section
3.4.2.
"RECORDS NOTICE" has the meaning set forth in Section 6.11.1.
"REIMBURSEMENT PROGRAMS" has the meaning set forth in Section
3.22.
"RELATED AGREEMENTS" means all agreements, instruments and
certificates to be executed and delivered at the Closing pursuant hereto.
"REPORTING PERIOD" has the meaning set forth in Section
2.10.2.1
"RFR PARTY" has the meaning set forth in Section 2.8.
"RIGHT OF FIRST REFUSAL" has the meaning set forth in Section
2.8.
"RMST" shall mean Ramsay Management Services of Texas, Inc., a
wholly-owned subsidiary of RCSI.
"SALE" has the meaning set forth in Section 2.8.
"SALE NOTICE" has the meaning set forth in Section 2.8.
"SAN ANTONIO FACILITY" shall mean the behavioral health care
facility leased and operated by RHCI San Antonio, Inc. located in San Antonio,
Texas.
"SECONDARY RESTRICTED PERIOD" has the meaning set forth in
Section 6.13.1.
"SECTION 338(H)(10) ELECTION" has the meaning set forth in
Section 6.18.
"SECTION 338 TAXES" has the meaning set forth in Section 6.18.
"SELLER COST REPORTS" has the meaning set forth in Section
6.9.
"SHAREHOLDER CONSOLIDATED GROUP" shall have the meaning set
forth in Section 2.10.2.2.
"SELLER SHORT PERIOD" shall have the meaning set forth in
Section 2.10.2.2.
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<PAGE> 18
"SOUTH CAROLINA GROUP HOME" has the meaning set forth in
Section 2.2.3.
"STOCK" shall mean all of the issued and outstanding shares of
capital stock of RCSI to be acquired by the Purchaser pursuant to this
Agreement.
"STRADDLE PATIENTS" has the meaning set forth in Section
2.7.1.
"STRADDLE PERIOD" has the meaning set forth in Section
2.10.2.1.
"SUBACUTE CARE UNITS" means the licensed subacute care units
operated at each of the DeSoto Facility, the Mesa Facility and the San Antonio
Facility.
"TAX CLAIM" shall have the meaning set forth in Section
2.10.6.
"TAX RETURNS" shall have the meaning set forth in Section
2.10.1.
"TAX(ES)" shall have the meaning set forth in Section 2.10.1.
"TERMINATION DATE" means the date on which the covenants,
representations or warranties contained herein shall expire or terminate in
accordance with the provisions of Section 11.1.
"THRESHOLD AMOUNT" has the meaning set forth in Section 11.6.
"TRANSITION PERIOD" has the meaning set forth in Section 6.14.
"WARN ACT" means the Worker Adjustment and Retraining
Notification Act, as amended.
"WCA OBJECTION NOTICE" has the meaning set forth in Section
2.6.
"YOUTH SERVICES" shall have the meaning set forth in Section
6.13.3.
2. COVENANTS AND UNDERTAKINGS
2.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth in this Agreement, on the Closing Date, the Sellers, as their
interests may appear, hereby agree to sell, assign, transfer, convey and deliver
to Purchaser, and the Purchaser agrees to purchase from the Sellers, and agrees
to accept and assume certain liabilities and obligations as set forth in Section
2.5 (the "ASSUMED LIABILITIES") related to, all of their respective right, title
and interest in and
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<PAGE> 19
to the Assets (excluding the Excluded Assets), free and
clear of any and all Liens (except for Permitted Liens), which Assets are more
specifically described as follows:
2.1.1 The Assumed Contracts;
2.1.2 The Inventory;
2.1.3 The Licenses, to the extent lawfully transferable;
2.1.4 The Personalty;
2.1.5 The Real Property;
2.1.6 The Accounts Receivable as of the Closing Date, to the
extent lawfully transferrable;
2.1.7 All of each Seller's right, title and interest in and to
all copyrights, patents, trademarks, trade names, service names, service marks,
permits and other similar intangible rights and interests applied for, issued to
or owned by such Seller and used in the operation of a Facility, including,
without limitation, those listed in SCHEDULE 3.8 hereto, together with the
goodwill of the business symbolized by and associated therewith; provided,
however, that the Assets shall not include the name "Ramsay" or any
abbreviation, variation or portion thereof regardless of whether any of the
foregoing intangible rights and interests contain, or were used by any Seller in
connection with, "Ramsay" or any abbreviation, variation or portion thereof;
2.1.8 All choses in action of each Seller relating to the
Assets (except to the extent such choses in action relate to liabilities
retained by a Seller pursuant to Section 2.5 hereof or to Excluded Assets),
together with all of each Seller's remedies, benefits, options, privileges and
warranty claims therein, thereto or thereunder, at law or in equity;
2.1.9 All of each Seller's rights to use the present telephone
numbers relating exclusively to a Facility from and after the Closing Date to
the extent legally transferable;
2.1.10 All prepaid expenses and deposits (other than bank
deposits) paid by each Seller in connection with the foregoing to the extent
they relate to Assumed Contracts;
2.1.11 The medical, clinical and other records associated with
the admission, care and treatment of patients at each Facility on or prior to
the Closing Date (the "PATIENT RECORDS"), subject to the right of the Sellers to
have access to and to copy (at its own expense) any such Patient Records for any
lawful purpose in accordance with the terms of Section 6.11.2 hereof; and
2.1.12 The goodwill generated by each Seller with respect to
the foregoing.
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<PAGE> 20
2.2 EXCLUDED ASSETS. Notwithstanding anything contained in
this Agreement to the contrary, the Assets shall not include the following
assets:
2.2.1 Each Seller's cash on hand and all other cash in any of
its bank or savings accounts as of the Closing Date, letters of credit, stocks,
bonds, certificates of deposit and similar investments and all cash equivalents;
2.2.2 All Intercompany Receivables;
2.2.3 That certain group home facility located in South
Carolina described on SCHEDULE 2.2.3 and all assets and employees located
thereat (the "SOUTH CAROLINA GROUP HOME");
2.2.4 Other than as expressly provided for in Section 2.1,
any books, records, files and other documents of any Seller, including, without
limitation, (i) each Seller's corporate minute books and other documents related
to internal corporate matters, (ii) those required by law to be retained
notwithstanding Section 2.1, (iii) those concerning medical staff and employee
files (provided that each Seller shall provide the Purchaser with copies of the
medical staff files upon receipt of the consent of the particular medical staff
member and that each Seller shall provide the Purchaser with copies of the
employee files of Hired Employees, subject to applicable laws (the "HIRED
EMPLOYEES RECORDS")) and (iv) those regarding any and all Cost Reports relating
to periods ending on or prior to the Closing Date, subject to the right of the
Purchaser to have access to and to copy (at its own expense) any such books,
records, files and documents at any time after the Closing Date at a location in
the continental United States made known to the Purchaser, subject to applicable
laws;
2.2.5 The Purchased Real Property;
2.2.6 The Information System, together with the Meditech
Software;
2.2.7 Any claims, rights and interests in and to (i) any
refunds of federal, state or local franchise, income or other Taxes or fees,
whether attributable to Taxes or fees paid with respect to periods ending on or
before the Closing Date or receivable by reason of any carryback to any such
period, and (ii) all amounts receivable and all other rights in connection with
Cost Report Settlements for periods ending on or before the Closing Date;
2.2.8 Any Employee Plan, Compensation Arrangement or
Multi-employer Plan and any employment or collective bargaining agreements and
all documents, agreements and/or assets relating thereto except to the extent
that any of such agreements are Assumed Contracts;
2.2.9 The name "Ramsay" and any abbreviation, variation or
portion thereof;
2.2.10 All tax returns and all other records relating to
Excluded Assets;
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<PAGE> 21
2.2.11 All ledger and financial records of the Sellers or the
Shareholder;
2.2.12 All insurance policies of the Sellers or the
Shareholder;
2.2.13 [Intentionally omitted]
2.2.14 The assets of any Seller set forth on SCHEDULE 2.2.14;
and
2.2.15 All claims, remedies and rights relating to each of the
foregoing or any of the Excluded Liabilities;
(all of the foregoing referred to herein as the "EXCLUDED ASSETS").
Notwithstanding anything set forth in this Section 2.2 to the contrary, no
assets of the Acquired Company shall constitute Excluded Assets; provided,
however, nothing set forth in this Agreement shall prohibit the Acquired Company
from distributing cash to the Shareholder, from time to time prior to the
Closing.
2.3 CONSIDERATION. Subject to the terms and conditions hereof, in
consideration of the sale, transfer, conveyance, assignment and delivery of the
Assets and the Stock, and in reliance upon the representations, warranties,
covenants and agreements of the Sellers, the Acquired Company and the
Shareholder set forth in this Agreement, the Purchaser, in full payment for the
Assets, the Stock and the Noncompetition Covenant, (i) shall assume the Assumed
Liabilities, and (ii) shall pay to the Sellers and the Shareholder an aggregate
amount equal to Thirteen Million Five Hundred Thousand and no/100ths Dollars
($13,500,000.00) minus the aggregate amount payable for the Purchased Real
Property pursuant to the Real Property Purchase and Sale Agreement (the
"PURCHASE PRICE"). The Purchase Price shall be payable in cash by wire transfer
of immediately available funds at the Closing to the accounts designated by the
Shareholder.
2.4 ALLOCATION OF CONSIDERATION. The aggregate consideration payable
pursuant to Section 2.3, will be allocated among the Assets, the Stock and the
Noncompetition Covenant in accordance with EXHIBIT 2.4. The parties hereto agree
to use such allocations for tax and Medicare purposes. The parties hereto agree
that such allocations shall be in accordance with, and as provided by, Section
1060 of the Code. The parties hereto also agree that any tax returns or other
tax information and any Cost Reports or other Medicare information they may file
or cause to be filed with any governmental agency or fiscal intermediary shall
be prepared and filed consistently with such agreed upon allocation. In this
regard, the parties agree that, to the extent required, they will each properly
and timely file Form 8594 in accordance with Section 1060 of the Code.
2.5 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. As of the Closing Date,
the Purchaser shall assume and timely pay, discharge and perform when due or
payable (i) all the obligations and liabilities of the Sellers under the
Licenses (to the extent such Licenses are lawfully transferred to the Purchaser)
and under the Assumed Contracts, insofar as such obligations and
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<PAGE> 22
liabilities relate to the time period after the Closing and arise out of events
occurring after the Closing or are reflected in the Closing Date Adjusted
Working Capital, (ii) all obligations and liabilities arising out of events
occurring after the Closing related to the Purchaser's ownership of or control
over the Assets or the Purchaser's conduct of the operations of the Facilities
after the Closing and (iii) those trade payables, accruals and other current
liabilities specifically set forth on SCHEDULE 2.5, including those relating to
Hired Employees and those severance obligations with respect to employees who
are not offered employment as set forth in Section 6.8.2, or to the extent they
are included in the Closing Date Adjusted Working Capital. All other obligations
and liabilities of any Seller other than those set forth in the preceding
sentence and except as provided in Section 11, including, without limitation,
any Environmental Claims to the extent arising out of, based on or resulting
from conditions or circumstances existing or occurring prior to the Closing, any
obligations under the Licenses, Assumed Contracts, Cost Reports or Cost Report
Settlements relating to any time prior to the Closing, any claims or pending
litigation or proceedings relating to the business or operation of a Facility
prior to the Closing, any and all wages, salaries, severance, vacation, sick pay
or other amounts accrued or payable to any Seller's employees (other than those
included in the Closing Date Adjusted Working Capital or assumed as provided
above) and any Employee Plan, Compensation Arrangement, Multi-employer Plan or
collective bargaining agreement of any Seller, shall remain and be the
obligations and liabilities solely of such Seller. Other than as specified
herein, the Purchaser shall assume no liabilities or obligations of any Seller.
2.6 WORKING CAPITAL ADJUSTMENT. In the event the Adjusted Working
Capital (as said term is defined below), on an aggregate basis, of the Acquired
Company and the Sellers with respect to the Facilities (excluding the Houma
Facility), calculated as of the Closing Date (the "CLOSING DATE ADJUSTED WORKING
CAPITAL"), shall equal or exceed the Adjusted Working Capital of the Acquired
Company and the Sellers with respect to the Facilities (excluding the Houma
Facility), on an aggregate basis, calculated as of March 31, 1998, a schedule of
which is attached hereto as EXHIBIT 2.6-1 (the "BASE ADJUSTED WORKING CAPITAL")
or in the event the Base Adjusted Working Capital shall exceed the Closing Date
Adjusted Working Capital by an amount not greater than $200,000, then no
adjustment to the Purchase Price will be made pursuant to this Section 2.6. For
purposes hereof, the term "ADJUSTED WORKING CAPITAL" shall mean (i) the sum of
(A) the current assets (net of any reserves therefor) of the Acquired Company
and (B) the current assets (net of any reserves therefor) of the Sellers which
are of a type to be included in the Assets minus (ii) the sum of (A) the current
liabilities of the Acquired Company and (B) the current liabilities of the
Sellers which are of a type to be included in the Assumed Liabilities. The
Adjusted Working Capital shall be determined in accordance with generally
accepted accounting principles consistently applied, shall be determined
employing the same methodology with respect to bad debt reserves and
Medicare/Medicaid contractual reserves as that employed in preparing the
Financial Statements and shall be calculated and prepared in a manner consistent
with, including the assumptions, process and procedures described in, EXHIBIT
2.6-2 and otherwise in a manner consistent with the Financial Statements. Within
fourteen (14) days of the date hereof, the Sellers and the Shareholder shall
calculate, prepare and deliver to the Purchaser a statement in reasonable detail
of the Adjusted Working Capital as of April 30, 1998, and within forty-five
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<PAGE> 23
(45) days of the end of each month thereafter until the Closing Date, the
Sellers and the Shareholder shall calculate, prepare and deliver to the
Purchaser a statement in reasonable detail of the Adjusted Working Capital as of
the end of each such month. Within 90 calendar days after the Closing Date, the
Purchaser shall prepare and deliver to the Shareholder a statement of the
Closing Date Adjusted Working Capital in reasonable detail, together with the
calculation and the components thereof (the "PURCHASER'S WCA STATEMENT"). The
Purchaser's WCA Statement will be reviewed by the Shareholder (and, if the
Shareholder so chooses and at its expense, by a firm of independent certified
public accountants), who shall, not later than 60 calendar days after receipt of
the Purchaser's WCA Statement, raise any objections it has to the Closing Date
Adjusted Working Capital calculation set forth in the Purchaser's WCA Statement
by notifying the Purchaser in writing within such time period in a statement
indicating the item or items disputed and containing, in reasonable detail, the
nature of Shareholder's objections (a "WCA OBJECTION NOTICE"). During such
60-day period, the Shareholder and any such independent certified public
accountants shall have full access to the books and records, other financial
information (including the working papers of the Purchaser's accountants, if
any) and appropriate financial personnel of the Purchaser reasonably necessary
for the preparation of a WCA Objection Notice. Absent delivery of a WCA
Objection Notice as provided above, the Purchaser's WCA Statement of the Closing
Date Adjusted Working Capital will be conclusive and binding upon the parties to
this Agreement for the purposes set forth in this Section 2.6. In the event that
a WCA Objection Notice is delivered by the Shareholder as provided above, the
Purchaser and the Shareholder shall each appoint a representative with
negotiating authority who shall negotiate in good faith for a period of 30
calendar days in an effort to resolve all outstanding issues and if the
Purchaser and the Shareholder are unable within said 30 calendar day period to
resolve the disputed exceptions, such disputed exceptions will be submitted to
arbitration pursuant to and in accordance with the provisions set forth in
Section 12.13 below; provided, however, that the arbitrators shall be certified
public accountants. Upon final determination of the Closing Date Adjusted
Working Capital in accordance with the foregoing, in the event that the amount
of the Closing Date Adjusted Working Capital is less than the amount of the Base
Adjusted Working Capital by an amount in excess of $200,000, then the Purchase
Price shall be reduced by the entire difference and the Sellers and the
Shareholder shall be jointly and severally obligated to pay to the Purchaser an
amount equal to such difference within five business days of the final
determination of the Closing Date Adjusted Working Capital; provided, however,
notwithstanding anything set forth in this Section 2.6, there shall be no
adjustment to the Purchaser Price pursuant to this Section 2.6 in the event that
the amount of such difference between the Closing Date Adjusted Working Capital
and the Base Adjusted Working Capital is less than $200,000. In the event the
Shareholder delivers a WCA Objection Notice and the amount of the Closing Date
Adjusted Working Capital as finally determined in accordance with the procedure
described above equals or exceeds the amount of the Closing Date Adjusted
Working Capital as set forth in the Purchaser's WCA Statement, the amount due
the Purchaser pursuant to this Section 2.6 shall bear interest at the rate of
twelve percent (12%) simple interest per annum commencing on the date which is
150 days from the Closing Date until said amount owing to the Shareholder is
paid in full.
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2.7 PATIENT BILLINGS.
2.7.1 CUT-OFF BILLINGS. To the extent that a Payor will accept
a cut-off billing, the Sellers shall prepare cut-off billings as of the close of
business on the Closing Date for all capitation payments for days ending on or
before the Closing Date for covered lives ("COVERED LIVES") and for services
rendered and medicine, drugs and supplies provided on or prior to the Closing
Date with respect to non-capitated patients of the Facilities who are patients
of the Facilities on a continuous basis during the period that begins on or
prior to the Closing Date and ends after the Closing Date (the "STRADDLE
PATIENTS"). The Sellers acknowledge and agree that such cut-off billing shall
constitute Accounts Receivable included in the Assets.
2.7.2 CUT-OFF BILLINGS NOT ACCEPTED. If the Payor of any
Straddle Patient cannot or does not for any reason accept cut-off billings, then
the Purchaser shall submit billing to such Payor for the entire portion of such
Straddle Patient's stay. In such event, a portion of such billing shall be
treated as an Account Receivable in an amount equal to (A) the total payment
received for such Straddle Patient (including any deductible payments and any
co-payments), multiplied by a fraction, the numerator of which shall be the
number of days such Straddle Patient was a patient through and including the
Closing Date, and the denominator of which shall be the total number of days
such Straddle Patient was a patient on a continuous basis during the period that
begins on or prior to the Closing Date and ends after the Closing Date, minus
(B) any deposits or co-payments made to the Sellers on or prior to the Closing
Date with respect to such Straddle Patient. If the Payor of any Covered Lives
cannot or does not for any reason accept cut-off billings, that portion of any
capitation payments relating to a period ending on or before the Closing Date
shall be treated as an Account Receivable.
2.7.3 RECEIPT OF PAYMENTS. If any Seller receives payment of
any amount with respect to Accounts Receivable included in the Assets, such
Seller shall promptly remit said funds to the Purchaser.
2.8 RIGHT OF FIRST REFUSAL. From and after the date hereof until the
first (1st) anniversary of the Closing Date of this Agreement (unless this
Section 2.8 has sooner terminated as provided below), in the event PIWV proposes
to sell the Morgantown Facility other than to West Virginia University
Hospitals, Inc. or any affiliate thereof (the "UNIVERSITY"), by virtue of sale
of assets, sale of stock, merger or other disposition (a "SALE"), PIWV shall
obtain from the proposed purchaser a bona fide written offer to so purchase the
Morgantown Facility, stating the terms and conditions upon which the Sale is to
be made and the consideration offered therefor, which consideration shall
consist solely of cash or be stated in a cash equivalent (the "OFFER"). PIWV
shall give written notice (a "SALE NOTICE") to the Purchaser enclosing a copy of
the Offer. The Sale Notice shall set forth, subject to the Purchaser's agreement
to keep the Offer and all information in the Offer and Sale Notice confidential
(except that it may disclose such information to its accountants, attorneys or
other advisors but only to the extent necessary for the Purchaser to evaluate
the Offer and the Sale Notice and provided that Purchaser shall be responsible
for any disclosure by such persons): (i) the name and address of the proposed
purchaser of the
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Morgantown Facility; (ii) the proposed amount and form of consideration to be
paid for the Morgantown Facility and the terms and conditions of payment; (iii)
the proposed Sale date; (iv) confirmation that the proposed purchaser has been
informed of the right of first refusal provisions of this Section 2.8. Upon
receipt of a Sale Notice, the Purchaser shall have the right of first refusal to
purchase the Morgantown Facility upon the same terms and conditions as stated in
the Sale Notice and the Offer (the "RIGHT OF FIRST REFUSAL") by giving written
notice to PIWV of its agreement to do so within thirty (30) days after receiving
the Sale Notice. The failure of the Purchaser to notify PIWV of its agreement to
purchase the Morgantown Facility within said 30-day period shall result in the
termination of the Right of First Refusal with respect to such Offer. In the
event that the Right of First Refusal is not timely exercised as provided for
herein, PIWV shall be entitled to consummate the Sale of the Morgantown Facility
to the third-party purchaser identified in the Sale Notice; provided, however,
that: (i) if such Sale is not consummated within 180 days after the date of the
Sale Notice, or (ii) if the terms of such Sale with respect to the consideration
to be paid (or any other terms and conditions which a reasonable investor would
consider material to a decision to exercise the Right of First Refusal) are less
favorable in any material respect to PIWV than as stated in the Sale Notice,
then PIWV shall be required to send a new Sale Notice and such Sale shall again
be subject to the Right of First Refusal. The Purchaser acknowledges and agrees
that the Morgantown Facility is subject to a right of first refusal (the "PRIOR
RIGHT OF FIRST REFUSAL") set forth in Section 18.02 of that certain ground lease
dated September 30, 1985 between PIWV and Facilities Management Corporation in
favor of the party identified in the said ground lease (the "RFR PARTY") and
that the Right of First Refusal is subject to the Prior Right of First Refusal
and the other provisions of said ground lease. Notwithstanding anything to the
contrary in this Section 2.8, the Right of First Refusal and this Section 2.8
shall automatically terminate and have no force or effect upon the earlier to
occur of (i) the first anniversary of the Closing Date unless the Purchaser has
exercised its Right of First Refusal prior to such date in accordance herewith;
provided that if the Purchaser has received a Sale Notice prior to the first
anniversary of the Closing Date, the Purchaser shall be entitled to exercise the
Right of First Refusal with respect to such Sale Notice within said 30-day
period and otherwise in accordance with the terms set forth in this Section 2.8
notwithstanding that the exercise or closing thereof occurs after the first
anniversary of the Closing Date, (ii) the consummation of the sale of the
Morgantown Facility to the University or (iii) the termination of this
Agreement.
2.9 PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
herein set forth, the Shareholder shall, at the Closing, sell, assign, transfer,
convey and deliver to the Purchaser, and the Purchaser shall at the Closing,
purchase and accept the Stock, free and clear of all encumbrances or Liens of
any character whatsoever, including, any option, right to purchase, right to
convert, mortgage, charge, claim, pledge, conditional sales contract or security
interest of any nature whatsoever other than any Liens created by or through the
Purchaser. The sale, transfer, assignment and delivery by the Shareholder of the
Stock to the Purchaser, as herein provided, shall be effected on the Closing
Date by delivery of duly endorsed in blank share certificates or by instruments
of transfer reasonably satisfactory in form and substance to counsel
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for the Purchaser. All Intercompany Receivables owed to or by the Acquired
Company shall be canceled as of the Closing.
2.10 TAXES.
2.10.1 As used in this Agreement, "TAXES" mean all federal,
state, local and foreign income, franchise, sales, use, occupation, property,
excise, alternative or add-on minimum, social security, employees' withholding,
unemployment, disability, transfer, capital stock and other taxes, assessments,
deficiencies, fees and other governmental charges or impositions (including,
without limitation, any estimated taxes, and any interest and penalties), and
"TAX" means any one of such Taxes. "BOOKED TAXES" means Taxes (other than any
income Tax) of the Acquired Company accrued with respect to a Seller Short
Period (as defined in Section 2.10.2.2) or with respect to a Reporting Period
(as defined in Section 2.10.2.2) that ends on or before the Closing Date that
are reflected in the Closing Date Adjusted Working Capital. "TAX RETURNS" means
all federal, state, local and foreign income, franchise, sales, use, occupation,
property, excise, alternative or add-on minimum, social security, employees'
withholding, unemployment, disability, transfer, capital stock and other tax
returns and tax reports, and "TAX RETURN" means any one of such Tax Returns.
2.10.2 Taxes of the Acquired Company with respect to the
period ending on (and including) the Closing Date, other than Booked Taxes, but
including 338 Taxes, shall be the responsibility of the Shareholder. Booked
Taxes and Taxes of the Acquired Company with respect to the period beginning on
the day after the Closing Date shall be the responsibility of the Purchaser.
2.10.2.1 Except as shown in SCHEDULE 2.10.2.1, the Shareholder
shall be responsible for preparing and filing on behalf of the Acquired Company
all Tax Returns for Reporting Periods of the Acquired Company ending on or
before the Closing Date, including Tax Returns of the Acquired Company for such
periods which are due after the Closing Date, and the Shareholder shall be
responsible for the contents of such returns; provided, however, that the
Shareholder shall furnish the Purchaser and the Acquired Company with copies of
such returns of the Acquired Company, on a separate company basis, within 30
days following the filing date. The Purchaser shall be responsible for preparing
and filing on behalf of the Acquired Company all Tax Returns for Reporting
Periods of the Acquired Company ending after the Closing Date (including any
Reporting Period that begins before and ends after the Closing Date (a "STRADDLE
PERIOD"). Purchaser shall provide the Shareholder a copy of all Straddle Period
Tax Returns no later than 10 business days prior to each such Straddle Period
Tax Return's due date, and shall accept all reasonable comments on each such
Straddle Period Tax Return received by Purchaser no later than three business
days prior to the due date of each such Straddle Period Tax Return.
2.10.2.2 The Shareholder agrees to pay and, notwithstanding
any disclosure of potential tax liabilities made by the Sellers, the Shareholder
or the Acquired Company, to indemnify, reimburse and hold harmless the Purchaser
(and other members of the affiliated group
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<PAGE> 27
of which the Purchaser is a member (the "PURCHASER CONSOLIDATED GROUP")) and the
Acquired Company and their respective successors, officers, directors,
employees, agents and representatives, from and against any and all Taxes of the
Acquired Company payable with respect to, any and all claims, liabilities,
losses, damages, costs and expenses (including, without limitation, court costs
and reasonable professional fees incurred in the investigation, defense or
settlement of any claims covered by this indemnity) (herein referred to as
"INDEMNIFIABLE TAX DAMAGES") arising out of or in any manner incident, relating
or attributable to Taxes of the Acquired Company payable with respect to (i) any
taxable year (or other applicable reporting period) ("REPORTING PERIOD") of the
Acquired Company ending on or before the Closing Date, and (ii) the portion of
any Straddle Period that ends on the Closing Date (a "SELLER SHORT PERIOD")
whether such Taxes are imposed directly on the Acquired Company or as a result
of including the Acquired Company in consolidated or combined returns filed by
the affiliated group of which the Acquired Company is a member (the "SHAREHOLDER
CONSOLIDATED GROUP"), except that with respect to any such Tax that is not an
income Tax, the Shareholder shall be responsible for the payment of such Taxes
only to the extent that they exceed Booked Taxes. The Shareholder shall be
entitled to any credits or refunds of Taxes of the Acquired Company payable with
respect to (A) any Reporting Period of the Acquired Company ending on or before
the Closing Date, and (B) any Seller Short Period. The Purchaser shall cause the
amount of any credits or refunds of Taxes to which the Shareholder is entitled
under this Section 2.10.2.2, but which are received by or credited to the
Purchaser, the Acquired Company or its successors after the Closing Date, to be
paid to the Shareholder within ten business days following such receipt or
crediting, provided that the Shareholder shall reimburse the Acquired Company or
its successors to the extent of any required subsequent repayment of, or
reduction in, the amount of such credits or refunds of Taxes so received or
credited.
2.10.2.3 The Purchaser agrees to pay and to indemnify,
reimburse and hold harmless the Shareholder, the Sellers, and other members of
the Shareholder Consolidated Group, and their successors, officers, directors,
employees, agents and representatives, from and against (i) any and all Booked
Taxes and (ii) any and all Taxes of the Acquired Company payable with respect
to, and any and all Indemnifiable Tax Damages, arising out of or in any manner
incident, relating or attributable to Taxes of the Acquired Company payable with
respect to, and any Taxes reflected on Tax Returns required to be filed by the
Acquired Company with respect to, (A) any Reporting Period of the Acquired
Company beginning after the Closing Date; and (B) the portion of any Straddle
Period which commences the day after the Closing Date, whether such Taxes are
imposed directly on the Acquired Company or as a result of including the
Acquired Company in consolidated or combined returns filed by the Purchaser
Consolidated Group.
2.10.2.4 The Tax liabilities with respect to the Acquired
Company for the Seller Short Period shall be determined by closing the books and
records of the Acquired Company as of the Closing Date, by treating such Seller
Short Period as if it were a separate Reporting Period, and by employing
accounting methods which are consistent with those employed in preparing the Tax
Returns for the Acquired Company in prior Reporting Periods and which do not
have the effect of distorting income or expenses (taking into account the
transactions contemplated by this
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Agreement), except that Taxes based on items other than income or sales shall be
prorated on a per diem basis; provided, however, that with respect to any Tax
which is not in effect during the entire Seller Short Period, the proration of
such Tax shall be based on the number of days during the Short Period that such
Tax was in effect.
2.10.3 The Shareholder shall indemnify and hold harmless the
Purchaser (and members of the Purchaser Consolidated Group) and the Acquired
Company from and against any and all Taxes of the Shareholder and members of the
Shareholder Consolidated Group other than the Acquired Company for any and all
periods, whether before or after the Closing Date, and from and against any and
all Indemnifiable Tax Damages arising out of or in any manner incident, relating
or attributable to such Taxes or to Tax Returns filed or required to be filed by
the Shareholder and members of the Shareholder Consolidated Group other than the
Acquired Company. The Purchaser shall indemnify and hold harmless the
Shareholder, the Sellers and members of the Shareholder Consolidated Group and
their successors, officers, directors, employees, agents and representatives,
from and against any and all Taxes of the Purchaser and members of the Purchaser
Consolidated Group other than the Acquired Company for any and all periods,
whether before or after the Closing Date, and from and against any and all
Indemnifiable Tax Damages arising out of or in any manner incident, relating, or
attributable to such Taxes or to Tax Returns filed or required to be filed by
the Purchaser and members of the Purchaser Consolidated Group other than the
Acquired Company.
2.10.4 Any tax sharing agreement, practice or other similar
arrangement between the Acquired Company and other members of the Shareholder
Consolidated Group shall be terminated as of the Closing Date.
2.10.5 Except as otherwise specifically provided in this
Section 2.10, any amounts owed by the Shareholder to any party under this
Section 2.10 shall be paid within ten business days of the Shareholder's receipt
of notice from such party; provided, however, that if such party has not paid
such amounts and such amounts are being contested before the appropriate
governmental authorities in good faith, the Shareholder shall not be required to
make payment until it is determined finally by an appropriate governmental
authority or court that payment is due. Except as otherwise specifically
provided in this Section 2.10, any amounts owed by the Purchaser to any party
under this Section 2.10 shall be paid within ten business days of the
Purchaser's receipt of notice from such party; provided, however, that if such
party has not paid such amounts and such amounts are being contested before the
appropriate governmental authorities in good faith, the Purchaser shall not be
required to make payment until it is determined finally by an appropriate
governmental authority or court that payment is due.
2.10.6 The Purchaser shall promptly notify the Shareholder in
writing of any notice, letter, correspondence, claim, determination, decision or
decree ("TAX CLAIM") received by the Purchaser or the Acquired Company or their
successors for any Reporting Period ending on or before the Closing Date and for
any Seller Short Period that might give rise to a claim for indemnification
hereunder. (Failure to give timely notice violates indemnification to the extent
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Shareholder is prejudiced thereby.) The Shareholder, at its cost and expense,
shall have the sole and exclusive right to (and shall promptly notify the
Purchaser as to whether or not it will) handle, answer, defend, compromise or
settle such Tax Claim and any tax examination, audit, contest or litigation in
connection therewith. If the Shareholder declines to defend or handle any Tax
Claim or any examination, audit, contest or litigation, the Shareholder shall be
bound by the results obtained by the Purchaser, the Acquired Company or their
respective successors or assigns in connection with such Tax Claim and such
examination, audit, contest or litigation. The Purchaser shall cause the
Acquired Company and its successors to give promptly to the Shareholder any
relevant information relating to such Tax Claim which may be particularly within
the knowledge of the Acquired Company or its successors and otherwise to
cooperate fully with the Shareholder in good faith with respect to such Tax
Claim. Notwithstanding the foregoing, the Shareholder shall not agree, without
the consent of the Purchaser (which consent shall not be unreasonably withheld
or delayed), to any adjustment for any period ending on or prior to the Closing
Date which will legally bind the Purchaser for any period after the Closing
Date. The Shareholder shall promptly notify the Purchaser in writing of any Tax
Claim received by the Shareholder or its successors for any Reporting Period
beginning after the Closing Date and for any portion of any Straddle Period that
might give rise to a claim for indemnification hereunder. (Failure to give
timely notice violates indemnification to the extent Purchaser is prejudiced
thereby.) The Purchaser, at its cost and expense, shall have the sole and
exclusive right to (and shall promptly notify the Shareholder as to whether or
not it will) handle, answer, defend, compromise or settle such Tax Claim and any
tax examination, audit, contest or litigation in connection therewith. If the
Purchaser declines to defend or handle any Tax Claim or any examination, audit,
contest or litigation, the Purchaser shall be bound by the results obtained by
the Shareholder or its respective successors or assigns in connection with such
Tax Claim and such examination, audit, contest or litigation. The Shareholder
shall give promptly to the Purchaser any relevant information relating to such
Tax Claim which may be particularly within the knowledge of the Shareholder or
its successors and otherwise shall cooperate fully with the Purchaser in good
faith with respect to such Tax Claim. Notwithstanding the foregoing, the
Purchaser shall not agree, without the consent of the Shareholder (which consent
shall not be unreasonably withheld or delayed), to any adjustment for any period
ending after the Closing Date which will legally bind the Shareholder for any
period ending prior to the Closing Date.
2.10.7 Each of the parties hereto will provide the other with
such assistance as may reasonably be requested by any of them in connection with
the preparation of any Tax Return (including amended Tax Returns and claims for
Tax refunds), any audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to liability for Taxes, and each
will retain until the expiration of any relevant statutes of limitations (and,
to the extent notified by the other party, any extension thereof) and provide
the other, at all reasonable times, with any work papers, records or other
information which may be relevant to such return, audit or examination,
proceeding or determination (including, but not limited to, determinations under
this Section 2.10). The party requesting assistance or documents hereunder shall
reimburse the other parties for reasonable expenses incurred in providing such
assistance or documents.
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2.11 HSR ACT REQUIREMENTS. The obligations of the parties to this
Agreement may be subject to the expiration of any waiting periods (including any
extensions of time occasioned by requests by the Federal Trade Commission or the
Department of Justice for further information about the transaction) applicable
to the purchase and sale of the Assets pursuant to this Agreement under the HSR
Act. No Closing shall take place until such waiting periods (including any
extensions thereof), if applicable, have terminated or expired without the
Federal Trade Commission or the Department of Justice having indicated to any
party to this Agreement an intention to initiate proceedings or having initiated
proceedings which look to preventing the consummation of the transactions
contemplated by this Agreement. The Purchaser, the Sellers and the Shareholder
shall make, or cause to be made, all filings required under the HSR Act in order
to consummate the transactions contemplated by this Agreement. If the Federal
Trade Commission or the Department of Justice requests additional information
from the Purchaser, the Sellers or the Shareholder or imposes any condition upon
the transactions contemplated by this Agreement, the Purchaser, the Sellers and
the Shareholder will use their reasonable best efforts to cooperate with the
Federal Trade Commission and the Department of Justice; provided, however, that
nothing herein shall compel the Purchaser, the Sellers or the Shareholder to
comply with any condition imposed upon it or its affiliates that is materially
adverse to the interests of the Purchaser , the Sellers, the Shareholder or
their respective affiliates as determined by the Purchaser , the Sellers or the
Shareholder, respectively, in their sole and absolute discretion. The Purchaser
shall pay the filing fee required under the HSR Act in connection with the
transaction contemplated hereby.
2.12 TERMINATION OF CERTAIN AGREEMENTS. Effective as of the Closing,
the agreements set forth on SCHEDULE 3.6.2 which are marked with an asterisk
shall automatically terminate and shall thereafter have no further force or
effect.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE SHAREHOLDER
The Sellers and the Shareholder, jointly and severally, represent and
warrant to the Purchaser and its successors and permitted assigns, as of the
date hereof as follows:
3.1 ORGANIZATION, STANDING AND AUTHORITY; CAPITALIZATION.
3.1.1 Each of the Sellers, RCSI and RMST is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation as set forth on SCHEDULE 3.1.1-1. The Shareholder is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each Seller and the Shareholder have all requisite
corporate power and authority (i) to execute, deliver and perform this Agreement
and all Related Agreements, and (ii) to consummate the transactions contemplated
hereby, and each Seller has all requisite corporate power and authority to
conduct the operations of its respective Facility as presently conducted. Each
of RCSI and RMST is duly qualified as a foreign corporation in each jurisdiction
in which it is required to be so qualified, and has all requisite
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corporate power and authority to own its properties and assets and to conduct
its business as now conducted. Each of RCSI and RMST has furnished the Purchaser
true, complete and correct copies of its Articles of Incorporation and By-laws,
with all amendments thereto. SCHEDULE 3.1.1-2 sets forth the name and security
ownership of each holder of equity or any right to acquire equity of RCSI or
RMST.
3.1.2 The Shareholder has full corporate power and the right
to vote its shares in the Acquired Company without obtaining the consent or
approval of any person or entity, except as set forth in Item 1 of SCHEDULE 3.7.
3.1.3 Except as described in SCHEDULE 3.1.3 hereto, the
Acquired Company does not, either directly or indirectly, own of record or
beneficially any shares or other equity interests in any corporation,
partnership, limited partnership, joint venture, trust or other business entity.
3.1.4 The entire authorized capital stock of RCSI consists of
1000 shares of $0.01 par value common stock, of which 1000 shares are issued and
outstanding, and no shares are held in RCSI's treasury. All of the issued and
outstanding shares of capital stock of RCSI are owned by the Shareholder (as set
forth in SCHEDULE 3.1.4), free and clear of all Liens, claims, charges,
Encumbrances and preemptive or other rights or options of any nature whatsoever,
and the authorization of no other person or entity is required in order to
consummate the transactions contemplated herein by virtue of any such person or
entity having an equitable or beneficial interest in RCSI, in each case except
for the Liens arising under the Credit Agreement and security documents set
forth in Item 1 of SCHEDULE 3.7. The shares of Stock are validly authorized and
issued, fully paid and nonassessable. Except for this Agreement, there are no
outstanding options, warrants, calls, commitments, plans or agreements to issue
any additional shares of RCSI's capital stock or to pay any dividends on such
shares or to purchase, redeem or retire any outstanding shares of its capital
stock, nor are there outstanding any securities or obligations which are
convertible into or exchangeable for any shares of capital stock of RCSI. The
shares of Stock constitute all of the issued and outstanding capital stock,
securities or other equity interests in RCSI, including, without limitation,
options, warrants, commitments, plans or agreements to issue any additional
shares of RCSI's capital stock, securities or obligations which are convertible
into or exchangeable for any shares of capital stock of RCSI.
3.1.5 The entire authorized capital stock of RMST consists of
1000 shares of $0.01 par value common stock, of which 1000 shares are issued and
outstanding, and no shares are held in RMST's treasury. All of the issued and
outstanding shares of capital stock of RMST are owned by RCSI (as set forth in
SCHEDULE 3.1.4), free and clear of all Liens, claims, charges, Encumbrances and
preemptive or other rights or options of any nature whatsoever, and the
authorization of no other person or entity is required in order to consummate
the transactions contemplated herein by virtue of any such person or entity
having an equitable or beneficial interest in RMST, in each case except the
Liens arising under the Credit Agreement and security documents set forth in
Item 1 of SCHEDULE 3.7. The issued and outstanding shares of RMST are validly
authorized and issued, fully paid and nonassessable. Except for this Agreement,
there are
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<PAGE> 32
no outstanding options, warrants, calls, commitments, plans or agreements to
issue any additional shares of RMST's capital stock or to pay any dividends on
such shares or to purchase, redeem or retire any outstanding shares of its
capital stock, nor are there outstanding any securities or obligations which are
convertible into or exchangeable for any shares of capital stock of RMST. The
issued and outstanding shares of RMST owned by RCSI constitute all of the issued
and outstanding capital stock, securities or other equity interests in RMST,
including, without limitation, options, warrants, commitments, plans or
agreements to issue any additional shares of RMST's capital stock, securities or
obligations which are convertible into or exchangeable for any shares of capital
stock of RMST.
3.2 AUTHORIZATION AND BINDING OBLIGATION. All corporate action on the
part of each Seller, the Shareholder, the Acquired Company and their respective
directors and stockholders necessary for the authorization, execution, delivery
and performance by each Seller and the Shareholder, respectively, of this
Agreement and the Related Agreements has been taken. This Agreement has been
duly executed and delivered by each Seller and the Shareholder, and this
Agreement and the Related Agreements constitute or will constitute, when duly
executed and delivered, the valid and legally binding obligations of each Seller
and the Shareholder, enforceable against each Seller and the Shareholder in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws
from time to time in effect affecting the enforcement of creditors' rights
generally, and except as enforcement of remedies may be limited by general
equitable principles.
3.3 ABSENCE OF CONFLICTING AGREEMENTS. Subject to obtaining the
Consents and except as set forth on SCHEDULE 3.3, the execution, delivery and
performance of this Agreement and the Related Agreements by each Seller and the
Shareholder and the consummation of the transactions contemplated hereby (with
or without the giving of notice, the lapse of time, or both): (i) will not
conflict with any provision of the Certificate of Incorporation or Bylaws of any
Seller, the Shareholder or the Acquired Company, respectively, (ii) will not
conflict with, result in a breach of, or constitute a default under, any
applicable law, rule or regulation or any applicable judgment, order, ordinance,
injunction or decree of any court or governmental instrumentality, (iii) will
not conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any material agreement, instrument,
franchise, certificate, license or permit to which any Seller, the Acquired
Company or the Shareholder, respectively, is a party or may be bound or by which
the Assets or any Facility is or may be affected and (iv) will not create any
Lien upon the Assets or any Facility (other than any Liens created by or through
the Purchaser).
3.4 TITLE TO AND CONDITION OF REAL PROPERTY.
3.4.1 All of the Real Property has legal access to public
roads or streets, and all utilities and services necessary for the proper and
lawful conduct and operation of the Facilities as now conducted are being
provided on a regular basis. All improvements, installations, equipment and
facilities utilized in connection with the Facilities currently are maintained,
placed
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and located in all material respects in accordance with the provisions of all
applicable laws, rules, regulations, deeds, easements, restrictions, leases,
licenses, permits or other arrangements.
3.4.2 The Sellers are the lessees or lessors under the real
property leases which are included in the Assumed Contracts, each of which are
identified on SCHEDULE 3.4.2 (the "REAL PROPERTY LEASES"), as applicable to each
Seller as indicated on SCHEDULE 3.4.2. None of the Sellers is in default under
any material covenant, agreement or representation under the corresponding Real
Property Lease, nor, to the Sellers' and/or the Shareholder's knowledge, is any
other party thereto. Except as otherwise disclosed on SCHEDULE 3.4.2, each of
the Sellers' leasehold interests under the corresponding Real Property Leases
(i) is valid, subsisting and in full force and effect and (ii) is free and clear
of all Liens (other than Permitted Liens) or will be at the time of Closing.
Subject to obtaining the corresponding Consents thereto, the purchase and sale
of the Assets and the consummation of the transactions contemplated hereby will
not affect the validity, enforceability and continuity of any of the Real
Property Leases.
3.4.3 Except as disclosed on SCHEDULE 3.4.3, all of the Real
Property (including the buildings and improvements thereon) (i) is in good
condition and repair in accordance with normal and customary industry practices
(ordinary wear and tear excepted), (ii) is available for immediate use in the
conduct of the business or operations of the respective Facility and (iii)
complies in all material respects with all applicable building, life safety and
zoning codes and the regulations of any governmental authority having
jurisdiction. There are no condemnation proceedings or eminent domain
proceedings, lawsuits or legal proceedings of any kind pending or, to the
Sellers' and/or the Shareholder's knowledge, threatened which would involve a
taking of any of the Real Property. The Real Property and the present use and
condition thereof do not violate in any material respect any applicable deed
restrictions or other covenants, restrictions, agreements, existing site plan
approvals, zoning or subdivision regulations or urban redevelopment plans
applicable to the Real Property as modified by any duly issued variances, and to
Sellers' and/or the Shareholder's knowledge no permits, licenses or certificates
pertaining to the ownership or operation of the Real Property, other than those
which are transferable with the Real Property and the Licenses, are required by
any governmental agency having jurisdiction over the Real Property or their
operation. All improvements constructed by or on behalf of any of the Sellers on
the Real Property were constructed in compliance in all material respects with
all applicable federal, state or other statutes, laws, ordinances, regulations,
rules, codes, orders or requirements (including, but not limited to, any
building, zoning or environmental laws or codes) affecting such premises, and to
the knowledge of each Seller and the Shareholder none of such improvements, in
the view of the purposes for which each of them is used, has any material
structural or engineering defect.
3.4.4 Each Seller has paid, or shall have paid prior to
Closing, all amounts owing by such Seller to any architect, contractor,
subcontractor or materialman for labor or materials performed, rendered or
supplied to or in connection with any of the Real Property, except for accruals
reflected on the Closing Date Adjusted Working Capital or as set forth on
SCHEDULE 2.5. SCHEDULE 3.4.4 sets forth a true and complete list of all
construction, architect, engineering and
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other agreements, if any, relating to uncompleted construction projects entered
into by any Sellers in connection with any of the Real Property.
3.5 TITLE TO AND CONDITION OF PERSONALTY.
3.5.1 Except with respect to any items of Assets which are the
subject of an Assumed Contract, each Seller owns and has good title to its
respective portion of the Assets (other than the Real Property which is the
subject of Section 3.4), free and clear of all Liens except for (i) Permitted
Liens and (ii) any Liens set forth in SCHEDULE 3.5.1, all of which shall be
removed at or prior to the Closing, except as otherwise specifically noted
therein. No Seller has materially reduced and, pending the Closing, will
materially reduce the Inventory of usable supplies from the quantities normally
maintained by it in accordance with its past practices.
3.5.2 Except as set forth in SCHEDULE 3.5.2, the Assets (other
than the Real Property which is the subject of Section 3.4 and intangible
assets) are in good operating condition and repair in all material respects
(ordinary wear and tear excepted) and are available for immediate use in the
business and operations of the respective Facility. All of the Accounts
Receivable reflect bona fide transactions for billable services and arose in the
ordinary course of business and are not subject to offset or deduction. Neither
any of the Sellers nor the Shareholder has any reason to believe that the
bad-debt allowance set forth in the Financial Statements is not an accurate
reflection of the expected collectibility of the accounts receivable as of the
date of such Financial Statements.
3.6 CONTRACTS.
3.6.1 SCHEDULE 3.6.1 contains a list (including memoranda of
oral Assumed Contracts) of all the Assumed Contracts. All of the Assumed
Contracts are in full force and effect and are valid and binding upon the
respective Seller and/ or the Acquired Company, except as set forth on SCHEDULE
3.6.1, and each other party thereto and enforceable in accordance with their
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally, and except as
enforcement of remedies may be limited by general equitable principles. There is
not under any Assumed Contract any material default by the respective Seller or
the Acquired Company or, to such Seller's and/or the Shareholder's knowledge,
any other party thereto, or any event which, after notice or lapse of time, or
both, would constitute such a default. Except as set forth in SCHEDULE 3.6.1,
neither any Seller nor the Acquired Company is aware of any intention by any
party to any material Assumed Contract to (i) terminate or amend the terms
thereof, (ii) refuse to renew same upon expiration of its current term or (iii)
renew same upon expiration of its current term only on terms and conditions that
are materially more onerous to the respective Seller or the Acquired Company
than those pertaining to the Assumed Contracts as of the date hereof.
3.6.2 SCHEDULE 3.6.2 contains a description of Excluded
Contracts.
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3.7 CONSENTS. Except for the expiration or termination of any
applicable waiting period under the HSR Act and the Consents described in
SCHEDULE 3.7, no consent, approval or authorization of, or declaration to or
filing with any governmental or regulatory authority or any other third party is
required by Seller or the Shareholder (i) to permit any Seller to assign or
transfer its respective portion of the Assets (including without limitation, the
Assumed Contracts and the Licenses, to the extent the Licenses are transferable)
to the Purchaser or (ii) to enable the Shareholder to transfer and sell the
Stock to the Purchaser.
3.8 TRADEMARKS, TRADE NAMES AND COPYRIGHTS. SCHEDULE 3.8 is a list of
all copyrights, trademarks, trade names, logos, licenses, patents, privileges
and other similar intangible property rights and interests (exclusive of those
required to be listed in SCHEDULE 3.9) registered, applied for, issued to or
owned by any Seller, or under which any Seller is licensed or franchised, and
used or useful in the conduct of the business or operations of any Facility, all
of which, to the Sellers' and/or Shareholder's knowledge, are valid, in good
standing and uncontested and, except as provided in Schedule 3.8, will be owned
or available for use by the Purchaser on identical terms and conditions after
the Closing. SCHEDULE 3.8 indicates which items, while used in the operations of
a Facility, will not be transferred to the Purchaser as part of the Assets. No
written claims, notices, oppositions or demands have been asserted by any third
party with respect to any of the items listed in SCHEDULE 3.8 and, to the
Sellers' and/or the Shareholder's knowledge, no person or entity has interfered
with, infringed upon, misappropriated, acted adversely to or otherwise come into
conflict with the rights of any Seller in any of such items. To each Seller's
and the Shareholder's knowledge, no Seller has interfered with, infringed upon,
misappropriated, acted adversely to or otherwise come into conflict with any
trademarks, trade names, copyrights, patents, patent applications, know-how,
methods or processes owned by any other person or persons, and there is no
action pending or, to the Sellers' and/or the Shareholder's knowledge, claim or
action threatened with respect thereto.
3.9 LICENSES. SCHEDULE 3.9 is a list of the material Licenses that any
Seller holds to enable it to carry on the business or operations of any Facility
as presently conducted. The Licenses were validly issued, and the Sellers are
currently the authorized legal holders thereof. The Licenses comprise all of the
material licenses, permits, certificates, accreditations and other
authorizations required from any governmental or regulatory authority or any
accrediting organization, for the conduct of the business and operations of the
Facilities in the manner and to the extent they are now conducted, and none of
the Licenses is subject to any restriction or condition which would limit the
operation of any Facility in any material respect as presently operated. The
Licenses are in full force and effect, and the conduct of the business and
operations of each Facility is in accordance therewith. No Seller has reason to
believe that any of the Licenses will not be renewed by the issuing authority or
other applicable granting authority in the ordinary course.
3.10 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 3.10 and
except with respect to Environmental Laws and Medical Waste Laws which are the
subject of Section 3.17, each Seller is presently operating its respective
Facility so as to comply in all material respects
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with (i) all applicable statutes, ordinances, rules, regulations, laws and
orders of any federal, state or local governmental authority and (ii) to the
extent applicable, all rules and regulations required as a condition of
participation in the Medicare, CHAMPUS and Medicaid reimbursement programs. Each
Seller is in compliance in all material respects with indigent care and other
conditions, if any, contained in or related to any certificates, licenses or
other instruments relating to its respective Facility, including, without
limitation, the certificates of need obtained by it for such Facility.
3.11 FINANCIAL STATEMENTS.
3.11.1 SCHEDULE 3.11 contains true and complete copies of the
unaudited balance sheet and statement of income of the Acquired Company and the
Sellers with respect to the Facilities as at and for the 9-month period ending
March 31, 1998 (collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except for the absence of footnotes and
normally reoccurring year-end adjustments) and present fairly, in all material
respects, the financial condition of the Sellers with respect to the Facilities
as of the date thereof and results of their operations for the period then ended
in accordance with generally accepted accounting principles consistently
applied. The Shareholder has allocated corporate overhead costs and expenses
with respect to the Facilities on a basis consistent with its allocations to its
other subsidiaries with respect to their facilities and operations and not in a
manner intended to understate the true costs and expenses of the business and
operations of the Facilities or to inflate the revenues of the Facilities.
3.11.2 The Sellers do not have any liability or obligation
related to the Assets or any Facility (whether accrued, absolute, contingent or
otherwise) which is of a nature required to be reflected in financial statements
prepared in accordance with generally accepted accounting principles,
consistently applied, except for (i) the liabilities and obligations of the
Sellers which are disclosed or reserved against in the Financial Statements, to
the extent and in the amounts so disclosed or reserved against, and (ii)
liabilities incurred or accrued in the ordinary course of business since the
date of the most recent Financial Statements which do not, either individually
or in the aggregate, have a Material Adverse Effect.
3.11.3 All liabilities or obligations shown or reflected in
the Financial Statements and such liabilities incurred or accrued subsequent to
the date of the most recent Financial Statements have been, or are being, paid
and discharged in the ordinary course consistent with past practice.
3.12 INSURANCE. SCHEDULE 3.12 contains a list of all insurance policies
held by any Seller (or its affiliates) relating to the Assets and/or any
Facility which are all in full force and effect. During the three-year period
ending on the date hereof, no such policies have been canceled by an insurer and
no application of any Seller for insurance has been rejected by any insurer.
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3.13 EMPLOYEE BENEFIT PLANS.
3.13.1 All Employee Plans and Compensation Arrangements of any
Seller, the Acquired Company and/or the affiliates of any of them that provide
benefits coverage to the current or former employees of the Acquired Company or
to employees of any Seller employed or previously employed at a Facility are
listed in SCHEDULE 3.13, other than employment agreements under which there are
no continuing obligations of the employer. Complete descriptions of any
unwritten Employee Plans or Compensation Arrangements of any Seller, the
Acquired Company and/or the affiliates of any of them that provide benefits
coverage to current or former employees of the Acquired Company or to employees
of any Seller employed or previously employed at a Facility also are provided in
SCHEDULE 3.13.
3.13.2 Each of the Employee Plans and Compensation
Arrangements listed in SCHEDULE 3.13 has been administered in all material
respects in compliance with its own terms and with ERISA, the Code, the Age
Discrimination in Employment Act and any other applicable federal or state laws.
3.13.3 Except as disclosed on SCHEDULE 3.13, neither the
Acquired Company nor any Seller contributes to or is required to contribute to
any Multi-employer Plan with respect to its employees, including any employees
employed or previously employed at any Facility, and neither the Acquired
Company, any Seller nor any other trade or business under common control with
any of them (within the meaning of Sections 414(b), (c), (m) or (o) of the Code)
has incurred or reasonably expects to incur any "withdrawal liability," as
defined under Section 4201 et seq. of ERISA.
3.13.4 Neither the Acquired Company nor any Seller is aware of
the existence of any governmental audit or examination of any of the Employee
Plans or Compensation Arrangements listed in SCHEDULE 3.13 or of any facts which
would lead it to believe that any such audit or examination is pending or
threatened. There exists no action, suit or material claim (other than routine
claims for benefits) with respect to any of the Employee Plans or Compensation
Arrangements listed in SCHEDULE 3.13 pending or, to the knowledge of the
Acquired Company, any Seller and/or the Shareholder, threatened.
3.13.5 Except as described in SCHEDULE 3.13, neither the
Acquired Company, any Seller nor any other trade or business under common
control with any of them (within the meaning of Sections 414(b), (c), (m) or (o)
of the Code) sponsors, maintains or contributes to any of the Employee Plans or
Compensation Arrangements that provides retiree medical or retiree life
insurance coverage to former employees of the Acquired Company nor of any Seller
employed or previously employed at a Facility.
3.13.6 There have been no failures to provide continuation
coverage as required by Section 4980B(f) of the Code with respect to the
employees or former employees of the Acquired Company or of any Seller.
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3.13.7 Neither the Acquired Company nor any Seller has any
Employee Plans or Compensation Arrangements as to which the Purchaser will be
required to make any contributions or with respect to which the Purchaser shall
have any obligation or liability whatsoever, whether on behalf of any of the
current employees of any Facility or on behalf of the Acquired Company or any
Seller or any other trade or business under common control with any of them
(within the meaning of Sections 414(b), (c), (m) or (o) of the Code), after the
Closing, except as otherwise specifically provided in this Agreement or except
for any obligations or liabilities that may be imposed on Purchaser either
directly because of actions taken by Purchaser (but excluding the actual hiring
of any of such employees) or under the provisions of Section 4980B of the Code
and Section 601 et seq. of ERISA, provided in either case that the imposition of
such obligations or liabilities are not the result of the failure of Seller
and/or the Shareholder to comply with the provisions of Section 6.8 of this
Agreement.
3.14 LABOR RELATIONS. Except as described in SCHEDULE 3.6.1, no Seller
is a party to or subject to any collective bargaining agreements with respect to
any Facility. No Seller has any written or oral contracts of employment with any
employee of any Facility, other than those listed in SCHEDULE 3.6.1 or SCHEDULE
3.6.2. Each Seller, in the operation of its Facility, has complied in all
material respects with all applicable laws, rules and regulations relating to
the employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination and the payment of social
security and other payroll related taxes, and it has not received any written
notice alleging that it has failed to comply with any such laws, rules or
regulations. No lockouts, strikes or proceedings are pending or, to any Seller's
and/or the Shareholder's knowledge, threatened between any Seller and employees
(individually or collectively) of any Facility. Except as described in SCHEDULE
3.14, no labor union or other collective bargaining unit represents or, to any
Seller's and/or the Shareholder's knowledge, claims to represent any of the
employees of any Facility. To each Seller's and/or the Shareholder's knowledge,
there is no union campaign being conducted to solicit cards from employees to
authorize a union to represent any of the employees at a Facility or to request
a National Labor Relations Board certification election with respect to any of
the employees at a Facility.
3.15 TAXES.
3.15.1 There are no Liens for Taxes (other than Permitted
Liens) on any of the Assets or the Facilities. There is not and there will not
be, any liability for any Taxes arising out of, or attributable to, or affecting
the Assets or any Facility through the close of business on the Closing Date, or
attributable to the conduct of the operations of any Seller at any time, for
which the Purchaser will have any liability for payment or otherwise except to
the extent included in Assumed Liabilities or Booked Taxes and reflected in the
Closing Date Adjusted Working Capital. There does not exist and will not exist
by virtue of the transactions contemplated by this Agreement any liability for
Taxes (except for sales, use, property and transfer taxes, if any, incident to
the consummation of the transactions contemplated herein) which may be asserted
by any taxing authority against the Assets or the business or operations of any
Facility, and no Lien
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for Taxes has or will attach to the Assets or the business or operations of any
Facility, except for any Taxes in the nature of property taxes or other fees or
assessments.
3.15.2 The Acquired Company has provided the Purchaser a true
and complete copy of all Tax Returns filed by the Acquired Company since
formation, if any.
3.15.3 All Tax Returns required to be filed before the Closing
Date in respect of the Acquired Company have been filed on a timely basis, and
the Acquired Company has paid when due, Taxes required to be paid in respect of
the periods covered by such Tax Returns. As of the Closing Date, the Acquired
Company's books and records will provide for adequate reserves for the payment
of all Taxes with respect to periods ending on or before the Closing Date for
which Tax Returns have not yet been filed. There are no proposed additional Tax
assessments against the Acquired Company not adequately provided for in the
Financial Statements. There are no unpaid Taxes which are or could become a Lien
(other than Permitted Liens) on the assets of the Acquired Company. There are no
tax audits pending with respect to the Acquired Company. The charges, accruals
and reserves with respect to Taxes on the books of the Acquired Company are
adequate (as determined in accordance with generally acceptable accounting
principles, consistently applied). All Taxes that the Acquired Company is or was
legally required to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper governmental
authority.
3.15.4 To the knowledge of the Acquired Company and the
Shareholder, SCHEDULE 3.15.4 sets forth each state and locality with
jurisdiction to impose any Tax on the Acquired Company, its properties or its
business.
3.16 CLAIMS AND LEGAL ACTIONS. Except as set forth in SCHEDULE 3.16,
there is no legal action, counterclaim, suit, arbitration, governmental
investigation or other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending or, to any Seller's and/or the
Shareholder's knowledge, threatened against or relating to the Acquired Company
any Seller, the Assets or the business or operations of any Facility or of the
Acquired Company. Except as set forth in SCHEDULE 3.16, there are no actions,
suits or proceedings pending or, to any Seller's and/or the Shareholder's the
knowledge, threatened, against or affecting the Acquired Company or any Seller
or the Shareholder which challenge the validity of this Agreement, or which if
adversely determined, would adversely effect any of their ability to consummate
the transactions contemplated by this Agreement or to perform their respective
covenants and agreements under this Agreement.
3.17 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.17:
3.17.1 the Assets and the business and operations of each
Facility are currently, and, to the knowledge of any of the Sellers and/or the
Shareholder, at all times prior to the date hereof have been, in compliance with
all Environmental Laws and Medical Waste Laws, which compliance includes, but is
not limited to, the possession by each Seller of all material permits
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and other governmental authorizations required under the Environmental Laws and
Medical Waste Laws and compliance with the terms and conditions thereof;
3.17.2 no Seller has stored, disposed of or arranged for
disposal of any Materials of Environmental Concern, except in compliance with
the Environmental Laws and Medical Waste Laws;
3.17.3 no Seller has received any written communication,
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that any Seller, the Real Property or the Assets are not in
compliance with the Environmental Laws or the Medical Waste Laws that has not
been cured, and, to the knowledge of any of the Sellers and/or the Shareholder,
there are no circumstances that may prevent or interfere with compliance in the
future. There are no Environmental Claims pending or, to any Seller's and/or the
Shareholder's knowledge, threatened against any Seller or associated in any way
with the Real Property, the Assets or the business or operations of any
Facility;
3.17.4 there have been no actions, activities, circumstances,
conditions, events or incidents arising out of any act or activities or
condition created by any Seller, including, without limitation, the generation,
handling, transportation, treatment, storage, release, emission, discharge,
presence or disposal of any Materials of Environmental Concern associated in any
way with the Real Property, the Assets or the business or operations of any
Facility, that could result in any Environmental Claims against any Seller;
3.17.5 with respect to the generation, transportation,
treatment, storage and disposal or other handling of Medical Waste, each Seller
is presently in compliance with all Medical Waste Laws;
3.17.6 during each Seller's ownership of the Assets and the
Real Property, (i) there have been no remedial responses or removal actions
related in any way to Materials of Environmental Concern; (ii) there have been
no underground or above ground tanks for the storage or handling of Materials of
Environmental Concern placed on or under the Real Property by or on behalf of
any Seller; (iii) and no Lien of any type (other than Permitted Liens) has been
attached to any Asset or the Real Property related to the presence or alleged
presence of Materials of Environmental Concern or pursuant to the Environmental
Laws;
3.17.7 there is no friable asbestos at, on, about, under or
within the Real Property or the Assets which constitutes a violation of
Environmental Laws; and
3.17.8 true, correct and complete copies of all material
permits, licenses, authorizations, registrations and other governmental consents
required by the Environmental Laws which relate to the Assets have been provided
to the Purchaser.
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3.18 REPORTS. All material returns, reports and statements which any
Seller is currently required to file with any governmental agency have been
filed, and all reporting requirements of governmental authorities having
jurisdiction thereover have been complied with in all material respects. All of
such reports, returns and statements are complete and correct in all material
respects as filed.
3.19 CONDUCT OF BUSINESS IN ORDINARY COURSE. Since the date of the
most recent Financial Statement, except as set forth in SCHEDULE 3.19, each
Seller and the Acquired Company have conducted its respective business and
operations only in the ordinary course and have not:
3.19.1 suffered any material adverse change in the business,
properties, financial condition of any Facility or its business, including any
material damage, destruction or loss affecting the Assets;
3.19.2 changed its accounting methods or business practices in
any material respects with respect to collection of Accounts Receivable or
payment of accounts payable;
3.19.3 made any material increase in compensation payable or
to become payable to any of the employees of any Seller or the Acquired Company,
or made or promised to make any bonus payment to any employee of any Seller or
the Acquired Company, or made any material change in personnel policies,
insurance benefits or other compensation arrangements affecting the employees of
any Seller or the Acquired Company other than merit increases and bonuses in the
ordinary course of business consistent with past practice; or
3.19.4 sold, transferred, leased to others or otherwise
disposed of any of the material Assets except for inventory sold or used in the
ordinary course of business consistent with past practices or for assets sold or
disposed of and replaced by other assets of comparable utility and value,
canceled or compromised any debts owed to, or claims relating to, the Acquired
Company's or any Seller's operations, which are of material value, or waived,
compromised or released any rights which are of material value.
3.20 COST REPORTS. Each Seller and each of its affiliates has duly
filed in respect of its respective Facility and the other Assets all Cost
Reports for all prior periods required to be filed as of the date hereof. All of
such Cost Reports accurately reflect in all material respects the information to
be included thereon. Set forth on SCHEDULE 3.20 is the date of the last audited
Cost Report for each Seller and a list of those Cost Reports of each Seller that
are still subject to audit. Except as set forth on SCHEDULE 3.20, neither any
Seller nor any of its affiliates has received written notice of any dispute
regarding such Cost Reports for any period subsequent to the audit dates set
forth on SCHEDULE 3.20. To the knowledge of each Seller and the Shareholder,
each Facility currently meets, without material exception, the conditions for
participation in the Medicare program and, to the knowledge of each Seller and
the Shareholder, no Facility has been subject to loss of waiver of liability for
utilization review denials with respect to any program during the past two
years.
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3.21 MEDICAL STAFF. Except as set forth on SCHEDULE 3.21, there are no
pending or, to any Seller's and/or the Shareholder's knowledge, threatened
disciplinary or corrective proceedings or appeals therefrom against any Seller
involving active or applying medical staff members of any Facility. SCHEDULE
3.21 also sets forth a complete and accurate list of each member of the medical
staff of each Facility.
3.22 MEDICARE/MEDICAID PARTICIPATION AND ACCREDITATION INVESTIGATIONS.
Each Facility is qualified for participation in the Medicare, CHAMPUS and
Medicaid reimbursement programs (the "REIMBURSEMENT PROGRAMS"), has current and
valid provider contracts with the Reimbursement Programs, is in compliance in
all material respects with the conditions of participation in the Reimbursement
Programs and has received all approvals or qualifications of the Reimbursement
Programs necessary for capital reimbursement on the Assets. Except as set forth
on SCHEDULE 3.22, none of the Sellers or the Shareholder have received written
notice of any claims by any of the Reimbursement Programs against any Seller
with regard to a Facility except for notice of program reimbursements received
in the ordinary course of business. Each Facility is duly accredited by the
JCAHO and all other applicable accreditation agencies listed on SCHEDULE 3.22
(the "OTHER HEALTH AGENCIES"), with no contingencies other than as shown on the
most recent surveys by the JCAHO and the Other Health Agencies (the
"DEFICIENCIES"). Each Seller has taken or is taking all necessary steps to
correct all Deficiencies and a description of any uncorrected Deficiency is
listed on SCHEDULE 3.22. True and complete copies of the most recent
accreditation letters, report of survey findings, deficiency lists and all other
related documents from the JCAHO and the Other Health Agencies pertaining to
each Facility have been delivered or made available to the Purchaser. Except as
described on SCHEDULE 3.22, neither any Seller nor any of its affiliates has
received written notice from the Reimbursement Programs, their fiscal
intermediaries, JCAHO, the Other Health Agencies or any other governmental
agency of any pending or, to any Seller's and/or the Shareholder's knowledge,
threatened investigations or surveys with respect to any Facility, and no Seller
has reason to believe that any such investigations or surveys are pending or
threatened.
3.23 HILL-BURTON CARE. No Seller has any outstanding loan, grant or
loan guarantee pursuant to the Hill-Burton Act (42 U.S.C.ss.291a, et seq.).
3.24 U.S. PERSON. Neither any Seller nor the Shareholder is a "foreign
person" within the meaning of Section 1445 of the Code.
3.25 BANK ACCOUNTS. SCHEDULE 3.25 contains a complete list of all of
the Acquired Company's bank accounts and all lines of credit owned or used by
the Acquired Company that will survive the Closing, and the names of all persons
with authority to withdraw funds from, or execute drafts or checks on, each such
account.
3.26 FULL DISCLOSURE. No representation or warranty made by any Seller
or the Shareholder herein contains any untrue statement of a material fact, or
omits to state any material
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fact required to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading.
3.27 ASSETS. The Assets constitute all of the assets owned, leased,
used or held for use by the Sellers that are necessary for the operation of the
Facilities, as presently operated, except for the Excluded Assets.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers and the
Shareholder and their respective successors and permitted assigns, as of the
date hereof as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. The Purchaser has all requisite company power
and authority (i) to execute, deliver and perform this Agreement and all Related
Agreements and (ii) to consummate the transactions contemplated hereby.
4.2 AUTHORIZATION AND BINDING OBLIGATION. All company action on the
part of the Purchaser and its directors and members necessary for the
authorization, execution, delivery and performance by the Purchaser of this
Agreement and the Related Agreements has been taken. This Agreement has been
duly executed and delivered by the Purchaser, and this Agreement and the Related
Agreements constitute or will constitute, when duly executed and delivered, the
valid and legally binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally, and except as enforcement of remedies may be limited by
general equitable principles.
4.3 ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement and the Related Agreements by the Purchaser and
the consummation of the transactions contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) will not conflict with any
provision of the organizational documents or limited liability company agreement
of the Purchaser, (ii) will not conflict with, result in a breach of, or
constitute a default under, any applicable law, rule or regulation or, to the
Purchaser's knowledge, any applicable judgment, order, ordinance, injunction or
decree of any court or governmental instrumentality and (iii) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any material agreement, instrument, franchise,
certificate, license or permit to which the Purchaser is a party or may be bound
or by which its assets are or may be affected.
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4.4 CONSENTS. Except for the expiration or termination of any
applicable waiting period under the HSR Act and the Consents described in
SCHEDULE 4.4, no consent, approval or authorization of, or declaration to or
filing with any governmental or regulatory authority or any other third party is
required to permit the Purchaser to consummate the transactions contemplated by
this Agreement.
4.5 LITIGATION; DISPUTES. There are no claims, actions, suits or
proceedings pending or, to the knowledge of the Purchaser, threatened, against
or affecting the Purchaser which challenge the validity of this Agreement, or
which if adversely determined, would adversely effect its ability to consummate
the transactions contemplated by this Agreement or to perform its covenants and
agreements under this Agreement.
4.6 FULL DISCLOSURE. No representation or warranty made by the
Purchaser herein contains any untrue statement of a material fact, or omits to
state any material fact required to make the statements made herein or therein,
in light of the circumstances under which they were made, not misleading.
5. PRE-CLOSING COVENANTS OF THE SELLERS
Except as contemplated by this Agreement or with the prior written
consent of the Purchaser, between the date hereof and the Closing Date (the
"EXECUTORY PERIOD"), each Seller shall operate its Facility and the Acquired
Company shall conduct its business in the ordinary course of business in
accordance with its past practices (except where such would breach the following
covenants or with such Seller's other obligations hereunder), and shall abide by
the following negative and affirmative covenants:
5.1 NEGATIVE COVENANTS. The Acquired Company and the Sellers each
covenants and agrees that it shall not do any of the following during the
Executory Period:
5.1.1 COMPENSATION. Increase the compensation, bonuses or
other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of any Facility, except in the
ordinary course of business consistent with past practice or as required by
contract or law;
5.1.2 CONTRACTS. Modify, amend or renew any of the Assumed
Contracts or enter into any new contracts, except in the ordinary course of
business, provided that no Seller shall enter into any new contract providing
for payments in excess of $10,000 per year without the prior written consent of
the Purchaser; provided further; however, no consent of the Purchaser shall be
required for any contracts providing for annual payments of $25,000 per year or
less that can be terminated upon no more that 30 days' notice (however, the
Shareholder shall give the Purchaser notice of any such contract with payments
in excess of $10,000 per year);
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5.1.3 LICENSES. Knowingly do any act or fail to do any act
which could reasonably be expected to result in the expiration, revocation,
suspension or modification of any of the Licenses, or fail to prosecute in the
ordinary course consistent with past practices any applications to any
governmental authority, if any, in connection with the operation of any
Facility;
5.1.4 WAIVER OF RIGHTS. Knowingly waive any material right
relating to the Assets or any Facility;
5.1.5 Construction. Except as set forth on SCHEDULE 5.1.5,
acquire (whether by purchase or lease) capital assets or incur costs in excess
of $10,000 in respect of any new construction projects relating to any Facility;
5.1.6 ACCOUNTING METHODS AND BUSINESS PRACTICES. Change its
accounting methods or business practices with respect to collection of Accounts
Receivable or payment of accounts payable;
5.1.7 DISPOSITION OF ASSETS. Sell, assign, lease or otherwise
transfer or dispose of any of the Assets, except for assets consumed or disposed
of in the ordinary course of business or that are no longer used or useful in
the business or operations of the Facilities or are replaced by property of
substantially similar kind and value;
5.1.8 ENCUMBRANCES. Create, assume or permit to exist any Lien
upon the Assets, except for Permitted Liens; or
5.1.9 NO INCONSISTENT ACTION. Knowingly take any action which
is a breach of its obligations hereunder.
5.2 AFFIRMATIVE COVENANTS. The Acquired Company and the Sellers each
covenants and agrees that it shall do the following during the Executory Period:
5.2.1 ACCESS TO INFORMATION. Subject to Section 12.14 hereof,
allow the Purchaser and its authorized representatives reasonable access at
their expense during normal business hours, on reasonable prior notice and
without undue interruption to the operation of any Seller or Shareholder to the
employees and staff of each Seller and to the Assets and all books, records,
files and other documents relating to each Facility for the purpose of audit and
inspection, and each Seller shall furnish or cause to be furnished or made
available all information with respect to the affairs and business of such
Seller relating to the Assets or the operation of any Facility as the Purchaser
may reasonably request;
5.2.2 MAINTENANCE OF ASSETS. Use its best efforts to maintain
all of the Assets or replacements thereof and improvements thereon in good
condition (ordinary wear and tear
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excepted) and to use, operate and maintain all of such assets in a manner
consistent with past practice;
5.2.3 INSURANCE. Maintain all existing or comparable
replacement insurance policies with respect to the Assets and each Facility;
5.2.4 CONSENTS. Use its best efforts to obtain the Consents;
5.2.5 PRESERVATION OF BUSINESS. Except as disclosed in
SCHEDULE 3.19, use its best efforts to preserve the business of each Facility
and each Seller's present relationships with doctors, patients, Payors,
suppliers, employees and others having business relations with it in the
ordinary course of business;
5.2.6 PRESERVATION OF REIMBURSEMENT RATES. Use its best
efforts to maintain the reimbursement rates of each Facility, including, without
limitation, the filing of all reports with Payors necessary to maintain such
rates, consistent with past practice;
5.2.7 BOOKS AND RECORDS. Maintain its books and records in
accordance with past practices;
5.2.8 NOTIFICATION. Promptly notify the Purchaser in writing
of any developments with respect to the business or operations of any Facility,
and of any change in any of the information contained in any Seller's
representations and warranties contained in Section 3 or in the schedules
hereto, in any case that could be reasonably expected to have a Material Adverse
Effect, provided that such notification shall not relieve any Seller of any
obligations hereunder;
5.2.9 FINANCIAL INFORMATION. Furnish to the Purchaser, within
45 days after the end of each month ending between the date of the most recent
Financial Statements and the Closing Date, a statement of income and expense for
the month just ended and such other financial information (including information
on payables and receivables) in each case as the Purchaser may reasonably
request and which is prepared in the ordinary course of business, provided that
such financial information with respect to the month ended April 30, 1998 shall
not be due until fourteen days following the date hereof;
5.2.10 CONTRACTS. Prior to the Closing, deliver to the
Purchaser a list of all material Contracts entered into by any Seller or the
Acquired Company between the date hereof and the Closing Date; and
5.2.11 COMPLIANCE WITH LAWS. Use its best efforts to comply in
all material respects with all laws, rules and regulations to the Acquired
Company, any Seller, the Assets and any Facility are subject.
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5.2.12 MESA FACILITY. The Shareholder shall use its best
efforts to cause the Mesa Facility to be owned in fee simple by Mesa Psychiatric
Hospital, Inc. by the Closing. In addition, the Shareholder shall use its best
efforts to enter into a binding agreement as soon as practicable after the date
hereof with the owner of the Mesa Facility to so convey the Mesa Facility to
Mesa Psychiatric Hospital, Inc. on or before the Closing.
6. ADDITIONAL COVENANTS
6.1 CONSENTS. Following the execution hereof, the Sellers and the
Purchaser shall promptly make applications to all third parties whose Consents
are required for the consummation of the transactions contemplated by this
Agreement (and shall use their best efforts to have made such applications by no
later than 7 days following the date hereof), and shall otherwise use their best
efforts to obtain the Consents as expeditiously as possible, each such Consent
being on terms which shall not effect a material adverse change to any License
or Assumed Contract with respect to which such Consent is being obtained. The
Sellers shall be ultimately responsible for obtaining all Consents which are
necessary for the Sellers to consummate the transactions contemplated hereby,
including, with respect to Assumed Contracts, and the Purchaser shall be
ultimately responsible for filing all applications and obtaining all Consents
which are necessary for the Purchaser to consummate the transactions
contemplated hereby, including, with respect to the transfer or obtaining of
certificates of need and other Licenses. Upon request, the Sellers and the
Purchaser shall periodically inform the other party of the status of its efforts
to obtain such Consents and shall reasonably cooperate with each other in
connection therewith. To the extent that a Consent with respect to the
assignment of an Assumed Contract has not been obtained by the Closing and both
the Sellers and the Purchaser waive the requirement that such Consent be
obtained for purposes of the Closing, the Sellers shall continue to use its best
efforts to obtain such Consent for a period of 60 days (with reasonable
extensions at the request of the Purchaser) and until such time as the Consent
is obtained or rejected or until the expiration of such 60-day period (or
extension thereof) the Sellers and the Purchaser shall treat such Assumed
Contract as though it had been assigned to and assumed by the Purchaser. To the
extent that a Consent with respect to the transfer of a License has not been
obtained by the Closing and both the Sellers and the Purchaser waive the
requirement that such Consent be obtained for purposes of the Closing, the
Purchaser shall continue to use its best efforts to obtain such Consent and
until such time as the Consent is obtained the Sellers shall continue to operate
under such License for the benefit of the Purchaser. To the extent that certain
Accounts Receivable are not transferrable the Sellers and the Purchaser shall
treat such Accounts Receivable as though they had been assigned to the Purchaser
and the Sellers shall collect said Accounts Receivable for the benefit of the
Purchaser and promptly remit to the Purchaser such collections. Notwithstanding
anything to the contrary set forth herein, there shall be no transfer of
ownership or control of the "controlled substances" in respect of the Assets
until such time as the Purchaser has obtained the appropriate Controlled
Substance Registration Certificate from the United States Drug Enforcement
Agency in respect of the applicable Facility's pharmacy. Until such time, the
Sellers shall continue to operate such Facility pharmacy in the manner
theretofore operated. The Purchaser shall indemnify and hold harmless the
Sellers, the Shareholders and their affiliates, upon and after the Closing, from
and
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against any Losses arising out of or relating to (i) the operation of such
Facility pharmacy after the Closing, including, without limitation, the
dispensing of controlled substances and (ii) the performance of any Assumed
Contract or License on behalf of Purchaser. The Sellers shall use their good
faith efforts to obtain the consent of the medical staff members to the
disclosure of such members' existing medical staff files to the Purchaser.
6.2 COOPERATION. The parties shall reasonably cooperate with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement.
6.3 TAXES, FEES AND EXPENSES. The Sellers and the Purchaser shall pay
one-half of all sales, use, transfer, recordation and documentary taxes and
fees, if any, arising out of the transfer of the Assets pursuant to this
Agreement. Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
6.4 BROKERS. Except as set forth on SCHEDULE 6.4, each of the parties
represents and warrants to the other that neither it nor any person or entity
acting on its behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the transaction contemplated by this
Agreement. Sellers and Shareholder shall be responsible for and pay and
indemnify the Purchaser against any and all fees or expenses payable to the
parties set forth on SCHEDULE 6.4.
6.5 BULK SALES LAW. The Purchaser hereby waives compliance by each of
the Shareholder and the Sellers with the provisions of any applicable bulk sales
laws with respect to the delivery of a listing of creditors and the related
notice of the transactions contemplated hereby to such creditors. Any loss,
liability, obligation or cost suffered by any Seller or the Purchaser as the
result of the failure of the Sellers to comply with the provisions of any bulk
sales law applicable to the transfer of the Assets as contemplated by this
Agreement shall be borne by the Sellers.
6.6 CONFIDENTIALITY. Except as necessary for the consummation of the
transactions contemplated hereby, each of the parties hereto will keep
confidential any information which is obtained from any other party hereto in
connection with the transactions contemplated hereby and which is not readily
available to the general public. In the event this Agreement is terminated, each
party will return all documents, work papers and other written material obtained
by it in connection with the transactions contemplated hereby, to the party
which provided such materials.
6.7 RISK OF LOSS.
6.7.1 The risk of any loss, damage or impairment, confiscation
or condemnation of any of the Assets from any cause whatsoever shall be borne by
the Sellers at all times prior to
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the Closing. In the event of any material physical loss, damage or impairment,
confiscation or condemnation of any material portion of the tangible Assets
prior to the Closing, the Sellers shall use their best efforts to repair,
replace or restore such Assets to their prior condition as soon as reasonably
practicable after such loss, damage, impairment, condemnation or confiscation,
and the proceeds of any claim for loss payable under any insurance policy,
judgment or award with respect thereto shall be applied to such repairs, subject
to applicable agreements governing indebtedness of Sellers and the Shareholder.
6.7.2 If any material damage or destruction of the Assets or
any other event occurs which prevents the operation of any Facility in the
normal and usual manner and the Sellers cannot restore or replace such Assets so
that such conditions are cured in all material respects and normal operations
are resumed before the Closing Date, the Closing Date shall be postponed for a
period of up to 60 days, to permit the repair or replacement of the damaged
Assets.
6.7.3 In the event of any damage or destruction of Assets
described in Section 6.7.2, if such Assets have not been restored or replaced
and the affected Facility's normal operations resumed within the 60-day period
contemplated by Section 6.7.2, the Purchaser or the Shareholder may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to the other.
6.8 EMPLOYEE BENEFIT MATTERS.
6.8.1 The Sellers and the Shareholder shall retain full
responsibility and liability for offering and providing "continuation coverage"
to any "qualified beneficiary" who is covered by a "group health plan"
sponsored, maintained or contributed to by any Seller, the Acquired Company or
the Shareholder and who has experienced a "qualifying event" or is receiving
such "continuation coverage" on or prior to the Closing Date. Nothing in this
Section 6.8.1 shall be construed as imposing any responsibility or liability on
the Sellers and the Shareholder with respect to any Hired Employee who
experiences a "qualifying event" after the Closing Date to the extent the
responsibility or liability relates to such "qualifying event", except to the
extent such liability or responsibility is imposed under the provisions of
Section 4980B of the Code and Section 601 et seq. of ERISA with respect to a
plan that was or is sponsored by the Sellers or by the Shareholder. Continuation
coverage, qualified beneficiary, qualifying event and group health plan shall
have the meanings given such terms under Section 4980B of the Code and Section
601 et seq. of ERISA.
6.8.2 On or prior to the Closing Date, the Purchaser shall
offer employment to such number of employees of the Shareholder employed at the
Facilities immediately prior to the Closing Date as the Purchaser shall
determine in its sole discretion at current pay rates, for positions which the
Purchaser reasonably believes to be comparable, and with benefits no less
favorable than those benefits being provided to similarly situated employees of
the Purchaser and its affiliates. The Purchaser agrees to notify the Shareholder
as soon as reasonably practicable following the date hereof, but in any event no
later than 10 days prior to the Closing, of those
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persons to whom the Purchaser does not intend to offer employment. The Purchaser
will strive to make offers to such employees of the Shareholder no later than 10
days prior to the Closing. To the extent that an employee of the Shareholder at
a Facility is not offered employment with the Purchaser in accordance with the
provisions set forth in this Section 6.8.2, the Purchaser shall reimburse and
indemnify and hold harmless the Shareholder and the Sellers for all severance
amounts payable to such persons in accordance with severance payment terms set
forth in SCHEDULE 6.8.2. Except as set forth in the immediately preceding
sentence, to the extent an employee of the Shareholder is not offered employment
with the Purchaser or any such employee is offered employment with the Purchaser
pursuant to this Section 6.8.2 but refuses such offer of employment, the Sellers
and the Shareholder shall be responsible for and shall cause to be discharged
and satisfied in full all amounts owed to such employee arising out of such
employee's employment by the Shareholder prior to the Closing, including,
without limitation, wages, salaries, severance, sick pay, accrued vacation and
all amounts owed pursuant to any employment, incentive, compensation or bonus
agreements, none of which shall be included in the Closing Date Adjusted Working
Capital, and the Shareholder agrees to indemnify the Purchaser and hold the
Purchaser harmless from any such liabilities. The Purchaser shall assume the
obligation of the Shareholder and the Sellers, as the case may be, to pay
accrued wages, salary and accrued vacation and sick pay to the Shareholder's
employees who accept employment with the Purchaser (the "HIRED EMPLOYEES") and
such accrued liability shall be included in the Closing Date Adjusted Working
Capital. The Purchaser shall grant to the Hired Employees, at the time of
hiring, a credit for the amount of paid days off, including vacation, holiday
and sick leave, as each such Hired Employee had accrued but had not used under
similar programs maintained by the Shareholder as of the time the Hired Employee
left the employ of the Shareholder; provided, that any such credit shall be
subject to the limits on credits for paid days off prescribed under the policies
currently maintained by the Purchaser's affiliates that are involved in the
operation of hospital facilities (the "HOSPITAL SUBSIDIARIES"); and provided
further that the monetary value of such credit shall be included in the Closing
Date Adjusted Working Capital. The Purchaser agrees to pay to Hired Employees an
amount equal to that portion of the monetary value of the accrued vacation,
holiday and sick leave that is in excess of the value of the credit provided
thereto by the Purchaser under its paid days off policy in accordance with this
Section 6.8.2. For purposes of the Purchaser's employee benefit plans and
policies that provide coverage to the Hired Employees on or after the Closing
Date, to the extent permitted or contemplated by such plans and policies, the
Purchaser shall give credit to employees who accept such offer for their
respective periods of employment with the Sellers prior to the Closing.
6.8.3 Except as disclosed in SCHEDULE 6.8.3, the Shareholder
represents and warrants to the Purchaser that none of the "full-time employees"
(as said term is defined under the WARN Act) of the Shareholder employed at the
Facilities or in the Acquired Company have experienced an "employment loss" (as
said term is defined under the WARN Act) during the 90-day period prior to the
date hereof, and the Shareholder agrees to provide to the Purchaser at the
Closing an updated list of such employees, effective as of the Closing Date. The
Purchaser shall indemnify and hold the Shareholder, the Sellers and their
affiliates harmless, in accordance with the provisions set forth in Section 11,
from and against all Losses resulting from any
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compliance obligation (including, without limitation, the obligation to give
notice or pay any money) that any Seller, the Shareholder and its affiliates or
the Purchaser has under the WARN Act arising from the termination of any Hired
Employees or other employees of the Shareholder at the Facilities or of the
Acquired Company on or after the Closing Date or the failure to hire a
sufficient number of any employees of the Shareholder at the Facilities or of
the Acquired Company.
6.8.4 The Purchaser shall offer health plan coverage to the
Hired Employees on terms and conditions generally applicable to the Purchaser's
at the Hospital Subsidiaries. For purposes of providing such coverage, the
Purchaser shall waive all preexisting condition limitations for all such Hired
Employees covered by the Sellers' health care plan as of the Closing Date and
shall provide such health care coverage effective as of the Closing Date without
the application of any eligibility period for coverage. In addition, the
Purchaser shall credit all payments made by Hired Employees toward deductible
and co-payment obligation limits under Sellers' health care plans for the plan
year that includes the Closing Date as if such payments had been made for
similar purposes by the Hired Employees under the Purchaser's health care plans
during the plan year that includes the Closing Date.
6.8.5 The Sellers and the Shareholder shall cause all Hired
Employees and all employees of the Acquired Company to cease participation in
any employee benefit and incentive plans sponsored or maintained by or on behalf
of any Seller and/or the Acquired Company, and shall cause all benefits
thereunder to be paid thereto in accordance with the terms of such employee
benefit and incentive plans, except for those liabilities or benefits for which
the Purchaser will grant credit pursuant to Section 6.8.2.
6.8.6 Notwithstanding the foregoing, nothing in this Agreement
shall, or shall be deemed to, create any rights in favor of any person not a
party hereto or to constitute an employment agreement or condition of employment
for any employee of any Seller, the Acquired Company or the Purchaser. No
provisions of this Section 6.8 shall be construed to create any right with
respect to any employee of any Seller, the Shareholder, the Acquired Company or
the Purchaser, including the Hired Employees, to continued employment with the
Purchaser.
6.8.7 To the extent permitted by applicable law, for purposes
of FICA tax withholding for periods after the Closing Date, the Purchaser shall
treat all wages (within the meaning of Section 3121(a) of the Code) paid by the
Sellers in the calendar year in which the Closing occurs to each Hired Employee
as if paid by the Purchaser in such calendar year. The Sellers agree to transfer
to the Purchaser any records relating to withholding and payments of income and
unemployment taxes (federal, state and local) and FICA taxes with respect to
wages paid to the Hired Employees for the calendar year in which the Closing
occurs, at or prior to Closing. The Purchaser and the Sellers hereby agree that,
pursuant to Revenue Procedure 96-60, the Sellers shall be relieved from
furnishing Forms W-2 to the Hired Employees for the calendar year in which the
Closing occurs and the Purchaser shall timely furnish such forms for such year
reflecting wages paid and taxes withheld by both the Purchaser and the Sellers.
At or prior to the
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Closing, the Sellers shall transfer to the Purchaser a current Form W-4
(Employee's Withholding Allowance Certificate) for each Hired Employee.
6.9 FILING OF COST REPORTS. The Sellers shall be entitled to, and
shall be responsible for, any and all receivables or payables, claims, rights or
other amounts due (or which may become due) to the Sellers as reimbursement or
other payments from the United States government or any agency thereof, any
state or any fiscal intermediary or other Payor in connection with the review,
audit or settlement of Cost Reports filed with the United States government
under the Medicare program, with any state under any state cost-based programs
or with any fiscal intermediary or other Payor, relating to the operations or
the businesses of the Sellers (including, without limitation, the Facilities) at
any time prior to or on the Closing Date including without limitation Cost
Report Settlements (collectively, the "COST REPORT ADJUSTMENTS"), whether or not
such Cost Reports were filed prior to, on or after the Closing Date. The Sellers
shall be responsible for filing the Medicare provider, state provider and fiscal
intermediary or other Payor Cost Reports for the Facilities for cost reporting
periods ending before or on the Closing Date (the "SELLER COST REPORTS"),
including any terminating Cost Reports due as a result of the transactions
contemplated hereby, and the Sellers shall accept full responsibility and
entitlement under such Seller Cost Reports, including without limitation,
responsibility for and entitlement to the Cost Report Adjustments, recapture, if
any, and audit and other liability for overpayment or recoupment in connection
with such Seller Costs Reports. The Sellers shall be responsible for Medicare
and any state provider appeals relating to the Facilities for all periods ended
on or before the Closing Date, both individual as well as group appeals as those
terms are defined in Part I, Section 2920 of the Provider Reimbursement Manual
published by the Health Care Financing Administration. The Sellers shall be
entitled to receive all amounts due from the Medicare and any state programs in
respect to all such appeals for period s ended on or before the Closing Date.
The Purchaser agrees that it shall not file or cause to be filed any amended
Costs Reports in any of the Sellers' respective names or otherwise with respect
to the Facilities for any period ending on or prior to the Closing Date; it
being understood and agreed that the Sellers shall have the sole discretion as
to the filing of such amended Cost Reports. For a period of two years following
the Closing Date, the Sellers will cooperate with the Purchaser regarding
amendments to Seller Cost Reports in cases where errors or omissions in said
Cost Reports result in adverse reimbursement consequences to the Purchaser on an
ongoing basis, provided that such amendments would not result in adverse
consequences to any of the Sellers, the Shareholder or their affiliates. The
Purchaser shall forward to the Sellers any and all correspondence relating to
any and all of the Seller Cost Reports, the Cost Report Adjustments, and the
other Excluded Assets promptly following receipt thereof by the Purchaser. The
Purchaser agrees to remit to the Sellers any checks or other receipts included
in or relating to the Cost Report Adjustments and any other item which is an
Excluded Asset immediately upon receipt by the Purchaser.
6.10 POST-CLOSING INSURANCE. For a period of five years after the
Closing, the Sellers shall maintain their existing comprehensive general
liability and hospital professional liability insurance coverages, or obtain
extended reporting period tail insurance, with respect to each
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Facility for all periods prior to the Closing in substantially their present
form as described on SCHEDULE 3.12; provided that Purchaser shall reimburse the
Sellers on the Closing Date for one-half (1/2) of the aggregate premium for such
required insurance as described in SCHEDULE 3.12.
6.11 Access to Information .
6.11.1 After the Closing, the Sellers agree to allow the
Purchaser and its authorized representatives reasonable access, at its own
expense and during normal business hours upon reasonable prior notice and
without undue interruption, to all books, records, files and other documents
relating to the Facilities or the Acquired Company relating to periods prior to
the Closing Date for the purpose of audit and compliance with laws, except as
such access may be restricted by law or applicable privilege. Each Sellers also
agrees to give the Purchaser notice (the "RECORDS NOTICE") of its intent to
destroy any such books, records, files and other documents, and the Purchaser
shall have the option to obtain, at its own expense, such books, records, files
and other documents from the Seller upon the giving of notice of the Purchaser's
desire to obtain such books, records, files and other documents to such Seller
within 15 days of receipt of such Records Notice.
6.11.2 After the Closing, the Purchaser agrees to allow the
Sellers and their authorized representatives reasonable access, at their own
expense and during normal business hours, to all Patient Records and all other
books, records, files and other documents relating to the Facilities relating to
periods prior to the Closing Date for any lawful purpose, including for the
purpose of financial, tax, audit, compliance with laws or other reasonable
business purpose, except as such access may be restricted by law or applicable
privilege, and including, without limitation in connection with the
determination of the Closing Date Adjusted Working Capital and any disputes
relating thereto, and in connection with the filing of tax returns and other
reports and related matters. Notwithstanding the foregoing, each Seller's access
to, or right to copies of, any Patient Records shall be subject to any
applicable law, accreditation standard or rule of confidentiality or privilege.
6.12 ENVIRONMENTAL REPORTS. The Purchaser may, at its expense, cause
Phase I and Phase II Environmental Assessments to be prepared with respect to
the Real Property on or prior to the date hereof. The Sellers covenant and
agree, at not cost to any Seller or the Shareholder, to reasonably cooperate
with the Purchaser in the preparation of any said Phase I and Phase II
Environmental Assessments.
6.13 NONCOMPETITION COVENANT.
6.13.1 Subject to the provisions set forth in Section 6.13.2,
each Seller and the Shareholder covenant and agree that, for a period of three
(3) years commencing on the Closing Date (the "PRIMARY RESTRICTED PERIOD"),
neither any of the Sellers, nor the Shareholder nor any subsidiary of any of
them shall compete, directly or indirectly (whether as an agent, broker,
consultant, employee, director, proprietor, owner, operator, manager, partner,
joint venturer,
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stockholder, lender, guarantor or other capacity of such competing enterprise),
with the Purchaser or any of its subsidiaries by constructing, owning, leasing,
operating or managing a behavioral health care business, whether free standing
or as a unit or component of another facility, anywhere within a 50-mile radius
of any Facility the assets of which are acquired by the Purchaser pursuant to
this Agreement (the "PRIMARY TERRITORY") or otherwise deliver behavioral health
care services within the Primary Territory. Each Seller and the Shareholder
further covenant and agree, subject to the provisions set forth in Sections
6.13.2 and 6.13.3, that, for a period of eighteen (18) months commencing on the
Closing Date (the "SECONDARY RESTRICTED PERIOD"), neither any of the Sellers,
nor the Shareholder nor any subsidiary of any of them shall compete, directly or
indirectly (whether as an agent, broker, consultant, employee, director,
proprietor, owner, operator, manager, partner, joint venturer, stockholder,
lender, guarantor or other capacity of such competing enterprise), with the
Purchaser or any of its subsidiaries by constructing, owning, leasing, operating
or managing an adult behavioral health care hospital or unit anywhere within a
50-mile radius of any acute care behavioral hospital owned or leased by the
Purchaser or any of its subsidiaries as of the date of this Agreement which are
set forth on SCHEDULE 6.13.1, together with such acute care behavioral hospitals
which Purchaser currently operates but which are the subject of joint ventures
as disclosed on SCHEDULE 6.13.1, so long as such hospital continues to be so
owned or leased (or in the case of the joint venture hospitals, operated) by the
Purchaser or one of its subsidiaries. The covenants set forth in this Section
6.13.1 are collectively referred to as the "NONCOMPETITION COVENANT").
6.13.2 Notwithstanding the foregoing, nothing set forth in
Section 6.13.1 shall prohibit the Sellers, the Shareholder or their subsidiaries
from engaging in the activities at the facilities or engaging in the other
activities described on SCHEDULE 6.13.2 (the "PERMITTED ACTIVITIES") provided
that the Sellers, the Shareholder and their subsidiaries do not materially
expand the Permitted Activities.
6.13.3 Notwithstanding anything to the contrary in the second
sentence of Section 6.13.1, the Sellers, the Shareholder or any of their
respective subsidiaries may acquire and operate any health care facility, unit
or business (the "ACQUIRED BUSINESS") which is or includes an adult behavioral
health care hospital, unit or business (the "ACQUIRED FACILITY") without
violating such Section provided that (i) the Acquired Facility is not located in
the Primary Territory, (ii) the aggregate revenues for the Acquired Business for
the most recently completed fiscal quarter of the Acquired Business derived from
Youth Services (as defined below) are equal to or in excess of 75% of the total
revenues for the Acquired Business for such fiscal quarter, (iii) the Purchaser
is given at least 15 days' prior notice of the consummation of such acquisition,
and (iv) following such acquisition and during the Secondary Restricted Period
the aggregate revenues for the Acquired Business during any fiscal quarter
derived from Youth Services will equal or exceed 75% of the total revenues for
the Acquired Business for such fiscal quarter. For purposes hereof, "YOUTH
SERVICES" shall mean the provision or management of programs and services for
at-risk and troubled youth and adolescents and the operation or management of
facilities and units relating thereto and the related provision or management of
behavioral health care services.
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6.13.4 The Sellers and the Shareholder acknowledge and agree
that (i) the covenants and restrictions contained in Section 6.13.1 are
necessary for the protection of the legitimate business interests of the
Purchaser and its operation of the Facilities, (ii) the covenants and
restrictions contained in Section 6.13.1 are a mandatory condition to the
consummation of the transactions contemplated by this Agreement, without which
the Purchaser would not be acquiring the Assets, (iii) the scope of the
covenants and restrictions contained in Section 6.13.1 with regard to time,
geography and activities is reasonable and (iv) the Sellers and the Shareholder
have received adequate consideration for the covenants and restrictions
contained in Section 6.13.1.
6.13.5 The Sellers and the Shareholder acknowledge and agree
that the rights of the Purchaser under this Section 6.13 are of a special and
unique character and that immediate and irreparable harm and damage will result
to the Purchaser if any Seller, the Shareholders or any of their affiliates
fails or refuses to perform its obligations under this Section 6.13. In addition
to any other damages or remedies available to the Purchaser, the Purchaser may
seek an injunction or other equitable relief in a court of competent
jurisdiction to restrain or enjoin such failure or refusal or otherwise
specifically enforce the provisions of this Section 6.13, and the Sellers, the
Shareholder and their affiliates waive any defense that the Purchaser has an
adequate remedy at law.
6.14 INFORMATION SYSTEMS. After the Closing, the Sellers agree to
allow the Purchaser to have reasonable access to the information system used by
them with respect to the business and operations of the Facilities (the
"INFORMATION SYSTEM") during a transition period of 180 days or such longer
period as reasonably requested by the Purchaser not to exceed a total of 270
days (the "TRANSITION PERIOD") for purposes of collecting the Accounts
Receivable. In addition, the Sellers agree, without undue interruption in the
Sellers' or the Shareholder's operations or business, to provide the Purchaser
with all reasonable support during the Transition Period to enable the Purchaser
to operate the Information System for such purposes; provided, however, that
such support shall be at Purchaser's expense from and after the initial 180 days
of the Transition Period.
6.15 AUDITED FINANCIAL STATEMENTS. The Shareholder shall deliver to
the Purchaser by July 1, 1998, the audited balance sheet and statement of income
of the Acquired Company and the Sellers with respect to the Facilities as at and
for the years ending June 30, 1995, June 30, 1996 and June 30, 1997
(collectively, the "AUDITED FINANCIAL STATEMENTS"). The Audited Financial
Statements will be prepared in accordance with generally accepted accounting
principles consistently applied and will present fairly, in all material
respects, the financial condition of the Sellers with respect to the Facilities
as of the date thereof and results of their operations for the period then ended
in accordance with generally accepted accounting principles consistently
applied. The Audited Financial Statements will only contain or reflect
allocations of corporate overhead costs and expenses with respect to the
Facilities on a basis consistent with the Shareholder's allocations to its other
subsidiaries with respect to their facilities and operations and not in a manner
intended to understate the true costs and expenses of the business and
operations of the Facilities or to inflate the revenues of the Facilities. The
Purchaser shall reimburse the
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Shareholder for the first $150,000 of the costs and expenses of preparing the
Audited Financial Statements upon receipt of an invoice with respect thereto.
6.16 AGREEMENT BY THE PURCHASER REGARDING NO OTHER REPRESENTATIONS OR
WARRANTIES BY THE SHAREHOLDER OR THE SELLERS. The Purchaser agrees that except
for the representations and warranties (including the Schedules with respect
thereto) made by the Shareholder or the Sellers expressly set forth in Section 3
of this Agreement, neither the Shareholder, the Sellers nor any affiliate, agent
or representative thereof has made and shall not be construed as having made to
the Purchaser or to any representative or affiliate thereof, and neither the
Purchaser nor any affiliate, agent or representative thereof has relied upon,
any representation or warranty of any kind. Without limiting the generality of
the foregoing, the Purchaser agrees that neither the Shareholder the Sellers nor
any affiliate, agent or representative thereof makes or has made any
representation or warranty to the Purchaser or to any affiliate or
representative thereof with respect to:
(i) any projections, estimates or budgets relating to the
Shareholder, the Sellers, the Acquired Company or the Facilities or
otherwise heretofore or hereafter delivered to or made available to the
Purchaser or its counsel, accountants, advisors, lenders,
representatives or affiliates of future revenues, expenses or
expenditures, future results of operations (or any component thereof),
future cash flows (or any component thereof) or future financial
condition (or any component thereof) of the Shareholder, the Sellers,
the Acquired Company, the Facilities or any of them or the future
business, operations or affairs of the Shareholder, the Sellers, the
Acquired Company, the Facilities or any of them; and
(ii) any other information, statement or documents heretofore
or hereafter delivered to or made available to the Purchaser or its
counsel, accountants, advisors, lenders, representatives or affiliates
with respect to the Shareholder, the Sellers, the Acquired Company, the
Facilities or any of them or the business, operations or affairs of the
Shareholder, the Sellers, the Acquired Company, the Facilities or any
of them, except to the extent and as expressly covered by a
representation and warranty (including the Schedules with respect
thereto) contained in Section 3 or Sections 6.4, 6.8.3 or 6.17 hereof.
6.17 BRYNN MARR. The Shareholder represents and warrants to the
Purchaser that since December 31, 1997, no contracts have been assigned by any
of the Sellers to the owner of Brynn Marr and no business has otherwise been
diverted from any of the Facilities to Brynn Marr. From and after the Closing,
the Shareholder covenants and agrees that it shall not, and shall cause its
subsidiaries (including the owner and operator of Brynn Marr) not to for a
period of three years following the Closing Date, advertise or market in the
State of South Carolina except with respect to Youth Services, as said term is
defined in Section 6.13.3.
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6.18 CERTAIN TAX MATTERS REGARDING ACQUIRED COMPANY. The Purchaser and
the Shareholder will join in making an election under Section 338(h)(10) of the
Code and any corresponding elections under state and local law (collectively, a
"SECTION 338(H)(10) ELECTION") with respect to the purchase and sale of the
Stock of the Acquired Company hereunder. The Shareholder shall be responsible
for Taxes of the Acquired Company attributable to the Section 338(h)(10)
Election other than state or local Taxes of the Acquired Company attributable to
the making of any state or local Section 338(h)(10) Election that gives rise to
income tax to both the Shareholder and Acquired Company (the "SECTION 338
TAXES").
7. ADDITIONAL COVENANTS OF THE PURCHASER
7.1 RESALE CERTIFICATE. The Purchaser agrees to furnish the Sellers
with any resale certificate or similar documents reasonably requested by any of
them to comply with applicable sales and use tax laws or to claim any available
exemption from any such taxes.
7.2 RECORDS RELATING TO COST REPORTS. Until final settlement of all
applicable Cost Reports, the Purchaser shall preserve, and provide Sellers or
Shareholder or their representatives reasonable access, during normal business
hours upon reasonable prior notice and without undue interruption (including
without limitation for purposes of obtaining copies at their expense), to all
financial books and records and other information and documents delivered to it
(including by leaving any of the foregoing at the Facilities) by the Sellers,
the Shareholder or their respective representatives relating to the preparation
or settlement of Cost Reports, including, without limitation, accounts payable
invoices, logs and billing information relating to the Reimbursement Programs,
for a period of seven years unless the respective Seller provides Purchaser of
notice of final settlement of such applicable Cost Reports. The Sellers agree to
give notice to Purchaser of any such final settlements. The Purchaser further
agrees to forward to the respective Seller, promptly but not later than 30 days
of receipt of same, all information received by the Purchaser from Payors
relating to periods prior to the Closing Date, including, without limitation,
Cost Report Settlements, notices of program reimbursements, demand letters for
payment and proposed audit adjustments.
7.3 BOOKS AND RECORDS OF THE SELLERS. Notwithstanding that the books,
records, files and documents of the Sellers described in Section 2.2.4 are
Excluded Assets, to the extent required by applicable law or at the Sellers'
election, the Sellers may choose not to remove such books, records, files and
documents from the Facilities or otherwise acquire possession of same after the
Closing. Unless removed by the Sellers or the Shareholder (which they shall have
the right to do at their expense at any time following Closing), the Purchaser
shall, in material compliance with applicable law, maintain such books, records,
files and documents at the particular Facility (or at such other mutually
approved location) at its own cost and as agent of and bailee for the Sellers
for a period of seven years. After the Closing, the Purchaser shall have the
right to assign to an entity acquiring from the Purchaser substantially all of
the Assets all of the Purchaser's obligations under this Section 7.3.
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7.4 NO INCONSISTENT ACTION. The Purchaser covenants and agrees that
it shall not during the Executory Period knowingly take any action which is a
breach of its obligations hereunder.
7.5 ACKNOWLEDGMENTS REGARDING CERTAIN PHYSICIAN CONTRACTS. The
Shareholder shall use its best efforts to obtain prior to the Closing from the
physicians identified on EXHIBIT 7.5 signed acknowledgments in substantially the
form attached hereto as EXHIBIT 7.5-1. In the event that any of said physicians
have not signed and returned to the Shareholder, or have informed the
Shareholder that he will not sign, an acknowledgment in substantially the form
attached as EXHIBIT 7.5-1, the Shareholder shall cause the employment or
independent contractor relationship, as the case may be, of such said
non-signing physicians which are identified by the Purchaser to be terminated
and the Shareholder and the Purchaser shall each be responsible for and pay
one-half of the obligations owing to said physician, if any, arising out of such
termination.
7.6 RENEGOTIATION OF ASSUMED CONTRACTS AFTER CLOSING. In the event
the Purchaser elects to renegotiate an Assumed Contract after Closing, the
Purchaser shall be responsible for and pay any and all costs or other amounts
payable with respect to such Assumed Contract and/or the renegotiation thereof.
8. CONDITIONS TO CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO CLOSE. The
obligations of the Purchaser to consummate the closing of the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions, all
or any of which may be waived, in whole or in part, by the Purchaser; provided,
however, that in the event that any or all of such conditions are waived, such
waiver shall be for all purposes and not only for purposes of closing the
transactions contemplated hereby, and the conditions so waived shall not serve
as a basis for indemnification under Section 11.2.
8.1.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Sellers and the Shareholder contained in this Agreement shall
be true and complete in all material respects at and as of the Closing Date as
though such representations and warranties were made at and as of such time
except to the extent that the breach thereof has not resulted in a Material
Adverse Effect.
8.1.2 COVENANTS AND CONDITIONS. The Sellers, the Shareholder
and the Acquired Company shall have performed and complied in all material
respects with all material covenants and agreements required by this Agreement
to be performed or complied with by them prior to or on the Closing Date.
8.1.3 CONSENTS AND APPROVALS. The applicable waiting period,
if any, under the HSR Act shall have expired or been terminated and each of the
Consents with an asterisk next to it on SCHEDULE 3.7 shall have been duly
obtained and delivered to the Purchaser with no material
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adverse conditions imposed by such Consent and no material adverse change to the
terms of any License or Assumed Contract with respect to which such Consent is
obtained.
8.1.4 DELIVERIES. The Sellers and the Shareholder shall have
made or stand willing and able to make all the deliveries to the Purchaser set
forth in Section 9.2.
8.1.5 MATERIAL ADVERSE CHANGE. Except as set forth on SCHEDULE
8.1.5, between March 31, 1998 and the Closing Date, there shall have been no
material adverse change in the business, operations or financial condition of
the Assets or any of the Facilities which has resulted in a Material Adverse
Effect.
8.1.6 LICENSES. The Sellers shall be the holder of all
material Licenses, and there shall not have been any material adverse
modification of any of such Licenses. No proceeding shall be pending the effect
of which would be to revoke, cancel, fail to renew, suspend or modify adversely
any such Licenses except in connection with obtaining any Consent to the
transfer of any such Licenses contemplated hereby.
8.1.7 NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding, or investigation shall have been instituted or threatened before any
court, governmental agency or legislative body, and no regulation or legislation
shall have been instituted, to enjoin, restrain, prohibit or obtain substantial
damages in respect of this Agreement or the consummation of the transaction
contemplated hereby.
8.1.8 PRE-CLOSING CONFIRMATIONS. The Purchaser shall have
obtained documentation or other evidence reasonably satisfactory to it that the
Purchaser has:
(i) Received all material approvals from all
governmental agencies whose approval is required to complete the transactions
herein contemplated;
(ii) Received reasonable assurances from all
applicable licensure agencies that upon or as of the Closing all material
certificates of need, licenses or permits required by law to operate the
Facilities as currently operated will be transferred to, or reissued in the name
of, the Purchaser; and
(iii) Obtained reasonable assurances that Medicare
and Medicaid certification of each Facility for its operation by the Purchaser
will be effective as of the Closing and that the Purchaser may participate in
and receive reimbursement from such programs without material interruption
effective from and after the Closing.
8.1.9 REAL PROPERTY PURCHASE AND SALE AGREEMENT. The closing
of the transactions contemplated by the Real Property Purchase and Sale
Agreement shall have occurred or shall occur simultaneously with the Closing.
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8.1.10 SUMMIT MANAGEMENT AGREEMENTS. The management agreements
with Summit Hospital Management, Inc. shall have been amended in substantially
the form attached hereto as EXHIBIT 8.1.10.
8.1.11 MESA FACILITY. Mesa shall own the Mesa Facility in fee
simple by the Closing.
8.1.12 CERTAIN PHYSICIAN CONTRACTS. The Shareholder shall have
obtained by the Closing the signed acknowledgments in substantially the form
attached hereto as EXHIBIT 7.5-1 from at least one-half of the physicians
identified on EXHIBIT 7.5.
8.2 CONDITIONS TO OBLIGATIONS OF THE SELLERS TO CLOSE. The
obligations of the Sellers to consummate the closing of the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions, all
or any of which may be waived, in whole or in part, by the Shareholder;
provided, however, that in the event that any or all of such conditions are
waived, such waiver shall be for all purposes and not only for purposes of
closing the transactions contemplated hereby, and the conditions so waived shall
not serve as a basis for indemnification under Section 11.3.
8.2.1 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Purchaser contained in this Agreement shall be true and
complete in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
8.2.2 COVENANTS AND CONDITIONS. The Purchaser shall have
performed and complied in all material respects with all material covenants and
agreements required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
8.2.3 CONSENTS AND APPROVALS. The applicable waiting period
under the HSR Act shall have expired or been terminated and each of the Consents
with an asterisk next to it on SCHEDULE 3.7 shall have been duly obtained and
delivered to the Purchaser and the Sellers with no material adverse conditions
imposed by such Consent on any of the Sellers or the Shareholder.
8.2.4 DELIVERIES. The Purchaser shall have made or stand
willing and able to make all the deliveries to the Sellers set forth in Section
9.3.
8.2.5 NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative body
to enjoin, restrain, prohibit or obtain substantial damages in respect of, or
which is related to, or arises out of, this Agreement or the consummation of the
transactions contemplated hereby.
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8.2.6 REAL PROPERTY PURCHASE AND SALE AGREEMENT. The closing
of the transactions contemplated by the Real Property Purchase and Sale
Agreement shall have occurred or shall occur simultaneously with the Closing.
8.2.7 MESA FACILITY. Mesa shall own the Mesa Facility in fee
simple by the Closing; provided, however, this Section 8.2.7 shall cease to be a
condition precedent under this Section 8.2 from and after August 7, 1998.
9. CLOSING AND CLOSING DELIVERIES
9.1 CLOSING. The Closing shall occur on the later of (i) July 31,
1998, or (ii) within 5 business days after the satisfaction or waiver of all
other conditions precedent set forth in Sections 8.1 and 8.2 (the "CLOSING
DATE"), and shall be held at the offices of the Purchaser, commencing at 9:00
a.m. local time, or at such other time and place as the Shareholder and the
Purchaser may mutually agree. Notwithstanding the actual time the following
deliveries are made on the Closing Date, the parties hereto agree that the
Closing shall be effective and deemed for all purposes to have occurred as of
12:01 a.m. local time on the day immediately following the Closing Date.
9.2 DELIVERIES BY THE SELLERS AND THE SHAREHOLDER. Prior to or on the
Closing Date, the Sellers and the Shareholder shall deliver to the Purchaser (or
make available at the Facilities) the following, in form and substance
reasonably satisfactory to the Purchaser and its counsel:
9.2.1 TRANSFER DOCUMENTS. Duly executed limited warranty
deeds, bills of sale, assignments, motor vehicle titles and other transfer
documents which shall be sufficient to vest good and valid title to the Assets
in the name of the Purchaser or its permitted assignees, free and clear of any
Liens (except for Permitted Liens);
9.2.2 STOCK. All certificates representing the Stock, duly
endorsed for transfer or accompanied by instruments of transfer;
9.2.3 CONSENTS. An original or copy of each Consent received
by the Sellers as of the Closing;
9.2.4 CONTRACTS, BUSINESS RECORDS, ETC. The Patient Records,
the Hired Employees Records, the Licenses (to the extent transferred to the
Purchaser), the Assumed Contracts, provider and supplier lists, blueprints,
working drawings, engineering records and plans related to the Real Property,
warranties and other documents relating to the Personalty and all other files
and records used by any of the Sellers relating to the Assets and in Sellers' or
the Shareholder's possession, except for any such files and records that are
Excluded Assets;
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9.2.5 SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the Secretary of each Seller certifying that the
resolutions, as attached to such certificate, were duly adopted by such Seller's
Board of Directors and stockholders (if required), authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby and that such resolutions remain in full force and effect;
9.2.6 OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the President or Vice President of each Seller,
certifying that: (i) the representations and warranties of such Seller contained
in this Agreement are true and complete in all material respects at and as of
the Closing Date (except for changes that are contemplated by this Agreement or
occurring in the ordinary course of business which do not singly or in the
aggregate have a Material Adverse Effect and that are disclosed in such
certificate), and (ii) such Seller has performed in all material respects all of
its obligations and complied in all material respects with all of its covenants
set forth in this Agreement to be performed or complied with on or prior to the
Closing Date;
9.2.7 INCUMBENCY CERTIFICATES. Certificates of incumbency for
the officers of each Seller duly authorized to execute and deliver this
Agreement and the Related Agreements;
9.2.8 OPINION. An opinion of the Sellers' legal counsel in
form and substance mutually agreeable to the Shareholder and the Purchaser;
9.2.9 CERTIFICATE OF NONFOREIGN STATUS. A certificate of
nonforeign status in the form required by Section 1445 of the Code, duly
executed by an authorized officer of each Seller; and
9.2.10 OTHER. Such other evidence of the performance of all
covenants and satisfaction of all conditions required of the Sellers and
Shareholder by this Agreement, at or prior to the Closing, as the Purchaser or
its counsel may reasonably require.
9.3 DELIVERIES BY THE PURCHASER. Prior to or on the Closing Date, the
Purchaser shall deliver to the Sellers the following, in form and substance
reasonably satisfactory to the Sellers and their counsel:
9.3.1 PURCHASE PRICE. The Purchase Price, in cash by wire
transfer of immediately available funds;
9.3.2 ASSUMPTION AGREEMENTS. Appropriate assumption agreements
pursuant to which the Purchaser shall assume and undertake to perform those
obligations of the Sellers relating to the Assets to be assumed by the Purchaser
pursuant to Section 2.5;
9.3.3 SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the Secretary of the Purchaser certifying that the
resolutions, as attached to such certificate,
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were duly adopted by the Purchaser's Board of Directors, or comparable governing
body, authorizing and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby and that such resolutions
remain in full force and effect;
9.3.4 OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the President or Vice President of the Purchaser,
certifying that: (i) the representations and warranties of the Purchaser
contained in this Agreement are true and complete in all material respects at
and as of the Closing Date and (ii) the Purchaser has performed in all material
respects all of its obligations and complied in all material respects with all
of its covenants set forth in this Agreement to be performed or complied with on
or prior to the Closing Date;
9.3.5 INCUMBENCY CERTIFICATES. Certificates of incumbency for
the officers of the Purchaser duly authorized to execute and deliver this
Agreement and the Related Agreements;
9.3.6 OPINION. An opinion of the Purchaser's legal counsel in
form and substance mutually agreeable to the Shareholder and the Purchaser; and
9.3.7 OTHER. Such other evidence of the performance of all
covenants and satisfaction of all conditions required of the Purchaser by this
Agreement, at or prior to the Closing, as the Sellers or their counsel may
reasonably require.
10. TERMINATION
10.1 METHOD OF TERMINATION. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, subject to and in accordance with the terms hereof, the consideration
for which is (i) the covenants, representations and warranties set forth in this
Agreement and (ii) expenditures and obligations incurred and to be incurred by
each of the parties hereto, in respect of this Agreement, and this Agreement may
be terminated or abandoned only as follows:
10.1.1 By the mutual consent of the Purchaser and the
Shareholder.
10.1.2 By the Purchaser or the Shareholder pursuant to the
terms of Section 6.7.
10.1.3 By the Purchaser upon written notice to the Shareholder
any time from and after September 15, 1998, if any of the conditions set forth
in Section 8.1 to which the obligations of the Purchaser are subject, have not
been fulfilled in all material respects or waived in writing, unless such
fulfillment has been frustrated or made impossible by any act or failure to act
of the Purchaser.
10.1.4 By the Shareholder upon written notice to the Purchaser
any time from and after September 15, 1998, if any of the conditions set forth
in Section 8.2, to which the obligations of the Sellers are subject, have not
been fulfilled in all material respects or waived in
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writing, unless such fulfillment has been frustrated or made impossible by any
act or failure to act of any or the Sellers or the Shareholder.
10.1.5 By the Purchaser or the Shareholder upon written notice
to the other at any time after 5:00 p.m. EDT June 26, 1998, in the event
Crescent Real Estate Funding VII, L.P., and Haven shall not have entered into
the Real Property Purchase and Sale Agreement (REIT) by such time substantially
in the form attached hereto as EXHIBIT 10.1.5 together with any changes to which
they mutually agree.
10.2 RIGHTS UPON TERMINATION.
10.2.1 In the event of a termination of this Agreement
pursuant to Section 10.1.1, Section 10.1.2, Section 10.1.3 (other than by reason
of a willful and knowing breach), Section 10.1.4 (other than by reason of a
willful and knowing breach) or Section 10.1.5, each party shall pay the costs
and expenses incurred by it in connection with this Agreement, and no party (or
any of its officers, directors, employees, agents, representatives or
stockholders) shall be liable to any other party for any costs, expenses,
damages or loss of anticipated profits hereunder.
10.2.2 In the event of a termination of this Agreement
pursuant to Section 10.1.3 and the Sellers shall be in breach of any material
provision of this Agreement as a result of a willful and knowing breach, then
the Purchaser shall have all rights and remedies available at law or in equity,
including, without limitation, damages arising out of the termination of the
Right of First Refusal.
10.2.3 In the event of a termination of this Agreement
pursuant to Section 10.1.4 and the Purchaser shall be in breach of any material
provision of this Agreement as a result of a willful and knowing breach, then
the Sellers shall have all rights and remedies available at law or in equity.
10.3 EXCLUSIVE REMEDY UPON TERMINATION. The sole and exclusive remedy
of any party following a termination of this Agreement or if the Closing does
not otherwise occur, for any misrepresentation or any breach of a warranty or
covenant under or pursuant to this Agreement or otherwise relating to the
subject matter of this Agreement shall be to terminate this Agreement pursuant
to Section 10.1 and to pursue the remedies provided for in Section 10.2 hereof;
provided; however, that nothing set forth in this Section shall prohibit or
restrict a party from not terminating this Agreement pursuant to Section 10.1.3
or 10.1.4 and seeking equitable relief, including, without limitation, specific
performance or injunctive relief, including, in a successful action for specific
performance of the purchase and sale of the Assets and the Stock, specific
performance to enforce the Right of First Refusal.
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11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
11.1 REPRESENTATIONS AND WARRANTIES. All representations, warranties
and covenants contained in this Agreement shall be deemed continuing
representations, warranties and covenants and shall survive the Closing Date as
follows (i) the representations and warranties set forth in Sections 3.1, 3.2,
4.1 and 4.2 shall continue in full force and effect indefinitely; (ii) the
representations and warranties set forth in Sections 3.13, 3.15 and 3.17 shall
continue in full force and effect for a time period equal to the applicable
statute of limitations with respect to claims pertaining thereto; (iii) all
other representations and warranties and the indemnification obligation set
forth in Section 11.2.3 shall continue in full force and effect until the second
(2nd) anniversary of the Closing Date; and (iv) except with respect to any
covenants that terminate or expire upon a date specified herein, all covenants
shall continue in full force and effect indefinitely. Any right of
indemnification pursuant to this Section 11 with respect to a claimed breach of
any representation, warranty or covenant shall expire as of the applicable
Termination Date, unless on or prior to the applicable Termination Date a claim
for indemnification has been made against the party from whom indemnification is
sought. If a claim for indemnification is timely made, it may continue to be
asserted beyond the applicable Termination Date of the representation, warranty
or covenant with respect to which such claim relates.
11.2 INDEMNIFICATION OF THE PURCHASER BY THE SELLERS AND THE
SHAREHOLDER. From and after the Closing, the Sellers and the Shareholder,
jointly and severally, agree to indemnify and hold harmless the Purchaser
against and with respect to:
11.2.1 Any and all Losses to the extent arising out of, based
on or resulting from any breach of a representation or warranty by any Seller or
the Shareholder contained herein, in the Related Agreements or in any
certificate, document or instrument delivered by any Seller or the Shareholder
to the Purchaser hereunder or thereunder;
11.2.2 Any and all Losses to the extent arising out of, based
on or resulting from any nonfulfillment of any covenant by any Seller or the
Shareholder contained herein (other than the covenants set forth in Section 5
which shall not survive Closing, Section 6.15 and the indemnification obligation
set forth in 11.2.3 which shall continue in full force and effect until the
second (2nd) anniversary of the Closing Date, and the indemnification
obligations set forth in Sections 11.2.4, 11.2.5 and 11.2.6), in the Related
Agreements, or in any document or instrument delivered by any Seller or the
Shareholder to the Purchaser hereunder;
11.2.3 Any and all Losses to the extent arising out of, based
on or resulting from the obligations of any Seller not assumed by the Purchaser
pursuant to the terms hereof (the obligations of the Sellers and the Shareholder
under this Section 11.2.3 shall terminate on the second (2nd) anniversary of the
Closing Date);
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11.2.4 Any and all Losses to the extent arising out of, based
on or resulting from (i) any and all Liens (except for Permitted Liens) on any
of the Assets as of the Closing Date other than Liens created by or through the
Purchaser, (ii) any and all Cost Reports filed or required to be filed by or on
behalf of any of the Sellers with respect to the businesses or operations of any
of the Facilities and (iii) any and all litigation, including, without
limitation, Professional Liability Claims relating to any act or omission at or
with respect to the Acquired Company or any Facility occurring on or prior to
the Closing Date;
11.2.5 Except with respect to matters set forth in SCHEDULE
3.17-1, any and all Losses to the extent arising out of, based on or resulting
from (i) claims by any federal, state, local government or other third party
relating to the presence of any Materials of Environmental Concern on, in or
under any part of the Assets or any Facility at any time prior to the Closing
Date, (ii) claims by any federal, state, local government or other third party
relating to the release into the environment (either before or after the Closing
Date) of any Materials of Environmental Concern that were generated, stored,
handled or disposed of on, in, under or from the Assets or any Facility prior to
the Closing Date, (iii) the alleged violation asserted by any federal, state,
local government or other third party of the Environmental Laws or the Medical
Waste Laws occurring with respect to the condition or operation of the Assets or
any Facility prior to the Closing Date or (iv) the violation of the
Environmental Laws or the Medical Waste Laws occurring with respect to the
condition or operation of the Assets or any Facility prior to the Closing Date;
11.2.6 Any and all Losses with respect to Taxes to the extent
provided for in and pursuant to Section 2.10;
11.2.7 With respect to matters set forth in SCHEDULE 3.17-1,
any and all Losses to the extent arising out of, based on or resulting from (i)
claims by any federal, state, local government or other third party relating to
the presence of any Materials of Environmental Concern on, in or under any part
of the Assets or any Facility at any time prior to the Closing Date, (ii) claims
by any federal, state, local government or other third party relating to the
release into the environment (either before or after the Closing Date) of any
Materials of Environmental Concern that were generated, stored, handled or
disposed of on, in, under or from the Assets or any Facility prior to the
Closing Date, (iii) the alleged violation asserted by any federal, state, local
government or other third party of the Environmental Laws or the Medical Waste
Laws occurring with respect to the condition or operation of the Assets or any
Facility prior to the Closing Date or (iv) the violation of the Environmental
Laws or the Medical Waste Laws occurring with respect to the condition or
operation of the Assets or any Facility prior to the Closing Date; and
11.2.8 Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
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11.3 INDEMNIFICATION OF THE SELLERS AND THE SHAREHOLDER BY THE
PURCHASER. From and after the Closing, the Purchaser shall indemnify and hold
the Sellers and the Shareholder harmless against and with respect to:
11.3.1 Any and all Losses to the extent arising out of, based
on or resulting from any breach of a representation or warranty by the Purchaser
contained herein, in the Related Agreements or in any certificate, document or
instrument delivered by the Purchaser to any Seller or the Shareholder hereunder
or thereunder;
11.3.2 Any and all Losses to the extent arising out of, based
on or resulting from any nonfulfillment of any covenant by the Purchaser
contained herein, including, without limitation the covenants set forth in
Sections 6.1 and 6.8 hereof but other than the indemnification obligations set
forth in Sections 11.3.3, 11.3.4 and 11.3.5, in the Related Agreements, or in
any document or instrument delivered by the Purchaser to any Seller or the
Shareholder hereunder;
11.3.3 Any and all Assumed Liabilities and Losses to the
extent arising out of, based on, resulting from or relating to Assumed
Liabilities or resulting from the Purchaser's operation under the Licenses (to
the extent such Licenses are transferred to the Purchaser) or under the Assumed
Contracts (to the extent such Assumed Contracts are transferred to the Purchaser
or as provided in Section 6.1), which relate to events occurring after the
Closing Date;
11.3.4 Any and all Losses to the extent arising out of, based
on or resulting from any and all litigation, including, without limitation,
Professional Liability Claims relating to any act or omission at or with respect
to the Acquired Company or any Facility occurring after the Closing Date;
11.3.5 Except with respect to matters set forth in SCHEDULE
3.17-1, any and all Losses to the extent arising out of, based on or resulting
from (i) claims by any federal, state, local government or other third party
relating to the presence of any Materials of Environmental Concern on, in or
under any part of the Assets or any Facility placed on any Facility by
Purchaser, its subsidiaries or their respective agents at any time after the
Closing Date, (ii) claims by any federal, state, local government or other third
party relating to the release into the environment after the Closing Date of any
Materials of Environmental Concern that were generated, stored, handled or
disposed of on, in, under or from the Assets or any Facility by the Purchaser,
its subsidiaries or their respective agents after the Closing Date, (iii) the
alleged violation asserted by any federal, state, local government or other
third party of the Environmental Laws or the Medical Waste Laws occurring with
respect to the condition or operation of the Assets or any Facility by the
Purchaser, its subsidiaries or their respective agents after the Closing Date or
(iv) the violation of the Environmental Laws or the Medical Waste Laws occurring
with respect to the condition or operation of the Assets or any Facility by the
Purchaser, its subsidiaries or their respective agents after the Closing Date;
and
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11.3.6 Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
11.4 PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
11.4.1 The party claiming indemnification (the "CLAIMANT")
shall give notice to the party from whom indemnification is claimed (the
"INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a
third party, specifying (i) the factual basis for such claim; and (ii) the
amount of the claim, if ascertainable. If the claim relates to an action, suit
or proceeding filed by a third party against Claimant, such notice shall be
given promptly by Claimant to the Indemnifying Party after written notice of
such action, suit or proceeding is received by Claimant.
11.4.2 Following receipt of notice from the Claimant of a
claim, the Indemnifying Party shall have 30 days to make such investigation of
the claim as the Indemnifying Party deems necessary or desirable. For the
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said 30-day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree
within said period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate legal remedy.
11.4.3 With respect to any claim by a third party as to which
the Claimant is entitled to indemnification hereunder, the Indemnifying Party
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual and reasonable
out-of-pocket expenses incurred by the Claimant as the result of a request by
the Indemnifying Party. If the Indemnifying Party elects to assume control of
the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the Indemnifying
Party does not elect to assume control or otherwise participate in the defense
of any third-party claim, it shall be bound by the results obtained by the
Claimant with respect to such claim.
11.4.4 In the event that the Indemnifying Party assumes
control of the defense of any claim by a third party, the Indemnifying Party
shall have the right to consent or otherwise agree to any monetary settlement,
but shall not have the right to consent or otherwise agree to any non-monetary
settlement or relief, including, without limitation, injunctive relief, without
the prior written consent of the Claimant which shall not be unreasonably
withheld or delayed.
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11.4.5 If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every reasonable effort
to reach a decision with respect thereto as expeditiously as possible.
11.4.6 The indemnification rights provided in Sections 11.2
and 11.3 shall extend to the affiliates, shareholders, directors, officers,
employees and representatives of the Claimant, although, for the purpose of the
procedures set forth in this Section 11.4, any indemnification claims by such
parties shall be made by and through the Claimant.
11.5 INVESTIGATION. Any investigation made at any time by or on behalf
of any party hereto shall not diminish in any respect whatsoever such party's
right to rely on the representations and warranties made by or on behalf of any
other party herein or pursuant to this Agreement.
11.6 LIMITATION ON INDEMNIFICATION OBLIGATIONS. Notwithstanding
anything contained in this Section 11 to the contrary, no party shall assert a
claim for indemnification against the other pursuant to this Section 11 unless
and until the amount of all Losses determined to have been incurred or suffered
at the time by the party seeking indemnification under this Agreement and/or
under the Real Property Purchase and Sale Agreement (other than those for which
first dollar claims which are not subject to any deductible amounts can be made
pursuant to the Real Property Purchase and Sale Agreement) exceeds, in the
aggregate, $250,000 (the "THRESHOLD AMOUNT"), at which time such party may make
a claim only to the extent that the aggregate amount of such claims exceeds the
Threshold Amount; provided, however, the foregoing limitation shall not apply to
a claim for indemnification pursuant to (i) Section 11.2.1 or 11.3.1 with
respect to those matters set forth in Sections 3.1, 3.2, 4.1 and 4.2, (ii)
Section 11.2.2, (iii) Section 11.2.4, (iv) Section 11.2.6, (v) Section 11.2.7,
(vi) Section 11.3.2, (vii) Section 11.3.3 or (viii) Section 11.3.4. The parties
hereto further acknowledge and agree that the total indemnification obligations
of the Sellers and the Shareholder, on the one hand, and the Purchaser, on the
other hand, under this Agreement and under the Real Property Purchase and Sale
Agreement shall not exceed, in the aggregate, the Purchase Price plus the amount
payable for the Purchased Real Property pursuant to the Real Property Purchase
and Sale Agreement; provided, however, the foregoing limitation shall not apply
to a claim for indemnification pursuant to (i) Section 11.2.1 or 11.3.1 with
respect to those matters set forth in Sections 3.1, 3.2, 4.1 and 4.2 (ii)
Section 11.2.2, (iii) Section 11.2.4, (iv) Section 11.2.5, (v) Section 11.2.6,
(vi) Section 11.2.7, (vii) Section 11.3.2, (viii) Section 11.3.4 or (ix) Section
11.3.5.
11.7 EXCLUSIVE REMEDY. From and after the Closing, the sole and
exclusive remedy of any party for any misrepresentation or any breach of a
warranty or covenant under or pursuant to this Agreement or otherwise relating
to the subject matter of this Agreement shall be a claim for indemnification
under and pursuant to this Section 11; provided; however, that nothing set forth
in this Section shall prohibit or restrict a party from seeking equitable
relief, including, without limitation, specific performance or injunctive
relief.
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12. MISCELLANEOUS
12.1 FURTHER ASSURANCES. Each party hereto shall execute and deliver
all such other documents and do all such other acts and things as may be
reasonably necessary to more fully effectuate this Agreement and the
transactions contemplated hereby.
12.2 NOTICES. All notices and other communications hereunder shall be
(i) in writing, (ii) delivered by telecopy, by commercial overnight or same-day
delivery service with all delivery costs paid by sender, or by registered or
certified mail with postage prepaid, return receipt requested, (iii) deemed
given on the date and at the time shown on the telecopy confirmation of receipt
(if delivered by telecopy), on the date and at the time (if recorded) of
delivery by the commercial delivery service, as shown in the records thereof (if
delivered by commercial overnight or same-day delivery service), or on the date
shown on the return receipt (if delivered by registered or certified mail) and
(iv) addressed to the parties at their addresses specified on the signature page
to this Agreement (or at such other address for a party as shall be specified by
like notice).
12.3 WAIVER. Any waiver of any terms or conditions of this Agreement
shall be in writing and shall not operate as a waiver of any other breach of
such terms or conditions or any other term or condition, nor shall any failure
to enforce any provision of this Agreement operate as a waiver of such provision
or of any other provision of this Agreement.
12.4 CAPTIONS; PARTIAL INVALIDITY. The captions, section numbers and
index appearing in this Agreement are inserted only as a matter of convenience
and in no way define, limit, construe or describe the scope or intent of such
sections or articles of this Agreement, nor in any way affect this Agreement. If
any term, covenant or condition of this Agreement or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement, or the application of such term, covenant or
condition to persons or circumstances, other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term, covenant
or condition of this Agreement shall be valid and be enforced to the fullest
extent permitted by law.
12.5 COUNTERPARTS. This Agreement may be executed in counterparts each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument, and in pleading or proving any provision of this
Agreement, it shall not be necessary to produce more than one complete set of
such counterparts. Any counterpart of this Agreement which has attached to it
separate signature pages, which together contain the signatures of all parties
hereto, shall for all purposes be deemed a fully executed original.
12.6 VARIATIONS OF PRONOUNS; NUMBER; GENDER. All pronouns and all
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person or persons or entity
may require. Whenever used herein the singular number shall include the plural,
the plural shall include the singular, and the use of any gender shall include
all genders.
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12.7 GOVERNING LAW; CONSTRUCTION. This Agreement shall be governed by
and construed in accordance with the substantive laws of the State of Georgia
without regard to its conflict of laws provisions. The parties acknowledge and
agree that they have been represented by counsel and that each of the parties
has participated in the drafting of this Agreement. Accordingly, it is the
intention and agreement of the parties that the language, terms and conditions
of this Agreement are not to be construed in any way against or in favor of any
party hereto by reason of the responsibilities in connection with the
preparation of this Agreement.
12.8 THIRD PARTIES. None of the provisions of this Agreement shall be
for the benefit of, or enforceable by, any employee or creditor of any party
hereto.
12.9 ENTIRE AGREEMENT. This Agreement and all of the related
agreements and exhibits attached hereto shall constitute the entire agreement of
the parties hereto; all prior agreements between the parties, whether written or
oral, are merged herein and shall be of no force and effect (except for that
certain Confidentiality Agreement between the Shareholder and the Purchaser (the
"CONFIDENTIALITY AGREEMENT"), which shall remain in full force and effect in the
event this Agreement is terminated pursuant to Section 10, and during the
Executory Period it shall remain in full force and effect provided that in the
event of conflict between the provisions set forth in this Agreement and those
set forth in the Confidentiality Agreement during the Executory Period, this
Agreement shall control); and there are no restrictions, agreements,
representations, warranties, arrangements or undertakings, oral or written,
between or among the parties relating to the transactions contemplated hereby
which are not fully expressed or referred to herein. This Agreement cannot be
changed, modified or discharged orally, but only by an agreement in writing,
signed by the party against whom enforcement of the change, modification or
discharge is sought.
12.10 REMEDIES. Except as provided in Section 10.3 and Section 11.7,
all remedies available to the parties, at law, in equity or otherwise, shall be
cumulative and may be exercised concurrently or separately, and the exercise of
any one remedy shall not be deemed an election of such remedy to the exclusion
of other remedies. In the event that anything in this Section 12.10 shall or
shall be deemed to conflict with the provisions of Section 12.13, the provisions
of Section 12.13 shall prevail.
12.11 BENEFIT AND BINDING EFFECT. None of the parties hereto may assign
this Agreement without the prior written consent of the other parties hereto;
provided, however, that the Purchaser may assign its rights (but not its
obligations) under this Agreement, in whole or in part, to an affiliate of the
Purchaser for purposes of enabling such affiliate to purchase all or a portion
of the Assets provided no such assignment shall delay the Closing or any
condition to the Closing, and in the event of such assignment by the Purchaser,
Purchaser's assignee shall for all purposes constitute the "Purchaser" with
respect to the portion of the Assets acquired by such assignee. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
12.12 DISPUTE RESOLUTION.
12.12.1 Any dispute, controversy or claim which arises out of
or relates to this Agreement (other than a dispute, controversy or claim which
arises out of or relates to Section 6.6 or Section 6.13) shall be resolved
through binding arbitration held before a three member panel of the American
Arbitration Association in a city mutually acceptable to the Purchaser and the
Shareholder in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Any party to this Agreement may
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initiate arbitration under this Section 12.12, and judgment upon the
arbitrators' award may be entered by any court having jurisdiction thereof.
12.12.2 As a condition precedent to the right of any party to
this Agreement to initiate arbitration under the provisions of this Section
12.12.1, the parties shall meet and consult for a period of 30 days upon written
notice issued by any party in an attempt to settle any dispute, controversy or
claim which arises out of or relates to this Agreement.
12.12.3 Notwithstanding anything to the contrary contained in
this Section 12.12, any action for specific performance of this Agreement or any
provision hereof may be filed and pursued by any party to this Agreement in any
court having jurisdiction thereof.
12.12.4 All fees (including, without limitation, arbitrators'
and attorneys' fees) shall be allocated between the parties in accordance with
the decision of the arbitrators.
12.13 CONTACT WITH CERTAIN PERSONS. Notwithstanding anything to the
contrary contained in this Agreement, the Purchaser agrees that it shall not,
without the prior written consent of the Vice Chairman of the Board, the
President or the Chief Financial Officer of the Shareholder, contact any
customer, provider or supplier (whether of goods or services) or any other
Person with whom the Shareholder or the Sellers have commercial dealings, other
than employees, to discuss the transactions contemplated by this Agreement or
the business, operations or affairs of any of the Shareholder, the Sellers, the
Facilities or otherwise. Any contact with employees shall be coordinated with
the Chief Executive Officer of each Facility and with the Executive Vice
President of the Acquired Company.
12.14 SCHEDULES AND EXHIBITS. All Schedules and Exhibits to this
Agreement are integral parts of this Agreement. Matters disclosed on each
Schedule of the Sellers shall be deemed disclosed only for purposes of the
matters to be disclosed on such Schedule and shall not be deemed to be disclosed
for any other purpose, unless expressly provided therein. The fact that any
disclosure on any of the Schedules is not required to be disclosed in order to
render the applicable representation or warranty to which it relates true, or
that the absence of such disclosure on the Schedule would not constitute a
breach of such representation or warranty, shall not be deemed or construed to
expand the scope of any representation or warranty hereunder or to establish a
standard of disclosure in respect of any representation or warranty.
12.15 BEST EFFORTS. Whenever used in this Agreement, the words "best
efforts" or "reasonable best efforts" or similar words shall mean diligently,
promptly and in good faith taking all actions which are reasonable, necessary
and appropriate to accomplish the objective requiring the use of best efforts,
but shall not include any obligation (a) to make any payment, incur any costs,
commit available resources, or forego the receipt of any payment, which in any
case is material in amount in light of the required objective, (b) to initiate
any lawsuit or other proceeding to achieve the required objective, or (c) to
take any action which is unlawful.
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IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the date first above written.
SELLERS:
--------
CAROLINA TREATMENT CENTER, INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
HOUMA PSYCHIATRIC HOSPITAL, INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
MESA PSYCHIATRIC HOSPITAL, INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
RHCI SAN ANTONIO, INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
THE HAVEN HOSPITAL, INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
TRANSITIONAL CARE VENTURES
(ARIZONA), INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
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TRANSITIONAL CARE VENTURES (NORTH
TEXAS), INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
TRANSITIONAL CARE VENTURES
(TEXAS), INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
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SHAREHOLDER:
------------
RAMSAY HEALTH CARE, INC.
By: /s/ (ILLEGIBLE)
-------------------------------------
Title:
----------------------------------
Address for Notices:
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Attention: President
Facsimile No.: (305) 569-4647
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost, Esq.
Facsimile No.: (212) 682-0200
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PURCHASER:
----------
CHARTER BEHAVIORAL HEALTH SYSTEMS,
LLC
By: /s/ Lance Taylor
-------------------------------------
Title: CFO
----------------------------------
Address for Notices:
Charter Behavioral Health Systems, LLC.
1105 Sanctuary Parkway
Suite 400
Alpharetta, Georgia 30004
Attn: Vice President Business Development
Facsimile No.: (678) _________
with a copy to:
Charter Behavioral Health Systems, LLC
1105 Sanctuary Parkway
Suite 400
Alpharetta, Georgia 30004
Attn: General Counsel
Facsimile No.: (678) _________
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Solely for purposes of Section 2.8 hereof:
PIWV:
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PSYCHIATRIC INSTITUTE OF WEST VIRGINIA,
INC.
By: /s/ (ILLEGIBLE)
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Title:
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Address for Notices:
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Attention: President
Facsimile No.: (305) 569-4647
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost, Esq.
Facsimile No.: (212) 682-0200
-70-
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EXHIBIT 2.10
PURCHASE AND SALE CONTRACT
1. PARTIES.
This Purchase and Sale Contract ("Contract") is made among MESA
PSYCHIATRIC HOSPITAL, INC., an Arizona corporation ("Mesa"), CAROLINA TREATMENT
CENTER, INC., a South Carolina corporation ("Carolina"; Mesa and Carolina are
collectively referred to herein as the "Sellers"), and CHARTER BEHAVIORAL HEALTH
SYSTEMS, LLC, a Delaware limited liability company ("Purchaser").
2. PROPERTIES.
On the terms and conditions stated in this Contract, Sellers hereby
agree to sell to Purchaser, and Purchaser hereby agrees to purchase from
Sellers, all of the following described property:
2.1 ARIZONA PROPERTY. Mesa's fee simple title in and to all of that
certain tract of land (the "Arizona Land") situated in Maricopa County, Arizona,
and described more particularly in EXHIBIT A-1 attached hereto and incorporated
herein by reference, and all buildings and improvements located thereon,
(collectively, the "Arizona Improvements"), together with all rights and
appurtenances pertaining to such land, including, without limitation, all of
Mesa's right, title and interest in and to (i) all minerals, oil, gas, and other
hydrocarbon substances thereon, (ii) all adjacent strips, streets, roads, alleys
and rights-of-way, public or private, open or proposed, (iii) all easements,
privileges, and hereditaments, whether or not of record, and (iv) all access,
air, water, riparian, development, utility, and solar rights (the Arizona Land,
the Arizona Improvements and all such other rights and appurtenances are
collectively referred to herein as the "Arizona Property").
2.2 SOUTH CAROLINA PROPERTY. Carolina's fee simple title in and to all
of that certain tract of land (the "South Carolina Land") situated in Horry
County, South Carolina, and described more particularly in EXHIBIT A-2 attached
hereto and incorporated herein by reference, and all buildings and improvements
located thereon, (collectively, the "South Carolina Improvements"), together
with all rights and appurtenances pertaining to such land, including, without
limitation, all of Carolina's right, title and interest in and to (i) all
minerals, oil, gas, and other hydrocarbon substances thereon, (ii) all adjacent
strips, streets, roads, alleys and rights-of-way, public or private, open or
proposed, (iii) all easements, privileges, and hereditaments, whether or not of
record, and (iv) all access, air, water, riparian, development, utility, and
solar rights (the South Carolina Land, the South Carolina Improvements and all
such other rights and appurtenances are collectively referred to herein as the
"South Carolina Property"). The South Carolina Improvements and Arizona
Improvements are collectively referred to herein as the "Improvements". The
South Carolina Land and Arizona Land are collectively referred to herein as the
"Land". The Arizona Property and the South Carolina Property are sometimes
individually referred to herein as a "Property" and are collectively referred to
herein as the "Properties".
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2.3 PERSONAL PROPERTY. All of Sellers' right, title and interest in and
to
(1) mechanical systems, fixtures and equipment comprising a
part of or attached to or located upon the Improvements,
(2) maintenance equipment and tools owned by Sellers and used
in connection with the Improvements,
(3) site plans, surveys, plans and specifications, marketing
materials and floor plans in Sellers' possession which relate to the Land or
Improvements,
(4) pylons and other signs,
(5) silverware, glassware, and other utensils and dishes,
(6) beds, tables, televisions, clocks, drapes and other
furniture and furnishings,
(7) art work, paintings, posters and other graphics,
(8) keys, stoves, refrigerators, ice makers, telephones,
switchboards, fixtures, telex and fax machines, computers, and other machinery
or appliances, and
(9) other tangible personal property of every kind and
character owned by Sellers and located in or on or used in connection with the
Land or Improvements or the operations thereon (it being agreed that Personal
Property shall exclude: (i) supplies (office, medical, food or otherwise), (ii)
inventory (office, medical, food, drug or otherwise), (iii) other items of
tangible personal property typically consumed or sold by Sellers at the
Properties in the ordinary course of business, plus such additions thereto and
less such deletions therefrom arising in the ordinary course of business between
the date hereof and the Closing Date and (iv) any personal property subject to
an Assumed Contract (as defined in the Charter Purchase Agreement) under the
Charter Purchase Agreement) (collectively, the "Personal Property").
2.4 PERMITS. To the extent legally transferrable, all of Sellers'
right, title and interest in and to all permits, licenses, certificates of
occupancy, and governmental approvals which relate to the Land, Improvements or
Personal Property (collectively, the "Permits").
2.5 PENDING AWARDS. Any pending or future award made with respect to
the condemnation of the Land or Improvements, any award or payment for damage to
the Land or Improvements or claim or cause of action for damage, injury or loss
with respect to the ownership, maintenance and operation of the Land or
Improvements.
3. PURCHASE PRICE.
3.1 The purchase price for the Properties (the "Purchase Price") will
be the sum allocated to such Properties pursuant to the Purchase Agreement among
Purchaser, Sellers, The Haven Hospital, Inc., Houma Psychiatric Hospital, Inc.,
Transitional Care Ventures (Arizona), Inc., Transitional Care Ventures (North
Texas), Inc., Transitional Care Ventures (Texas), Inc. and Ramsay Health Care,
Inc., dated June 24, 1998 (the "Charter Purchase Agreement")). The
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Purchase Price will be payable, at Sellers' direction, to Sellers in cash, by
wire transfer in immediately available funds at the "Closing" (as hereinafter
defined).
4. CONSIDERATION.
4.1 INDEPENDENT CONTRACT CONSIDERATION. Within three (3) business days
after the execution of this Contract by all parties hereto, Purchaser will
deliver to Sellers the amount of One Hundred and No/100 Dollars ($ 100.00) (the
"Independent Contract Consideration") which amount has been bargained for and
agreed to as consideration for Sellers' execution and delivery of this Contract.
The Independent Contract Consideration is in addition to and independent of all
other consideration provided in this Contract, and is nonrefundable in all
events.
5. TITLE AND SURVEY.
5.1 TITLE COMMITMENTS AND DOCUMENTS. Purchaser shall, within five (5)
Business Days after the Effective Date, order the following documents, at
Purchaser's sole cost and expense:
(i) a current Commitment for Title Insurance for each of the
Properties (each, a "Title Commitment", and collectively the "Title
Commitments") issued by a reputable title company designated by Purchaser (the
"Title Company"), setting forth the state of title to the Properties, including
a list of all liens, mortgages, security interests, encumbrances, pledges,
assignments, claims, charges, leases (surface, space, mineral, or otherwise),
conditions, restrictions, options, conditional sale contracts, rights of first
refusal, restrictive covenants, exceptions, easements (temporary or permanent),
rights-of-way, encroachments, overlaps, or other outstanding claims, interests,
estates, or equities of any nature which affect title to the Properties
(together with, true, correct, and legible copies of all instruments that create
or evidence title exceptions, including those described in Schedule B and
Schedule C of each Title Commitment) that would appear in an owner's title
policy, if one were issued, (ii) for each of the Properties, a currently dated
as-built, on-the-ground, ALTA survey (each, a "Survey", and collectively, the
"Surveys") prepared by a surveyor licensed in the state in which the relevant
Property is located and dated no earlier than the Effective Date and (iii) a
search of the Uniform Commercial Code Records of each County and State where the
Properties are located in the name of the relevant Seller (the "UCC Searches").
Purchaser shall endeavor to cause the Title Commitments, Surveys and UCC
Searches to be delivered to Sellers within twenty (20) Business Days after the
Effective Date.
Each Title Commitment will contain the express commitment of the Title Company
to issue a Title Policy (as hereinafter defined) to Purchaser in the amount of
the Purchase Price for the relevant Property, insuring the title to the
Properties as is specified in the Title Commitment, with the standard printed
exceptions.
5.2 REVIEW OF TITLE COMMITMENT AND SURVEY. Purchaser shall have ten
(10) Business Days after the receipt of the last of the Title Commitments
(together with true, correct and legible copies of all instruments that create
or evidence title exceptions), Surveys and UCC Searches (together with true,
correct and legible copies of all financing statements and related documents
comprising such search) in which to furnish Sellers with a written statement of
any
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title or survey objections affecting title to each of the Properties, other
than the Permitted Exceptions. Should Purchaser fail to notify Sellers of any
such title objections within the aforesaid time period, Purchaser shall be
deemed to have waived objections to the matters affecting title to the
Properties revealed by the Title Commitments, Surveys and UCC Searches. Sellers
shall have ten (10) Business Days after receipt of any such written objections
(hereinafter referred to as the "Title Cure Period") in which Sellers shall in
good faith endeavor to satisfy or correct (but shall not be obligated to cure)
all such valid title objections. In the event Sellers fail to satisfy or correct
all valid title objections within the Title Cure Period, Purchaser shall, by
written notice to Sellers given within ten (10) Business Days after the
expiration of the Title Cure Period, elect one of the following: (a) to waive
such title objections and to close the transaction, without reduction of the
Purchase Price, on or before the Closing Date, as defined herein, or (b) to
terminate this Contract, in which event, neither Sellers nor Purchaser shall
have any rights, duties or obligations under this Contract, except for any
rights or obligations hereunder which, by their terms, survive any termination,
cancellation, rescission, expiration or consummation of this Contract, and the
lien or right, if any, of Purchaser against or to the Properties shall wholly
cease. Sellers shall not be required and are not obligated hereby to bring, any
action or proceeding, or otherwise to incur any expense, to render the title to
the Properties free of any matters objected to by Purchaser; provided, however,
that Sellers shall, subject to the satisfaction of all conditions precedent to
Sellers obligation to consummate the transactions contemplated herein, be
obligated to cure any monetary liens against the Properties created by Sellers
and, if Sellers do not effect such cure as of the Closing, Purchaser may deduct
from the Purchase Price the amount necessary to effect such cure. The acceptance
of the Deeds (as defined herein) by Purchaser shall be deemed to be full
performance of and discharge of every agreement and obligation on the part of
Sellers to be performed pursuant to the provisions of this Contract, except for
any rights or obligations hereunder which, by their terms, survive any
termination, cancellation, rescission, expiration or consummation of this
Contract. Mortgages and financing statements filed in connection thereto
encumbering the Properties, which are to be released by Sellers at the Closing
shall not constitute valid title objections so long as any such mortgages are
not exceptions to title on Closing Date. Purchaser shall also have the right, by
giving written notice to Sellers within five (5) Business Days after Purchaser's
receipt of notice thereof, to object to any matter affecting title to the
Properties which is not shown in the Title Commitments, Surveys or UCC Searches
and which arises after the relevant date of such document and prior to Closing,
other than the Permitted Exceptions. Thereafter, with respect to such
objections, Sellers shall have the same cure rights and Purchaser shall have the
same termination rights as are provided above in this Section 5.2 with respect
to Purchaser's initial title objections.
5.3 PERMITTED EXCEPTIONS. For purposes of this Contract the term
"Permitted Exceptions" shall, for each of the Properties, mean:
(a) Liens for ad valorem taxes not yet due and payable;
(b) Matters of record pertaining to such Property; in each
case, provided the same are not material and do not materially detract from the
value of such Property or materially interfere with the present use of such
Property;
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(c) All matters that would be shown by an accurate survey or
inspection of such Property, including but not limited to easements,
encroachments, overlaps, riparian rights, and boundary disputes, if any;
provided the same are not material and do not materially detract from the value
of such Property or materially interfere with the present use of such Property;
(d) All building, zoning, and other state, county or Federal
laws, codes, and regulations, affecting any portion of such Property; provided
the same are not violated; and
(e) Leases numbered 3-10 on Schedule 7.1.3 hereto;
(f) Any other title exceptions discovered and waived by
Purchaser as hereinafter provided.
6. DUE DILIGENCE.
6.1 ITEMS TO BE DELIVERED BY SELLERS. Except to the extent previously
delivered to Purchaser, within fifteen (15) days following the Effective Date,
Sellers will deliver to Purchaser for Purchaser's review the following items
(collectively, the "Property Information"):
6.1.1 PERMITS. Copies of all Permits in Sellers' possession or
control.
6.1.2 DEVELOPMENT CONDITIONS. A copy of all proffers, if any,
land use restrictions, or other conditions in Sellers' possession or control
limiting development of the Properties.
6.1.3 PLANS AND SPECIFICATIONS. Copies of any surveys, site
plans, subdivision plans, and as-built plans and specifications for the
Properties and leasehold improvements in Sellers' possession or control.
6.1.4 WARRANTIES. Copies of all unexpired warranties and
guaranties in Sellers' possession or control covering the Personal Property, the
roof, elevators, heating and air conditioning systems and any other component of
the Improvements and a list and description of any material third party bonds,
warranties and guaranties which will be in effect after Closing with respect to
the Properties.
6.1.5 TAX STATEMENTS. To the extent not included in the Title
Commitments, evidence of the real estate taxes for the Properties for the
current year.
6.1.6 TESTS AND INSPECTIONS. To the extent in Sellers'
possession, copies of soils and other engineering inspections (including copies
of any current elevator inspections), tests, surveys, studies and reports
pertaining to the Land or Improvements or any portion thereof, and all
inspection reports or audits and information regarding the existence of
"Hazardous Substances" (hereinafter defined) or underground storage tanks on the
Properties or use or storage of Hazardous Substances on the Properties, and all
reports and audits with respect to compliance of the Properties with the
Americans with Disabilities Act (the "ADA") and any plan in existence for
compliance with ADA and similar state or local laws with respect to disabled
persons.
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6.2 INSPECTION PERIOD. During the period commencing on the Effective
Date and through the Closing Date (the "Inspection Period"), Purchaser will have
the option and right to conduct, upon reasonable notice and at reasonable times,
such investigations, inspections, audits, analyses, surveys, tests,
examinations, studies, and appraisals of the Properties, as Purchaser deems
necessary or desirable, at Purchaser's sole cost and expense.
6.3 ACCESS. To facilitate the due diligence contemplated in ARTICLE 6
during the Inspection Period, Sellers will provide Purchaser and Purchaser's
agents and representatives reasonable access to the Properties. Upon at least
five (5) days prior notice to Sellers and after receiving the approval of
Sellers, not to be unreasonably withheld, Purchaser will conduct any such
physical inspections, tests, examinations, studies, and appraisals only on
Business Days and will use reasonable efforts to minimize interference with
Sellers' operations at the Properties.
6.4 INDEMNITY. Purchaser agrees to indemnify and hold Sellers harmless
from and against any liens, claims, or damages including, without limitation,
any and all demands, actions or causes of action, assessments, losses, costs,
liabilities, interest and penalties, and reasonable attorneys' fees suffered or
incurred by Sellers to the extent such matters result from Purchaser's or
Purchaser's agents or representatives access to the Properties and/or conduct of
the activities contemplated hereunder. Purchaser will, to the extent
practicable, repair or cause to be repaired any damages caused by Purchaser or
Purchaser's agents or representatives in the conduct of the activities
contemplated hereunder. Notwithstanding anything set forth herein to the
contrary, the indemnification and restoration obligations of Purchaser in this
SECTION 6.4 will survive the termination of this Contract for any reason.
7. WARRANTIES, REPRESENTATIONS AND COVENANTS.
7.1 EXPRESS WARRANTIES. Sellers make the following warranties and
representations to Purchaser as of the date hereof:
7.1.1 TITLE TO REAL PROPERTY. The Sellers have good leasehold
title to the Arizona Property and good and indefeasible fee simple title to the
South Carolina Property. Neither Sellers nor any of their affiliates own any
parcel of land which is contiguous with any of the Properties. The Properties
are not subject to any outstanding agreements of sale or any options, liens or
other rights of third parties to acquire any interest therein, except as
described in this Contract and except for the rights of General Electric Capital
Corporation under the existing financing and security agreements with Sellers
and their affiliates and Capstone Capital Corporation under the Capstone Lease,
as hereinafter defined, which Sellers intend to terminate as to the Properties
at or prior to Closing.
7.1.2 TITLE TO PERSONAL PROPERTY. None of the Personal
Property is held by Sellers under a lease or installment sale contract, and
Sellers own title to the Personal Property, free and clear of any liens or
claims, except for Permitted Liens (as defined in the Charter Purchase
Agreement).
7.1.3 PARTIES IN POSSESSION. There are no tenants or other
parties in possession of the Properties, except as shown on Schedule 7.1.3 and
except that, (i) with respect to the Arizona Property, the tenant under the
Lease between Capstone Capital Corporation and Mesa
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Psychiatric Hospital, Inc. (the "Capstone Lease") and (ii) with respect to the
South Carolina Property, the Tenant under the lease between the Carolina
Treatment Center, Inc. and Transitional Care Ventures (South Carolina), Inc.,
which shall be terminated as of the Closing.
7.1.4 LITIGATION. Except as set forth in Schedule 7.1.4, there
is no action, suit or proceeding presently pending in any court or before any
federal, state, county or municipal department, commission, board, bureau or
agency or other governmental instrumentality or before any arbitration tribunal
or panel, affecting (i) the Properties, or any portions thereof, (ii) Sellers'
title, use, operation or ownership of the Properties, or (iii) Sellers' ability
to perform their obligations under this Contract, nor, to the best knowledge of
Sellers, is any such action, suit or proceeding threatened.
7.1.5 BANKRUPTCY. Sellers are not aware of any attachments,
executions, assignments for the benefit of creditors, or voluntary or
involuntary bankruptcy proceedings, or proceedings under any debtor relief laws,
contemplated by or pending or threatened against Sellers or the Properties.
7.1.6 CONDEMNATION. No condemnation, eminent domain or similar
proceeding has been instituted or, to the best of Sellers' knowledge, threatened
against the Properties.
7.1.7 MATERIAL CHANGE. Sellers have not received written
notice of any pending or contemplated material change in any regulation, code,
ordinance or law, or private restriction applicable to the Properties.
7.1.8 COMPLIANCE WITH LAWS. The Improvements and Personal
Property and the current use thereof comply in all material respects with all
laws, regulations, ordinances (including, without limitation, zoning
ordinances), rules, orders and other requirements of all governmental
authorities having jurisdiction over the Properties or affecting all or any part
thereof or bearing on its construction or operation, and with all private
covenants or restrictions.
7.1.9 LICENSES AND PERMITS. Sellers have acquired all material
Permits, easements, and rights-of-way, including, without limitation, all
building and occupancy permits, from all governmental authorities having
jurisdiction over the Properties or from private parties for the normal use,
maintenance, occupancy, and operation of the Properties as presently being
conducted by Sellers, and to ensure unimpeded access, ingress and egress to and
from the Properties as required to permit normal usage of the related
Improvements, as presently being used by Sellers and all such Permits, easements
and rights-of-way are in full force and effect.
7.1.10 HAZARDOUS SUBSTANCES. Except as (i) disclosed on
Schedule 7.1.10 hereto or in any of the environmental reports furnished to
Purchaser or otherwise obtained by Purchaser, or as otherwise disclosed by
Sellers to Purchaser in writing, or (ii) would not have a material and adverse
effect on the Properties or the business of Sellers operated thereon, (a)
Sellers' operation and management of the Properties and, to the best of Sellers'
knowledge, the Properties, are not in violation of any Environmental Law (as
hereinafter defined) or subject to any pending or, to the best of Sellers'
knowledge, threatened litigation or inquiry by any governmental authority or to
any remedial action or obligations under any Environmental Law; (b) no
underground storage tanks have been located on the Properties by Sellers during
their
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period of ownership and Sellers are not otherwise aware of any underground
storage tanks having been located at the Properties; (c) Sellers have not used
the Properties and, to the best of Sellers' knowledge, no other party has used
the Properties, for the storage, treatment or disposal of hazardous waste,
hazardous material, chemical waste, or other toxic substance except in
accordance with Environmental Law, and (d) no hazardous substances or toxic
wastes have been disposed of or located upon the Properties by Sellers, and, to
the best of Sellers' knowledge, by any other party, in violation of applicable
Environmental Law (including, without limitation, asbestos and PCBs). As used
herein, the term "Environmental Law" means any law, statute, ordinance, rule,
regulation, order or determination of any governmental authority or agency
affecting the Properties and pertaining to health or the environment including,
but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1982 and the Resource Conservation and Recovery Act of 1986.
Prior to Closing, Sellers agree to promptly notify Purchaser of any fact of
which Sellers acquire actual knowledge which would cause this representation to
become false and of any written notice that Sellers receive regarding the
matters set forth in this SECTION 7.1.10.
7.1.11 ASSESSMENTS. To the best knowledge of Sellers, there
are no unpaid assessments for public improvements against the Properties, and
Sellers have no knowledge of any proposed assessments against the Properties. To
the best knowledge of Sellers, the Properties are not subject to assessments for
any street paving or curbing heretofore laid. All sewer, water, gas, electric,
telephone and drainage lines and facilities required by law and for the normal
operation of the Properties are fully installed, currently function and service
the Properties adequately for their current use, and there are no unpaid
assessments or charges for the installation of such utilities or for making
connection thereto that have not been fully paid.
7.1.12 ORGANIZATION AND ENFORCEABILITY. Sellers are duly
organized, validly existing and in good standing under the laws of the State of
their respective organization and are qualified to transact business in the
state in which each Sellers' respective Property is situated. This Contract and
all instruments, documents and agreements to be executed by Sellers in
connection herewith are, or when delivered shall be, duly and validly executed
and delivered by Sellers to Purchaser and are, or when delivered shall be,
legal, valid and binding obligations of Sellers, enforceable against Sellers in
accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, conservatorship, receivership, insolvency, moratorium or
similar laws affecting creditors' rights generally or by general principles of
equity.
7.1.13 CORPORATE CAPACITY. Sellers have the corporate capacity
and complete corporate authority to enter into and perform this Contract, and
except as set forth in Schedule 7.1.13 hereto, no consent, approval or other
action by any other party or entity will be needed thereafter to authorize
Sellers' execution and performance of this Contract. None of the execution and
delivery of this Contract by Sellers, the consummation by Sellers of the
transactions contemplated hereby or compliance by Sellers with any of the
provisions hereof will (i) conflict with or result in any breach of any
provisions of the formation documents of Sellers; (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right to termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Sellers are a party or by which
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Sellers or the Properties may be bound; or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Sellers or the
Properties; except in the case of clauses (ii) or (iii) above, for violations,
breach or defaults (A) that would not, in the aggregate, have a material adverse
effect on the business or financial condition of Sellers and on the
effectiveness of the transactions contemplated hereby or (B) for which waivers
or consents have been or will be obtained prior to the Closing Date (as herein
defined).
7.1.14 FOREIGN PERSON. None of the Sellers is a "foreign
person," "foreign trust" or "foreign corporation" within the meaning of the
United States Foreign Investment and Real Property Tax Act of 1980 and the
Internal Revenue Code of 1986, as subsequently amended.
7.1.15 NO DEFECTS. The Improvements, including, without
limitation, the heating, air conditioning, ventilating, plumbing, life safety
and electrical systems, are in good operating condition and repair in accordance
with normal and customary industry practices (ordinary wear and tear excepted)
and are in material compliance with all applicable governmental laws,
ordinances, regulations and requirements. To the best knowledge of Sellers,
there are no material structural or engineering defects affecting or relating to
all or any part of the Improvements.
7.1.16 AGREEMENTS AFFECTING PROPERTIES. There are no contracts
or other material obligations, other than those matters set forth in the Title
Commitments, Surveys and UCC Searches, outstanding (i) for the sale, exchange or
transfer of the Properties or any portion thereof, or (ii) creating or imposing
any burdens, obligations or restrictions on the Properties, or any portion
thereof, which will bind the Purchaser after Closing.
7.1.17 ACCURACY OF DOCUMENTS. All documents and records
delivered pursuant to Section 6 will be true, correct and complete copies of the
documents and records required to be delivered.
7.1.18 FLOOD PLAIN. To the best of Sellers' knowledge, no
portion of any of the Properties is located inside the 100 year flood plain for
the relevant County, as such plain is determined by the Federal Emergency
Management Agency.
7.1.19 INSURANCE. Sellers currently maintain customary
insurance with respect to the Properties under policies of insurance which are
in full force and effect. During the three-year period ending on the date
hereof, no such policies have been cancelled by an insurer and no application of
Sellers for insurance has been rejected by an insurer. Sellers have not received
any written notice that any insurance policy now in effect would not be renewed
or that any defects or inadequacies exist in the Property, or any part thereof,
which could materially and adversely affect the insurability thereof or the cost
of such insurance.
7.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents to
Sellers that, as of the date hereof:
7.2.1 ORGANIZATION AND ENFORCEABILITY. Purchaser is duly
organized, validly existing and in good standing under the laws of the state of
its organization. This Contract and all instruments, documents and agreements to
be executed by Purchaser in connection herewith
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are, or when delivered shall be, duly and validly executed and delivered by
Purchaser to Sellers and are, or when delivered shall be, legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with their respective terms, except as such enforcement may be limited by
bankruptcy, conservatorship, receivership, insolvency, moratorium or similar
laws affecting creditors' rights generally or by general principles of equity.
7.2.2 CORPORATE CAPACITY. Purchaser has the capacity and
complete authority to enter into and perform this Contract, and except as set
forth in Schedule 7.2.2 hereto, no consent, approval or other action by any
other party or entity will be needed thereafter to authorize Purchaser's
execution and performance of this Contract. None of the execution and delivery
of this Contract by Purchaser, the consummation by Purchaser of the transactions
contemplated hereby or compliance by Purchaser with any of the provisions hereof
will (i) conflict with or result in any breach of any provisions of the
formation documents of Purchaser; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right to termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Purchaser is a party or by which Purchaser may be bound; or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Purchaser; except in the case of clauses (ii) or (iii) above, for violations,
breach or defaults (A) that would not in the aggregate have a material adverse
effect on the business or financial condition of Purchaser and on the
effectiveness of the transaction contemplated hereby or (B) for which waivers or
consents have been or will be obtained prior to the Closing Date.
7.2.3 LITIGATION. There is no action, suit, proceeding or
claim presently pending in any court or before any federal, state, county or
municipal department, commission, board, bureau or agency or other governmental
instrumentality or before any arbitration tribunal or panel, affecting
Purchaser's ability to perform its obligations under this Contract, nor, to the
best knowledge of Purchaser, is any such action, suit, proceeding or claim
threatened.
7.3 BEST KNOWLEDGE. For purposes of this Contract, the phrase "to the
best of Sellers' knowledge" means that Sellers have conducted a reasonable
review of Sellers' files and interviewed Sellers' current employees in positions
of responsibility on the subject and, except as otherwise disclosed herein, such
review and interviews resulted in no information that would create actual
knowledge of the inaccuracy or falsehood of any such representation or warranty.
7.4 SELLERS' COVENANTS. Sellers agree that during the period from the
date hereof through the Closing Date Sellers will perform the following
covenants:
7.4.1 OPERATION. Sellers will (i) operate the Properties as
presently being conducted (ii) continue to offer services and amenities in
accordance with past practices and (iii) maintain the Improvements and Personal
Property in as good a condition and state of repair as that existing on the date
of this Contract (ordinary wear and tear excepted).
7.4.2 NEW CONTRACTS. Sellers will not, without the prior
written consent of Purchaser, (i) enter into any service contract that will not
be fully performable by Sellers on or before the Closing Date, (ii) amend,
modify or supplement any existing service contract or
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Permit in any material respect, except in the ordinary course of business, or
(iii) enter into any new lease for the Properties; provided, however, that
Sellers shall not enter into any new service contract providing for payments in
excess of $10,000 per year without the prior written consent of Purchaser and
provided, further, however, no consent of the Purchaser shall be required for
any contract providing for annual payments of $25,000 per year or less that can
be terminated upon no more than thirty (30) days' notice (however, the Sellers
shall give the Purchaser notice of any such contract with payments in excess of
$10,000 per year). Any consent requested by Sellers pursuant to this SECTION
7.4.2 will be deemed rejected if Purchaser does not respond by written notice to
Sellers within ten (10) days after Purchaser's receipt of Sellers' written
request.
7.4.3 LITIGATION. Sellers will advise Purchaser promptly after
becoming aware of any litigation or any arbitration proceeding or any
administrative hearing (including condemnation) before any governmental agency
which materially and adversely concerns or affects the Properties in any manner
and which is instituted after the Effective Date, provided that such
notification will not relieve Sellers of any obligations hereunder.
7.4.4 CONSTRUCTION. Sellers will not, without the prior
written consent of the Purchaser, permit any material modifications or additions
to the Improvements.
7.4.5 SALE OF PERSONAL PROPERTY. Sellers will not transfer or
dispose of, or permit to be sold, transferred or otherwise disposed of, any item
or group of items constituting Personal Property, except for the use and
consumption of inventory, office and other supplies and spare parts, and the
replacement of worn out, obsolete and defective tools, equipment and appliances,
in the ordinary course of business.
7.4.6 INSURANCE. Sellers will maintain Sellers' existing or
comparable replacement insurance coverage with respect to the Properties.
7.4.7 FURTHER ENCUMBRANCES. Sellers will not voluntarily
encumber the Properties in any manner.
7.4.8 COOPERATION. Sellers will, at no cost to Sellers,
reasonably assist and cooperate with Purchaser prior to Closing (i) in obtaining
all necessary permits and licenses to continue operating the Properties in the
present manner and (ii) with any evaluation, inspection, audit or study of the
Properties prepared by, for or at the request of Purchaser.
7.4.9 CONSENTS. Sellers will use their best efforts to obtain
from any federal, state or local authorities or any private persons or entities,
any consents, approvals, authorizations and permissions which are reasonably
considered necessary or appropriate for consummation of this transaction by
Sellers or to prevent the termination of any Permit.
7.4.10 FEE SIMPLE. Mesa shall use its best efforts to cause
the Arizona Property to be owned in fee simple by Mesa by the Closing. In
addition, Mesa shall use its best efforts to enter into a binding agreement as
soon as practicable after the date hereof with the owner of the Arizona Property
to so convey the Arizona Property to Mesa on or before the Closing.
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7.5 INTENTIONALLY OMITTED.
7.6 PURCHASER'S CONDITIONS PRECEDENT. Purchaser's obligation to
consummate this transaction is expressly conditional upon the conditions
precedent set forth in SUBSECTIONS 7.6.1 through 7.6.7 of this Contract.
7.6.1 ACCURACY OF REPRESENTATIONS. Each of the representations
and warranties made by Sellers in this Contract will be true and correct in all
material respects on the Closing Date as if made on and as of such date except
to the extent that the breach thereof has not resulted in a material adverse
effect on the business, operations, properties, financial condition, results of
operations, Properties, Personal Property, Property (as defined in the Crescent
Real Estate Purchase Contract), Personal Property (as defined in the Crescent
Real Estate Purchase Contract), or Assets (as defined in the Charter Purchase
Agreement) of Sellers, the Seller (as defined in the Crescent Real Estate
Purchase Contract) and the Sellers (as defined in the Charter Purchase
Agreement), taken as a whole. For purposes hereof, "Crescent Real Estate
Purchase Contract" means that certain Purchase and Sale Contract to be entered
into between The Haven Hospital, Inc., as Seller, and Crescent Real Estate
Equities Limited Partnership, as Purchaser.
7.6.2 PERFORMANCE OF COVENANTS. Sellers will not have failed
to perform or comply in any material respect with any of Sellers' material
agreements, covenants or obligations in the manner and within the periods
provided herein.
7.6.3 TITLE. The Title Company will have irrevocably committed
to issue to Purchaser an owner's title insurance policy (ALTA Form B, 10/17/70
revision with `84 amendments) for each of the Properties (collectively, the
"Title Policies"), in the amount of the portion of the Purchase Price applicable
to the relevant Property, and insuring that Purchaser has good and indefeasible
fee simple title to the relevant Property, subject only to the Permitted
Exceptions applicable to such Property.
7.6.4 NO INJUNCTION. On the Closing Date, there will be no
third party injunction, writ, preliminary restraining order or any order of any
nature issued or threatened by a court of competent jurisdiction directing that
the transactions contemplated by this Contract not be consummated, as herein
provided.
7.6.5 FEE SIMPLE. Mesa shall own the Arizona Property in fee
simple by the Closing.
7.6.6 CONSENTS. The applicable waiting period, if any, under
the Hart-Scott-Rodino Act shall have expired or been terminated, the consent
with an asterisk next to it on Schedule 7.1.13 shall have been duly obtained and
delivered to Purchaser and Seller and each of the consents on Schedule 7.2.2
shall have been duly obtained and delivered to the Purchaser and Sellers.
7.6.7 CLOSING. The Closing (as that term is defined in the
Charter Purchase Agreement) of the transactions contemplated in the Charter
Purchase Agreement has occurred or shall occur simultaneously with the Closing
of the transactions contemplated herein and the Closing (as that term is defined
in Crescent Real Estate Purchase Contract) of the transactions contemplated in
the Crescent Real Estate Purchase Contract has occurred or shall occur
simultaneously with the closing of the transactions contemplated herein.
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7.7 SELLERS' CONDITIONS PRECEDENT. Sellers' obligation to consummate
this transaction is expressly conditional upon the conditions precedent set
forth in SUBSECTIONS 7.7.1 through 7.7.6 of this Contract.
7.7.1 ACCURACY OF REPRESENTATIONS. Each of the representations
and warranties made by Purchaser in this Contract will be true and correct in
all material respects on the Closing Date as if made on and as of such date.
7.7.2 PERFORMANCE OF COVENANTS. Purchaser will not have failed
to perform or comply in any material respect with any of Purchaser's material
agreements, covenants or obligations in the manner and within the periods
provided herein.
7.7.3 NO INJUNCTION. On the Closing Date, there will be no
third party injunction, writ, preliminary restraining order or any order of any
nature issued or threatened by a court of competent jurisdiction directing that
the transactions contemplated by this Contract not be consummated, as herein
provided.
7.7.4 CONSENTS. The applicable waiting period, if any, under
the Hart-Scott-Rodino Act shall have expired or been terminated and the consent
with an asterisk next to it on Schedule 7.1.13 shall have been duly obtained and
delivered to the Purchaser and Sellers.
7.7.5 CLOSING. The Closing (as that term is defined in the
Charter Purchase Agreement) of the transactions contemplated in the Charter
Purchase Agreement has occurred or shall occur simultaneously with the Closing
of the transactions contemplated herein and the Closing (as that term is defined
in Crescent Real Estate Purchase Contract) of the transactions contemplated in
the Crescent Real Estate Purchase Contract has occurred or shall occur
simultaneously with the closing of the transactions contemplated herein.
7.7.6 ARIZONA PROPERTY. Sellers shall own the Arizona Property
in fee simple by the Closing Date; provided, however, that this Section 7.7.6
shall cease to be a condition precedent under this Section 7.7 from and after
August 7, 1998.
8. INDEMNITY.
8.1 PURCHASER'S INDEMNITY. From and after Closing, Purchaser hereby
agrees to indemnify Sellers against, and to hold Sellers harmless from, all
claims, demands, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) (collectively, "Losses") asserted against or incurred by Sellers
to the extent in connection with or arising out of (i) Purchaser's failure to
perform any of Purchaser's covenants contained herein (other than the
indemnification obligations set forth in Section 8.3.2) except if such failure
results from the termination of this Contract by Purchaser or Sellers pursuant
to a right to terminate expressly set forth in this Contract or Sellers' failure
to perform Sellers' obligations under this Contract, or (ii) a breach of any
representation, warranty or covenant of Purchaser contained in this Contract.
8.2 SELLERS' INDEMNITY. From and after Closing, Sellers hereby agree to
jointly and severally indemnify Purchaser against, and to hold Purchaser
harmless from all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation,
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reasonable attorneys' fees and disbursements) asserted against or incurred by
Purchaser to the extent in connection with or arising out of (i) Sellers'
failure to perform any of Sellers' covenants contained herein (other than the
indemnification obligations set forth in Section 8.3.1) except if such failure
results from the termination of this Contract by Purchaser or Sellers pursuant
to a right to terminate expressly set forth in this Contract or Purchaser's
failure to perform Purchaser's obligations under this Contract or (ii) a breach
of any representation, warranty or covenant of Sellers contained in this
Contract.
8.3 ENVIRONMENTAL INDEMNITIES.
8.3.1 SELLERS' ENVIRONMENTAL INDEMNITY. From and after the
Closing, the Sellers shall jointly and severally indemnify and hold the
Purchaser harmless against with respect to, except with respect to matters set
forth in Schedule 7.1.10-1, any and all Losses to the extent arising out of,
based on or resulting from (i) claims by any federal, state, local government or
other third party relating to the presence of any Materials of Environmental
Concern on, in or under any part of the Properties at any time prior to the
Closing Date, (ii) claims by any federal, state, local government or other third
party relating to the release into the environment (either before or after the
Closing Date) of any Materials of Environmental Concern that were generated,
stored, handled or disposed of on, in, under or from the Properties prior to the
Closing Date, (iii) the alleged violation asserted by any federal, state, local
government or other third party of the Environmental Laws or the Medical Waste
Laws occurring with respect to the condition or operation of the Properties
prior to the Closing Date or (iv) the violation of the Environmental Laws or the
Medical Waste Laws occurring with respect to the condition or operation of the
Properties prior to the Closing Date.
8.3.2 PURCHASER'S ENVIRONMENTAL INDEMNITY. From and after the
Closing, Purchaser shall indemnify and hold the Sellers harmless against with
respect to, except with respect to matters set forth in Schedule 7.1.10-1, any
and all Losses to the extent arising out of, based on or resulting from (i)
claims by any federal, state, local government or other third party relating to
the presence of any Materials of Environmental Concern on, in or under any part
of the Properties placed on the Properties by Purchaser, its subsidiaries or
their respective agents at any time after the Closing Date, (ii) claims by any
federal, state, local government or other third party relating to the release
into the environment after the Closing Date of any Materials of Environmental
Concern that were generated, stored, handled or disposed of on, in, under or
from the Properties by the Purchaser, its subsidiaries or their respective
agents after the Closing Date, (iii) the alleged violation asserted by any
federal, state, local government or other third party of the Environmental Laws
or the Medical Waste Laws occurring with respect to the condition or operation
of the Properties by the Purchaser, its subsidiaries or their respective agents
after the Closing Date or (iv) the violation of the Environmental Laws or the
Medical Waste Laws occurring with respect to the condition or operation of the
Properties by the Purchaser, its subsidiaries or their respective agents after
the Closing Date.
8.3.3 SELLERS' ADDITIONAL ENVIRONMENTAL INDEMNITY. From and
after the Closing, Sellers shall jointly and severally indemnify and hold
Purchaser harmless against, with respect to matters set forth in Schedule
7.1.10-1, any and all Losses to the extent arising out of, based on or resulting
from (i) claims by any federal, state, local government or other third party
relating to the presence of any Materials of Environmental Concern on, in or
under any part of the
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Properties at any time prior to the Closing Date, (ii) claims by any federal,
state, local government or other third party relating to the release into the
environment (either before or after the Closing Date) of any Materials of
Environmental Concern that were generated, stored, handled or disposed of on,
in, under or from the Properties prior to the Closing Date, (iii) the alleged
violation asserted by any federal, state, local government or other third party
of the Environmental Laws or the Medical Waste Laws occurring with respect to
the condition or operation of the Properties prior to the Closing Date or (iv)
the violation of the Environmental Laws or the Medical Waste Laws occurring with
respect to the condition or operation of the Properties prior to the Closing
Date;
8.3.4 CERTAIN DEFINITIONS. For purposes hereof, (i) "Materials
of Environmental Concern" means any toxic or hazardous waste, pollutants or
substances, including, without limitation, asbestos, urea formaldehyde,
radioactive substances, materials or wastes, PCBs, petroleum products and
byproducts defined or listed as "hazardous substances", "hazardous waste",
"toxic substances", "toxic pollutants", "medical waste", "air pollutants",
"hazardous air pollutants" or similarly identified substances or mixtures, in or
pursuant to the Environmental Laws or the Medical Waste Laws, (ii) "Medical
Waste Laws" means the following, including regulations promulgated and orders
issued thereunder, to the extent such laws regulate Medical Waste, all as may be
amended or modified until the date of Closing: Medical Waste Tracking Act of
1988, 42 U.S.C. section 6992, ET SEQ. ("MWTA"), 42 CFR Part 72 and 49 CFR Part
173, 386; Resource Conservation and Recovery Act of 1976, 42 U.S.C. section 6901
ET SEQ.; Air Pollution Prevention and Control Act, 42 U.S.C. section 7401 ET
SEQ.; Water Pollution Control Act, 33 U.S.C. section 1251 ET SEQ.; Marine
Protection, Research and Sanctuaries Act of 1972, 33 U.S.C. section 1401 ET
SEQ.; Nuclear Regulatory Commission regulations contained in 10 CFR Parts 20 and
61; Occupational Safety and Health Act, 29 U.S.C. section 651 ET SEQ.; Public
Health Service regulations contained in 42 CFR Part 72; Food and Drug
Administration regulations contained in 21 CFR Parts 58 and 211; U.S. Department
of Transportation regulations contained in 49 CFR Parts 171-179; The Act to
Prevent Pollution from Ships, 33 U.S.C. section 1901 ET SEQ.; U.S. Department of
Agriculture regulations contained in 9 CFR Parts 50-56; U.S. Postal Service
regulations contained in 39 CFR Part 111; local environmental and safety laws,
rules, regulations and other legally binding requirements and any other federal,
state, regional, county, municipal or other local laws, regulations and
ordinances insofar as they purport to regulate Medical Waste or impose
requirements relating to Medical Waste, and (iii) "Medical Waste" means any
substance, pollutant, materials or contaminant listed or regulated under the
Medical Waste Laws.
8.4 LIMITATION ON INDEMNIFICATION OBLIGATIONS. Notwithstanding anything
contained in this Section 8 to the contrary, no party shall assert a claim for
indemnification against the other pursuant to this Section 8 unless and until
the amount of all Losses determined to have been incurred or suffered at the
time by the Sellers hereunder, the Seller (as defined in the Crescent Real
Estate Purchase Agreement) and the Sellers (as defined in the Charter Purchase
Agreement) and the Shareholder (as defined in the Charter Purchase Agreement),
on the one hand, and the Purchaser, the Purchaser (as defined in the Charter
Purchase Agreement) and the Purchaser (as defined in the Crescent Real Estate
Purchase Contract), on the other hand, pursuant to the indemnification
provisions under this Contract, the Crescent Real Estate Purchase Contract
and/or under the Charter Purchase Agreement (other than those for which first
dollar claims which are not subject to deductible amounts can be made pursuant
to the Charter Purchase Agreement or the Crescent Real Estate Purchase Contract)
exceeds, in the aggregate, $250,000
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(the "Threshold Amount"), at which time such party may make a claim only to the
extent that the aggregate amount of such claims exceeds the Threshold Amount;
provided, however, the foregoing limitation shall not apply to a claim for
indemnification pursuant to (w) Section 8.1 (ii) or Section 8.2 (ii) with
respect to those matters set forth in Section 7.1.2, 7.1.4, 7.1.12, 7.1.13,
7.2.1 and 7.2.2 hereof, (x) Section 8.1(i), (y) Section 8.2(i) or (z) Section
8.3.3. The parties hereto further acknowledge and agree that the total
indemnification obligations of the Sellers, the Seller (as defined in the
Crescent Real Estate Purchase Agreement) and of the Sellers (as defined in the
Charter Purchase Agreement) and the Shareholder (as defined in the Charter
Purchase Agreement), on the one hand, and of the Purchaser, the Purchaser (as
defined in the Charter Purchase Agreement) and the Purchaser (as defined in the
Crescent Real Estate Purchase Contract) on the other hand, under this Contract,
the Crescent Real Estate Purchase Contract, and under the Charter Purchase
Agreement shall not exceed, in the aggregate, the Purchase Price payable
hereunder, plus the Purchase Price (as defined in the Crescent Real Estate
Purchase Contract) payable under the Crescent Real Estate Purchase Contract,
plus the Purchase Price (as defined in the Charter Purchase Agreement) payable
under the Charter Purchase Agreement; provided, however, the foregoing
limitation shall not apply to a claim for indemnification pursuant to (w)
Section 8.1 (ii) or Section 8.2 (ii) with respect to those matters set forth in
Sections 7.1.2, 7.1.4, 7.1.10, 7.1.12, 7.1.13, 7.2.1 and 7.2.2 hereof, (w)
Section 8.1(i),(x) Section 8.2(i), (y) Section 8.3.1 or Section 8.3.2 or (z)
Section 8.3.3.
8.5 SURVIVAL, REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants contained in this Contract shall be deemed continuing
and shall survive the Closing Date as follows (i) the representations and
warranties set forth in Sections 7.1.12, 7.1.13, 7.2.1 and 7.2.2 shall continue
in full force and effect indefinitely; (ii) the representations and warranties
set forth in Section 7.1.10 shall continue in full force and effect for a time
period equal to the applicable statute of limitations with respect to claims
pertaining thereto; (iii) all other representations and warranties shall
continue in full force and effect until the second (2nd) anniversary of the
Closing Date; and (iv) except with respect to any covenants that terminate or
expire upon a date specified herein, all covenants shall continue in full force
and effect indefinitely (except for covenants under Section 7.4 which shall not
survive the Closing).
8.6 EXCLUSIVE REMEDY. From and after the Closing, the sole and
exclusive remedy of any party for any misrepresentation or any breach of a
warranty or covenant under or pursuant to this Contract or otherwise relating to
the subject matter of this Contract shall be a claim for indemnification under
and pursuant to this Section 8; provided, however, that nothing set forth in
this Section shall prohibit or restrict a party from seeking equitable relief,
including, without limitation, specific performance or injunctive relief.
9. CLOSING.
9.1 CLOSING DATE. The consummation of this transaction (the "Closing")
will take place at such location upon which Sellers and Purchaser mutually
agree, at 2:00 p.m. on the date that is the later of July 31, 1998 or within
five Business Days after the satisfaction or waiver of all Purchaser's and
Sellers' conditions precedent set forth herein (the "Closing Date"), unless
Sellers and Purchaser mutually agree to an earlier or later date.
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9.2 SELLERS' OBLIGATIONS AT THE CLOSING. At the Closing, Sellers will
do, or cause to be done, the following:
9.2.1 DOCUMENTS. Each of the Sellers, as applicable, will
execute, acknowledge (if necessary), and deliver the following documents:
9.2.1.1 A Special Warranty Deed for the relevant
Property, in substantially the form and substance of Exhibit B (the "Deeds");
9.2.1.2 A Bill of Sale for the relevant Personal
Property, in substantially the form and substance of Exhibit C;
9.2.1.3 Certificate of Non-Foreign Status for each
of the Sellers in substantially the form and substance of Exhibit D;
9.2.1.4 An updated certificate executed by Sellers
remaking and reaffirming all representations and warranties made by Sellers to
Purchaser in accordance with the provisions of ARTICLE 7.
9.2.2 ORIGINAL DOCUMENTS. Sellers will deliver to Purchaser
originals within Sellers' possession of all items enumerated in SECTION 6.1 of
this Contract.
9.2.3 POSSESSION. Sellers will deliver possession of the
Properties.
9.2.4 KEYS. Sellers will deliver all keys and master keys to
all locks located on the Properties, properly tagged for identification, as well
as combinations, card keys and cards for the security systems, if any.
9.2.5 COSTS. Sellers will pay all costs allocated to Sellers
pursuant to SECTION 9.4 of this Contract.
9.2.6 ADDITIONAL DOCUMENTS. Sellers will execute and deliver
or obtain for delivery to the Title Company any other instruments reasonably
necessary to consummate this Contract, including, by way of example, closing
statements, releases, evidence of the authority of the party executing
instruments on Sellers' behalf and delivery of instruments reasonably required
by the Title Company under each of the Title Commitments including an owner's
affidavit required by the Title Company for removal of standard exceptions, but
excluding any indemnification documents.
9.3 PURCHASER'S OBLIGATIONS AT THE CLOSING. At the Closing, Purchaser
will do, or cause to be done, the following:
9.3.1 PAYMENT OF CONSIDERATION. Purchaser will pay to Sellers
the Purchase Price, as adjusted in accordance with the provisions of this
Contract.
9.3.2 ADDITIONAL DOCUMENTS. Purchaser will execute and deliver
or obtain for delivery to the Title Company any instruments reasonably necessary
to consummate this
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Contract, including by way of example, closing statements and evidence of the
authority of the party executing instruments on behalf of Purchaser.
9.3.3 COSTS. Purchaser will pay all costs allocated to
Purchaser pursuant to SECTION 9.4 of this Contract.
9.4 COSTS AND ADJUSTMENTS AT CLOSING.
9.4.1 EXPENSES. Purchaser will pay for the title examination
fees and the premiums for the Title Policies (including the cost of any special
deletions from standard printed exceptions on the Title Policies and all
endorsements to the Title Policies required by Purchaser), the cost of the UCC
Searches, the cost of preparing the Surveys, one-half of all real property
transfer taxes, one-half of the recording fees, and one-half of the escrow fees
charged by the Title Company. Sellers will be responsible for one-half of the
transfer taxes one-half of the recording fees and one-half of the escrow fees
charged by the Title Company. Sellers and Purchaser will be responsible for the
fees and expenses of their respective attorneys.
9.4.2 REAL ESTATE TAXES. Real estate taxes on the Properties
for the calendar year of the Closing will be prorated between Sellers and
Purchaser as of the Closing Date. If the amount of such taxes are not known at
Closing, the proration of such real estate taxes will be based on the amount of
such taxes for the previous real estate tax fiscal period. As soon as the actual
amount of real estate taxes on the Properties for the calendar year of Closing
are known, Sellers and Purchaser will readjust the amount of such taxes to be
paid by each party with the result that Sellers will pay for those taxes
applicable to the Properties up to and including the date of Closing and
Purchaser will pay for those taxes and assessments applicable to the Properties
after the Closing Date. The provisions of this SECTION 9.4.2 will survive the
Closing.
9.4.3 ADJUSTMENT. To the extent that errors are discovered in,
or additional information becomes available with respect to the prorations and
allocations made at Closing, Sellers and Purchaser agree to make such
post-Closing adjustments as may be necessary to correct any inaccuracy; however,
all prorations (except for ad valorem taxes) will be final within ninety (90)
days after Closing. Sellers agree to deliver to Purchaser all invoices and
payments related to the Properties received by Sellers after Closing.
10. TERMINATION.
10.1 METHOD OF TERMINATION. This Contract constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, subject to and in accordance with the terms hereof, the consideration
for which is (i) the covenants, representations and warranties set forth in this
Contract and (ii) expenditures and obligations incurred and to be incurred by
each of the parties hereto, in respect of this Contract, and this Contract may
be terminated or abandoned only as follows:
10.1.1 By the mutual consent of the Purchaser and Sellers.
10.1.2 By the Purchaser pursuant to the terms of Section 5.2
or Section 11 and by the Sellers pursuant to Section 11.
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10.1.3 By the Purchaser after September 15, 1998, if any of
the conditions set forth in Section 7.6, to which the obligations of the
Purchaser are subject, have not been fulfilled in all material respects or
waived in writing, unless such fulfillment has been frustrated or made
impossible by any act or failure to act of the Purchaser.
10.1.4 By Sellers after September 15, 1998, if any of the
conditions set forth in Section 7.7, to which the obligations of the Sellers are
subject, have not been fulfilled in all material respects or waived in writing,
unless such fulfillment has been frustrated or made impossible by any act or
failure to act of the Sellers.
10.1.5 By the Sellers or the Purchaser upon written notice to
the other at any time after 5:00 P.M. E.D.T. on June 26, 1998 if the Crescent
Real Estate Purchase Contract, in substantially the form attached as Exhibit
10.1.5 to the Charter Purchase Agreement (together with any changes mutually
agreed by the parties to the Crescent Real Estate Purchase Contract), is not
fully executed by all the parties thereto by 5:00 P.M. E.D.T. on June 26, 1998.
10.2 RIGHTS UPON TERMINATION.
10.2.1 In the event of a termination of this Contract pursuant
to Section 10.1.1 or Section 10.1.2, Section 10.1.3 (other than by reason of a
willful and knowing breach) or Section 10.1.4 (other than by reason of a willful
and knowing breach), or Section 10.1.5, each party shall pay the costs and
expenses incurred by it in connection with this Contract and no party (or any of
its officers, directors, employees, agents, representatives or stockholders)
shall be liable to any other party for any costs, expenses, damages or loss of
anticipated profits, except for any rights or obligations hereunder which, by
their terms, survive any termination of this Contract.
10.2.2 In the event of a termination of this Contract pursuant
to Section 10.1.3 and if the Sellers shall be in breach of any material
provision of this Contract as a result of a willful and knowing breach, then the
Purchaser shall have all rights and remedies available at law or in equity.
10.2.3 In the event of a termination of this Contract pursuant
to Section 10.1.4 and if the Purchaser shall be in breach of any material
provision of this Contract as a result of a willful and knowing breach, then the
Sellers shall have all rights and remedies available at law or in equity.
10.3 EXCLUSIVE REMEDY UPON TERMINATION. The sole and exclusive remedy
of any party following a termination of this Contract or if the Closing does not
otherwise occur, for any misrepresentation or breach of any warranties or
covenants under or pursuant to this Contract or otherwise relating to the
subject matter hereof shall be to terminate this Contract pursuant to Section
10.1 (to the extent not theretofore terminated) and to pursue the remedies
provided for in Section 10.2 hereof.
11. RISK OF LOSS, DESTRUCTION, AND CONDEMNATION.
11.1 RISK OF LOSS. Risk of loss for damage to the Properties, or any
part thereof, by fire or other casualty from the Effective Date through the
Closing Date will be on Sellers. Upon Closing, full risk of loss with respect to
the Properties will pass to Purchaser.
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11.2 CASUALTY AND CONDEMNATION.
In the event of any material physical loss, damage or
impairment, confiscation or condemnation of any material portion of the
Properties prior to the Closing, the Sellers shall use their best efforts to
repair, replace or restore such Properties to their prior condition as soon as
reasonably practicable after such loss, damage, impairment, condemnation or
confiscation, and the proceeds of any claim for loss payable under any insurance
policy, judgment or award with respect thereto shall be applied to such repairs,
subject to applicable agreements governing the indebtedness of Sellers. If any
material damage or destruction of the Properties or any other event occurs which
prevents the operation of the Properties in the normal and usual manner and the
Sellers cannot restore or replace the Properties so that such conditions are
cured in all material respects and normal operations are resumed before the
Closing Date, the Closing Date shall be postponed for a period of up to 60 days,
to permit the repair or replacement of the damaged portion of the Properties. In
the event of any material damage or destruction of the Properties as described
herein, if such Properties have not been restored or replaced and the affected
Property's normal operations resumed within the 60-day period contemplated
hereby, the Purchaser or the Sellers may terminate this Contract forthwith
without any further obligation hereunder by written notice to the other.
12. REAL ESTATE COMMISSIONS AND FEES.
Sellers represent and warrant to Purchaser that Sellers have not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any party in connection with this transaction and that Sellers have
not taken any action which would result in any real estate broker's or finder's
fees or commissions being due and payable to any party with respect to the
transaction contemplated hereby. Purchaser hereby represents and warrants to
Sellers that Purchaser has not contracted or entered into any agreement with any
real estate broker, agent, finder, or any party in connection with this
transaction and that Purchaser has not taken any action which would result in
any real estate broker's or finder's fees or commissions being due or payable to
any party with respect to the transaction contemplated hereby. Each party hereby
indemnifies and agrees to hold the other party harmless from any loss,
liability, damage, cost, or expense (including, without limitation, reasonable
attorneys' fees) paid or incurred by the other party by reason of a breach of
the representation and warranty made by such party under this SECTION 12.
Notwithstanding anything to the contrary contained herein, the indemnities set
forth in this Section 12 will survive the Closing.
13. NOTICES.
13.1 WRITTEN NOTICE. All notices, demands and requests which may be
given or which are required to be given by either party to the other party under
this Contract must be in writing.
13.2 METHOD OF TRANSMITTAL. All notices, demands and requests required
to be in writing must be sent by United States certified or registered mail,
postage fully prepaid, return receipt requested, or by Federal Express or a
similar nationally recognized overnight courier service, or by facsimile with a
confirmation copy delivered by a nationally recognized overnight courier
service. Notice will be considered effective on the earlier to occur of actual
receipt or twenty-four (24) hours after depositing same with the overnight
courier service.
<PAGE> 21
21
13.3 ADDRESSES. The addresses for proper notice under this Contract are
as follows:
Purchaser:
Charter Behavioral Health Systems, LLC
1105 Sanctuary Parkway - Suite 400
Alpharetta, Georgia 30004
Attn: Vice President Business Development
Facsimile No.: (678) _________
with a copy to:
Charter Behavioral Health Systems, LLC
1105 Sanctuary Parkway - Suite 400
Alpharetta, Georgia 30004
Attn: General Counsel
Facsimile No.: (678) ________
Sellers:
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Attention: President
Facsimile No.: (305) 569-4647
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost, Esq.
Facsimile No.: (292) 682-0200
Either party may from time to time by written notice designate a different
address to the other party.
14. ASSIGNMENT.
None of the parties hereto may assign this Contract without the prior
written consent of the other parties hereto; provided, however, that the
Purchaser may assign its rights (but not its obligations) under this Contract,
in whole or in part, to an affiliate of the Purchaser for purposes of enabling
such affiliate to purchase all or a portion of the Properties provided no such
assignment shall delay the Closing or any condition to the Closing, and in the
event of such assignment by the Purchaser, Purchaser's assignee shall for all
purposes constitute the "Purchaser" with respect to the portion of the
Properties acquired by such assignee.
<PAGE> 22
22
15. INTERPRETATIVE.
15.1 ENTIRE AGREEMENT. This Contract embodies the entire agreement
between the parties and cannot be varied except by the written agreement of the
parties.
15.2 NO OTHER REPRESENTATIONS AND WARRANTIES. It is agreed that, except
for the representations and warranties specifically set forth herein, Purchaser
is not relying on any representation or warranty of Sellers (expressed or
implied), its representatives, agents or employees, whatsoever pertaining to the
Properties, the condition thereof, the value thereof, the physical,
environmental or other conditions of the Properties, or any other matter with
respect to the Properties, and Sellers specifically disclaim making any such
representation or warranty.
15.3 GENDER AND NUMBER. Words of any gender used in this Contract will
be construed to include any other gender and words in the singular number will
be construed to include the plural, and vice versa, unless the context requires
otherwise.
15.4 CAPTIONS. The captions used in connection with the Articles,
Sections and Subsections of this Contract are for convenience only and will not
be deemed to expand or limit the meaning of the language of this Contract.
15.5 SUCCESSORS AND ASSIGNS. This Contract will be binding upon and
inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
15.6 MULTIPLE COUNTERPARTS. This Contract may be executed in several
counterparts, each of which will be deemed an original, and all of which will
constitute but one and the same instrument. This Contract may be executed via
facsimile, and such Contract executed via facsimile shall have the same force
and effect as an original document and shall be legally binding upon the
parties.
15.7 CONTROLLING LAW. This Contract will be construed under, governed
by and enforced in accordance with the laws of the State of Georgia.
15.8 EXHIBITS. All exhibits, attachments, annexed instruments and
addenda referred to herein will be considered a part hereof for all purposes
with the same force and effect as if copied verbatim herein.
15.9 NO RULE OF CONSTRUCTION. Sellers and Purchaser have been
represented by counsel in the negotiations and preparation of this Contract;
therefore, this Contract will be deemed to be drafted by both Sellers and
Purchaser, and no rule of construction will be invoked respecting the authorship
of this Contract.
15.10 SEVERABILITY. All agreements and covenants contained in this
Contract are severable. In the event any agreement or covenant is held to be
invalid by any court, this Contract will be interpreted as if such invalid
agreement or covenant were not contained herein.
15.11 CONSTRUCTION OF CERTAIN WORDS. "Any" will be construed as "any
and all." "Including" will be construed as "including but not limited to."
<PAGE> 23
23
15.12 TIME OF ESSENCE. Time is important to both Sellers and Purchaser
in the performance of this Contract, and both parties have agreed that strict
compliance is required as to any date set out in this Contract.
15.13 BUSINESS DAYS. "Business Day" means any day on which business is
generally transacted by banks in Atlanta, Georgia. If the final date of any
period which is set out in any paragraph of this Contract falls upon a day which
is not a Business Day, then, and in such event, the time of such period will be
extended to the next Business Day.
15.14 LEGAL FEES. In the event any party to this Contract commences
legal action of any kind to enforce the terms and conditions of this Contract,
the prevailing party in such litigation will be entitled to collect from the
other party or parties all costs, expenses and attorneys' fees incurred in
connection with such action.
15.15 CONTACT WITH CERTAIN PERSONS. Notwithstanding anything to the
contrary contained in this Contract, the Purchaser agrees that it shall not,
without the prior written consent of the Vice Chairman of the Board, the
President or the Chief Financial Officer of Sellers, contact any customer,
provider or supplier (whether of goods or services) or any other person or
entity with whom the Sellers have commercial dealings, other than employees, to
discuss the transactions contemplated by this Contract or the business,
operations or affairs of any of the Sellers, the Properties or otherwise. Any
contact with employees shall be coordinated with the Chief Executive Officer for
each Property.
16. CONFIDENTIALITY.
Purchaser and Sellers agree not to record this Contract and to hold all
information related to this transaction in strict confidence, and will not
disclose same to any person other than directors, officers, employees and agents
of their companies, as well as to consultants, banks or other third parties
working with Sellers or Purchaser in connection with the transaction ("Related
Parties") who need to know such information for the purpose of consummating this
transaction. This prohibition will not be applicable to disclosure of
information required by applicable law, rule or regulation and will not survive
the Closing.
17. PRESS RELEASES.
Except as provided in this Section 17, prior to Closing, any release to
the public of information with respect to the matters set forth in this Contract
will be made only in the form approved by Purchaser and Sellers and their
respective counsel, except to the extent otherwise required by law. Purchaser
and Sellers are affiliated with publicly-held corporations, the securities of
which are traded on national securities exchanges. The parties acknowledge that
the parties and their respective affiliates may be compelled by considerations
of legal obligation, fiduciary and public responsibility, commercial pragmatism
and established corporate policy, to issue a public press release announcing
that they have entered into this Contract and stating the material terms hereof.
Subject to reasonable advance notice to and consultation with the
non-disseminating party, the parties hereby consent to the dissemination of any
such press release and to all such additional statements and disclosures any
party may reasonably make in responding to inquiries arising as a result of any
such press release. No party shall make mention of any other
<PAGE> 24
24
party's name in any such press release, without the prior consent of such other
party, except to the extent required by law.
18. IRS REPORTING REQUIREMENTS.
For the purpose of complying with any information reporting
requirements or other rules and regulations of the Internal Revenue Service
("IRS") that are or may become applicable as a result of or in connection with
the transaction contemplated by this Contract, including, but not limited to,
any requirements set forth in proposed Income Tax Regulation Section 1.6045-4
and any final or successor version thereof (collectively the "IRS Reporting
Requirements"), Sellers and Purchaser hereby designate and appoint the Title
Company to act as the "Reporting Person" (as that term is defined in the IRS
Reporting Requirements) to be responsible for complying with any IRS Reporting
Requirements. The Title Company hereby acknowledges and accepts such designation
and appointment and agrees to fully comply with any IRS Reporting Requirements
that are or may become applicable as a result of or in connection with the
transaction contemplated by this Contract. Without limiting the responsibility
and obligations of the Title Company as the Reporting Person, Sellers and
Purchaser hereby agree to comply with any provisions of the IRS Reporting
Requirements that are not identified therein as the responsibility of the
Reporting Person, including, but not limited to, the requirement that Sellers
and Purchaser each retain an original counterpart of this Contract for at least
four (4) years following the calendar year of the Closing.
19. EFFECTIVE DATE.
This Contract will be deemed executed as of the date of the last
signature to this Contract (the "Effective Date").
* * *
<PAGE> 25
25
<TABLE>
<S> <C>
SELLERS:
MESA PSYCHIATRIC HOSPITAL, INC., an Arizona
corporation
Date June 25, 1998 By:
Name: ---------------------------------------
----------------------------------
Title:
---------------------------------
CAROLINA TREATMENT CENTER, INC., a South Carolina
corporation
Date June 25, 1998 By:
Name: ---------------------------------------
----------------------------------
Title:
---------------------------------
PURCHASER:
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, a Delaware
limited liability company
Date June 25, 1998 By:
Name: ---------------------------------------
----------------------------------
Title:
---------------------------------
</TABLE>
<PAGE> 26
26
LIST OF EXHIBITS:
Exhibit A-1 - Legal Description of the Arizona Property
Exhibit A-2 - Legal Description of the South Carolina Property
Exhibit B - Form of Special Warranty Deed
Exhibit C - Form of Bill of Sale
Exhibit D - Certificate of Non-foreign Status
<PAGE> 27
27
EXHIBIT A-1
LEGAL DESCRIPTION OF THE ARIZONA PROPERTY
<PAGE> 28
28
EXHIBIT A-2
LEGAL DESCRIPTION OF THE SOUTH CAROLINA PROPERTY
<PAGE> 29
29
EXHIBIT B
FORM OF SPECIAL WARRANTY DEED
<PAGE> 30
30
This Instrument Prepared by: Mail Tax Notice to:
Adam A. Veltri
Haythe & Curley
237 Park Avenue
New York, New York 10017
SPECIAL WARRANTY DEED
STATE OF _______ )
)
COUNTY OF _______ )
KNOW ALL MEN BY THESE PRESENTS,
That in consideration of TEN DOLLARS ($10.00) and other good and valuable
consideration, to the undersigned Grantor, ________________________, a ________
corporation, (herein referred to as GRANTOR) in hand paid by the GRANTEE herein,
the receipt of which is hereby acknowledged, the said GRANTOR does by these
presents hereby grant, bargain, sell and convey unto
______________________________________, a ____________________________, whose
address is (herein referred to as GRANTEE), the following described real estate,
situated and being in the County of _______, State of ________, to wit:
SEE EXHIBIT "A" ATTACHED HERETO AND INCORPORATED HEREIN.
TO HAVE AND TO HOLD, To the said GRANTEE, its successors and assigns
forever.
And said GRANTOR does for itself, its successors and assigns, covenant
with said GRANTEE, its successors and assigns, that GRANTOR has done nothing to
impair such title as GRANTOR received, and GRANTOR will warrant and defend the
title against the lawful claims of all persons claiming by, under or through
GRANTOR, except for the exceptions hereinafter stated.
Subject to the following matters:
1. Real estate taxes and water and sewer rents, which are not yet due
and payable;
2. Any and all matters shown by the survey of the real estate prepared
by ________________________________________ entitled __________________________
bearing the seal and certification of ___________________, ________ Registered
Land Surveyor No. _______, dated ___________________; and
3. All covenants, agreements, conditions, easements, restrictions and
rights affecting the real estate, all to the extent they are of record and are
valid and enforceable and still applicable to the real estate.
<PAGE> 31
31
IN WITNESS WHEREOF, the said GRANTOR, its __________________ who is
authorized to execute this conveyance, hereto set its signature and seal
this _____ day of _____________ , 1998
GRANTOR:
Signed, Sealed and
delivered in the presence of: __________________, a ________ corporation
- -----------------------------
Witness: By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
<PAGE> 32
32
EXHIBIT C
FORM OF BILL OF SALE
<PAGE> 33
33
BILL OF SALE
Concurrently with the execution and delivery hereof,
________________, a _____________ corporation ("ASSIGNOR"), is conveying to
______________________, a ___________ corporation "ASSIGNEE"), (i) all that real
property more particularly described on EXHIBIT A attached hereto and made a
part hereof for all purposes, and (ii) all improvements now or hereafter
situated thereon (collectively, the "PROPERTY").
It is the desire of Assignor to hereby assign, transfer, set
over and deliver to Assignee all of Assignor's title and interest in and to all
furniture, fixtures and equipment owned by Assignor and located at or used in
connection with the operation of the Property, site plans, surveys, plans and
specifications, and floor plans which relate to the Property, all transferable
guaranties and warranties (express or implied), bonds and development rights
related to the property or any of the foregoing items of personal property, and,
subject to applicable law and regulations, all of transferable licenses,
permits, authorizations, approvals, certificates of occupancy and other consents
and regulatory approvals necessary for the current ownership, occupancy, and
leasing of the Property, together with any and all other incidental rights and
appurtenances relating thereto, except those not owned by Assignor, all as more
fully described below (such property being collectively called the "Assigned
Property").
NOW, THEREFORE, in consideration of the receipt of ten Dollars
($10.00) and other good and valuable consideration in hand paid by Assignee to
Assignor, the receipt and sufficiency of which are hereby acknowledged and
confessed by Assignor, Assignor does hereby ASSIGN, TRANSFER, SET OVER and
DELIVER to Assignee, its successors and assigns, all of Assignor's rights, title
and interest in and to all of the Assigned Property (whether statutory, express
or implied), including, without limitation, the following:
1. All furniture, fixtures and equipment owned by Assignor and
located at or used in connection with the operation of the property, site plans,
surveys, plans and specifications, and floor plans which relate to the Property,
all transferable guaranties and warranties (express or implied), bonds and
development rights related to the Property or any of the foregoing items of
personal property, and, subject to applicable law and regulations, all
transferable licenses, permits, authorizations, approvals, certificates of
occupancy and other consents and regulatory approvals necessary for the current
ownership, occupancy, and leasing of the Property;
2. All master keys and keys to common areas; and
3. Any and all other rights, privileges and appurtenances
owned by Assignor and related to or used in connection with any of the
foregoing.
TO HAVE AND HOLD the Assigned Property unto Assignee and
Assignee's successors, legal representatives and assigns, forever.
This Bill of Sale and the provisions herein contained will be
binding upon the inure to the benefit of the Assignee and the Assignor and their
respective successors and assigns.
IN WITNESS WHEREOF, Assignor has caused this Bill of Sale to
be executed as of the ____ day of ______, 1998.
ASSIGNOR:
---------------------------------------
By:
------------------------------------
<PAGE> 34
34
EXHIBIT D
CERTIFICATE OF NON-FOREIGN STATUS
<PAGE> 35
35
CERTIFICATE OF NONFOREIGN STATUS
The undersigned _____________________, a _____________ corporation,
("Transferor") hereby certifies to ("Transferee") for purposes of Section 1445
of the Internal Revenue Code of 1986, as amended, in connection with the sale,
transfer and conveyance of the Property described in SCHEDULE A attached hereto
and incorporated herein by reference ("Property"), that
1) that Transferor is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);
2) that the Transferor's United States identification number
is _______________;
3) that Transferor's principal office address is ___________,
_______________; and
4) that Transferor is aware that "Transferee" is relying upon
this Certificate in not withholding ten percent (10%) of the amount realized on
the disposition of the Property by Transferor to Transferee as required of
Transferee by Section 1445 of the Internal Revenue Code of 1986, as amended.
Transferor understands that this Certificate may be disclosed
to the Internal Revenue Service by Transferee and that any false statement
contained herein could be punished by fine, imprisonment or both.
TRANSFEROR:
[ ]
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE> 36
36
LIST OF SCHEDULES:
Schedule 7.1.3 Parties in Possession
Schedule 7.1.4 Litigation
Schedule 7.1.10 Hazardous Substances
Schedule 7.1.10-1 Certain Environmental Disclosures
Schedule 7.1.13 Sellers' Consents
Schedule 7.2.2 Purchaser's Consents
<PAGE> 37
37
SCHEDULE 7.1.3
PARTIES IN POSSESSION
<PAGE> 38
38
REAL PROPERTY LEASES
FACILITY: MESA PSYCHIATRIC HOSPITAL, INC.
DESERT VISTA HOSPITAL
1. DATE OF LEASE: April 12, 1995
LESSOR:** Capstone Capital Corporation
LESSEE:** Mesa Psychiatric Hospital, Inc.
2. DATE OF LEASE: November 1, 1994
LESSOR:* Mesa Psychiatric Hospital, Inc.,
as assignee of Ramsay Health Care, Inc.
LESSEE:* Transitional Care Ventures (Arizona), Inc.
3. DATE OF LEASE: July 15, 1997
LESSOR: Mesa Psychiatric Hospital, Inc.
LESSEE: Youth Developmental Institute
4. DATE OF LEASE: August 18, 1992
LESSOR: Mesa Psychiatric Hospital. Inc.
d/b/a Desert Vista Hospital
LESSEE: Scott Connor, Psy.D.
5. DATE OF LEASE: November 21, 1996
LESSOR: Mesa Psychiatric Hospital, Inc.
d/b/a Desert Vista Hospital
LESSEE: Jarek Opechowski, M.D.
6. DATE OF LEASE: December 26, 1996
LESSOR: Mesa Psychiatric Hospital, Inc.
d/b/a Desert Vista Hospital
LESSEE: John Jarvis, M.D. - Desert Psychiatry
7. DATE OF LEASE: January 15, 1997
LESSOR: Mesa Psychiatric Hospital, Inc.
d/b/a Desert Vista Hospital
LESSEE: Psychiatric Services of the East Valley, P.C.
8. DATE OF LEASE: March 18, 1997
LESSOR: Mesa Psychiatric Hospital, Inc.
d/b/a Desert Vista Hospital
LESSEE: Metropolitan Psychiatric Physicians, P.C.
9. DATE OF LEASE: July 25, 1997
LESSOR: Mesa Psychiatric Hospital, Inc.
d/b/a Desert Vista Hospital
LESSEE: Arizona Community Psychiatric Groups, Ltd.
10. DATE OF LEASE: September 10, 1997
LESSOR: Mesa Psychiatric Hospital, Inc
d/b/a Desert Vista Hospital
LESSEE: Arizona Psychiatric Affiliates
* As of the Closing Date, these leases will be cancelled.
** It is anticipated that this lease will be paid off by the Sellers prior
to the Closing.
<PAGE> 39
39
SCHEDULE 7.1.4
LITIGATION
<PAGE> 40
40
CLAIMS AND LEGAL ACTIONS
MESA:
A. Pending or Threatened Professional Malpractice Claims
1. Sierra Sonora Enterprises v. Humana Health Plan et al
B. Workers' Compensation Claims
1. Steven L. Love
2. Bonita K. Lundin
3. Roger Brown
4. Cher Vanenglehoven
5. Wanda Scott
6. Melaine N. Pennington
7. Thomas D. Wilder
8. Sam Eatman
CAROLINA:
A. Pending or Threatened Professional Malpractice Claims
1. Threat of Claim, Patient Marion McKenzie
B. Workers' Compensation Claims
1. Susan Labate
2. Calvin Johnson
3. Scott A. Thompson
4. Robert A. Schubert
5. Larry Miller
6. Bethel Nealy
<PAGE> 41
41
SCHEDULE 7.1.10
HAZARDOUS SUBSTANCES
<PAGE> 42
42
HAZARDOUS SUBSTANCES
I. Matters set forth in the Phase I environmental audit reports by Rust &
Environment Infrastructure dated March 1995:
a. Mesa
II. Matters set forth in the Phase I environmental audit reports by Robert
Bates & Associates, Inc. dates March 1993:
a. Carolina
III. Matters set forth in any Phase I, Phase II or other environmental audit
reports prepared by or for the benefit of Purchaser or its affiliates,
or any assignee thereof.
<PAGE> 43
43
SCHEDULE 7.1.10-1
CERTAIN ENVIRONMENTAL DISCLOSURES
<PAGE> 44
44
SCHEDULE 7.1.13
SELLERS' CONSENTS
<PAGE> 45
45
CONSENTS OF SELLERS
1. The Credit Agreement, dated as of September 30, 1997, as
amended and supplemented from time to time (the "Credit
Agreement"), by and among Ramsay Health Care, Inc., the Credit
Parties (as defined in the Credit Agreement), the Lenders from
time to time party thereto, General Electric Capital
Corporation, as Administrative Agent and GECC Capital Markets
Group, Inc., as Syndication Agent*
2. All of the real property leases included in Schedule 7.1.3
<PAGE> 46
46
SCHEDULE 7.2.2
PURCHASER'S CONSENTS
None
<PAGE> 1
EXHIBIT 2.11
PURCHASE AND SALE CONTRACT
1. PARTIES.
This Purchase and Sale Contract ("Contract") is made between THE HAVEN
HOSPITAL, INC., a Delaware corporation ("Seller"), and CRESCENT REAL ESTATE
EQUITIES LIMITED PARTNERSHIP, a Delaware limited partnership ("Purchaser").
2. PROPERTY.
On the terms and conditions stated in this Contract, Seller hereby
agrees to sell to Purchaser, and Purchaser hereby agrees to purchase from
Seller, all of the following described property:
2.1 TEXAS PROPERTY. Seller's fee simple title in and to all of that
certain tract of land (the "Land") situated in Dallas County, Texas, and
described more particularly in EXHIBIT A attached hereto and incorporated herein
by reference, and all buildings and improvements located thereon, (collectively,
the "Improvements"), together with all rights and appurtenances pertaining to
such land, including, without limitation, all of Seller's right, title and
interest in and to (i) all minerals, oil, gas, and other hydrocarbon substances
thereon, (ii) all adjacent strips, streets, roads, alleys and rights-of-way,
public or private, open or proposed, (iii) all easements, privileges, and
hereditaments, whether or not of record, and (iv) all access, air, water,
riparian, development, utility, and solar rights (the Land, the Improvements and
all such other rights and appurtenances are collectively referred to herein as
the "Property").
2.2 PERSONAL PROPERTY. All of Seller's right, title and interest in and
to
(1) mechanical systems, fixtures and equipment comprising a
part of or attached to or located upon the Improvements,
(2) maintenance equipment and tools owned by Seller and used
in connection with the Improvements,
(3) site plans, surveys, plans and specifications, marketing
materials and floor plans in Seller's possession which relate to the Land or
Improvements,
(4) pylons and other signs,
(5) silverware, glassware, and other utensils and dishes,
(6) beds, tables, televisions, clocks, drapes and other
furniture and furnishings,
(7) art work, paintings, posters and other graphics,
<PAGE> 2
2
(8) keys, stoves, refrigerators, ice makers, telephones,
switchboards, fixtures, telex and fax machines, computers, and other machinery
or appliances, and
(9) other tangible personal property of every kind and
character owned by Seller and located in or on or used in connection with the
Land or Improvements or the operations thereon (it being agreed that Personal
Property shall exclude: (i) supplies (office, medical, food or otherwise), (ii)
inventory (office, medical, food, drug or otherwise), (iii) other items of
tangible personal property typically consumed or sold by Seller at the Property
in the ordinary course of business, plus such additions thereto and less such
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date and (iv) any personal property subject to an Assumed
Contract (as defined in the Charter Purchase Agreement) under the Charter
Purchase Agreement) (collectively, the "Personal Property").
2.3 PERMITS. To the extent legally transferrable, all of Seller's
right, title and interest in and to all permits, licenses, certificates of
occupancy, and governmental approvals which relate to the Land, Improvements or
Personal Property (collectively, the "Permits").
2.4 PENDING AWARDS. Any pending or future award made with respect to
the condemnation of the Land or Improvements, any award or payment for damage to
the Land or Improvements or claim or cause of action for damage, injury or loss
with respect to the ownership, maintenance and operation of the Land or
Improvements.
3. PURCHASE PRICE.
3.1 The purchase price for the Property (the "Purchase Price") will be
the sum of $6,350,000; provided, however that the Purchase Price may be
increased (and never decreased) to any amount up to $7,500,000 upon written
notice from Purchaser, in its sole discretion, at or prior to Closing (as
hereinafter defined). The Purchase Price will be payable, at Seller's direction,
to Seller in cash, by wire transfer in immediately available funds at the
Closing.
4. CONSIDERATION.
4.1 INDEPENDENT CONTRACT CONSIDERATION. Within three (3) business days
after the execution of this Contract by all parties hereto, Purchaser will
deliver to Seller the amount of One Hundred and No/100 Dollars ($ 100.00) (the
"Independent Contract Consideration") which amount has been bargained for and
agreed to as consideration for Seller's execution and delivery of this Contract.
The Independent Contract Consideration is in addition to and independent of all
other consideration provided in this Contract, and is nonrefundable in all
events.
5. TITLE AND SURVEY.
5.1 TITLE COMMITMENT AND DOCUMENTS. Purchaser shall, within five (5)
Business Days after the Effective Date, order the following documents, at
Purchaser's sole cost and expense:
(i) a current Commitment for Title Insurance for the Property
(the "Title Commitment") issued by a reputable title company designated by
Purchaser (the "Title Company"), setting forth the state of title to the
Property, including a list of all liens, mortgages,
<PAGE> 3
3
security interests, encumbrances, pledges, assignments, claims, charges, leases
(surface, space, mineral, or otherwise), conditions, restrictions, options,
conditional sale contracts, rights of first refusal, restrictive covenants,
exceptions, easements (temporary or permanent), rights-of-way, encroachments,
overlaps, or other outstanding claims, interests, estates, or equities of any
nature which affect title to the Property (together with, true, correct, and
legible copies of all instruments that create or evidence title exceptions,
including those described in Schedule B and Schedule C of the Title Commitment)
that would appear in an owner's title policy, if one were issued, (ii) a
currently dated as-built, on-the-ground, ALTA survey (the "Survey") prepared by
a surveyor licensed in Texas and dated no earlier than the Effective Date and
(iii) a search of the Uniform Commercial Code Records of Dallas County, Texas in
the name of the Seller (the "UCC Search"). Purchaser shall endeavor to cause the
Title Commitment, Survey and UCC Search to be delivered to Seller within twenty
(20) Business Days after the Effective Date.
The Title Commitment will contain the express commitment of the Title Company to
issue a Title Policy (as hereinafter defined) to Purchaser in the amount of the
Purchase Price for the Property, insuring the title to the Property as is
specified in the Title Commitment, with the standard printed exceptions.
5.2 REVIEW OF TITLE COMMITMENT AND SURVEY. Purchaser shall have ten
(10) Business Days after the receipt of the last of the Title Commitment
(together with true, correct and legible copies of all instruments that create
or evidence title exceptions), Survey and UCC Search (together with true,
correct and legible copies of all financing statements and related documents
comprising such search) in which to furnish Seller with a written statement of
any title or survey objections affecting title to the Property, other than the
Permitted Exceptions (as hereinafter defined). Should Purchaser fail to notify
Seller of any such title objections within the aforesaid time period, Purchaser
shall be deemed to have waived objections to the matters affecting title to the
Property revealed by the Title Commitment, Survey and UCC Search. Seller shall
have ten (10) Business Days after receipt of any such written objections
(hereinafter referred to as the "Title Cure Period") in which Seller shall in
good faith endeavor to satisfy or correct (but shall not be obligated to cure)
all such valid title objections. In the event Seller fails to satisfy or correct
all valid title objections within the Title Cure Period, Purchaser shall, by
written notice to Seller given within ten (10) Business Days after the
expiration of the Title Cure Period, elect one of the following: (a) to waive
such title objections and to close the transaction, without reduction of the
Purchase Price, on or before the Closing Date, as defined herein, or (b) to
terminate this Contract, in which event, neither Seller nor Purchaser shall have
any rights, duties or obligations under this Contract, except for any rights or
obligations hereunder which, by their terms, survive any termination,
cancellation, rescission, expiration or consummation of this Contract, and the
lien or right, if any, of Purchaser against or to the Property shall wholly
cease. Seller shall not be required and is not obligated hereby to bring, any
action or proceeding, or otherwise to incur any expense to render the title to
the Property free of any matters objected to by Purchaser; provided, however,
that Seller shall, subject to the satisfaction of all conditions precedent to
Seller's obligation to consummate the transactions contemplated herein, be
obligated to cure any monetary liens against the Property created by Seller and,
if Seller does not effect such cure as of the Closing, Purchaser may deduct from
the Purchase Price the amount necessary to effect such cure. The acceptance of
the Deed (as defined herein) by Purchaser shall be deemed to be full performance
of and discharge of every agreement and obligation on the part of Seller to be
performed pursuant to the provisions of this Contract, except for any rights or
obligations
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hereunder which, by their terms, survive any termination, cancellation,
rescission, expiration or consummation of this Contract. Mortgages and financing
statements filed in connection thereto encumbering the Property, which are to be
released by Seller at the Closing shall not constitute valid title objections so
long as any such mortgages are not exceptions to title on Closing Date.
Purchaser shall also have the right, by giving written notice to Seller within
five (5) Business Days after Purchaser's receipt of notice thereof, to object to
any matter affecting title to the Property which is not shown in the Title
Commitment, Survey or UCC Search and which arises after the relevant date of
such document and prior to Closing, other than Permitted Exceptions. Thereafter,
with respect to such objections, Seller shall have the same cure rights and
Purchaser shall have the same termination rights as are provided above in this
Section 5.2 with respect to Purchaser's initial title objections.
5.3 PERMITTED EXCEPTIONS. For purposes of this Contract the term
"Permitted Exceptions" shall, mean:
(a) Liens for ad valorem taxes not yet due and payable;
(b) Matters of record pertaining to the Property; provided the
same are not material and do not materially detract from the value of the
Property or materially interfere with the present use of the Property;
(c) All matters that would be shown by an accurate survey or
inspection of the Property, including but not limited to easements,
encroachments, overlaps, riparian rights, and boundary disputes, if any;
provided the same are not material and do not materially detract from the value
of the Property or materially interfere with the present use of the Property;
(d) All building, zoning, and other state, county or federal
laws, codes, and regulations, affecting any portion of the Property; provided
the same are not violated; and
(e) Any other title exceptions discovered and waived by
Purchaser as hereinafter provided.
6. DUE DILIGENCE.
6.1 ITEMS TO BE DELIVERED BY SELLER. Except to the extent previously
delivered to Purchaser, within fifteen (15) days following the Effective Date,
Seller will deliver to Purchaser for Purchaser's review the following items
(collectively, the "Property Information"):
6.1.1 PERMITS. Copies of all Permits in Seller's possession or
control.
6.1.2 DEVELOPMENT CONDITIONS. A copy of all proffers, if any,
land use restrictions, or other conditions in Seller's possession or control
limiting development of the Property.
6.1.3 PLANS AND SPECIFICATIONS. Copies of any surveys, site
plans, subdivision plans, and as-built plans and specifications for the Property
in Seller's possession or control.
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6.1.4 WARRANTIES. Copies of all unexpired warranties and
guaranties in Seller's possession or control covering the Personal Property, the
roof, elevators, heating and air conditioning systems and any other component of
the Improvements and a list and description of any material third party bonds,
warranties and guaranties which will be in effect after Closing with respect to
the Property.
6.1.5 TAX STATEMENTS. To the extent not included in the Title
Commitment, evidence of the real estate taxes for the Property for the current
year.
6.1.6 TESTS AND INSPECTIONS. To the extent in Seller's
possession, copies of soils and other engineering inspections (including copies
of any current elevator inspections), tests, surveys, studies and reports
pertaining to the Land or Improvements or any portion thereof, and all
inspection reports or audits and information regarding the existence of
"Hazardous Substances" (as hereinafter defined) or underground storage tanks on
the Property or use or storage of Hazardous Substances on the Property, and all
reports and audits with respect to compliance of the Property with the Americans
with Disabilities Act (the "ADA") and any plan in existence for compliance with
the ADA and similar state or local laws with respect to disabled persons.
6.2 INSPECTION PERIOD. During the period commencing on the Effective
Date and through the Closing Date (the "Inspection Period"), Purchaser will have
the option and right to conduct, upon reasonable notice and at reasonable times,
such investigations, inspections, audits, analyses, surveys, tests,
examinations, studies, and appraisals of the Property, as Purchaser deems
necessary or desirable, at Purchaser's sole cost and expense.
6.3 ACCESS. To facilitate the due diligence contemplated in ARTICLE 6
during the Inspection Period, Seller will provide Purchaser and Purchaser's
agents and representatives reasonable access to the Property. Upon at least five
(5) days prior notice to Seller and after receiving the approval of Seller, not
to be unreasonably withheld, Purchaser will conduct any such physical
inspections, tests, examinations, studies, and appraisals only on Business Days
and will use reasonable efforts to minimize interference with Seller's
operations at the Property.
6.4 INDEMNITY. Purchaser agrees to indemnify and hold Seller harmless
from and against any liens, claims, or damages including, without limitation,
any and all demands, actions or causes of action, assessments, losses, costs,
liabilities, interest and penalties, and reasonable attorneys' fees suffered or
incurred by Seller to the extent such matters result from Purchaser's or
Purchaser's agents or representatives, access to the Property and/or conduct of
the activities contemplated hereunder. Purchaser will, to the extent
practicable, repair or cause to be repaired any damages caused by Purchaser or
Purchaser's agents or representatives in the conduct of the activities
contemplated hereunder. Notwithstanding anything set forth herein to the
contrary, the indemnification and restoration obligations of Purchaser in this
SECTION 6.4 will survive the termination of this Contract for any reason.
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7. WARRANTIES, REPRESENTATIONS AND COVENANTS.
7.1 EXPRESS WARRANTIES. Seller makes the following warranties and
representations to Purchaser as of the date hereof:
7.1.1 TITLE TO REAL PROPERTY. Seller has good and indefeasible
fee simple title to the Property. Neither Seller nor any of its affiliates owns
any parcel of land which is contiguous with the Property. The Property is not
subject to any outstanding agreements of sale or any options, liens or other
rights of third parties to acquire any interest therein, except as described in
this Contract and except for such rights of General Electric Capital Corporation
under the existing financing and security agreements with Seller and its
affiliates, that Seller intends to extinguish as to the Property at or prior to
Closing.
7.1.2 TITLE TO PERSONAL PROPERTY. None of the Personal
Property is held by Seller under a lease or installment sale contract, and the
Seller owns title to the Personal Property, free and clear of any liens or
claims, except for liens held by General Electric Capital Corporation, which
shall be removed by Closing. That certain Purchase Agreement among Purchaser,
Seller, Mesa Psychiatric Hospital, Inc., Carolina Treatment Center, Inc., Houma
Psychiatric Hospital, Inc., Transitional Care Ventures (Arizona), Inc.,
Transitional Care Ventures (North Texas), Inc., Transitional Care Ventures
(Texas), Inc. and Ramsay Health Care, Inc., dated June 24, 1998 is herein
referred to as the "Charter Purchase Agreement."
7.1.3 PARTIES IN POSSESSION. There are no tenants or other
parties in possession of the Property, except Seller, as lessor under the Lease
between The Haven Hospital, Inc. and Transitional Care Ventures (North Texas),
Inc., which shall be terminated as of the Closing.
7.1.4 LITIGATION. Except as set forth in Schedule 7.1.4, there
is no action, suit or proceeding presently pending in any court or before any
federal, state, county or municipal department, commission, board, bureau or
agency or other governmental instrumentality or before any arbitration tribunal
or panel, affecting (i) the Property, or any portions thereof, (ii) Seller's
title, use, operation or ownership of the Property, or (iii) Seller's ability to
perform its obligations under this Contract, nor, to the best knowledge of
Seller, is any such action, suit or proceeding threatened.
7.1.5 BANKRUPTCY. Seller is not aware of any attachments,
executions, assignments for the benefit of creditors, voluntary or involuntary
bankruptcy proceedings or proceedings under any debtor relief laws, contemplated
by or pending or threatened against Seller, or the Property.
7.1.6 CONDEMNATION. No condemnation, eminent domain or similar
proceedings have been instituted or to the best of Seller's knowledge,
threatened against the Property.
7.1.7 MATERIAL CHANGE. Seller has not received written notice
of any pending or contemplated material change in any regulation, code,
ordinance or law, or private restriction applicable to the Property.
7.1.8 COMPLIANCE WITH LAWS. The Improvements and Personal
Property and the current use thereof comply in all material respects with all
laws, regulations, ordinances (including, without limitation, zoning
ordinances), rules, orders and other requirements of all governmental
authorities having jurisdiction over the Property or affecting all or any part
thereof or bearing on its construction or operation, and with all private
covenants or restrictions.
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7.1.9 LICENSES AND PERMITS. Seller has acquired all material
Permits, easements, and rights-of-way, including, without limitation, all
building and occupancy permits, from all governmental authorities having
jurisdiction over the Property or from private parties for the normal use,
maintenance, occupancy, and operation of the Property as presently being
conducted by Seller, and to ensure unimpeded access, ingress and egress to and
from the Property as required to permit normal usage of the Improvements, as
presently being used by Seller and all such Permits, easements and rights-of-way
are in full force and effect.
7.1.10 HAZARDOUS SUBSTANCES. Except as (i) disclosed on
Schedule 7.1.10 hereto or in any of the environmental reports furnished to
Purchaser or otherwise obtained by Purchaser, or as otherwise disclosed by
Seller to Purchaser in writing, or (ii) would not have a material and adverse
effect on the Property or the business of Seller operated thereon, (a) Seller's
operation and management of the Property and, to the best of Seller's knowledge,
the Property is not in violation of any Environmental Law (as hereinafter
defined) or subject to any pending or, to the best of Seller's knowledge,
threatened litigation or inquiry by any governmental authority or to any
remedial action or obligations under any Environmental Law; (b) no underground
storage tanks have been located on the Property by Seller during their period of
ownership and Seller is not otherwise aware of any underground storage tanks
having been located at the Property; (c) Seller has not used the Property and,
to the best of Seller's knowledge, no other party has used the Property, for the
storage, treatment or disposal of hazardous waste, hazardous material, chemical
waste, or other toxic substance except in accordance with Environmental Law, and
(d) no hazardous substances or toxic wastes have been disposed of or located
upon the Property by Seller, and, to the best of Seller's knowledge, by any
other party, in violation of applicable Environmental Law (including, without
limitation, asbestos and PCBs. As used herein, the term "Environmental Law"
means any law, statute, ordinance, rule, regulation, order or determination of
any governmental authority or agency affecting the Property and pertaining to
health or the environment including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1982 and the Resource
Conservation and Recovery Act of 1986. Prior to Closing, Seller agrees to
promptly notify Purchaser of any fact of which Seller acquires actual knowledge
which would cause this representation to become false and of any written notice
that Seller receives regarding the matters set forth in this SECTION 7.1.10.
7.1.11 ASSESSMENTS. To the best knowledge of the Seller, there
are no unpaid assessments for public improvements against the Property, and
Seller has no knowledge of any proposed assessments against the Property. To the
best knowledge of the Seller, the Property is not subject to assessments for any
street paving or curbing heretofore laid. All sewer, water, gas, electric,
telephone and drainage lines and facilities required by law and for the normal
operation of the Property are fully installed, currently function and service
the Property adequately for its current use, and there are no unpaid assessments
or charges for the installation of such utilities or for making connection
thereto that have not been fully paid.
7.1.12 ORGANIZATION AND ENFORCEABILITY. Seller is duly
organized, validly existing and in good standing under the laws of the state of
Delaware and is qualified to transact business in the state of Texas. This
Contract and all instruments, documents and agreements to be executed by Seller
in connection herewith are, or when delivered shall be, duly and validly
executed and delivered by Seller to Purchaser and are, or when delivered shall
be, legal, valid
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and binding obligations of Seller, enforceable against Seller in accordance with
their respective terms, except as such enforcement may be limited by bankruptcy,
conservatorship, receivership, insolvency, moratorium or similar laws affecting
creditors' rights generally or by general principles of equity.
7.1.13 CORPORATE CAPACITY. Seller has the corporate capacity
and complete corporate authority to enter into and perform this Contract, and
except as set forth in Schedule 7.1.13 hereto, no consent, approval or other
action by any other party or entity will be needed thereafter to authorize
Seller's execution and performance of this Contract. None of the execution and
delivery of this Contract by Seller, the consummation by Seller of the
transactions contemplated hereby or compliance by Seller with any of the
provisions hereof will (i) conflict with or result in any breach of any
provisions of the formation documents of Seller, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right to termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Seller is a party or by which Seller or the Property may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Seller or the Property; except in the case of clauses (ii) or
(iii) above, for violations, breach or defaults (A) that would not in the
aggregate have a material adverse effect on the business or financial condition
of Seller and on the effectiveness of the transactions contemplated hereby or
(B) for which waivers or consents have been or will be obtained prior to the
Closing Date.
7.1.14 FOREIGN PERSON. The Seller is not a "foreign person,"
"foreign trust" or "foreign corporation" within the meaning of the United States
Foreign Investment and Real Property Tax Act of 1980 and the Internal Revenue
Code of 1986, as subsequently amended.
7.1.15 NO DEFECTS. The Improvements, including, without
limitation, the heating, air conditioning, ventilating, plumbing, life safety
and electrical systems, are in good operating condition and repair in accordance
with normal and customary industry practices (ordinary wear and tear excepted)
and are in material compliance with all applicable governmental laws,
ordinances, regulations and requirements. To the best knowledge of the Seller,
there are no material structural or engineering defects affecting or relating to
all or any part of the Improvements.
7.1.16 AGREEMENTS AFFECTING PROPERTY. There are no contracts
or other material obligations other than those matters set forth in the Title
Commitment, Survey and UCC Search, outstanding (i) for the sale, exchange or
transfer of the Property or any portion thereof, or (ii) creating or imposing
any burdens, obligations or restrictions on the Property or any portion thereof,
which will bind the Purchaser after Closing.
7.1.17 ACCURACY OF DOCUMENTS. All documents and records
delivered pursuant to Section 6 herein will be true, correct and complete copies
of the documents and records required to be delivered.
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7.1.18 FLOOD PLAIN. To the best of Seller's knowledge, no
portion of the Property is located inside the 100 year flood plain for Dallas
County, Texas, as such plain is determined by the Federal Emergency Management
Agency.
7.1.19 INSURANCE. Seller currently maintains customary
insurance with respect to the Property under policies of insurance which are in
full force and effect. During the three-year period ending on the date hereof,
no such policies have been cancelled by an insurer and no application of Seller
for insurance has been rejected by an insurer. Seller has not received any
written notice that any insurance policy now in effect would not be renewed or
that any defects or inadequacies exist in the Property, or any part thereof,
which could materially and adversely affect the insurability thereof or the cost
of such insurance.
7.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents to
Seller that, as of the date hereof:
7.2.1 ORGANIZATION AND ENFORCEABILITY. Purchaser is duly
organized, validly existing and in good standing under the laws of the state of
its organization. This Contract and all instruments, documents and agreements to
be executed by Purchaser in connection herewith are, or when delivered shall be,
duly and validly executed and delivered by Purchaser to Seller and are, or when
delivered shall be, legal, valid and binding obligations of Purchaser,
enforceable against Purchaser in accordance with their respective terms, except
as such enforcement may be limited by bankruptcy, conservatorship, receivership,
insolvency, moratorium or similar laws affecting creditors' rights generally or
by general principles of equity.
7.2.2 CORPORATE CAPACITY. Purchaser has the capacity and
complete authority to enter into and perform this Contract, and except as set
forth in Schedule 7.2.2 hereto, no consent, approval or other action by any
other party or entity will be needed thereafter to authorize Purchaser's
execution and performance of this Contract.
7.2.3 LITIGATION. There is no action, suit, proceeding or
claim presently pending in any court or before any federal, state, county or
municipal department, commission, board, bureau or agency or other governmental
instrumentality or before any arbitration tribunal or panel, affecting
Purchaser's ability to perform its obligations under this Contract, nor, to the
best knowledge of Purchaser, is any such action, suit, proceeding or claim
threatened.
7.3 BEST KNOWLEDGE. For purposes of this Contract, the phrase "to the
best of Seller's knowledge" means that Seller has conducted a reasonable review
of Seller's files and interviewed Seller's current employees in positions of
responsibility on the subject and, except as otherwise disclosed herein, such
review and interviews resulted in no information that would create actual
knowledge of the inaccuracy or falsehood of any such representation or warranty.
7.4 SELLER'S COVENANTS. Seller agrees that during the period from the
date hereof through the Closing Date Seller will perform the following
covenants:
7.4.1 OPERATION. Seller will (i) operate the Property as
presently being conducted (ii) continue to offer services and amenities in
accordance with past practices, and
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(iii) maintain the Improvements and Personal Property in as good a condition and
state of repair as that existing on the date of this Contract (ordinary wear and
tear excepted).
7.4.2 NEW CONTRACTS. Seller will not, without the prior
written consent of Purchaser, (i) enter into any service contract that will not
be fully performable by Seller on or before the Closing Date, (ii) amend, modify
or supplement any existing service contract or Permit in any material respect,
except in the ordinary course of business, or (iii) enter into any new lease for
the Property; provided, however, that Seller shall not enter into any new
service contract providing for payments in excess of $10,000 per year without
the prior written consent of Purchaser and provided, further, however, no
consent of the Purchaser shall be required for any contract providing for annual
payments of $25,000 per year or less that can be terminated upon no more than
thirty (30) days' notice (however, the Seller shall give the Purchaser notice of
any such contract with payments in excess of $10,000 per year). Any consent
requested by Seller pursuant to this SECTION 7.4.2 will be deemed rejected if
Purchaser does not respond by written notice to Seller within ten (10) days
after Purchaser's receipt of Seller's written request.
7.4.3 LITIGATION. Seller will advise Purchaser promptly after
becoming aware of any litigation or any arbitration proceeding or any
administrative hearing (including condemnation) before any governmental agency
which materially and adversely concerns or affects the Property in any manner
and which is instituted after the Effective Date, provided that such
notification will not relieve Seller of any obligations hereunder.
7.4.4 CONSTRUCTION. Seller will not, without the prior written
consent of the Purchaser, permit any material modifications or additions to the
Improvements.
7.4.5 SALE OF PERSONAL PROPERTY. Seller will not transfer or
dispose of, or permit to be sold, transferred or otherwise disposed of, any item
or group of items constituting Personal Property, except for the use and
consumption of inventory, office and other supplies and spare parts, and the
replacement of worn out, obsolete and defective tools, equipment and appliances,
in the ordinary course of business.
7.4.6 INSURANCE. Seller will maintain Seller's existing or
comparable replacement insurance coverage with respect to the Property.
7.4.7 FURTHER ENCUMBRANCES. Seller will not voluntarily
encumber the Property in any manner.
7.4.8 COOPERATION. Seller will, at no cost to Seller,
reasonably assist and cooperate with Purchaser prior to Closing (i) in obtaining
all necessary permits and licenses to continue operating the Property in the
present manner and (ii) with any evaluation, inspection, audit or study of the
Property prepared by, for or at the request of Purchaser.
7.4.9 CONSENTS. Seller will use its best efforts to obtain
from any federal, state or local authorities or any private persons or entities,
any consents, approvals, authorizations and permissions which are reasonably
considered necessary or appropriate for consummation of this transaction by
Seller or to prevent the termination of any Permit.
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7.5 INTENTIONALLY OMITTED.
7.6 PURCHASER'S CONDITIONS PRECEDENT. Purchaser's obligation to
consummate this transaction is expressly conditional upon the conditions
precedent set forth in SUBSECTIONS 7.6.1 through 7.6.6 of this Contract.
7.6.1 ACCURACY OF REPRESENTATIONS. Each of the representations
and warranties made by Seller in this Contract will be true and correct in all
material respects on the Closing Date as if made on and as of such date except
to the extent that the breach thereof has not resulted in a material adverse
effect on the business, operations, properties, financial condition, results of
operations, Property, Personal Property, Properties (as defined in the Charter
Real Estate Purchase Contract), Personal Property (as defined in the Charter
Real Estate Purchase Contract), or Assets (as defined in the Charter Purchase
Agreement) of Seller, the Sellers (as defined in the Charter Real Estate
Purchase Contract) and the Sellers (as defined in the Charter Purchase
Agreement), taken as a whole. For purposes hereof, "Charter Real Estate Purchase
Contract" means that certain Purchase and Sale Contract dated June 25, 1998
between Mesa Psychiatric Hospital, Inc. and Carolina Treatment Center, Inc., as
sellers, and Charter Behavioral Health Systems, LLC, as purchaser.
7.6.2 PERFORMANCE OF COVENANTS. Seller will not have failed to
perform or comply in any material respect with any of Seller's material
agreements, covenants or obligations in the manner and within the periods
provided herein.
7.6.3 TITLE. The Title Company will have irrevocably committed
to issue to Purchaser an owner's title insurance policy (ALTA Form B, 10/17/70
revision with `84 amendments) for the Property (the "Title Policy"), in the
amount of the Purchase Price and insuring that Purchaser has good and
indefeasible fee simple title to the Property, subject only to the Permitted
Exceptions.
7.6.4 NO INJUNCTION. On the Closing Date, there will be no
third party injunction, writ, preliminary restraining order or any order of any
nature issued or threatened by a court of competent jurisdiction directing that
the transactions contemplated by this Contract not be consummated, as herein
provided.
7.6.5 CONSENTS. The applicable waiting period, if any, under
the Hart-Scott-Rodino Act shall have expired or been terminated, each of the
consents on Schedule 7.1.13 shall have been duly obtained and delivered to
Purchaser and Seller and each of the consents on Schedule 7.2.2 shall have been
duly obtained and delivered to the Purchaser and Seller.
7.6.6 CLOSING. The Closing (as that term is defined in the
Charter Purchase Agreement) of the transactions contemplated in the Charter
Purchase Agreement has occurred or shall occur simultaneously with the Closing
of the transactions contemplated herein and the Closing (as that term is defined
in Charter Real Estate Purchase Contract) of the transactions contemplated in
the Charter Real Estate Purchase Contract has occurred or shall occur
simultaneously with the closing of the transactions contemplated herein.
7.7 SELLER'S CONDITIONS PRECEDENT. Seller's obligation to consummate
this transaction is expressly conditional upon the conditions precedent set
forth in SUBSECTIONS 7.7.1 through 7.7.5 of this Contract.
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7.7.1 ACCURACY OF REPRESENTATIONS. Each of the representations
and warranties made by Purchaser in this Contract will be true and correct in
all material respects on the Closing Date as if made on and as of such date.
7.7.2 PERFORMANCE OF COVENANTS. Purchaser will not have failed
to perform or comply in any material respect with any of Purchaser's material
agreements, covenants or obligations in the manner and within the periods
provided herein.
7.7.3 NO INJUNCTION. On the Closing Date, there will be no
third party injunction, writ, preliminary restraining order or any order of any
nature issued or threatened by a court of competent jurisdiction directing that
the transactions contemplated by this Contract not be consummated, as herein
provided.
7.7.4 CONSENTS. The applicable waiting period, if any, under
the Hart-Scott-Rodino Act shall have expired or been terminated and each of the
consents on Schedule 7.1.13 shall have been duly obtained and delivered to the
Purchaser and Seller.
7.7.5 CLOSING. The Closing (as that term is defined in the
Charter Purchase Agreement) of the transactions contemplated in the Charter
Purchase Agreement has occurred or shall occur simultaneously with the Closing
of the transactions contemplated herein and the Closing (as that term is defined
in Charter Real Estate Purchase Contract) of the transactions contemplated in
the Charter Real Estate Purchase Contract has occurred or shall occur
simultaneously with the closing of the transactions contemplated herein.
8. INDEMNITY.
8.1 PURCHASER'S INDEMNITY. From and after Closing, Purchaser hereby
agrees to indemnify Seller against, and to hold Seller harmless from, all
claims, demands, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) (collectively, "Losses") asserted against or incurred by Seller
to the extent in connection with or arising out of (i) Purchaser's failure to
perform any of Purchaser's covenants contained herein (other than the
indemnification obligations set forth in Section 8.3.2) except if such failure
results from the termination of this Contract by Purchaser or Seller pursuant to
a right to terminate expressly set forth in this Contract or Seller's failure to
perform Seller's obligations under this Contract or (ii) a breach of any
representation, warranty or covenant of Purchaser contained in this Contract.
8.2 SELLER'S INDEMNITY. From and after Closing, Seller hereby agrees to
indemnify Purchaser against, and to hold Purchaser harmless from all claims,
demands, causes of action, losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
asserted against or incurred by Purchaser to the extent in connection with or
arising out of (i) Seller's failure to perform any of Seller's covenants
contained herein (other than the indemnification obligations set forth in
Section 8.3.1) except if such failure results from the termination of this
Contract by Purchaser or Seller pursuant to a right to terminate expressly set
forth in this Contract or Purchaser's failure to perform Purchaser's obligations
under this Contract or (ii) a breach of any representation, warranty or covenant
of Seller contained in this Contract.
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8.3 ENVIRONMENTAL INDEMNITIES.
8.3.1 SELLER'S ENVIRONMENTAL INDEMNITY. From and after the
Closing, the Seller shall indemnify and hold the Purchaser harmless against,
except with respect to matters set forth in Schedule 7.1.10-1, any and all
Losses to the extent arising out of, based on or resulting from (i) claims by
any federal, state, local government or other third party relating to the
presence of any Materials of Environmental Concern on, in or under any part of
the Property at any time prior to the Closing Date, (ii) claims by any federal,
state, local government or other third party relating to the release into the
environment (either before or after the Closing Date) of any Materials of
Environmental Concern that were generated, stored, handled or disposed of on,
in, under or from the Property prior to the Closing Date, (iii) the alleged
violation asserted by any federal, state, local government or other third party
of the Environmental Laws or the Medical Waste Laws occurring with respect to
the condition or operation of the Property prior to the Closing Date or (iv) the
violation of the Environmental Laws or the Medical Waste Laws occurring with
respect to the condition or operation of the Property prior to the Closing Date.
8.3.2 PURCHASER'S ENVIRONMENTAL INDEMNITY. From and after the
Closing, Purchaser shall indemnify and hold the Seller harmless against, except
with respect to matters set forth in Schedule 7.1.10-1, any and all Losses to
the extent arising out of, based on or resulting from (i) claims by any federal,
state, local government or other third party relating to the presence of any
Materials of Environmental Concern on, in or under any part of any Property
placed on the Property by Purchaser, its subsidiaries or their respective agents
at any time after the Closing Date, (ii) claims by any federal, state, local
government or other third party relating to the release into the environment
after the Closing Date of any Materials of Environmental Concern that were
generated, stored, handled or disposed of on, in, under or from the Property by
the Purchaser, its subsidiaries or their respective agents after the Closing
Date, (iii) the alleged violation asserted by any federal, state, local
government or other third party of the Environmental Laws or the Medical Waste
Laws occurring with respect to the condition or operation of the Property by the
Purchaser, its subsidiaries or their respective agents after the Closing Date or
(iv) the violation of the Environmental Laws or the Medical Waste Laws occurring
with respect to the condition or operation of the Property by the Purchaser, its
subsidiaries or their respective agents after the Closing Date.
8.3.3 SELLER'S ADDITIONAL ENVIRONMENTAL INDEMNITY. From and
after the Closing, Seller shall indemnify and hold Purchaser harmless against,
with respect to matters set forth in Schedule 7.1.10-1, any and all Losses to
the extent arising out of, based on or resulting from (i) claims by any federal,
state, local government or other third party relating to the presence of any
Materials of Environmental Concern on, in or under any part of the Property at
any time prior to the Closing Date, (ii) claims by any federal, state, local
government or other third party relating to the release into the environment
(either before or after the Closing Date) of any Materials of Environmental
Concern that were generated, stored, handled or disposed of on, in, under or
from the Property prior to the Closing Date, (iii) the alleged violation
asserted by any federal, state, local government or other third party of the
Environmental Laws or the Medical Waste Laws occurring with respect to the
condition or operation of the Property prior to the Closing Date or (iv) the
violation of the Environmental Laws or the Medical Waste Laws occurring with
respect to the condition or operation of the Property prior to the Closing Date.
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8.3.4 CERTAIN DEFINITIONS. For purposes hereof, (i) "Materials of
Environmental Concern" means any toxic or hazardous waste, pollutants or
substances, including, without limitation, asbestos, urea formaldehyde,
radioactive substances, materials or wastes, PCBs, petroleum products and
byproducts defined or listed as "hazardous substances", "hazardous waste",
"toxic substances", "toxic pollutants", "medical waste", "air pollutants",
"hazardous air pollutants" or similarly identified substances or mixtures, in or
pursuant to the Environmental Laws or the Medical Waste Laws, (ii) "Medical
Waste Laws" means the following, including regulations promulgated and orders
issued thereunder, to the extent such laws regulate Medical Waste, all as may be
amended or modified until the date of Closing: Medical Waste Tracking Act of
1988, 42 U.S.C. section 6992, ET SEQ. ("MWTA"), 42 CFR Part 72 and 49 CFR Part
173, 386; Resource Conservation and Recovery Act of 1976, 42 U.S.C. section 6901
ET SEQ.; Air Pollution Prevention and Control Act, 42 U.S.C. section 7401 ET
SEQ.; Water Pollution Control Act, 33 U.S.C. section 1251 ET SEQ.; Marine
Protection, Research and Sanctuaries Act of 1972, 33 U.S.C. section 1401 ET
SEQ.; Nuclear Regulatory Commission regulations contained in 10 CFR Parts 20 and
61; Occupational Safety and Health Act, 29 U.S.C. section 651 ET SEQ.; Public
Health Service regulations contained in 42 CFR Part 72; Food and Drug
Administration regulations contained in 21 CFR Parts 58 and 211; U.S. Department
of Transportation regulations contained in 49 CFR Parts 171-179; The Act to
Prevent Pollution from Ships, 33 U.S.C. section 1901 ET SEQ.; U.S. Department of
Agriculture regulations contained in 9 CFR Parts 50-56; U.S. Postal Service
regulations contained in 39 CFR Part 111; local environmental and safety laws,
rules, regulations and other legally binding requirements and any other federal,
state, regional, county, municipal or other local laws, regulations and
ordinances insofar as they purport to regulate Medical Waste or impose
requirements relating to Medical Waste, and (iii) "Medical Waste" means any
substance, pollutant, materials or contaminant listed or regulated under the
Medical Waste Laws.
8.4 LIMITATION ON INDEMNIFICATION OBLIGATIONS. Notwithstanding anything
contained in this Section 8 to the contrary, no party shall assert a claim for
indemnification against the other pursuant to this Section 8 unless and until
the amount of all Losses determined to have been incurred or suffered at the
time by the Seller hereunder, the Sellers (as defined in the Charter Real Estate
Purchase Contract) and the Sellers (as defined in the Charter Purchase
Agreement) and the Shareholder (as defined in the Charter Purchase Agreement),
on the one hand, and the Purchaser, the Purchaser (as defined in the Charter
Real Estate Purchase Contract) and the Purchaser (as defined in the Charter
Purchase Agreement), on the other hand, pursuant to the indemnification
provisions under this Contract, the Charter Real Estate Purchase Contract and/or
under the Charter Purchase Agreement (other than those for which first dollar
claims which are not subject to deductible amounts can be made pursuant to the
Charter Purchase Agreement or the Charter Real Estate Purchase Contract)
exceeds, in the aggregate, $250,000 (the "Threshold Amount"), at which time such
party may make a claim only to the extent that the aggregate amount of such
claims exceeds the Threshold Amount; provided, however, the foregoing limitation
shall not apply to a claim for indemnification pursuant to (w) Section 8.1(ii)
or Section 8.2(ii) with respect to those matters set forth in Section 7.1.2,
7.1.4, 7.1.12, 7.1.13, 7.2.1 and 7.2.2 hereof, (x) Section 8.1(i), (y) Section
8.2(i) or (z) Section 8.3.3. The parties hereto further acknowledge and agree
that the total indemnification obligations of the Seller, the Sellers (as
defined in the Charter Real Estate Purchase Contract) and of the Sellers (as
defined in the Charter Purchase Agreement) and the Shareholder (as defined in
the Charter Purchase Agreement), on the one hand, and of the Purchaser, the
Purchaser (as defined in the Charter Purchase Agreement) and the Purchaser (as
defined in the Charter Real Estate Purchase Contract), on the other hand, under
this Contract, the Charter Real Estate Purchase Contract and under the Charter
Purchase Agreement shall not exceed, in the aggregate, the aggregate of the
Purchase Price payable hereunder, plus the Purchase Price (as defined in the
Charter Real Estate Purchase
<PAGE> 15
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Contract) payable under the Charter Real Estate Purchase Contract, plus the
Purchase Price (as defined in the Charter Purchase Agreement) payable under the
Charter Purchase Agreement; provided, however, the foregoing limitation shall
not apply to a claim for indemnification pursuant to (w) Section 8.1(ii) or
Section 8.2(ii) with respect to those matters set forth in Sections 7.1.2,
7.1.4, 7.1.10, 7.1.12, 7.1.13, 7.2.1 and 7.2.2 hereof, (w) Section 8.1(i), (x)
Section 8.2(i), (y) Section 8.3.1 or Section 8.3.2 or (z) Section 8.3.3.
8.5 SURVIVAL, REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants contained in this Contract shall be deemed continuing
and shall survive the Closing Date as follows (i) the representations and
warranties set forth in Sections 7.1.12, 7.1.13, 7.2.1 and 7.2.2 shall continue
in full force and effect indefinitely, (ii) the representations and warranties
set forth in Section 7.1.10 shall continue in full force and effect for a time
period equal to the applicable statute of limitations with respect to claims
pertaining thereto, (iii) all other representations and warranties shall
continue in full force and effect until the second (2nd) anniversary of the
Closing Date, and (iv) except with respect to any covenants that terminate or
expire upon a date specified herein, all covenants shall continue in full force
and effect indefinitely (except for covenants under Section 7.4 which shall not
survive the Closing).
8.6 EXCLUSIVE REMEDY. After the Closing, the sole and exclusive remedy
of any party for any misrepresentation or any breach of a warranty or covenant
under or pursuant to this Contract or otherwise relating to the subject matter
of this Contract shall be a claim for indemnification under and pursuant to this
Section 8; provided, however, that nothing set forth in this Section shall
prohibit or restrict a party from seeking equitable relief, including, without
limitation, specific performance or injunctive relief.
9. CLOSING.
9.1 CLOSING DATE. The consummation of this transaction (the "Closing")
will take place at such location upon which Seller and Purchaser mutually agree,
at 2:00 p.m. on the date that is the later of July 31, 1998 or within five
Business Days after the satisfaction or waiver of all Purchaser's and Seller's
conditions precedent set forth herein (the "Closing Date"), unless Seller and
Purchaser mutually agree to an earlier or later date.
9.2 SELLER'S OBLIGATIONS AT THE CLOSING. At the Closing, Seller will
do, or cause to be done, the following:
9.2.1 DOCUMENTS. Seller will execute, acknowledge (if
necessary), and deliver the following documents:
9.2.1.1 A Special Warranty Deed for the Property, in
substantially the form and substance of Exhibit B (the "Deed");
9.2.1.2 A Bill of Sale for the Personal Property, in
substantially the form and substance of Exhibit C;
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9.2.1.3 A Certificate of Non-Foreign Status for the
Seller in substantially the form and substance of Exhibit D;
9.2.1.4 An updated certificate executed by Seller
remaking and reaffirming all representations and warranties made by Seller to
Purchaser in accordance with the provisions of ARTICLE 7.
9.2.2 ORIGINAL DOCUMENTS. Seller will deliver to Purchaser
originals within Seller's possession of all items enumerated in SECTION 6.1 of
this Contract.
9.2.3 POSSESSION. Seller will deliver possession of the
Property.
9.2.4 KEYS. Seller will deliver all keys and master keys to
all locks located on the Property, properly tagged for identification, as well
as combinations, card keys and cards for the security systems, if any.
9.2.5 COSTS. Seller will pay all costs allocated to Seller
pursuant to SECTION 9.4 of this Contract.
9.2.6 ADDITIONAL DOCUMENTS. Seller will execute and deliver or
obtain for delivery to the Title Company any other instruments reasonably
necessary to consummate this Contract, including, by way of example, closing
statements, releases, evidence of the authority of the party executing
instruments on Seller's behalf and delivery of instruments reasonably required
by the Title Company under the Title Commitment including an owner's affidavit
required by the Title Company for removal of standard exceptions, but excluding
any indemnification documents.
9.3 PURCHASER'S OBLIGATIONS AT THE CLOSING. At the Closing, Purchaser
will do, or cause to be done, the following:
9.3.1 PAYMENT OF CONSIDERATION. Purchaser will pay to Seller
the Purchase Price, as adjusted in accordance with the provisions of this
Contract.
9.3.2 ADDITIONAL DOCUMENTS. Purchaser will execute and deliver
or obtain for delivery to the Title Company any instruments reasonably necessary
to consummate this Contract, including by way of example, closing statements and
evidence of the authority of the party executing instruments on behalf of
Purchaser.
9.3.3 COSTS. Purchaser will pay all costs allocated to
Purchaser pursuant to SECTION 9.4 of this Contract.
9.4 COSTS AND ADJUSTMENTS AT CLOSING.
9.4.1 EXPENSES. Purchaser will pay for the title examination
fees and the premiums for the Title Policy (including the cost of any special
deletions from standard printed exceptions on the Title Policy and all
endorsements to the Title Policy required by Purchaser), the cost of the UCC
Search, the cost of preparing the Survey, one-half of all real property transfer
taxes, one-half of the recording fees, and one-half of the escrow fees charged
by the Title
<PAGE> 17
Company. Seller will be responsible for one-half of the transfer taxes one-half
of the recording fees and one-half of the escrow fees charged by the Title
Company. Seller and Purchaser will be responsible for the fees and expenses of
their respective attorneys.
9.4.2 REAL ESTATE TAXES. Real estate taxes on the Property for
the calendar year of the Closing will be prorated between Seller and Purchaser
as of the Closing Date. If the amount of such taxes are not known at Closing,
the proration of such real estate taxes will be based on the amount of such
taxes for the previous real estate tax fiscal period. As soon as the actual
amount of real estate taxes on the Property for the calendar year of Closing are
known, Seller and Purchaser will readjust the amount of such taxes to be paid by
each party with the result that Seller will pay for those taxes applicable to
the Property up to and including the Closing Date and Purchaser will pay for
those taxes and assessments applicable to the Property after the Closing Date.
The provisions of this SECTION 9.4.2 will survive the Closing.
9.4.3 ADJUSTMENT. To the extent that errors are discovered in,
or additional information becomes available with respect to the prorations and
allocations made at Closing, Seller and Purchaser agree to make such
post-Closing adjustments as may be necessary to correct any inaccuracy; however,
all prorations (except for ad valorem taxes) will be final within ninety (90)
days after Closing. Seller agrees to deliver to Purchaser all invoices and
payments related to the Property received by Seller after Closing.
10. TERMINATION.
10.1 METHOD OF TERMINATION. This Contract constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, subject to and in accordance with the terms hereof, the consideration
for which is (i) the covenants, representations and warranties set forth in this
Contract and (ii) expenditures and obligations incurred and to be incurred by
each of the parties hereto, in respect of this Contract, and this Contract may
be terminated or abandoned only as follows:
10.1.1 By the mutual consent of the Purchaser and the Seller.
10.1.2 By the Purchaser pursuant to the terms of Section 5.2
or Section 11 and by the Seller pursuant to Section 11.
10.1.3 By the Purchaser after September 15, 1998, if any of
the conditions set forth in Section 7.6, to which the obligations of the
Purchaser are subject, have not been fulfilled in all material respects or
waived in writing, unless such fulfillment has been frustrated or made
impossible by any act or failure to act of the Purchaser.
10.1.4 By the Seller after September 15, 1998, if any of the
conditions set forth in Section 7.7, to which the obligations of the Seller are
subject, have not been fulfilled in all material respects or waived in writing,
unless such fulfillment has been frustrated or made impossible by any act or
failure to act of the Seller.
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10.2 RIGHTS UPON TERMINATION.
10.2.1 In the event of a termination of this Contract pursuant
to Section 10.1.1 or Section 10.1.2, or Section 10.1.3 (other than by reason of
a willful and knowing breach) or Section 10.1.4 (other than by reason of a
willful and knowing breach), each party shall pay the costs and expenses
incurred by it in connection with this Contract, and no party (or any of its
officers, directors, employees, agents, representatives or stockholders) shall
be liable to any other party for any costs, expenses, damages or loss of
anticipated profits, except for any rights or obligations hereunder which, by
their terms, survive any termination of this Contract.
10.2.2 In the event of a termination of this Contract pursuant
to Section 10.1.3 and if the Seller shall be in breach of any material provision
of this Contract as a result of a willful and knowing breach, then the Purchaser
shall have all rights and remedies available at law or in equity.
10.2.3 In the event of a termination of this Contract pursuant
to Section 10.1.4 and if the Purchaser shall be in breach of any material
provision of this Contract as a result of a willful and knowing breach, then the
Seller shall have all rights and remedies available at law or in equity.
10.3 EXCLUSIVE REMEDY UPON TERMINATION. The sole and exclusive remedy
of any party following a termination of this Contract or if the Closing does not
otherwise occur, for any misrepresentation or breach of any warranties or
covenants under or pursuant to this Contract or otherwise relating to the
subject matter hereof shall be to terminate this Contract pursuant to Section
10.1 (to the extent not theretofore terminated) and to pursue the remedies
provided for in Section 10.2 hereof.
11. RISK OF LOSS, DESTRUCTION, AND CONDEMNATION.
11.1 RISK OF LOSS. Risk of loss for damage to the Property, or any part
thereof, by fire or other casualty from the Effective Date through the Closing
Date will be on Seller. Upon Closing, full risk of loss with respect to the
Property will pass to Purchaser.
11.2 CASUALTY AND CONDEMNATION.
In the event of any material physical loss, damage or
impairment, confiscation or condemnation of any material portion of the Property
prior to the Closing, the Seller shall use its best efforts to repair, replace
or restore the Property to its prior condition as soon as reasonably practicable
after such loss, damage, impairment, condemnation or confiscation, and the
proceeds of any claim for loss payable under any insurance policy, judgment or
award with respect thereto shall be applied to such repairs, subject to
applicable agreements governing the indebtedness of Seller. If any material
damage or destruction of the Property or any other event occurs which prevents
the operation of the Property in the normal and usual manner and the Seller
cannot restore or replace the Property so that such conditions are cured in all
material respects and normal operations are resumed before the Closing Date, the
Closing Date shall be postponed for a period of up to sixty (60) days, to permit
the repair or replacement of the damaged Property. In the event of any material
damage or destruction of the Property as described herein, if the Property has
not been restored or replaced and the Property's normal operations resumed
within
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the sixty (60) day period contemplated hereby, the Purchaser or the Seller may
terminate this Contract forthwith without any further obligation hereunder by
written notice to the other.
12. REAL ESTATE COMMISSIONS AND FEES.
Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any party in connection with this transaction and that Seller has not
taken any action which would result in any real estate broker's or finder's fees
or commissions being due and payable to any party with respect to the
transaction contemplated hereby. Purchaser hereby represents and warrants to
Seller that Purchaser has not contracted or entered into any agreement with any
real estate broker, agent, finder, or any party in connection with this
transaction and that Purchaser has not taken any action which would result in
any real estate broker's or finder's fees or commissions being due or payable to
any party with respect to the transaction contemplated hereby. Each party hereby
indemnifies and agrees to hold the other party harmless from any loss,
liability, damage, cost, or expense (including, without limitation, reasonable
attorneys' fees) paid or incurred by the other party by reason of a breach of
the representation and warranty made by such party under this SECTION 12.
Notwithstanding anything to the contrary contained herein, the indemnities set
forth in this Section 12 will survive the Closing.
13. NOTICES.
13.1 WRITTEN NOTICE. All notices, demands and requests which may be
given or which are required to be given by either party to the other party under
this Contract must be in writing.
13.2 METHOD OF TRANSMITTAL. All notices, demands and requests required
to be in writing must be sent by United States certified or registered mail,
postage fully prepaid, return receipt requested, or by Federal Express or a
similar nationally recognized overnight courier service, or by facsimile with a
confirmation copy delivered by a nationally recognized overnight courier
service. Notice will be considered effective on the earlier to occur of actual
receipt or twenty-four (24) hours after depositing same with the overnight
courier service.
13.3 ADDRESSES. The addresses for proper notice under this Contract are
as follows:
Purchaser:
Crescent Real Estate
Equities Limited Partnership
777 Main Street, Suite 2100
Fort Worth, Texas 76102
Attn: Mr. Bruce Picker and
David M. Dean, Esq., General Counsel
Facsimile: (817) 321-2000
WITH A COPY TO:
Wendelin A. White, Esq.
Shaw, Pittman, Potts & Trowbridge
2300 N. Street, N.W.
Washington, DC 20011
Facsimile: (202) 663-8007
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Seller:
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Attention: President
Facsimile No.: (305) 569-4647
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Bradley P. Cost, Esq.
Facsimile No.: (292) 682-0200
Either party may from time to time by written notice designate a different
address to the other party.
14. ASSIGNMENT.
No party will have the right to assign this Contract, without the prior
written consent of the other parties hereto.
15. INTERPRETATIVE.
15.1 ENTIRE AGREEMENT. This Contract embodies the entire agreement
between the parties and cannot be varied except by the written agreement of the
parties.
15.2 NO OTHER REPRESENTATIONS AND WARRANTIES. It is agreed that, except
for the representations and warranties specifically set forth herein, Purchaser
is not relying on any representation or warranty of Seller (expressed or
implied), its representatives, agents or employees, whatsoever pertaining to the
Property, the condition thereof, the value thereof, the physical, environmental
or other conditions of the Property, or any other matter with respect to the
Property, and Seller specifically disclaims making any such representation or
warranty.
15.3 GENDER AND NUMBER. Words of any gender used in this Contract will
be construed to include any other gender and words in the singular number will
be construed to include the plural, and vice versa, unless the context requires
otherwise.
15.4 CAPTIONS. The captions used in connection with the Articles,
Sections and Subsections of this Contract are for convenience only and will not
be deemed to expand or limit the meaning of the language of this Contract.
<PAGE> 21
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15.5 SUCCESSORS AND ASSIGNS. This Contract will be binding upon and
inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
15.6 MULTIPLE COUNTERPARTS. This Contract may be executed in several
counterparts, each of which will be deemed an original, and all of which will
constitute but one and the same instrument. This Contract may be executed via
facsimile, and such Contract executed via facsimile shall have the same force
and effect as an original document and shall be legally binding upon the
parties.
15.7 CONTROLLING LAW. This Contract will be construed under, governed
by and enforced in accordance with the laws of the State of Georgia.
15.8 EXHIBITS. All exhibits, attachments, annexed instruments and
addenda referred to herein will be considered a part hereof for all purposes
with the same force and effect as if copied verbatim herein.
15.9 NO RULE OF CONSTRUCTION. Seller and Purchaser have been
represented by counsel in the negotiations and preparation of this Contract;
therefore, this Contract will be deemed to be drafted by both Seller and
Purchaser, and no rule of construction will be invoked respecting the authorship
of this Contract.
15.10 SEVERABILITY. All agreements and covenants contained in this
Contract are severable. In the event any agreement or covenant is held to be
invalid by any court, this Contract will be interpreted as if such invalid
agreement or covenant were not contained herein.
15.11 CONSTRUCTION OF CERTAIN WORDS. "Any" will be construed as "any
and all." "Including" will be construed as "including but not limited to."
15.12 TIME OF ESSENCE. Time is important to both Seller and Purchaser
in the performance of this Contract, and both parties have agreed that strict
compliance is required as to any date set out in this Contract.
15.13 BUSINESS DAYS. "Business Day" means any day on which business is
generally transacted by banks in Atlanta, Georgia. If the final date of any
period which is set out in any paragraph of this Contract falls upon a day which
is not a Business Day, then, and in such event, the time of such period will be
extended to the next Business Day.
15.14 LEGAL FEES. In the event any party to this Contract commences
legal action of any kind to enforce the terms and conditions of this Contract,
the prevailing party in such litigation will be entitled to collect from the
other party or parties all costs, expenses and attorneys' fees incurred in
connection with such action.
15.15 CONTACT WITH CERTAIN PERSONS. Notwithstanding anything to the
contrary contained in this Contract, the Purchaser agrees that it shall not,
without the prior written consent of the Vice Chairman of the Board, the
President or the Chief Financial Officer of the Seller, contact any customer,
provider or supplier (whether of goods or services) or any other person or
entity with whom the Seller has commercial dealings, other than employees, to
discuss the transactions contemplated by this Contract or the business,
operations or affairs of the Seller, the
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Property or otherwise. Any contact with employees shall be coordinated with the
Chief Executive Officer for the Property.
16. CONFIDENTIALITY.
Purchaser and Seller agrees not to record this Contract and to hold all
information related to this transaction in strict confidence, and will not
disclose same to any person other than directors, officers, employees and agents
of their companies, as well as to consultants, banks or other third parties
working with Seller or Purchaser in connection with the transaction ("Related
Parties") who need to know such information for the purpose of consummating this
transaction. This prohibition will not be applicable to disclosure of
information required by applicable law, rule or regulation and will not survive
the Closing.
17. PRESS RELEASES.
Except as provided in this Section 17, prior to Closing, any release to
the public of information with respect to the matters set forth in this Contract
will be made only in the form approved by Purchaser and Seller and their
respective counsel, except to the extent otherwise required by law. Purchaser
and Seller are affiliated with publicly-held corporations, the securities of
which are traded on national securities exchanges. The parties acknowledge that
the parties and their respective affiliates may be compelled by considerations
of legal obligation, fiduciary and public responsibility, commercial pragmatism
and established corporate policy, to issue a public press release announcing
that they have entered into this Contract and stating the material terms hereof.
Subject to reasonable advance notice to and consultation with the
non-disseminating party, the parties hereby consent to the dissemination of any
such press release and to all such additional statements and disclosures any
party may reasonably make in responding to inquiries arising as a result of any
such press release. In any event, copies of any such press release by either
party shall be sent to the other party immediately upon its release. Neither
party shall make mention of the other party's name in any such press release,
without the prior written consent of such party, which consent may be granted or
withheld in its sole and absolute discretion, except to the extent required by
law.
18. IRS REPORTING REQUIREMENTS.
For the purpose of complying with any information reporting
requirements or other rules and regulations of the Internal Revenue Service
("IRS") that are or may become applicable as a result of or in connection with
the transaction contemplated by this Contract, including, but not limited to,
any requirements set forth in proposed Income Tax Regulation Section 1.6045-4
and any final or successor version thereof (collectively the "IRS Reporting
Requirements"), Seller and Purchaser hereby designate and appoint the Title
Company to act as the "Reporting Person" (as that term is defined in the IRS
Reporting Requirements) to be responsible for complying with any IRS Reporting
Requirements. The Title Company hereby acknowledges and accepts such designation
and appointment and agrees to fully comply with any IRS Reporting Requirements
that are or may become applicable as a result of or in connection with the
transaction contemplated by this Contract. Without limiting the responsibility
and obligations of the Title Company as the Reporting Person, Seller and
Purchaser hereby agree to comply with any provisions of the IRS Reporting
Requirements that are not identified therein as the responsibility
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of the Reporting Person, including, but not limited to, the requirement that
Seller and Purchaser each retain an original counterpart of this Contract for at
least four (4) years following the calendar year of the Closing.
19. EFFECTIVE DATE.
This Contract will be deemed executed as of the date of the last
signature to this Contract (the "Effective Date").
* * *
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<TABLE>
<S> <C>
SELLER:
THE HAVEN HOSPITAL, INC., a Delaware Corporation
Date June __, 1998 By:_______________________________
Name:_____________________________
Title:____________________________
PURCHASER:
CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP,
a Delaware limited partnership
Date June __, 1998 By:_______________________________
Name:_____________________________
Title:____________________________
</TABLE>
<PAGE> 25
25
Charter Behavioral Health Systems, LLC ("Charter") is signing this Contract
solely for the purpose of the following:
1. Notwithstanding anything contained herein to the contrary, Charter
hereby agrees to pay (i) the title examination fees, (ii) premiums for the Title
Policy, (iii) the cost of the UCC Search, (iv) the cost of preparing the Survey
and (v) the closing costs incurred by Purchaser including, but not limited to
Purchaser's portion of all real property transfer taxes, recording fees and
escrow fees charged by the Title Company. However, in no event shall Charter be
responsible for any attorneys' fees and expenses incurred by Purchaser.
<TABLE>
<S> <C>
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC, a Delaware
limited liability company
Date June __, 1998 By:_______________________________
Name:_____________________________
Title:____________________________
</TABLE>
<PAGE> 26
26
LIST OF EXHIBITS:
- -----------------
Exhibit A - Legal Description of the Property
Exhibit B - Form of Special Warranty Deed
Exhibit C - Form of Bill of Sale
Exhibit D - Certificate of Non-foreign Status
<PAGE> 27
27
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
<PAGE> 28
28
EXHIBIT B
FORM OF SPECIAL WARRANTY DEED
<PAGE> 29
29
This Instrument Prepared by: Mail Tax Notice to:
Adam A. Veltri, Esq.
Haythe & Curley
237 Park Avenue
New York, New York 10017
SPECIAL WARRANTY DEED
STATE OF _______ )
)
COUNTY OF _______ )
KNOW ALL MEN BY THESE PRESENTS,
That in consideration of TEN DOLLARS ($10.00) and other good and valuable
consideration, to the undersigned Grantor, The Haven Hospital, Inc., a Delaware
corporation, (herein referred to as GRANTOR) in hand paid by the GRANTEE herein,
the receipt of which is hereby acknowledged, the said GRANTOR does by these
presents hereby grant, bargain, sell and convey unto Crescent Real Estate
Equities Limited Partnership, a Delaware Limited Partnership, whose address is
777 Main Street, Suite 2100, Fort Worth, Texas 76102 (herein referred to as
GRANTEE), the following described real estate, situated and being in the County
of Dallas, State of Texas, to wit:
SEE EXHIBIT "A" ATTACHED HERETO AND INCORPORATED HEREIN.
TO HAVE AND TO HOLD, To the said GRANTEE, its successors and assigns
forever.
And said GRANTOR does for itself, its successors and assigns, covenant
with said GRANTEE, its successors and assigns, that GRANTOR has done nothing to
impair such title as GRANTOR received, and GRANTOR will warrant and defend the
title against the lawful claims of all persons claiming by, under or through
GRANTOR, except for the exceptions hereinafter stated.
Subject to the following matters:
1. All covenants, agreements, conditions, easements, restrictions
and rights affecting the real estate, all to the extent they
are of record and are valid and enforceable and still
applicable to the real estate.
<PAGE> 30
30
IN WITNESS WHEREOF, the said GRANTOR, its ______________ who is
authorized to execute this conveyance, hereto set its signature and seal this
_____ day of September, 1998
GRANTOR:
Signed, Sealed and
delivered in the presence of The Haven Hospital, Inc., a Delaware corporation
Witness: By:
---------------------------------
Name: Bert G. Cibran
Title: President
<PAGE> 31
31
EXHIBIT C
FORM OF BILL OF SALE
<PAGE> 32
32
BILL OF SALE
Concurrently with the execution and delivery hereof,
________________, a _____________ corporation ("ASSIGNOR"), is conveying to
______________________, a ___________ corporation "ASSIGNEE"), (i) all that real
property more particularly described on EXHIBIT A attached hereto and made a
part hereof for all purposes, and (ii) all improvements now or hereafter
situated thereon (collectively, the "PROPERTY").
It is the desire of Assignor to hereby assign, transfer, set
over and deliver to Assignee all of Assignor's title and interest in and to all
furniture, fixtures and equipment owned by Assignor and located at or used in
connection with the operation of the Property, site plans, surveys, plans and
specifications, and floor plans which relate to the Property, all transferable
guaranties and warranties (express or implied), bonds and development rights
related to the property or any of the foregoing items of personal property, and,
subject to applicable law and regulations, all of transferable licenses,
permits, authorizations, approvals, certificates of occupancy and other consents
and regulatory approvals necessary for the current ownership, occupancy, and
leasing of the Property, together with any and all other incidental rights and
appurtenances relating thereto, except those not owned by Assignor, all as more
fully described below (such properties being collectively called the "Assigned
Property").
NOW, THEREFORE, in consideration of the receipt of ten Dollars
($10.00) and other good and valuable consideration in hand paid by Assignee to
Assignor, the receipt and sufficiency of which are hereby acknowledged and
confessed by Assignor, Assignor does hereby ASSIGN, TRANSFER, SET OVER and
DELIVER to Assignee, its successors and assigns, all of Assignor's rights, title
and interest in and to all of the Assigned Property (whether statutory, express
or implied), including, without limitation, the following:
1. All furniture, fixtures and equipment owned by Assignor and
located at or used in connection with the operation of the property, site plans,
surveys, plans and specifications, and floor plans which relate to the Property,
all transferable guaranties and warranties (express or implied), bonds and
development rights related to the Property or any of the foregoing items of
personal property, and, subject to applicable law and regulations, all
transferable licenses, permits, authorizations, approvals, certificates of
occupancy and other consents and regulatory approvals necessary for the current
ownership, occupancy, and leasing of the Property;
2. All master keys and keys to common areas; and
3. Any and all other rights, privileges and appurtenances
owned by Assignor and related to or used in connection with any of the
foregoing.
TO HAVE AND HOLD the Assigned Property unto Assignee and
Assignee's successors, legal representatives and assigns, forever.
This Bill of Sale and the provisions herein contained will be
binding upon the inure to the benefit of the Assignee and the Assignor and their
respective successors and assigns.
IN WITNESS WHEREOF, Assignor has caused this Bill of Sale to
be executed as of the ____ day of ______, 1998.
ASSIGNOR:
---------------------------------------
By:
------------------------------------
<PAGE> 33
33
EXHIBIT D
CERTIFICATE OF NON-FOREIGN STATUS
<PAGE> 34
34
CERTIFICATE OF NON FOREIGN STATUS
The undersigned __________________, a ____________ corporation, ("Transferor")
hereby certifies to ("Transferee") for purposes of Section 1445 of the Internal
Revenue Code of 1986, as amended, in connection with the sale, transfer and
conveyance of the Property described in SCHEDULE A attached hereto and
incorporated herein by reference ("Property"), that
1) that Transferor is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);
2) that the Transferor's United States identification number
is _______________;
3) that Transferor's principal office address is ____________,
_______________; and
4) that Transferor is aware that "Transferee" is relying upon
this Certificate in not withholding ten percent (10%) of the amount realized on
the disposition of the Property by Transferor to Transferee as required of
Transferee by Section 1445 of the Internal Revenue Code of 1986, as amended.
Transferor understands that this Certificate may be disclosed
to the Internal Revenue Service by Transferee and that any false statement
contained herein could be punished by fine, imprisonment or both.
TRANSFEROR:
[ ]
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 35
35
LIST OF SCHEDULES:
Schedule 7.1.4 Litigation
Schedule 7.1.10 Hazardous Substances
Schedule 7.1.10-1 Certain Environmental Disclosures
Schedule 7.1.13 Seller's Consents
Schedule 7.2.2 Purchaser's Consents
<PAGE> 36
36
SCHEDULE 7.1.4
LITIGATION
<PAGE> 37
37
THE HAVEN:
A: Pending or Threatened Professional Malpractice Claims
1. Patty B., individually and as Next Friend for Brando S. v.
Moses Ramos, Jr., MaKy Patterson, Sylvia Turner, Sylvia
Turner, M.D., Inc., and The Haven Hospital, Inc. In the
District Court of the 162nd Judicial District of Dallas
County, Dallas, Texas, Case No. 95-158
2. Carolyn Sue R., as Next Friend of Troy H., a Minor v. The
Haven Hospital, Inc., Ramsay Health Care, Inc., Individually
and d/b/a The Haven Hospital, Inc., Ricardo M. Schack, M.D.
and Terry Alley, M.D. In the District Court of Dallas County,
Texas, Case No. 97-7657
3. Threat of Claim, Patient Evelyn Stelphenson
B. EEOC or Other Employment-Related Claims
1. Kimberly E. Duncan v. The Haven: EEOC Charge No. 310971493
C. Workers' Compensation Claims
1. Mary K. Goettsch
2. Carol A. Brain
3. Lori Ennis
4. James Sterns
5. John Knight
6. Elbetrice Stewart
7. Rosie M. Walker
8. Anthony Virgil
9. Anthony D. Virgil
10. Jodi E. Hudson
11. Corliss Brewton
12. Angela Murphree
13. Carla G. Carrier
14. Gus Agson
15. Rose Womack
16. Judy D. Jones
17. Amanda J. Morris
18. Amanda J. Morris
19. John L. Knight
20. Vera Stephens
21. John W. Binkley
22. Amanda J. Morris
23. Gary Dessesaure
24. Delta J. Brown
25. Nicole Soileau
26. Mark A. Thompson
27. Mark A. Thompson
28. Pedro Lopez
29. Brett Lincoln
30. Shirley Turner
31. Amanda J. Morris
32. Nicole Soileau
<PAGE> 38
38
SCHEDULE 7.1.10
HAZARDOUS SUBSTANCES
<PAGE> 39
39
I. Matters set forth in the Phase I environmental audit reports by Robert
Bates & Associates, Inc. dates March 1993:
a. The Haven
II. Matters set forth in any Phase I, Phase II or other environmental audit
reports prepared by or for the benefit of Purchaser or its affiliates,
or any assignee thereof.
<PAGE> 40
40
SCHEDULE 7.1.10-1
CERTAIN ENVIRONMENTAL DISCLOSURES
<PAGE> 41
41
SCHEDULE 7.1.13
SELLER'S CONSENTS
1. The Credit Agreement, dated as of September 30, 1997, as
amended and supplemented from time to time (the "Credit
Agreement"), by and among Ramsay Health Care, Inc., the Credit
Parties (as defined in the Credit Agreement), the Lenders from
time to time party thereto, General Electric Capital
Corporation, as Administrative Agent and GECC Capital Markets
Group, Inc., as Syndication Agent
<PAGE> 42
42
SCHEDULE 7.2.2
PURCHASER'S CONSENTS
None
<PAGE> 1
Exhibit 2.12
ASSET PURCHASE AGREEMENT
among
WEST VIRGINIA UNIVERSITY HOSPITALS, INC.,
PSYCHIATRIC INSTITUTE OF WEST VIRGINIA, INC.
and
RAMSAY HEALTH CARE, INC.
July 2, 1998
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. DEFINED TERMS..................................................................................................... 1
2. COVENANTS AND UNDERTAKINGS........................................................................................ 8
2.1 Purchase and Sale of Assets.............................................................................. 8
2.2 Excluded Assets ......................................................................................... 9
2.3 Consideration ........................................................................................... 10
2.4 Allocation of Consideration ............................................................................. 11
2.5 Assumption of Liabilities and Obligations ............................................................... 11
2.6 Working Capital Adjustment .............................................................................. 11
2.7 Patient Billings ........................................................................................ 13
2.8 HSR Act Requirements .................................................................................... 13
2.9 Termination of Certain Agreements ....................................................................... 14
2.10 West Virginia Law Requirements .......................................................................... 14
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER.................................................. 15
3.1 Organization, Standing and Authority .................................................................... 15
3.2 Authorization and Binding Obligation .................................................................... 15
3.3 Absence of Conflicting Agreements ....................................................................... 15
3.4 Title to and Condition of Real Property ................................................................. 16
3.5 Title to and Condition of Personalty .................................................................... 17
3.6 Contracts ............................................................................................... 17
3.7 Consents ................................................................................................ 17
3.8 Trademarks, Trade Names and Copyrights .................................................................. 18
3.9 Licenses ................................................................................................ 18
3.10 Compliance with Laws .................................................................................... 18
3.11 Financial Statements .................................................................................... 19
3.12 Insurance ............................................................................................... 19
3.13 Employee Benefit Plans .................................................................................. 19
3.14 Labor Relations ......................................................................................... 20
3.15 Taxes ................................................................................................... 21
3.16 Claims and Legal Actions ................................................................................ 21
3.17 Environmental Matters ................................................................................... 21
3.18 Reports ................................................................................................. 22
3.19 Conduct of Business in Ordinary Course .................................................................. 23
3.20 Cost Reports ............................................................................................ 23
3.21 Medical Staff............................................................................................ 23
3.22 Medicare/Medicaid Participation and Accreditation Investigations ........................................ 23
3.23 Hill-Burton Care ........................................................................................ 24
3.24 U.S. Person ............................................................................................. 24
3.25 Full Disclosure ......................................................................................... 24
3.26 Assets .................................................................................................. 24
3.27 Intentionally Omitted ................................................................................... 24
3.28 Personnel ............................................................................................... 24
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................................... 25
4.1 Organization, Standing, and Authority ................................................................... 25
4.2 Authorization and Binding Obligation .................................................................... 25
4.3 Absence of Conflicting Agreements ....................................................................... 25
4.4 Consents ................................................................................................ 25
4.5 Litigation; Disputes .................................................................................... 26
4.6 Full Disclosure ......................................................................................... 26
4.7 Financing ............................................................................................... 26
5. PRE-CLOSING COVENANTS OF THE SELLER............................................................................... 26
5.1 Negative Covenants ...................................................................................... 26
5.2 Affirmative Covenants ................................................................................... 27
6. ADDITIONAL COVENANTS.............................................................................................. 29
6.1 Consent ................................................................................................. 29
6.2 Cooperation ............................................................................................. 30
6.3 Taxes, Fees and Expenses ................................................................................ 30
6.4 Brokers ................................................................................................. 30
6.5 Confidentiality ......................................................................................... 30
6.6 Risk of Loss ............................................................................................ 30
6.7 Employee Benefit Matters ................................................................................ 31
6.8 Filing of Cost Reports .................................................................................. 33
6.9 Post-Closing Insurance .................................................................................. 34
6.10 Access to Information ................................................................................... 34
6.11 Environmental Reports ................................................................................... 34
6.12 Non-Competition Covenant ................................................................................ 35
6.13 Information Systems ..................................................................................... 35
6.14 Agreement by the Purchaser Regarding No Other Representations or
Warranties by the Shareholder or the Sellers ............................................................ 36
7. ADDITIONAL COVENANTS OF THE PURCHASER............................................................................. 36
7.1 Resale Certificate ...................................................................................... 36
7.2 Records Relating to Cost Reports ........................................................................ 36
7.3 Books and Records of the Seller ......................................................................... 37
7.4 Consents ................................................................................................ 37
7.5 Purchaser's Efforts to Close ............................................................................ 37
8. CONDITIONS TO CLOSING............................................................................................. 37
8.1 Conditions to Obligations of the Purchaser to Close ..................................................... 37
8.2 Conditions to Obligations of the Seller to Close ........................................................ 39
9. CLOSING AND CLOSING DELIVERIES.................................................................................... 39
9.1 Closing ................................................................................................. 39
9.2 Deliveries by the Seller and the Shareholder ............................................................ 40
9.3 Deliveries by the Purchaser ............................................................................. 41
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
10. TERMINATION....................................................................................................... 42
10.1 Method of Termination ................................................................................... 42
10.2 Rights Upon Termination ................................................................................. 42
10.3 Sole and Exclusive Remedy ............................................................................... 43
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.................................................... 43
11.1 Representations and Warranties .......................................................................... 43
11.2 Indemnification of the Purchaser by the Seller and the Shareholder ...................................... 43
11.3 Indemnification of the Seller and the Shareholder by the Purchaser ...................................... 44
11.4 Procedure for Indemnification ........................................................................... 45
11.5 Investigation ........................................................................................... 46
11.6 Limitation on Indemnification Obligations ............................................................... 46
11.7 Intentionally Omitted ................................................................................... 47
11.8 Exclusive Remedy ........................................................................................ 47
12. MISCELLANEOUS..................................................................................................... 47
12.1 Further Assurances ...................................................................................... 47
12.2 Notices ................................................................................................. 47
12.3 Waiver .................................................................................................. 47
12.4 Captions; Partial Invalidity ............................................................................ 47
12.5 Counterparts ............................................................................................ 48
12.6 Variations of Pronouns; Number; Gender .................................................................. 48
12.7 Governing Law; Construction ............................................................................. 48
12.8 Third Parties ........................................................................................... 48
12.9 Entire Agreement ........................................................................................ 48
12.10 Remedies ................................................................................................ 48
12.11 Benefit and Binding Effect .............................................................................. 49
12.12 Dispute Resolution ...................................................................................... 49
12.13 Contact with Employees and Other Persons ................................................................ 49
12.14 Schedules and Exhibits .................................................................................. 49
12.15 Best Efforts ............................................................................................ 50
12.16 Knowledge ............................................................................................... 50
</TABLE>
<PAGE> 5
LIST OF EXHIBITS
2.4 Allocation of Consideration
2.6-1 Base Adjusted Working Capital
2.6-2 Adjusted Working Capital Methodology
<PAGE> 6
LIST OF SCHEDULES
2.2.11 Certain Excluded Assets
2.5 Certain Assumed Liabilities
3.3 List of Violations
3.4.2 Real Property Leases
3.4.3 Condition of Real Property, Etc.
3.4.4 Real Property Construction, Etc. Agreements
3.5.1 Title to Assets (Other than Real Property)
3.5.2 Condition of Assets (Other than Real Property)
3.6.1 Assumed Contracts
3.6.2 Excluded Contracts
3.7 Consents of Sellers
3.8 Trademarks, Trade Names and Copyrights
3.9 Licenses
3.11 Financial Statements
3.12 Insurance Policies
3.13 Employee Plans and Compensation Arrangements
3.14 Labor Relations
3.16 Claims and Legal Actions
3.17 Environmental Matters
3.19 Changes in Conduct of Business
3.20 Cost Report Audits
3.21 Medical Staff
3.22 Medicare Participation and Accreditation Investigations
3.28 Employee Information
4.4 Consents of Purchaser
6.4 Brokers
6.7.2 Description of Severance Terms
6.7.3 Incidents of Loss of Employment
8.1.5 Material Adverse Changes
<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, entered into as of this 2nd day of July,
1998, by and among West Virginia University Hospitals, Inc., a West Virginia
private non-stock, non profit corporation (the "PURCHASER"), Psychiatric
Institute of West Virginia, Inc., a Virginia corporation (the "SELLER"), and
Ramsay Health Care, Inc., a Delaware corporation (the "SHAREHOLDER").
W I T N E S S E T H:
WHEREAS, the Shareholder, through the Seller, owns (subject to the
Ground Lease) and operates a behavioral health care facility in Morgantown, West
Virginia; and
WHEREAS, the Seller desires to sell to the Purchaser and the Purchaser
desires to purchase from the Seller substantially all of the assets used and
useful in the operation of said facility upon the terms and conditions set forth
below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. DEFINED TERMS
The following terms shall have the following meanings in this Agreement
(terms defined in the singular to have the same meanings when used in the plural
and VICE VERSA):
"ACCOUNTS RECEIVABLE" means all accounts receivable of the
Seller as of the Closing Date, including, without limitation, accounts
receivable from the Seller's employees, physicians or other representatives, and
all rights of Seller to payment for goods or services rendered by the Seller
prior to the Closing Date, excluding (i) any and all Cost Report Adjustments and
any and all other rights to payment relating to Cost Report Settlements for
periods ending on or prior to the Closing Date, (ii) any and all Intercompany
Receivables and (iii) the West Virginia Receivable.
"ADJUSTED WORKING CAPITAL" shall have the meaning set forth in
Section 2.6.
"AGREEMENT" means this Asset Purchase Agreement, as it may be
amended, modified, or supplemented from time to time in accordance with its
terms.
"ASSETS" means the tangible and intangible assets owned or
held by the Seller which are to be sold to and purchased by the Purchaser
pursuant to Section 2.1.
"ASSUMED CONTRACTS" means the Contracts which are to be
assigned to and assumed by the Purchaser and which are identified on SCHEDULE
3.6.1 and no others, except those entered into in the ordinary course and with
the consent of the Purchaser, as applicable, as contemplated in Section 5.1.2.
<PAGE> 8
2
"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 2.1.
"BASE ADJUSTED WORKING CAPITAL" shall have the meaning set
forth in Section 2.6.
"CHARTER AGREEMENT" shall have the meaning set forth in
Section 8.1.9.(i).
"CLAIMANT" has the meaning set forth in Section 11.4.1.
"CLOSING" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Section 9.
"CLOSING DATE" means the date of the Closing specified in
Section 9.1.
"CLOSING DATE ADJUSTED WORKING CAPITAL" shall have the meaning
set forth in Section 2.6.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder, or any subsequent legislative enactment thereof,
as in effect from time to time.
"COMPENSATION ARRANGEMENT" means any plan or compensation
arrangement other than an Employee Plan, whether written or unwritten, which
provides to employees, former employees, officers, independent contractors,
directors and/or shareholders of the Seller or any entity related to the Seller
(under the terms of Sections 414(b), (c), (m) or (o) of the Code) any
compensation or other benefits, whether deferred or not, in excess of base
salary or wages and excluding overtime pay, excluding Assumed Contracts.
"CONSENTS" means all of the consents or approvals of
government authorities and other third parties necessary to sell, transfer and
assign the Assets to the Purchaser and otherwise to consummate the transactions
contemplated hereby in compliance with all applicable laws, regulations, orders
and decrees.
"CONTRACTS" means all (i) agreements with physicians or
physician groups or other health care professionals, (ii) agreements with
Payors, (iii) leases, (iv) health, liability, theft, fidelity, fire and other
forms of insurance policies or commitments, (v) software licenses, (vi)
employment agreements, collective bargaining and trade agreements, (vii) barter
agreements and (viii) other agreements, written or oral (including any
amendments and other modifications thereto), relating to the Facility to which
the Seller is a party or which are binding upon the Seller or affect the Assets
or the business or operations of the Seller relating to the Facility, together
with all advances, deposits and prepaid items related thereto, which are in
effect on the date hereof or are entered into by the Seller in the ordinary
course of business between the date hereof and the Closing Date.
"COST REPORT" means the cost report required to be filed, as
of the end of a provider cost year or for any other required period, including,
without limitation, a terminating cost report, with cost-based Payors with
respect to cost reimbursement.
<PAGE> 9
3
"COST REPORT ADJUSTMENTS" shall have the meaning set forth in
Section 6.8.
"COST REPORT SETTLEMENTS" means the right, title and interest
of the Seller in amounts due from Medicare, any state under any state cost-based
programs or from any fiscal intermediary or other Payor in connection with the
resolution of disputes or adjustments relating to Cost Reports filed for periods
ending on or prior to the Closing Date, including initial settlements as well as
reopenings of previously settled Cost Reports, but does not include any amounts
included in Accounts Receivable.
"COVERED LIVES" has the meaning set forth in Section 2.7.1.
"DEFICIENCIES" has the meaning set forth in Section 3.22.
"EMPLOYEE PLAN" means any pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus, incentive, medical, vision,
dental, disability, life insurance or any other employee benefit plan as defined
in Section 3(3) of ERISA to which the Seller or any entity related to the Seller
(under the terms of Sections 414(b), (c), (m) or (o) of the Code) contributes or
otherwise is bound or which the Seller or any entity related to the Seller
(under the terms of Sections 414(b), (c), (m) or (o) of the Code) sponsors or
maintains.
"ENVIRONMENTAL CLAIMS" means any claim, action, cause of
action, investigation or notice by any person or entity alleging potential
liability (including, without limitation, 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, in part or in whole, (i) the presence, or release into the
environment, of any Materials of Environmental Concern at any location, whether
or not owned or operated by the Seller or (ii) circumstances forming the basis
of any violation, or alleged violation, of the Environmental Laws or the Medical
Waste Laws.
"ENVIRONMENTAL LAWS" means the federal, state, regional,
county, parish, municipal and local environmental, health or safety laws,
regulations, ordinances, rules and policies and the common law relating to the
use, refinement, recycling, handling. treatment, removal, storage, production,
manufacture, transportation, disposal, emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise relating
to protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), as the same may
be amended or modified until the date of closing, including, without limitation,
the following statutes: Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901, ET SEQ.; Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601, ET SEQ.; Air
Pollution Prevention and Control Act, 42 U.S.C. Section 7401, ET SEQ.; Water
Pollution Control Act, 33 U.S.C. Section 1251, ET SEQ.; Federal Insecticide,
Fungicide, and Rodenticide Act, Federal Pesticide Act of 1978, 7 U.S.C. Section
136, ET SEQ.; Hazardous Materials Transportation Act, 49 U.S.C. Section 1471,
1472, 1655 and 1801, ET SEQ.; Toxic Substances Control Act, 15 U.S.C. Section
2601, ET SEQ.; Safe Drinking Water Act. 42 U.S.C. Section 300f, ET SEQ.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder, as in effect from time to
time.
<PAGE> 10
4
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"EXCLUDED CONTRACTS" means those Contracts which are not to be
assigned to and assumed by the Purchaser, including, without limitation, those
identified on SCHEDULE 3.6.2.
"EXECUTORY PERIOD" shall have the meaning set forth in Section
5.
"EXISTING AGREEMENTS" shall have the meaning set forth in
Section 2.9.
"FACILITY" means the Morgantown Facility.
"FINANCIAL STATEMENTS" has the meaning set forth in Section
3.11.1.
"FMC" shall mean Facilities Management Corporation, a West
Virginia corporation controlled by the Purchaser, its sole member.
"GROUND LEASE" means that certain Ground Lease between FMC and
the Seller dated as of September 30, 1985.
"HIRED EMPLOYEES" has the meaning set forth in Section 6.7.2.
"HIRED EMPLOYEES RECORDS" has the meaning set forth in Section
2.2.3.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder, or any
subsequent legislative enactment thereof, as in effect from time to time.
"INDEMNIFYING PARTY" has the meaning set forth in Section
11.4.1.
"INFORMATION SYSTEM" has the meaning set forth in Section
6.13.
"INTERCOMPANY RECEIVABLES" means all accounts receivable or
other amounts due from the Seller to the Shareholder and all receivables or
other amounts due from the Shareholder or any of its subsidiaries to the Seller.
"INVENTORY" means the following items of personal property
owned by the Seller relating to the Facility: (i) supplies (office, medical,
food or otherwise), (ii) inventory (office, medical, food, drug or otherwise)
and (iii) other items of tangible personal property typically consumed or sold
by the Seller at the Facility in the ordinary course of business, plus such
additions thereto and less such deletions therefrom arising in the ordinary
course of business between the date hereof and the Closing Date.
"JCAHO" means the Joint Commission on the Accreditation of
Healthcare Organizations.
"LICENSES" means all of the certificates of need,
accreditations, registrations, licenses, permits, certificates and other
authorizations issued by any federal, state or local governmental authorities or
accreditation organizations to the Seller and required in connection with the
conduct of the business or operations of its business or the Facility.
<PAGE> 11
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"LIEN" means any claim, easement, encumbrance, mortgage,
lease, covenant, security interest, lien, option, right of first refusal,
pledge, conditional sales contract, levy, exception, encroachment, limitation,
charge or other restriction of any kind or nature whatsoever.
"LOSSES" means any cost, damage, disbursement, expense,
liability, loss, deficiency, interest, penalty, fine, judgment or settlement of
any kind or nature whatsoever, including, without limitation, reasonable legal,
accounting and other professional fees, expenses and disbursements that may be
imposed on or otherwise incurred or suffered by the Claimant.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any toxic or
hazardous waste, pollutants or substances, including, without limitation,
asbestos, urea formaldehyde, radioactive substances, materials or wastes, PCBs,
petroleum products and byproducts, defined or listed as "hazardous substances,"
"hazardous waste," "toxic substances," "toxic pollutant," "medical waste," "air
pollutants," "hazardous air pollutants" or similarly identified substances or
mixtures, in or pursuant to the Environmental Laws or the Medical Waste Laws.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, operations, properties, financial condition, results of operations
or Assets of the Seller taken as a whole.
"MEDICAL WASTE" means any substance, pollutant, materials or
contaminant listed or regulated under the Medical Waste Laws.
"MEDICAL WASTE LAWS" means the following, including
regulations promulgated and orders issued thereunder, to the extent such laws
regulate Medical Waste, all as may be amended or modified until the date of
closing: Medical Waste Tracking Act of 1988, 42 U.S.C. section 6992, ET SEQ.
("MWTA"), 42 CFR Part 72 and 49 CFR Part 173, 386; Resource Conservation and
Recovery Act of 1976, 42 U.S.C. section 6901 ET SEQ.; Air Pollution Prevention
and Control Act, 42 U.S.C. section 7401 ET SEQ; Water Pollution Control Act, 33
U.S.C. section 1251 ET SEQ.; Marine Protection, Research and Sanctuaries Act of
1972, 33 U.S.C. section 1401 ET SEQ.; Nuclear Regulatory Commission regulations
contained in 10 CFR Parts 20 and 61; Occupational Safety and Health Act, 29
U.S.C. section 651 ET SEQ.; Public Health Service regulations contained in 42
CFR Part 72; Food and Drug Administration regulations contained in 21 CFR Parts
58 and 211; U.S. Department of Transportation regulations contained in 49 CFR
Parts 171-179; The Act to Prevent Pollution from Ships, 33 U.S.C. section 1901
ET SEQ.; U.S. Department of Agriculture regulations contained in 9 CFR Parts
50-56; U.S. Postal Service regulations contained in 39 CFR Part 111; local
environmental and safety laws, rules, regulations and other legally binding
requirements and any other federal, state, regional, county, municipal or other
local laws, regulations and ordinances insofar as they purport to regulate
Medical Waste or impose requirements relating to Medical Waste.
"MORGANTOWN FACILITY" shall mean the behavioral health care
facility owned (subject to the Ground Lease) and operated by the Seller located
in Morgantown, West Virginia.
"MULTI-EMPLOYER PLAN" means a plan, as defined in ERISA
Section 3(37), to which the Seller or any entity related to the Seller (under
the terms of Sections 414(b), (c), (m) or (o) of the Code) contributes or is
required to contribute.
<PAGE> 12
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"NONCOMPETITION COVENANT" has the meaning set forth in Section
6.12.
"OTHER HEALTH AGENCIES" has the meaning set forth in Section
3.22.
"PATIENT RECORDS" has the meaning set forth in Section 2.1.11.
"PAYOR" shall mean Medicare, Medicaid, CHAMPUS and Medically
Indigent Assistance programs, Blue Cross/Blue Shield or any other third-party
payor (including an insurance company and self-insured employer), or any health
care provider (such as a health maintenance organization, preferred provider
organization, peer review organization or any other managed care program).
"PERMITTED LIENS" shall mean:
(a) Liens for Taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves with
respect to contested taxes are maintained;
(b) pledges or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other social security legislation;
(c) easements, rights-of-way, restrictions and other similar
encumbrances previously incurred in the ordinary course of business which are
not material, and which do not materially detract from the value of any such
properties or assets or materially interfere with any present use of such
properties or assets;
(d) carriers, warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 90 days or which are being contested
in good faith by appropriate proceedings;
(e) deposits to secure the performance of bids, contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(f) statutory and contractual Liens in favor of landlords
securing leases; and
(g) Liens set forth on Schedule 3.5.1 indicated with an
asterisk.
"PERSONALTY" means all items of personal property, other than
Inventory, including, without limitation, all medical and diagnostic equipment,
computer equipment, computer software, furniture, fixtures, office and other
equipment and other tangible personal property, which is owned or leased by the
Seller and used or useful as of the date hereof in the conduct of the business
or operations of the Facility, plus such additions thereto and less such
deletions therefrom arising in the ordinary course of business between the date
hereof and the Closing Date.
"PRIMARY TERRITORY" has the meaning set forth in Section
6.12.1.
<PAGE> 13
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"PROFESSIONAL LIABILITY CLAIM" means any professional
liability claim for damages for tort, including, without limitation, bodily
injury, infliction of emotional distress or property damage, arising out of the
businesses or operations of the Facility on or before the Closing Date.
"PURCHASE PRICE" has the meaning set forth in Section 2.3.
"PURCHASER'S WCA STATEMENT" has the meaning set forth in
Section 2 6.
"REAL PROPERTY" means any and all real property interests,
including, without limitation, fee simple ownership interests, leasehold
interests, easements, licenses, rights to access, rights-of-way, all building
and other improvements located thereon and any and all other real property
interests of the Seller which are used as of the date hereof in the business or
operations of the Facility.
"RECORDS NOTICE" has the meaning set forth in Section 6.10.1.
"REIMBURSEMENT PROGRAMS" has the meaning set forth in Section
3.22.
"RELATED AGREEMENTS" means all agreements, instruments and
certificates to be executed and delivered at the Closing pursuant hereto.
"RESTRICTED PERIOD" has the meaning set forth in Section
6.12.1.
"SELLER COST REPORTS" has the meaning set forth in Section
6.8.
"SERVICES AGREEMENT" means that certain Clinical Management
and Shared Services Agreement between the Purchaser and the Seller dated as of
September 30, 1985.
"STRADDLE PATIENTS" has the meaning set forth in Section
2.7.1.
"TAXES" shall mean all federal, state, local and foreign
income, franchise, sales, use, occupation, property, excise, alternative or
add-on minimum, social security, employees' withholding, unemployment,
disability, transfer, capital stock and other taxes, assessments, deficiencies,
fees and other governmental charges or impositions (including, without
limitation, any estimated taxes, and any interest and penalties).
"TERMINATION DATE" means the date on which the covenants,
representations or warranties contained herein shall expire or terminate in
accordance with the provisions of Section 11.1.
"THRESHOLD AMOUNT" has the meaning set forth in Section 11.6.
"TRANSITION PERIOD" has the meaning set forth in Section 6.13.
"WARN ACT" means the Worker Adjustment and Retraining
Notification Act, as amended.
"WCA OBJECTION NOTICE" has the meaning set forth in Section
2.6.
<PAGE> 14
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"WEST VIRGINIA CON LAW" means the laws of the State of West
Virginia related to the issuance of health care certificate of need as found in
Chapter 16, Article 2D, Sections 1, et seq. of the West Virginia Code, as from
time to time amended.
"WEST VIRGINIA RECEIVABLE" has the meaning set forth in
Section 2.2.2.
2. COVENANTS AND UNDERTAKINGS
2.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth in this Agreement, on the Closing Date, the Seller hereby agrees to
sell, assign, transfer, convey and deliver to Purchaser, and the Purchaser
agrees to purchase from the Seller, and agrees to accept and assume certain
liabilities and obligations as set forth in Section 2.5 (the "ASSUMED
LIABILITIES") related to, all of its respective right, title and interest in and
to the Assets (excluding the Excluded Assets), free and clear of any and all
Liens (except for Permitted Liens), which Assets are more specifically described
as follows:
2.1.1. The Assumed Contracts;
2.1.2. The Inventory;
2.1.3. The Licenses, to the extent lawfully transferable;
2.1.4. The Personalty;
2.1.5. The Real Property;
2.1.6. The Accounts Receivable as of the Closing Date, to the
extent lawfully transferable;
2.1.7. All of the Seller's right, title and interest in and to
all copyrights, patents, trademarks, trade names, service names, service marks,
permits and other similar intangible rights and interests applied for, issued to
or owned by the Seller and used in the operation of the Facility, including,
without limitation, those listed in SCHEDULE 3.8 hereto, together with the
goodwill of the business symbolized by and associated therewith; provided,
however, that the Assets shall not include the name "Ramsay" or any
abbreviation, variation or portion thereof regardless of whether any of the
foregoing intangible rights and interests contain, or were used by the Seller in
connection with, "Ramsay" or any abbreviation, variation or portion thereof;
2.1.8. All choses in action of the Seller relating to the
Assets (except to the extent such choses in action relate to liabilities
retained by Seller pursuant to Section 2.5 hereof or to Excluded Assets),
together with all the Seller's remedies, benefits, options, privileges and
warranty claims therein, thereto or thereunder, at law or in equity;
2.1.9. All of the Seller's rights to use the present telephone
and facsimile numbers relating exclusively to the Facility from and after the
Closing Date to the extent transferable;
<PAGE> 15
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2.1.10. All prepaid expenses and deposits (other than bank
deposits) paid by the Seller in connection with the foregoing to the extent they
relate to Assumed Contracts;
2.1.11. The medical, clinical and other records associated
with the admission, care and treatment of patients at the Facility on or prior
to the Closing Date (the "PATIENT RECORDS"), subject to the right of the Seller
to have access to and to copy (at its own expense) any such Patient Records for
any lawful purpose in accordance with the terms of Section 6.10.2 hereof; and
2.1.12. The goodwill generated by the Seller with respect to
the foregoing.
2.2. EXCLUDED ASSETS. Notwithstanding anything contained in this
Agreement to the contrary, the Assets shall not include the following assets:
2.2.1. The Seller's cash on hand and all other cash in any of
its bank or savings accounts as of the Closing Date, letters of credit, stocks,
bonds, certificates of deposit and similar investments and all cash equivalents
other than the prepaid expenses and deposits described in Section 2.1.10;
2.2.2. All accounts receivable related to the West Virginia
juvenile program at the Morgantown Facility for services rendered prior to the
Closing Date (the "WEST VIRGINIA RECEIVABLE") and all Intercompany Receivables
(the West Virginia Receivable was $1,647,137 as of May 30, 1998);
2.2.3. Other than as expressly provided for in Section 2.1,
any books, records, files and other documents of the Seller, including, without
limitation, (i) the Seller's corporate minute books and other documents related
to internal corporate matters, (ii) those required by law to be retained
notwithstanding Section 2.1, (iii) those concerning medical staff and employee
files (provided that the Seller shall provide the Purchaser with copies of the
medical staff files upon receipt of the consent of the particular medical staff
member and that the Seller shall provide the Purchaser with copies of the
employee files of Hired Employees, subject to applicable laws (the "HIRED
EMPLOYEES RECORDS")) and (iv) those regarding any and all Cost Reports relating
to periods ending on or prior to the Closing Date, subject to the right of the
Purchaser to have access to and to copy (at its own expense) any such books,
records, files and documents at any time after the Closing Date at a location in
the continental United States made known to the Purchaser, subject to applicable
laws;
2.2.4. The Information System, together with the Meditech
Software;
2.2.5. Any claims, rights and interests in and to (i) any
refunds of federal, state or local franchise, income or other taxes or fees,
whether attributable to Taxes or fees paid with respect to periods ending on or
before the Closing Date or receivable by reason of any carryback to any such
period, and (ii) all amounts receivable and all other rights in connection with
Cost Report Settlements for periods ending on or before the Closing Date;
2.2.6. Any Employee Plan, Compensation Arrangement or
Multi-employer Plan and any employment or collective bargaining agreements and
all documents, agreements and/or assets relating thereto, except to the extent
any of such employment agreements are Assumed Contracts;
<PAGE> 16
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2.2.7. The name "Ramsay" and any abbreviation, variation or
portion thereof;
2.2.8. All tax returns, and all other records relating to
Excluded Assets;
2.2.9. All ledger and financial records of the Seller or the
Shareholder;
2.2.10. All insurance policies of the Seller or the
Shareholder;
2.2.11. The assets of the Seller set forth on SCHEDULE 2.2.11;
and
2.2.12. All claims, remedies and rights relating to each of
the foregoing or any of the Excluded Liabilities;
(all of the foregoing referred to herein as the "EXCLUDED ASSETS").
2.3. CONSIDERATION. Subject to the terms and conditions hereof, in
consideration of the sale, transfer, conveyance, assignment and delivery of the
Assets, and in reliance upon the representations, warranties, covenants and
agreements of the Seller and the Shareholder set forth in this Agreement, the
Purchaser, in full payment for the Assets and the Noncompetition Covenant, (i)
shall assume the Assumed Liabilities, and (ii) shall pay to the Seller an
aggregate amount equal to FOURTEEN MILLION EIGHT HUNDRED THOUSAND AND NO/100THS
DOLLARS ($14,800,000.00) (the "PURCHASE PRICE"). The Purchase Price shall be
payable in cash by wire transfer of immediately available funds at the Closing
and shall be subject to adjustment as set forth below in Section 2.6.
2.4. ALLOCATION OF CONSIDERATION. The aggregate consideration payable
pursuant to Section 2.3, will be allocated among the Assets and the
Noncompetition Covenant in accordance with EXHIBIT 2.4. The parties hereto agree
to use such allocations for tax and Medicare purposes. The parties hereto agree
that such allocations shall be in accordance with, and as provided by, Section
1060 of the Code. The parties hereto also agree that any tax returns or other
tax information and any Cost Reports or other Medicare information they may file
or cause to be filed with any governmental agency or fiscal intermediary shall
be prepared and filed consistently with such agreed upon allocation. In this
regard, the parties agree that, to the extent required, they will each properly
and timely file Form 8594 in accordance with Section 1060 of the Code.
2.5. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. As of the Closing Date,
the Purchaser shall assume and timely pay, discharge and perform when due or
payable (i) all the obligations and liabilities of the Seller under the Licenses
(to the extent such Licenses are lawfully transferred to the Purchaser) and
under the Assumed Contracts, insofar as such obligations and liabilities relate
to the time period after the Closing and arise out of events occurring after the
Closing or are reflected in the Closing Date Adjusted Working Capital, (ii) all
obligations and liabilities arising out of events occurring after the Closing
related to the Purchaser's ownership of or control over the Assets or the
Purchaser's conduct of the operations of the Facility after the Closing and
(iii) those trade payables, accruals and other current liabilities specifically
set forth
<PAGE> 17
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on SCHEDULE 2.5, including those relating to Hired Employees, or to
the extent they are included in the Closing Date Adjusted Working Capital. All
other obligations and liabilities of the Seller, including, without limitation,
any Environmental Claims arising out of, based on or resulting from conditions
or circumstances existing or occurring prior to the Closing, any obligations
under the Licenses, Assumed Contracts, Cost Reports or Cost Report Settlements
relating to any time prior to the Closing, any pending litigation or proceedings
relating to the business or operation of the Facility prior to the Closing, any
and all wages, salaries, severance, vacation, sick pay or other amounts accrued
or payable to the Seller's employees (other than those included in the Closing
Date Adjusted Working Capital) and any Employee Plan, Compensation Arrangement,
Multi-employer Plan or employment or collective bargaining agreement of the
Seller, other than employment agreements that are Assumed Contracts, shall
remain and be the obligations and liabilities solely of the Seller. Other than
as specified herein, the Purchaser shall assume no liabilities or obligations of
the Seller.
2.6. WORKING CAPITAL ADJUSTMENT. In the event the Adjusted Working
Capital (as said term is defined below), of the Seller with respect to the
Facility, calculated as of the Closing Date (the "CLOSING DATE ADJUSTED WORKING
CAPITAL"), shall equal or exceed the Adjusted Working Capital of the Seller with
respect to the Facility, calculated as of March 31, 1998, a schedule of which is
attached hereto as EXHIBIT 2.6-1 (the "BASE ADJUSTED WORKING CAPITAL") or in the
event the Base Adjusted Working Capital shall exceed the Closing Date Adjusted
Working Capital by an amount not greater than $100,000, then no adjustment to
the Purchase Price will be made pursuant to this Section 2.6. For purposes
hereof, the term "ADJUSTED WORKING CAPITAL" shall mean (i) the sum of the
current assets (net of any reserves therefor) of the Seller which are of a type
to be included in the Assets minus (ii) the sum of the current liabilities of
the Seller which are of a type to be included in the Assumed Liabilities. The
Adjusted Working Capital shall be determined in accordance with generally
accepted accounting principles consistently applied, shall be determined
employing the same methodology with respect to bad debt reserves and
Medicare/Medicaid contractual reserves as that employed in preparing the
Financial Statements and shall be calculated and prepared in a manner consistent
with, including the assumptions, process and procedures described in EXHIBIT
2.6-2 and otherwise in a manner consistent with the Financial Statements. Within
twenty-one (21) days of the date hereof, the Seller and the Shareholder shall
calculate, prepare and deliver to the Purchaser a statement in reasonable detail
of the Adjusted Working Capital as of April 30, 1998 and May 31, 1998, and
within forty-five (45) days of each month thereafter until the Closing Date, the
Seller and the Shareholder shall calculate, prepare and deliver to the Purchaser
a statement in reasonable detail of the Adjusted Working Capital as of the end
of each such month. Within 90 calendar days after the Closing Date, the
Purchaser shall prepare and deliver to the Shareholder a statement of the
Closing Date Adjusted Working Capital in reasonable detail, together with the
calculation and the components thereof (the "PURCHASER'S WCA STATEMENT"). The
Purchaser's WCA Statement will be reviewed by the Shareholder (and, if the
Shareholder so chooses and at its expense, by a firm of independent certified
public accountants), who shall, not later than 60 calendar days after receipt of
the Purchaser's WCA Statement, raise any objections it has to the Closing Date
Adjusted Working Capital calculation set forth in the Purchaser's WCA Statement
by notifying the Purchaser in writing within such time period in a statement
indicating the item or items disputed, and containing, in reasonable detail, the
nature of the Shareholder's objections (a "WCA OBJECTION NOTICE"). During such
60-day period, the Shareholder and any such independent certified public
accountants shall have full access to the
<PAGE> 18
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books and records, other financial information (including the working papers of
the Purchaser's accountants, if any) and appropriate financial personnel of the
Purchaser reasonably necessary for the preparation of a WCA Objection Notice.
Absent delivery of a WCA Objection Notice as provided above, the Purchaser's WCA
Statement of the Closing Date Adjusted Working Capital will be conclusive and
binding upon the parties to this Agreement for the purposes set forth in this
Section 2.6. In the event that a WCA Objection Notice is delivered by the
Shareholder as provided above, the Purchaser and the Shareholder shall each
appoint a representative with negotiating authority who shall negotiate in good
faith for a period of 30 calendar days in an effort to resolve all outstanding
issues and if the Purchaser and the Shareholder are unable within said 30
calendar day period to resolve the disputed exceptions, such disputed exceptions
will be submitted to arbitration pursuant to and in accordance with the
provisions set forth in Section 12.12 below; provided, however, that the
arbitrators shall be certified public accountants. Upon final determination of
the Closing Date Adjusted Working Capital in accordance with the foregoing, in
the event that the amount of the Closing Date Adjusted Working Capital is less
than the amount of the Base Adjusted Working Capital by an amount in excess of
$100,000, then the Purchase Price shall be reduced by the entire difference and
the Seller and the Shareholder shall be obligated to pay to the Purchaser an
amount equal to such difference within five business days of the final
determination of the Closing Date Adjusted Working Capital; provided, however,
notwithstanding anything set forth in this Section 2.6, there shall be no
adjustment to the Purchaser Price pursuant to this Section 2.6 in the event that
the amount of such difference between the Closing Date Adjusted Working Capital
and the Base Adjusted Working Capital is less than or equal to $100,000.
2.7. PATIENT BILLINGS.
2.7.1. CUT-OFF BILLINGS. To the extent that a Payor will
accept a cut-off billing, the Seller shall prepare cut-off billings as of the
close of business on the Closing Date for all capitation payments for days
ending on or before the Closing Date for covered lives ("COVERED LIVES") and for
services rendered and medicine, drugs and supplies provided on or prior to the
Closing Date with respect to non-capitated patients of the Facility who are
patients of the Facility on a continuous basis during the period that begins on
or prior to the Closing Date and ends after the Closing Date (the "STRADDLE
PATIENTS"). The Seller acknowledges and agrees that such cut-off billing shall
constitute Accounts Receivable included in the Assets (except to the extent any
of such cut-off billing relates to the West Virginia Receivable).
2.7.2. CUT-OFF BILLINGS NOT ACCEPTED. If the Payor of any
Straddle Patient cannot or does not for any reason accept cut-off billings, then
the Purchaser shall submit billing to such Payor for the entire portion of such
Straddle Patient's stay. In such event, a portion of such billing shall be
treated as an Account Receivable (except to the extent any of such billing
relates to the West Virginia Receivable) in an amount equal to (A) the total
payment received for such Straddle Patient (including any deductible payments
and any co-payments), multiplied by a fraction, the numerator of which shall be
the number of days such Straddle Patient was a patient through and including the
Closing Date, and the denominator of which shall be the total number of days
such Straddle Patient was a patient on a continuous basis during the period that
begins on or prior to the Closing Date and ends after the Closing Date, minus
(B) any deposits or co-payments made to the Seller on or prior to the Closing
Date with respect to such Straddle Patient. If the Payor of any Covered Lives
cannot or does not for any reason accept cut-off
<PAGE> 19
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billings, that portion of any capitation payments relating to a period ending on
or before the Closing Date shall be treated as an Account Receivable (except to
the extent any of such payments relates to the West Virginia Receivable).
2.7.3. RECEIPT OF PAYMENTS. If the Seller receives payment of
any amount with respect to Accounts Receivable included in the Assets, the
Seller shall promptly remit said funds to the Purchaser.
2.8. HSR ACT REQUIREMENTS. The obligations of the parties to this
Agreement are subject to the expiration of any waiting periods (including any
extensions of time occasioned by requests by the Federal Trade Commission or the
Department of Justice for further information about the transaction) applicable
to the purchase and sale of the Assets pursuant to this Agreement under the HSR
Act. No Closing shall take place until such waiting periods (including any
extensions thereof) have terminated or expired without the Federal Trade
Commission or the Department of Justice having indicated to any party to this
Agreement an intention to initiate proceedings or having initiated proceedings
which look to preventing the consummation of the transactions contemplated by
this Agreement. The Purchaser, the Seller and the Shareholder shall make, or
cause to be made, all filings required under the HSR Act in order to consummate
the transactions contemplated by this Agreement and shall use their respective
best efforts to make the initial filing no later than July 24, 1998. If the
Federal Trade Commission or the Department of Justice requests additional
information from the Purchaser, the Seller or the Shareholder or imposes any
condition upon the transactions contemplated by this Agreement, the Purchaser,
the Seller and the Shareholder will use their reasonable best efforts to
cooperate with the Federal Trade Commission and the Department of Justice;
provided, however, that nothing herein shall compel the Purchaser, the Seller or
the Shareholder to comply with any condition imposed upon it or its affiliates
that is materially adverse to the interests of the Purchaser, the Seller, the
Shareholder or their respective affiliates as determined by the Purchaser, the
Seller or the Shareholder, respectively, in their sole and absolute discretion.
The Purchaser shall pay 50% and the Shareholder shall pay 50% of the filing fee
required under the HSR Act in connection with the transaction contemplated
hereby.
2.9. TERMINATION OF CERTAIN AGREEMENTS. The Purchaser and the Seller
hereby agree that, effective as of the Closing, the Ground Lease, the Services
Agreement and each other agreement (collectively, the "Existing Agreements") set
forth on Schedule 3.6.1 between either the Purchaser or FMC, on the one hand, or
the Seller or the Shareholder, on the other hand, shall each be terminated by
the respective parties thereto and shall be of no further force and effect
following the Closing, and the Purchaser hereby covenants and agrees to cause
FMC to agree to be bound by this Section 2.9 promptly after the date hereof and
prior to the Closing and to terminate all Existing Agreements effective as of
the Closing as aforesaid. The Purchaser and the Seller hereby further agree that
effective as of the Closing, neither the Seller, the Shareholder, FMC nor the
Purchaser shall have any further liability or obligation under the Ground Lease,
the Services Agreement or any other Existing Agreement. Notwithstanding anything
to the contrary contained in the Ground Lease, the Services Agreement, any other
Existing Agreement or any other document or agreement, each of the Purchaser, on
behalf of itself and on behalf of FMC, the Shareholder and the Seller hereby
waives any and all notice or other rights it may have under the Ground Lease,
the Services Agreement or any other Existing
<PAGE> 20
14
Agreement in connection with the execution, delivery and performance of this
Agreement and the transactions contemplated thereby.
2.10. WEST VIRGINIA LAW REQUIREMENTS. The obligations of the parties to
this agreement are subject to the receipt by Purchaser of a certificate of need
decision from the West Virginia Health Care Authority ("WVHCA") which approves
the transaction described in this Agreement ("CON Approval") and is final. For
the purpose of this Agreement, "final" with respect to the CON Approval shall
mean that one of the following events has occurred: (1) no person or entity with
standing has filed a timely request for review of the CON Approval with the West
Virginia Department of Tax and Revenue ("DTR") within the time period permitted
by the West Virginia CON Law as evidenced by the records of the HCCRA and DTR;
or (2) a person or entity with standing has filed a timely request for review of
the CON Approval with DTR within the time period permitted by the West Virginia
CON Law as evidenced by the records of the HCCRA and DTR, and all administrative
and judicial appeals and reviews by such person or entity have been exhausted
with no right on the part of such person or entity to any further appeal or
review, and such administrative and judicial appeals and reviews by such person
or entity have not (a) reversed the CON Approval, or (b) imposed a condition or
limitation upon the certificate of need which would have a material adverse
effect on the financial condition and results of operations of the Facility as
operated by the Purchaser and renders the implementation of the certificate of
need financially infeasible as a result thereof.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER
The Seller and the Shareholder, jointly and severally, represent and
warrant to the Purchaser and its successors and permitted assigns, as of the
date hereof as follows:
3.1. ORGANIZATION, STANDING AND AUTHORITY.
3.1.1. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Virginia. The
Shareholder is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Seller and the Shareholder
have all requisite corporate power and authority (i) to execute, deliver and
perform this Agreement and all Related Agreements, and (ii) to consummate the
transactions contemplated hereby, and the Seller has all requisite corporate
power and authority to conduct the operations of the Facility as presently
conducted.
3.1.2. The Shareholder has full corporate power to vote its shares of
common stock of Americare of Galax, Inc., a Virginia corporation and
wholly-owned subsidiary of the Shareholder ("Galax"), and to cause Galax, the
sole stockholder of the Seller, to vote its shares of common stock of the Seller
without obtaining the consent or approval of any Person or entity, subject to
the Liens on the common stock of Galax and of the Seller arising under the
Credit Agreement and security documents set forth in Item 1 of SCHEDULE 3.7.
3.2. AUTHORIZATION AND BINDING OBLIGATION. All corporate action on the
part of the Seller and the Shareholder and their respective directors and
stockholders necessary for the authorization, execution, delivery and
performance by the Seller and the Shareholder, respectively, of this Agreement
and the Related Agreements has been taken. This Agreement has been duly executed
and delivered by the Seller and the Shareholder,
<PAGE> 21
15
and this Agreement and the Related Agreements constitute or will constitute,
when duly executed and delivered, the valid and legally binding obligations of
the Seller and the Shareholder, enforceable against the Seller and the
Shareholder in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally, and except as enforcement of remedies may be limited by
general equitable principles.
3.3. ABSENCE OF CONFLICTING AGREEMENTS. Subject to obtaining the
Consents and except as set forth on SCHEDULE 3.3, the execution, delivery and
performance of this Agreement and the Related Agreements by the Seller and the
Shareholder and the consummation of the transactions contemplated hereby (with
or without the giving of notice, the lapse of time, or both): (i) will not
conflict with any provision of the Certificate of Incorporation or Bylaws of the
Seller or the Shareholder, respectively, (ii) will not conflict with, result in
a breach of, or constitute a default under, any applicable law, rule or
regulation or any applicable judgment, order, ordinance, injunction or decree of
any court or governmental instrumentality, (iii) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any material agreement, instrument, franchise,
certificate, license or permit to which the Seller, or the Shareholder,
respectively, is a party or may be bound or by which the Assets or the Facility
is or may be affected and (iv) will not create any Lien upon the Assets or the
Facility (other than any Liens created by or through the Purchaser or expressly
granted by the Purchaser).
3.4. TITLE TO AND CONDITION OF REAL PROPERTY.
3.4.1. All of the Real Property has legal access to public
roads or streets, and all utilities and services necessary for the proper and
lawful conduct and operation of the Facility as now conducted are being provided
on a permanent basis. All improvements, installations, equipment and facilities
utilized in connection with the Facility currently are maintained, placed and
located in all material respects in accordance with the provisions of all
applicable laws, rules, regulations, deeds, easements. restrictions, leases,
licenses, permits or other arrangements.
3.4.2. The Seller is the lessee under the Ground Lease and no
other real property leases.
3.4.3. Except as disclosed on SCHEDULE 3.4.3, all of the Real
Property (including the buildings and improvements thereon) (i) is in good
condition and repair in accordance with normal and customary industry practices
(ordinary wear and tear excepted), (ii) is available for immediate use in the
conduct of the business or operations of the Facility and (iii) complies in all
material respects with all applicable building, life safety and zoning codes and
the regulations of any governmental authority having jurisdiction. There are no
condemnation proceedings or eminent domain proceedings, lawsuits or legal
proceedings of any kind pending or, to the Seller's and/or the Shareholder's
knowledge, threatened which would involve a taking of any of the Real Property.
The Real Property and the present use and condition thereof do not violate in
any material respect any applicable deed restrictions or other covenants,
restrictions, agreements, existing site plan approvals, zoning or subdivision
regulations or urban redevelopment plans
<PAGE> 22
16
applicable to the Real Property as modified by any duly issued variances and no
permits, licenses or certificates pertaining to the ownership or operation of
the Real Property, other than those which are transferable with the Real
Property and the Licenses, are required by any governmental agency having
jurisdiction over the Real Property or their operation. All improvements
constructed by or on behalf of the Seller on the Real Property were constructed
in compliance in all material respects with all applicable federal, state or
other statutes, laws, ordinances, regulations, rules, codes, orders or
requirements (including, but not limited to, any building, zoning or
environmental laws or codes) affecting such premises, and to the knowledge of
Seller and the Shareholder none of such improvements, in the view of the
purposes for which each of them is used, has any material structural or
engineering defect.
3.4.4. The Seller has paid, or shall have paid prior to
Closing, all amounts owing by the Seller to any architect, contractor,
subcontractor or materialman for labor or materials performed, rendered or
supplied to or in connection with the Real Property. SCHEDULE 3.4.4 sets forth a
true and complete list of all construction, architect, engineering and other
agreements, if any, relating to uncompleted construction projects entered into
by the Seller in connection with the Real Property.
3.5. TITLE TO AND CONDITION OF PERSONALTY.
3.5.1. Except with respect to any items of Assets which are
the subject of an Assumed Contract, the Seller owns and has good title to its
respective portion of the Assets (other than the Real Property which is the
subject of Section 3.4), free and clear of all Liens except for (i) Permitted
Liens and (ii) any Liens set forth in SCHEDULE 3.5.1, all of which shall be
removed at or prior to the Closing, except as otherwise specifically noted
therein. The Seller has not materially reduced and, pending the Closing, will
not materially reduce the Inventory of usable supplies from the quantities
normally maintained by it in accordance with its past practices.
3.5.2. Except as set forth in SCHEDULE 3.5.2, the Assets
(other than the Real Property which is the subject of Section 3.4 and intangible
assets) are in good operating condition and repair in all material respects
(ordinary wear and tear excepted) and are available for immediate use in the
business and operations of the Facility. All of the Accounts Receivable reflect
bona fide transactions for billable services and arose in the ordinary course of
business and are not subject to offset or deduction. Neither the Seller nor the
Shareholder has any reason to believe that the bad-debt allowance set forth in
the Financial Statements is not an accurate reflection of the expected
collectibility of the accounts receivable of the Seller as of March 31, 1998
(excluding the West Virginia Receivable).
3.6. CONTRACTS.
3.6.1. SCHEDULE 3.6.1 contains a list (including memoranda of
oral Assumed Contracts) of all the Assumed Contracts. All of the Assumed
Contracts are in full force and effect and are valid and binding upon the Seller
and each other party thereto and enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy insolvency,
reorganization, moratorium and other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally, and except as
enforcement of remedies may be limited
<PAGE> 23
17
by general equitable principles. There is not under any Assumed Contract any
material breach or default by the Seller or, to the Seller's and/or the
Shareholder's knowledge, any other party thereto, or any event which, after
notice or lapse of time, or both, would constitute such a material breach or
default. Except as set forth in SCHEDULE 3.6.1, the Seller is not aware of any
intention by any party to any material Assumed Contract to (i) terminate or
amend the terms thereof, (ii) refuse to renew same upon expiration of its
current term or (iii) renew same upon expiration of its current term only on
terms and conditions that are more materially onerous to the Seller than those
pertaining to the Assumed Contracts as of the date hereof.
3.6.2. SCHEDULE 3.6.2 contains a description of Excluded
Contracts.
3.7. CONSENTS. Except for the expiration or termination of any
applicable waiting period under the HSR Act, receipt of CON Approval and the
Consents described in SCHEDULE 3.7, no consent, approval or authorization of, or
declaration to or filing with any governmental or regulatory authority or any
other third party is required by Seller to permit the Seller to assign or
transfer the Assets (including without limitation, the Assumed Contracts and the
Licenses, to the extent the Licenses are transferable) to the Purchaser.
3.8. TRADEMARKS, TRADE NAMES AND COPYRIGHTS. SCHEDULE 3.8 is a list of
all copyrights, trademarks, trade names, logos, licenses, patents, privileges
and other similar intangible property rights and interests (exclusive of those
required to be listed in SCHEDULE 3.9) registered, applied for, issued to or
owned by the Seller, or under which the Seller is licensed or franchised, and
used or useful in the conduct of the business or operations of the Facility (the
"Intellectual Property"). All of the Intellectual Property is valid, and to
Seller's knowledge in good standing and uncontested and will be owned or
available for use by the Purchaser after the Closing, except as specifically set
forth on Schedule 3.8. SCHEDULE 3.8 indicates which items, while used in the
operations of the Facility, will not be transferred to the Purchaser as part of
the Assets. No written claims, notices, oppositions or demands have been
asserted by any third party with respect to any of the items listed in SCHEDULE
3.8 and, to the Seller's and/or the Shareholder's knowledge, no person or entity
has interfered with, infringed upon, misappropriated, acted adversely to or
otherwise come into conflict with the rights of the Seller in any of such items.
To the Seller's and the Shareholder's knowledge, the Seller has not interfered
with, infringed upon, misappropriated, acted adversely to or otherwise come into
conflict with any trademarks, trade names, copyrights, patents, patent
applications, know-how, methods or processes owned by any other person or
persons, and there is no action pending or, to the Seller's and/or the
Shareholder's knowledge, threatened with respect thereto.
3.9. LICENSES. SCHEDULE 3.9 is a list of the material Licenses that the
Seller holds to enable it to carry on the business or operations of the Facility
as presently conducted. The Licenses were validly issued, and the Seller is
currently the authorized legal holder thereof. The Licenses include all of the
material licenses, permits, certificates, accreditations and other
authorizations required from any governmental or regulatory authority or any
accrediting organization, for the conduct of the business and operations of the
Facility in the manner and to the extent they are now conducted by the Seller,
and none of the Licenses is subject to any restriction or condition which would
limit the operation of the Facility in any material respect as presently
operated. The Licenses are in full force and effect, and the conduct of the
business and operations of the Facility is in accordance therewith in all
material respects. The Seller does not
<PAGE> 24
18
have reason to believe that any of the Licenses will not be renewed by the
issuing authority or other applicable granting authority in the ordinary course.
3.10. COMPLIANCE WITH LAWS. The Seller is presently operating its
Facility so as to comply in all material respects with (i) all applicable
statutes, ordinances, rules, regulations, laws and orders, other than
Environmental Laws and Medical Waste Laws, of any federal, state or local
governmental authority and (ii) to the extent applicable, all rules and
regulations required as a condition of participation in the Medicare, CHAMPUS
and Medicaid reimbursement programs. The Seller is in compliance in all material
respects with indigent care and other conditions, if any, contained in or
related to any certificates, licenses or other instruments relating to the
Facility, including, without limitation, the certificates of need obtained by it
for the Facility.
3.11. FINANCIAL STATEMENTS.
3.11.1. SCHEDULE 3.11 contains true and complete copies of the
unaudited balance sheet and statement of income of the Seller with respect to
the Facility as at and for the 9-month period ending March 31, 1998
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied (except for the absence of footnotes and normally
reoccurring year-end adjustments including, without limitation, income tax
accruals or any reserves which may be necessary with respect to the West
Virginia Receivable) and present fairly, in all material respects, the financial
condition of the Seller with respect to the Facility as of the date thereof and
results of its operations for the period then ended in accordance with generally
accepted accounting principles consistently applied.
The Shareholder has allocated corporate overhead costs and
expenses with respect to the Facility on a basis consistent with its allocations
to its other subsidiaries with respect to their facilities and operations and
not in a manner intended to understate the true costs and expenses of the
business and operations of the Facility or to inflate the revenues of the
Facility.
3.11.2. The Seller does not have any liability or obligation
related to the Assets or the Facility (whether accrued, absolute, contingent or
otherwise) which is of a nature required to be reflected in financial statements
prepared in accordance with generally accepted accounting principles,
consistently applied, except for (i) the liabilities and obligations of the
Seller which are disclosed or reserved against in the Financial Statements, to
the extent and in the amounts so disclosed or reserved against, and (ii)
liabilities incurred or accrued in the ordinary course of business since the
date of the most recent Financial Statements which do not, either individually
or in the aggregate, have a Material Adverse Effect.
3.11.3. All liabilities or obligations shown or reflected in
the Financial Statements and such liabilities incurred or accrued subsequent to
the date of the most recent Financial Statements have been, or are being, paid
and discharged in the ordinary course consistent with past practice.
3.12. INSURANCE. SCHEDULE 3.12 contains a list of all insurance
policies held by the Seller (or its affiliates) relating to the Assets and/or
the Facility which are all in full force and
<PAGE> 25
19
effect. During the three-year period ending on the date hereof, no such policies
have been canceled by an insurer and no application of the Seller for insurance
has been rejected by any insurer.
3.13. EMPLOYEE BENEFIT PLANS.
3.13.1. All Employee Plans and Compensation Arrangements of
the Seller and/or its affiliates that provide benefits coverage to employees of
the Seller employed or previously employed at the Facility are listed in
SCHEDULE 3.13. Complete descriptions of any unwritten Employee Plans or
Compensation Arrangements of the Seller and/or its affiliates that provide
benefits coverage to employees of the Seller employed or previously employed at
the Facility also are provided in SCHEDULE 3.13.
3.13.2. Each of the Employee Plans and Compensation
Arrangements of the Seller listed in SCHEDULE 3.13 has been administered in all
material respects in compliance with its own terms and with ERISA, the Code, the
Age Discrimination in Employment Act and any other applicable federal or state
laws.
3.13.3. Except as disclosed on SCHEDULE 3.13, the Seller does
not contribute to and is not required to contribute to any Multi-employer Plan
with respect to its employees employed or previously employed at the Facility,
and neither the Seller nor any other trade or business under common control with
the Seller (within the meaning of Sections 414(b), (c), (m) or (o) of the Code)
has incurred or reasonably expects to incur any "withdrawal liability," as
defined under Section 4201 ET SEQ. of ERISA.
3.13.4. The Seller is not aware of the existence of any
governmental audit or examination of any of its Employee Plans or Compensation
Arrangements listed in SCHEDULE 3.13 or of any facts which would lead it to
believe that any such audit or examination is pending or threatened. There
exists no action, suit or material claim (other than routine claims for
benefits) with respect to any of the Employee Plans or Compensation Arrangements
of the Seller listed in SCHEDULE 3.13 pending or, to the Seller's and/or the
Shareholder's knowledge, threatened.
3.13.5. Except as described in SCHEDULE 3.13, neither the
Seller nor any other trade or business under common control with the Seller
(within the meaning of Sections 414(b), (c), (m) or (o) of the Code) sponsors,
maintains or contributes to any of the Employee Plans or Compensation
Arrangements of the Seller that provides retiree medical or retiree life
insurance coverage to former employees of the Seller employed or previously
employed at a Facility.
3.13.6. There have been no failures to provide continuation
coverage as required by Section 4980B(f) of the Code.
3.13.7. The Seller has no Employee Plans or Compensation
Arrangements as to which the Purchaser will be required to make any
contributions or with respect to which the Purchaser shall have any obligation
or liability whatsoever, whether on behalf of any of the current employees of
the Facility or on behalf of the Seller or any other trade or business under
common control with the Seller (within the meaning of Sections 414(b), (c), (m)
or (o) of the Code), after the Closing, except as otherwise specifically
provided in this Agreement.
<PAGE> 26
20
3.14. LABOR RELATIONS. Except as described in SCHEDULE 3.6.1, the
Seller is not a party to or subject to any collective bargaining agreements with
respect to the Facility. The Seller has no written or oral contracts of
employment with any employee of the Facility, other than those listed in
SCHEDULE 3.6.1 or SCHEDULE 3.6.2. The Seller, in the operation of the Facility,
has complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination and the
payment of social security and other payroll related taxes, and it has not
received any written notice alleging that it has failed to comply with any such
laws, rules or regulations. No lockouts, strikes or proceedings are pending or,
to the Seller's and/or the Shareholder's knowledge, threatened between the
Seller and employees (individually or collectively) of the Facility. Except as
described in SCHEDULE 3.14, no labor union or other collective bargaining unit
represents or, to any Seller's and/or the Shareholder's knowledge, claims to
represent any of the employees of the Facility. To the Seller's and/or the
Shareholder's knowledge, there is no union campaign being conducted to solicit
cards from employees to authorize a union to represent any of the employees at
the Facility or to request a National Labor Relations Board certification
election with respect to any of the employees at the Facility.
3.15. TAXES.
3.15.1. There are no Liens for Taxes (other than any Lien for
current taxes not yet due and payable or which are being contested in good faith
by appropriate proceedings) on any of the assets or properties of the Seller.
There is not and there will not be, any liability for any Taxes arising out of,
or attributable to, or affecting the Assets or any Facility through the close of
business on the Closing Date, or attributable to the conduct of the operations
of any Seller at any time, for which the Purchaser will have any liability for
payment or otherwise except to the extent included in Assumed Liabilities and
reflected in the Closing Date Adjusted Working Capital and except for real
property or other ad valorem Taxes not yet due and payable. There does not exist
and will not exist by virtue of the transactions contemplated by this Agreement
any liability for Taxes (except for sales, use, property and transfer taxes, if
any, incident to the consummation of the transactions contemplated herein) which
may be asserted by any taxing authority against the Assets or the business or
operations of the Facility, and no Lien for Taxes has or will attach to the
Assets or the business or operations of the Facility, except for any Taxes in
the nature of property taxes or other fees or assessments.
3.16. CLAIMS AND LEGAL ACTIONS. Except as set forth in SCHEDULE 3.16,
there is no legal action, counterclaim, suit, arbitration, governmental
investigation or other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending or, to the Seller's and/or the
Shareholder's knowledge, threatened against or relating to the Seller, the
Assets or the business or operations of the Facility. Except as set forth in
SCHEDULE 3.16, there are no actions, suits or proceedings pending or, to the
Seller's and/or the Shareholder's knowledge, threatened, against or affecting
the Seller or the Shareholder which challenge the validity of this Agreement, or
which if adversely determined, would adversely effect any of their ability to
consummate the transactions contemplated by this Agreement or to perform their
respective covenants and agreements under this Agreement.
<PAGE> 27
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3.17. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.17:
3.17.1. the Assets and the business and operations of the
Facility are currently, and, to the knowledge of the Seller and/or the
Shareholder, at all times prior to the date hereof have been, in compliance with
all Environmental Laws and Medical Waste Laws, which compliance includes, but is
not limited to, the possession by the Seller of all material permits and other
governmental authorizations required under the Environmental Laws and Medical
Waste Laws and compliance with the terms and conditions thereof, except where
such non-compliance would not have a Material Adverse Effect;
3.17.2. the Seller has not stored, disposed of or arranged for
disposal of any Materials of Environmental Concern, except in compliance with
the Environmental Laws and Medical Waste Laws, except where such non-compliance
would not have a Material Adverse Effect;
3.17.3. the Seller has not received any written communication,
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that the Seller, the Real Property or the Assets are not in
compliance in all material respects with the Environmental Laws or the Medical
Waste Laws that has not been cured and, to the knowledge of the Seller and/or
the Shareholder, there are no circumstances that may prevent or interfere with
compliance in the future. There are no Environmental Claims pending or, to the
Seller's and/or the Shareholder's knowledge, threatened against the Seller or
associated in any way with the Real Property, the Assets or the business or
operations of the Facility;
3.17.4. there have been no actions, activities, circumstances,
conditions, events or incidents arising out of any act or activities or
condition created by the Seller, including, without limitation, the generation,
handling, transportation, treatment, storage, release, emission, discharge,
presence or disposal of any Materials of Environmental Concern associated in any
way with the Real Property, the Assets or the business or operations of the
Facility, that could result in any Environmental Claims against the Seller that
would have a Material Adverse Effect;
3.17.5. with respect to the generation, transportation,
treatment, storage and disposal or other handling of Medical Waste, the Seller
is presently in compliance with all Medical Waste Laws, except where such
non-compliance would not have a Material Adverse Effect;
3.17.6. during the Seller's ownership of the Assets and the
Real Property, (i) there have been no remedial responses or removal actions
related in any way to Materials of Environmental Concern; (ii) there have been
no underground or above ground tanks for the storage or handling of Materials of
Environmental Concern placed on or under the Real Property by or on behalf of
the Seller; (iii) and no Lien of any type (other than Permitted Liens) has been
attached to any Asset or the Real Property related to the presence or alleged
presence of Materials of Environmental Concern or pursuant to the Environmental
Laws;
3.17.7. there is no friable asbestos at, on, about, under or
within the Real Property or the Assets that would have a Material Adverse
Effect; and
<PAGE> 28
22
3.17.8. true, correct and complete copies of all material
permits, licenses, authorizations, registrations and other governmental consents
required by the Environmental Laws which relate to the Assets have been provided
to the Purchaser.
3.18. REPORTS. All material returns, reports and statements which the
Seller is currently required to file with any governmental agency have been
filed, and all reporting requirements of governmental authorities having
jurisdiction thereover have been complied with in all material respects. All of
such reports, returns and statements are complete and correct in all material
respects as filed.
3.19. CONDUCT OF BUSINESS IN ORDINARY COURSE. Since the date of the
most recent Financial Statements, except as set forth in SCHEDULE 3.19, the
Seller has conducted the business and operations of the Facility only in the
ordinary course and has not:
3.19.1. suffered any material adverse change in the business,
properties, financial condition or prospects of the Facility, including any
material damage, destruction or loss affecting the Assets;
3.19.2. changed its accounting methods or business practices
in any material respects with respect to collection of Accounts Receivable or
payment of accounts payable;
3.19.3. made any material increase in compensation payable or
to become payable to any of the employees of the Seller, or made or promised to
make any bonus payment to any employee of the Seller, or made any material
change in personnel policies, insurance benefits or other compensation
arrangements affecting the employees of the Seller other than merit increases
and bonuses in the ordinary course of business consistent with past practice; or
3.19.4. sold, transferred, leased to others or otherwise
disposed of any of the material Assets except for inventory sold or used in the
ordinary course of business consistent with past practices or for assets sold or
disposed of and replaced by other assets of comparable utility and value,
canceled or compromised any debts owed to, or claims relating to, the Seller's
operations, which are of material value, or waived, compromised or released any
rights which are of material value.
3.20. COST REPORTS. The Seller and each of its affiliates has duly
filed in respect of the Facility and the other Assets all Cost Reports for all
prior periods required to be filed as of the date hereof, and such Cost Reports
have been filed when due. All of such Cost Reports accurately reflect in all
material respects the information to be included thereon. Set forth on SCHEDULE
3.20 is the date of the last audited Cost Report for the Seller and a list of
those Cost Reports of the Seller that are still subject to audit. Except as set
forth on SCHEDULE 3.20, neither the Seller nor any of its affiliates has
received notice of any dispute regarding such Cost Reports for any period
subsequent to the periods set forth on SCHEDULE 3.20. The Facility currently
meets, without material exception, the conditions for participation in the
Medicare program and the Facility has not been subject to loss of waiver of
liability for utilization review denials with respect to any program during the
past two years.
3.21. MEDICAL STAFF. Except as set forth on SCHEDULE 3.21, there are no
pending or, to the Seller's and/or the Shareholder's knowledge, threatened
disciplinary or corrective
<PAGE> 29
23
proceedings or appeals therefrom against the Seller involving active or applying
medical staff members of the Facility who are not medical staff members or
employees of the Purchaser or its affiliates. SCHEDULE 3.21 also sets forth a
complete and accurate list of each physician of the medical staff of the
Facility.
3.22. Medicare/Medicaid Participation and Accreditation Investigations.
The Facility is qualified for participation in the Medicare, CHAMPUS and
Medicaid reimbursement programs (the "REIMBURSEMENT PROGRAMS"), has current and
valid provider contracts with the Reimbursement Programs, is in compliance in
all material respects with the conditions of participation in the Reimbursement
Programs and has received all approvals or qualifications of the Reimbursement
Programs necessary for capital reimbursement on the Assets. Except as set forth
on SCHEDULE 3.22, neither the Seller nor the Shareholder has received written
notice of any claims by any of the Reimbursement Programs against the Seller
with regard to the Facility. The Facility is duly accredited by the JCAHO and
all other applicable licensing or accreditation agencies listed on SCHEDULE 3.22
(the "OTHER HEALTH AGENCIES"), with no contingencies other than as shown on the
most recent surveys by the JCAHO and the Other Health Agencies (the
"DEFICIENCIES"). The Seller has taken or is taking all necessary steps to
correct all Deficiencies and a description of any uncorrected Deficiency is
listed on SCHEDULE 3.22. True and complete copies of the most recent
accreditation letters, report of survey findings, deficiency lists and all other
related documents from the JCAHO and the Other Health Agencies pertaining to the
Facility have been delivered or made available to the Purchaser. Except as
described on SCHEDULE 3.22, neither the Seller nor any of its affiliates has
received written notice from the Reimbursement Programs, their fiscal
intermediaries, JCAHO, the Other Health Agencies or any other governmental
agency of any pending or, to the Seller's and/or the Shareholder's knowledge,
threatened investigations or surveys with respect to the Facility, and neither
the Seller nor the Shareholder has reason to believe that any such
investigations or surveys are pending or threatened.
3.23. HILL-BURTON CARE. The Seller does not have any outstanding loan,
grant or loan guarantee pursuant to the Hill-Burton Act (42 U.S.C. section 291a,
ET SEQ.).
3.24. U.S. PERSON. Neither the Seller nor the Shareholder is a "foreign
person" within the meaning of Section 1445 of the Code.
3.25. FULL DISCLOSURE. No representation or warranty made by the Seller
or the Shareholder herein contains any untrue statement of a material fact, or
omits to state any material fact required to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading.
3.26. ASSETS. The Assets constitute all of the assets owned, leased,
used or held for use by the Seller that are necessary for the operation of the
Facility, as presently operated, except for the Excluded Assets.
3.27. INTENTIONALLY OMITTED.
3.28. PERSONNEL. (a) Schedule 3.28 sets forth a complete list (as of
the date set forth therein) of names, positions and current annual salaries or
wage rates, bonus and other
<PAGE> 30
24
compensation, accrued sick and vacation days, and period of service credited for
vesting as of the date thereof of all full-time and part-time employees of
Seller or its affiliates and indicating whether such employee is a part-time or
full-time employee.
(b) The Seller and the Shareholder are in material compliance
with all federal and state laws, rules and regulations respecting employment and
employment practices, terms and conditions of employment with respect to their
respective employees who are employed at the Facility (including, but not
limited to, the Fair Labor Standards Act, Title VII of the Civil Rights Act of
1964, the Occupational Safety and Health Act, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, the Family
and Medical Leave Act and the West Virginia Workers' Compensation Act, all as
amended).
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller and the Shareholder
and their respective successors and permitted assigns, as of the date hereof as
follows:
4.1. ORGANIZATION, STANDING, AND AUTHORITY. The Purchaser is a
nonprofit duly organized, validly existing and in good standing under the laws
of the State of West Virginia. The Purchaser and FMC each has all requisite
company power and authority (i) to execute, deliver and perform this Agreement
and all Related Agreements and (ii) to consummate the transactions contemplated
hereby. The Purchaser is the sole member of FMC.
4.2. AUTHORIZATION AND BINDING OBLIGATION. All company action on the
part of the Purchaser and its directors and members and all corporate action on
the part of FMC necessary for the authorization, execution, delivery and
performance by the Purchaser and FMC of this Agreement and the Related
Agreements has been taken with respect to the Purchaser and will be taken on or
prior to the Closing with respect to FMC. This Agreement has been duly executed
and delivered by the Purchaser, and this Agreement and the Related Agreements
constitute or will constitute, when duly executed and delivered, the valid and
legally binding obligations of the Purchaser and FMC, enforceable against the
Purchaser and FMC in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws from time to time in effect affecting the
enforcement of creditors' rights generally, and except as enforcement of
remedies may be limited by general equitable principles.
4.3. ABSENCE OF CONFLICTING AGREEMENTS. The execution, delivery and
performance of this Agreement and the Related Agreements by the Purchaser and
FMC and the consummation of the transactions contemplated hereby (with or
without the giving of notice, the lapse of time, or both): (i) will not conflict
with any provision of the organizational documents of the Purchaser or FMC, (ii)
will not conflict with, result in a breach of, or constitute a default under,
any applicable law, rule or regulation or, to the Purchaser's knowledge, any
applicable judgment, order, ordinance, injunction or decree of any court or
governmental instrumentality and (iii) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of, any material agreement, instrument, franchise, certificate, license or
permit to which the Purchaser or FMC is a party or may be bound or by which its
assets are or may be affected.
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4.4. CONSENTS. Except for the expiration or termination of any
applicable waiting period under the HSR Act, the receipt of CON Approval and the
Consents described in SCHEDULE 4.4, no consent, approval or authorization of, or
declaration to or filing with any governmental or regulatory authority or any
other third party is required to permit the Purchaser or FMC to consummate the
transactions contemplated by this Agreement.
4.5. LITIGATION; DISPUTES. There are no claims, actions, suits or
proceedings pending or, to the knowledge of the Purchaser, threatened, against
or affecting the Purchaser or FMC which challenge the validity of this
Agreement, or which if adversely determined, would adversely effect its ability
to consummate the transactions contemplated by this Agreement or to perform its
covenants and agreements under this Agreement.
4.6. FULL DISCLOSURE. No representation or warranty made by the
Purchaser herein contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading.
4.7 FINANCING. The Purchaser has available as of the date hereof, and
will have available as of the Closing Date, all funds necessary to pay in full
in cash the Purchase Price at the Closing.
5. PRE-CLOSING COVENANTS OF THE SELLER
Except as contemplated by this Agreement or with the prior written
consent of the Purchaser, between the date hereof and the Closing Date (the
"EXECUTORY PERIOD"), the Seller shall operate its Facility in the ordinary
course of business in accordance with its past practices (except where such
would breach the following covenants or with the Seller's other obligations
hereunder), and shall abide by the following negative and affirmative covenants:
5.1. NEGATIVE COVENANTS. The Seller covenants and agrees that it shall
not do any of the following during the Executory Period:
5.1.1. COMPENSATION. Increase the compensation, bonuses or
other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Facility, except in the
ordinary course of business consistent with past practice or as required by
contract or law;
5.1.2. CONTRACTS. Modify, amend or renew any of the Assumed
Contracts or enter into any new contracts, except in the ordinary course of
business, provided that the Seller shall not renew (other than automatic
renewals) or enter into any new contract providing for payments in excess of
$10,000 per year without the prior written consent of the Purchaser other than
any contract which is terminable on not more than 30 days' notice;
5.1.3. LICENSES. Knowingly do any act or fail to do any act
which could reasonably be expected to result in the expiration revocation,
suspension or modification of any of the Licenses, or fail to prosecute with due
diligence in the ordinary course, consistent with past practices any
applications, or renewals thereof, to any governmental authority, if any, in
connection with the operation of the Facility;
<PAGE> 32
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5.1.4. WAIVER OF RIGHTS. Knowingly waive any material right
relating to the Assets or the Facility;
5.1.5. CONSTRUCTION. Acquire (whether by purchase or lease)
capital assets or incur costs in excess of $10,000 in respect of any new
construction projects relating to the Facility;
5.1.6. ACCOUNTING METHODS AND BUSINESS PRACTICES. Change its
accounting methods or business practices with respect to collection of Accounts
Receivable or payment of accounts payable;
5.1.7. DISPOSITION OF ASSETS. Sell, assign, lease or otherwise
transfer or dispose of any of the Assets, except for assets consumed or disposed
of in the ordinary course of business or that are no longer used or useful in
the business or operations of the Facility or are replaced by property of
substantially similar kind and value;
5.1.8. ENCUMBRANCES. Create, assume or permit to exist any
Lien upon the Assets, except for Permitted Liens; or
5.1.9. NO INCONSISTENT ACTION. Knowingly take any action which
is a breach of its obligations hereunder.
5.2. AFFIRMATIVE COVENANTS. The Seller covenants and agrees
that it shall do the following during the Executory Period:
5.2.1. ACCESS TO INFORMATION. Subject to Section 12.13 hereof,
allow the Purchaser and its authorized representatives reasonable access at the
Purchaser's expense during normal business hours, on reasonable prior notice and
without undue interruption to the operation of the Seller or Shareholder to the
employees and staff of the Seller and to the Assets and all books, records,
files and other documents relating to the Facility for the purpose of audit and
inspection, and the Seller shall furnish or cause to be furnished or made
available at the Facility, or, to the extent previously provided to the
Purchaser or its representatives, at the offices of the Shareholder, all
information with respect to the affairs and business of the Seller relating to
the Assets or the operation of the Facility as the Purchaser may reasonably
request;
5.2.2. MAINTENANCE OF ASSETS. Use its best efforts to maintain
all of the Assets or replacements thereof and improvements thereon in good
condition (ordinary wear and tear excepted) and to use, operate and maintain all
of such assets in a manner consistent with past practice;
5.2.3. INSURANCE. Maintain all existing or comparable
replacement insurance policies with respect to the Assets and the Facility;
5.2.4. CONSENTS. Use its best efforts to obtain the Consents;
5.2.5. PRESERVATIONS OF BUSINESS. Use its best efforts to
preserve the business of the Facility and the Seller's present relationships
with doctors, patients, Payors, suppliers, employees and others having business
relations with it in the ordinary course of business;
<PAGE> 33
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5.2.6. PRESERVATION OF REIMBURSEMENT RATES. Use its best
efforts to maintain the reimbursement rates of the Facility, including, without
limitation, the filing of all reports with Payors necessary to maintain such
rates, consistent with past practice;
5.2.7. BOOKS AND RECORDS. Maintain its books and records in
accordance with past practices;
5.2.8. NOTIFICATION. Promptly notify the Purchaser in writing
of any unusual developments with respect to the business or operations of the
Facility which has resulted in a Material Adverse Effect, and of any change in
any of the information contained in the Seller's representations and warranties
contained in Section 3 or in the schedules hereto which has resulted in a
Material Adverse Effect, provided that such notification shall not relieve the
Seller of any obligations hereunder;
5.2.9. FINANCIAL INFORMATION. Furnish to the Purchaser, within
45 days after the end of each month ending between the date of the most recent
month ended prior to the date hereof and the Closing Date, a statement of income
and expense for the month just ended and such other financial information
(including information on payables and receivables) in each case as the
Purchaser may reasonably request and which is prepared in the ordinary course of
business;
5.2.10. CONTRACTS. Prior to the Closing, deliver to the
Purchaser a list of all material Contracts entered into by the Seller between
the date hereof and the Closing Date; and
5.2.11. CONDUCT OF BUSINESS. Conduct the business and
operations of the Seller with respect to the Facility in the ordinary course of
business consistent with past practice.
5.2.12. INTENTIONALLY OMITTED.
5.2.13. SELLER'S AND SHAREHOLDER'S EFFORTS TO CLOSE. The
Seller and the Shareholder shall use their best efforts to satisfy all of the
conditions precedent set forth in Article 8 to their or Purchaser's obligations
under this Agreement to the extent that Seller's or Shareholder's actions or
inactions can control the satisfaction of such conditions.
5.2.14. NO-SHOP CLAUSE. From and after the date hereof until
the earlier of the Closing or the termination of this Agreement, except as
provided in Section 2.8 of that certain Purchase Agreement dated as of June 24,
1998 among the Shareholder, certain of its subsidiaries and Charter Behavioral
Health Systems, LLC, neither the Seller nor the Shareholder nor Galax shall,
without the prior written consent of Purchaser: (i) offer for sale or lease the
assets of the Facility or the Assets (or any material portion thereof) owned or
leased by the Seller; or any of the stock or other securities of the Seller;
(ii) solicit offers to buy all or any material portion of the Facility or the
Assets or any stock or other securities of the Seller; (iii) hold discussions
with any party (other than the Purchaser) looking toward such an offer or
solicitation or looking toward a merger or consolidation of the Seller; or (iv)
enter into any agreement with any party (other than the Purchaser) with respect
to the sale or other disposition of the Facility or the Assets or of any stock
or other securities of the Seller, or with respect to any merger, consolidation,
or similar transaction involving the Seller.
<PAGE> 34
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6. ADDITIONAL COVENANTS
6.1. CONSENT. Following the execution hereof, the Seller and the
Purchaser shall promptly make applications to all third parties whose Consents
are required for the consummation of the transactions contemplated by this
Agreement (and shall use their respective best efforts to have made such
applications by no later than July 24, 1998), and shall otherwise use their best
efforts to obtain the Consents as expeditiously as possible, each such Consent
being on terms which shall not effect a material adverse change to any License
or Assumed Contract with respect to which such Consent is being obtained. The
Seller shall be ultimately responsible for obtaining all Consents which are
necessary for the Seller to consummate the transactions contemplated hereby,
including, with respect to Assumed Contracts, and the Purchaser shall be
ultimately responsible for filing all applications and obtaining all Consents
which are necessary for the Purchaser to consummate the transactions
contemplated hereby, including, with respect to the transfer or obtaining of
certificates of need and other Licenses. Upon request, the Seller and the
Purchaser shall periodically inform the other party of the status of its efforts
to obtain such Consents and shall reasonably cooperate with each other in
connection therewith. To the extent that a Consent with respect to the
assignment of an Assumed Contract has not been obtained by the Closing and both
the Seller and the Purchaser waive the requirement that such Consent be obtained
for purposes of the Closing, the Seller shall continue to use its best efforts
to obtain such Consent for up to 60 days following the Closing Date and until
such time as the Consent is obtained or rejected or the expiration of such
60-day period the Seller and the Purchaser shall cooperate with each other in
any reasonable and lawful arrangements designed to provide the Purchaser the
benefits of the use of such Contract (subject to the obligations thereunder) for
its term (or any right or benefit arising thereunder, including the enforcement
for the benefit of the Purchaser of any and all rights of the Seller against a
third party thereunder). Once such Consent is obtained, the Seller shall
promptly assign, transfer, convey and deliver such Contract to the Purchaser,
and the Purchaser shall assume the obligations of such Contract. To the extent
that a Consent with respect to the transfer of a License has not been obtained
by the Closing and both the Seller and the Purchaser waive the requirement that
such Consent be obtained for purposes of the Closing, the Purchaser shall
continue to use its best efforts to obtain such Consent and until such time as
the Consent is obtained the Seller shall, to the extent lawfully permitted,
continue to operate under such License for the benefit of the Purchaser. To the
extent that certain Accounts Receivable are not transferable the Seller and the
Purchaser shall treat such Accounts Receivable as though they had been assigned
to the Purchaser and the Seller shall collect Accounts Receivable for the
benefit of the Purchaser and promptly remit to the Purchaser such collections.
To the extent that the Purchaser collects the West Virginia Receivable (or any
portion thereof), such West Virginia Receivable (or portion thereof) shall be
held for the benefit of the Seller and promptly remitted to the Seller (no later
than 3 business days after receipt). Notwithstanding anything to the contrary
set forth herein, there shall be no transfer of ownership or control of the
"controlled substances" in respect of the Assets until such time as the
Purchaser has obtained the appropriate Controlled Substance Registration
Certificate from the United States Drug Enforcement Agency in respect of the
Facility's pharmacy. Until such time, the Seller shall continue to operate the
Facility pharmacy in the manner theretofore operated. The Purchaser shall
indemnify and hold harmless the Seller, the Shareholder and their affiliates in
accordance with Section 11, upon and after the Closing, from and against any
Losses arising out of or relating to (i) the operation of the Facility pharmacy
after the Closing, including, without limitation, the dispensing of controlled
substances
<PAGE> 35
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and (ii) the performance of any Assumed Contract or License on behalf of
Purchaser. The Seller shall use its best efforts to obtain the consent of the
medical staff members other than those who are medical staff or employees of the
Purchaser or its affiliates to the disclosure of such members' existing medical
staff files to the Purchaser.
6.2. COOPERATION. The parties shall reasonably cooperate with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement.
6.3. TAXES, FEES AND EXPENSES. The Seller and the Purchaser shall each
pay one half of all sales, use, transfer, recordation and documentary taxes and
fees, if any, arising out of the transfer of the Assets pursuant to this
Agreement. Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents and other representatives.
6.4. BROKERS. Except as set forth on SCHEDULE 6.4, each of the parties
represents and warrants to the other that neither it nor any person or entity
acting on its behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the transaction contemplated by this
Agreement. The Seller and Shareholder shall be responsible for and pay and
indemnify the Purchaser against any and all fees or expenses payable to the
parties set forth on SCHEDULE 6.4.
6.5. CONFIDENTIALITY. Except as necessary for the consummation of the
transactions contemplated hereby or as may be required by law, each of the
parties hereto will keep confidential any information which is obtained from any
other party hereto in connection with the transactions contemplated hereby and
which is not readily available to the general public. In the event this
Agreement is terminated, each party will return all documents, work papers and
other written material obtained by it in connection with the transactions
contemplated hereby, to the party which provided such materials.
6.6. RISK OF LOSS.
6.6.1. The risk of any loss, damage or impairment,
confiscation or condemnation of any of the Assets from any cause whatsoever
shall be borne by the Seller at all times prior to the Closing. In the event of
any material physical loss, damage or impairment, confiscation or condemnation
of any material portion of the Assets prior to the Closing, the Seller shall use
their best efforts to repair, replace or restore such Assets to their prior
condition as soon as reasonably practicable after such loss, damage, impairment,
condemnation or confiscation, and the proceeds of any claim for loss payable
under any insurance policy, judgment or award with respect thereto shall be
applied to such repairs subject to applicable agreements governing indebtedness
of Seller and the Shareholder.
6.6.2. If any material damage or destruction of the Assets or
any other event occurs which prevents the operation of the Facility in the
normal and usual manner and the Seller cannot restore or replace such Assets so
that such conditions are cured in all material respects
<PAGE> 36
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and normal operations are resumed before the Closing Date, the Closing Date
shall be postponed for a period of up to 60 days, to permit the repair or
replacement of the damaged Assets.
6.6.3. In the event of any damage or destruction of Assets
described in Section 6.6.2, if such Assets have not been restored or replaced
and the Facility's normal operations resumed within the 60-day period
contemplated by Section 6.6.2, the Purchaser or the Shareholder may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to the other.
6.7. EMPLOYEE BENEFIT MATTERS.
6.7.1. Except for the Hired Employees, with respect to whom
Purchaser hereby assumes full responsibility and liability, the Seller shall
retain full responsibility and liability for offering and providing
"continuation coverage" to any "qualified beneficiary" who is covered by a
"group health plan" sponsored, maintained or contributed to by the Seller and
who has experienced a "qualifying event" or is receiving such "continuation
coverage" on or prior to the Closing Date. Continuation coverage, qualified
beneficiary, qualifying event and group health plan shall have the meanings
given such terms under Section 4980B of the Code and Section 601 ET SEQ. of
ERISA.
6.7.2. On the Closing Date, the Purchaser shall offer
employment to all employees of the Shareholder employed at the Facility
immediately prior to the Closing Date. Such offers shall be to employ all such
employees as at-will employees of the Purchaser with their initial salary and
benefits set at their current pay rates and otherwise upon terms which, as a
whole, are no less favorable than those in effect prior to the Closing Date and
with benefits no less favorable than those benefits being provided to similarly
situated employees of the Purchaser and its affiliates. To the extent that an
employee of the Shareholder employed at the Facility is not offered employment
with the Purchaser, the Purchaser shall reimburse the Shareholder for all
severance amounts payable to such persons in accordance with severance payment
terms set forth in SCHEDULE 6.7.2 and all other Losses relating thereto. Except
as otherwise set forth herein, to the extent an employee of the Shareholder
employed at the Facility is not offered employment with the Purchaser pursuant
to this Section 6.7.2, the Purchaser shall be responsible for and shall cause to
be discharged and satisfied in full all amounts owed to such employee arising
out of such employee's employment by the Shareholder prior to the Closing,
including, without limitation, wages, salaries, severance, sick pay, accrued
vacation and all amounts owed pursuant to any employment, incentive,
compensation or bonus agreements, and the Purchaser agrees to indemnify the
Shareholder and hold the Shareholder harmless from any such liabilities. The
Purchaser shall assume the obligation of the Seller to pay accrued wages and
salary to the Seller's employees who accept employment with the Purchaser (the
"HIRED EMPLOYEES") but such accrued liability shall be included in the Closing
Date Adjusted Working Capital. The Purchaser shall grant to the Hired Employees,
at the time of hiring, a credit for the amount of paid days off, including
vacation, holiday and sick leave, as each such Hired Employee had accrued but
had nor used under similar programs maintained by the Seller as of the time the
Hired Employee left the employ of the Seller; provided that the monetary value
of such credit shall be included in the Closing Date Adjusted Working Capital.
For purposes of the Purchaser's employee benefit plans and policies that provide
coverage to the Hired Employees on or after the Closing Date, to the extent
permitted or contemplated by such plans and policies,
<PAGE> 37
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the Purchaser shall give credit to employees who accept such offer for their
respective periods of employment with the Seller prior to the Closing.
6.7.3. Except as disclosed in SCHEDULE 6.7.3, the Seller
represents and warrants to the Purchaser that none of the "full-time employees"
of the Seller (as said term is defined under the WARN Act) have experienced an
"employment loss" (as said term is defined under the WARN Act) during the 90-day
period prior to the date hereof, and the Seller agrees to provide to the
Purchaser at the Closing an updated list of such employees, effective as of the
Closing Date. The Purchaser shall indemnify and hold the Shareholder and their
affiliates harmless, in accordance with the provisions set forth in Section 11,
from and against all Losses resulting from any compliance obligation (including,
without limitation, the obligation to give notice or pay any money) that the
Seller and its affiliates or the Purchaser has under the WARN Act arising from
the termination of any Hired Employees or other employees of the Seller at the
Facility on and after the Closing Date or the failure to hire a sufficient
number of any employees of the Seller at the Facility.
6.7.4. The Purchaser shall offer health plan coverage to the
Hired Employees on terms and conditions generally applicable to the Purchaser's
employees. For purposes of providing such coverage, the Purchaser shall waive
all preexisting condition limitations for all such Hired Employees covered by
the Seller's health care plan as of the Closing Date and shall provide such
health care coverage effective as of the Closing Date without the application of
any eligibility period for coverage.
6.7.5. The Seller shall cause all Hired Employees to cease
participation in any employee benefit and incentive plans sponsored or
maintained by or on behalf of the Seller and shall cause all benefits thereunder
by the Seller to be paid thereto in accordance with the terms of such employee
benefit and incentive plans, except for those liabilities or benefits for which
the Purchaser will grant credit pursuant to Section 6.7.2
6.7.6. Notwithstanding the foregoing, nothing in this
Agreement shall, or shall be deemed to, create any rights in favor of any person
not a party hereto or to constitute an employment agreement or condition of
employment for any employee of the Seller or the Purchaser. No provisions of
this Section 6.7 shall be construed to create any right with respect to any
employee of the Seller or the Purchaser, including the Hired Employees, to
continued employment with the Purchaser and the terms of such continued
employment after the Closing Date.
6.7.7. To the extent permitted by applicable law, for purposes
of FICA tax withholding for periods after the Closing Date, the Purchaser shall
treat all wages within the meaning of Section 3121(a) of the Code) paid by the
Seller in the calendar year in which the Closing occurs to each Hired Employee
as if paid by the Purchaser in such calendar year. The Seller agrees to transfer
to the Purchaser any records relating to withholding and payments of income and
unemployment taxes (federal, state and local) and FICA taxes with respect to
wages paid to the Hired Employees at or prior to the Closing. The Purchaser and
the Seller hereby agree that, pursuant to Revenue Procedure 96-60, the Seller
shall be relieved from furnishing Forms W-2 to the Hired Employees for the
calendar year in which the Closing occurs and the Purchaser shall timely furnish
such forms for such year reflecting wages paid and taxes withheld
<PAGE> 38
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by both the Purchaser and the Seller. At or prior to the Closing, the Seller
shall transfer to the Purchaser a current Form W-4 (Employee's Withholding
Allowance Certificate) for each Hired Employee.
6.8. FILING OF COST REPORTS. The Seller shall be entitled to, and shall
be responsible for any and all receivables or payables, claims, rights or other
amounts due (or which may become due) to the Seller as reimbursement or other
payments from the United States government or any agency thereof, any state or
any fiscal intermediary or other Payor in connection with the review, audit or
settlement of Cost Reports filed with the United States government under the
Medicare program, with any state under any state cost-based programs or with any
fiscal intermediary or other Payor, relating to the operations or the businesses
of the Seller (including, without limitation, the Facility) at any time prior to
or on the Closing Date including, without limitation, Cost Report Settlements
(collectively, the "COST REPORT ADJUSTMENTS"), whether or not such Cost Reports
were filed prior to, on or after the Closing Date. The Seller shall be
responsible for filing the Medicare provider, state provider and fiscal
intermediary or other Payor Cost Reports for the Facility for cost reporting
periods ending before or on the Closing Date (the "SELLER COST REPORTS"),
including any terminating Cost Reports due as a result of the transactions
contemplated hereby, and the Seller shall accept full responsibility and
entitlement under the Seller Cost Reports, including without limitation,
responsibility for and entitlement to the Cost Report Adjustments recapture, if
any, and audit and other liability for overpayment or recoupment in connection
with the Seller Costs Reports. The Seller shall be responsible for Medicare and
any state provider appeals relating to the Facility for all periods ended on or
before the Closing Date, both individual as well as group appeals as those terms
are defined in Part I, Section 2920 of the Provider Reimbursement Manual
published by the Health Care Financing Administration. The Seller shall be
entitled to receive all amounts due from the Medicare and any state programs in
respect to all such appeals for periods ended on or before the Closing Date. The
Purchaser agrees that it shall not file or cause to be filed any amended Costs
Reports in the Seller's respective names or otherwise with respect to the
Facility for any period ending on or prior to the Closing Date; it being
understood and agreed that the Seller shall have the sole discretion as to the
filing of such amended Cost Reports. The Seller will cooperate with the
Purchaser regarding amendments to Seller Cost Reports in cases where errors or
omissions in said Cost Reports result in adverse reimbursement consequences to
the Purchaser on an ongoing basis. The Purchaser shall forward to the Seller any
and all correspondence relating to any and all of the Seller Cost Reports, the
Cost Report Adjustments, and the other Excluded Assets promptly following
receipt thereof by the Purchaser. The Purchaser agrees to remit to the Seller
any checks or other receipts included in or relating to the Cost Report
Adjustments and any other item which is an Excluded Asset (including, without
limitation, the West Virginia Receivable or any portion thereof) immediately
upon receipt by the Purchaser.
6.9. POST-CLOSING INSURANCE. For a period of five years after the
Closing, the Seller shall maintain their existing comprehensive general
liability and hospital professional liability insurance coverages, or obtain
extended reporting period tail insurance, with respect to the Facility for all
periods prior to the Closing in substantially their present form as described on
Schedule 3.12.; provided that the Purchaser shall reimburse the Seller on the
Closing Date for one-half of the cost of such insurance coverage.
<PAGE> 39
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6.10. ACCESS TO INFORMATION.
6.10.1. After the Closing, the Seller agrees to allow the
Purchaser and its authorized representatives reasonable access, at its own
expense and during normal business hours upon reasonable prior notice and
without undue interruption, to all books, records, files and other documents
relating to the Facility relating to periods prior to the Closing Date for the
purpose of audit, compliance with laws or other reasonable business purpose,
except as such access may be restricted by law or applicable privilege. The
Seller also agrees to give the Purchaser notice (the "RECORDS NOTICE") of its
intent to destroy any such books, records, files and other documents, and the
Purchaser shall have the option to obtain, at its own expense, such books,
records, files and other documents from the Seller upon the giving of notice of
the Purchaser's desire to obtain such books, records, files and other documents
to the Seller within 15 days of receipt of such Records Notice.
6.10.2. After the Closing, the Purchaser agrees to allow the
Seller and their authorized representatives reasonable access, at their own
expense and during normal business hours upon reasonable prior notice and
without undue interruption, to all Patient Records and all other books, records,
files and other documents relating to the Facility relating to periods prior to
the Closing Date for any lawful purpose, including for the purpose of financial,
tax, audit and compliance with laws or other reasonable business purpose, except
as such access may be restricted by law or applicable privilege, and including,
without limitation in connection with the preparation of the Closing Date
Adjusted Working Capital and any disputes relating thereto, and in connection
with the filing of tax returns and other reports and related matters.
Notwithstanding the foregoing, the Seller's access to, or right to copies of,
any Patient Records shall be subject to any applicable law, accreditation
standard or rule of confidentiality or privilege.
6.11. ENVIRONMENTAL REPORTS. The Purchaser may, at its expense, cause
Phase I and Phase II Environmental Assessments, at no cost to the Seller or the
Shareholder, to be prepared with respect to the Real Property no later than
thirty (30) days after the date hereof. The Seller covenants and agrees at no
cost to the Shareholder or the Seller, to reasonably cooperate with the
Purchaser in the preparation of any said Phase I and Phase II.
6.12. NON-COMPETITION COVENANT.
6.12.1. Subject to the provisions set forth in Section 6.12.2,
the Seller and the Shareholder covenant and agree that, for a period of three
(3) years commencing on the Closing Date (the "RESTRICTED Period"), neither the
Seller, nor the Shareholder nor any subsidiary of any of them shall compete,
directly or indirectly (whether as an agent, broker, consultant, employee,
director, proprietor, owner, operator, manager, partner, joint venturer,
stockholder, Lender, guarantor or other capacity of such competing enterprise),
with the Purchaser by constructing, owning, leasing, operating or managing a
behavioral health care business, whether free standing or as a unit or component
of another facility, anywhere within a 50-mile radius of the Facility the assets
of which are acquired by the Purchaser pursuant to this Agreement (the "PRIMARY
TERRITORY") or otherwise deliver behavioral health care services within the
Primary Territory (the covenant set forth above to be referred to as the
"NONCOMPETITION COVENANT").
6.12.2. The Seller and the Shareholder acknowledge and agree
that (i) the covenants and restrictions contained in Section 6.12.1 are
necessary for the protection of the
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legitimate business interests of the Purchaser and its operation of the
Facility, (ii) the covenants and restrictions contained in Section 6.12.1 are a
mandatory condition to the consummation of the transactions contemplated by this
Agreement, without which the Purchaser would not be acquiring the Assets, (iii)
the scope of the covenants and restrictions contained in Section 6.12.1 with
regard to time, geography and activities is reasonable and (iv) the Seller and
the Shareholder have received adequate consideration for the covenants and
restrictions contained in Section 6.12.1.
6.12.3. The Seller and the Shareholder acknowledge and agree
that the rights of the Purchaser under this Section 6.12 are of a special and
unique character and that immediate and irreparable harm and damage will result
to the Purchaser if the Seller, the Shareholder or any of their affiliates fails
or refuses to perform its obligations under this Section 6.12. In addition to
any other damages or remedies available to the Purchaser, the Purchaser may seek
an injunction or other equitable relief in a court of competent jurisdiction to
restrain or enjoin such failure or refusal or otherwise specifically enforce the
provisions of this Section 6.12, and the Seller, the Shareholder and their
affiliates waive any defense that the Purchaser has an adequate remedy at law.
6.13. INFORMATION SYSTEMS. After the Closing, the Seller agrees to
allow the Purchaser to have reasonable access to the information system used by
them with respect to the business and operations of the Facility (the
"INFORMATION SYSTEM") during a transition period of 180 days or such longer
period reasonably requested by the Purchaser not to exceed a total of 270 days
(the "TRANSITION PERIOD") for purposes of collecting the Accounts Receivable. In
addition, the Seller agrees, at Purchaser's expense and without undue
interruption in the Seller's or the Shareholder's operations or business, to
provide the Purchaser with reasonable support during the Transition Period to
enable the Purchaser to operate the Information System for such purposes.
6.14 Agreement by the Purchaser Regarding No Other Representations or
Warranties by the Shareholder or the Seller. The Purchaser agrees that except
for the representations and warranties (including the Schedules with respect
thereto) made by the Shareholder or the Seller expressly set forth in Section 3
of this Agreement, neither the Shareholder, the Seller nor any affiliate, agent
or representative thereof has made and shall not be construed as having made to
the Purchaser or to any representative or affiliate thereof, and neither the
Purchaser nor any affiliate, agent or representative thereof has relied upon,
any representation or warranty of any kind. Without limiting the generality of
the foregoing, the Purchaser agrees that neither the Shareholder, the Seller nor
any affiliate, agent or representative thereof makes or has made any
representation or warranty to the Purchaser or to any affiliate or
representative thereof with respect to:
(i) any projections, estimates or budgets relating to
the Shareholder, the Seller, the Assets or the Facility or
otherwise heretofore or hereafter delivered to or made
available to the Purchaser or its counsel, accountants,
advisors, lenders, representatives or affiliates of future
revenues, expenses or expenditures, future results of
operations (or any component thereof), future cash flows (or
any component thereof) or future financial condition (or any
component thereof) of the Shareholder, the Seller, the Assets,
the Facility or any of them or the future
<PAGE> 41
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business, operations or affairs of the Shareholder, the
Seller, the Assets, the Facility or any of them; and
(ii) any other information, statement or documents
heretofore or hereafter delivered to or made available to the
Purchaser or its counsel, accountants, advisors, lenders,
representatives or affiliates with respect to the Shareholder,
the Seller, the Assets, the Facility or any of them or the
business, operations or affairs of the Shareholder, the
Seller, the Assets, the Facility or any of them, except to the
extent and as expressly covered by a representation and
warranty (including the Schedules with respect thereto)
contained in Section 3 hereof.
7. ADDITIONAL COVENANTS OF THE PURCHASER
7.1. RESALE CERTIFICATE. The Purchaser agrees to furnish the Seller
with any resale certificate or similar documents reasonably requested by the
Seller to comply with applicable sales and use tax laws or to claim any
available exemption from any such taxes.
7.2. RECORDS RELATING TO COST REPORTS. Until final settlement of all
applicable Cost Reports, the Purchaser shall preserve, and provide Seller or
Shareholder or their representatives reasonable access, during normal business
hours upon reasonable prior notice and without undue interruption (including
without limitation for purposes of obtaining copies at their expense), to all
financial books and records and other information and documents delivered to it
by the Seller or the Shareholder or their representatives relating to the
preparation or settlement of Cost Reports, including, without limitation,
accounts payable invoices, logs and billing information relating to the
Reimbursement Programs, for a period of seven years unless the Seller provides
Purchaser of notice of final settlement of such applicable Cost Reports. The
Seller agrees to give notice to Purchaser of any such formal settlements. The
Purchaser further agrees to forward to the Seller, promptly but not later than
30 days of receipt of same, all information received by the Purchaser from
Payors relating to periods prior to the Closing Date, including, without
limitation, Cost Report Settlements, notices of program reimbursements, demand
letters for payment and proposed audit adjustments.
7.3. BOOKS AND RECORDS OF THE SELLER. Notwithstanding that the books,
records, files and documents of the Seller described in Section 2.2.3 are
Excluded Assets, to the extent required by applicable law or at the Seller's
election, the Seller may choose not to remove such books, records, files and
documents from the Facility or otherwise acquire possession of same after the
Closing. Unless removed by the Seller (which the Seller shall have the right to
do at any time following the Closing), the Purchaser shall, in material
compliance with applicable law, maintain such books, records, files and
documents at the Facility (or at such other mutually approved location) at the
Purchaser's own cost as agent of and bailee for the Seller for a period of seven
years; provided that the Purchaser may remove any of such books, records, files
and documents upon 30 days prior written notice to the Seller, provided that the
Purchaser shall provide the Seller the opportunity to review and remove, at the
Seller's own cost, any of such books, records, files and documents that the
Purchaser in such written notice expresses its intent to remove from the
Facility. After the Closing, the Purchaser shall have the right to assign to an
entity acquiring from the Purchaser substantially all of the Assets and all of
the Purchaser's obligations under this Section 7.3.
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7.4. CONSENTS. The Purchaser covenants and agrees that during the
Executory Period, it shall use its best efforts to obtain the Consents.
7.5. PURCHASER'S EFFORTS TO CLOSE. Purchaser shall use its best efforts
to satisfy all of the conditions precedent set forth in Article 8 to its or the
Seller's or the Shareholder's obligations under this Agreement to the extent
that the Purchaser's actions or inactions can control the satisfaction of such
conditions.
8. CONDITIONS TO CLOSING
8.1. CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO CLOSE. The
obligations of the Purchaser to consummate the closing of the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions, all
or any of which may be waived, in whole or in part, by the Purchaser; provided,
however, that in the event that any or all of such conditions are waived, such
waiver shall be for all purposes and not only for purposes of closing the
transactions contemplated hereby, and the conditions so waived shall not serve
as a basis for indemnification under Section 11.2.
8.1.1. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Seller and the Shareholder contained in this Agreement shall
be true and complete at and as of the Closing Date as though such
representations and warranties were made at and as of such time, except to the
extent that the breach thereof has not resulted in a Material Adverse Effect.
8.1.2. COVENANTS AND CONDITIONS. The Seller shall have
performed and complied in all material respects with all material covenants and
agreements required by this Agreement to be performed or complied with by them
prior to or on the Closing Date.
8.1.3. CONSENTS AND APPROVALS. The applicable waiting period
under the HSR Act shall have expired or been terminated and each of the Consents
with an asterisk next to it on SCHEDULE 3.7 shall have been duly obtained and
delivered to the Purchaser with no material adverse conditions imposed by such
Consent and no material adverse change to the terms of any License or Assumed
Contract with respect to which such Consent is obtained.
8.1.4. DELIVERIES. The Seller and the Shareholder shall have
made or stand willing and able to make all the deliveries to the Purchaser set
forth in Section 9.2.
8.1.5. MATERIAL ADVERSE CHANGE. Except as set forth on
SCHEDULE 8.1.5, between March 31, 1998 and the Closing Date, there shall have
been no change in the business, operations or financial condition of the Assets
or the Facility which has resulted in a Material Adverse Effect.
8.1.6. LICENSES. The Seller shall be the holder of all
material Licenses, and there shall not have been any material adverse
modification of any of such Licenses. No proceeding shall be pending the effect
of which would be to revoke, cancel, fail to renew, suspend or modify adversely
any such Licenses except in connection with the transactions contemplated
hereby.
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37
8.1.7. NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding or investigation shall have been instituted before any court or
governmental agency to enjoin, restrain, prohibit or obtain substantial damages
in respect of this Agreement or the consummation of the transaction contemplated
hereby. No regulation or legislation shall have been enacted by any legislative
body to enjoin, restrain, prohibit or obtain substantial damages in respect of
this Agreement or the consummation of the transaction contemplated hereby.
8.1.8. PRE-CLOSING CONFIRMATIONS. The Purchaser shall have
obtained documentation or other evidence reasonably satisfactory to it that the
Purchaser has:
(i) Received all material approvals from all
governmental agencies whose approval is required to complete the transactions
herein contemplated, including, without limitation, the CON Approval which shall
be "final" as such term is defined in Section 2.10 of this Agreement;
(ii) Received reasonable assurances from all
applicable licensure agencies that upon or as of the Closing all material
certificates of need, licenses or permits required by law to operate the
Facility as currently operated will be transferred to, or reissued in the name
of, the Purchaser; and
(iii) Obtained reasonable assurances that Medicare
and Medicaid certification of the Facility for its operation by the Purchaser
will be effective as of the Closing and that the Purchaser may participate in
and receive reimbursement from such programs without material interruption
effective from and after the Closing.
8.1.9. INTENTIONALLY OMITTED.
8.2. CONDITIONS TO OBLIGATIONS OF THE SELLER TO CLOSE. The obligations
of the Seller to consummate the closing of the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing Date,
of each and every one of the following conditions, all or any of which may be
waived, in whole or in part, by the Shareholder; provided, however, that in the
event that any or all of such conditions are waived, such waiver shall be for
all purposes and not only for purposes of closing the transactions contemplated
hereby, and the conditions so waived shall not serve as a basis for
indemnification under Section 11.3.
8.2.1. REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Purchaser contained in this Agreement shall be true and
complete in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
8.2.2. COVENANTS AND CONDITIONS. The Purchaser shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
8.2.3. CONSENTS AND APPROVALS. The applicable waiting period
under the HSR Act shall have expired or been terminated and each of the Consents
with an asterisk next to it on SCHEDULE 3.7 shall have been duly obtained and
delivered to the Purchaser and the Seller.
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38
8.2.4. DELIVERIES. The Purchaser shall have made or stand
willing and able to make all the deliveries to the Seller set forth in Section
9.3.
8.2.5. NO ACTION OR OTHER PROCEEDING PENDING. No action,
proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative body
to enjoin, restrain, prohibit or obtain substantial damages in respect of, or
which is related to, or arises out of, this Agreement or the consummation of the
transactions contemplated hereby.
9. CLOSING AND CLOSING DELIVERIES
9.1. CLOSING. The Closing shall occur on the later of (i) August 31,
1998, or (ii) within 5 business days and after the satisfaction or waiver of all
other conditions precedent set forth in Sections 8.1 and 8.2 (the "CLOSING
DATE"), and shall be held at the offices of the Purchaser, commencing at 9:00
a.m. local time, or at such other time and place as the Shareholder and the
Purchaser may mutually agree. Notwithstanding the actual time the following
deliveries are made on the Closing Date, the parties hereto agree that the
Closing shall be effective and deemed for all purposes to have occurred as of
11:59 p.m. local time on the day immediately preceding the Closing Date.
9.2. DELIVERIES BY THE SELLER AND THE SHAREHOLDER. Prior to or on the
Closing Date, the Seller and the Shareholder shall deliver to the Purchaser (or
make available at the Facility) the following, in form and substance reasonably
satisfactory to the Purchaser and its counsel:
9.2.1. TRANSFER DOCUMENTS. Duly executed limited warranty
deeds, bills of sale, assignments, motor vehicle titles and other transfer
documents which shall be sufficient to vest good and marketable title to the
Assets in the name of the Purchaser or its permitted assignees, free and clear
of any Liens (except for Permitted Liens);
9.2.2. CONSENTS. An original or copy of each Consent received
by the Seller as of the Closing;
9.2.3. CONTRACTS, BUSINESS RECORDS, ETC. The Patient Records,
the Hired Employees Records, the Licenses (to the extent transferred to the
Purchaser), the Assumed Contracts, provider and supplier lists, blueprints,
working drawings, engineering records and plans related to the Real Property,
warranties and other documents relating to the Personalty and all other files
and records used by the Seller relating to the Assets and in Seller's or the
Shareholder's possession, except for any such files and records that are
Excluded Assets;
9.2.4. SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the Secretary of the Seller certifying that the
resolutions, as attached to such certificate, were duly adopted by the Seller's
Board of Directors and stockholders (if required), authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby and that such resolutions remain in full force and effect;
9.2.5. OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the President or Vice President of the Seller,
certifying that: (i) the representations and warranties of the Seller contained
in this Agreement are true and complete at and as of the
<PAGE> 45
39
Closing Date (except to the extent that the breach thereof has not resulted in a
Material Adverse Effect and except for changes that are contemplated by this
Agreement), and (ii) the Seller has performed in all material respects all of
its material obligations and complied in all material respects with all of its
material covenants set forth in this Agreement to be performed or complied with
on or prior to the Closing Date.
9.2.6. INCUMBENCY CERTIFICATES. Certificates of incumbency for
the officers of the Seller duly authorized to execute and deliver this Agreement
and the Related Agreements;
9.2.7. OPINION. An opinion of the Seller's legal counsel in
the form as is mutually agreed to between the Seller and the Purchaser;
9.2.8. CERTIFICATE OF NONFOREIGN STATUS. A certificate of
nonforeign status in the form required by Section 1445 of the Code, duly
executed by an authorized officer of the Seller;
9.2.9. OTHER. Such other evidence of the performance of all
covenants and satisfaction of all conditions required of the Seller and
Shareholder by this Agreement, at or prior to the Closing, as the Purchaser or
its counsel may reasonably require.
9.3. DELIVERIES BY THE PURCHASER. Prior to or on the Closing Date, the
Purchaser shall deliver to the Seller the following, in form and substance
reasonably satisfactory to the Seller and their counsel:
9.3.1. CASH PURCHASE PRICE. The Cash Purchase Price, in cash
by wire transfer of immediately available funds;
9.3.2. INTENTIONALLY OMITTED.
9.3.3. INTENTIONALLY OMITTED.
9.3.4. ASSUMPTION AGREEMENTS. Appropriate assumption
agreements pursuant to which the Purchaser shall assume and undertake to perform
those obligations of the Seller relating to the Assets to be assumed by the
Purchaser pursuant to Section 2.5;
9.3.5. SECRETARY'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the Secretary of the Purchaser certifying that the
resolutions, as attached to such certificate, were duly adopted by the
Purchaser's Board of Directors, or comparable governing body, authorizing and
approving the execution of this Agreement and the consummation of the
transactions contemplated hereby and that such resolutions remain in full force
and effect;
9.3.6. OFFICER'S CERTIFICATE. A certificate, dated as of the
Closing Date, executed by the President or Vice President of the Purchaser,
certifying that: (i) the representations and warranties of the Purchaser
contained in this Agreement are true and complete in all material respects at
and as of the Closing Date and (ii) the Purchaser has performed in all material
respects all of its obligations and complied in all material respects with all
of its covenants set forth in this Agreement to be performed or complied with,
on or prior to the Closing Date.
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40
9.3.7. INCUMBENCY CERTIFICATES. Certificates of incumbency for
the officers of the Purchaser duly authorized to execute and deliver this
Agreement and the Related Agreements;
9.3.8. OPINION. An opinion of the Purchaser's legal counsel in
the form as is mutually agreed to between the Seller and the Purchaser; and
9.3.9. FMC. An agreement by FMC in favor of the Seller and the
Shareholder agreeing to be bound by Section 2.9 hereof and terminating the
Existing Agreements effective as of the Closing, in form and substance
reasonably satisfactory to the Seller.
9.3.10. OTHER. Such other evidence of the performance of all
covenants and satisfaction of all conditions required of the Purchaser by this
Agreement, at or prior to the Closing, as the Seller or their counsel may
reasonably require.
10. TERMINATION
10.1. METHOD OF TERMINATION. This Agreement constitutes the binding and
irrevocable agreement of the parties to consummate the transactions contemplated
hereby, subject to and in accordance with the terms hereof, the consideration
for which is (i) the covenants, representations and warranties set forth in this
Agreement and (ii) expenditures and obligations incurred and to be incurred by
each of the parties hereto, in respect of this Agreement, and this Agreement may
be terminated or abandoned only as follows:
10.1.1. By the mutual consent of the Purchaser and the
Shareholder.
10.1.2. By the Purchaser or the Shareholder pursuant to the
terms of Section 6.6.
10.1.3. By the Purchaser after October 31, 1998, if any of the
conditions set forth in Section 8.1 to which the obligations of the Purchaser
are subject, have not been fulfilled in all material respects or waived in
writing, unless such fulfillment has been frustrated or made impossible by any
act or failure to act of the Purchaser; provided, however, that, if at October
31, 1998, the CON Approval is still pending or has not become final, the
Purchaser shall have no right to terminate this Agreement under this Section
10.1.3 until the CON Approval, or the denial of such approval, has been received
and become final.
10.1.4. By the Shareholder after October 31, 1998, if any of
the conditions set forth in Section 8.2, to which the obligations of the Seller
are subject, have not been fulfilled in all material respects or waived in
writing, unless such fulfillment has been frustrated or made impossible by any
act or failure to act of any of the Seller or the Shareholder; provided,
however, that, if at October 31, 1998, the Purchaser has used and is using its
best efforts to obtain the CON Approval, to complete all submissions required
with respect to the CON Approval and to cause it to become final, then the
Shareholder shall have no right to terminate this Agreement under this Section
10.1.4, so long as the Purchaser continues to use its best efforts as aforesaid,
until 5 business days after the CON Approval, or the denial of such Approval,
becomes final.
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10.2. RIGHTS UPON TERMINATION.
10.2.1. In the event of a termination of this Agreement
pursuant to Section 10.1.1, Section 10.1.2, Section 10.1.3 (other than by reason
of a willful and knowing breach) or Section 10.1.4 (other than by reason of a
willful and knowing breach), each party shall pay the costs and expenses
incurred by it in connection with this Agreement, and no party (or any of its
officers, directors, employees, agents, representatives or stockholders) shall
be liable to any other party for any costs, expenses, damages or loss of
anticipated profits hereunder.
10.2.2. In the event of a termination of this Agreement
pursuant to Section 10.1.3 and Seller shall have committed a willful and knowing
breach of any material provision of this Agreement, then the Purchaser shall
have all rights and remedies available at law or in equity.
10.2.3. In the event of a termination of this Agreement
pursuant to Section 10.1.4 and Purchaser shall have committed a willful and
knowing breach of any material provision of this Agreement, then the Seller
shall have all rights and remedies available at law or in equity.
10.3 SOLE AND EXCLUSIVE REMEDY. Except as set forth in Section 11.8,
following the termination of this Agreement or, if the Closing does not
otherwise occur, each party hereto acknowledges and agrees that such party's
sole and exclusive remedy with respect to any and all claims for any breach or
liability under this Agreement or otherwise relating to the subject matter of
this Agreement and the transactions contemplated hereby shall be solely in
accordance with, and limited by the right to terminate this Agreement pursuant
to Section 10.1 and the effect of any such termination pursuant to Section 10.2
hereof; provided; however, that nothing set forth in this Section shall prohibit
or restrict a party from not terminating this Agreement pursuant to Section
10.1.3 or 10.1.4 and seeking equitable relief, including, without limitation,
specific performance or injunctive relief.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION
11.1. REPRESENTATIONS AND WARRANTIES. All representations, warranties
and covenants contained in this Agreement shall be deemed continuing
representations, warranties and covenants and shall survive the Closing Date as
follows (i) the representations and warranties set forth in Sections 3.1, 3.2,
4.1 and 4.2 shall continue in full force and effect indefinitely; (ii) the
representations and warranties set forth in Sections 3.13, 3.15 and 3.17 shall
continue in full force and effect for a time period equal to the applicable
statute of limitations with respect to claims pertaining thereto; (iii) all
other representations and warranties shall continue in full force and effect
until the second (2nd) anniversary of the Closing Date; and (iv) except with
respect to any covenants that terminate or expire upon a date specified herein
(including, without limitation, Section 5), all covenants (including, without
limitation, Sections 11.2.3 and 11.3.3) shall continue in full force and effect
indefinitely. Any right of indemnification pursuant to this Section 11 with
respect to a claimed breach of any representation, warranty or covenant shall
expire as of the applicable Termination Date, unless on or prior to the
applicable Termination Date a claim for indemnification has been made against
the party from whom indemnification is sought. If a claim for indemnification is
timely made, it may continue to be asserted beyond the applicable Termination
Date of the representation, warranty or covenant with respect to which such
claim relates.
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11.2. Indemnification of the Purchaser by the Seller and the
Shareholder. From and after the Closing, the Seller and the Shareholder, jointly
and severally, agree to indemnify and hold harmless the Purchaser against and
with respect to:
11.2.1. Any and all Losses to the extent resulting from any
breach of a representation or warranty by the Seller or the Shareholder
contained herein, in the Related Agreements or in any certificate, document or
instrument delivered by the Seller or the Shareholder to the Purchaser hereunder
or thereunder;
11.2.2. Any and all Losses to the extent resulting from any
nonfulfillment of any covenant by the Seller or the Shareholder contained herein
(other than the covenants set forth in Section 5 which shall not survive Closing
and Sections 11.2.3, 11.2.4 and 11.2.5), in the Related Agreements, or in any
document or instrument delivered by the Seller or the Shareholder to the
Purchaser hereunder;
11.2.3. Any and all Losses to the extent arising out of the
obligations of the Seller not assumed by the Purchaser pursuant to the terms
hereof;
11.2.4. Any and all Losses to the extent resulting from (i)
any and all Liens (except for Permitted Liens) on any of the Assets as of the
Closing Date other than any Liens created by or for the Purchaser, (ii) any and
all Taxes imposed on or with respect to the ownership of the Assets and/or the
Excluded Assets and the conduct and operation of the businesses of the Facility
on or prior to the Closing Date except to the extent included in Assumed
Liabilities and reflected in the Closing Date Adjusted Working Capital and (iii)
any and all Cost Reports filed or required to be filed by or on behalf of the
Seller with respect to the businesses or operations of the Facility and (iv) any
and all Professional Liability Claims;
11.2.5. Except as set forth on SCHEDULE 3.1.17, any and all
Losses to the extent arising out of, based on or resulting from (i) claims made
by federal, state or local government authorities or other third parties not
affiliated with the Purchaser relating to the presence of any Materials of
Environmental Concern on, in or under any part of the Assets or the Facility at
any time prior to the Closing Date, (ii) claims made by federal, state or local
government authorities or other third parties not affiliated with the Purchaser
relating to the release into the environment (either before or after the Closing
Date) of any Materials of Environmental Concern that were generated, stored,
handled or disposed of on, in, under or from the Assets or the Facility prior to
the Closing Date or (iii) the violation or alleged violation made by federal,
state or local government authorities or other third parties not affiliated with
the Purchaser relating to the Environmental Laws or the Medical Waste Laws
occurring with respect to the condition or operation of the Assets or the
Facility prior to the Closing; and
11.2.6. Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses to the extent incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
<PAGE> 49
43
11.3. Indemnification of the Seller and the Shareholder by the
Purchaser. From and after the Closing, the Purchaser shall indemnify and hold
the Seller and the Shareholder harmless against and with respect to:
11.3.1. Any and all Losses to the extent resulting from any
breach of a representation or warranty by the Purchaser contained herein in the
Related Agreements or in any certificate, document or instrument delivered by
the Purchaser to the Seller or the Shareholder hereunder or thereunder:
11.3.2. Any and all Losses to the extent resulting from any
nonfulfillment of any covenant by the Purchaser or FMC contained herein
including, without limitation, the covenants contained in Sections 2.9, 6.1 and
6.7.3, in the Related Agreements, or in any document or instrument delivered by
the Purchaser or FMC to the Seller or the Shareholder hereunder;
11.3.3. Any and all Losses to the extent arising out of the
Assumed Liabilities or resulting from the Purchaser's operation under the
Licenses (to the extent such Licenses are transferred to the Purchaser) or under
the Assumed Contracts (to the extent such Assumed Contracts are transferred to
the Purchaser or as provided in Section 6.1), which relate to events occurring
after the Closing Date;
11.3.4. Any and all Losses to the extent arising out of, based
on or resulting from (i) claims made by federal, state or local government
authorities or other third parties not affiliated with the Seller or the
Shareholder relating to the presence of any Materials of Environmental Concern
on, in or under any part of the Assets or the Facility at any time on or after
the Closing Date, (ii) claims made by federal, state or local government
authorities or other third parties not affiliated with the Seller or the
Shareholder relating to the release into the environment (either before or after
the Closing Date) of any Materials of Environmental Concern that were generated,
stored, handled or disposed of on, in, under or from the Assets or the Facility
on or after the Closing Date or (iii) the violation or alleged violation made by
federal, state or local government authorities or other third parties not
affiliated with the Seller or the Shareholder relating to the Environmental Laws
or the Medical Waste Laws occurring with respect to the condition or operation
of the Assets or the Facility on or after the Closing Date; and
11.3.5. Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses to the extent incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
11.4. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
11.4.1. The party claiming indemnification (the "CLAIMANT")
shall give notice to the party from whom indemnification is claimed (the
"INDEMNIFYING PARTY") of any claim, whether between the parties or brought by a
third party, specifying (i) the factual basis for such claim; and (ii) the
amount of the claim, if ascertainable. If the claim relates to an action, suit
or proceeding filed by a third party against Claimant, such notice shall be
given promptly by
<PAGE> 50
44
Claimant to the Indemnifying Party after written notice of such action, suit or
proceeding is received by Claimant.
11.4.2. Following receipt of notice from the Claimant of a
claim, the Indemnifying Party shall have 30 days to make such investigation of
the claim as the Indemnifying Company deems necessary or desirable. For the
purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representative(s) the information
relied upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of said 30-day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim. If the Claimant and the Indemnifying Party do not agree
within said period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate legal remedy.
11.4.3. With respect to any claim by a third party as to which
the Claimant is entitled to indemnification hereunder, the Indemnifying Party
shall have the right at its own expense, to participate in or assume control of
the defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual and reasonable
out-of-pocket expenses incurred by the Claimant as the result of a request by
the Indemnifying Party. If the Indemnifying Party elects to assume control of
the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the Indemnifying
Party does not elect to assume control or otherwise participate in the defense
of any third-party claim, it shall be bound by the results obtained by the
Claimant with respect to such claim
11.4.4. In the event that the Indemnifying Party assumes
control of the defense of any claim by a third party, the Indemnifying Party
shall have the right to consent or otherwise agree to any monetary settlement,
but shall not have the right to consent or otherwise agree to any non-monetary
settlement or relief, including, without limitation, injunctive relief, without
the prior written consent of the Claimant which shall not be unreasonably
withheld or delayed.
11.4.5. If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every reasonable effort
to reach a decision with respect thereto as expeditiously as possible.
11.4.6. The indemnification rights provided in Sections 11.2
and 11.3 shall extend to the affiliates. shareholders, directors, officers,
employees and representatives of the Claimant, although, for the purpose of the
procedures set forth in this Section 11.4. any indemnification claims by such
parties shall be made by and through the Claimant.
11.5. INVESTIGATION. Any investigation made at any time by or on behalf
of any party hereto shall not diminish in any respect whatsoever such party's
right to rely on the representations and warranties made by or on behalf of any
other party herein or pursuant to this Agreement.
11.6. LIMITATION ON INDEMNIFICATION OBLIGATIONS. Notwithstanding
anything contained in this Section 11 to the contrary, no party shall assert a
claim for indemnification against the
<PAGE> 51
45
other pursuant to this Section 11 unless and until the amount of all Losses
determined to have been incurred or suffered at the time by the party seeking
indemnification under this Agreement exceeds, in the aggregate, $150,000 (the
"THRESHOLD AMOUNT"), at which time such party may make a claim only to the
extent that the aggregate amount of such claims exceeds the Threshold Amount;
provided, however, the foregoing limitation shall not apply to a claim for
indemnification pursuant to (i) Section 11.2.1 or 11.3.1 with respect to those
matters set forth in Sections 3.1, 3.2, 3.13, 3.15, 4.1 and 4.2, (ii) Section
11.2.2, (iii) Section 11.2.3, (iv) Section 11.2.4, (v) Section 11.3.2. or (vi)
Section 11.3.3. The parties hereto further acknowledge and agree that the total
indemnification obligations of the Seller and the Shareholder, on the one hand,
and the Purchaser, on the other hand, shall not exceed, in the aggregate, the
Purchase Price; provided, however, the foregoing limitation shall not apply to a
claim for indemnification pursuant to (i) Section 11.2.1 or 11.3.1 with respect
to matters set forth in Sections 3.1, 3.2, 3.13, 3.15, 3.17, 4.1 and 4.2, (ii)
Section 11.2.2, (iii) 11.2.3, (iv) 11.2.4, (v) 11.2.5, (vi) 11.3.2, (vii) 11.3.3
or (viii) 11.3.4.
11.7. INTENTIONALLY OMITTED.
11.8. EXCLUSIVE REMEDY. From and after the Closing, the sole and
exclusive remedy of any party for any misrepresentation or any breach of a
warranty or covenant under or pursuant to this Agreement shall be a claim for
indemnification under and pursuant to this Section 11; provided; however, that
nothing set forth in this Section shall prohibit or restrict a party from
seeking equitable relief, including, without limitation, specific performance or
injunctive relief.
12. MISCELLANEOUS
12.1. FURTHER ASSURANCES. Each party hereto shall execute and deliver
all such other documents and do all such other acts and things as may be
reasonably necessary to more fully effectuate this Agreement and the
transactions contemplated hereby.
12.2. NOTICES. All notices and other communications hereunder shall be
(i) in writing, (ii) delivered by telecopy, by commercial overnight or same-day
delivery service with all delivery costs paid by sender, or by registered or
certified mail with postage prepaid, return receipt requested, (iii) deemed
given on the date and at the time shown on the telecopy confirmation of receipt
(if delivered by telecopy), on the date and at the time (if recorded) of
delivery by the commercial delivery service, as shown in the records thereof (if
delivered by commercial overnight or same-day delivery service), or on the date
shown on the return receipt (if delivered by registered or certified mail) and
(iv) addressed to the parties at their addresses specified on the signature page
to this Agreement (or at such other address for a party as shall be specified by
like notice).
12.3. WAIVER. Any waiver of any terms or conditions of this Agreement
shall be in writing and shall not operate as a waiver of any other breach of
such terms or conditions or any other term or condition, nor shall any failure
to enforce any provision of this Agreement operate as a waiver of such provision
or of any other provision of this Agreement.
12.4. CAPTIONS; PARTIAL INVALIDITY. The captions, section numbers and
index appearing in this Agreement are inserted only as a matter of convenience
and in no way define, limit,
<PAGE> 52
45
construe or describe the scope or intent of such sections or articles of this
Agreement, nor in any way affect this Agreement. If any term, covenant or
condition of this Agreement or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Agreement, or the application of such term, covenant or condition to
persons or circumstances, other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
12.5. COUNTERPARTS. This Agreement may be executed in counterparts each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument, and in pleading or proving any provision of this
Agreement, it shall not be necessary to produce more than one complete set of
such counterparts. Any counterpart of this Agreement which has attached to it
separate signature pages, which together contain the signatures of all parties
hereto, shall for all purposes be deemed a fully executed original.
12.6. VARIATIONS OF PRONOUNS; NUMBER; GENDER. All pronouns and all
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person or persons or entity
may require. Whenever used herein the singular number shall include the plural,
the plural shall include the singular. and the use of any gender shall include
all genders.
12.7. GOVERNING LAW; CONSTRUCTION. This Agreement shall be governed by
and construed in accordance with the substantive laws of the State of West
Virginia, without regard to its conflict of laws provisions. The parties
acknowledge and agree that they have been represented by counsel and that each
of the parties has participated in the drafting of this Agreement. Accordingly.
it is the intention and agreement of the parties that the language, terms and
conditions of this Agreement are not to be construed in any way against or in
favor of any party hereto by reason of the responsibilities in connection with
the preparation of this Agreement.
12.8. THIRD PARTIES. None of the provisions of this Agreement shall be
for the benefit of, or enforceable by, any employee or creditor of any party
hereto.
12.9. ENTIRE AGREEMENT. This Agreement and all of the related
agreements and exhibits attached hereto shall constitute the entire agreement of
the parties hereto; all prior agreements between the parties, whether written or
oral, are merged herein and shall be of no force and effect (other than the
Ground Lease, the Services Agreement and the other Existing Agreements which
shall remain in full force and effect in accordance with their terms until
terminated pursuant to Section 2.9 hereof and other than the confidentiality
letter agreements by West Virginia United Health Systems in favor of the
Shareholder) and there are no restrictions, agreements, representations,
warranties, arrangements or undertakings, oral or written, between or among the
parties relating to the transactions contemplated hereby which are not fully
expressed or referred to herein. This Agreement cannot be changed, modified or
discharged orally, but only by an agreement in writing, signed by the party
against whom enforcement of the change, modification or discharge is sought.
<PAGE> 53
47
12.10. REMEDIES. Except as provided in Sections 10.3 or 11.8, all
remedies available to the parties, at law, in equity or otherwise, shall be
cumulative and may be exercised concurrently or separately, and the exercise of
any one remedy shall not be deemed an election of such remedy to the exclusion
of other remedies. In the event that anything in this Section 12.10 shall or
shall be deemed to conflict with the provisions of Section 12.12, the provisions
of Section 12.12 shall prevail.
12.11. BENEFIT AND BINDING EFFECT. None of the parties hereto may
assign this Agreement without the prior written consent of the other parties
hereto; provided, however, that the Purchaser may assign its rights (but not its
obligations) under this Agreement, in whole or in part, to an affiliate of the
Purchaser for purposes of enabling such affiliate to purchase all or a portion
of the Assets provided no such assignment shall delay the Closing or any
condition to the Closing, and in the event of such assignment by the Purchaser,
Purchaser's assignee shall for all purposes constitute the "Purchaser" with
respect to the portion of the Assets acquired by such assignee. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
12.12. DISPUTE RESOLUTION.
12.12.1. Any dispute, controversy or claim which arises out of
or relates to this Agreement (other than a dispute, controversy or claim which
arises out of or relates to Section 6.5 or Section 6.12) shall be resolved
through binding arbitration held before a three member panel of the American
Arbitration Association in a city mutually acceptable to the Purchaser and the
Shareholder in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Any party to this Agreement may initiate arbitration
under this Section 12.12, and judgment upon the arbitrators' award may be
entered by any court having jurisdiction thereof.
12.12.2. As a condition precedent to the right of any party to
this Agreement to initiate arbitration under the provisions of this Section
12.12.1, the parties shall meet and consult for a period of 30 days upon written
notice issued by any party in an attempt to settle any dispute, controversy or
claim which arises out of or relates to this Agreement.
12.12.3. Notwithstanding anything to the contrary contained in
this Section 12.12. any action for specific performance of this Agreement or any
provision hereof may be filed and pursued by any party to this Agreement in any
court having jurisdiction thereof.
12.12.4. All fees (including, without limitation, arbitrators'
and attorneys' fees) shall be allocated between the parties in accordance with
the decision of the arbitrators.
12.13. CONTACT WITH EMPLOYEES AND OTHER PERSONS. Notwithstanding
anything to the contrary contained in this Agreement, the Purchaser agrees that
it shall not, without the prior written consent of the Vice Chairman of the
Board, the President or the Chief Financial Officer of the Shareholder, contact
any employee, customer, provider or supplier (whether of goods or services) or
any other Person with whom the Shareholder or the Seller have commercial
dealings to discuss the transactions contemplated by this Agreement or the
business, operations or affairs of any of the Shareholder, the Seller, the
Facility or otherwise.
<PAGE> 54
48
12.14. SCHEDULES AND EXHIBITS. All Schedules and Exhibits to this
Agreement are integral parts of this Agreement. Any item disclosed hereunder
(including on any Schedule hereto) shall be deemed disclosed for all purposes
hereof irrespective of the specific representation or warranty to which it is
explicitly referenced. Without limiting the generality of the foregoing, the
fact that any disclosure on any of the Schedules is not required to be disclosed
in order to render the applicable representation or warranty to which it relates
true, or that the absence of such disclosure on the Schedule would not
constitute a breach of such representation or warranty, shall not be deemed or
construed to expand the scope of any representation or warranty hereunder or to
establish a standard of disclosure in respect of any representation or warranty.
12.15. BEST EFFORTS. Whenever used in this Agreement, the words "best
efforts" or "reasonable best efforts" or similar words shall mean diligently,
promptly and in good faith taking actions which are reasonable, necessary and
appropriate to accomplish the objective requiring the use of best efforts, but
shall not include any obligation (a) to make any payment, incur any costs,
commit available resources, or forego the receipt of any payment, which in any
case is material in amount in light of the required objective, (b) to initiate
any lawsuit or other proceeding to achieve the required objective, or (c) to
take any action which is unlawful.
12.16 KNOWLEDGE. Whenever used in this Agreement, the words "to the
knowledge of the Shareholder or the Seller" "to the best knowledge of the
Shareholder or the Seller" or similar words shall mean the actual knowledge or
awareness of the executive officers of the Shareholder or the Seller or the
chief executive officer, chief financial officer, chief operating officer, chief
personnel officer or officer in charge of environmental matters of the Facility
(or officers or employees of the Seller or the Shareholder who perform such
functions in respect of the Facility, regardless of title).
* * *
<PAGE> 55
49
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
SELLER:
PSYCHIATRIC INSTITUTE OF WEST VIRGINIA, INC.
By:
------------------------------------------
Title:
---------------------------------------
Address for Notices:
Columbus Center
One Alhambra Plaza. Suite 750
Coral Gables. Florida 33134
Attention: President
Facsimile No.: (305) 569-4647
with a copy to:
Haythe & Curley
237 Park Avenue
New York. New York 10017
Attention: Joseph J. Romagnoli, Esq.
Facsimile No.: (212) 682-0200
SHAREHOLDER:
RAMSAY HEALTH CARE. INC
By:
------------------------------------------
Title:
---------------------------------------
Address for Notices:
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables. Florida 33134
Attention: President
Facsimile No.: (305) 569-4647
with a copy to:
Haythe & Curley
237 Park Avenue
New York, New York 10017
Attention: Joseph J. Romagnoli, Esq.
Facsimile No.: (212) 682-0200
<PAGE> 56
50
PURCHASER:
WEST VIRGINIA UNIVERSITY HOSPITALS, INC.
By:
------------------------------------------
Title:
---------------------------------------
Address for Notices:
West Virginia University Hospitals, Inc.
Medical Center Drive, Box 8136
Morgantown, West Virginia 26506-8136
Attn: Bruce B. McClymonds
Facsimile No.: (304) 598-4038
with a copy to:
West Virginia United Health Systems
1000 Technology Drive
Suite 2320
Fairmont, West Virginia 26554
Attn: General Counsel
Facsimile No.: (304) 368-2719
with a copy to:
Spilman Thomas & Battle, PLLC
300 Kanawha Boulevard, East
Charleston, West Virginia 25301
Attention: David B. Shapiro
Facsimile No.: (304) 340-3801
<PAGE> 1
Exhibit 2.13
AMENDMENT NO. 1
TO
PURCHASE AGREEMENT
AMENDMENT dated as of September 28, 1998 (this "Amendment")
by and among Charter Behavioral Health Systems, LLC, a Delaware limited
liability company (the "Purchaser"), Ramsay Health Care, Inc., a Delaware
corporation ("RHCI"), Carolina Treatment Center, Inc., a South Carolina
corporation ("Carolina"), Houma Psychiatric Hospital, Inc., a Louisiana
corporation ("Houma"), Mesa Psychiatric Hospital, Inc., an Arizona corporation
("Mesa"), RHCI San Antonio, Inc., a Delaware corporation ("San Antonio"), The
Haven Hospital, Inc., a Delaware corporation ("Haven"), Transitional Care
Ventures (Arizona), Inc., a Delaware corporation ("TCVA"), Transitional Care
Ventures (North Texas), Inc., a Delaware corporation ("TCVNT") and Transitional
Care Ventures (Texas), Inc., a Delaware corporation ("TCVT"; together with
Carolina, Houma, Mesa, San Antonio, Haven, TCVA and TCVNT collectively, the
"Sellers") to the certain Purchase Agreement dated as of June 24, 1998
(including, without limitation, all Schedules and Exhibits thereto the "Purchase
Agreement") among the Purchaser, RHCI and Sellers. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to them in the
Purchase Agreement.
WITNESSETH
WHEREAS, the parties hereto have entered into the Purchase
Agreement pursuant to which, among other things, the Sellers and RHCI have
agreed to sell, and the Purchaser has agreed to purchase, the Assets; and
WHEREAS, the parties hereto desire to amend certain of the
provisions of the Purchase Agreement as more particularly described below;
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I.
AMENDMENT TO PURCHASE AGREEMENT
1.1 The parties hereto acknowledge and agree that Schedule
3.6.1 of the Purchase Agreement is hereby amended by deleting all references to
the following Contracts (as defined below) for all purposes of the Purchase
Agreement, including, without limitation, for purposes of Section 8.1.3 thereof:
(i) ComCare, Inc. Single Purchase of Care Contract, set forth as item 50,
Subheading Desert Vista, to Schedule 3.6.1 to the Purchase Agreement, (ii)
Navajo Nation Department of Behavioral Health Services Provider Agreement, set
forth as item 67, Subheading Desert Vista, to Schedule 3.6.1 to the Purchase
Agreement, (iii) Navajo Nation
<PAGE> 2
Regional Behavioral Health Authority Provider Agreement, set forth as item 68,
Subheading Desert Vista, to Schedule 3.6.1 to the Purchase Agreement, and (iv)
PacifiCare of Texas HMO Health Plan, set forth as item 27, Subheading Mission
Vista Sub-Acute Unit, to Schedule 3.6.1 to the Purchase Agreement, a copy of
which is attached hereto as Annex A (collectively the "Contracts").
1.2 The parties hereto acknowledge and agree that,
notwithstanding any provision in the Purchase Agreement to the contrary, the
Purchase Agreement is hereby amended as follows: each of RHCI San Antonio, Inc.,
a Delaware corporation ("San Antonio"), and Transitional Care Ventures (Texas),
Inc., a Delaware corporation ("TCVT"), is hereby no longer a party to or bound
by the Purchase Agreement and shall have no obligations or liabilities
thereunder and Purchaser shall no longer be bound by its obligations under the
Purchase Agreement with respect to San Antonio and TCVT, except as provided in
Section 1.3 below. Without limiting the generality of the foregoing, (a) San
Antonio is not a Seller and the Assets and the Assumed Liabilities shall not
include any assets or properties of any kind (including, without limitation, the
San Antonio Facility or the Subacute Care Unit thereat) or any obligations or
liabilities of San Antonio or TCVT, and (b) any and all direct or indirect
references to the San Antonio Facility, TCVT, San Antonio or to any of their
respective contracts (including, without limitation, all agreements listed under
the subheadings Mission Vista and Mission Vista Sub-Acute Unit to Schedule 3.6.1
of the Purchase Agreement) agreements, leases (including, without limitation,
those certain leases (the "Mission Vista Leases") listed as items 2 and 6 on
Schedule 3.4.2 of the Purchase Agreement) business, operations or other assets
or properties of any kind or to any obligations or liabilities of San Antonio or
TCVT are hereby deleted from the Purchase Agreement (including, without
limitation, the Schedules and Exhibits thereto).
1.3 Notwithstanding the foregoing, and for and in
consideration for the covenants and agreements set forth in this Amendment,
Purchaser shall have the right to purchase the assets of San Antonio and TCVT
(as defined and as set forth in the Purchase Agreement prior to the execution of
this Amendment) for a period of 90 days from the date of Closing in accordance
with the terms and conditions of the Purchase Agreement as in effect prior to
this Amendment in the event that the Consent of Capstone Capital of San Antonio,
Ltd. ("Capstone") is obtained; provided, however, that in the event the
Shareholder, San Antonio or TCVT shall have accepted a bona fide third-party
offer (the "Offer") to buy the assets of both San Antonio and TCVT prior to the
receipt by Shareholder of such Consent (the "Acceptance"), then the right of the
Purchaser to purchase the assets which are the subject of the Offer shall be
tolled until the closing of the third-party transaction. In accordance with the
foregoing, if the third-party transaction does not close, the right of Charter
to purchase such assets shall be extended for a period of time equal to 90 days
minus the number of days from the date of this Amendment to the date of the
Acceptance, which period shall commence on the date written notice is received
by Charter from Shareholder, San Antonio or TCVT that the third-party
transaction has not, and will not, close. If the third-party transaction closes,
the right of Purchaser to purchase the assets of San Antonio and TCVT shall
terminate. No consideration, other than that paid to Sellers and Shareholder on
the date hereof and other than the assumption of the Mission Vista Leases and
the Assumed Liabilities relating to San Antonio and TCVT,
-2-
<PAGE> 3
shall be required for Purchaser's acquisition of the assets of San Antonio and
TCVT. Sellers and Shareholder shall reasonably cooperate with Purchaser during
said 90-day period (as such period may be extended hereunder) in obtaining the
Consent of Capstone to said acquisition of the assets of San Antonio and TCVT.
(It is understood and agreed that neither the Sellers nor the Shareholder shall
be required to enter into any guaranty or incur any other obligation in
connection with obtaining said Consent).
ARTICLE II.
MISCELLANEOUS
2.1 INVALIDITY. ETC. If any provision of this Amendment, or
the application of any such provision to any person or circumstance, shall be
held invalid by a court of competent jurisdiction, the remainder of this
Amendment, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.
2.2 GOVERNING LAW. This Amendment shall be interpreted,
construed, and enforced under and according to the laws of the State of Georgia
without regard to its conflicts of law provisions.
2.3 COUNTERPARTS. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
2.4 RATIFICATION. The parties hereto hereby ratify and approve
the Purchase Agreement, as amended hereby, and the parties hereto acknowledge
that all of the terms and provisions of the Purchase Agreement as amended
hereby, are and remain in full force and effect.
* * *
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first above written.
CHARTER BEHAVIORAL
HEALTH SYSTEMS, LLC
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
RAMSAY HEALTH CARE, INC.
By:
----------------------------------------
Name: Jorge Rico
Title: Vice President
CAROLINA TREATMENT CENTER, INC.
HOUMA PSYCHIATRIC HOSPITAL, INC.
MESA PSYCHIATRIC HOSPITAL, INC.
RHCI SAN ANTONIO, INC.
THE HAVEN HOSPITAL, INC.
TRANSITIONAL CARE VENTURES
(ARIZONA), INC.
TRANSITIONAL CARE VENTURES
(NORTH TEXAS), INC.
TRANSITIONAL CARE VENTURES
(TEXAS), INC.
By:
----------------------------------------
Name: Jorge Rico
Title: Vice President of the
foregoing entities
-4-
<PAGE> 1
Exhibit 2.14
AGREEMENT OF SALE AND PURCHASE
BY AND AMONG
HAVENWYCK HOSPITAL, INC.
AND
MICHIGAN PSYCHIATRIC SERVICES, INC., AS SELLERS
AND
CAPSTONE CAPITAL CORPORATION, AS PURCHASER
September 28, 1998
For
HAVENWYCK HOSPITAL AND RELATED PROPERTIES
1525 University Drive
Auburn Hills, Michigan
1333-1376 University Drive
Auburn Hills, Michigan
1360 Doris Road
Auburn Hills, Michigan
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 1 DEFINITIONS................................................................................1
ARTICLE 2 AGREEMENTS TO SELL, PURCHASE AND LEASE.....................................................7
2.1 AGREEMENT TO SELL AND PURCHASE.............................................................7
2.2 AGREEMENT TO LEASE.........................................................................7
ARTICLE 3 EXCHANGE CONSIDERATION.....................................................................7
3.1 PAYMENT OF CASH CONSIDERATION..............................................................7
3.2 TRANSFER OF EXCHANGE PROPERTY..............................................................7
ARTICLE 4 ITEMS TO BE FURNISHED TO PURCHASER BY SELLER...............................................8
4.1 DUE DILIGENCE MATERIALS....................................................................8
4.2 DUE DILIGENCE REVIEW.......................................................................9
ARTICLE 5 TITLE AND SURVEY...........................................................................9
5.1 TITLE COMMITMENT, EXCEPTION DOCUMENTS AND SURVEY...........................................9
ARTICLE 6 REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS......................................9
6.1 REPRESENTATIONS AND WARRANTIES OF SELLER...................................................9
6.2 INDEMNITY OF SELLER.......................................................................13
6.3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER....................................14
ARTICLE 7 CONDITIONS TO PURCHASER'S AND SELLER'S OBLIGATIONS........................................15
7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS.....................................................15
7.2 FAILURE OF CONDITIONS TO PURCHASER'S OBLIGATIONS..........................................17
7.3 CONDITIONS TO SELLER'S OBLIGATIONS........................................................17
7.4 FAILURE OF CONDITIONS TO SELLER'S OBLIGATIONS.............................................18
ARTICLE 8 PROVISIONS WITH RESPECT TO THE CLOSING....................................................18
8.1 SELLER'S CLOSING OBLIGATIONS..............................................................18
8.2 PURCHASER'S CLOSING OBLIGATIONS...........................................................19
ARTICLE 9 EXPENSES OF CLOSING.......................................................................19
9.1 ADJUSTMENTS...............................................................................19
9.2 CLOSING COSTS.............................................................................19
ARTICLE 10 DEFAULT AND REMEDIES......................................................................20
10.1 SELLER'S DEFAULT; PURCHASER'S REMEDIES....................................................20
10.2 PURCHASER'S DEFAULT; SELLER'S REMEDIES....................................................20
ARTICLE 11 MISCELLANEOUS.............................................................................21
11.1 SURVIVAL..................................................................................21
11.2 NOTICES...................................................................................21
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
11.3 ENTIRE AGREEMENT; MODIFICATIONS...........................................................22
11.4 APPLICABLE LAW............................................................................22
11.5 CAPTIONS..................................................................................23
11.6 BINDING EFFECT............................................................................23
11.7 EXTENSION OF DATES........................................................................23
11.8 TIME IS OF THE ESSENCE....................................................................23
11.9 WAIVER OF CONDITIONS......................................................................23
11.10 BROKERS...................................................................................23
11.11 RISK OF LOSS..............................................................................24
11.12 NO ASSUMPTION OF LIABILITIES..............................................................24
11.13 COUNTERPARTS..............................................................................24
11.14 OTHER TERMS...............................................................................24
11.15 SINGULAR AND PLURAL REFERENCES............................................................24
</TABLE>
<PAGE> 4
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE (this "Agreement") is made and
entered into as of September ____ , 1998, by and among HAVENWYCK HOSPITAL, INC.,
a Michigan corporation, and MICHIGAN PSYCHIATRIC SERVICES, INC., a Michigan
corporation (collectively, "Seller"), and CAPSTONE CAPITAL CORPORATION, a
Maryland corporation ("Purchaser"). Seller and Purchaser are sometimes
collectively referred to herein as the "Parties" and each of the Parties is
sometimes singularly referred to herein as a "Party".
WHEREAS, Seller is the owner of the Property (as defined below),
consisting of certain parcels of real property and the improvements located
thereon commonly known as Havenwyck Hospital located at 1525 University Drive,
1360 Doris Road, and 1333-1376 University Drive, City of Auburn Hills, Oakland
County, Michigan, which improvements, together with all related land and parking
areas, total approximately 31.395 acres, more or less, as more particularly
described on EXHIBIT A attached hereto;
WHEREAS, Purchaser is the owner of the Exchange Property (as defined
below), consisting of certain real property and improvements located thereon
commonly known as Desert Vista Hospital located at 570 West Brown Road, Mesa,
Maricopa County, Arizona, consisting of one two-story building comprising and
containing 113,555 square feet, more or less, which together with all related
land and parking areas total approximately 10.485 acres, more or less, as more
particularly described on EXHIBIT A-1; and
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
Property, and simultaneously therewith, to enter into a lease transaction
pursuant to which Purchaser shall lease to Seller, and Seller shall lease from
Purchaser, the Property.
NOW, THEREFORE, in consideration of the sum of $10.00, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE 1
DEFINITIONS
As used herein (including any Exhibits attached hereto), the following
terms shall have the meanings indicated:
"Bill of Sale" means a bill or bills of sale in the form attached as
EXHIBIT B hereto, and sufficient to transfer to Purchaser all of the items set
forth therein.
"Business Agreement" means any management agreement, service contract,
easement, covenant, restriction or other agreement relating to the operation or
maintenance of the Property.
"Business Day(s)" means calendar days other than Saturdays, Sundays and
legal holidays.
"Cash Consideration" means an amount equal to $1,300,000.
<PAGE> 5
"Certificate of Non-Foreign Status" means a certificate dated as of the
Closing Date, addressed to Purchaser and duly executed by Seller, in the form of
EXHIBIT C attached hereto.
"Claim" means any obligation, liability, lien, encumbrance, loss,
damage, cost, expense or claim, including, without limitation, any claim for
damage to property or injury to or death of any person or persons.
"Closing" means the consummation of the sale and purchase provided for
herein, to be held at such place as the Parties may mutually agree.
"Closing Certificate" means a certificate in the form of EXHIBIT D
wherein Seller shall represent that the representations and warranties of Seller
contained in this Agreement are true and correct as of the Closing Date as if
made on and as of the Closing Date, except with respect to those matters that
may be disclosed in writing to and accepted by Purchaser prior to the Closing
Date.
"Closing Date" means the closing date as shall be hereafter agreed upon
by the Parties but in no event later than September __, 1998.
"Credit Enhancements" means all security deposits, security interests,
letters of credit, pledges, prepaid rent or other sums, deposits or interests,
if any, held by Seller with respect to the Property, the Tenant Leases or the
Tenants.
"Deed" means a special warranty deed substantially in the form of
EXHIBIT E attached hereto (as the same may be modified to comply with local law
and custom), executed by each Seller, as grantor, in favor of Purchaser, as
grantee, conveying the Land and Improvements to Purchaser, subject only to the
Permitted Exceptions.
"Disclosure Schedule" has the meaning set forth in Section 6.1(v).
"Due Diligence Materials" means the information to be provided by
Seller to Purchaser pursuant to the provisions of Section 4.1 hereof.
"Date hereof" means the later of the two dates on which this Agreement
is signed and all changes initialed by Seller and Purchaser, as indicated by
their signatures below; provided that in the event only one Party dates its
signature, then the date of its signature shall be the Date hereof.
"Engineering Documents" means all site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications, engineering
plans and studies, floor plans, landscape plans, and other plans and studies
that relate to the Land, the Improvements or the Fixtures and are in Seller's
possession or control.
"Exception Documents" means true, correct and legible copies of each
document listed as an exception to title on the Title Commitment.
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<PAGE> 6
"Exchange Personal Property" means the personal property set forth on
EXHIBIT G attached hereto.
"Exchange Property" means the real property described on EXHIBIT A-1
attached hereto, together with any related improvements and the Exchange
Personal Property.
"Exchange Value" means $9,850,000, which is the sum of the Cash
Consideration plus the assumed value of the Exchange Property.
"Fixtures" means all permanently affixed equipment, machinery,
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter located in, on or used in connection with,
and permanently affixed to or incorporated into the Improvements, including
without limitation all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire and theft protection
equipment, built-in vacuum, cable transmission, oxygen and similar systems, all
of which, to the greatest extent permitted by law, are hereby deemed by the
Parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically excluding any
Tenant's trade fixtures or other fixtures or equipment that a Tenant is
permitted to remove pursuant to the applicable Tenant Lease.
"Guarantor" means Ramsay Health Care, Inc., a Delaware corporation, and
owner of 100% of the issued and outstanding capital stock of Michigan
Psychiatric Services, Inc., who is the owner of 100% of the issued and
outstanding capital stock of Havenwyck Hospital, Inc.
"Guaranty" means a guaranty of the obligations of Seller under the
Lease, executed by Guarantor.
"Hazardous Materials" means any substance, including without limitation
asbestos or any substance containing asbestos and deemed hazardous under any
Hazardous Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, medical waste,
chemicals, pollutants, effluents, contaminants, emissions or related materials
and items included in the definition of hazardous or toxic wastes, materials or
substances under any Hazardous Materials Law.
"Hazardous Materials Law" means any law, regulation or ordinance
relating to environmental conditions, medical waste and industrial hygiene,
including without limitation the Resource Conservation and Recovery Act of 1976
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Hazardous Materials Transportation
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Atomic
Energy Act, and all similar federal, state and local environmental statutes,
ordinances and the regulations, orders, or decrees now or hereafter promulgated
thereunder.
"Independent Consideration" means the sum of $100.00.
3
<PAGE> 7
"Improvements" means all buildings, structures, Fixtures and other
improvements of every kind now or on the Closing Date located on the Land,
including without limitation all alleyways, connecting tunnels, crosswalks,
sidewalks, landscaping, parking lots and structures, roads, drainage and all
above-ground and underground utility structures, equipment systems that
constitute Fixtures and other so-called "infrastructure" improvements.
"Intangible Property" means all intangible property or any interest
therein now or on the Closing Date owned or held by Seller in connection with
the Land, the Improvements or the Fixtures, including without limitation all
water rights and reservations, zoning rights and warranties related to the Land,
the Improvements or the Fixtures, or any part thereof, PROVIDED "Intangible
Property" shall not include the general corporate trademarks, service marks,
logos or insignia or books and records of Seller.
"Land" means the real property more particularly described on EXHIBIT A
attached hereto and made a part hereof, together with all covenants, licenses,
privileges and benefits thereto belonging, and any easements, rights-of-way,
rights of ingress or egress or other interests of Seller in, on, or to any land,
highway, street, road or avenue, open or proposed, in, on, across, in front of,
abutting or adjoining such real property including without limitation all strips
and gores adjacent to or lying between such real property and any adjacent real
property.
"Laws" means all federal, state and local laws, moratoria, initiatives,
referenda, ordinances, rules, regulations, standards, orders and other
governmental requirements, including, without limitation, those relating to the
environment, health and safety, disabled or handicapped persons.
"Lease" means a lease agreement to be executed and delivered by Lessee
in favor of Purchaser at the Closing, pursuant to the terms of which Purchaser
shall lease the Property to Seller following the Closing.
"Lessee" means MICHIGAN PSYCHIATRIC SERVICES, INC., a Michigan
corporation.
"Party" and "Parties" have the meanings set forth in the preamble to
this Agreement.
"Permits" means all permits, licenses, approvals, entitlements,
notifications, determinations and other governmental and quasi-governmental
authorizations including without limitation certificates of occupancy, required
in connection with the ownership, planning, development, construction, use,
operation or maintenance of the Property (other than such items related solely
to the conduct by Seller of its business on the Property or Seller's other
property or assets.) As used herein, "quasi-governmental" shall include the
providers of all utility services to the Property.
"Permitted Exceptions" means the exceptions listed on EXHIBIT F
attached hereto.
"Property" means, collectively, the Real Property (together with all
rights, titles and appurtenant interests), the Intangible Property, the
Warranties, the Engineering Documents and the Seller's Personal Property. As
used in the foregoing, "appurtenant interests" shall mean those interests which
pass by operation of law with the conveyance of the fee simple estate in the
Land and Improvements.
4
<PAGE> 8
"Real Property" means the Land, the Improvements and the Fixtures.
"Search Reports" means the initial reports of searches made of the
Uniform Commercial Code Records of the County in which the Property is located,
and of the office of the Secretary of State of the State in which the Property
is located, which searches shall reflect that none of the Property is encumbered
by liens. The Search Reports shall be updated, at Seller's expense, at or within
one week prior to Closing.
"Seller's Personal Property" means the personal property set forth on
EXHIBIT I attached hereto.
"Survey" means a current "as-built" ALTA survey, certified to ALTA
requirements, prepared by an engineer or surveyor licensed in the State in which
the Land is located and who is acceptable to Purchaser, which survey shall: (a)
include a legal description of the Land by metes and bounds (which shall include
a reference to the recorded plat, if any), and a computation of the area
comprising the Land in both acre, gross square feet and net square feet (to the
nearest one-hundredth of said respective measurement); (b) accurately (upon
Seller's belief, without inquiry) show the location on the Land of all
improvements, building and set-back lines, fences, evidence of abandoned fences,
ponds, creeks, streams, rivers, officially designated 100-year flood plains and
flood prone areas, canals, ditches, easements, roads, rights-of-way and
encroachments; (c) be certified to Purchaser, the Title Company, and any
third-party lender designated by Purchaser pursuant to a certification in
substantially the form of EXHIBIT K attached hereto; (d) legibly identify any
and all recorded matters shown on the Title Commitment or on said survey by
appropriate volume and page recording references and the survey shall show the
location of all adjoining streets; and (e) be satisfactory to the Title Company
so as to permit it to amend the standard exception for area and boundaries in
the Title Policy.
"Tenant" means the lessees or tenants under the Tenant Leases, if any.
"Tenant Leases" means all leases, subleases and other rental
agreements, if any (written or verbal, now or hereafter in effect) that grant a
possessory interest in and to any space in the Improvements or that otherwise
have rights with regard to the use of the Land or Improvements, and all Credit
Enhancements, if any, held in connection therewith.
"Title Commitment" means a current commitment issued by the Title
Company to Purchaser pursuant to the terms of which the Title Company shall
commit to issue the Title Policy to Purchaser in accordance with the provisions
of this Agreement, and reflecting all matters which would be listed as
exceptions to coverage on the Title Policy.
"Title Company" means Commonwealth Land Title Insurance Company, whose
address is c/o New York Land Title Services, Inc., 630 3rd Avenue, 5th Floor,
New York, New York 10017, Attention:
Luanne Lilore, National Department.
5
<PAGE> 9
"Title Policy" means an ALTA Extended Coverage Owner's Policy of Title
Insurance (1970 Form B - 1987 revision), together with such endorsements thereto
as are reasonably and customarily required by institutional purchasers of real
property similar to the Property, with liability in the amount of the Exchange
Value, dated as of the Closing Date, issued by the Title Company, insuring title
to the fee interest in the Real Property in Purchaser, subject only to the
Permitted Exceptions and to the standard printed exceptions included in the ALTA
standard form owner's extended coverage policy of title insurance, with the
following modifications: (a) the exception for areas and boundaries shall be
deleted; (b) the exception for ad valorem taxes shall reflect only taxes for the
current and subsequent years; (c) any exception as to parties in possession
shall be limited to rights of tenants in possession, as tenants only, pursuant
to the Lease and the Tenant Leases; (d) there shall be no general exception for
visible and apparent easements or roads and highways or similar items (with any
exception for visible and apparent easements or roads and highways or similar
items to be specifically referenced to and shown on the Survey and also
identified by applicable recording information); and (e) all other exceptions
shall be modified or endorsed in a manner reasonably acceptable to Purchaser.
"Warranties" means all warranties, representations and guaranties with
respect to the Property, whether express or implied, which Seller now holds or
under which Seller is the beneficiary (other than such items related solely to
the conduct by Seller of its business on the Property or Seller's other property
or assets.)
ARTICLE 2
AGREEMENTS TO SELL, PURCHASE AND LEASE
2.1 AGREEMENT TO SELL AND PURCHASE. In consideration for the transfer
of the Exchange Property and the payment of the Cash Consideration by Purchaser
to Seller (or its designee) Seller shall sell, convey, assign, transfer and
deliver to Purchaser and Purchaser shall purchase, acquire and accept from
Seller, the Property (it being expressly agreed that the Property shall not
include any accounts receivable of Seller), subject to the terms and conditions
of this Agreement. To the extent permitted or required by law, Seller shall
assign to Purchaser all of Seller's right, title and interest in and to the
Permits.
2.2 AGREEMENT TO LEASE. On the Closing Date, and subject to performance
by the Parties of the terms and provisions of this Agreement, Purchaser shall
lease to Lessee and Lessee shall lease from Purchaser, the Property at the
rental and upon the terms and conditions set forth in the Lease.
ARTICLE 3
EXCHANGE CONSIDERATION
3.1 PAYMENT OF CASH CONSIDERATION. The Cash Consideration shall be paid
by Purchaser delivering to Seller at the Closing a wire transfer or other
immediately available funds payable to the order of Seller in the amount of the
Cash Consideration, subject to adjustment as provided in Article 9 hereof.
6
<PAGE> 10
3.2 TRANSFER OF EXCHANGE PROPERTY. At the Closing, Purchaser shall
transfer title to the Exchange Property to Seller (or Seller's designee) by
means of a special warranty deed in a form reasonably acceptable to the Title
Company and Seller, together with a bill of sale in substantially the same form
as the Bill of Sale for the Exchange Personal Property, if any. Additionally,
Purchaser shall execute such affidavits and other instruments as Seller may
reasonably request prior to the Closing in connection with the transfer of the
Exchange Property to Seller.
ARTICLE 4
ITEMS TO BE FURNISHED TO PURCHASER BY SELLER
4.1 DUE DILIGENCE MATERIALS. Prior to the execution hereof, Seller
shall have delivered to Purchaser or made available to Purchaser at the Property
for its review the following items:
(a) True, correct, complete and legible copies of all Tenant Leases,
Business Agreements, Warranties, Permits, and Engineering Documents;
(b) A true, correct, complete and legible rent roll of all existing
Tenant Leases, if any, setting forth with respect to each of the Tenant Leases:
(i) the premises covered; (ii) the date of such Tenant Lease and all amendments
and modifications thereto; (iii) the name of the Tenant, licensee or occupant;
(iv) the term, including specification of the commencement date and the
termination date; (v) the rents; (vi) the nature and amount of the security
deposits thereunder, if any; (vii) options to renew or extend contained in any
of the Tenant Leases; (viii) the status of Tenant improvements to be performed
by Seller; and
(c) True, correct, complete and legible copies of the following items:
(i) tax statements or assessments for all real estate and
personal property taxes assessed against the Property for the current
and the prior two calendar years;
(ii) certificates of insurance evidencing all existing fire
and extended coverage insurance policies and any other insurance
policies pertaining to the Property;
(iii) all instruments evidencing, governing or securing the
payment of any loans secured by the Property or related thereto;
(iv) audited balance sheets and income statements of Guarantor
for 1996 and 1997;
(v) all environmental studies or impact reports relating to
the Property in possession or control of Seller, if any, and any
approvals, conditions, orders or declarations issued by any
governmental authority relating thereto (such studies and reports shall
include, but not be limited to, reports indicating whether the Property
is or has been contaminated by Hazardous Materials); and
7
<PAGE> 11
(vi) all litigation files, if any, with respect to any pending
litigation and claim files for any claims made or threatened, the
outcome of which might have a material adverse effect on the Property
or the use and operation of the Property.
4.2 DUE DILIGENCE REVIEW. Prior to the Closing, Purchaser shall be
entitled to review the Due Diligence Materials delivered or made available by
Seller to Purchaser pursuant to the provisions of Section 4.1 above. If
Purchaser shall, for any reason in Purchaser's sole discretion, disapprove or be
dissatisfied with any aspect of such information, or the Property, then
Purchaser shall be entitled to terminate this Agreement by giving written notice
thereof to Seller on or before the Closing, whereupon this Agreement shall
automatically be rendered null and void, all moneys which have been delivered by
Purchaser to Seller or the Title Company (other than the Independent
Consideration) shall be immediately returned to Purchaser and thereafter neither
Party shall have any further obligations or liabilities to the other hereunder.
Alternatively, Purchaser may give written notice setting forth any defect,
deficiency or encumbrance and specify a time within which Seller may remedy or
cure such matter. If any defect, deficiency or encumbrance, so noticed, is not
satisfied or resolved to the satisfaction of Purchaser, in Purchaser's sole
discretion, within the time period specified in such written notice, this
Agreement shall automatically terminate as provided in this section. If no such
notice is timely given, then Purchaser shall be deemed to have waived its right
to so terminate. Also, Purchaser shall treat the Due Diligence Materials as
confidential and shall use them solely for the purpose of evaluating the
Property. If this Agreement is terminated, Purchaser shall promptly redeliver to
Seller all Due Diligence Materials.
ARTICLE 5
TITLE AND SURVEY
5.1 TITLE COMMITMENT, EXCEPTION DOCUMENTS AND SURVEY. Prior to the Date
hereof, Seller shall have delivered or caused to be delivered to Purchaser, the
Title Commitment, Exception Documents, Survey, and Search Reports.
ARTICLE 6
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
6.1 REPRESENTATIONS AND WARRANTIES OF SELLER. To induce Purchaser to
enter into this Agreement and to purchase the Property, Seller represents and
warrants to Purchaser, to the best of its knowledge, as follows:
(a) Seller has, and at the Closing Seller will convey, transfer and
assign to Purchaser, good, marketable, fee simple and insurable title to the
Land, free and clear of any deeds of trust, mortgages, liens, encumbrances,
leases, tenancies other than the Tenants or Tenant Leases, licenses, chattel
mortgages, conditional sales agreements, security interests, covenants,
conditions, restrictions, judgments, rights-of-way, easements, encroachments and
any other matters affecting title or use of the Property, except for the
Permitted Exceptions.
8
<PAGE> 12
(b) Seller has duly and validly authorized and executed this Agreement
and has right, title, power and authority to enter into this Agreement and, at
Closing, to consummate the actions provided for herein, and the joinder of no
person or entity will be necessary to convey the Property fully and completely
to Purchaser at Closing. The execution by Seller of this Agreement and the
consummation by Seller of the transactions contemplated hereby do not, and at
the Closing will not (i) result in a breach of any of the terms or provisions
of, or constitute a default or a condition which upon notice or lapse of time or
both would ripen into a default under, any indenture, agreement, instrument or
obligation to which Seller is a party or by which Seller or the Property or any
portion thereof is bound; or (ii) constitute a violation of any order, rule or
regulation of any court or of any federal or state or municipal regulatory body
or administrative agency or other governmental body having jurisdiction over
Seller or any portion of the Property.
(c) There are no adverse or other parties in possession of the Property
or of any part thereof except Seller and Tenants, if any, under valid and
effective Tenant Leases delivered to Purchaser pursuant to this Agreement, and
no party has been granted any license, lease or other right relating to the use
or possession of the Property, except Tenants under Tenant Leases which have
been delivered to Purchaser pursuant to this Agreement.
(d) Each Tenant Lease, if any, furnished to Purchaser pursuant to this
Agreement is in full force and effect and has not been materially amended,
modified or supplemented in any way that has not been disclosed to Purchaser in
writing. The Tenant Leases, if any, furnished to Purchaser pursuant to this
Agreement constitute all material written and oral agreements of any kind for
the leasing, rental or occupancy of any portion of the Property. No material
default or breach on the part of Seller as landlord or Tenant exists under any
of the Tenant Leases. All material Tenant improvements, repairs and other work
and obligations, if any, then required to be performed by the landlord under
each of the Tenant Leases will be fully performed and paid for in full on or
prior to the Closing. Seller has not, except as disclosed to Purchaser in
writing, accepted the payment of rent or other sums due under any of the Tenant
Leases for more than one month in advance.
(e) None of the Tenant Leases and none of the rents or other charges
payable thereunder, if any, have been assigned, pledged or encumbered by Seller.
(f) No brokerage or leasing commissions or other compensation will be
due or payable to any person, firm, corporation or other entity with respect to,
or on account of, any Tenant Lease or any extensions or renewals thereof, if
any, except those agreements entered into or accepted in writing by Purchaser.
(g) No notice has been received by Seller and Seller is not aware of
any person having received notice from any insurance company that has issued a
policy with respect to any portion of the Property or from any board of fire
underwriters (or other body exercising similar functions), claiming any defects
or deficiencies or requiring the performance of any repairs, replacements,
alterations or other work. No notice has been received by Seller from any
issuing insurance company that any of such policies will not be renewed, or will
be renewed only at a higher premium rate than is presently payable therefor,
except as disclosed to and accepted by Purchaser in writing.
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<PAGE> 13
(h) No pending condemnation, eminent domain, assessment or similar
proceeding or charge affecting the Property or any portion thereof exists.
Seller has not received any notice of a proposed increase in the assessed
valuation of the Property.
(i) (i) All of the Improvements (including all utilities) have been
completed and installed and are being used in accordance in all material
respects with all applicable Laws; (ii) permanent certificates of occupancy, all
licenses, permits, authorizations and approvals required by all governmental
authorities having jurisdiction, and the requisite certificates of the local
board of fire underwriters (or other body, exercising similar functions) have
been issued for the Improvements, and are in full force and effect; and (iii)
the Improvements, as designed and constructed, comply in all material respects
with all Laws applicable thereto.
(j) (i) The existing water, sewer, gas and electricity lines, storm
sewer and other utility systems on the Land are adequate to serve the utility
needs of the Property; (ii) all utilities required for the operation of the
Improvements enter the Land through adjoining public streets or through
adjoining private land in accordance with valid public or private easements that
will inure to the benefit of Purchaser; (iii) all approvals, licenses and
permits required for said utilities have been obtained and are in force and
effect; and (iv) all of said utilities are installed and operating, all
installation and connection charges have been paid in full, and the right to the
return of any deposit or contribution in connection therewith shall inure to
Purchaser.
(k) (i) There are no material structural defects in any of the
buildings or other Improvements constituting the Property; (ii) the
Improvements, all heating, electrical, plumbing and drainage at or servicing the
Property and all facilities and equipment relating thereto are in reasonably
good condition and working order and adequate in quantity and quality for the
normal operation of the Property; (iii) no part of the Property has been
destroyed or damaged by fire or other casualty; and (iv) there are no
unsatisfied requests for repairs, restorations or alterations with regard to the
Property from any Tenant, lender, insurance provider or governmental authority.
(l) No work has been performed or is in progress at the Property, and
no materials will have been delivered to the Property, that might reasonably be
expected to provide the basis for a mechanic's, materialmen's or other lien
against the Property or any portion thereof.
(m) Other than the Business Agreements furnished to Purchaser pursuant
to Section 4.1(a), there are no material agreements or understandings (oral or
written) with respect to the Property or any portion thereof to which Seller is
a party (other than such items related solely to the conduct by Seller of its
business on the Property or Seller's other property or assets).
(n) No default or breach exists under any of the Business Agreements,
or any covenant, condition, restriction, right-of-way or easement affecting the
Property or any portion thereof.
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<PAGE> 14
(o) There are no actions, suits or proceedings pending or, to the best
of Seller's knowledge, threatened against or affecting the Property or any
portion thereof, any of the Tenant Leases or relating to or arising out of the
ownership of the Property, or before any federal, state, county or municipal
department, commission, board, bureau or agency or other governmental
instrumentality, other than those disclosed to Purchaser pursuant to Section
4.1. All judicial proceedings concerning the Property will be finally dismissed
and terminated prior to Closing.
(p) The Property has free and unimpeded access to presently existing
public highways and/or roads (either directly or by way of perpetual easements),
and all approvals necessary therefor have been obtained and in full force and
effect. No fact or condition exists which would result in the termination of the
current access from the Property to any presently existing public highways
and/or roads adjoining or situated on the Property.
(q) There are no attachments, executions, assignments for the benefit
of creditors, or voluntary or involuntary proceedings in bankruptcy or under any
other debtor relief laws contemplated by or pending or threatened against Seller
or the Property.
(r) Except as set forth in the Disclosure Schedule and other than with
respect to activities in connection with or conditions arising strictly from
customary and ordinary use or maintenance of the Property by Seller and Tenants
in full compliance with any or all Hazardous Materials Law, to the best of
Seller's knowledge, there is not (i) any Hazardous Materials installed, used,
generated, manufactured, treated, handled, refined, produced, processed, stored
or disposed of, or otherwise on or under, the Property; (ii) any activity on the
Property which could cause (a) the Property to become a hazardous waste
treatment, storage or disposal facility within the meaning of any Hazardous
Materials Law, (b) a release or threatened release of Hazardous Materials from
the Property within the meaning of any Hazardous Materials Law, or (c) the
discharge of any Hazardous Materials into any watercourse, body of surface or
subsurface water or wetland, or the discharge into the atmosphere of any
Hazardous Materials which would require a permit under any Hazardous Materials
Law; (iii) any activity with respect to the Property which would cause a
violation or support a claim under any Hazardous Materials Law; (iv) any
investigation, administrative order, litigation or settlement with respect to
any Hazardous Materials relating to or affecting the Property; or (v) any notice
being served on Seller from any entity, governmental body or individual claiming
any violation of any Hazardous Materials Law, or requiring compliance with any
Hazardous Materials Law, or demanding payment or contribution for the
environmental damage or injury to natural resources. Seller has not obtained and
is not required to obtain, and Seller has no knowledge of any reason Purchaser
will be required to obtain, any permits, licenses, or similar authorizations to
occupy, operate or use the Improvements or any part of the Property by reason of
any Hazardous Materials Law.
(s) The Exchange Value is being allocated to the Real Property and the
portion of the Property which is considered to be personal property as set forth
on EXHIBIT J attached hereto.
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(t) All certificates of need or approvals or consents from any
governmental authorities necessary or appropriate for Seller's use of the
Property as currently used have been finally and properly obtained, and all
applicable appeal periods have lapsed with respect thereto, and no transfer or
reissuance of, or notice in connection with, any such certificate, approval or
consent is or will be required as a result of this Agreement or the consummation
of the transactions contemplated hereby.
(u) The number of parking spaces available for use in connection with
the Improvements complies with all applicable Laws.
(v) All documents and information delivered by Seller to Purchaser
pursuant to the provisions of this Agreement are true, correct and complete as
of the Date hereof and will be correct and complete as of the Closing Date,
except as set forth in this Agreement and in the disclosure schedule
accompanying this Agreement and initialed by the Parties (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered paragraphs in this Section 6.1. From time to time after the
execution of this Agreement until the Closing, Seller shall deliver to Purchaser
one or more supplemental schedules setting forth all changes in the schedules,
and in previously delivered supplemental schedules, if any, and in any of the
representations and warranties made herein whether or not previously modified by
a schedule, arising out of matters discovered or occurring prior to the Closing.
Purchaser and its counsel shall have 30 days to object in writing to any
material information in any supplemental schedule. Failure by Purchaser to
notify Seller within such 30-day period of any objection to information provided
in the supplemental schedule prior to the Closing shall be deemed to be approval
thereof.
6.2 INDEMNITY OF SELLER. Subject to the provisions provided hereafter
limiting the liability of Seller, Seller hereby agrees to indemnify and defend,
at its sole cost and expense, and hold Purchaser, its successors and assigns,
harmless from and against and to reimburse Purchaser with respect to any and all
claims, demands, actions, causes of action, losses, damages, liabilities, costs
and expenses (including without limitation reasonable attorneys' fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Purchaser at any time and from time
to time by reason of or arising out of (a) the breach of any representation or
warranty of Seller set forth in this Agreement, (b) the failure of Seller, in
whole or in part, to perform any obligation required to be performed by Seller
pursuant to this Agreement, or (c) except for the matters disclosed herein or in
the Disclosure Schedule, the ownership, construction, occupancy, operation, use
and maintenance of the Property prior to the Closing Date, or (d) the violation
on or before the Closing Date of any Hazardous Material Law in effect on or
before the Closing Date and any and all matters arising out of any act,
omission, event or circumstance existing or occurring on or prior to the Closing
Date (including, without limitation, the presence on the Property or release
from the Property of Hazardous Materials disposed of or otherwise released prior
to the Closing Date) which results in a violation of a Hazardous Materials Law,
regardless of whether the act, omission, event or circumstance constituted a
violation of any Hazardous Materials Law at the time of its existence or
occurrence. The provisions of this Section 6.2 shall survive the Closing of the
transaction contemplated by this Agreement and shall continue thereafter in full
force and effect for the benefit of Purchaser, its successors and assigns.
However, notwithstanding any provision of this Agreement to the contrary,
Purchaser may exercise any right or remedy Purchaser may have at law or in
equity should Seller fail to meet, comply with or perform its indemnity
obligations required by this Section 6.2.
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6.3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser
represents and warrants to Seller that:
(a) Purchaser has duly and validly authorized and executed this
Agreement, and has full right, power and authority to enter into this Agreement
and to consummate the actions provided for herein, and the joinder of no person
or entity will be necessary to purchase the Property from Seller at Closing.
(b) The execution by Purchaser of this Agreement and the consummation
by Purchaser of the transactions contemplated herein do not, and at the Closing
will not, result in any breach of any of the terms or provisions of or
constitute a default or a condition which upon notice or lapse of time or both
would ripen into a default under any indenture, agreement, instrument or
obligation to which Purchaser is a party, and do not constitute a violation of
any order, rule or regulation of any court or of any federal or state or
municipal regulatory body or administrative agency or other governmental body
having jurisdiction over Purchaser.
(c) Purchaser shall indemnify and hold Seller harmless from and against
any claims for any brokerage fee or commission, finder's fee or financial
advisory fee arising from or related to the transactions contemplated by this
Agreement and which is asserted by any person or entity claiming to have acted
as agent or a representative of Purchaser.
(d) All documents and information delivered by Purchaser to Seller
pursuant to the provisions of this Agreement are true, correct and complete as
of the Date hereof and will be correct and complete as of the Closing Date,
except as set forth in this Agreement and in the Disclosure Schedule. From time
to time after the execution of this Agreement until the Closing, Purchaser shall
deliver to Seller one or more supplemental schedules setting forth all changes
in the schedules, and in previously delivered supplemental schedules, if any,
and in any of the representations and warranties made herein whether or not
previously modified by a schedule, arising out of matters discovered or
occurring prior to the Closing. Seller and its counsel shall have 30 days to
object in writing to any material information in any supplemental schedule;
failure by Seller to notify Purchaser within such 30-day period of any objection
to information provided in the supplemental schedule prior to the Closing shall
be deemed to be approval thereof.
(e) Purchaser has, and at the Closing Purchaser will convey, transfer
and assign to Seller, title to the Exchange Property, free and clear of any
deeds of trust, mortgages, liens, encumbrances, leases, tenancies other than
such encumbrances and other exceptions to title (i) as existed on the date of
transfer of the same to Purchaser from an affiliate of Guarantor and Seller,
Mesa Psychiatric Hospital, Inc., an Arizona corporation ("Mesa") and (ii)
arising out of or in connection with the Lease Agreement dated as of April 12,
1995 (the "Mesa Lease"), between Purchaser, as lessor, and Mesa, as lessee.
Purchaser does not own any fixtures, intangible property, warranties,
engineering documents and permits related to the Exchange Property other than
the Exchange Personal Property that was transferred to Purchaser by Mesa.
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(f) To the best of Purchaser's knowledge, there are no actions, suits
or proceedings pending or threatened against or affecting the Exchange Property,
the Exchange Personal Property or any portion thereof, before any federal,
state, county or municipal department, commission, board, bureau or agency or
other governmental instrumentality.
ARTICLE 7
CONDITIONS TO PURCHASER'S AND SELLER'S OBLIGATIONS
7.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligations of Purchaser
to purchase the Property from Seller and to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, as of the
Closing Date, of each of the following conditions:
(a) All of the representations and warranties of Seller set forth in
this Agreement shall be true as of the Closing Date in all material respects
except for changes expressly permitted or contemplated by the terms of this
Agreement.
(b) Seller shall have delivered, performed, observed and complied in
all material respects with, all of the items, instruments, documents, covenants,
agreements and conditions required by this Agreement to be delivered, performed,
observed and complied with by Seller prior to, or as of, the Closing Date.
(c) Neither Seller nor any Tenant shall be in receivership or
dissolution proceedings or have made any assignment for the benefit of
creditors, or admitted in writing its inability to pay its debts as they mature,
or have been adjudicated as bankrupt, or have filed a petition in voluntary
bankruptcy, a petition or answer seeking reorganization or an arrangement with
creditors under the federal bankruptcy law or any other similar law or statute
of the United States or any state and no such petition shall have been filed
against it.
(d) No material or substantial change shall have occurred with respect
to the condition, financial or otherwise, of the Property or Seller.
(e) Neither the Property nor any part thereof or interest therein shall
have been taken by execution or other process of law in any action prior to the
Closing Date.
(f) Purchaser shall be reasonably satisfied with its inspection of the
Property with respect to the physical condition thereof by agents or contractors
selected by Purchaser.
(g) Purchaser shall have received, in form acceptable to Purchaser,
evidence of compliance by the Property with all Permits required as of the Date
hereof and such other Permits as may be necessary or appropriate for the
operation of the Property for the current and intended use and for the
transactions contemplated by this Agreement and the Lease.
(h) All necessary approvals, consents and the like of third parties to
the validity and effectiveness of the transactions contemplated hereby shall
have been obtained.
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(i) Purchaser shall be reasonably satisfied that the Property is
sufficient and adequate for Seller to carry on the business now being conducted
thereon and that the Property is in good condition and repair as reasonably
required for the proper operation and use thereof in compliance with applicable
Laws and the requirements of applicable accreditation and licensing authorities.
(j) Purchaser shall be satisfied with all matters regarding title and
survey pursuant to Article 5 hereof.
(k) Purchaser shall have obtained an environmental site assessment
report covering the Property in form and content acceptable to Purchaser.
(l) No portion of the Property shall have been destroyed by fire or
casualty.
(m) No condemnation, eminent domain or similar proceeding shall have
been commenced or threatened with respect to any portion of the Property.
(n) Purchaser shall have received an appraisal satisfactory to
Purchaser in all respects, including without limitation a fair market value not
less than the Exchange Value.
(o) Seller shall have provided such representations, warranties and
consents as may be reasonably required by the United States Securities and
Exchange Commission (including, but not limited to, inclusion of financial
statements, financial information and other required information concerning
Seller or any affiliate of Seller in any United States Securities and Exchange
Commission filings made by Purchaser or any affiliate of Purchaser).
7.2 FAILURE OF CONDITIONS TO PURCHASER'S OBLIGATIONS. In the event any
one or more of the conditions to Purchaser's obligations are not satisfied in
whole or in part as of the Closing Date, Purchaser, at Purchaser's option, shall
be entitled to: (a) terminate this Agreement by giving written notice thereto to
Seller, whereupon all moneys which have been delivered by Purchaser to Seller or
the Title Company (other than the Independent Consideration) shall be
immediately refunded to Purchaser and, except for the obligations set forth in
Section 4.2 hereof related to confidentiality, neither Purchaser nor Seller
shall have any further obligations or liabilities hereunder; (b) waive such
failure of condition and proceed to Closing hereunder; or (c) pursue such other
remedies as may be available to Purchaser.
7.3 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller to
sell the Property to Purchaser and to consummate the transactions contemplated
by this Agreement are subject to the satisfaction, as of the Closing Date, of
each of the following conditions:
(a) The representations and warranties of Purchaser contained herein
shall be in all material respects true and accurate as of the Closing Date.
(b) Purchaser shall have delivered, performed, observed and complied in
all material respects with, all of the items, instruments, documents, covenants,
agreements and conditions required by this Agreement to be delivered, performed,
observed and complied with by Purchaser as of the Closing Date.
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(c) No statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by any court of competent
jurisdiction or United States governmental authority which prohibits the
consummation of the transactions contemplated by this Agreement.
(d) All action required to be taken by Purchaser to authorize the
execution, delivery, and performance of this Agreement and the other agreements
or documents related hereto, and the consummation of the transactions
contemplated hereby, shall have been duly and validly taken.
7.4 FAILURE OF CONDITIONS TO SELLER'S OBLIGATIONS. In the event any one
or more of the conditions to Seller's obligations are not satisfied in whole or
in part as of the Closing, Seller, at Seller's option, shall be entitled to: (a)
terminate this Agreement by giving written notice thereto to Purchaser,
whereupon all moneys which have been delivered by Purchaser to Seller or the
Title Company (other than the Independent Consideration) shall be immediately
refunded to Purchaser and neither Purchaser nor Seller shall have any further
obligations or liabilities hereunder; or (b) waive such failure of conditions
and proceed to Closing hereunder.
ARTICLE 8
PROVISIONS WITH RESPECT TO THE CLOSING
8.1 SELLER'S CLOSING OBLIGATIONS. At Closing, Seller shall furnish and
deliver, or shall cause Guarantor to furnish and deliver, to the Title Company
and/or Purchaser the following:
(a) The Deed, Title Commitment obligating the Title Company to issue
the Title Policy subject only to the Permitted Exceptions, Bill of Sale,
Certificate of Non-Foreign Status, the Closing Certificate, the Guaranty and the
Lease, each duly executed and acknowledged by Seller or Guarantor, as the case
may be.
(b) An affidavit, agreement and indemnity executed by Seller and dated
as of the Closing Date, stating that there are no unpaid debts for any work that
has been done or materials furnished to the Property prior to and as of Closing
and stating that Seller shall indemnify, save and protect Purchaser and its
assigns harmless from and against any and all Claims, including court costs and
reasonable attorneys' fees related thereto, arising out of, in connection with,
or resulting from the same, up to and including the Closing Date, in form and
substance mutually acceptable to Seller and Purchaser.
(c) Certificates of casualty and fire insurance for the Property
required pursuant to the Lease showing Purchaser as additional insured and loss
payee thereunder, with appropriate provisions for 30 days' prior written notice
to Purchaser in the event of cancellation or termination of such policies.
(d) Updated Search Reports, dated not more than ten days prior to
Closing, evidencing no UCC-l Financing Statements or other filings in the name
of Seller with respect to the Property.
(e) Such affidavits, certificates or letters of indemnity as the Title
Company shall reasonably require in order to omit from its insurance policy all
exceptions for unfiled mechanic's, materialman's or similar liens.
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(f) Any and all transfer declarations or disclosure documents, duly
executed by the appropriate parties, required in connection with the Deed by any
state, county or municipal agency having jurisdiction over the Property or the
transactions contemplated hereby.
(g) Such instruments or documents as are necessary, or reasonably
required by Purchaser or the Title Company, to evidence the status and capacity
of Seller and the authority of the person or persons who are executing the
various documents on behalf of Seller in connection with the purchase and sale
transaction contemplated hereby.
(h) All costs and expenses payable by Seller pursuant to Section 9.2.
8.2 PURCHASER'S CLOSING OBLIGATIONS. At Closing, Purchaser shall
deliver to the Title Company and/or Seller the following:
(a) The Lease, duly executed and acknowledged by Purchaser.
(b) Such instruments as are necessary, or reasonably required by Seller
or the Title Company to evidence the authority of Purchaser to consummate the
transactions contemplated hereby and to execute and deliver the closing
documents on Purchaser's part to be delivered.
(c) A special warranty deed, bill of sale, closing certificate and
certificate of non-foreign status with respect to the Exchange Property, each in
substantially the same form as the Deed, the Bill of Sale, the Closing
Certificate and the Certificate of Non-Foreign Status, respectively.
(d) A termination of the Mesa Lease and any related guaranty.
ARTICLE 9
EXPENSES OF CLOSING
9.1 ADJUSTMENTS. There shall be no adjustment of taxes, assessments,
water or sewer charges, gas, electric, telephone or other utilities, operating
expenses, employment charges, premiums on insurance policies or other items that
are normally prorated, it being agreed and understood by the Parties that Seller
shall be obligated to pay such items under the terms of the Lease.
9.2 CLOSING COSTS. Seller shall pay all costs of closing, including
without limitation reasonable attorneys' fees and expenses for Purchaser and
Seller, all title examination fees and premiums for the Title Policy, the Search
Reports, the Survey, any environmental reports, appraisals, structural or
engineering reports, all state, municipal or other documentary or transfer taxes
payable in connection with the delivery of any instrument or document required
or contemplated by this Agreement or any agreement or commitment described or
referred to herein, and the charges for or in connection with the recording
and/or filing of any instrument or document required or contemplated by this
Agreement or any agreement or document described or referred to herein.
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ARTICLE 10
DEFAULT AND REMEDIES
10.1 SELLER'S DEFAULT; PURCHASER'S REMEDIES.
(a) Seller's Default. Seller shall be deemed to be in default hereunder
upon the occurrence of any one or more of the following events: (i) any of
Seller's warranties or representations set forth herein shall be untrue in any
material aspect when made or at Closing; or (ii) Seller shall fail in any
material respect to meet, comply with, or perform any covenant, agreement or
obligation on its part required within the time limits and in the manner
required in this Agreement.
(b) Purchaser's Remedies. In the event Seller shall be deemed to be in
default hereunder Purchaser may, as its sole remedies: (i) terminate this
Agreement by written notice delivered to Seller on or before the Closing; or
(ii) enforce specific performance of this Agreement against Seller including
Purchaser's reasonable costs and attorneys fees in connection therewith. It is
understood and agreed that termination or specific performance as provided in
(i) and (ii) above constitute Purchaser's sole remedy against Seller, and that
Purchaser shall not be entitled to seek monetary damages from Seller or assert
any other remedy against Seller, except for the items to be paid by Seller
pursuant to Section 9.2 hereof.
10.2 PURCHASER'S DEFAULT; SELLER'S REMEDIES.
(a) Purchaser's Default. Purchaser shall be deemed to be in default
hereunder upon the occurrence of any one or more of the following events: (i)
any of Purchaser's warranties or representations set forth herein shall be
untrue in any material respect when made or at Closing; or (ii) Purchaser shall
fail in any material respect to meet, comply with, or perform any covenant,
agreement or obligation on its part within the time limits and in the manner
required in this Agreement.
(b) Seller's Remedy. In the event Purchaser shall be deemed to be in
default hereunder, Seller, as Seller's sole and exclusive remedy for such
default, shall be entitled to terminate this Agreement and all rights of
Purchaser hereunder and to receive the Independent Consideration, it being
agreed between Purchaser and Seller that such sum shall be liquidated damages
for a default of Purchaser hereunder because of the difficulty, inconvenience,
and uncertainty of ascertaining actual damages for such default. If Seller shall
be entitled to the Independent Consideration in accordance with this Section
10.2, Purchaser agrees to deliver, on written request of Seller, such
instructions as may be reasonably necessary to cause the Title Company to
deliver the Independent Consideration to Seller. In such event, Purchaser will
pay the costs of the Survey, Title Commitment, Search Reports, appraisals and
any environmental survey, report or study, which items shall be and become
property of Purchaser.
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ARTICLE 11
MISCELLANEOUS
11.1 SURVIVAL. All of the representations, warranties, covenants,
agreements and indemnities (but not matters or items identified as conditions
for parties' obligation to close) of Seller and Purchaser contained in this
Agreement, to the extent not performed at the Closing, shall survive the Closing
and shall not be deemed to merge upon the acceptance of the Deed by Purchaser.
11.2 NOTICES. Any notices, demands, approvals and other communications
provided for herein shall be in writing and shall be delivered by telephonic
facsimile, overnight air courier, personal delivery or registered or certified
U.S. Mail with return receipt requested, postage paid, to the appropriate party
at its address as follows:
If to Purchaser:
CAPSTONE CAPITAL CORPORATION
1000 Urban Center Drive
Suite 630
Birmingham, Alabama 35242
Attention: Mr. John W. Tyson
Telephone: (205) 967-2092
Telecopy: (205) 967-9066
With a copy to:
Mr. Thomas A. Ansley
Sirote & Permutt, P.C.
2222 Arlington Avenue South
Birmingham, Alabama 35205
Telephone: (205) 930-5300
Telecopy: (205) 930-5301
If to Seller:
MICHIGAN PSYCHIATRIC SERVICES, INC.
c/o Ramsey HealthCare, Inc.
One Alhambra Plaza
Suite 750
Coral Gables, Florida 33134
Telephone: (305) 569-4621
Telecopy: (305) 569-4648
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With a copy to:
Adam A. Veltri, Esq.
Haythe & Curley
237 Park Avenue
20th Floor
New York, New York 10017
Telephone: (212) 880-6234
Telecopy: (212) 880-6056
Addresses for notice may be changed from time to time by written notice
to all other parties. Any communication will be effective (i) if given by mail,
upon the earlier of (a) three business days following deposit in a post office
or other official depository under the care and custody of the United States
Postal Service or (b) actual receipt, as indicated by the return receipt; (ii)
if given by telephone facsimile, when sent; and (iii) if given by personal
delivery or by overnight air courier, when delivered to the appropriate address
set forth.
11.3 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement embodies and
constitutes the entire understanding between the parties with respect to the
transactions contemplated herein, and all prior or contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Agreement. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument in writing
signed by the Party against whom the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent set
forth in such instrument.
11.4 APPLICABLE LAW. This Agreement and the transactions contemplated
hereby shall be governed by and construed in accordance with the laws of the
state in which the Property is located.
11.5 CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only and in no way define, describe, or limit the scope
or intent of this Agreement or any of the provisions hereof.
11.6 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal and personal representatives, successors, and
assigns.
11.7 EXTENSION OF DATES. Notwithstanding anything to the contrary
contained in this Agreement, if Seller shall fail to deliver any document or
item required pursuant to any of the terms and provisions of Article 4 and/or
Article 5 within the applicable time period required, Purchaser, at its option,
shall have the right to extend the date of expiration of the Review Period, and
correspondingly the date of Closing, by the number of days elapsing from the
date such items were required to be delivered and the date such items were
actually delivered to Purchaser; provided that Purchaser shall give Seller
notice of its intent to extend such dates. Nothing herein shall diminish
Seller's obligation to timely furnish such items.
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11.8 TIME IS OF THE ESSENCE. With respect to all provisions of this
Agreement, time is of the essence. However, if the first date of any period
which is set out in any provision of this Agreement falls on a day which is not
a Business Day, then, in such event, the time of such period shall be extended
to the next day which is a Business Day.
11.9 WAIVER OF CONDITIONS. Any Party may at any time or times, at its
election, waive any of the conditions to its obligations hereunder, but any such
waiver shall be effective only if contained in a writing signed by such Party.
No waiver by a Party of any breach of this Agreement or of any warranty or
representation hereunder by the other Party shall be deemed to be a waiver of
any other breach by such other Party (whether preceding or succeeding and
whether or not of the same or similar nature), and no acceptance of payment or
performance by a Party after any breach by the other Party shall be deemed to be
a waiver of any breach of this Agreement or of any representation or warranty
hereunder by such other Party, whether or not the first Party knows of such
breach at the time it accepts such payment or performance. No failure or delay
by a Party to exercise any right it may have by reason of the default of the
other Party shall operate as a waiver of default or modification of this
Agreement or shall prevent the exercise of any right by the first Party while
the other Party continues to be so in default.
11.10 BROKERS. Each Party hereby represents to the other Party that it
has not discussed this Agreement or the subject matter thereof with any real
estate broker or salesman so as to create any legal rights in any such broker or
salesman to claim a real estate commission or similar fee with respect to the
purchase or sale of the Property, and agrees to defend, indemnify and hold the
other Party harmless from any and all claims for any real estate commissions,
leasing fees or similar fees arising out of or in any way relating to a breach
of the foregoing representation.
11.11 RISK OF LOSS. Until the Closing Date, the risk of loss of any
portion of the Property shall be solely that of Seller. Risk of loss shall be
that of Purchaser from and after the Closing Date, at which time Seller shall
deliver to Purchaser possession of the Property.
11.12 NO ASSUMPTION OF LIABILITIES. Purchaser shall not assume any of
the existing liabilities, indebtedness, commitments or obligations of any nature
whatsoever (whether fixed or contingent) of Seller in respect of the Property or
otherwise, except those expressly assumed herein.
11.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.14 OTHER TERMS. The term "document" is used in its broadest sense
and encompasses agreements, certificates, opinions, consents, instruments and
other written material of every kind. The word "including", when following any
general statement, term or matter shall not be construed to limit such
statement, term or matter to the specific terms or matters as provided
immediately following the word "including" or to similar items or matters,
whether or not non-limiting language (such as "without limitation", "but not
limited to", or words of similar import) as used with reference to the word
"including" or the similar items or matters, but rather shall be deemed to refer
to all other items or matters that could reasonably fall within the broadest
possible scope of the general statement, term or matter. The term "any" as a
modifier to any noun, shall be construed to mean "any and/or all" preceding the
same noun in the
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plural. The terms "herein" "hereunder" and other similar compounds of the word
"here" refer to the entire document in which the term appears and not to any
particular provision or section of the document. In all cases where the Owner's
approval or consent is required hereunder, such approval or consent must be in
writing and, except as herein otherwise provided, may be withheld in the Owner's
sole and absolute discretion.
11.15 SINGULAR AND PLURAL REFERENCES. Reference to any party in the
singular, or as "him," "her," "it," "its," "itself," or other like references,
shall also be deemed to include the plural or the masculine or feminine
reference, as the case may be. References to any of the Parties in the plural,
or as "they," "them," "their," or other like references, shall also be deemed to
include the singular reference.
EXECUTED as of the date first written above to be effective as of the
Date hereof.
PURCHASER:
CAPSTONE CAPITAL CORPORATION
By /s/ John W. McRoberts
---------------------------------
John W. McRoberts
President
SELLER:
HAVENWYCK HOSPITAL, INC.
By: /s/ Jorge Rico
--------------------------------
Name: Jorge Rico
------------------------------
Title: Vice President
------------------------------
Seller's Tax Identification Number:
-----------------------------------
22
<PAGE> 26
MICHIGAN PSYCHIATRIC SERVICES, INC.
By: /s/ Jorge Rico
--------------------------------
Name: Jorge Rico
------------------------------
Title: Vice President
------------------------------
Seller's Tax Identification Number:
-----------------------------------
23
<PAGE> 27
LIST OF EXHIBITS
Exhibit A - Property Description
Exhibit A-1 - Exchange Property
Exhibit B - Bill of Sale and Assignment
Exhibit C - Certificate of Non-Foreign Status
Exhibit D - Closing Certificate
Exhibit E - Special Warranty Deed
Exhibit F - Permitted Exceptions
Exhibit G - Exchange Personal Property
Exhibit H - Intentionally Left Blank
Exhibit I - Seller's Personal Property
Exhibit J - Allocation of Exchange Value
Exhibit K - Survey Certificate
Disclosure Schedule
24
<PAGE> 28
EXHIBITS
TO
AGREEMENT OF SALE AND PURCHASE
BY AND BETWEEN
HAVENWYCK HOSPITAL, INC.
AND
MICHIGAN PSYCHIATRIC SERVICES, INC.
AND
CAPSTONE CAPITAL CORPORATION
25
<PAGE> 29
EXHIBIT A
PROPERTY DESCRIPTION
(Parcel 1)
Situated in the City of Auburn Hills, Oakland County, Michigan, described as:
Part of the Northwest 1/4 of Section 23, Town 3 North, Range 10 East, being more
particularly described as follows: Beginning at a point which is North 00
degrees 13 minutes 10 seconds East 1360.94 feet along the West line of Section
23, which is also the East line of Assessor's Plat No. 104 (liber 48, page 26
and 26a, Oakland County Records) from the West 1/4 corner of Section 23, Town 3
North, Range 10 East; thence along the West line of Section 23, 897.98 feet;
thence North 89 degrees 00 minutes 00 seconds East 270.00 feet; thence South 65
degrees 09 minutes 27 seconds East 538.14 feet; thence South 39 degrees 10
minutes 58 seconds East 292.62 feet; thence South 01 degrees 26 minutes 00
seconds West 135.00 feet; thence along the center line of Mt. Clemens Road
(University Drive), Southwesterly 177.16 feet along a curve concave curve to the
Northwest (Radius of 1084.04 feet, central angle 09 degrees 21 minutes 50
seconds, long chord bears South 67 degrees 41 minutes 35 seconds West 176.97
feet), and South 72 degrees 22 minutes 30 seconds West 817.91 feet to the point
of beginning.
Excepting the following described parcel for University Drive Right-of-Way.
Beginning at a point which is North 00 degrees 13 minutes 10 seconds East,
1360.94 feet along the West line of said Section 23, which is also the east line
of Assessor's Plat No. 104 (liber 48, page 26 and 26a, Oakland County Records)
from the West 1/4 corner of said Section 23; thence continuing along the West
line of said Section 23, North 00 degrees 13 minutes 10 seconds East 63.14 feet;
thence North 72 degrees 04 minutes 17 seconds East 867.83 feet; thence 128.76
feet along the arc of a curve to the left having a radius of 825.00 feet passing
through a central angle of 08 degrees 56 minutes 32 seconds with a long chord
bearing of North 67 degrees 36 minutes 01 seconds, East 128.63 feet; thence
South 01 degrees 26 minutes 00 seconds West, 64.50 feet; thence 177.16 feet
along the arc of a curve to the right having a radius of 1084.04 feet passing
through a central angle of 09 degrees 21 minutes 50 seconds with a long chord
bearing of South 67 degrees 41 minutes 35 seconds West, 176.97 feet; thence
South 72 degrees 22 minutes 30 seconds West, 817.91 feet to the point of
beginning.
Parcel Identification No. 14-23-101-007
Commonly known as: 1525 University Drive
26
<PAGE> 30
(Parcel 2)
Situated in the City of Auburn Hills, Oakland County, Michigan, described as:
Part of the Northwest 1/4 of Section 23, Town 3 North, Range 10 East, described
as beginning at a point in the center line of Mt. Clemens Road located North 00
degrees 13 minutes 10 seconds East 1360.94 feet along the West line of Section
23, which is also the East line of Assessor's Plat No. 104 and North 72 degrees
22 minutes 30 seconds East 751.66 feet along the center line of Mt. Clemens Road
from the West 1/4 corner of said Section 23; thence from said point of beginning
North 72 degrees 22 minutes 30 seconds East 66.25 feet along the centerline of
Mt. Clemens Road; thence on a curve to the left (radius 1084.04) feet, delta
angle 9 degrees 46 minutes 41 seconds, Long Chord North 67 degrees 29 minutes 09
seconds East 184.78 feet) an arc distance of 185.00 feet along the center line
of Mt. Clemens Road; thence South 26 degrees 21 minutes 20 seconds East 281.15
feet; thence South 61 degrees 44 minutes 10 seconds West 205.78 feet to the
center line of Doris Road; thence North 34 degrees 27 minutes 10 seconds West
313.56 feet along the center line of Doris Road to the point beginning. Subject
to the rights of the public and of any governmental unit in any part thereof
taken, used or deeded for street, road or highway purposes.
Containing 1.520 acres more or less.
Parcel Identification No. 14-23-102-001
Commonly known as: 1360 Doris Road
(Parcel 3)
The East 190.75 feet of Lot 1 and all of Lot 2, Assessor's Plat No. 104 as
recorded in Liber 48, Pages 26 and 26a of Plats, Oakland County Records, more
particularly described as: Beginning at the Southeast corner of Lot 2; thence
South 69 degrees 39 minutes 05 seconds West along the centerline of University
Drive 540.97 feet; thence North 01 degrees 40 minutes 58 seconds West 1,472.03
feet; thence North 88 degrees 14 minutes 06 seconds East 512.52 feet to a point
on the East line of Section 23; thence along said section line South 01 degrees
40 minutes 58 seconds East 1,299.64 feet to the point of beginning.
Excepting the following 2 parcels for University Drive Right-of-Way:
Commencing at the Southeasterly corner of Lot 1, "Assessor's Plat No. 104",
subdivision of part of the Northeast 1/4 and part of the Southeast 1/4, Section
22, Town 3 North, Range 10 East, City of Pontiac, Oakland County, Michigan and
recorded in Liber 48 of Plats, Pages 26, and 26a, Oakland County Records, said
Southeasterly corner being on the centerline of University Drive (variable
width); thence North 01 degrees 40 minutes 58 seconds West, 34.83 feet along the
Easterly line of said Lot 1, also being the Westerly line of Lot 2 of said
"Assessor's Plat Not 104", to the point of beginning; thence South 69 degrees 39
minutes 05 seconds West 201.34 along the existing Northwesterly Right-of-Way
line of University Drive; thence North 01 degrees 40 minutes 58 seconds West
28.50 feet along the Westerly line of the Easterly 190.75 feet of said Lot 1;
thence North 69 degrees 39 minutes 05 seconds East 201.34 feet; thence South 01
degrees 40 minutes 58 seconds East 28.50 feet along said Easterly line of Lot 1
to the
27
<PAGE> 31
point of beginning. Being a part of said Lot 1, also being 27.00 feet in width
and containing 5,436 square feet of land. Also being subject to easements and
restrictions of record, if any.
Commencing at the Southwesterly corner of Lot 2, "Assessor's Plat No. 104" a
subdivision of part of the Northeast 1/4 and part of the Southeast 1/4, Section
22, Town 3 North, Range 10 East, City of Pontiac, Oakland County, Michigan and
recorded in Liber 48 of Plats, Pages 26 and 26a, Oakland County Records, said
Southwesterly corner being on the centerline of University Drive (variable
width); thence North 01 degrees 40 minutes 58 seconds West, 34.83 feet along the
Westerly line of said Lot 2, also being the Easterly line of Lot 1 of said
"Assessor's Plat No. 104" to the point of beginning; thence continuing North 01
degrees 40 minutes 58 seconds East 28.50 feet along said Westerly line of Lot 2;
thence North 69 degrees 39 minutes 05 seconds East 339.63 feet; thence South 01
degrees 40 minutes 58 seconds East 28.50 feet along the Easterly line of said
Lot 2, also being the Easterly line of said "Assessor's Plat No. 104", also
being the East line of said Section 22, also being the Easterly limits of the
City of Pontiac; thence South 69 degrees 39 minutes 05 seconds West, 339.63 feet
along the existing Northwesterly Right- of-Way line of University Drive to the
point of beginning. Being a part of said Lot 2, also being 27.00 feet in width
and containing 9.170 square feet of land. Also being subject to easements and
restrictions of record, if any.
Subject to the riparian rights of the public in Galloway Lake.
28
<PAGE> 32
EXHIBIT A-1
REAL PROPERTY DESCRIPTION - EXCHANGE PROPERTY
That part of the East half of the Northwest quarter of the Northeast quarter of
Section 16, Township 1 North, Range 5 East of the Gila and Salt River Base and
Meridian, Maricopa County, Arizona, described as follows:
Commencing at the Northeast corner of said Section 16, thence South 88 degrees
40 minutes 15 seconds West, 1253.68 feet to the Northeast corner of said East
half of the Northwest quarter of the Northeast quarter and the point of
beginning;
Thence South 00 degrees 10 minutes 08 seconds East, 698.01 feet along the East
line of said Northwest quarter of the Northeast quarter of the Northwesterly
Right-of-Way line of those certain premises described in instrument recorded in
Docket 9044, Page 917, records of Maricopa County, Arizona;
Thence along said Northwesterly Right-of-Way along a curve to the left having a
radius of 470.74 feet, a delta of 32 degrees 30 minutes 03 seconds, and a chord
bearing and distance of South 35 degrees 19 minutes 23 seconds West, 263.46
feet, to a Point of Spiral Curve;
Thence continuing along said Northwesterly Right-of-Way, along said spiral curve
to the left, having an "A" of 10 and a chord bearing and distance of South 14
degrees 10 minutes 49 seconds West, 115.49 feet, to a Point of Curve;
Thence continuing along said Northwesterly Right-of-Way along a curve to the
left having a radius of 3183.02 feet a delta of 00 degrees 52 minutes 34 seconds
and a chord bearing and distance of South 10 degrees 25 minutes 43 seconds West,
48.66 feet;
Thence along a non-tangent line, North 12 degrees 58 minutes 08 seconds West
(North 12 degrees 43 minutes West, Record) 381.00 feet to a point on the South
line of the North 695.00 feet of said Northwest quarter of the Northeast quarter
said point being South 88 degrees 40 minutes 15 seconds West (Record South 88
degrees 47 minutes West), 275.00 feet from the East line of said Northwest
quarter of the Northeast quarter;
Thence South 88 degrees 40 minutes 15 seconds West, 349.01 feet along said South
line of the North 695.0 feet;
Thence North 00 degrees 09 minutes 15 seconds West 695.15 feet, along a line
3.00 feet East of and parallel to the West line of said East half of the
Northwest quarter of the Northeast quarter to a point on the North line of said
Section 16;
Thence North 88 degrees 40 minutes 15 seconds East, 623.84 feet along the North
line of said Section 16 to the Point of Beginning;
29
<PAGE> 33
EXCEPT the following described parcel:
Commencing at the Northeast Corner of Section 16, Township 1 North, Range 5
East; Thence South 88 degrees 40 minutes 15 seconds West continuing along the
North line of said Section 16, a distance of 1,253.66 feet to the point of
beginning;
Thence south 88 degrees 40 minutes 15 seconds West continuing along the North
line of said Section 16, a distance of 623.83 feet;
Thence South 00 degrees, 10 minutes three seconds East a distance of 162.62
feet;
Thence North 64 degrees 41 minutes 35 seconds East a distance of 196.89 feet;
Thence North 88 degrees 31 minutes 01 seconds East a distance of 445.59 feet;
Thence North 00 degrees 10 minutes 33 seconds West a distance of 81.40 feet to
the point of beginning.
30
<PAGE> 34
EXHIBIT B
BILL OF SALE AND ASSIGNMENT
STATE OF MICHIGAN )
:
OAKLAND COUNTY )
KNOW ALL MEN BY THESE PRESENTS THAT, HAVENWYCK HOSPITAL, INC., a
Michigan corporation, and MICHIGAN PSYCHIATRIC SERVICES, INC., a Michigan
corporation (collectively, "Seller"), for and in consideration of the sum of
$10.00 and other good and valuable consideration to it in hand paid by CAPSTONE
CAPITAL CORPORATION, a Maryland corporation ("Purchaser") has granted, sold,
assigned, transferred, conveyed, and delivered and does by these presents grant,
sell, assign, transfer, convey, and deliver unto the said Purchaser, all of
Seller's right, title and interest in and to the following described properties,
rights and interests located on, affixed to, and/or arising or used in
connection with that certain real property described in EXHIBIT A attached to
that certain Agreement of Sale and Purchase dated September __, 1998 by and
between Seller and Purchaser (the "Purchase Agreement") and incorporated herein
for all purposes (hereinafter referred to as the "Real Property" as defined in
the Purchase Agreement):
To the extent permitted or required by law, all Permits (as
defined in the Purchase Agreement) required in connection with the
ownership, planning, development, construction, use, operation or
maintenance of the Real Property or the transfer thereof from Seller to
Purchaser.
All of the Property (as defined in the Purchase Agreement)
which is not deemed to be real property.
TO HAVE AND TO HOLD the foregoing property unto the said Purchaser, its
successors and assigns, forever, and Seller does hereby bind itself and its
successors to warrant and forever defend, all and singular, the assigned Permits
and said property unto the said Purchaser, its successors and assigns, against
every person whomsoever lawfully claiming or to claim the same, or any part
thereof by, through or under Seller, but not otherwise. Seller and its
successors hereby warrants, represents, covenants and agrees with Purchaser as
follows:
(i) That Seller is the owner of the foregoing property, which property
is free and clear of any and all liens, security interests or other encumbrances
except the Permitted Exceptions (as defined in the Agreement) and attached
hereto as Schedule A and incorporated herein by reference for all purposes, and
this assignment is made and accepted expressly subject to the matters set forth
on EXHIBIT F attached to the Purchase Agreement;
<PAGE> 35
(ii) That Seller shall indemnify and hold harmless Purchaser from and
against any and all liability, loss, damage, cost or expense, including
attorneys' fees, which Purchaser may suffer or incur by reason of any act or
cause of action occurring or accruing prior to the effective date hereof and
arising out of the ownership and/or operation of the Property by Seller, except
for (A) any obligations expressly assumed hereunder by Purchaser; (B) any
liability, loss, damage, cost or expense arising out of actions of Purchaser; or
(C) any matter set forth on Schedule A.
(iii) That Purchaser shall indemnify and hold harmless Seller from and
against any and all liability, loss, damage, cost or expense, including
attorneys' fees, which Seller may suffer or incur by reason of any act or cause
of action occurring or accruing subsequent to the effective date hereof and
arising out of the ownership and/or operation of the Property by Purchaser,
except (A) any obligations which are expressly retained by Seller pursuant to
the terms and provisions of a written agreement with Purchaser, and (B) any
liability, loss, damage, cost or expense arising out of the actions of Seller.
The agreements, covenants, warranties and representations herein set
forth shall be binding upon and shall inure to the benefit of Seller and
Purchaser and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Bill of Sale
and Assignment to be executed effective as of September __, 1998.
SELLER:
MICHIGAN PSYCHIATRIC SERVICES, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
HAVENWYCK HOSPITAL, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
2
<PAGE> 36
PURCHASER:
CAPSTONE CAPITAL CORPORATION
By
---------------------------------------
John W. McRoberts
President
3
<PAGE> 37
EXHIBIT C
CERTIFICATE OF NON-FOREIGN STATUS
STATE OF ________ )
:
________________ COUNTY )
KNOW ALL MEN BY THESE PRESENTS THAT BEFORE ME, the undersigned
authority, on this day personally appeared ________________________ ("Affiant"),
________________________ of HAVENWYCK HOSPITAL, INC., a Michigan corporation
("Seller"), who after being duly sworn, upon Seller's oath did depose and state
under penalty of perjury that for purposes of Section 1445 of the Internal
Revenue Code of 1986, as amended, in connection with the sale, transfer and
conveyance of that certain property located in Oakland County, Michigan and more
particularly described on EXHIBIT A attached hereto and incorporated herein for
all purposes (the "Property"), and in order to inform CAPSTONE CAPITAL
CORPORATION, a Maryland corporation ("Purchaser") that withholding of tax is not
required upon the disposition of the Property by Seller:
(i) that Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as these terms are defined in the Internal
Revenue Code and Income Tax Regulations);
(ii) that Seller's United States taxpayer identification number is
38-2409580;
(iii) that Seller's address is One Alhambra Plaza, Suite 750, Coral
Gables, Florida 33134; and
(iv) that Seller understands that this Affidavit may be disclosed to
the Internal Revenue Service by Purchaser and that any false statement contained
herein could be punishable by fine, imprisonment or both.
Under penalties of perjury Affiant declares that he has examined this
Affidavit, that to the best of his knowledge and belief it is true, correct and
complete, and that Affiant has the authority to sign this Affidavit on behalf of
Seller.
Dated as of September ____, 1998.
4
<PAGE> 38
HAVENWYCK HOSPITAL, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
STATE OF ________ )
________________ COUNTY )
I, the undersigned authority, a Notary Public in and for said county in
said state, hereby certify that ________________________, whose name as
________________ of HAVENWYCK HOSPITAL, INC., a Michigan corporation, is signed
to the foregoing instrument and who is known to me, acknowledged before me on
this day that, being informed of the contents of the said instrument, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said corporation.
GIVEN under my hand and seal, this _____ day of ____________________,
1998.
[NOTARIAL SEAL] ----------------------------------------
Notary Public
My Commission Expires __________________
5
<PAGE> 39
STATE OF _______ )
:
________________ COUNTY )
KNOW ALL MEN BY THESE PRESENTS THAT BEFORE ME, the undersigned
authority, on this day personally appeared ________________________ ("Affiant"),
________________________ of MICHIGAN PSYCHIATRIC SERVICES, INC., a Michigan
corporation ("Seller"), who after being duly sworn, upon Seller's oath did
depose and state under penalty of perjury that for purposes of Section 1445 of
the Internal Revenue Code of 1986, as amended, in connection with the sale,
transfer and conveyance of that certain property located in Oakland County,
Michigan and more particularly described on EXHIBIT A attached hereto and
incorporated herein for all purposes (the "Property"), and in order to inform
CAPSTONE CAPITAL CORPORATION, a Maryland corporation ("Purchaser") that
withholding of tax is not required upon the disposition of the Property by
Seller:
(i) that Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as these terms are defined in the Internal
Revenue Code and Income Tax Regulations);
(ii) that Seller's United States taxpayer identification number is
38-2423002._____________;
(iii) that Seller's address is One Alhambra Plaza, Suite 750, Coral
Gables, Florida 33134; and
(iv) that Seller understands that this Affidavit may be disclosed to
the Internal Revenue Service by Purchaser and that any false statement contained
herein could be punishable by fine, imprisonment or both.
Under penalties of perjury Affiant declares that he has examined this
Affidavit, that to the best of his knowledge and belief it is true, correct and
complete, and that Affiant has the authority to sign this Affidavit on behalf of
Seller.
Dated as of September ____, 1998.
MICHIGAN PSYCHIATRIC SERVICES, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
6
<PAGE> 40
STATE OF ________ )
__________COUNTY )
I, the undersigned authority, a Notary Public in and for said county in
said state, hereby certify that ________________________, whose name as
________________ of MICHIGAN PSYCHIATRIC SERVICES, INC., a Delaware corporation,
is signed to the foregoing instrument and who is known to me, acknowledged
before me on this day that, being informed of the contents of the said
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
GIVEN under my hand and seal, this _____ day of ____________________,
1998.
[NOTARIAL SEAL] --------------------------------------------
Notary Public
My Commission Expires ______________________
7
<PAGE> 41
EXHIBIT D
CLOSING CERTIFICATE
The undersigned hereby certifies that the representations and
warranties contained in Article 6 of that certain Agreement of Sale and Purchase
(the "Agreement") dated September __, 1998 by and between MICHIGAN PSYCHIATRIC
SERVICES, INC., a Delaware corporation ("Seller"), and CAPSTONE CAPITAL
CORPORATION, a Maryland corporation ("Purchaser"), which representations and
warranties are incorporated herein as though set out in full herein, are true to
Seller's knowledge, except with respect to matters which have been disclosed on
the Disclosure Schedule of the Agreement, as currently in effect and correct as
of the date hereof, shall survive the consummation of the purchase and sale
transaction as contemplated by and for the time period provided in the Agreement
and shall not be deemed to merge upon the acceptance of the deed delivered in
connection with the consummation of such purchase and sale transaction.
This certificate is given to Purchaser with the realization and
understanding that all matters referenced above are material to the decision of
Purchaser to close said sale and purchase this date and Purchaser is acting in
reliance thereon.
Dated as of September _____, 1998.
MICHIGAN PSYCHIATRIC SERVICES, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
HAVENWYCK HOSPITAL, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
8
<PAGE> 42
STATE OF _______ )
________________ COUNTY )
I, the undersigned authority, a Notary Public in and for said county in
said state, hereby certify that ________________________, whose name as
________________ of MICHIGAN PSYCHIATRIC SERVICES, INC., a Delaware corporation,
is signed to the foregoing instrument and who is known to me, acknowledged
before me on this day that, being informed of the contents of the said
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
GIVEN under my hand and seal, this _____ day of ____________________,
1998.
[NOTARIAL SEAL] ------------------------------------------
Notary Public
My Commission Expires ____________________
9
<PAGE> 43
EXHIBIT E
SPECIAL WARRANTY DEED
STATE OF MICHIGAN )
:
OAKLAND COUNTY )
KNOW ALL MEN BY THESE PRESENTS, that________________________________, a
Michigan corporation (herein called "Grantor"), for and in consideration of the
sum of $10.00, and other good and valuable consideration paid to Grantor by
CAPSTONE CAPITAL CORPORATION, a Maryland corporation (herein called "Grantee"),
the receipt of which is hereby acknowledged, does hereby grant, sell, bargain,
convey, assign, and deliver to Grantee the real property in the City of
____________, Oakland County, Michigan, as more particularly described in
EXHIBIT A attached hereto and made a part hereof, together with all and singular
rights and appurtenances pertaining thereto (all of such real property, rights,
and appurtenances being herein called the "Property"), subject, however, to the
liens, easements, and other matters set forth in EXHIBIT B attached hereto and
made a part hereof, and any other matters affecting the Property and appearing
of record in the real property records of Oakland County, Michigan (all of such
liens, easements, and other matters being herein called the "Permitted
Exceptions"). Grantor grants to Grantee the right to make all of the division(s)
under section 108 of the Land Division Act, Act. No. 288 of the Public Acts of
1967. The Property may be located within the vicinity of farm land or a farm
operation. Generally accepted agricultural and management practices which may
generate noise, dust, odors, and other associated conditions may be used and are
protected by the Michigan Right to Farm Act.
TO HAVE AND TO HOLD the Property unto Grantee, its heirs, successors,
and assigns forever, and Grantor does hereby bind itself and its heirs,
successors, and assigns to warrant and forever defend all and singular the
Property unto Grantee, its heirs, successors, and assigns, against every person
whomsoever lawfully claiming, or to claim the same, or any part thereof, by,
through or under Grantor and subject only to the Permitted Exceptions.
IN WITNESS WHEREOF, this Special Warranty Deed is executed by Grantor
as of September __, 1998.
1
<PAGE> 44
WITNESS GRANTOR
- ------------------------------ -----------------------------------
Name
WITNESS
By:
----------------------------------------
- ------------------------------ Name:
Name --------------------------------------
Title:
-------------------------------------
STATE OF ________ )
________________ COUNTY )
I, the undersigned authority, a Notary Public in and for said county in
said state, hereby certify that ________________________, whose name as
________________ of a Michigan corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the said instrument, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
GIVEN under my hand and seal, this _____ day of ____________________,
1998.
[NOTARIAL SEAL] ----------------------------------------------
Notary Public
My Commission Expires ________________________
2
<PAGE> 45
EXHIBIT F
PERMITTED EXCEPTIONS
1. Payment of any taxes not yet due and payable.
2. Subject to that certain Right-of-Way granted to the City of Auburn
Hills over the Northwesterly 10.30 feet of the Southeasterly 60.30 feet
of Parcel 1, bordering University Drive, as more fully described in an
unrecorded Quit Claim Deed wherein Havenwyck Hospital, Inc. is the
grantor, dated May 25, 1995.
3. Subject to that certain Right-of-Way granted to the City of Pontiac
over the Northwesterly 27 feet of the Southeasterly 60 feet of Parcel
3, bordering University Drive, as more fully described in an unrecorded
Warranty Deed wherein Michigan Psychiatric Services, Inc., a/k/a
Havenwyck Hospital, a Michigan Corporation is the grantor, dated
December 5, 1997.
4. Rights of the public and of any governmental unit in any part thereof
taken, used or deeded for street, road or highway purposes for Doris
Road.
(Parcel 2)
5. Rights, if any, of riparian owners and the public to use the surface,
sub-surface and bed of Galloway Lake for purposes of navigation and
recreation.
(Parcels 1 and 3)
6. Any adverse claims based on the assertion that the bed of Galloway Lake
has changed location as a result of other than natural causes.
(Parcels 1 and 3)
7. Easement for and right to erect, construct and maintain a line of poles
and ancillary equipment vested in the Michigan State Telephone Company
by instrument dated February 1, 1917 and recorded February 28, 1917 in
liber 3 of Miscellaneous Records, page 232.
(Parcels 1 and 2)
8. Subject to easement for highway purposes as to University Drive and the
terms, conditions and provisions contained therein vested in the Board
of County Road Commissioners of the County of Oakland by instrument
dated October 22, 1952 and recorded December 4, 1952 in liber 2943,
page 32.
(Parcels 1 and 2)
3
<PAGE> 46
9. Easement for the installation, repair, replacement and maintenance of
sanitary sewer lines vested in the Charter township of Pontiac, a
Michigan constitutional corporation, by instrument dated September 3,
1982 and recorded September 28, 1982 in liber 8248, page 127.
(Parcel 1)
10. Easement for the installation, repair, replacement and maintenance of
watermain lines vested in the Charter Township of Pontiac, a Michigan
constitutional corporation, by instrument dated September 3, 1982 and
recorded September 28, 1982 in liber 8248, page 129.
(Parcel 1)
11. Easement for the construction, operation, maintenance, repair and/or
replacement of the Joachim Drain and the terms, conditions and
provisions contained therein vested in the Joachim Drain Drainage
District by instrument dated April 26, 1983 and recorded May 25, 1983
in liber 8382, page 750 and by instrument dated April 26, 1983 and
recorded May 25, 1983 in liber 8382, page 755.
(Parcel 1)
12. A portion of subject property lies within a 100 year flood plain
contour established by D.N.R. (elevation 909.60), and Galloway Drain,
which contains no improvements, as shown on survey of Johnson &
Anderson, Inc., dated October 18, 1988 and last revised on September
15, 1997, Job No. 12917.
NOTE: The above is given for informational purposes only and will not
be shown on final policy.
(Parcels 1 and 3)
13. The following matters as disclosed by survey prepared by Johnson &
Anderson, Inc., dated October 18, 1988 and last revised on September
15, 1997, Job No. 12917, latest revision September 10, 1998.
(Parcel 1)
a) concrete curb at the West side of subject property.
b) unrecorded 10 foot wide easement given to the City of Auburn Hills.
c) existing 8" water main reserved over subject property.
d) existing 10" sanitary sewer line reserved over subject property.
e) sanitary manhole(s) reserved over subject property.
4
<PAGE> 47
f) existing storm sewers and manholes reserved over subject property.
g) 6' chain link fence encroaching on University Drive Right of Way.
14. Rights, if any, of others to the use of existing bituminous parking at
West side of Parcel 1 as disclosed by survey of Johnson & Anderson,
Inc., dated October 18, 1988 and last revised on September 15, 1997,
Job No. 12917, latest revision September 10, 1998.
(Parcel 1)
15. Gas main, water main, hydrant, utility poles and storm drain as
disclosed on survey prepared by Johnson & Anderson, Inc., being Job No.
12919 dated October 18, 1988, latest revision September 10, 1998.
(Parcel 2)
16. Encroachment of bituminous parking and curb over the property adjoining
Parcel 2 to the South, disclosed in the survey prepared by Johnson &
Anderson, Inc., Job No. 12918, dated October 18, 1988.
(Parcel 2)
17. Easement for the construction and maintenance of sewers, drains or
water mains vested in the City of Pontiac, a municipal corporation, by
instrument dated December 30, 1961 and recorded January 22, 1962 in
liber 4267, page 475 and by instrument dated December 30, 1961,
recorded January 22, 1962 in liber 4267, page 479.
(Parcel 3)
18. Agreement with easements and restrictions in favor of Michigan Bell
Telephone Company for the installation and maintenance of communication
facilities and ancillary equipment as contained in the instrument
recorded in liber 4897, page 114.
(Parcel 3)
19. Easement for the construction, operation, maintenance, repair and/or
replacement of the Joachim Relief Drains and the terms, conditions and
provisions contained therein vested in the Joachim Relief Drains
Drainage District by instrument dated April 13, 1972 and recorded May
15, 1972 in liber 5866, page 317, and by instrument recorded on in
liber 8382, page 755.
(Parcel 3)
5
<PAGE> 48
20. Easement for the construction, operation, maintenance, repair and/or
replacement of the Joachim Drain and the terms, conditions and
provisions contained therein vested in the Joachim Drain Drainage
District by instrument dated July 19, 1983 and recorded August 10, 1983
in liber 8440, page 5 and by the instrument dated July 18, 1983,
recorded August 10, 1983 in liber 8440, page 12, and by instrument
recorded _________ in liber 8413, page 700.
(Parcel 3)
21. Easement for Drainage Purposes granted to the City of Auburn Hills, as
more fully described in an unrecorded Quit Claim Deed wherein Havenwyck
Hospital is the grantor, dated May 25, 1995.
(Parcel 3)
22. Rights of others to use the bituminous drive for ingress and egress to
and from the Havenwyck Hospital parking lot, if any, as disclosed on
survey prepared by Johnson & Anderson, Inc., Job No. 12918, dated
October 18, 1988, latest revision September 10, 1998.
(Parcel 3)
23. Encroachment of bituminous parking lot on the Easterly portion of the
property as disclosed on survey prepared by Johnson & Anderson, Inc.,
Job No. 12918, dated October 18, 1988, last revision September 10,
1998.
(Parcel 3)
24. Rights or claims of parties in possession not shown of record.
25. Should the deed required in schedule B, Section I, Paragraph 4,5 and 6,
contain the statement provided for in Section 109 (3) of the
Subdivision Control Act of 1967, as amended, the policy(s) to be issued
pursuant to this Commitment will contain the following exception:
Terms, conditions and provisions contained in the instrument recorded
___________ in Liber _______, Page __, as same pertain to the transfer
of divisions under Section 109(3) of the Subdivision Control Act of
1967, as amended.
26. Liens for any tax and/or assessment which become due and payable on or
after the effective date of this Commitment.
27. Lease between Havenwyck Hospital, Inc. and Mamoun DabGaugh, M.D., dated
January 4, 1997.
28. Lease between Havenwyck Hospital, Inc. and Srinivasa R. Kodali, M.D.,
dated January 26, 1996.
29. Lease between Havenwyck Hospital, Inc. and Doopyo Hong, M.D., dated
dated January 8, 1993.
29. Lease between Havenwyck Hospital, Inc. and James W. Johnson, M.D.,
dated January 8, 1996.
6
<PAGE> 49
<PAGE> 50
EXHIBIT G
EXCHANGE PERSONAL PROPERTY
All property covered by that certain Bill of Sale dated the date hereof from
Capstone to Mesa Psychiatric Hospital, Inc.
7
<PAGE> 51
EXHIBIT H
INTENTIONALLY LEFT BLANK
8
<PAGE> 52
EXHIBIT I
SELLER'S PERSONAL PROPERTY
NONE.
<PAGE> 53
EXHIBIT J
ALLOCATION OF EXCHANGE VALUE
PERSONAL PROPERTY $ 0.00
REAL PROPERTY $ 9,850,000.00
<PAGE> 54
EXHIBIT K
SURVEYOR'S CERTIFICATE
Date ____________________
This survey is made for the benefit of Capstone Capital Corporation,
________________________ and Commonwealth Land Title Insurance Company.
I, ______________________________, Registered Land Surveyor do hereby
certify to the aforesaid parties, as of the date set forth above that I have
made a careful survey of a tract of land described as follows:
legal description
I further certify that:
1. The accompanying survey was made on the ground and correctly shows the
location of all buildings, structures and other improvements situated on the
above premises; the print of survey reflects boundary lines of the described
property which "close" by mathematical calculation; the courses and distances
shown on the survey are correct; the size and location of the buildings and
improvements are correct as shown and are all within the boundary lines of the
property; there are no easements, encroachments or rights-of-way of which the
undersigned has been advised, or appearing from a careful physical inspection of
the property, other than those shown and depicted on the survey; and that the
property described hereon is the same as the property described in
____________________ Commitment Number ____________________, dated
____________________, and that all easements, covenants and restrictions
referenced in said title commitment have been plotted hereon or otherwise noted
as to their effect on the subject property; that there are no building
encroachments on the subject property or upon adjacent land abutting said
property unless shown hereon.
2. This map or plat and the survey on which it is based were made in
accordance with "Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys," jointly establishing and adopted by ALTA and ACSM in 1992 and meets
the accuracy requirements of an Urban Survey, as defined therein, and including
Items 1-4, 6-11 and 13 in Table A contained therein.
3. Said described property is located within an area having a Zone
Designation _____ by the Federal Emergency Management Agency (FEMA), on Flood
Insurance Rate Map Number _____, in Oakland County, State of Michigan, which is
the current Flood Insurance Rate Map for the community in which said premises is
situated.
4. All set back, side yard and rear yard lines shown on the recorded
plat or set forth in the applicable zoning ordinance are shown on the survey.
5. The property has access to ____________________, a dedicated public
street or highway.
<PAGE> 55
6. The number of striped parking spaces on the property is _____.
-------------------------------------
Registered Land Surveyor No. ________
<PAGE> 56
DISCLOSURE SCHEDULE
1. Asbestos Air Monitoring Report prepared by Michigan Environmental
Auditors, Inc. (Project Dates: September 10, 11 and 14, 1998).
2. Asbestos Inspection Report prepared by Michigan Environmental Auditors,
Inc. (Inspection Date: August 7, 1998).
3. Lead-Based Paint Inspection Report prepared by Michigan Environmental
Auditors, Inc. (Inspection Date: August 7, 1998).
4. Phase I Environmental Site Assessment prepared by Davis Environmental
Consulting, L.L.C. dated July 24, 1998.
5. Summary of Environmental Services, prepared by Michigan Environmental
Auditors, Inc., dated September 18, 1998.
<PAGE> 1
EXHIBIT 10.116
LEASE AGREEMENT
BETWEEN
CAPSTONE CAPITAL CORPORATION
AND
HAVENWYCK HOSPITAL, INC.
September 28, 1998
For
HAVENWYCK HOSPITAL AND RELATED PROPERTIES
1525 University Drive
Auburn Hills, Michigan
1333-1376 University Drive
Auburn Hills, Michigan
1360 Doris Road
Auburn Hills, Michigan
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 1 LEASED PROPERTY; TERM......................................................................1
ARTICLE 2 RENT.......................................................................................2
2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT...............................................2
2.2 CALCULATION OF INCREASES TO MINIMUM RENT...................................................2
2.3 ADDITIONAL CHARGES.........................................................................3
2.4 NET LEASE..................................................................................3
ARTICLE 3 IMPOSITIONS................................................................................3
3.1 PAYMENT OF IMPOSITIONS.....................................................................3
3.2 PRORATION OF IMPOSITIONS...................................................................4
3.3 UTILITY CHARGES............................................................................4
3.4 INSURANCE PREMIUMS.........................................................................4
ARTICLE 4 NO TERMINATION.............................................................................4
ARTICLE 5 OWNERSHIP OF LEASED PROPERTY ..............................................................5
5.1 OWNERSHIP OF THE PROPERTY..................................................................5
5.2 LESSEE'S PERSONAL PROPERTY.................................................................5
ARTICLE 6 CONDITION AND USE OF LEASED PROPERTY.......................................................5
6.1 CONDITION OF THE LEASED PROPERTY...........................................................5
6.2 USE OF THE LEASED PROPERTY.................................................................6
6.3 LESSOR TO GRANT EASEMENTS..................................................................6
6.4 REPAIRS OF THE LEASED PROPERTY BY LESSEE...................................................7
ARTICLE 7 LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS................................................7
7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS...........................................7
7.2 LEGAL REQUIREMENT COVENANTS................................................................7
ARTICLE 8 REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS...............................................7
8.1 MAINTENANCE AND REPAIR.....................................................................7
8.2 ENCROACHMENTS; RESTRICTIONS................................................................9
ARTICLE 9 CAPITAL ADDITIONS..........................................................................9
9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY...................................9
9.2 CAPITAL ADDITIONS FINANCED BY LESSEE......................................................10
9.3 CAPITAL ADDITIONS FINANCED BY LESSOR......................................................10
9.4 REMODELING AND NON-CAPITAL ADDITIONS......................................................12
9.5 SALVAGE...................................................................................12
ARTICLE 10 LIENS.....................................................................................12
ARTICLE 11 PERMITTED CONTESTS........................................................................13
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 12 INSURANCE.................................................................................13
12.1 GENERAL INSURANCE REQUIREMENTS............................................................13
12.2 REPLACEMENT COST..........................................................................15
12.3 ADDITIONAL INSURANCE......................................................................15
12.4 WAIVER OF SUBROGATION.....................................................................15
12.5 FORM OF INSURANCE.........................................................................15
12.6 CHANGE IN LIMITS..........................................................................15
12.7 BLANKET POLICY............................................................................16
12.8 NO SEPARATE INSURANCE.....................................................................16
12.9 INSURANCE FOR CONTRACTORS.................................................................16
ARTICLE 13 FIRE AND CASUALTY.........................................................................16
13.1 INSURANCE PROCEEDS........................................................................16
13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY INSURANCE.................17
13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY INSURANCE.............18
13.4 LESSEE'S PROPERTY.........................................................................19
13.5 RESTORATION OF LESSEE'S PROPERTY..........................................................19
13.6 NO ABATEMENT OF THE RENT..................................................................19
13.7 DAMAGE NEAR END OF TERM...................................................................19
13.8 PURCHASE OR SUBSTITUTION..................................................................19
13.9 WAIVER....................................................................................19
13.10 PRIORITY OF PURCHASE OPTION RIGHTS........................................................19
ARTICLE 14 CONDEMNATION..............................................................................20
14.1 PARTIES' RIGHTS AND OBLIGATIONS...........................................................20
14.2 TOTAL TAKING..............................................................................20
14.3 PARTIAL TAKING............................................................................20
14.4 RESTORATION...............................................................................21
14.5 AWARD DISTRIBUTION........................................................................21
14.6 TEMPORARY TAKING..........................................................................21
14.7 PURCHASE OR SUBSTITUTION..................................................................21
14.8 PRIORITY OF PURCHASE OPTION RIGHTS........................................................21
ARTICLE 15 DEFAULT...................................................................................22
15.1 EVENTS OF DEFAULT.........................................................................22
15.2 REMEDIES..................................................................................23
15.3 ADDITIONAL EXPENSES.......................................................................24
15.4 WAIVER....................................................................................24
15.5 APPLICATION OF FUNDS......................................................................24
15.6 NOTICES BY LESSOR.........................................................................25
ARTICLE 16 LESSOR'S RIGHT TO CURE....................................................................25
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 17 PURCHASE OF THE LEASED PROPERTY...........................................................25
ARTICLE 18 HOLDING OVER..............................................................................26
ARTICLE 19 ABANDONMENT; OBSOLESCENCE.................................................................26
19.1 DISCONTINUANCE OF OPERATIONS ON THE LEASED PROPERTY.......................................26
19.2 OBSOLESCENCE OF THE LEASED PROPERTY; OFFER TO PURCHASE....................................26
19.3 CONVEYANCE OF LEASED PROPERTY.............................................................27
19.4 OPTION TO PURCHASE........................................................................27
ARTICLE 20 SUBSTITUTION OF PROPERTY..................................................................27
20.1 SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY..........................................27
20.2 CONDITIONS TO SUBSTITUTION................................................................29
20.3 CONVEYANCE TO LESSEE......................................................................30
20.4 EXPENSES..................................................................................30
ARTICLE 21 RISK OF LOSS..............................................................................30
ARTICLE 22 INDEMNIFICATION...........................................................................30
ARTICLE 23 SUBLETTING AND ASSIGNMENT.................................................................31
23.1 SUBLETTING AND ASSIGNMENT.................................................................31
23.2 NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT.............................................31
23.3 SUBLEASE LIMITATION.......................................................................32
ARTICLE 24 OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS...........................................32
24.1 ESTOPPEL CERTIFICATE......................................................................32
24.2 FINANCIAL STATEMENTS AND CERTIFICATES.....................................................32
ARTICLE 25 INSPECTION................................................................................33
ARTICLE 26 QUIET ENJOYMENT...........................................................................33
ARTICLE 27 NOTICES...................................................................................34
ARTICLE 28 APPRAISAL.................................................................................35
ARTICLE 29 PURCHASE..................................................................................36
29.1 THIRD PARTY OFFER.........................................................................36
29.2 PROPOSED SALE.............................................................................36
ARTICLE 30 DEFAULT BY LESSOR.........................................................................37
30.1 DEFAULT BY LESSOR.........................................................................37
30.2 LESSEE'S RIGHT TO CURE....................................................................38
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 31 ARBITRATION...............................................................................38
31.1 CONTROVERSIES.............................................................................38
31.2 APPOINTMENT OF ARBITRATORS................................................................38
31.3 THIRD ARBITRATOR..........................................................................38
31.4 ARBITRATION PROCEDURE.....................................................................38
31.5 EXPENSES..................................................................................39
ARTICLE 32 FINANCING OF THE LEASED PROPERTY..........................................................39
ARTICLE 33 SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE.............................................39
ARTICLE 34 EXTENDED TERMS............................................................................40
ARTICLE 35 MISCELLANEOUS.............................................................................40
35.1 NO WAIVER.................................................................................40
35.2 REMEDIES CUMULATIVE.......................................................................40
35.3 SURRENDER.................................................................................40
35.4 NO MERGER OF TITLE........................................................................40
35.5 TRANSFERS BY LESSOR.......................................................................41
35.6 GENERAL...................................................................................41
35.7 MEMORANDUM OF LEASE.......................................................................41
35.8 TRANSFER OF LICENSES......................................................................41
ARTICLE 36 GLOSSARY OF TERMS.........................................................................41
</TABLE>
iv
<PAGE> 6
LEASE
THIS LEASE ("Lease") dated as of September __, 1998 is entered into by
and between CAPSTONE CAPITAL CORPORATION, a Maryland corporation, having its
principal office at 1000 Urban Center Drive, Suite 630, Birmingham, Alabama
35242 ("Lessor") and HAVENWYCK HOSPITAL, INC., a Michigan corporation, having
its principal office at c/o Ramsey Health Care, Inc., One Alhambra Plaza, Suite
750, Coral Gables, Florida 33134 ("Lessee").
ARTICLE 1
LEASED PROPERTY; TERM
---------------------
Upon and subject to the terms and conditions hereinafter set forth,
Lessor leases to Lessee and Lessee rents from Lessor all of Lessor's rights and
interest in and to the following real property (collectively, the "Leased
Property"):
(a) the real property more particularly described on EXHIBIT A attached
hereto together with all covenants, licenses, privileges and benefits thereto
belonging, and any easements, rights-of-way, rights of ingress and egress or
other interests of Lessor in, on or to any land, highway, street, road or
avenue, open or proposed, in, on, across, in front of, abutting or adjoining
such real property, including all strips and gores adjacent to or lying between
such real property and any adjacent real property (the "Land");
(b) all buildings, structures, Fixtures (as hereinafter defined) and
other improvements of every kind (including all alleyways and connecting
tunnels, crosswalks, sidewalks, landscaping, parking lots and structures and
roadways appurtenant to such buildings and structures presently or hereafter
situated upon the Land, and Capital Additions financed by Lessor (but
specifically excluding Capital Additions financed by Lessee), drainage and all
above-ground and underground utility structures) (collectively, the "Leased
Improvements");
(c) all permanently affixed equipment, machinery, fixtures and other
items of real and/or personal property, including all components thereof, now
and hereafter located in, on or used in connection with, and permanently affixed
to or incorporated into the Leased Improvements, including all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control, waste
disposal, air-cooling and air conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, carpet, moveable or immoveable
walls or partitions and built-in oxygen and vacuum systems, all of which are
hereby deemed by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto (collectively the
"Fixtures");
(d) to the extent permitted by law, all permits, approvals and other
intangible property or any interest therein now or hereafter owned or held by
Lessor in connection with the Leased Property including all contract rights,
agreements, trade names, water rights and reservations, zoning rights, business
licenses, warranties (including those relating to construction or fabrication)
related to the Leased Property or any part thereof; and
<PAGE> 7
(e) all site plans, surveys, soil and substrata studies, architectural
drawings, plans and specifications, engineering plans and studies, floor plans,
landscape plans, and other plans and studies that relate to the Land or the
Leased Improvements and are in Lessor's possession or control.
SUBJECT, HOWEVER, to the matters set forth on EXHIBIT B attached hereto (the
"Permitted Exceptions"), to have and to hold for a fixed term (the "Initial
Term") commencing on the date hereof (the "Commencement Date") and ending at
midnight on April 30, 2010.
ARTICLE 2
RENT
----
2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT. Lessee shall pay to
Lessor, without notice, demand, set off (except as set forth in Section 30.2 or
Article 32 hereof) or counterclaim, in advance in lawful money of the United
States of America, at Lessor's address set forth herein or at such other place
or to such other person, firms or corporations as Lessor from time to time may
designate in writing, Minimum Rent, as adjusted annually pursuant to Section
2.1(b) during the Term, as follows:
(a) MINIMUM RENT. Lessee will pay to Lessor as rent (as adjusted from
time to time in accordance with Section 2.1(b), the "Minimum Rent") for the
Leased Property the annual sum of $1,262,770, payable in advance in 12 equal,
consecutive monthly installments of $105,230.83, on the first day of each
calendar month of the Term. Minimum Rent shall be prorated as to any partial
month, and is subject to adjustment as provided in Sections 2.1(b), 9.3(b)(iv)
and 20.1 below; and
(b) INCREASES TO MINIMUM RENT. On April 12, 1999, and on each
anniversary of such date thereafter (each such annual date individually referred
to as the "Adjustment Date") throughout the remainder of the Initial Term and
any Extended Terms, the then-current Minimum Rent shall be increased annually
effective at such Adjustment Date (i) in the case of the first Adjustment Date,
by 93.889145% of the increase in the Consumer Price Index from April 12, 1997,
to the date immediately preceding the first Adjustment Date and, (ii) in the
case of each Adjustment Date thereafter, by 100% of the increase in the Consumer
Price Index from the immediately preceding Adjustment Date to the date
immediately preceding such Adjustment Date; provided that the increase on any
Adjustment Date shall not exceed three percent of the Minimum Rent in effect on
the date immediately preceding such Adjustment Date.
(c) PAYMENT OF MINIMUM RENT. All payments of Minimum Rent shall be made
in lawful money of the United States by wire transfer of same day funds to
Lessor's account #0000040999 at First Commercial Bank, Birmingham, Alabama, ABA
Routing #062003605, Attention: Todd Beard, with advice to John W. Tyson at (205)
967-2092 (or such other account or location specified by Lessor from time to
time in writing) on or before 2:00 p.m., Birmingham time, on any Business Day.
2.2 CALCULATION OF INCREASES TO MINIMUM RENT. On or about each
Adjustment Date, Lessor will calculate the increase in the Minimum Rent pursuant
to the provisions of Section 2.1(b) and will provide Lessee with written notice
of same.
2
<PAGE> 8
2.3 ADDITIONAL CHARGES. Lessee will also pay and discharge as and when
due (a) all other amounts, liabilities, obligations and Impositions, which
Lessee assumes or agrees to pay under this Lease including, to the extent
applicable, any condominium association dues, assessments or other charges, and
(b) in the event of any failure on the part of Lessee to pay any of those items
referred to in clause (a) above, Lessee will also promptly pay and discharge
every fine, penalty, interest and cost which may be added for non-payment or
late payment of such items (the items referred to in clauses (a) and (b) above
being referred to herein collectively as the "Additional Charges"), and Lessor
shall have all legal, equitable and contractual rights, powers and remedies
provided in this Lease, by statute or otherwise, in the case of non-payment of
the Additional Charges, as well as the Minimum Rent. If any installment of
Minimum Rent or Additional Charges (but only as to those Additional Charges
which are payable directly to Lessor) shall not be paid within ten days after
the date when due, Lessee will pay Lessor on demand, as Additional Charges,
interest (to the extent permitted by law) computed at the Overdue Rate on the
amount of such installment, from the due date when due to the date of payment in
full thereof. In the event Lessor provides Lessee with written notice of failure
to timely pay any installment of Minimum Rent or any Additional Charges pursuant
to Section 15.1(b) more than three times within any twelve-month period, Lessee
shall pay an administrative fee to Lessor in the amount of $500.00 for each
additional written notice Lessor gives pursuant to Section 15.1(b) during the
next twelve months. To the extent that Lessee pays any Additional Charges to
Lessor or the Facility Mortgagee pursuant to any requirement of this Lease,
Lessee shall be relieved of its obligation to pay such Additional Charges to the
entity to which such Additional Charges would otherwise be due. Additional
Charges shall be deemed Rent hereunder.
2.4 NET LEASE. The Rent shall be paid absolutely net to Lessor, so that
this Lease shall yield to Lessor the full amount of the installments of Minimum
Rent and the payments of Additional Charges throughout the Term but subject to
any provisions of this Lease which expressly provide for payments by Lessor or
the adjustment of the Rent or other charges.
ARTICLE 3
IMPOSITIONS
-----------
3.1 PAYMENT OF IMPOSITIONS. Subject to Article 11 relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible, and Lessee will promptly,
upon request, furnish to Lessor copies of official receipts or other
satisfactory proof evidencing such payments. Lessee's obligation to pay such
Impositions and the amount thereof shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Leased Property or any part
thereof. If any such Imposition may lawfully be paid in installments (whether or
not interest shall accrue on the unpaid balance of such Imposition), Lessee may
exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and, in such event, shall pay such
installments during the Term hereof as the same become due and before any fine,
penalty, premium, further interest or cost may be added thereto. Lessor, at its
expense, shall, to the extent permitted by applicable law, prepare and file all
tax returns and reports as may be required by governmental authorities in
respect of Lessor's net income, gross receipts, franchise taxes and taxes on its
capital stock. Lessee, at its expense, shall, to the extent permitted by
applicable laws and regulations, prepare and file all other tax returns and
reports in respect of any Imposition as may be required by governmental
authorities. If any refund shall be due from any taxing authority in respect of
any Imposition paid by Lessee, the same
3
<PAGE> 9
shall be paid over to or retained by Lessee if no Event of Default shall have
occurred hereunder and be continuing. Any such funds retained by Lessor due to
an Event of Default shall be applied as provided in Article 15. Lessor and
Lessee shall, upon request of the other, provide such data as is maintained by
the party to whom the request is made with respect to the Leased Property as may
be necessary to prepare any required returns and reports. In the event
governmental authorities classify any property covered by this Lease as personal
property, Lessee shall file all personal property tax returns in such
jurisdictions where filing is required. Lessor and Lessee will provide the other
party, upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal property. Where Lessor is
legally required to file personal property tax returns, and Lessee is obligated
for the same hereunder, Lessee will be provided with copies of assessment
notices in sufficient time for Lessee to file a protest. Lessee may, upon giving
30 days' prior written notice to Lessor, at Lessee's option and at Lessee's sole
cost and expense, protest, appeal, or institute such other proceedings as Lessee
may deem appropriate to effect a reduction of real estate or personal property
assessments and Lessor, if requested by Lessee and at Lessee's expense as
aforesaid, shall fully cooperate with Lessee in such protest, appeal, or other
action. Billings for reimbursement by Lessee to Lessor of personal property
taxes shall be accompanied by copies of an invoice therefor and payments thereof
which identify the personal property with respect to which such payments are
made. Lessor will cooperate with Lessee in order that Lessee may fulfill its
obligations hereunder, including the execution of any instruments or documents
reasonably requested by Lessee.
3.2 PRORATION OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be prorated between
Lessor and Lessee, whether or not such Imposition is imposed before or after
such termination, and Lessee's and Lessor's obligation to pay their respective
prorated shares thereof shall survive such termination.
3.3 UTILITY CHARGES. Lessee will, or will cause Tenants to, contract
for, in its own name, and will pay or cause to be paid all charges for,
electricity, power, gas, oil, water and other utilities used in the Leased
Property during the Term.
3.4 INSURANCE PREMIUMS. Lessee will contract for, in its own name, and
will pay or cause to be paid all premiums for, the insurance coverage required
to be maintained by Lessee pursuant to Article 12 during the Term.
ARTICLE 4
NO TERMINATION
--------------
Except as provided in this Lease, Lessee shall remain bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Lessor to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor and Lessee be
otherwise affected by reason of (a) any damage to, or destruction of, the Leased
Property or any portion thereof from whatever cause or any Taking of the Leased
Property or any portion thereof, except as otherwise provided in Articles 13 or
14, (b) the lawful or unlawful prohibition of, or restriction upon, Lessee's use
of the Leased Property, or any portion thereof, or the interference with such
use by any person, corporation, partnership or other entity, or by reason of
eviction by paramount title, (c) any claim which Lessee has or might have
against Lessor or by reason of any default or breach of any warranty by Lessor
under this Lease or any other
4
<PAGE> 10
agreement between Lessor and Lessee or to which Lessor and Lessee are parties,
(d) any bankruptcy, insolvency, reorganization, composition, readjustment,
liquidation, dissolution, winding up or other proceedings affecting Lessor or
any assignee or transferee of Lessor, or (e) for any other cause whatsoever
whether similar or dissimilar to any of the foregoing. Lessee hereby
specifically waives all rights arising from any occurrence whatsoever which may
now or hereafter be conferred upon it by law to (i) modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion
thereof, or (ii) entitle Lessee to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Lessee hereunder, except as
otherwise specifically provided in this Lease. The obligations of Lessor and
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim or seek any damages it may have against Lessor as a result of a breach by
Lessor of the terms of this Lease.
ARTICLE 5
OWNERSHIP OF LEASED PROPERTY
----------------------------
5.1 OWNERSHIP OF THE PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor and that Lessee has only the right to the
possession and use of the Leased Property upon the terms and conditions of this
Lease.
5.2 LESSEE'S PERSONAL PROPERTY. Lessee may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements any items of personal property,
and may remove, replace or substitute for the same from time to time in the
Ordinary Course of Business. Lessee shall provide and maintain during the entire
Term all such personal property as shall be necessary in order to operate the
Facility in compliance with all licensure and certification requirements, in
compliance with all applicable Legal Requirements and Insurance Requirements and
otherwise in accordance with customary practice in the industry for the Primary
Intended Use.
ARTICLE 6
CONDITION AND USE OF LEASED PROPERTY
------------------------------------
6.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise acquired knowledge of the condition of the Leased Property prior to
the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. LESSOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE,
SUITABILITY, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE,
OR AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT
BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES
THAT
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THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT IN
ALL RESPECTS.
6.2 USE OF THE LEASED PROPERTY.
(a) After the Commencement Date and during the entire Term, Lessee
shall use or cause to be used the Leased Property and the improvements thereon
as a licensed behavioral services facility providing diversified treatment
programs for adults and at-risk and troubled youth, including residential
out-patient and day treatment programs, and for such other uses as may be
necessary in connection with or incidental to such use (the "Primary Intended
Use"). Lessee shall not use the Leased Property or any portion thereof for any
other use without the prior written consent of Lessor, which consent shall not
be unreasonably withheld or delayed.
(b) Lessee covenants that it will obtain and maintain all material
approvals needed to use and operate the Leased Property and the Facility for the
Primary Intended Use in compliance with all applicable Legal Requirements.
(c) Lessee covenants and agrees that during the Term it will use its
reasonable best efforts to operate continuously the Leased Property in
accordance with its Primary Intended Use and to maintain its certifications for
reimbursement, if any, and licensure and its accreditation, if compliance with
accreditation standards is required to maintain the operations of the Facility
and if a failure to comply would adversely affect operations of the Facility.
(d) Lessee shall not commit or suffer to be committed any waste on the
Leased Property, or in the Facility or cause or permit any nuisance thereon.
(e) Lessee shall neither suffer nor permit the Leased Property or any
portion thereof, including any Capital Addition whether or not financed by
Lessor, to be used in such a manner as (i) is reasonably likely to impair
Lessor's estate therein or in any portion thereof, or (ii) is reasonably likely
to result in a claim or claims of adverse usage or adverse possession by the
public, as such, or of implied dedication of the Leased Property or any portion
thereof.
(f) Lessee will not utilize any Hazardous Materials on the Leased
Property except in accordance with applicable Legal Requirements and will not
permit any contamination which may require remediation under any applicable
Hazardous Materials Law. Lessee agrees not to dispose of any Hazardous Materials
or substances within the sewerage system of the Leased Property, and that it
will handle all "red bag" wastes in accordance with applicable Hazardous
Materials Laws.
6.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time, at the
request of Lessee and at Lessee's cost and expense, but subject to the approval
of Lessor (a) grant easements and other rights in the nature of easements, (b)
release existing easements or other rights in the nature of easements which are
for the benefit of the Leased Property, (c) dedicate or transfer unimproved
portions of the Leased Property for road, highway or other public purposes, (d)
execute petitions to have the Leased Property annexed to any municipal
corporation or utility district, (e) execute amendments to any covenants and
restrictions affecting the Leased Property, and (f) execute and deliver to any
person such instruments as may be necessary or appropriate to confirm or effect
such grants, releases, dedications and transfers (to
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the extent of its interest in the Leased Property), but only upon delivery to
Lessor of an Officer's Certificate stating (and such other information as Lessor
may reasonably require confirming) that such grant, release, dedication,
transfer, petition or amendment is required or beneficial for and not
detrimental to the proper conduct of the business of Lessee on the Leased
Property and does not reduce the value thereof in any material respect.
6.4 REPAIRS OF THE LEASED PROPERTY BY LESSEE. Lessee acknowledges that
as part of the consideration for Lessor to purchase the Leased Property and
lease it to Lessee pursuant to this Lease is the agreement of Lessee to make
certain repairs. Therefore, Lessee agrees to use reasonable commercial efforts
to complete the repairs, at Lessee's sole expense, set forth on EXHIBIT C
attached hereto within 30 days after the Commencement Date.
ARTICLE 7
LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS
-------------------------------------------
7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to
Article 11 relating to permitted contests, Lessee, at its expense, will promptly
(a) comply with all material Legal Requirements and Insurance Requirements in
respect of the use, operation, maintenance, repair and restoration of the Leased
Property, whether or not compliance therewith shall require structural change in
any of the Leased Improvements or interfere with the use and enjoyment of the
Leased Property, and (b) directly or indirectly with the cooperation of Lessor,
but at Lessee's sole cost and expense, procure, maintain and comply with all
material licenses, certificates of need, if any, and other authorizations
required for (i) any use of the Leased Property then being made, and for (ii)
the proper erection, installation, operation and maintenance of the Leased
Improvements or any part thereof, including any Capital Additions.
7.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property shall not be used for any unlawful purpose. Lessee shall,
directly or indirectly with the cooperation of Lessor, but at Lessee's sole cost
and expense, acquire and maintain all material licenses, certificates, permits
and other authorizations and approvals needed to operate the Leased Property in
its customary manner for the Primary Intended Use and any other use conducted on
the Leased Property as may be permitted from time to time hereunder. Lessee
further covenants and agrees that Lessee's use of the Leased Property and
Lessee's maintenance, alteration, and operation of the same, and all parts
thereof, shall at all times conform to all applicable Legal Requirements.
ARTICLE 8
REPAIRS; RESTRICTIONS AND ANNUAL INSPECTIONS
--------------------------------------------
8.1 MAINTENANCE AND REPAIR.
(a) Lessee, at its expense, will keep the Leased Property and all
private roadways, sidewalks and curbs appurtenant thereto in reasonably good
order and repair (whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements, the age of the Leased Property or any
portion thereof), and except as otherwise provided in Articles 13 and 14, with
reasonable promptness will make all necessary and appropriate repairs thereto of
every kind and nature (including remodeling to the extent necessary to maintain
the Leased Property in a condition substantially the same as exists on the date
hereof), whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or
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unforeseen or arising by reason of a condition existing prior to or after the
commencement of the Term of this Lease (concealed or otherwise). All repairs and
remodeling shall, to the extent reasonably achievable, be at least equivalent in
quality to the original work and shall be accomplished by Lessee or a party
selected by Lessee. Lessee will not take or omit to take any action the taking
or omission of which might materially impair the value or usefulness of the
Leased Property or any part thereof for the Primary Intended Use. If Lessee
fails to perform any of its obligations hereunder, or if Lessor reasonably
determines that action is necessary and is not being taken, Lessor may, on
giving 30 days' written notice to Lessee (other than in a case reasonably deemed
by Lessor to be an emergency, in which case no such notice shall be required),
without demand on Lessee, perform any such obligations in such manner and to
such extent and take such other action as Lessor may deem appropriate in the
event that Lessee has not timely commenced to perform such obligation or take
such action, and all costs, expenses and charges of Lessor relating to any such
action shall constitute Additional Charges and shall be payable by Lessee to
Lessor in accordance with Section 2.3.
(b) Except for the use of any insurance proceeds (to the extent
required by Sections 13.1 and 13.2) and any Award (to the extent required by
Section 14.3) Lessor shall not under any circumstances be required to build or
rebuild any improvements on the Leased Property, or to make any repairs,
replacements, alterations, restorations, or renewals of any nature or
description to the Leased Property, whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any expenditure
whatsoever with respect thereto in connection with this Lease, or to maintain
the Leased Property in any way.
(c) Nothing contained in this Lease and no action or inaction by Lessor
shall be construed as (i) constituting the consent or request of Lessor,
expressed or implied, to any contractor, subcontractor, laborer, materialman or
vendor to or for the performance of any particular labor or services or the
furnishing of any particular materials or other property for the construction,
alteration, addition, repair or demolition of or to the Leased Property or any
part thereof, or (ii) giving Lessee any right, power or permission to contract
for or permit the performance of any labor or services or the finishing of any
materials or other property in such fashion as would permit the making of any
claim against Lessor in respect thereof or to make any agreement that may
create, or in any way be the basis for, any right, title, interest, lien, claim
or other encumbrance upon the estate of Lessor in the Leased Property or any
portion thereof.
(d) Unless Lessor shall convey any of the Leased Property to Lessee
pursuant to the provisions of this Lease, Lessee will, upon the expiration or
prior termination of this Lease, vacate and surrender the Leased Property to
Lessor in the condition in which the Leased Property was originally received
from Lessor, except for ordinary wear and tear (subject to the obligation of
Lessee to maintain the Property in good order and repair during the entire
Term), damage caused by the gross negligence or willful acts of Lessor, and
damage or destruction described in Article 13 or resulting from a Taking
described in Article 14 which Lessee is not required by the terms of this Lease
to repair or restore, and except as repaired, rebuilt, restored, altered or
added to as permitted or required by the provisions of this Lease.
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<PAGE> 14
8.2 ENCROACHMENTS; RESTRICTIONS. If any of the Improvements shall, at
any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
applicable Legal Requirement, lawful restrictive covenant or other agreement
affecting the Leased Property, or any part thereof, or shall impair the rights
of others under any easement or right-of-way to which the Leased Property is
subject, then promptly upon the request of Lessor, Lessee shall at its expense,
subject to its right to contest the existence of any such encroachment,
violation or impairment, (a) obtain valid and effective waivers or settlements
of all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Lessor or Lessee, or (b)
make such changes in the Improvements, and take such other actions, as Lessor in
the good faith exercise of its judgment deems reasonably practicable, to remove
such encroachment, or to end such violation or impairment, including, if
necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Facility for the Primary Intended Use substantially in the
manner and to the extent the Facility was operated prior to the assertion of
such violation or encroachment. Any such alteration shall be made in conformity
with the applicable requirements of Article 9. Lessee's obligations under this
Section 8.2 shall be in addition to and shall in no way discharge or diminish
any obligation of any insurer under any policy of title or other insurance and
Lessee shall be entitled to a credit for any sums recovered by Lessor under any
such policy of title or other insurance.
ARTICLE 9
CAPITAL ADDITIONS
-----------------
9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.
(a) If no Event of Default shall have occurred and be continuing,
Lessee shall have the right, upon and subject to the terms and conditions set
forth below, to construct or install Capital Additions on the Leased Property
with the prior written consent of Lessor; provided that Lessor's consent shall
not be required for any Capital Addition, the estimated cost of which, when
added to the estimated cost of all other Capital Additions commenced within the
same calendar year, does not exceed $200,000; and provided further that Lessee
shall not be permitted to create any Encumbrance on the Leased Property in
connection with such Capital Addition without first complying with Section
9.1(b) hereof. Prior to commencing construction of any Capital Addition, Lessee
shall submit to Lessor in writing a proposal setting forth in reasonable detail
any proposed Capital Addition and shall provide to Lessor such plans and
specifications, permits, licenses, contracts and other information concerning
the proposed Capital Addition as Lessor may reasonably request. Without limiting
the generality of the foregoing, such proposal shall indicate the approximate
projected cost of constructing such Capital Addition and the use or uses to
which it will be put.
(b) Prior to commencing construction of any Capital Addition (other
than a Capital Addition, the Capital Addition Cost of which is reasonably
projected not to exceed $200,000 or a Capital Addition financed solely by Lessee
or an Affiliate of Lessee), Lessee shall first request Lessor to provide funds
to pay for such Capital Addition in accordance with the provisions of Section
9.3. If Lessor declines or is unable to provide such financing on terms
acceptable to Lessee in Lessee's sole discretion, or if Lessee is prohibited
under the terms of any credit facility from borrowing from Lessor, then Lessee
may arrange or provide other financing, subject to the provisions of Section
9.2. Lessor shall reasonably cooperate with Lessee regarding the grant of any
consents or easements or the like necessary or appropriate in connection
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with any Capital Addition; provided that no Capital Addition shall be made which
would tie in or connect any Leased Improvements on the Leased Property with any
other improvements on property adjacent to the Leased Property (and not part of
the Land covered by this Lease) including tie-ins of buildings or other
structures or utilities, unless Lessee shall have obtained the prior written
approval of Lessor, which approval shall not be unreasonably withheld. All
proposed Capital Additions shall be architecturally integrated into and
consistent with the Leased Property.
9.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee finances or
arranges to finance any Capital Addition with a party other than Lessor or if
Lessee pays cash for any Capital Addition, this Lease shall be and hereby is
amended to provide as follows:
(a) There shall be no adjustment in the Minimum Rent by reason of any
such Capital Addition.
(b) Upon the expiration or earlier termination of this Lease, Lessor
shall compensate Lessee for all Capital Additions paid for or financed by Lessee
in any of the following ways:
(i) By purchasing all Capital Additions paid for by Lessee
from Lessee for cash in the amount of the Fair Market Added Value at
the time of purchase by Lessor of all such Capital Additions paid for
or financed by Lessee; or
(ii) Such other arrangement regarding such compensation as
shall be mutually acceptable to Lessor and Lessee.
Any amount owed by Lessee to Lessor under this Lease at such termination or
expiration may be deducted from any compensation for Capital Additions payable
by Lessor to Lessee under this Section 9.2.
9.3 CAPITAL ADDITIONS FINANCED BY LESSOR.
(a) If so required by Section 9.1, Lessee shall request that Lessor
provide or arrange financing for a Capital Addition by providing to Lessor such
information about the Capital Addition as Lessor may reasonably request (a
"Request"), including all information referred to in Section 9.1 above. Lessor
may, but shall be under no obligation to provide or obtain the funds necessary
to meet the Request. Within 30 days of receipt of a Request, Lessor shall notify
Lessee as to whether it will finance the proposed Capital Addition and, if so,
the terms and conditions upon which it would do so, including the terms of any
amendment to this Lease. In the case of any proposed financing to be provided by
Lessor, in no event (i) shall the portion of the projected Capital Addition Cost
comprised of land (if any), materials, labor charges and fixtures be less than
90% of the total amount of such cost, or (ii) shall Lessee or any of its
Affiliates be entitled to any commission or development fee, directly or
indirectly, as a portion of the Capital Addition Cost. Any Capital Addition not
financed by Lessor must still be approved in writing by Lessor pursuant to the
terms of Section 9.1 hereof, which consent will not be unreasonably withheld.
Lessee may withdraw its Request by notice to Lessor at any time before or after
receipt of Lessor's terms and conditions.
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(b) If Lessor agrees to finance the proposed Capital Addition, Lessor's
obligation to advance any funds shall be subject to receipt of all of the
following, in form and substance reasonably satisfactory to Lessor:
(i) such loan documentation as may be required by Lessor;
(ii) any information, certificates, licenses, permits or
documents requested by Lessor, or by any lender with whom Lessor has
agreed or may agree to provide financing, which are necessary or
appropriate to confirm that Lessee will be able to use the Capital
Addition upon completion thereof in accordance with the Primary
Intended Use, including all required federal, state or local government
licenses and approvals;
(iii) an Officer's Certificate and, if requested, a
certificate from Lessee's architect, setting forth in detail reasonably
satisfactory to Lessor the projected (or actual, if available) cost of
the proposed Capital Addition;
(iv) an amendment to this Lease, duly executed and
acknowledged, in form and substance satisfactory to Lessor and Lessee
(the "Lease Amendment"), containing such provisions as may be necessary
or appropriate due to the Capital Addition, including any appropriate
changes in the legal description of the Land and the Rent, all such
changes to be mutually agreed upon by Lessor and Lessee;
(v) if appropriate, a deed conveying title to Lessor to any
land and improvements or other rights acquired for the purpose of
constructing the Capital Addition, free and clear of any liens or
encumbrances except those approved in writing by Lessor and, both prior
to and following completion of the Capital Addition, an as-built survey
thereof reasonably satisfactory to Lessor;
(vi) if appropriate, endorsements to any outstanding policy of
title insurance covering the Leased Property or a supplemental policy
of title insurance covering the Leased Property reasonably satisfactory
in form and substance to Lessor (A) updating the same without any
additional exceptions, except as may be permitted by Lessor; and (B)
increasing the coverage thereof by an amount equal to the Fair Market
Value of the Capital Addition (except to the extent covered by the
owner's policy of title insurance referred to in subparagraph (vii)
below);
(vii) if required by Lessor, (A) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Lessor
pursuant to subparagraph (v), free and clear of all liens and
encumbrances except those approved by Lessor and (B) a lender's policy
of title insurance satisfactory in form and substance to Lessor and the
Lending Institution advancing any portion of the Capital Addition Cost;
(viii) if required by Lessor upon completion of the Capital
Addition, an M.A.I appraisal of the Leased Property; and
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(ix) such other certificates (including endorsements
increasing the insurance coverage, if any, at the time required by
Section 12.1), documents, customary opinions of Lessee's counsel,
appraisals, surveys, certified copies of duly adopted resolutions of
the Board of Directors of Lessee authorizing the execution and delivery
of the Lease Amendment and any other instruments or documents as may be
reasonably required by Lessor.
(c) Upon making a Request to finance a Capital Addition, whether or not
such financing is actually consummated, Lessee shall pay the reasonable costs
and expenses of Lessor and any Lending Institution which has committed to
finance such Capital Addition paid or incurred in connection with the financing
of the Capital Addition, including (i) the fees and expenses of their respective
counsel, (ii) the amount of any recording or transfer taxes and fees, (iii)
documentary stamp taxes, if any, (iv) title insurance charges, (v) appraisal
fees, if any, and (vi) commitment fees, if any.
9.4 REMODELING AND NON-CAPITAL ADDITIONS. Lessee shall have the right
and the obligation to make additions, modifications or improvements to the
Leased Property which are not Capital Additions, including tenant improvements
made in connection with the Tenant Leases, from time to time as may reasonably
be necessary for its uses and purposes and to permit Lessee to comply fully with
its obligations set forth in this Lease; provided that such action will be
undertaken expeditiously, in a workmanlike manner and will not significantly
alter the character or purpose or detract from the value or operating efficiency
of the Leased Property and will not significantly impair the revenue producing
capability of the Leased Property or adversely affect the ability of Lessee to
comply with the provisions of this Lease. Title to all non-Capital Additions,
modifications and improvements shall, without payment by Lessor at any time, be
included under the terms of this Lease and, upon expiration or earlier
termination of this Lease, shall pass to and become the property of Lessor.
9.5 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions permitted by Section 9.1 or repairs
required by Article 8 shall be or become the property of Lessee; provided that
Lessor may require Lessee to dispose of such materials and retain the net
proceeds thereof.
ARTICLE 10
LIENS
-----
Subject to the provisions of Article 11 relating to permitted contests,
Lessee will not directly or indirectly create or suffer to exist and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in EXHIBIT B attached hereto, (c)
restrictions, liens and other encumbrances which are consented to in writing by
Lessor, or any easements granted pursuant to the provisions of Section 6.4 of
this Lease, (d) liens for those taxes of Lessor which Lessee is not required to
pay hereunder, (e) subleases permitted by Article 23, (f) liens for Impositions
or for sums resulting from noncompliance with Legal Requirements so long as (1)
the same are not yet payable or are payable without the addition of any fine or
penalty or (2) such liens are in the process of being contested in accordance
with the provisions of Article 11, (g) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
60 days after the
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completion of the action (including any appeal from any judgment rendered
therein) giving rise to such lien and such reserve or other appropriate
provisions as shall be required by law or generally accepted accounting
principles shall have been made therefor or (2) any such liens are in the
process of being contested in accordance with the provisions of Article 11, and
(h) any Encumbrance placed on the Leased Property by Lessor.
ARTICLE 11
PERMITTED CONTESTS
------------------
Lessee, after ten days' prior written notice to Lessor, on its own or
on Lessor's behalf (or in Lessor's name), but at Lessee's expense, may contest,
by appropriate legal proceedings conducted in good faith and with due diligence,
the amount, validity or application, in whole or in part, of any Imposition,
Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance,
charge or claim (collectively "Charge") not otherwise permitted by Article 10,
which is required to be paid or discharged by Lessee or any Tenant; provided
that (a) in the case of an unpaid Charge, the commencement and continuation of
such proceedings, or the posting of a bond or certificate of deposit as may be
permitted by applicable law, shall suspend the collection thereof from Lessor
and from the Leased Property; (b) neither the Leased Property nor any Rent
therefrom nor any part thereof or interest therein would be in any immediate
danger of being sold, forfeited, attached or lost; (c) Lessor would not be in
any immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings; (d) in the event that any
such contest shall involve a sum of money or potential loss in excess of
$50,000.00, then Lessee shall deliver to Lessor and its counsel an Officer's
Certificate as to the matters set forth in clauses (a), (b) and (c) and such
opinions of legal counsel to Lessee as Lessor may reasonably request; (e) in the
case of an Insurance Requirement, the coverage required by Article 12 shall be
maintained; and (f) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or otherwise comply with the applicable Charge; provided further that
nothing contained herein shall be construed to permit Lessee to contest the
payment of the Rent, or any other sums payable by Lessee to Lessor hereunder.
Lessor, at Lessee's expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in any such
contest and, if reasonably requested by Lessee or if Lessor so desires and then
at its own expense, Lessor shall join as a party therein. Lessor shall do all
things reasonably requested by Lessee in connection with such action. Lessee
shall indemnify and save Lessor harmless against any liability, cost or expense
of any kind that may be imposed upon Lessor in connection with any such contest
and any loss resulting therefrom.
ARTICLE 12
INSURANCE
---------
12.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease,
Lessee shall at all times keep the Leased Property, and all property located in
or on the Leased Property insured with the kinds and amounts of insurance
described below and written by companies reasonably acceptable to Lessor
authorized to do insurance business in the state in which the Leased Property is
located. The policies must name Lessor as an additional insured and losses shall
be payable to Lessor and/or Lessee as provided in Article 13. In addition, the
policies shall name as an additional insured the holder ("Facility Mortgagee")
of any mortgage, deed of trust or other security agreement securing any
Encumbrance placed on the Leased Property or any part thereof in accordance with
the provisions of Article 32 ("Facility Mortgage"),
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if any, by way of a standard form of mortgagee's loss payable endorsement. Any
loss adjustment in excess of $100,000.00 shall require the written consent of
Lessor and each affected Facility Mortgagee. Evidence of insurance shall be
deposited with Lessor and, if requested, with any Facility Mortgagee(s). If any
provision of any Facility Mortgage which constitutes a first lien on the Leased
Property requires deposits of insurance to be made with such Facility Mortgagee,
Lessee shall either pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to such Facility Mortgagee or, pursuant to written
direction by Lessor, Lessee shall make such deposits directly with such Facility
Mortgagee. The policies on the Leased Property, including the Leased
Improvements and the Fixtures, shall insure against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief, extended
coverage perils commonly known as "All Risk" and all physical loss perils,
including sprinkler leakage and business interruption, in an amount not less
than 90% of the then Full Replacement Cost thereof (as defined below in Section
12.2) after deductible with a replacement cost endorsement sufficient to prevent
Lessee from becoming a co-insurer together with an agreed value endorsement;
(b) Loss or damage by explosion of steam boilers, pressure vessels or
similar apparatus now or hereafter installed in the Facility, in such limits
with respect to any one accident as may be reasonably requested by Lessor from
time to time;
(c) Loss or damage by hurricane and earthquake in the amount of the
Full Replacement Cost, after deductible;
(d) Loss of rental under a business interruption insurance policy
covering risk of loss during the first 12 months of reconstruction necessitated
by the occurrence of any of the hazards described in Sections 12.1(a), 12.1(b)
or 12.1 (c), in an amount sufficient to prevent Lessee from becoming a co-
insurer; provided that in the event that Lessee shall not be in default
hereunder and Lessor shall receive any proceeds from such rental insurance
which, when added to rental amounts received with respect to the applicable time
period, exceed the amount of rental owed by Lessee hereunder, Lessor shall
immediately pay such excess to Lessee;
(e) Claims for personal injury or property damage under a policy of
comprehensive general public liability insurance including insurance against
assumed or contractual liability including indemnities under this Lease, with
amounts not less than $5,000,000.00 per occurrence in respect of bodily injury
and death and $10,000,000.00 for property damage; provided that if it becomes
customary for tenants occupying similar buildings in the same City where the
Leased Property is located to be required to provide liability coverage with
higher limits than the foregoing, then Lessee shall provide Lessor with an
insurance policy with coverage limits that are not less than such customary
limits; and
(f) Flood (when the Leased Property is located in whole or in part
within a designated flood plain area) and such other hazards and in such amounts
as may be customary for comparable properties in the area and if available from
insurance companies authorized to do business in the state in which the Leased
Property is located.
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12.2 REPLACEMENT COST. The term "Full Replacement Cost" as used herein
shall mean the actual replacement cost of the Facility from time to time,
including increased cost of construction endorsement, less exclusions provided
in the normal fire insurance policy. In the event Lessor or Lessee believes that
the Full Replacement Cost has increased or decreased at any time during the
Term, it shall have the right at its own expense to have such Full Replacement
Cost redetermined by the insurance company which is then providing the largest
amount of casualty insurance carried on the Leased Property, hereinafter
referred to as the "impartial appraiser". The party desiring to have the Full
Replacement Cost so redetermined shall forthwith, on receipt of such
determination by the impartial appraiser, give written notice thereof to the
other party hereto. The determination of such impartial appraiser shall be final
and binding on the parties hereto, and Lessee shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this Article to the
amount so determined by the impartial appraiser.
12.3 ADDITIONAL INSURANCE. In addition to the insurance described
above, Lessee shall maintain such additional insurance as may be reasonably
required from time to time by any Facility Mortgagee which is consistent with
insurance coverage for similar properties in the city, county and state where
the Leased Property is located, or required pursuant to any applicable Legal
Requirement, and shall at all times maintain or cause to be maintained adequate
worker's compensation insurance coverage for all persons employed by Lessee on
the Leased Property, in accordance with all applicable Legal Requirements.
12.4 WAIVER OF SUBROGATION. All insurance policies carried by either
party covering the Leased Property, the Fixtures and/or the Facility, including
contents, fire and casualty insurance, shall expressly waive any right of
subrogation on the part of the insurer against the other party. The parties
hereto agree that their policies will include such a waiver clause or
endorsement so long as the same is obtainable without extra cost, and in the
event of such an extra charge the other party, at its election, may request and
pay the same, but shall not be obligated to do so.
12.5 FORM OF INSURANCE. All of the policies of insurance referred to in
this Section shall be written in form reasonably satisfactory to Lessor by
insurance companies reasonably satisfactory to Lessor; provided that the
deductibles for insurance required by Sections 12.1(a) through 12.1 (d) shall be
no greater than $50,000.00 and the deductible for coverage required by Section
12.1(e) shall be no greater than $100,000.00. Lessee shall pay all premiums
therefor, and deliver such policies or certificates thereof to Lessor prior to
their effective date (and, with respect to any renewal policy, at least 30 days
prior to the expiration of the existing policy). In the event of the failure of
Lessee to effect such insurance in the names herein called for or to pay the
premiums therefor, or to deliver such policies or certificates thereof to Lessor
at the times required, Lessor shall be entitled, but shall have no obligation,
to enact such insurance and pay the premiums therefor, which premiums shall be
repayable by Lessee to Lessor upon written demand therefor, and failure to repay
the same shall constitute an Event of Default within the meaning of Section
15.1(c). Each insurer mentioned in this Section shall agree, by endorsement on
the policy or policies issued by it, or by independent instrument furnished to
Lessor, that it will give to Lessor prior written notice before the policy or
policies in question shall be altered, allowed to expire or canceled.
12.6 CHANGE IN LIMITS. In the event that Lessor shall at any time
reasonably and in good faith believe the limits of the personal injury, property
damage or general public liability insurance then carried to be insufficient,
the parties shall endeavor to agree on the proper and reasonable limits for such
insurance to be carried and such insurance shall thereafter be carried with the
limits thus agreed on until further change pursuant to the provisions of this
Section. If the parties shall be unable to agree thereon, the proper
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and reasonable limits for such insurance shall be determined by an impartial
third party selected by the parties the costs of which shall be divided equally
between the parties. Such redeterminations, whether made by the parties or by
arbitration, shall be made no more frequently than every year. Nothing herein
shall permit the amount of insurance to be reduced below the amount or amounts
reasonably required by any Facility Mortgagee.
12.7 BLANKET POLICY. Notwithstanding anything to the contrary contained
in this Section, Lessee's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee; provided that the coverage afforded
Lessor will not be reduced or diminished or otherwise be different from that
which would exist under separate policies meeting all other requirements of this
Lease; provided further that the requirements of this Article 12 are otherwise
satisfied.
12.8 NO SEPARATE INSURANCE. Without the prior written consent of
Lessor, Lessee shall not, on Lessee's own initiative or pursuant to the request
or requirement of any third party, take out separate insurance concurrent in
form or contributing in the event of loss with that required in this Article 12
to be furnished by, or which may reasonably be required by a Facility Mortgagee
to be furnished by, Lessee, or increase the amounts of any then-existing
insurance required under this Article 12 by securing an additional policy or
additional policies, unless all parties having an insurable interest in the
subject matter of the insurance, including in all cases Lessor and all Facility
Mortgagees, are included therein as additional insureds and the loss is payable
under said insurance in the same manner as losses are required to be payable
under this Lease. Lessee shall immediately notify Lessor of the taking out of
any such separate insurance or of the increasing of any of the amounts of the
then-existing insurance required under this Article 12 by securing an additional
policy or additional policies.
12.9 INSURANCE FOR CONTRACTORS. If Lessee shall engage or cause to be
engaged any contractor to perform work on the Leased Property, Lessee shall
require such contractor to carry and maintain insurance coverage comparable to
the foregoing requirements, at no expense to Lessor; provided that in cases
where such coverage is excessive in relation to the work being done, Lessee may
allow any such contractor to carry or maintain alternative coverage in
reasonable amounts upon Lessor's prior written consent, which shall not be
unreasonably withheld.
ARTICLE 13
FIRE AND CASUALTY
-----------------
13.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property or any portion thereof, and insured under any
policy of insurance required by Article 12 of this Lease shall be paid to Lessor
and held by Lessor in trust (subject to the provisions of Section 13.7) and
shall be made available for reconstruction or repair, as the case may be, of any
damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair in accordance with this Article 13 after Lessee has
expended an amount equal to or exceeding the deductible under any applicable
insurance policy. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property shall be
retained by Lessee free and clear upon completion of any such repair and
restoration except as otherwise specifically provided below in this Article 13;
provided that in the event neither Lessor nor Lessee is required or elects to
repair or restore the Leased Property, then all such
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insurance proceeds shall be retained by Lessor. All salvage resulting from any
risk covered by insurance shall belong to Lessee, including any salvage relating
to Capital Additions paid for by Lessee.
13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
(a) FACILITY RENDERED UNSUITABLE FOR ITS PRIMARY INTENDED USE. Except
as provided in Section 13.7, if during the Term, the Facility is totally or
partially destroyed from a risk covered by the insurance described in Article 12
and the Facility thereby is rendered Unsuitable for its Primary Intended Use,
such damage or destruction shall not terminate this Lease and all of Lessee's
obligations with respect to payment of the Rent shall continue in full force and
effect and shall not be affected thereby and Lessee shall either:
(i) apply all proceeds payable with respect thereto to restore
the Facility to substantially the same condition as existed immediately
prior to such damage or destruction, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Price of the
Leased Property immediately prior to such damage or destruction or (B)
to substitute a new property or properties for the Leased Property
pursuant to and in accordance with the provisions of Article 20 (which
offers Lessor may in its sole discretion refuse).
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i) or option (ii), and if
either option (i) or option (ii) is chosen, such notice shall be accompanied by
the offer referred to therein. In the event Lessee fails to give such notice or
does not make an offer under either option (i) or option (ii), Lessee shall
promptly proceed to restore the Facility to substantially the same condition as
existed immediately prior to the damage or destruction. If Lessor does not
accept Lessee's offer to substitute for or purchase the Leased Property within
30 days after the date of such offer, Lessee's offer shall be deemed withdrawn
on such 30th day and Lessee shall promptly proceed to restore the Facility to
substantially the same condition as existed immediately prior to such damage for
destruction. If Lessor accepts Lessee's offer to substitute for or purchase the
Leased Property, Lessee shall be entitled to retain the insurance proceeds.
(b) FACILITY NOT RENDERED UNSUITABLE FOR ITS PRIMARY INTENDED USE.
Except as provided in Section 13.7, if during the Term, the Facility is
partially destroyed from a risk covered by the insurance described in Article
12, but the Facility is not thereby rendered Unsuitable for its Primary Intended
Use, Lessee shall restore the Facility to substantially the same condition as
existed immediately prior to the damage or destruction and such damage or
destruction shall not terminate this Lease and all of Lessee's obligations
hereunder, including Lessee's obligations with respect to the payment of the
Rent, shall continue in full force and effect and shall not be affected thereby;
provided that if Lessee cannot within a reasonable time obtain all necessary
governmental approvals, including building permits, licenses, conditional use
permits and any certificates of need, after diligent efforts to do so, in order
to be able to perform all required repair and restoration work and to operate
the Facility for its Primary Intended Use in substantially the same manner as
immediately prior to such damage or destruction, then Lessee may either offer
(A) to acquire that Leased Property from Lessor for a purchase price equal to
the Minimum Purchase Price immediately prior to such damage or destruction, or
(B) to substitute a new property or
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properties for the Leased Property pursuant to and in accordance with the
provisions of Article 20 (which offers Lessor in its sole discretion may
refuse.)
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (A) or option (B), and if
option (A) or (B) is chosen, such notice shall be accompanied by the offer
referred to therein. In the event Lessee fails to give such notice or does not
make an offer under either option (A) or option (B), Lessee shall, to the extent
practical and permitted by applicable Legal Requirements, promptly proceed to
restore the Facility to substantially the same condition as existed immediately
prior to the damage or destruction. If Lessor does not accept Lessee's offer to
substitute for or purchase the Leased Property within 30 days after the date of
such offer, Lessee's offer shall be deemed withdrawn on such 30th day and Lessee
shall, to the extent practical and permitted by applicable Legal Requirements,
promptly proceed to restore the Facility to substantially the same condition as
existed immediately prior to such damage for destruction. If Lessor accepts
Lessee's offer to substitute for or purchase the Leased Property, Lessee shall
be entitled to retain the insurance proceeds.
13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED
BY INSURANCE. Except as provided in Section 13.7, if during the Term the
Facility is totally or materially destroyed from a risk (including earthquake)
not covered by the insurance described in Article 12, whether or not such damage
or destruction renders the Facility Unsuitable for Its Primary Intended Use,
Lessee shall at its option:
(i) restore the Facility to substantially the same condition
it was in immediately prior to such damage or destruction and such
damage or destruction shall not terminate this Lease, and all of
Lessee's obligations hereunder, including Lessee's obligations with
respect to the payment of the Rent, shall continue in full force and
effect and not be affected thereby, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Price
immediately prior to such damage or destruction, or (B) to substitute a
new property or properties for the Leased Property pursuant to and in
accordance with the provisions of Article 20 (which offers Lessor in
its sole discretion may refuse); provided that if such damage or
destruction is not material in the reasonable opinion of Lessor, Lessee
shall restore the Facility to substantially the same condition as
existed immediately prior to any such damage or destruction.
Lessee shall give written notice to Lessor within 60 days after the date of such
damage or destruction whether Lessee chooses option (i) or option (ii), and if
option (ii) is chosen such notice shall be accompanied by the offer referred to
therein. If Lessor does not accept Lessee's offer to substitute for or purchase
the Leased Property within 30 days after the date of such offer, Lessee's offer
shall be deemed to be withdrawn on such 30th day, and Lessee may elect either to
(i) promptly proceed to restore the Facility to substantially the same condition
as existed immediately prior to such damage or (ii) treat such damage and
destruction as a total Taking of such Facility under Section 14.2, and the
provisions of said Section 14.2 shall apply to the rights of the parties and all
insurance proceeds payable in connection with such damage or destruction shall
be treated as if such proceeds constituted an "Award" under said Section 14.2.
If Lessor accepts Lessee's offer to substitute for or purchase the Leased
Property, Lessee shall be entitled to retain the insurance proceeds.
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13.4 LESSEE'S PROPERTY. Lessee shall use any insurance proceeds payable
by reason of any loss of or damage to any of the Lessee's personal property to
restore such personal property to the Leased Property with items of
substantially equivalent value to the items being replaced.
13.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects
to restore the Facility as provided in Sections 13.2 or 13.3, Lessee shall also
restore the Lessee's personal property related thereto as required by Section
13.4 and all Capital Additions paid for or financed by Lessor. Insurance
proceeds payable by reason of damage to Capital Additions paid for or financed
by Lessor shall be paid to Lessor and Lessor shall hold such insurance proceeds
in trust to pay the cost of repairing or replacing such Capital Additions in the
event Lessee does not purchase or substitute other property or properties for
the Leased Property. Notwithstanding anything to the contrary set forth herein,
Lessee shall not be obligated to restore any of the Leased Property to the
extent any insurance proceeds are retained by Lessor or any Facility Mortgagee.
13.6 NO ABATEMENT OF THE RENT. This Lease shall remain in full force
and effect and Lessee's obligation to make rental payments and to pay all other
charges required by this Lease shall remain unabated during any period required
for repair and restoration.
13.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of
Sections 13.2 or 13.3 to the contrary, if damage to or destruction of the
Facility occurs during the last 12 months of the Term, and if such damage or
destruction cannot be fully repaired and restored within the lesser of (i) six
months or (ii) the period remaining in the Term immediately following the date
of loss, then either party shall have the right to terminate this Lease by
giving notice of termination to the other within 30 days after the date of such
damage or destruction, in which event Lessor shall be entitled to retain the
insurance proceeds and Lessee shall pay to Lessor on demand the amount of any
deductible or uninsured loss arising in connection therewith; provided that any
such notice given by Lessor shall be void and of no force and effect if Lessee
exercises an available option to extend the Term for one Extended Term, or one
additional Extended Term, as the case may be, within 30 days following receipt
of such termination notice.
13.8 PURCHASE OR SUBSTITUTION. In the event Lessor accepts any offer by
Lessee to purchase the Leased Property or to substitute a property or properties
for the Leased Property, this Lease shall terminate upon payment of the purchase
price and execution and delivery of all documentation in accordance with Article
17, or execution and delivery of all documents required in connection with a
Substitute Property under Article 20. Lessor shall remit to Lessee, or in the
case of a purchase allow Lessee a credit toward the purchase price, an amount
equal to all insurance proceeds being held in trust by Lessor.
13.9 WAIVER. Lessee hereby knowingly and expressly waives any statutory
or common law rights of termination which may arise by reason of any damage or
destruction of the Facility.
13.10 PRIORITY OF PURCHASE OPTION RIGHTS. Notwithstanding anything to
the contrary set forth herein, Lessee's purchase option rights under Section
19.4 and Article 29 hereof shall supersede the terms and conditions set forth in
this Article 13, and notwithstanding the occurrence of any of the events set
forth in this Article 13, Lessee shall at its sole option and discretion, be
entitled to exercise its purchase option rights under Section 19.4 and Article
29 hereof, as applicable.
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ARTICLE 14
CONDEMNATION
------------
14.1 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article 14.
14.2 TOTAL TAKING. If there is a Taking of all of the Leased Property
by Condemnation, this Lease shall terminate on the Date of Taking, and the
Minimum Rent and all Additional Charges paid or payable hereunder shall be
apportioned and paid to the Date of Taking and Lessor shall pay to Lessee the
excess of any Award over the Minimum Purchase Price.
14.3 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation such that the Facility is not thereby rendered
Unsuitable for Its Primary Intended Use, this Lease shall not terminate and all
of Lessee's obligations hereunder, including Lessee's obligations with respect
to the payment of the Rent, shall continue in full force and effect and shall
not be affected thereby. If, however, the Facility is thereby rendered
Unsuitable for Its Primary Intended Use, Lessee shall either at its sole option:
(i) at Lessee's expense, restore the Facility, to the extent
possible, to substantially the same condition as existed immediately
prior to the partial Taking, in which case the proceeds of any Award
shall be applied to such restoration to the extent necessary or
appropriate, or
(ii) offer either (A) to acquire the Leased Property from
Lessor for a purchase price equal to the Minimum Purchase Price of the
Leased Property immediately prior to such partial Taking, or (B) to
substitute a new property or properties for the Leased Property
pursuant to and in accordance with the provisions of Article 20 (which
offers Lessor may in its sole discretion refuse), or
(iii) terminate this Lease effective upon the effective date
of such Taking. Any termination is subject to Lessee first being
entitled to exercise any purchase option set forth in Section 19.4 or
Article 29, as applicable.
Lessee will give written notice to Lessor within 60 days after Lessee receives
notice of the Taking whether Lessee chooses option (i), option (ii) or option
(iii), and if option (ii) is chosen, such notice shall be accompanied by the
offer referred to therein. In the event Lessor does not accept Lessee's offer to
substitute for or so purchase the Leased Property within 30 days after receipt
of the notice described in the preceding sentence, Lessee may either (a)
withdraw its offer to substitute for or purchase the Leased Property and proceed
to restore the Facility, to the extent possible, to substantially the same
condition as existed immediately before the partial Taking, or (b) terminate the
offer and this Lease by written notice to Lessor. Any termination is subject to
Lessee first being entitled to exercise any purchase option set forth in Section
19.4 or Article 29. If Lessor accepts Lessee's offer to substitute for or
purchase the Leased Property, Lessee shall be entitled to receive the Award.
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14.4 RESTORATION. If there is a partial Taking of the Leased Property
and this Lease remains in full force and effect pursuant to any provision of
this Article 14, Lessee shall, to the extent practical, accomplish all necessary
restoration in order that the Leased Property may continue to be used for its
Primary Intended Use. (Notwithstanding anything to the contrary set forth
herein, Lessee should not be obligated to restore to the extent Award or
insurance proceeds are retained by Lessor or Facility Mortgagee.)
14.5 AWARD DISTRIBUTION. In the event Lessee purchases the Leased
Property pursuant to Section 14.3 or Lessor accepts any offer by Lessee to
purchase the Leased Property or to provide a Substitute Property therefor
pursuant to this Article 14, then the entire Award shall belong to Lessee and
Lessor agrees to assign to Lessee all of its rights thereto. Except as otherwise
expressly provided in this Article 14, in any other event the entire Award shall
belong to and be paid to Lessor; provided that if this Lease is terminated in
accordance with Section 14.2 or 14.3, and subject to the rights of any Facility
Mortgagees, Lessee shall be entitled to receive from the Award any sum
attributable to any Capital Additions for which Lessee would be entitled to
reimbursement at the end of the Term pursuant to the provisions of Section
9.2(b), but only if any to the extent such Award expressly includes such items
and allocates a value thereto and in the event of termination and Total Taking,
Lessee shall be entitled receive excess of the Award over the Minimum Purchase
Price. If Lessee is required or elects to restore the Facility, Lessor agrees
that, subject to the rights of the Facility Mortgagees, its portion of the Award
shall be used for such restoration and it shall hold such portion of the Award
in trust, for application to the costs of the restoration.
14.6 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six months. During any such six-month period all the
provisions of this Lease shall remain in full force and effect and the Rent
shall not be abated or reduced during such period of Taking; provided that to
the extent any compensation is paid by the Taking authority as a result of such
temporary Taking, Lessee will retain such compensation.
14.7 PURCHASE OR SUBSTITUTION. In the event Lessor accepts any offer by
Lessee to purchase the Leased Property or to substitute a property or properties
for the Leased Property, this Lease shall terminate upon payment of the purchase
price and execution and delivery of all appropriate documentation in accordance
with Article 17, or execution and delivery of all documents required in
connection with a Substitute Property under Article 20.
14.8 PRIORITY OF PURCHASE OPTION RIGHTS. Notwithstanding anything to
the contrary set forth herein, Lessee's purchase option rights under Section
19.4 and Article 29 hereof shall supersede the terms and conditions set forth in
this Article 14, and notwithstanding the occurrence of any of the events set
forth in this Article 14, Lessee shall at its sole option and discretion, be
entitled to exercise its purchase option rights under Section 19.4 or Article 29
hereof, as applicable.
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ARTICLE 15
DEFAULT
-------
15.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute events of default (individually, an "Event of
Default" and, collectively, "Events of Default") hereunder:
(a) An event of default shall occur under any other lease (the "Related
Leases") between Lessor or any of its Affiliates and Lessee or any of its
Affiliates, which event of default is not cured within the applicable grace
period set forth in such Related Lease; provided that the foregoing provision
shall be applicable to that certain Lease Agreement dated as of April 12, 1995,
between Capstone Capital of San Antonio, Ltd., d/b/a Cahaba of San Antonio,
Ltd., an Alabama limited partnership, and RHCI San Antonio, Inc., a Delaware
corporation, only to the extent of an event of default arising out of a breach
of obligations of RHCI San Antonio, Inc. prior to the date of this Lease;
(b) Lessee shall fail to make a payment of the Rent payable by Lessee
under this Lease within ten Business Days of the date when due;
(c) Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease or any document executed in connection herewith and such
failure is not cured by Lessee within a period of 30 days after receipt by
Lessee of notice thereof from Lessor, unless such failure cannot with due
diligence be cured within a period of 30 days, in which case such failure shall
not be deemed to continue if Lessee proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof (as soon as
reasonably possible);
(d) Lessee or Guarantor shall:
(i) admit in writing its inability to pay its debts generally
as they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency law,
(iii) make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable
law or statute of the United States of America or any state thereof; or
(vi) be in default with respect to any Indebtedness in the
outstanding amount of (i) in the case of Lessee, at least $50,000, and
(ii) in the case of Guarantor, at least $1,000,000, which default shall
have resulted in an acceleration of the maturity of such Indebtedness;
or
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(e) As at the end of each fiscal quarter, commencing with the fiscal
quarter ending December 31, 1998, Lessee shall fail to maintain a Cash Flow
Coverage Ratio of at least 1.5 to 1.0 for the twelve-month period then ended.
15.2 REMEDIES. If an Event of Default shall have occurred, Lessor may,
at its election, then or at any time thereafter, pursue any one or more of the
following remedies, in addition to any remedies which may be permitted by law or
by other provisions of this Lease, without further notice or demand, except as
hereinafter provided:
(a) Without any notice or demand whatsoever, Lessor may take any one or
more actions permissible at law to ensure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee abandons or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease. Lessor shall use reasonable efforts to relet but shall have no
absolute obligation to relet. If Lessor does, at its sole discretion, elect to
relet the Leased Property, such action by Lessor shall not be deemed as an
acceptance of Lessee's surrender of the Leased Property unless Lessor expressly
notifies Lessee of such acceptance in writing, Lessee hereby acknowledging that
Lessor shall otherwise be reletting as Lessee's agent. It is further agreed in
this regard that in the event of any Event of Default described in this Article
15, Lessor shall have the right to enter upon the Leased Property and do
whatever Lessee is obligated to do under the terms of this Lease. Lessee agrees
to reimburse Lessor on demand for any reasonable expenses which Lessor may incur
in thus effecting compliance with Lessee's obligations under this Lease, and
further agrees that Lessor shall not be liable for any damages resulting to
Lessee from such action, except as may result from Lessor's gross negligence or
willful misconduct.
(b) Lessor may terminate this Lease by written notice to Lessee, in
which event Lessee shall immediately surrender the Leased Property to Lessor,
and if Lessee fails to do so, Lessor may, without prejudice to any other remedy
which Lessor may have for possession or arrearage in rent (including any
interest which may have accrued pursuant to Section 2.3 of this Lease or
otherwise), enter upon and take possession of the Leased Property and expel or
remove Lessee and any other person who may be occupying said premises or any
part thereof other than Tenants pursuant to Tenant Leases. In addition, Lessee
agrees to pay to Lessor on demand the amount of all loss and damage which Lessor
may suffer by reason of any termination effected pursuant to this subsection
(b), said loss and damage to be determined, at Lessor's option, by either of the
following alternative measures of damages:
(i) Although Lessor shall be under no absolute obligation to
attempt and shall be obligated only to use reasonable efforts, to relet
the Leased Property, until the Leased Property is relet Lessee shall
pay to Lessor on or before the first day of each calendar month the
monthly rentals and other charges provided in this Lease. After the
Leased Property has been relet by Lessor, Lessee shall pay to Lessor on
the 10th day of each calendar month the difference between the monthly
rentals and other charges provided in this Lease for the preceding
calendar month and that actually collected by Lessor for such month. If
it is necessary for Lessor to bring suit in order to collect any
deficiency, Lessor shall have a right to allow such deficiencies to
accumulate and to bring an action on several or all of the accrued
deficiencies at one time. Any such suit shall not prejudice in any way
the right of Lessor to bring a similar action for any subsequent
deficiency or
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deficiencies. Any amount collected by Lessor from subsequent tenants
for any calendar month in excess of the monthly rentals and other
charges provided in this Lease shall be credited to Lessee in reduction
of Lessee's liability for any calendar month for which the amount
collected by Lessor will be less than the monthly rentals and other
charges provided in this Lease, but Lessee shall have no right to such
excess other than the above described credit; or
(ii) When Lessor desires, Lessor may demand a final settlement
not to exceed the Minimum Purchase Price at the time of such final
settlement. Upon demand for a final settlement, Lessor shall have a
right to, and Lessee hereby agrees to pay, the difference between the
total of all monthly rentals and other charges provided in this Lease
for the remainder of the Term and the reasonable rental value of the
Leased Property for such period (including a reasonable time to relet
the Leased Property), as determined pursuant to the provisions of
Article 28 hereof, such difference to be discounted to present value at
a rate equal to the Treasury Yield then in effect with maturity periods
substantially equivalent to the balance of the Initial Term or any
Extended Term then in effect.
The rights and remedies of Lessor hereunder are cumulative, and pursuit
of any of the above remedies shall not preclude pursuit of any other remedies
prescribed in other sections of this Lease and any other remedies provided by
law or equity. Forbearance by Lessor to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of such Event of Default. Exercise by Lessor of any one or
more remedies shall not constitute an acceptance of surrender of the Leased
Property by Lessee, it being understood that such surrender can be effected only
by the prior written agreement of Lessor and Lessee.
15.3 ADDITIONAL EXPENSES. In addition to payments required pursuant to
subsections (a) and (b) of Section 15.2 above, Lessee shall compensate Lessor
for all reasonable expenses incurred by Lessor in repossessing the Leased
Property (including any increase in insurance premiums caused by the vacancy of
the Leased Property), all reasonable expenses incurred by Lessor in reletting
(including repairs, remodeling, replacements, advertisements and brokerage
fees), all reasonable concessions granted to a new tenant upon reletting
(including renewal options), all fees and expenses incurred by Lessor as a
direct or indirect result of any appropriate action by a Facility Mortgagee, any
expenses of Lessor incurred for the installation of separate lines or meters for
any public utilities not previously metered separately from adjacent property of
Lessee and a reasonable allowance for Lessor's administrative efforts, salaries
and overhead attributable directly or indirectly to Lessee's default and
Lessor's pursuing the rights and remedies provided herein and under applicable
law.
15.4 WAIVER. If this Lease is terminated pursuant to law or the
provisions of this Article 15, Lessee waives, to the extent permitted by
applicable law, (a) any right of redemption, reentry or repossession and (b) the
benefit of any laws now or hereafter in force exempting property from liability
for rent or for debt.
15.5 APPLICATION OF FUNDS. All payments otherwise payable to Lessee
which are received by Lessor under any of the provisions of this Lease during
the existence or continuance of any Event of Default shall be applied to
Lessee's obligations in the order which Lessor may reasonably determine or as
may be prescribed by the laws of the state in which the Facility is located.
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15.6 NOTICES BY LESSOR. The provisions of this Article 15 concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if it shall generally apprise
Lessee of the nature and approximate extent of any default.
ARTICLE 16
LESSOR'S RIGHT TO CURE
----------------------
If Lessee, without the prior written consent of Lessor, shall fail to
make any payment, or to perform any act required to be made or performed under
this Lease and to cure the same within the relevant time periods provided in
Section 15.1, Lessor, without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) make such payment or perform
such act for the account and at the expense of Lessee, and may, to the extent
permitted by law, enter upon the Leased Property for such purpose and take all
such action thereon as, in Lessor's opinion, may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Lessee. All sums so paid
by Lessor, together with a late charge thereon (to the extent permitted by law)
at the Overdue Rate from the date on which such sums or expenses are paid or
incurred by Lessor, and all costs and expenses (including reasonable attorneys'
fees and expenses, in each case, to the extent permitted by law) so incurred
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.
ARTICLE 17
PURCHASE OF THE LEASED PROPERTY
-------------------------------
In the event Lessee purchases the Leased Property from Lessor pursuant
to any of the terms of this Lease, Lessor shall, upon receipt from Lessee of the
applicable purchase price, together with full payment of any unpaid Rent due and
payable with respect to any period ending on or before the date of the purchase
and any other amounts owing to Lessor hereunder, deliver to Lessee an
appropriate special warranty deed (in substantially the same form used to convey
the Leased Property to Lessor) and any other documents reasonably requested by
Lessee to convey the interest of Lessor in and to the Leased Property to Lessee,
and such other standard documents usually and customarily prepared in connection
with such transfers, free and clear of all encumbrances other than (a) those
that Lessee has agreed hereunder to pay or discharge, (b) those mortgage liens,
if any, which Lessee has agreed in writing and in its discretion to accept and
to take title subject to, (c) any other Encumbrances permitted to be imposed on
the Leased Property under the provisions of Article 32 which are assumable at no
cost to Lessee, and (d) any matters affecting the Leased Property on or as of
the Commencement Date. The difference between the applicable purchase price and
the total of the encumbrances assigned or taken subject to shall be paid in cash
to Lessor, or as Lessor may direct, in federal or other immediately available
funds except as otherwise mutually agreed by Lessor and Lessee. The closing of
any such sale shall be contingent upon and subject to Lessee obtaining all
required governmental consents and approvals for such transfer. If such sale
shall fail to be consummated by reason of the inability of Lessee to obtain all
such approvals and consents, any options to extend the Term which otherwise
would have expired during the period from the date when Lessee elected or became
obligated to purchase the Leased Property until Lessee's inability to obtain the
approvals and consents is confirmed shall be deemed to remain in effect for 30
days after the end of such period. The closing with respect to any such sale
shall be appropriately timed to accommodate the determination of the Minimum
Purchase Price in accordance with Article 28. All expenses of such conveyance,
including the cost of title examination or standard coverage title insurance,
reasonable
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attorneys' fees incurred by Lessor in connection with such conveyance, transfer
taxes and recording fees shall be paid by Lessee. Additionally, any sale to
Lessee shall be subject to delivery of an opinion of Lessor's counsel confirming
that (i) the sale will not result in ordinary recapture income to Lessor
pursuant to Code Section 1245 or 1250 or any other Code provision, (ii) the sale
will result in income, if any, to Lessor of a type described in Code Section
856(c)(2) or 856(c)(3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6), and (iii) the sale, together with all other substitutions and sales
made or requested by Lessee pursuant to any other leases with Lessor of
properties hereto or any other transfers of the Leased Property or the
properties leased under other such operating leases, during the relevant time
period, will not jeopardize the qualification of Lessor as a real estate
investment trust under Code Sections 856-860. In the event that Lessor's counsel
cannot deliver such an opinion, the parties hereto agree to endeavor to enter
into an alternate arrangement such that the economic benefits conferred upon the
parties under this Lease are not impaired (such arrangements to include, by way
of example and not limitation, deferral of the conveyance until such time as
such opinion can be delivered).
ARTICLE 18
HOLDING OVER
------------
If Lessee shall for any reason remain in possession of the Leased
Property after the expiration of the Term or any earlier termination of the Term
hereof, such possession shall be as a tenancy at will during which time Lessee
shall pay as rental each month an amount equal to the sum of (a) 150% of the
aggregate of 1/12 of the aggregate Minimum Rent payable with respect to the last
complete year prior to the expiration of the Term, plus (b) all Additional
Charges accruing during such month, plus (c) all other sums, if any, payable
pursuant to the provisions of this Lease with respect to the Leased Property.
During such period of tenancy, Lessee and Lessor shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease and to
continue its occupancy and use of the Leased Property. Nothing contained herein
shall constitute the consent, express or implied, of Lessor to the holding over
of Lessee after the expiration or earlier termination of this Lease.
ARTICLE 19
ABANDONMENT; OBSOLESCENCE
-------------------------
19.1 DISCONTINUANCE OF OPERATIONS ON THE LEASED PROPERTY; OFFER OF
SUBSTITUTION. If Lessee has discontinued use of the Leased Property for its
Primary Intended Use for 90 consecutive days without Lessor's prior written
consent for alterations or remodeling pursuant to Article 9, repairs or
restoration pursuant to Article 13 or Article 14 or otherwise, then provided
Lessor has not terminated this Lease pursuant to Section 15.2, Lessee may offer
to substitute a new property or properties for the Leased Property pursuant to
and in accordance with the provisions of Article 20 (which offers Lessor may in
its sole discretion refuse).
19.2 OBSOLESCENCE OF THE LEASED PROPERTY; OFFER TO PURCHASE. If the
Leased Property becomes Unsuitable for its Primary Intended Use, all as set
forth in an Officer's Certificate delivered to Lessor. Lessee may, on or after
the fifteenth anniversary of the Commencement Date (provided this Lease is still
in effect), purchase the Leased Property for the Minimum Purchase Price on the
first Payment Date occurring not less than 120 days after the date of such
Officer's Certificate.
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19.3 CONVEYANCE OF LEASED PROPERTY. In the event Lessee elects to
purchase the Leased Property pursuant to Section 19.2, then on the first Payment
Date occurring not less than 120 days after the date of the Officer's
Certificate referred to in Section 19.2, Lessor shall, upon receipt from Lessee
of the Minimum Purchase Price as of the date of such purchase and all Rent and
or other sums then due and payable under this Lease (excluding any installment
of Minimum Rent due on such Payment Date), convey the Leased Property to Lessee
on such date in accordance with the provisions of Article 17 and this Lease
shall thereupon terminate as to the Leased Property.
19.4 OPTION TO PURCHASE. Up to and including the third anniversary of
the Commencement Date, Lessee shall have the option to purchase the Leased
Property upon written notice to Lessor sent at any time on or prior to the third
Anniversary of the Commencement Date for a purchase price equal to the Minimum
Purchase Price. If not sooner exercised, the option to purchase granted hereby
will expire and be of no further force and effect after the third anniversary of
the Commencement Date or the earlier termination of this Lease; provided that a
termination of this Lease for any reason under any of the terms and conditions
hereof shall be subject to Lessee's being provided an opportunity to exercise
its purchase option rights provided for in this Section 19.4, by giving written
notice thereof within 20 days after such termination would have otherwise
occurred.
ARTICLE 20
SUBSTITUTION OF PROPERTY
------------------------
20.1 SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY.
(a) In the event Lessor accepts an offer by Lessee to substitute other
property for the Leased Property under Article 13, Article 14 or Article 19, and
provided that no Event of Default shall have occurred and be continuing, Lessee
shall have the right (subject to the conditions set forth below in this Article
20, and upon notice to Lessor) to substitute one or more properties
(collectively referred to as "Substitute Properties" or individually as a
"Substitute Property") for the Leased Property on a monthly Payment Date
specified in such notice (the "Substitution Date") occurring not less than 90
days after receipt by Lessor of such notice. The notice shall be in the form of
an Officer's Certificate and shall specify the reason(s) for the proposed
substitution and the proposed Substitution Date. Notwithstanding anything
contained herein to the contrary, any other substitution for the Leased Property
shall require the prior written consent of Lessor which shall be within the sole
discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above,
Lessee shall present to Lessor one or more properties (or groups of properties)
each of which property (or groups of properties) shall provide Lessor with a
yield (i.e., an annual return on its equity in such property) equal to or
greater than the Current Yield (and the yield reasonably expected to be received
thereafter throughout the remainder of the term) from the Leased Property at the
time of such proposed substitution (or in the case of a proposed substitution as
a result of damage, destruction or Condemnation, the Current Yield immediately
prior to such damage, destruction or Condemnation) and as reasonably projected
over the remaining Term of this Lease and shall have a Fair Market Value
substantially equivalent to the Fair Market Value of the Leased Property. Lessor
shall have a period of 90 days within which to review such information and
either to accept or to reject the Substitute Property or Substitute Properties
so presented; provided that if Lessee is required by a court order or
administrative action to divest or otherwise dispose of the Leased Property
within a shorter time period, in which case the time period shall be shortened
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appropriately to meet the reasonable needs of Lessee, but in no event shall said
period be less than 15 Business Days after Lessor's receipt of said notice
(subject to further extension for any period of time in which Lessor is not
timely provided with the information provided for in Section 20.2 and Section
20.3 below); provided that if Lessor shall contend that the Substitute
Properties fail to meet all the conditions for substitution set forth in this
Article 20, including the provisions of Sections 20.1(c), (d) and (e) below, the
matter shall be submitted to arbitration in accordance with Article 31 and the
time periods for Lessor's approval or rejection shall be tolled during the
period of such arbitration.
(c) It shall be a condition to consummation of any substitution
hereunder that all of the conditions set forth in Section 20.2 below, shall have
been satisfied with respect to such substitution, and to the delivery of an
opinion of counsel for Lessor confirming that (i) the substitution of the
Substitute Property for the Leased Property will qualify as an exchange solely
of property of a like-kind under Section 1031 of the Code, in which, generally,
except for "boot" such as cash needed to equalize exchange values or discharge
indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution or
sale will not result in ordinary recapture income to Lessor pursuant to Code
Section 1245 or 1250 or any other Code provision, (iii) the substitution or sale
will result in income, if any, to Lessor of a type described in Code Section
856(c)(2) or 856(c)(3) and will not result in income of the types described in
Code Section 856(c)(4) or result in the tax imposed under Code Section
857(b)(6), and (iv) the substitution or sale, together with all other
substitutions and sales made or requested by Lessee pursuant to any other leases
with Lessor of properties hereto or any other transfers of the Leased Property
or the properties leased under other such operating leases, during the relevant
time period, will not jeopardize the qualification of Lessor as a real estate
investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or
group of Substitute Properties (i.e., the Fair Market Value of the Substitute
Property or group of Substitute Properties minus the encumbrances subject to
which Lessor will take the Substitute Property or group of Substitute
Properties) as of the Substitution Date is greater than the equity value of the
Leased Property (i.e., the Fair Market Value of the Leased Property minus the
encumbrances subject to which Lessee will take the Leased Property) as of the
Substitution Date (or in the case of damage destruction or Condemnation, the
Fair Market Value immediately prior to such damage, destruction or
Condemnation), Lessor shall pay to Lessee an amount equal to the difference,
subject to the limitation set forth below. In the event that said equity value
of the Substitute Property or group of Substitute Properties is less than said
equity value of the Leased Property, Lessee shall pay to Lessor an amount equal
to the difference, subject to the limitation set forth below. Notwithstanding
the foregoing, neither Lessor nor Lessee shall be obligated to consummate any
substitution if such party would be required to make a payment to the other in
excess of an amount equal to ten percent of said Fair Market Value of the Leased
Property (the amount of cash paid by one party to the other being hereinafter
referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide
Lessor with a yield at the time of such substitution (i.e., annual return on its
investment in such Substitute Property) not less than the Current Yield (and the
yield reasonably expected to be received thereafter throughout the remainder of
the Term) from the Leased Property prior to any damage, destruction or
Condemnation, taking into account the Cash Adjustment paid or received by Lessor
and any other relevant factors.
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(f) The Minimum Purchase Price of any Substitute Property or Substitute
Properties shall be an amount equal to the Minimum Purchase Price of the Leased
Property on the Substitution Date (i) increased by any Cash Adjustment paid by
Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash
Adjustment paid by Lessee pursuant to Section 20.1(d) above.
20.2 CONDITIONS TO SUBSTITUTION. On the Substitution Date, the
Substitute Property will become the Leased Property hereunder upon delivery by
Lessee to Lessor of the following items in form and substance reasonably
satisfactory to Lessor:
(a) an Officer's Certificate representing, warranting and certifying
that (i) the Substitute Property has been accepted by Lessee for all purposes of
this Lease and there has been no material damage to the improvements located on
the Substitute Property nor is any condemnation or eminent domain proceeding
pending with respect thereto; (ii) all permits, licenses and certificates
(including a permanent, unconditional certificate of occupancy and, to the
extent permitted by law, all certificates of need and licenses) which are
necessary to permit the use of the Substitute Property in accordance with the
provisions of this Lease have been obtained and are in full force and effect;
(iii) under applicable zoning and use laws, ordinances, rules and regulations
the Substitute Property may be used for the purposes contemplated by Lessee and
all necessary subdivision approvals have been obtained; (iv) there are no
mechanic's or materialmen's liens outstanding or threatened to the knowledge of
Lessee against the Substitute Property arising out of or in connection with the
construction of the improvements thereon, other than those being contested by
Lessee pursuant to Article 11; (v) any mechanic's or materialmen's liens being
contested by Lessee will be promptly paid by Lessee if such contest is resolved
in favor of the mechanic or materialman; (vi) to the best knowledge of Lessee,
there exists no Event of Default under this Lease, and no defense, offset or
claim exists with respect to any sums to be paid by Lessee hereunder; and (vii)
any exceptions to Lessor's title to the Substitute Property do not materially
interfere with the intended use of the Substitute Property by Lessee;
(b) a special warranty deed with warranties against claims arising
under Lessee conveying to Lessor title to the Substitute Property free and clear
of any liens and encumbrances except those approved in writing or assumed by
Lessor;
(c) a lease duly executed, acknowledged and delivered by Lessee,
containing the same terms and conditions as are contained herein, except that
(i) the legal description of the Land shall refer to the Substitute Property,
(ii) the Minimum Purchase Price, Rent and any Additional Charges for the
Substitute Property shall be consistent with the requirements of Section 20.1
and (iii) such other changes therein as may be necessary or appropriate under
the circumstances shall be made;
(d) a standard owner's or lessee's (as applicable) policy of title
insurance covering the Substitute Property (or a valid, binding, unconditional
commitment therefor), dated the Substitution Date, in current form and including
mechanics' and materialmen's lien coverage, issued to Lessor by a title
insurance company reasonably satisfactory to Lessor. Such policy shall (i)
insure (A) Lessor's fee title to the Substitute Property, subject to no liens or
encumbrances except those approved or assumed by Lessor, and (B) that any
restrictions affecting the Substitute Property have not been violated and that a
further violation thereof will not result in a forfeiture or reversion of title,
(ii) be in an amount at least equal to the Fair Market Value of the Substitute
Property, and (iii) contain such endorsements as may be reasonably requested by
Lessor;
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(e) certificates of insurance with respect to the Substitute Property
fulfilling the requirements of Article 12;
(f) current appraisals or other evidence satisfactory to Lessor, in its
sole discretion, as to the current Fair Market Values of such Substitute
Property;
(g) all available revenue data relating to the Substitute Property for
the period from the date of opening for business of the Substitute Property to
the date of Lessee's most recent Fiscal-Year end, or for the most recent three
years, whichever is less; and
(h) such other certificates, documents, opinions of counsel (which may
be in-house counsel), and other instruments as may be reasonably required by
Lessor.
20.3 CONVEYANCE TO LESSEE. On the Substitution Date Lessor will convey
the Leased Property to Lessee in accordance with the provisions of Article 17
(except as to payment of any expenses in connection therewith which shall be
governed by Section 20.4 below) upon either (a) payment in cash therefor or (b)
conveyance to Lessor of the Substitute Property, as appropriate.
20.4 EXPENSES. Lessee shall pay or cause to be paid, on demand, all
reasonable costs and expenses paid or incurred by Lessor in connection with the
substitution and conveyance of the Leased Property and the Substitute Property,
including (a) fees and expenses of Lessor's counsel, (b) the amount of any
recording taxes and filing fees, (c) the cost of preparing and recording, if
appropriate, a release of the Leased Property from the lien of any mortgage, (d)
broker's fees and commissions for Lessee, if any, (e) documentary stamp and
transfer taxes, if any, (f) title insurance charges, and (g) escrow fees, if
any.
ARTICLE 21
RISK OF LOSS
------------
Except as otherwise provided in this Lease, during the Term of this
Lease, the risk of loss or of decrease in the enjoyment and beneficial use of
the Leased Property in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than by Lessor and those
claiming from, through or under Lessor) is assumed by Lessee and, Lessor shall
in no event be answerable or accountable therefor nor shall any of the events
mentioned in this Section entitle Lessee to any abatement of the Rent except as
specifically provided in this Lease.
ARTICLE 22
INDEMNIFICATION
---------------
Notwithstanding the existence of any insurance or self insurance
provided for in Article 12, and without regard to the policy limits of any such
insurance or self insurance, Lessee will protect, indemnify, save harmless and
defend Lessor from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable attorneys'
fees and expenses), to the extent permitted by law, imposed upon or incurred by
or asserted against Lessor by reason of: (a) any accident, injury to or death of
persons or loss to property occurring on or about the Leased Property, including
any claims of malpractice, (b) any use, misuse, no use, condition, maintenance
or repair by Lessee of the
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Leased Property, (c) any Impositions (which are the obligations of Lessee to pay
pursuant to the applicable provisions of this Lease), (d) any failure on the
part of Lessee to perform or comply with any of the terms of this Lease, (e) the
non-performance of any of the terms and provisions of any and all existing and
future subleases of the Leased Property to be performed by Lessee as landlord
thereunder and (f) the violation of any Hazardous Materials Law, in the case of
(a) through (f) above, while this Lease is in effect or Lessee is in possession
of the Leased Property. Any amounts which become payable by Lessee under this
Section shall be paid within ten days after liability therefor on the part of
Lessor is finally determined by litigation or otherwise (including the
expiration of any time for appeals) and, if not timely paid, shall bear interest
(to the extent permitted by law) at the Overdue Rate from the date of such
determination to the date of payment. Lessee, at its expense, shall contest,
resist and defend any such claim, action or proceeding asserted or instituted
against Lessor or may compromise or otherwise dispose of the same as Lessee sees
fit. Lessor shall cooperate with Lessee in a reasonable manner to permit Lessee
to satisfy Lessee's obligations hereunder, including the execution of any
instruments or documents reasonably requested by Lessee. Nothing herein shall be
construed as indemnifying Lessor or its agents for their own negligent acts or
omissions or willful misconduct. Lessee's liability for a breach of the
provisions of this Article shall survive any termination of this Lease.
ARTICLE 23
SUBLETTING AND ASSIGNMENT
-------------------------
23.1 SUBLETTING AND ASSIGNMENT. Without the prior written consent of
Lessor, Lessee may not assign or sublet all or any part of the Leased Property,
except pursuant to (i) Tenant Leases listed on EXHIBIT B attached hereto and
Tenant Leases for office space rented to physicians and other health care
professionals having patients at the Leased Property, and (ii) Permitted
Assignments for Security, it being agreed that Lessor does hereby (i) consent to
and approve Lessee's granting a Leasehold Mortgage to General Electrical Capital
Corporation and its affiliates and (ii) agree to execute and deliver a Consent,
Waiver and Subordination Agreement, in each case, in substantially the same form
of such documents as were approved and executed by Lessor in connection with
that certain Lease Agreement dated April 12, 1995, between Lessor and Mesa
Psychiatric Hospital, Inc. Any lease executed pursuant to the foregoing
exceptions to the prohibition on assignment shall expressly state that they are
subordinate to this Lease. Any attempted assignment or subletting in violation
of this provision shall be null and void and of no force or effect and shall
constitute a breach of this Lease by Lessee. At the expiration or earlier
termination of this Lease for any reason, Lessee shall assign its rights under
all Tenant Leases then in effect to Lessor, PROVIDED that Lessee shall have the
right to terminate any Tenant Lease with a Tenant which is an affiliate of
Lessee.
23.2 NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT. Except for existing
Tenant Leases, Lessee shall insert in each sublease permitted under Section 23.1
provisions to the effect that (a) such sublease is subject and subordinate to
all of the terms and provisions of this Lease and to the rights of Lessor
hereunder, (b) in the event this Lease shall terminate before the expiration of
such sublease, the sublessee thereunder will, at Lessor's option, attorn to
Lessor and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder as a result of the termination of this Lease
and (c) in the event the sublessee receives a written notice from Lessor or
Lessor's assignees, if any, stating that Lessee is in default under this Lease,
the sublessee, shall thereafter be obligated to pay all rentals accruing under
said sublease directly to the party giving such notice, or as such party may
direct. All rentals received from the sublessee by Lessor or Lessor's assignees,
if any, shall be credited against
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amounts owing by Lessee under this Lease. Lessor agrees that notwithstanding any
default, termination, expiration, sale, entry or other act or omission of Lessee
pursuant to the terms of this Lease, or at law or in equity, Tenant's possession
shall not be disturbed unless such possession may otherwise be terminated
pursuant to the terms of the applicable Tenant Lease. Lessor hereby agrees, upon
Lessee's request, to execute a nondisturbance agreement in favor of any Tenant
or in favor of any sublessee under any sublease permitted under Section 23.1
above; provided that the Tenant or any such sublessee has acknowledged all of
the foregoing provisions and executed all documents required by this Section
23.2.
23.3 SUBLEASE LIMITATION. Notwithstanding anything contained in this
Lease to the contrary, Lessee shall not sublet the Leased Property, including
any of the Tenant Leases, on any basis such that the rental to be paid by the
sublessee thereunder would be based, in whole or in part, on any formula such
that any portion of the sublease rental received by Lessor would fail to qualify
as "rents from real property" within the meaning of Section 856(d) of the Code,
or any similar or successor provision thereto.
ARTICLE 24
OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS
-----------------------------------------------
24.1 ESTOPPEL CERTIFICATE. At any time and from time to time within 20
days following written request by Lessor, Lessee will furnish to Lessor an
Officer's Certificate certifying that this Lease is unmodified and in full force
and effect (or that this Lease is in full force and effect as modified and
setting forth the modifications) and the dates to which the Rent has been paid.
Any such Officer's Certificate furnished pursuant to this Article may be relied
upon by Lessor, any prospective purchaser of the Leased Property and any third
parties who have an interest in the Leased Property, including any Lender or
professional advisor or Lessor.
24.2 FINANCIAL STATEMENTS AND CERTIFICATES. Lessee will furnish the
following statements to Lessor; provided that Lessor shall keep confidential
items furnished by Lessee which are not generally available to the public:
(i) within 120 days after the end of each of Lessee's fiscal
years (A) a copy of Lessee's unaudited Financial Statements for such
fiscal year, (B) an Officer's Certificate stating that no Event of
Default, or event which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default, has occurred and
is continuing and has not been waived, or, if there shall have occurred
and be continuing such an Event of Default or event, specifying the
nature thereof and the steps being taken to remedy the same, (C) a
current rent or lease roll for the Leased Property setting forth rental
information in reasonable detail regarding all of the Tenants and
Tenant Leases, including any space utilized by Lessee, and (D) a
calculation of the Cash Flow Coverage Ratio for such fiscal year;
(ii) within 120 days after the end of each of Guarantor's
fiscal years (A) a copy of Guarantor's audited Consolidated Financial
statements for such fiscal year, and (B) an Officer's Certificate
stating that no Event of Default involving Guarantor, or event which,
with the giving of notice or the passage of time, or both, would
constitute such an Event of Default, has occurred and is continuing and
has not been waived, or, if there
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shall have occurred and be continuing such an Event of Default or
event, specifying the nature thereof and the steps being taken to
remedy the same;
(iii) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year of Lessee, (A) a copy of Lessee's
balance sheet and statement of earnings for such quarter, together with
Lessee's utilization statements produced in the ordinary course of
business, which Lessor will hold in confidence, (B) an Officer's
Certificate stating that no Event of Default or event which, with the
giving of notice or the passage of time, or both, would constitute an
Event of Default, has occurred and is continuing and has not been
waived, or, if there shall have occurred and be continuing such an
Event of Default or event, specifying the nature thereof and the steps
being taken to remedy the same, and (C) a calculation of the Cash Flow
Coverage Ratio for such fiscal quarter;
(iv) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year of Guarantor, (A) a copy of
Guarantor's unaudited Consolidated Financial Statements for such fiscal
quarter, and (B) an Officer's Certificate stating that no Event of
Default involving Guarantor or event which, with the giving of notice
or the passage of time, or both, would constitute an Event of Default
involving Guarantor, has occurred and is continuing and has not been
waived, or, if there shall have occurred and be continuing such an
Event of Default or event, specifying the nature thereof and the steps
being taken to remedy the same; and
(v) with reasonable promptness, such other information
respecting the financial condition, affairs and properties of Lessee
and Guarantor as Lessor may reasonably request from time to time.
ARTICLE 25
INSPECTION
----------
Lessee shall permit Lessor and its authorized representatives to
inspect the Leased Property during usual business hours subject to any security,
health, safety or confidentiality requirements of Lessee, the rights of the
Tenants, any Insurance Requirements relating to the Leased Property, or any
other restrictions imposed by law or applicable regulations.
ARTICLE 26
QUIET ENJOYMENT
---------------
So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder, Lessee shall peaceably and quietly have, hold and enjoy
the Leased Property for the Term hereof, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor, but subject to all liens
and encumbrances of record as of the date hereof or hereafter consented to by
Lessee. No failure by Lessor to comply with the foregoing covenant shall give
Lessee any right to cancel or terminate this Lease, or to fail to pay any other
sum payable under this Lease, or to fail to perform any other obligation of
Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right by
separate and independent action to pursue any claim or seek
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any damages it may have against Lessor as a result of a breach by Lessor of the
covenant of quiet enjoyment contained in this Article.
ARTICLE 27
NOTICES
-------
Any notices, demands, approvals and other communications provided for
herein shall be in writing and shall be delivered by telephonic facsimile,
overnight air courier, personal delivery or registered or certified U.S. Mail
with return receipt requested, postage paid, to the appropriate party at its
address as follows:
If to Lessor:
CAPSTONE CAPITAL CORPORATION
1000 Urban Center Drive
Suite 630
Birmingham, Alabama 35242
Attention: Mr. John W. Tyson
Telephone: (205) 967-2092
Telecopy: (205) 967-9066
With a copy to:
Mr. Thomas A. Ansley
Sirote & Permutt, P.C.
2222 Arlington Avenue South
Birmingham, Alabama 35205
Telephone: (205) 930-5300
Telecopy: (205) 930-5301
If to Lessee:
HAVENWYCK HOSPITAL, INC.
Mr. Bert G. Cibran
Ramsay Health Care, Inc.
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
Telephone: (305) 569-4621
Telecopy: (305) 569-4648
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With a copy to:
Adam A. Veltri, Esq.
Haythe & Curley
237 Park Avenue
20th Floor
New York, New York 10017
Telephone: (212) 880-6234
Telecopy: (212) 880-6056
Addresses for notice may be changed from time to time by written notice
to all other parties. Any communication will be effective (i) if given by mail,
upon the earlier of (a) three business days following deposit in a post office
or other official depository under the care and custody of the United States
Postal Service or (b) actual receipt, as indicated by the return receipt; (ii)
if given by telephone facsimile, when sent; and (iii) if given by personal
delivery or by overnight air courier, when delivered to the appropriate address
set forth.
ARTICLE 28
APPRAISAL
---------
In the event that it becomes necessary to determine the Fair Market
Value, Fair Market Value Purchase Price, the Fair Market Added Value, or the
Fair Market Rental Value of the Leased Property or a Substitute Property for any
purpose of this Lease, the party required or permitted to give notice of such
required determination shall include in the notice the name of a person selected
to act as an appraiser on its behalf. Within ten days after receipt of any such
notice, Lessor (or Lessee, as the case may be) shall by notice to Lessee (or
Lessor, as the case may be) appoint a second person as an appraiser on its
behalf. The appraisers thus appointed (each of whom must be a member of the
American Institute of Real Estate Appraisers or any successor organization
thereto) shall, within 45 days after the date of the notice appointing the first
appraiser, proceed to appraise the Leased Property or the Substitute Property,
as the case may be, to determine any of the foregoing values as of the relevant
date (giving effect to the impact, if any, of inflation from the date of their
decision to the relevant date); provided that if only one appraiser shall have
been so appointed, or if two appraisers shall have been so appointed but only
one such appraiser shall have made such determination within 50 days after the
making of Lessee's or Lessor's request, then the determination of such appraiser
shall be final and binding upon the parties. If two appraisers shall have been
appointed and shall have made their determinations within the respective
requisite periods set forth above and if the difference between the amounts so
determined shall not exceed ten percent of the lesser of such amounts, then the
Fair Market Value or Fair Market Added Value or the Fair Market Rental Value
shall be an amount equal to 50% of the sum of the amounts so determined. If the
difference between the amounts so determined shall exceed 10% of the lesser of
such amounts, then such two appraisers shall have 20 days to appoint a third
appraiser, but if such appraisers fail to do so, then either party may request
the American Arbitration Association or any successor organization thereto to
appoint an appraiser within 20 days of such request, and both parties shall be
bound by any appointment so made within such 20-day period. If no such appraiser
shall have been appointed within such 20 days or within 90 days of the original
request for a determination of Fair Market Value or Fair Market Added Value or
the Fair Market Rental Value, whichever is earlier, either Lessor or Lessee may
apply to any court having jurisdiction to have appointment made by such court.
Any appraiser appointed, by the American Arbitration Association
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or by such court, shall be instructed to determine the Fair Market Value or Fair
Market Added Value or the Fair Market Rental Value within 30 days after
appointment of such appraiser. The determination of the appraiser which differs
most in terms of dollar amount from the determinations of the other two
appraisers shall be excluded, and 50% of the sum of the remaining two
determinations shall be final and binding upon Lessor and Lessee as the Fair
Market Value or Fair Market Added Value or the Fair Market Rental Value for such
interest. However, in the event that following the appraisal performed by said
third appraiser, the dollar amount of two of such appraisals are higher and
lower, respectively, than the dollar amount of the remaining appraisal in equal
degrees, the determinations of both the highest and lowest appraisal,
respectively, shall be rejected and the determination of the remaining appraisal
shall be final and binding upon Lessor and Lessee as the Fair Market Value or
Fair Market Added Value or the Fair Market Rental Value for such interest. This
provision for determination by appraisal shall be specifically enforceable to
the extent such remedy is available under applicable law, and any determination
hereunder shall be final and binding upon the parties except as otherwise
provided by applicable law. Lessor and Lessee shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half of the
fees and expenses of the third appraiser and one-half of all other costs and
expenses incurred in connection with each appraisal.
ARTICLE 29
PURCHASE RIGHTS
---------------
29.1 THIRD PARTY OFFER. At any time during the Term hereof after the
third anniversary of the Commencement Date, Lessee shall have a first refusal
option to purchase the Leased Property in the event that Lessor, or its
successors and assigns, shall have received an offer from a third party to
purchase the Leased Property, which offer ("Third Party Offer") Lessor intends
to accept (or has accepted subject to Lessee's right of first refusal granted
herein). Lessor shall promptly give Lessee notice of any Third Party Offer that
Lessor intends to accept, together with the total purchase price offered in
connection therewith (the "Third Party Offer Price"). If the Third Party Offer
Price is less than the Minimum Purchase Price, then Lessee shall have the option
to purchase the Leased Property for an amount equal to the Minimum Purchase
Price. If the Third Party Offer Price is greater than the Minimum Purchase
Price, then Lessee shall have the option to purchase the Lease Property for an
amount equal to the Adjusted Minimum Purchase Price - Third Party. Lessee shall
have 30 days after receipt of such notice from Lessor within which time to
exercise Lessee's option to purchase. If Lessee exercises its option to
purchase, then such purchase shall be consummated within the time set forth in
the Third Party Offer and in accordance with the provisions of Article 17 hereof
to the extent not inconsistent herewith. If Lessee shall not exercise Lessee's
option to purchase within said 30-day period after receipt of said notice from
Lessor, Lessor shall be free for a period of 90 days after the expiration of
said 30-day period to sell the Leased Property to the third party at the Third
Party Offer Price and not at any other price without first offering the Leased
Property to Lessee in accordance with this Article 29. Whether or not such sale
is consummated, Lessee shall be entitled to exercise its right of first refusal
as provided in this Article, as to any subsequent sale of the Leased Property
during the Term of this Lease.
29.2 PROPOSED SALE. At any time during the Term hereof after the third
anniversary of the Commencement Date, Lessee shall have a first refusal option
to purchase the Leased Property in the event that Lessor, or its successors and
assigns, shall propose to sell (a "Proposed Sale") the Leased Property. Lessor
shall promptly notify Lessee of Lessor's intent to sell the Leased Property ,
together with Lessor's estimate of the Fair Market Value of the Leased Property.
If the Fair Market Value of the Leased Property
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is less than the Minimum Purchase Price, then Lessee shall have the option to
purchase the Leased Property for an amount equal to the Minimum Purchase Price.
If the Fair Market Value is greater than the Minimum Purchase Price, then Lessee
shall have the option to purchase the Leased Property for an amount equal to the
Adjusted Minimum Purchase Price - Proposed Sale. Lessee shall have 30 days after
receipt of notice from Lessor regarding a Proposed Sale within which time to
exercise Lessee's option to purchase unless Lessee disagrees with Lessor's
estimate of the Fair Market Value of the Leased Property. In the event of such
disagreement, the Fair Market Value of the Leased Property shall be determined
in accordance with the provisions of Article 28 and Lessee shall have 30 days
after the final determination of the same within which to exercise Lessee's
first refusal option to purchase pursuant to the terms of this Section 29.2. If
Lessee exercises its option, then such purchase shall be consummated in
accordance with the provisions of Article 17 hereof to the extent not
inconsistent herewith within 90 days of Lessee's notice of exercise. If Lessee
shall not exercise Lessee's option to purchase within such 30-day period after
receipt of said notice from Lessor or the final determination of the Fair Market
Value, as the case may be, Lessor shall be free for a period of 180 days after
the expiration of said 30-day period to sell the Leased Property to any third
party at the lesser of Lessor's estimate of the Fair Market Value of the Leased
Property and, in the event required by Lessee, the final determination of the
Fair Market Value of the Leased Property in accordance with the terms of Article
28 and not at any other price without first offering the Leased Property to
Lessee in accordance with this Article 29. Whether or not such sale is
consummated, Lessee shall be entitled to exercise its right of first refusal as
provided in this Article, as to any subsequent sale of the Leased Property
during the Term of this Lease.
ARTICLE 30
DEFAULT BY LESSOR
-----------------
30.1 DEFAULT BY LESSOR. Lessor shall be in default of its obligations
under this Lease if Lessor shall fail to observe or perform any term, covenant
or condition of this Lease on its part to be performed and such failure shall
continue for a period of 30 days after written notice thereof is received by
Lessor, unless such failure cannot with due diligence be cured within a period
of 30 days, in which case such failure shall not be deemed to continue if
Lessor, within said 30-day period, proceeds promptly and with due diligence to
cure the failure and diligently completes the curing thereof. The time within
which Lessor shall be obligated to cure any such failure shall also be subject
to extension of time due to the occurrence of any Unavoidable Delay. In the
event Lessor fails to cure any such default, Lessee, without waiving or
releasing any obligations hereunder, and in addition to all other remedies
available to Lessee hereunder or at law or in equity, may purchase the Leased
Property from Lessor for a purchase price equal to the greater of the Fair
Market Value Purchase Price or the Minimum Purchase Price of the Leased Property
minus an amount equal to any damage suffered by Lessee by reason of such
default. In the event Lessee elects to purchase the Leased Property, it shall
deliver a notice thereof to Lessor specifying a Payment Date occurring no less
than 90 days subsequent to the date of such notice on which it shall purchase
the Leased Property, and the same shall be thereupon conveyed in accordance with
the provisions of Article 17. Any sums owed Lessee by Lessor hereunder shall
bear interest at the Overdue Rate from the date due and payable until the date
paid.
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30.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of Section 30.1,
if Lessor shall breach any covenant to be performed by it under this Lease,
Lessee, after giving notice to and demand upon Lessor in accordance with Section
30.1, without waiving or releasing any obligation of Lessor hereunder, and in
addition to all other remedies available to Lessee hereunder and at law or in
equity, Lessee may (but shall be under no obligation at any time thereafter to)
make such payment or perform such act for the account and at the expense of
Lessor. All sums so paid by Lessee and all costs and expenses (including
reasonable attorneys' fees) so incurred, together with interest thereon at the
Overdue Rate from the date on which such sums or expenses are paid or incurred
by Lessee, shall be paid by Lessor to Lessee on demand or set off against the
Rent. The rights of Lessee hereunder to cure and to secure payment from Lessor
in accordance with this Section 30.2 shall survive the termination of this
Lease.
ARTICLE 31
ARBITRATION
-----------
31.1 CONTROVERSIES. Except with respect to the payment of Minimum Rent
hereunder, in case any controversy shall arise between the parties hereto as to
any of the requirements of this Lease or the performance thereof which
controversy the parties shall be unable to settle by agreement or as otherwise
provided herein, such controversy shall be determined by arbitration to be
initiated and conducted as provided in this Article 31.
31.2 APPOINTMENT OF ARBITRATORS. The party or parties requesting
arbitration shall serve upon the other a written demand therefor specifying the
matter to be submitted to arbitration, and nominating an arbitrator who is a
member in good standing of the American Arbitration Association ("AAA"). Within
20 days after receipt of such written demand and notification, the other party
shall, in writing, nominate a person who is a member in good standing with AAA
and the two arbitrators so designated shall, within ten days thereafter, select
a third arbitrator who is a person who is a member in good standing with AAA and
give immediate written notice of such selection to the parties and shall fix in
said notice a time and place for the first meeting of the arbitrators, which
meeting shall be held as soon as conveniently possible after the selection of
all arbitrators, at which time and place the parties to the controversy may
appear and be heard.
31.3 THIRD ARBITRATOR. In case the notified party or parties shall fail
to make a selection upon notice, as aforesaid, or in case the first two
arbitrators selected shall fail to agree upon a third arbitrator within ten days
after their selection, then such arbitrator or arbitrators may, upon application
made by either of the parties to the controversy, after 20 days' written notice
thereof to the other party or parties, have a third arbitrator appointed by any
judge of any United States court of record having jurisdiction in the state in
which the Leased Property is located or, if such office shall not then exist, by
a judge holding an office most nearly corresponding thereto.
31.4 ARBITRATION PROCEDURE. Said arbitrators shall give each of the
parties not less than ten days' written notice of the time and place of each
meeting at which the parties or any of them may appear and be heard and after
hearing the parties in regard to the matter in dispute and taking such other
testimony and making such other examinations and investigations as justice shall
require and as the arbitrators may deem necessary, they shall decide the
questions submitted to them in accordance with the rules of AAA. The decision of
said arbitrators in writing signed by a majority of them shall be final and
binding upon the
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parties to such controversy. In rendering such decisions and award, the
arbitrators shall not add to, subtract from or otherwise modify the provisions
of this Lease.
31.5 EXPENSES. The expenses of such arbitration shall be divided
between Lessor and Lessee unless otherwise specified in the decision of the
arbitrators. Each party in interest shall pay the fees and expenses of its own
counsel.
ARTICLE 32
FINANCING OF THE LEASED PROPERTY
--------------------------------
Lessor agrees that it will not grant or create any mortgage, deed of
trust, lien, encumbrance or other title retention agreement upon the Leased
Property to secure any indebtedness of Lessor (an "Encumbrance"), unless each
holder of such an Encumbrance agrees (a) to give Lessee the same notice, if any,
given to Lessor of any default or acceleration of any obligation underlying any
such Encumbrance or any sale in foreclosure of such Encumbrance, (b) to permit
Lessee to appear with its representatives and to bid at any public foreclosure
sale with respect to any such Encumbrance, (c) agrees to release the Leased
Property from the Encumbrance upon the exercise by Lessee of a right to purchase
contained in this Lease and the payment by Lessee of the applicable purchase
price, and (d) enters into an agreement with Lessee containing the provisions
described in Article 33 of this Lease. Lessee agrees to execute and deliver to
Lessor or the holder of an Encumbrance any written agreement required by this
Article within ten days of written request thereof by Lessor or such holder of
an Encumbrance.
ARTICLE 33
SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
---------------------------------------------
At the request from time to time by one or more holders of an
Encumbrance that may hereafter be placed upon the Leased Property or any part
thereof, and any and all renewals, replacements, modifications, consolidations,
spreaders and extensions thereof, Lessee will subordinate this Lease and all of
Lessee's rights and estate hereunder to each such Encumbrance and will attorn to
and recognize such holder (or the purchaser at any foreclosure sale or any sale
under a power of sale contained in any such Encumbrance or a holder by a deed in
lieu of foreclosure, as the case may be) as Lessor under this Lease for the
balance of the Term then remaining, subject to all of the terms and provisions
of this Lease; provided that each such holder simultaneously with or prior to
recording any such Encumbrance executes and delivers a written agreement in
recordable form (a) consenting to this Lease and agreeing that, notwithstanding
any such other lease, mortgage, deed of trust, right, title or interest, or any
default, expiration, termination, foreclosure, sale, entry or other act or
omission under, pursuant to or affecting any of the foregoing, Lessee shall not
be disturbed in peaceful enjoyment of the Leased Property nor shall this Lease
be terminated or canceled at any time, except in the event Lessor shall have the
right to terminate this Lease under the terms and provisions expressly set forth
herein; (b) agreeing that it will be bound by all the terms of this Lease
(including, without limitation, all terms with respect to Lessee's rights to
purchase or substitute for the Leased Property), perform and observe all of
Lessor's obligations set forth herein; and (c) agreeing that all proceeds of the
casualty insurance described in Article 13 of this Lease and all Awards
described in Article 14 will be made available to Lessor for restoration of the
Leased Property as and to the extent required by this Lease, subject only to
reasonable regulation regarding the manner of disbursement and application
thereof. Lessee agrees to execute and deliver to Lessor or the holder of an
Encumbrance any written agreement required by this Article within ten days of
written request
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thereof by Lessor or such holder of an Encumbrance. Lessee agrees to execute
from time to time, at the request of Lessor, an institutional investor of
Lessor's or a Facility Mortgagee, a certificate setting forth any defaults of
Lessor hereunder and the dates through which Rent has been paid and such other
matters as may be reasonably requested.
ARTICLE 34
EXTENDED TERMS
--------------
If no Event of Default shall have occurred and be continuing, Lessee is
hereby granted the right to extend the Term of this Lease for three additional,
consecutive five-year periods (each such period, an "Extended Term") for a
maximum possible Term of 26 years, seven months, three days, by giving written
notice to Lessor of each such extension at least 180 days, but not more than 270
days, prior to the expiration of the then-current Term; subject, however, to the
provisions of Section 13.7 hereof. Lessee may not exercise its option for more
than one Extended Term at a time. During each Extended Term, all of the terms
and conditions of this Lease shall continue in full force and effect, except
that the Minimum Rent for and during each of the Extended Terms shall be the
Fair Market Rental Value on the first day of such Extended Term. In any event,
the Minimum Rent shall continue to be increased throughout the Extended Terms in
accordance with the provisions of Section 2.1(b) hereof.
ARTICLE 35
MISCELLANEOUS
-------------
35.1 NO WAIVER. No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of the Rent during the continuance of any such breach, shall constitute a waiver
of any such breach or any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
35.2 REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Lessor or Lessee now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy and the exercise or beginning of the exercise by Lessor or Lessee of
any one or more of such rights, powers and remedies shall not preclude the
simultaneous or subsequent exercise by Lessor or Lessee of any or all of such
other rights, powers and remedies.
35.3 SURRENDER. No surrender to Lessor of this Lease or of the Leased
Property or any part thereof, or of any interest therein, shall be valid or
effective unless agreed to and accepted in writing by Lessor and no act by
Lessor or any representative or agent of Lessor, other than such a written
acceptance by Lessor, shall constitute an acceptance of any such surrender.
35.4 NO MERGER OF TITLE. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly, (a) this Lease or the leasehold estate created hereby or any
interest in this Lease or (b) such leasehold estate and the fee estate in the
Leased Property.
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35.5 TRANSFERS BY LESSOR. If Lessor or any successor owner of the
Leased Property shall convey the Leased Property in accordance with the terms
hereof, other than as security for a debt, the grantee or transferee of the
Leased Property shall expressly assume all obligations of Lessor hereunder
arising or accruing from and after the date of such conveyance or transfer
including, without limitation, all terms with respect to Lessee's rights to
purchase or substitute for the Leased Property), and shall be reasonably capable
of performing the obligations of Lessor hereunder and Lessor or such successor
owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Lessor under this Lease arising or accruing from
and after the date of such conveyance or other transfer and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
35.6 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee and Lessor
against the other arising out of or relating to this Lease and arising prior to
any date of termination of this Lease shall survive such termination. If any
term or provision of this Lease or any application thereof shall be invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby. If any late charges provided
for in any provision of this Lease are based upon a rate in excess of the
maximum rate permitted by applicable law, the parties agree that such charges
shall be fixed at the maximum permissible rate. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated except by an
instrument in writing and in recordable form signed by Lessor and Lessee. All
the terms and provisions of this Lease shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. The
headings in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. This Lease shall be governed by and
construed in accordance with the laws of Alabama, but not including its conflict
of laws rules. This Lease may be executed in one or more counterparts, each of
which shall be an original but, when taken together, shall constitute but one
document.
35.7 MEMORANDUM OF LEASE. Lessor and Lessee shall, promptly upon the
request of either, enter into a short form memorandum of this Lease in form
suitable for recording under the laws of the state in which the Leased Property
is located in which reference to this Lease, and all options contained herein,
shall be made.
35.8 TRANSFER OF LICENSES. Upon the expiration or earlier termination
of the Term, Lessee shall take all action necessary or appropriate to effect (or
useful in effecting) the transfer, to the extent permitted by any Legal
Requirement, to Lessor or Lessor's nominee of all licenses, operating permits
and other governmental authorizations and all service contracts which may be
necessary or useful in the ownership of the Facility and which relate
exclusively to the Facility which have not previously been transferred or
assigned to Lessor other than permits or licenses which pertain to the operation
of Lessee's business.
ARTICLE 36
GLOSSARY OF TERMS
-----------------
36.1 For purposes of this Lease, except as otherwise expressly provided
or unless the context otherwise requires, (a) the terms defined in this Article
36 have the meanings assigned to them in this Article 36 and include the plural
as well as the singular, (b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles
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as at the time applicable, (c) all references in this Lease to designated
"Articles", "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Lease, and (d) the words "herein",
"hereof" and "hereunder" and other words of similar import refer to this Lease
as a whole and not to any particular Article, Section or other subdivision, (e)
the word "including" shall mean "including without limitation," and (f) all
consents required of Lessor hereunder shall be in Lessor's sole and absolute
discretion, unless otherwise specifically set forth herein. For purposes of this
Lease, the following terms shall have the meanings indicated:
"AAA" means the American Arbitration Association.
"Additional Charges" has the meaning set forth in Section 2.3 hereof
together with all other items specifically included as "Additional Charges" in
this Lease.
"Adjusted Minimum Purchase Price - Proposed Sale" means the sum of (i)
the Minimum Purchase Price and (ii) the greater of (A) $500,000 and (B) 0.15
TIMES the excess, if any, of the Fair Market Value of the Leased Property over
the Minimum Purchase Price.
"Adjusted Minimum Purchase Price - Third Party" means the sum of (i)
the Minimum Purchase Price and (ii) the greater of (A) $500,000 and (B) 0.15
TIMES the excess, if any, of the Third Party Offer Price over the Minimum
Purchase Price.
"Adjustment Date" has the meaning set forth in Section 2.1(b) hereof.
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with Lessee. For the
purposes of this definition, "control", as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, through the
ownership of voting securities, partnership interests or other equity interests.
"Award" means all compensation, sums or anything of value awarded, paid
or received on a total or partial Condemnation.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national banks in the City of Birmingham,
Alabama are closed.
"Capital Additions" means one or more new buildings or one or more
additional structures annexed to any portion of any of the Leased Improvements,
which are constructed on any parcel or portion of the Land during the Term,
including the construction of a new wing or new story, or the rebuilding of the
existing Leased Improvements or any portion thereof not normal, ordinary or
recurring to maintain the Leased Property, excluding, however, any construction
governed by the provisions of Article 13.
"Capital Addition Cost" means the cost of any Capital Additions
proposed to be made by Lessee whether paid for by Lessee or Lessor. Such cost
shall include and be limited to (a) the cost of construction of the Capital
Additions, including site preparation and improvement, materials, labor,
supervision and certain related design, engineering and architectural services
and the cost of any fixtures, construction financing and miscellaneous items
approved in writing by Lessor, (b) if agreed to by Lessor in writing in
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advance, the cost of any land contiguous to the Leased Property purchased for
the purpose of placing thereon the Capital Additions or any portion thereof or
for providing means of access thereto, or parking facilities therefor, including
the cost of surveying the same, (c) the cost of insurance, real estate taxes,
water and sewage charges and other carrying charges for such Capital Additions
during construction, (d) the cost of title insurance, (e) reasonable fees and
expenses of legal counsel and accountants, (f) filing, registration and
recording taxes and fees, (g) documentary stamp taxes, if any, (h) environmental
assessments and boundary surveys and (i) all reasonable costs and expenses of
Lessor and any Lending Institution which has committed to finance the Capital
Additions, including, (A) the reasonable fees and expenses of their respective
legal counsel, (B) all printing expenses, (C) the amount of any filing,
registration and recording taxes and fees, (D) documentary stamp taxes, if any,
(E) title insurance charges, appraisal fees, if any, (F) rating agency fees, if
any, and (G) commitment fees, if any, charged by any Lending Institution
advancing or offering to advance any portion of the financing for such Capital
Additions.
"Cash Adjustment" has the meaning set forth in Section 20.1(d).
"Cash Flow Coverage Ratio" means, as of the end of any fiscal quarter,
the ratio of (a) Net Income for the twelve-month period ending at the end of
such quarter to (b) Total Rent payable in respect of such twelve-month period,
as evidenced by Financial Statements covering such period.
"Charge" has the meaning set forth in Article 11 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Date" has the meaning set forth in Article 1.
"Condemnation" means the transfer of all or any part of the Leased
Property as a result of (i) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or
transfer by Lessor to any Condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending.
"Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.
"Consolidated Financial Statements" means for any fiscal year or other
accounting period for Lessee and its respective consolidated Affiliates, audited
statements of earnings and retained earnings and of changes in financial
position for such period and for the period from the beginning of the respective
fiscal year of Lessee to the end of such period and the related balance sheet as
at the end of such period, together with the notes thereto, all in reasonable
detail and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year of Lessee, and prepared in
accordance with generally accepted accounting principles consistently applied,
except as noted.
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"Consumer Price Index" or "CPI" means the Consumer Price Index for All
Urban Consumers for the U.S. City Average for all Items (1982-1984=100) as
published by the United States Department of Labor, Bureau of Labor Statistics.
If the manner in which the Consumer Price Index is determined by the Bureau of
Labor Statistics shall be substantially revised (including a change in the base
index year), an adjustment shall be made by Lessor in such revised index which
would produce results equivalent, as nearly as possible, to those which would
have been obtained if the Consumer Price Index had not been so revised. If the
Consumer Price Index shall become unavailable to the public because publication
is discontinued or otherwise, or if equivalent data is not readily available to
enable Lessor to make the adjustment referred to in the preceding sentence,
Lessor will substitute therefor a comparable index reasonably acceptable to
Lessee based upon changes in the cost of living or purchasing power of the
consumer dollar published by any other governmental agency, or if no such index
shall be available, then a comparable index published by a major bank or other
financial institution or by a university or a recognized financial publication.
"Credit Enhancements" means all cash collateral, security deposits,
security interests, letters of credit, pledges, prepaid rent or other sums,
deposits or interests held by Lessee, if any, to secure obligations with respect
to the Leased Property, the Tenant Leases or the Tenants.
"Current Yield" means as of any date the annual Minimum Rent, as
adjusted from time-to-time pursuant to the terms of this Lease, divided by the
sum of (i) the purchase price as set forth in the Purchase and Sale Agreement
plus (ii) all Capital Additions Costs paid for or financed by Lessor which have
not been repaid by Lessee.
"Date of Taking" means the date the Condemnor has the right to
possession of the property being condemned.
"Encumbrance" has the meaning set forth in Article 32.
"Event of Default" has the meaning set forth in Section 15.1.
"Extended Term" has the meaning set forth in Section 34.
"Facility" means the building, to be operated on the Leased Property
commonly known as Havenwyck Hospital.
"Facility Mortgage" has the meaning set forth in Section 12.1.
"Facility Mortgagee" has the meaning set forth in Section 12.1.
"Fair Market Added Value" means the Fair Market Value (as hereinafter
defined) of the Leased Property (including all Capital Additions) less the Fair
Market Value of the Leased Property determined as if no Capital Additions paid
for by Lessee without financing by Lessor had been constructed.
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"Fair Market Rental Value" means the fair market rental value of the
Leased Property or any Substitute Property, (a) assuming the same is
unencumbered by this Lease, (b) determined in accordance with the appraisal
procedures set forth in Article 28 or in such other manner as shall be mutually
acceptable to Lessor and Lessee, and (c) not taking into account any reduction
in value resulting from an indebtedness to which the Leased Property or
Substitute Property may be subject.
"Fair Market Value" means the fair market value of the Leased Property
or any Substitute Property, including all Capital Additions, (a) assuming the
same is unencumbered by this Lease, (b) determined in accordance with the
appraisal procedures set forth in Article 28 or in such other manner as shall be
mutually acceptable to Lessor and Lessee, and (c) not taking into account any
reduction in value resulting from any indebtedness to which the Leased Property
or such Substitute Property is subject or which encumbrance Lessee or Lessor is
otherwise required to remove pursuant to any provision of this Lease or agrees
to remove at or prior to the closing of the transaction as to which such Fair
Market Value determination is being made. The positive or negative effect on the
value of the Leased Property or Substitute Property attributable to the interest
rate, amortization schedule, maturity date, prepayment penalty and other terms
and conditions of any Encumbrance on the Leased Property or any Substitute
Property, as the case may be, which is not so required or agreed to be removed
shall be taken into account in determining such Fair Market Value.
"Fair Market Value Purchase Price" means the Fair Market Value less the
Fair Market Added Value.
"Fiscal Year" means the 12-month period from July 1 to the next
succeeding June 30.
"Fixtures" has the meaning set forth in Article 1.
"Full Replacement Cost" has the meaning set forth in Section 12.2.
"Guarantor" means Ramsay Health Care, Inc., a Delaware corporation ,and
owner of 100% of the issued and outstanding capital stock of Lessee.
"Guaranty" means a guaranty of the obligations of Lessee hereunder,
executed by Guarantor.
"Hazardous Materials" means any substance, including asbestos or any
substance containing asbestos, the group of organic compounds known as
polychlorinated biphenyls, flammable explosives, radioactive materials, medical
waste, chemicals, pollutants, effluents, contaminants, emissions or any other
related materials and items included in the definition of hazardous or toxic
wastes, materials or substances under any Hazardous Materials Law.
"Hazardous Materials Law" means any law, regulation or ordinance
relating to environmental conditions, medical waste and industrial hygiene,
including the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), the Hazardous Materials Transportation Act, the Federal Water
Pollution Control Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the Atomic Energy Act and
all similar federal, state and local environmental statutes and ordinances,
whether heretofore or
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hereafter enacted or effective and all regulations, orders, or decrees
heretofore or hereafter promulgated thereunder.
"Impositions" means, collectively, all taxes relating to the Leased
Property, including all ad valorem, sales and use, gross receipts, action,
privilege, rent (with respect to the Tenant Leases) or similar taxes,
assessments (including all assessments for public improvements or benefits,
whether or not commenced or completed prior to the date hereof and whether or
not to be completed within the Term), water, sewer or other rents and charges,
excises, tax levies, fees (including license, permit, inspection, authorization
and similar fees), and all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character in respect of the Leased Property and/or the Rent (including all
interest and penalties thereon due to any failure in payment by Lessee), which
at any time prior to, during or in respect of the Term hereof may be assessed or
imposed on or in respect of or be a lien upon (a) Lessor or Lessor's interest in
the Leased Property, (b) the Rent, the Leased Property or any part thereof or
any rent therefrom or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, sales from, or activity conducted
on, or in connection with, the Leased Property or the Tenant Leases or use of
the Leased Property or any part thereof; provided that nothing contained in this
Lease shall be construed to require Lessee to pay (1) any tax based on net
income (whether denominated as a franchise or capital stock or other tax)
imposed on Lessor, (2) any transfer or net revenue tax of Lessor, (3) any tax
imposed with respect to the sale, exchange or other disposition by Lessor of any
portion of the Leased Property or the proceeds thereof, or (4) except as
expressly provided elsewhere in this Lease, any principal or interest on any
Encumbrance on the Leased Property, except to the extent that any tax,
assessment, tax levy or charge which Lessee is obligated to pay pursuant to this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1), (2) or (3) is levied, assessed or imposed expressly in lieu thereof.
"Indebtedness" with respect to Lessee or Guarantor means: (i) any debt
(a) for borrowed money or (b) evidenced by a bond, note, debenture or similar
instrument (including purchase money obligations and accounts payable and other
obligations created or assumed in the course of business in connection with the
obtaining of materials or services) given in connection with the acquisition of
any business, property or assets, whether by purchase, merger, consolidation or
otherwise, or (c) which is a direct or indirect obligation which arises as a
result of banker's acceptances or bank letters of credit issued to secure
obligations of such person, or to secure the payment of bonds issued for the
benefit of such person, whether contingent or otherwise; (ii) any debt of others
described in the preceding clause (i) which such person has guaranteed or for
which it is otherwise liable, (iii) the obligation of such person as lessee
under any lease of property which is (a) reflected on such person's balance
sheet as a capitalized lease or (b) an operating lease; and (iv) any deferral,
amendment, renewal, extension, supplement or refunding of any liability of the
kind described in any of the preceding clauses (i), (ii) and (iii).
"Initial Term" has the meaning set forth in Article 1.
"Insurance Requirements" means all terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.
"Land" has the meaning set forth in Article 1.
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"Lease" means this Lease.
"Lease Amendment" has the meaning set forth in Section 9.3(b)(iv).
"Leased Improvements" and "Leased Property" have the meanings set forth
in Article 1.
"Legal Requirements" means all federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Leased Property or the
construction, use or alteration thereof, whether now or hereafter enacted and in
force, including any which may (a) require repairs, modifications or alterations
of or to the Leased Property, or (b) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, actions and encumbrances
contained in any instruments, either of record or known to Lessee (other than
encumbrances created by Lessor without the consent of Lessee), at any time in
force affecting the Leased Property.
"Lending Institution" means any insurance company, federally insured
commercial or savings bank, national banking association, savings and loan
association, employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension plan, college or university, or real estate investment
company including any corporation qualified to be treated for federal tax
purposes as a real estate investment trust having a net worth of at least
$50,000,000.
"Lessee" has the meaning set forth in the first paragraph of this
Lease.
"Lessor" has the meaning set forth in the first paragraph of this
Lease.
"Minimum Rent" has the meaning set forth in Section 2.1(a).
"Minimum Purchase Price" means the sum of (i) $9,850,000, as such
amount is increased at the rate of three percent compounded annually for each
year (to be prorated for partial years) between the Commencement Date and the
date of repurchase by Lessee, PLUS (ii) the sum of all Capital Addition Costs
relating to the Leased Property paid for or financed by Lessor to the extent
that as of the date of repurchase of the Leased Property such Capital Additions
Costs have not been repaid by Lessee, MINUS (iii) the net amount (after
deduction of all reasonable legal fees and other costs and expenses, including
expert witness fees, incurred by Lessor in connection with obtaining any such
award or proceeds) of all Awards received and retained by Lessor from
Condemnation of the Leased Property and all insurance proceeds in excess of the
costs of any restoration which are retained by Lessor, PLUS (ii)$300,000.
"Net Income" of Lessee means, for any period, net income before federal
and state taxes and interest expense paid or payable in respect of such period,
PLUS amounts which, i the determination of net income for such period, have been
deducted for amortization of debt discount in respect of Indebtedness of Lessee
for borrowed money, depreciation of tangible assets, amortization of intangible
assets, Total Rent payable in respect of such period, and management fees paid
or payable to Guarantor in respect of such period, all as determined in
accordance with generally accepted accounting principles consistently applied
(except to the extent that this Lease shall be accounted for as an operating
lease by Lessee.)
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"Officer's Certificate" means a certificate of Lessee signed by the
Chairman of the Board of Directors, the President, any Vice President or another
officer authorized to so sign by the Board of Directors or By-Laws of Lessee, or
any other person whose power and authority to act has been authorized by
delegation in writing by any of the persons holding the foregoing offices.
"Ordinary Course of Business" means the ordinary course of business for
Lessee consistent with past custom and practice (including quantity and
frequency).
"Overdue Rate" means as of any date, a rate per annum equal to the
Prime Rate as of such date, plus two percent, but in no event greater than the
maximum rate then permitted under applicable law.
"Payment Date" means any due date for the payment of the installments
of Minimum Rent under this Lease.
"Permitted Assignment for Security" means an assignment of Lessee's
leasehold interest hereunder as collateral security for funded indebtedness of
Lessee or an Affiliate of Lessee, pursuant to documentation which (i) expressly
provides that such assignment and all rights of the assignee thereunder shall be
subject and subordinate in all respects to the terms of this Lease, and to any
Encumbrance upon the Leased Property then existing or thereafter granted or
created by Lessor, provided that the holder of any such Encumbrance complies
with Articles 32 and 33 hereof (including without limitation the provisions with
respect to subordination and non-disturbance contained therein), (ii) obligates
the assignee thereunder to execute and deliver reasonably appropriate
documentation to evidence such subordination to Lessor and to the holder of any
such Encumbrance, provided that such holder complies with the provisions of said
Articles 32 and 33, and (iii) is otherwise approved by Lessor, which approval
shall not be unreasonably withheld.
"Permitted Exceptions" has the meaning set forth in Article 1 hereof.
"Permitted Liens" means (i) the Permitted Exceptions, (ii) pledges or
deposits made to secure payments of worker's compensation insurance (or to
participate in any fund in connection with worker's compensation insurance),
unemployment insurance, pensions or social security programs, (iii) liens
imposed by mandatory provisions of law such as for materialmen, mechanics,
warehousemen and other like liens arising in the Ordinary Course of Business,
securing indebtedness whose payment is not yet due and payable, (iv) liens for
taxes, assessments and governmental charges or levies if the same are not yet
due and payable or if the same are being contested in good faith and as to which
adequate cash reserves have been provided, (v) liens arising from good faith
deposits in connection with tenders, leases, real estate bids or contracts
(other than contracts involving the borrowing of money), pledges or deposits to
secure public or statutory obligations and deposits to secure (or in lieu of)
surety, stay, appeal or customs bonds and deposits to secure the payment of
taxes, assessments, duties or other similar charges, (vi) liens to secure
purchase money indebtedness, so long as the indebtedness incurred to purchase
the new asset is secured only by such asset, or (vii) encumbrances consisting of
zoning restrictions, easements or other restrictions on the use of real
property; provided that such items do not impair the use of such property for
the purposes intended, none of which is violated by existing or proposed
structures or land use.
"Person" means a natural person, corporation, partnership, trust,
association, limited liability company or other entity.
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"Primary Intended Use" has the meaning set forth in Section 6.2(a).
"Prime Rate" means the annual rate reported by The Wall Street Journal,
Eastern Edition (or, if The Wall Street Journal shall no longer be published or
shall cease to report such rates, then a publication or journal generally
acceptable in the financial industry as authoritative evidence of prevailing
commercial lending rates) from time to time as being the prevailing prime rate
(or, if more than one such rate shall be published in any given edition, the
arithmetic mean of such rates). The prime rate is an index rate used by The Wall
Street Journal to report prevailing lending rates and may not necessarily be its
most favorable lending rate available. Any change in the Prime Rate hereunder
shall take effect on the effective date of such change in the prime rate as
reported by The Wall Street Journal, without notice to Lessee or any other
action by Lessor. Interest shall be computed on the basis that each year
contains 360 days, by multiplying the principal amount by the per annum rate set
forth above, dividing the product so obtained by 360, and multiplying the
quotient thereof by the actual number of days elapsed.
"Proposed Sale" has the meaning set forth in Section 29.2.
"Purchase and Sale Agreement" means the agreement dated as of even date
herewith, between Lessee, as "Seller", and Lessor as "Purchaser" relating to the
acquisition by Lessor of the Leased Property.
"Related Leases" has the meaning set forth i Section 15(a).
"Rent" means, collectively, the Minimum Rent and the Additional
Charges.
"Request" has the meaning set forth in Section 9.3(a).
"Substitution Date" has the meaning set forth in Section 20.1.
"Substitute Properties" has the meaning set forth in Section 20.1.
"Taking" means a taking or voluntary conveyance during the Term hereof
of all or part of the Leased Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of any Condemnation
or other eminent domain proceeding affecting the Leased Property whether or not
the same shall have actually been commenced.
"Tenant" means the lessees or tenants under the Tenant Leases, if any.
"Tenant Leases" means all leases, subleases, assignments and other
rental agreements (written or verbal, now or hereafter in effect), if any, that
grant a possessory interest in and to any space in the Improvements, or that
otherwise grant possessory or occupancy rights with regard to the Leased
Property, and all Credit Enhancements, if any, held in connection therewith.
"Term" means the Initial Term and any Extended Term as to which Lessee
has exercised its options to extend contained in Article 34 hereof unless
earlier terminated pursuant to the provisions hereof.
"Third Party Offer" has the meaning set forth in Section 29.1.
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"Third Party Purchase Price" has the meaning set forth in Article 29.1.
"Treasury Yield" means as of any date the weekly average yield on
United States Treasury Securities - Constant Maturity Series issued by the
United States Government, as most recently published by the Federal Reserve
Board in Federal Reserve Statistical Release H.15(519). If, with respect to the
Treasury Yield, Lessor determines that the sale of Treasury Securities by the
United States Government has been suspended, or Treasury Securities are not
being offered for sale, or the weekly average yield is no longer printed by the
Federal Reserve Board in Federal Reserve Statistical Release H.15(519) or for
any other reason Lessor is not able to obtain a quotation from the Federal
Reserve for the sale of such Treasury Securities, then Lessor will promptly give
notice to Lessee and advise Lessee of a new index for determining the interest
rate to be used in connection with this Lease, which rate, in the good faith
judgment of Lessor, will be substantially equivalent to the Treasury Yield.
"Unavoidable Delays" means delays due to strikes, lockouts, inability
to procure materials after the exercise of reasonable efforts, power failure,
acts of God, governmental restrictions, enemy action, civil commotion, fire,
unavoidable casualty or other causes beyond the control of the party responsible
for performing an obligation hereunder, provided that lack of funds shall not be
deemed a cause beyond the control of either party hereto unless such lack of
funds is caused by the failure of the other party hereto to perform any
obligations of such other party under this Lease.
"Unsuitable for Its Primary Intended Use" as used anywhere in this
Lease, shall mean that, by reason of damage or destruction, or a partial Taking,
in the good faith judgment of Lessee, reasonably exercised, the Facility cannot
be profitably operated for its Primary Intended Use, taking into account, among
other relevant factors, the number of usable suites and number and diversity of
Tenants affected by such damage or destruction or partial Taking.
IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and their respective corporate seals to be hereunto affixed and attested by
their respective officers thereunto duly authorized as of the date first written
above.
Lessor:
CAPSTONE CAPITAL CORPORATION
By /s/ John W. McRoberts
--------------------------------
John W. McRoberts
President
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Lessee:
HAVENWYCK HOSPITAL, INC.
By: /s/ Jorge Rico
-----------------------------------
Name: Jorge Rico
--------------------------------
Title: Vice President
--------------------------------
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EXHIBIT A
PROPERTY DESCRIPTION
(Parcel 1)
Situated in the City of Auburn Hills, Oakland County, Michigan, described as:
Part of the Northwest 1/4 of Section 23, Town 3 North, Range 10 East, being more
particularly described as follows: Beginning at a point which is North 00
degrees 13 minutes 10 seconds East 1360.94 feet along the West line of Section
23, which is also the East line of Assessor's Plat No. 104 (liber 48, page 26
and 26a, Oakland County Records) from the West 1/4 corner of Section 23, Town 3
North, Range 10 East; thence along the West line of Section 23, 897.98 feet;
thence North 89 degrees 00 minutes 00 seconds East 270.00 feet; thence South 65
degrees 09 minutes 27 seconds East 538.14 feet; thence South 39 degrees 10
minutes 58 seconds East 292.62 feet; thence South 01 degrees 26 minutes 00
seconds West 135.00 feet; thence along the center line of Mt. Clemens Road
(University Drive), Southwesterly 177.16 feet along a curve concave curve to the
Northwest (Radius of 1084.04 feet, central angle 09 degrees 21 minutes 50
seconds, long chord bears South 67 degrees 41 minutes 35 seconds West 176.97
feet), and South 72 degrees 22 minutes 30 seconds West 817.91 feet to the point
of beginning.
Excepting the following described parcel for University Drive Right-of-Way.
Beginning at a point which is North 00 degrees 13 minutes 10 seconds East,
1360.94 feet along the West line of said Section 23, which is also the east line
of Assessor's Plat No. 104 (liber 48, page 26 and 26a, Oakland County Records)
from the West 1/4 corner of said Section 23; thence continuing along the West
line of said Section 23, North 00 degrees 13 minutes 10 seconds East 63.14 feet;
thence North 72 degrees 04 minutes 17 seconds East 867.83 feet; thence 128.76
feet along the arc of a curve to the left having a radius of 825.00 feet passing
through a central angle of 08 degrees 56 minutes 32 seconds with a long chord
bearing of North 67 degrees 36 minutes 01 seconds, East 128.63 feet; thence
South 01 degrees 26 minutes 00 seconds West, 64.50 feet; thence 177.16 feet
along the arc of a curve to the right having a radius of 1084.04 feet passing
through a central angle of 09 degrees 21 minutes 50 seconds with a long chord
bearing of South 67 degrees 41 minutes 35 seconds West, 176.97 feet; thence
South 72 degrees 22 minutes 30 seconds West, 817.91 feet to the point of
beginning.
Parcel Identification No. 14-23-101-007
Commonly known as: 1525 University Drive
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(Parcel 2)
Situated in the City of Auburn Hills, Oakland County, Michigan, described as:
Part of the Northwest 1/4 of Section 23, Town 3 North, Range 10 East, described
as beginning at a point in the center line of Mt. Clemens Road located North 00
degrees 13 minutes 10 seconds East 1360.94 feet along the West line of Section
23, which is also the East line of Assessor's Plat No. 104 and North 72 degrees
22 minutes 30 seconds East 751.66 feet along the center line of Mt. Clemens Road
from the West 1/4 corner of said Section 23; thence from said point of beginning
North 72 degrees 22 minutes 30 seconds East 66.25 feet along the centerline of
Mt. Clemens Road; thence on a curve to the left (radius 1084.04) feet, delta
angle 9 degrees 46 minutes 41 seconds, Long Chord North 67 degrees 29 minutes 09
seconds East 184.78 feet) an arc distance of 185.00 feet along the center line
of Mt. Clemens Road; thence South 26 degrees 21 minutes 20 seconds East 281.15
feet; thence South 61 degrees 44 minutes 10 seconds West 205.78 feet to the
center line of Doris Road; thence North 34 degrees 27 minutes 10 seconds West
313.56 feet along the center line of Doris Road to the point beginning. Subject
to the rights of the public and of any governmental unit in any part thereof
taken, used or deeded for street, road or highway purposes.
Containing 1.520 acres more or less.
Parcel Identification No. 14-23-102-001
Commonly known as: 1360 Doris Road
(Parcel 3)
The East 190.75 feet of Lot 1 and all of Lot 2, Assessor's Plat No. 104 as
recorded in Liber 48, Pages 26 and 26a of Plats, Oakland County Records, more
particularly described as: Beginning at the Southeast corner of Lot 2; thence
South 69 degrees 39 minutes 05 seconds West along the centerline of University
Drive 540.97 feet; thence North 01 degrees 40 minutes 58 seconds West 1,472.03
feet; thence North 88 degrees 14 minutes 06 seconds East 512.52 feet to a point
on the East line of Section 23; thence along said section line South 01 degrees
40 minutes 58 seconds East 1,299.64 feet to the point of beginning.
Excepting the following 2 parcels for University Drive Right-of-Way:
Commencing at the Southeasterly corner of Lot 1, "Assessor's Plat No. 104",
subdivision of part of the Northeast 1/4 and part of the Southeast 1/4, Section
22, Town 3 North, Range 10 East, City of Pontiac, Oakland County, Michigan and
recorded in Liber 48 of Plats, Pages 26, and 26a, Oakland County Records, said
Southeasterly corner being on the centerline of University Drive (variable
width); thence North 01 degrees 40 minutes 58 seconds West, 34.83 feet along the
Easterly line of said Lot 1, also being the Westerly line of Lot 2 of said
"Assessor's Plat Not 104", to the point of beginning; thence South 69 degrees 39
minutes 05 seconds West 201.34 along the existing Northwesterly Right-of-Way
line of University Drive; thence North 01 degrees 40 minutes 58 seconds West
28.50 feet along the Westerly line of the Easterly 190.75 feet of said Lot 1;
thence North 69 degrees 39 minutes 05 seconds East 201.34 feet; thence South 01
degrees 40 minutes 58 seconds East 28.50 feet along said Easterly line of Lot 1
to the point of beginning. Being a part of said Lot 1, also being 27.00 feet in
width and containing 5,436 square feet of land. Also being subject to easements
and restrictions of record, if any.
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Commencing at the Southwesterly corner of Lot 2, "Assessor's Plat No. 104" a
subdivision of part of the Northeast 1/4 and part of the Southeast 1/4, Section
22, Town 3 North, Range 10 East, City of Pontiac, Oakland County, Michigan and
recorded in Liber 48 of Plats, Pages 26 and 26a, Oakland County Records, said
Southwesterly corner being on the centerline of University Drive (variable
width); thence North 01 degrees 40 minutes 58 seconds West, 34.83 feet along the
Westerly line of said Lot 2, also being the Easterly line of Lot 1 of said
"Assessor's Plat No. 104" to the point of beginning; thence continuing North 01
degrees 40 minutes 58 seconds East 28.50 feet along said Westerly line of Lot 2;
thence North 69 degrees 39 minutes 05 seconds East 339.63 feet; thence South 01
degrees 40 minutes 58 seconds East 28.50 feet along the Easterly line of said
Lot 2, also being the Easterly line of said "Assessor's Plat No. 104", also
being the East line of said Section 22, also being the Easterly limits of the
City of Pontiac; thence South 69 degrees 39 minutes 05 seconds West, 339.63 feet
along the existing Northwesterly Right- of-Way line of University Drive to the
point of beginning. Being a part of said Lot 2, also being 27.00 feet in width
and containing 9.170 square feet of land. Also being subject to easements and
restrictions of record, if any.
Subject to the riparian rights of the public in Galloway Lake.
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EXHIBIT B
PERMITTED EXCEPTIONS
1. Payment of any taxes not yet due and payable.
2. Subject to that certain Right-of-Way granted to the City of Auburn
Hills over the Northwesterly 10.30 feet of the Southeasterly 60.30 feet
of Parcel 1, bordering University Drive, as more fully described in an
unrecorded Quit Claim Deed wherein Havenwyck Hospital, Inc. is the
grantor, dated May 25, 1995.
3. Subject to that certain Right-of-Way granted to the City of Pontiac
over the Northwesterly 27 feet of the Southeasterly 60 feet of Parcel
3, bordering University Drive, as more fully described in an unrecorded
Warranty Deed wherein Michigan Psychiatric Services, Inc., a/k/a
Havenwyck Hospital, a Michigan Corporation is the grantor, dated
December 5, 1997.
4. Rights of the public and of any governmental unit in any part thereof
taken, used or deeded for street, road or highway purposes for Doris
Road.
(Parcel 2)
5. Rights, if any, of riparian owners and the public to use the surface,
sub-surface and bed of Galloway Lake for purposes of navigation and
recreation.
(Parcels 1 and 3)
6. Any adverse claims based on the assertion that the bed of Galloway Lake
has changed location as a result of other than natural causes.
(Parcels 1 and 3)
7. Easement for and right to erect, construct and maintain a line of poles
and ancillary equipment vested in the Michigan State Telephone Company
by instrument dated February 1, 1917 and recorded February 28, 1917 in
liber 3 of Miscellaneous Records, page 232.
(Parcels 1 and 2)
8. Subject to easement for highway purposes as to University Drive and the
terms, conditions and provisions contained therein vested in the Board
of County Road Commissioners of the County of Oakland by instrument
dated October 22, 1952 and recorded December 4, 1952 in liber 2943,
page 32.
(Parcels 1 and 2)
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9. Easement for the installation, repair, replacement and maintenance of
sanitary sewer lines vested in the Charter township of Pontiac, a
Michigan constitutional corporation, by instrument dated September 3,
1982 and recorded September 28, 1982 in liber 8248, page 127.
(Parcel 1)
10. Easement for the installation, repair, replacement and maintenance of
watermain lines vested in the Charter Township of Pontiac, a Michigan
constitutional corporation, by instrument dated September 3, 1982 and
recorded September 28, 1982 in liber 8248, page 129.
(Parcel 1)
11. Easement for the construction, operation, maintenance, repair and/or
replacement of the Joachim Drain and the terms, conditions and
provisions contained therein vested in the Joachim Drain Drainage
District by instrument dated April 26, 1983 and recorded May 25, 1983
in liber 8382, page 750 and by instrument dated April 26, 1983 and
recorded May 25, 1983 in liber 8382, page 755.
(Parcel 1)
12. The following matters as disclosed by survey prepared by Johnson &
Anderson, Inc., dated October 18, 1988 and last revised on September
15, 1997, Job No. 12917, latest revision September 10, 1998.
(Parcel 1)
a) concrete curb at the West side of subject property.
b) unrecorded 10 foot wide easement given to the City of Auburn Hills.
c) existing 8" water main reserved over subject property.
d) existing 10" sanitary sewer line reserved over subject property.
e) sanitary manhole(s) reserved over subject property.
f) existing storm sewers and manholes reserved over subject property.
g) 6' chain link fence encroaching on University Drive Right of Way.
13. Rights, if any, of others to the use of existing bituminous parking at
West side of Parcel 1 as disclosed by survey of Johnson & Anderson,
Inc., dated October 18, 1988 and last revised on September 15, 1997,
Job No. 12917, latest revision September 10, 1998.
(Parcel 1)
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14. Gas main, water main, hydrant, utility poles and storm drain as
disclosed on survey prepared by Johnson & Anderson, Inc., being Job No.
12919 dated October 18, 1988, latest revision September 10, 1998.
(Parcel 2)
15. Encroachment of bituminous parking and curb over the property adjoining
Parcel 2 to the South, disclosed in the survey prepared by Johnson &
Anderson, Inc., Job No. 12918, dated October 18, 1988.
(Parcel 2)
16. Easement for the construction and maintenance of sewers, drains or
water mains vested in the City of Pontiac, a municipal corporation, by
instrument dated December 30, 1961 and recorded January 22, 1962 in
liber 4267, page 475 and by instrument dated December 30, 1961,
recorded January 22, 1962 in liber 4267, page 479.
(Parcel 3)
17. Agreement with easements and restrictions in favor of Michigan Bell
Telephone Company for the installation and maintenance of communication
facilities and ancillary equipment as contained in the instrument
recorded in liber 4897, page 114.
(Parcel 3)
18. Easement for the construction, operation, maintenance, repair and/or
replacement of the Joachim Relief Drains and the terms, conditions and
provisions contained therein vested in the Joachim Relief Drains
Drainage District by instrument dated April 13, 1972 and recorded May
15, 1972 in liber 5866, page 317, and by instrument recorded __________
on in liber 8382, page 755.
(Parcel 3)
19. Easement for the construction, operation, maintenance, repair and/or
replacement of the Joachim Drain and the terms, conditions and
provisions contained therein vested in the Joachim Drain Drainage
District by instrument dated July 19, 1983 and recorded August 10, 1983
in liber 8440, page 5 and by the instrument dated July 18, 1983,
recorded August 10, 1983 in liber 8440, page 12, and by instrument
recorded ___________ in liber 8413, page 700.
(Parcel 3)
20. Easement for Drainage Purposes granted to the City of Auburn Hills, as
more fully described in an unrecorded Quit Claim Deed wherein Havenwyck
Hospital is the grantor, dated May 25, 1995.
(Parcel 3)
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21. Rights of others to use the bituminous drive for ingress and egress to
and from the Havenwyck Hospital parking lot, if any, as disclosed on
survey prepared by Johnson & Anderson, Inc., Job No. 12918, dated
October 18, 1988, latest revision September 10, 1998.
(Parcel 3)
22. Encroachment of bituminous parking lot on the Easterly portion of the
property as disclosed on survey prepared by Johnson & Anderson, Inc.,
Job No. 12918, dated October 18, 1988, last revision September 10,
1998.
(Parcel 3)
23. Rights or claims of parties in possession not shown of record.
24. Should the deed required in schedule B, Section I, Paragraph 4,5 and 6,
contain the statement provided for in Section 109 (3) of the
Subdivision Control Act of 1967, as amended, the policy(s) to be issued
pursuant to this Commitment will contain the following exception:
Terms, conditions and provisions contained in the instrument recorded
____________ in Liber __________, Page __, as same pertain to the
transfer of divisions under Section 109(3) of the Subdivision Control
Act of 1967, as amended.
25. Liens for any tax and/or assessment which become due and payable on or
after the effective date of this Commitment.
26. Written leases with third party tenants for office space within the
Property.
27. Lease between Havenwyck Hospital, Inc. and Mamoun DabGaugh, M.D., dated
January 4, 1997.
28. Lease between Havenwyck Hospital, Inc. and Srinivasa R. Kodali, M.D.,
dated January 26, 1996.
29. Lease between Havenwyck Hospital, Inc. and Doopyo Hong, M.D., dated
January 8, 1993.
30. Lease between Havenwyck Hospital, Inc. and James W. Johnson, M.D.,
dated January 8, 1996.
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EXHIBIT C
REPAIRS
1. The house located on the Property west of the main hospital is in very
bad repair. It is not secure and is most likely a health hazard. Some
hospital material is stored in this house, including some chemicals. A
great deal of time and effort would be required to bring the house back
to use. DEC recommends that this house be well secured or razed. Also,
chemical stored in the house should be returned to the main hospital
for proper storage.
2. The property adjoining the parcel on which the former residence is
located has dumped asphalt shingles onto the Property. These should be
removed and properly disposed.
3. A large amount of waste has been dumped on the western portion of the
Property. A considerable amount of waste is concentrated at the
northeast corner of that parcel that contains the ballfield and
consists of mattresses, wood, tires and some household trash. This
waste pile should be removed and disposed properly. Automobile and
truck tires have also been dumped across the western portion of the
Property and should be removed and properly disposed.
4. A former domestic fuel oil tank which had probably been converted to a
grill was noted in the lake which is included in the western property,
northwest of the main hospital. This should be removed from the lake
and disposed properly.
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EXHIBIT 10.117
GUARANTY OF OBLIGATIONS
PURSUANT TO LEASE AGREEMENT
The undersigned, RAMSAY HEALTH CARE, INC., a Delaware corporation
("Guarantor"), as a material and necessary inducement to CAPSTONE CAPITAL
CORPORATION, a Maryland corporation (the "Lessor"), to enter into a Lease
Agreement of even date herewith (the "Lease") with HAVENWYCK HOSPITAL, INC., a
Michigan corporation (the "Lessee"), for the demise by the Lessor to Lessee of
real property and the improvements located thereon commonly known as Havenwyck
Hospital located at 1525 University Drive, 1360 Doris Road, and 1333-1376
University Drive, Cities of Pontiac and Auburn Hills, Oakland County, Michigan,
which improvements, together with all related land and parking areas, total
approximately 31.395 acres, more or less, as more particularly described on
EXHIBIT A attached hereto (the "Property"), hereby represents, warrants,
covenants and agrees as follows:
1. Guarantor hereby irrevocably guarantees to Lessor the prompt payment
when due, whether by acceleration or otherwise, of all rent and all
other sums payable by Lessee under the Lease and the faithful and
prompt performance when due of each and every one of the terms,
conditions and covenants to be kept and performed by Lessee under the
Lease, and any and all amendments, extensions and renewals of the
Lease. In the event of the failure of Lessee to pay any such rent or
other sums, or to render any other performance required of Lessee under
the Lease, if and when due after the expiration of any applicable cure
period, Guarantor shall, upon receiving notice of such failure from
Lessor, pay the rent and forthwith perform all provisions of the Lease
to be performed by Lessee thereunder. Guarantor further agrees to pay
to Lessor, upon demand, all losses and reasonable costs and expenses
incurred by Lessor in enforcing the Lease or this Guaranty.
2. In such manner, upon such terms and at such times as Lessor in its sole
discretion deems necessary or expedient, and without notice to or
consent by Guarantor, which notice and consent are hereby expressly
waived by Guarantor, Lessor may alter, compromise, accelerate, extend
or change the time or manner for the payment or the performance of any
obligation hereby guaranteed (in accordance with the terms of the
instruments and documents pursuant to or by which such obligations are
created or evidenced), release Lessee by consent to any assignment (or
otherwise) as to all or any portion of the obligations hereby
guaranteed, release, substitute or add any one or more guarantors,
accept additional or substituted security for any obligation secured
hereby, release or subordinate any security for any obligation secured
hereby or release or substitute the Property now or hereafter covered
by the Lease for any other facility. No exercise or non-exercise by
Lessor of any right hereby given Lessor (or neglect or delay in
connection therewith), no dealing by Lessor with Guarantor or any other
guarantor or any other person, and no change, impairment, release or
suspension of any right or remedy of Lessor against any person,
including Lessee and any other guarantor, shall in any way affect any
of the obligations of Guarantor hereunder or any security furnished by
Guarantor or give
<PAGE> 2
Guarantor any recourse or right of offset against Lessor. If Lessor has
exculpated Lessee from personal liability under theLease in whole or in
part, said exculpation shall not affect the obligations of Guarantor
hereunder. Guarantor's obligations hereunder are independent of the
obligations of Lessee and are to be construed as if no such exculpation
had been given to Lessee by Lessor. It is further understood and agreed
that if any such exculpation has been or at any time hereafter is given
to Lessee, Lessor has done or will do so in reliance upon the
agreements of Guarantor expressed herein.
3. Subject to the provisions of the last sentence of this Section,
Guarantor hereby waives and relinquishes all rights and remedies
accorded by applicable law to sureties and/or guarantors or any other
accommodation parties, under any statutory provisions, common law or
any other provision of law, custom or practice, and agrees not to
assert or take advantage of any such rights or remedies, including, but
not limited to, (a) any right to require Lessor to proceed against
Lessee or any other person or to proceed against or exhaust any
security held by Lessor at any time or to pursue any other remedy in
Lessor's power before proceeding against Guarantor; (b) any defense
that may arise by reason of incapacity, lack of authority, insolvency,
bankruptcy, death or disability of any other person or persons or the
failure of Lessor to file or enforce a claim against the estate (in
administration, bankruptcy) or any other proceeding) of any other
person or persons; (c) any defense arising because of Lessor's
election, in any proceeding instituted under the Federal Bankruptcy
Code, together with all amendments and revisions thereto (the
"Bankruptcy Code"), of the application of Section 1111(b)(2) of the
Bankruptcy Code; (d) any defense based on any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code; and (e) any
duty on the part of Lessor to disclose to Guarantor any facts Lessor
may now or hereafter know about Lessee, regardless of whether Lessor
has reason to believe that any such facts materially increase the risk
beyond that which Guarantor intends to assume or has reason to believe
that such facts are unknown to Guarantor or has a reasonable
opportunity to communicate such facts to Guarantor, it being understood
and agreed that the undersigned is fully responsible for being and
keeping informed of the financial condition of Lessee and of all
circumstances bearing on the risk of non-payment or non-performance of
any obligations or indebtedness hereby guaranteed. Guarantor hereby
waives all notices of acceptance of this Guaranty, protest, notice of
intention to accelerate (and notice of such acceleration), demand,
dishonor and presentment, and all other demands of any kind now or
hereafter provided for by any statute or rule of law. Notwithstanding
anything to the contrary in this Guaranty, Guarantor shall have as a
defense to payment or performance hereunder each and every defense,
real and personal, which Lessee may have to payment or performance
under the Lease, it being the intention of Guarantor and Lessor that
Guarantor's obligations hereunder shall not be greater or more
burdensome than or otherwise different from Lessee's obligations under
the Lease.
4. Until all obligations of Lessee under the Lease have been satisfied and
discharged in full, Guarantor shall have no right of subrogation and
hereby waives any right to enforce any
2
<PAGE> 3
remedy which Lessor now has or may hereafter have against Lessee and
any benefit of, any right to participate in, any security now or
hereafter held by Lessor with respect to the Lease.
5. Notwithstanding any modification or discharge of the obligations
guaranteed hereby (or any part thereof) or any amendment, modification,
rearrangement, stay or care of any of Lessor's rights, remedies or
recourse under the Lease which may occur in any bankruptcy or
reorganization case or proceeding concerning Lessee, whether permanent
or temporary, and whether or not assented to by Lessor, Guarantor
hereby agrees that Guarantor shall be obligated under this Guaranty to
pay and perform all of the obligations guaranteed hereby in accordance
with the respective terms of the Lease and of this Guaranty in effect
on the date hereof. Guarantor understands and acknowledges that, by
virtue of this Guaranty, Guarantor has specifically assumed any and all
risks of a bankruptcy, reorganization, or other case or proceeding
under any of the Debtor Relief Laws (as hereinafter defined) with
respect to Lessee. The term "Debtor Relief Laws," as used in this
Guaranty, shall mean the Bankruptcy Code or any other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or
similar debtor relief law from time to time in effect which affects the
rights of creditors generally.
6. With or without notice to Guarantor, Lessor, in its sole discretion and
at any time and from time to time and in such manner and upon such
terms as it deems fit, may (a) apply any or all payments or recoveries
from Lessee or from any other guarantor under any other instrument or
realized from any security, in such manner and order or priority as
Lessor may determine, to any indebtedness or other obligation of Lessee
with respect to the Lease, whether or not such indebtedness or other
obligation is guaranteed hereby or is otherwise secured or is due at
the time of such application, and (b) refund to Lessee any payment
received by Lessor under the Lease.
7. The amount of Guarantor's liability and all rights, powers and remedies
of Lessor hereunder and under any other agreement now or at any time
hereafter in force between Lessor and Guarantor including any other
guaranty executed by Guarantor relating to any indebtedness or other
obligation of any lessee to Lessor shall be cumulative and not
alternative and such rights, powers and remedies shall be in addition
to all rights, powers and remedies given to Lessor by law. This
Guaranty is in addition to and exclusive of the guaranty of any other
guarantor of any indebtedness of Lessee to Lessor.
8. This Guaranty is a guaranty of payment and performance and not of
collection. The obligations of Guarantor hereunder are primary, direct
and independent of the obligations of Lessee and, in the event of any
default by Lessee under the Lease, a separate action may be brought and
prosecuted against Guarantor, whether or not Lessee is joined therein
or a separate action is brought against Lessee. Lessor may maintain
successive actions for defaults, and Lessor's rights hereunder shall
not be exhausted by its exercise of any of its
3
<PAGE> 4
rights or remedies or by any such action or by any number of successive
actions until and unless all indebtedness and obligations, the payment
and performance of which are hereby guaranteed, have been paid and
fully performed.
9. Guarantor shall pay to Lessor on demand all reasonable attorneys' fees
and all costs and expenses which Lessor expends or incurs in enforcing
performance of any indebtedness or other obligation hereby guaranteed
or in enforcing this Guaranty against Guarantor, whether or not suit is
filed, expressly including but not limited to all costs, reasonable
attorneys' fees and expenses incurred by Lessor in connection with any
insolvency, bankruptcy, reorganization, arrangement or other similar
proceedings involving Guarantor which in any way affects the exercise
by Lessor of its rights and remedies hereunder.
10. The most recent audited financial statements of Guarantor heretofore
delivered to Lessor have been prepared in accordance with generally
accepted accounting principles and fairly represent the financial
condition of Guarantor as of the date thereof, and no material adverse
change has occurred in the financial condition of Guarantor since the
respective dates thereof.
11. If any provision or portion thereof of this Guaranty is declared or
found by a court of competent jurisdiction to be unenforceable or null
and void, such provision or portion thereof shall be deemed stricken
and severed from this Guaranty, and the remaining provisions and
portions thereof shall continue in full force and effect.
12. This Guaranty shall be a continuing guaranty and shall inure to the
benefit of Lessor, its successors and assigns, and any subsequent
owners of the Property who succeed to all or any portion of Lessor's
obligations and rights under the Lease, and shall bind the heirs,
executors, administrators, personal representatives, successors and
assigns of Guarantor; provided that Guarantor may not, without Lessor's
prior written consent, assign or transfer any of its powers, duties or
obligations under this Guaranty. This Guaranty may be assigned by
Lessor with respect to all or any portion of the indebtedness or
obligations hereby guaranteed to any subsequent owners or encumbrances
of the Property, and when so assigned Guarantor shall be liable to the
assignees under this Guaranty without in any manner affecting the
liability of Guarantor hereunder with respect to any indebtedness or
obligations retained by Lessor.
13. Neither any provision of this Guaranty nor any right of Lessor
hereunder may be waived in whole or in part, nor shall Guarantor be
released from Guarantor's obligations hereunder, except by a writing
duly executed by an authorized officer of Lessor.
14. When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa. The
word "person" as used herein shall include any individual, company,
firm, association, partnership, corporation, trust or other legal
entity of any kind
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whatsoever. The term "Lessee" as used herein shall mean the party
herein so named and its successors, including but not limited to a
debtor in possession under Chapter 11 of the Bankruptcy Code.
15. EXCEPT WHERE FEDERAL LAW IS APPLICABLE AND UNLESS OTHERWISE EXPRESSLY
PROVIDED HEREIN, THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA. Guarantor hereby (a)
irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts of the State of Alabama in any legal proceeding arising
out of or in connection with this Guaranty, the Lease and the
obligations guaranteed hereby; and (b) irrevocably consents to the
service of process upon Guarantor by the mailing of copies thereof by
certified mail, return receipt requested, postage prepaid, to Guarantor
at One Alhambra Plaza, Suite 750, Coral Gables, Florida 33134,
Attention: President, or such other address of which Guarantor shall
notify Lessor in writing. Nothing herein shall affect the rights of
Lessor to commence legal proceedings or otherwise proceed against
Guarantor in any jurisdiction or to service process in any manner
permitted by applicable law, and nothing herein shall constitute a
general consent to jurisdiction or service of process.
16. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
PERTAINING TO THE SUBJECT MATTER ADDRESSED HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
- SIGNATURE IS ON THE FOLLOWING PAGE -
5
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EXECUTED as of September 28, 1998.
RAMSAY HEALTH CARE, INC.
By: /s/ Jorge Rico
----------------------------------
Name: Jorge Rico
---------------------------------
Title: Vice President
--------------------------------
6
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EXHIBIT A
REAL PROPERTY DESCRIPTION
(Parcel 1)
Situated in the City of Auburn Hills, Oakland County, Michigan, described as:
Part of the Northwest 1/4 of Section 23, Town 3 North, Range 10 East, being more
particularly described as follows: Beginning at a point which is North 00
degrees 13 minutes 10 seconds East 1360.94 feet along the West line of Section
23, which is also the East line of Assessor's Plat No. 104 (liber 48, page 26
and 26a, Oakland County Records) from the West 1/4 corner of Section 23, Town 3
North, Range 10 East; thence along the West line of Section 23, 897.98 feet;
thence North 89 degrees 00 minutes 00 seconds East 270.00 feet; thence South 65
degrees 09 minutes 27 seconds East 538.14 feet; thence South 39 degrees 10
minutes 58 seconds East 292.62 feet; thence South 01 degrees 26 minutes 00
seconds West 135.00 feet; thence along the center line of Mt. Clemens Road
(University Drive), Southwesterly 177.16 feet along a curve concave curve to the
Northwest (Radius of 1084.04 feet, central angle 09 degrees 21 minutes 50
seconds, long chord bears South 67 degrees 41 minutes 35 seconds West 176.97
feet), and South 72 degrees 22 minutes 30 seconds West 817.91 feet to the point
of beginning.
Excepting the following described parcel for University Drive Right-of-Way.
Beginning at a point which is North 00 degrees 13 minutes 10 seconds East,
1360.94 feet along the West line of said Section 23, which is also the east line
of Assessor's Plat No. 104 (liber 48, page 26 and 26a, Oakland County Records)
from the West 1/4 corner of said Section 23; thence continuing along the West
line of said Section 23, North 00 degrees 13 minutes 10 seconds East 63.14 feet;
thence North 72 degrees 04 minutes 17 seconds East 867.83 feet; thence 128.76
feet along the arc of a curve to the left having a radius of 825.00 feet passing
through a central angle of 08 degrees 56 minutes 32 seconds with a long chord
bearing of North 67 degrees 36 minutes 01 seconds, East 128.63 feet; thence
South 01 degrees 26 minutes 00 seconds West, 64.50 feet; thence 177.16 feet
along the arc of a curve to the right having a radius of 1084.04 feet passing
through a central angle of 09 degrees 21 minutes 50 seconds with a long chord
bearing of South 67 degrees 41 minutes 35 seconds West, 176.97 feet; thence
South 72 degrees 22 minutes 30 seconds West, 817.91 feet to the point of
beginning.
Parcel Identification No. 14-23-101-007
Commonly known as: 1525 University Drive
(Parcel 2)
Situated in the City of Auburn Hills, Oakland County, Michigan, described as:
7
<PAGE> 8
Part of the Northwest 1/4 of Section 23, Town 3 North, Range 10 East, described
as beginning at a point in the center line of Mt. Clemens Road located North 00
degrees 13 minutes 10 seconds East 1360.94 feet along the West line of Section
23, which is also the East line of Assessor's Plat No. 104 and North 72 degrees
22 minutes 30 seconds East 751.66 feet along the center line of Mt. Clemens Road
from the West 1/4 corner of said Section 23; thence from said point of beginning
North 72 degrees 22 minutes 30 seconds East 66.25 feet along the centerline of
Mt. Clemens Road; thence on a curve to the left (radius 1084.04) feet, delta
angle 9 degrees 46 minutes 41 seconds, Long Chord North 67 degrees 29 minutes 09
seconds East 184.78 feet) an arc distance of 185.00 feet along the center line
of Mt. Clemens Road; thence South 26 degrees 21 minutes 20 seconds East 281.15
feet; thence South 61 degrees 44 minutes 10 seconds West 205.78 feet to the
center line of Doris Road; thence North 34 degrees 27 minutes 10 seconds West
313.56 feet along the center line of Doris Road to the point beginning. Subject
to the rights of the public and of any governmental unit in any part thereof
taken, used or deeded for street, road or highway purposes. Containing 1.520
acres more or less.
Parcel Identification No. 14-23-102-001
Commonly known as: 1360 Doris Road
(Parcel 3)
The East 190.75 feet of Lot 1 and all of Lot 2, Assessor's Plat No. 104 as
recorded in Liber 48, Pages 26 and 26a of Plats, Oakland County Records, more
particularly described as: Beginning at the Southeast corner of Lot 2; thence
South 69 degrees 39 minutes 05 seconds West along the centerline of University
Drive 540.97 feet; thence North 01 degrees 40 minutes 58 seconds West 1,472.03
feet; thence North 88 degrees 14 minutes 06 seconds East 512.52 feet to a point
on the East line of Section 23; thence along said section line South 01 degrees
40 minutes 58 seconds East 1,299.64 feet to the point of beginning.
Excepting the following 2 parcels for University Drive Right-of-Way:
Commencing at the Southeasterly corner of Lot 1, "Assessor's Plat No. 104",
subdivision of part of the Northeast 1/4 and part of the Southeast 1/4, Section
22, Town 3 North, Range 10 East, City of Pontiac, Oakland County, Michigan and
recorded in Liber 48 of Plats, Pages 26, and 26a, Oakland County Records, said
Southeasterly corner being on the centerline of University Drive (variable
width); thence North 01 degrees 40 minutes 58 seconds West, 34.83 feet along the
Easterly line of said Lot 1, also being the Westerly line of Lot 2 of said
"Assessor's Plat Not 104", to the point of beginning; thence South 69 degrees 39
minutes 05 seconds West 201.34 along the existing Northwesterly Right-of-Way
line of University Drive; thence North 01 degrees 40 minutes 58 seconds West
28.50 feet along the Westerly line of the Easterly 190.75 feet of said Lot 1;
thence North 69 degrees 39 minutes 05 seconds East 201.34 feet; thence South 01
degrees 40 minutes 58 seconds East 28.50 feet along said Easterly line of Lot 1
to the point of beginning. Being a part of said Lot 1, also being 27.00 feet in
width and containing 5,436 square feet of land.
Also being subject to easements and restrictions of record, if any.
8
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Commencing at the Southwesterly corner of Lot 2, "Assessor's Plat No. 104" a
subdivision of part of the Northeast 1/4 and part of the Southeast 1/4, Section
22, Town 3 North, Range 10 East, City of Pontiac, Oakland County, Michigan and
recorded in Liber 48 of Plats, Pages 26 and 26a, Oakland County Records, said
Southwesterly corner being on the centerline of University Drive (variable
width); thence North 01 degrees 40 minutes 58 seconds West, 34.83 feet along the
Westerly line of said Lot 2, also being the Easterly line of Lot 1 of said
"Assessor's Plat No. 104" to the point of beginning; thence continuing North 01
degrees 40 minutes 58 seconds East 28.50 feet along said Westerly line of Lot 2;
thence North 69 degrees 39 minutes 05 seconds East 339.63 feet; thence South 01
degrees 40 minutes 58 seconds East 28.50 feet along the Easterly line of said
Lot 2, also being the Easterly line of said "Assessor's Plat No. 104", also
being the East line of said Section 22, also being the Easterly limits of the
City of Pontiac; thence South 69 degrees 39 minutes 05 seconds West, 339.63 feet
along the existing Northwesterly Right-of-Way line of University Drive to the
point of beginning. Being a part of said Lot 2, also being 27.00 feet in width
and containing 9.170 square feet of land. Also being subject to easements and
restrictions of record, if any.
Subject to the riparian rights of the public in Galloway Lake.
9
<PAGE> 1
EXHIBIT 99.1
RAMSAY HEALTH CARE, INC.
NEWS RELEASE
FOR IMMEDIATE RELEASE
- ---------------------
RAMSAY HEALTH CARE, INC. AND
CHARTER BEHAVIORAL HEALTH SYSTEMS
ANNOUNCE THE COMPLETION OF TRANSACTION
CORAL GABLES, FLORIDA, SEPTEMBER 30, 1998, . . . Ramsay Health Care, Inc.
(NASDAQ:RHCI) and Atlanta, Georgia based Charter Behavioral Health Systems,
LLC, announced today that they have completed a transaction under which Charter
Behavioral Health Systems acquired four of Ramsay Health Care, Inc.'s
psychiatric hospitals and Ramsay's contract management business.
As a result of the transaction, the following Ramsay psychiatric hospitals are
now Charter operated facilities: Bayou Oaks in Houma, Louisiana; Coastal
Carolina in Conway, South Carolina; The Haven in DeSoto, Texas; and Desert
Vista in Mesa, Arizona. In addition, through this transaction Charter has
acquired Ramsay's contract management business which manages the delivery of
behavioral health care programs on behalf of acute care hospitals and community
mental health centers.
Luis E. Lamela, Chief Executive Officer of Ramsay Health Care, Inc., said, "We
are very pleased with the successful completion of the Charter transaction.
This transaction further solidifies our commitment to our debt reduction
strategy and our focus on the youth services industry."
Vernon S. Westrich, Chief Operating Officer of Charter Behavioral Health
Systems, LLC, said, "Charter is pleased to add facilities and expand contract
management services through attractive pricing in key strategic markets. We are
delighted to welcome these facilities and staff to our network."
Except for historical information contained herein, the matters set forth in
this news release are forward-looking statements as defined under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties.
Actual operations and results may differ materially from those expected in the
forward-looking statements made by the Company. Please refer to Ramsay's
filings with the Securities and Exchange Commission for additional information.
Ramsay Health Care, Inc. is a provider and manager of specialized programs and
services for at-risk and troubled youth. The Company through its subsidiary,
Ramsay
<PAGE> 2
Youth Services, Inc., operates residential treatment centers, group
homes and other specialized treatment and educational youth programs in 9
states and Puerto Rico.
Charter Behavioral Health Systems, LLC, is the nation's leading provider of
behavioral and addiction treatment programs. The Company's 88 domestic
facilities provide a full continuum of care, including inpatient, outpatient
and partial hospitalization programs. The company is owned equally by Magellan
Health Services, Inc. (NYSE:MGL) and Crescent Operating, Inc. (Nasdaq:COPI).
###
Contacts: Isa Diaz Joel Weiden
Vice President Charter Behavioral Health Systems, LLC
Corporate Relations (212) 445-8244
Ramsay Health Care, Inc.
(305) 569-4626
<PAGE> 1
EXHIBIT 99.2
RAMSAY HEALTH CARE, INC.
NEWS RELEASE
FOR IMMEDIATE RELEASE
RAMSAY HEALTH CARE, INC. AND WEST VIRGINIA UNIVERSITY HOSPITALS
ANNOUNCE THE COMPLETION OF TRANSACTION
Coral Gables, FL, October 2, 1998 . . . Ramsay Health Care, Inc., (NASDAQ:RHCI)
and West Virginia University Hospitals announced today that they have completed
a transaction under which West Virginia University Hospitals has acquired, for
$14.8 million in cash, Ramsay Health Care, Inc.'s Chestnut Ridge Hospital, a 70
bed psychiatric facility located on the West Virginia University Campus in
Morgantown.
Luis E. Lamela, Chief Executive Officer of Ramsay Health Care, Inc., stated,
"We are delighted that we have finalized the transaction with West Virginia
University Hospitals. The consummation of this transaction and the recently
announced transaction with Charter Behavioral Health Systems reflects our
commitment to our debt reduction strategy and our focus on the youth services
industry."
"Patient care has continued without any interruption, and the transaction has
been a smooth one," says Bruce McClymonds, President and CEO of WVUH. "We have
retained the same management team that made this a successful hospital in the
past, and the employees are now a part of our hospital family."
Except for historical information contained herein, the matters set forth in
this news release are forward-looking statements as defined under the safe
harbor provisions of the private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties.
Actual operations and results may differ materially from those expected in the
forward looking statements made by the Company. Please refer to Ramsay's
filings with the Securities Exchange Commission for additional information.
Ramsay Health Care, Inc. is a provider and manager of specialized programs and
services for at-risk and troubled youth. The Company through its subsidiary,
Ramsay Youth Services, Inc. operates residential treatment centers, group homes
and other specialized treatment and educational youth programs in 9 states and
Puerto Rico.
West Virginia University Hospitals is a private, not-for-profit corporation
that provides health care services, clinical education and research in support
of the mission of the Robert C. Byrd Health Sciences Center at West Virginia
University. It is a member institution of the West Virginia United Health
System. The Department of Behavioral
<PAGE> 2
Medicine and Psychiatry of the WVU School of Medicine is located in Chestnut
Ridge Hospital and provides its medical staff.
###
Contacts: Isa Diaz Bill Case
Vice President Manager, News Service
Corporate Relations West Virginia University Hospitals
Ramsay Health Care, Inc. (304) 293-7087
(305) 569-4626
