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Exhibit 2.17
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ASSET PURCHASE AGREEMENT
BETWEEN
CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC
AND
RAMSAY YOUTH SERVICES, INC.
DATED AS OF MAY 19, 2000
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with all Exhibits and other
documents and instruments incorporated herein by reference, the "AGREEMENT") is
made and entered into as of the 19th day of May, 2000, by and between CHARTER
BEHAVIORAL HEALTH SYSTEMS, LLC, a limited liability company duly organized under
the laws of the State of Delaware ("CHARTER"), the entities identified on
EXHIBIT A attached hereto and incorporated herein, all of which are wholly-owned
by Charter (each a "CHARTER SUBSIDIARY" and collectively, the "CHARTER SUBS"),
CHARTER ADVANTAGE, LLC, a wholly-owned subsidiary of Charter and a limited
liability company duly organized under the laws of the State of Delaware
("CHARTER ADVANTAGE"), and CHARTER MANAGED CARE SERVICES, LLC, a wholly-owned
subsidiary of Charter and a limited liability company duly organized under the
State of Delaware ("CHARTER MANAGED CARE") (with Charter, the Charter Subs,
Charter Advantage, and Charter Managed Care being collectively referred to as
"THE CHARTER ENTITIES"), and RAMSAY YOUTH SERVICES, INC., a corporation duly
organized under the laws of the State of Delaware, or its designee ("BUYER").
W I T N E S S E T H:
WHEREAS, Charter, through the Charter Subs, operates certain
psychiatric facilities (the "FACILITIES") listed on EXHIBIT A attached hereto
and incorporated herein;
WHEREAS, operation of the Facilities shall be referred to herein as the
"BUSINESS";
WHEREAS, two of the Facilities are located on real estate owned by
Crescent Real Estate Funding VII, L.P. ("Crescent"), and such Facilities (the
"Real Estate Facilities") contain equipment owned by Crescent;
WHEREAS, Ramsay has submitted a Real Estate Purchase Agreement to
Crescent to purchase the real estate and equipment owned by Crescent at the Real
Estate Facilities where Charter conducts the Business; and
WHEREAS, Buyer desires to purchase from the Charter Entities, and the
Charter Entities desire to sell to Buyer, the "PURCHASED ASSETS" (as defined
herein) on the terms and conditions set forth in this Agreement subject to
approvals from the United States Bankruptcy Court for the District of Delaware
(the "BANKRUPTCY COURT");
NOW, THEREFORE, for and in consideration of the premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
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ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 PURCHASED ASSETS. Subject to the terms and conditions set forth in
this Agreement and on the basis of and in reliance upon the covenants and other
obligations set forth in this Agreement, at the "CLOSING" (as defined in Section
3.1), the Charter Entities shall sell, convey, transfer, assign and deliver to
Buyer, and Buyer shall purchase from the Charter Entities, all of the Purchased
Assets, on an "AS IS, WHERE IS" basis. For purposes of this Agreement,
"PURCHASED ASSETS" shall mean all of the following assets, properties and
rights:
(a) to the extent assignable, all of the Charter Entities'
rights, title and interests in, to and under those certain
equipment, machinery and vehicle leases, service agreements,
third party payor agreements, or other contracts, agreements
or commitments related to the Facilities or the Business that
Buyer elects to assume in accordance with the provisions of
this Section 1.1(a) and Section 1.2 (the "CONTRACTS"), with a
preliminary list of such assumed Contracts to be attached
hereto as EXHIBIT B and incorporated herein by reference and
with a final list of Contracts to be provided by way of the
process described in Section 1.2; provided, however, that the
Buyer shall be solely responsible for all costs of curing the
assigned Contracts;
(b) subject to Section 1.4(b), all inventories of office
supplies, clinical supplies and other supplies owned by the
Charter Entities as of the Closing Date and used in the
Business, wherever located (collectively, the "INVENTORY");
(c) all vehicles and medical and office equipment and all of
the furniture, fixtures and other tangible personal property
owned by the Charter Subs and located at the Facilities or
used in the Business (collectively, the "EQUIPMENT");
(d) to the extent the same are in the name of the Charter
Entities and are assignable without cost or the consent of any
third party, all permits, provider numbers, certificates,
licenses, franchises and authorizations and all consents,
approvals, notices, filings, recordings, registrations,
qualifications and similar rights (and all applications
therefor), obtained from any person or entity or any federal,
state, municipal or local government or any agency,
department, division or other subdivision of any such
government or any federal, state, municipal or local court
(each, an "AUTHORITY" or, collectively, the "AUTHORITIES"),
pertaining in any way directly or indirectly to the Business,
the Facilities, any of the other Purchased Assets or the
conduct, ownership or operation thereof (collectively, the
"PERMITS");
(e) to the extent assignable without the consent of any third
party, the computer software used at the Facilities or in the
Business and all licenses with respect thereto;
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(f) all telephone numbers, facsimile numbers, e-mail addresses
and the like used exclusively in the conduct of the Business
or the ownership or operation of any of the Purchased Assets;
(g) subject to the provisions of Section 7.5, of any
applicable Permit or of any applicable law, regulation, rule,
ordinance, injunction, or order (whether state, federal or
municipal), copies of all books, records and other
information, data and documentation of the Charter Entities
related to the Business, any of the Purchased Assets or the
conduct, ownership or operation thereof, including without
limitation financial information, operating records, patient
lists, patient records, supplier lists, equipment manuals,
deeds and medical records and charts (collectively, the "BOOKS
AND RECORDS"); and
(h) the non-exclusive right to use the "Charter" name and all
trademarks or service mark and other intellectual property
associated therewith or derived therefrom.
In the event it is discovered that the Charter Entities own or hold any
other assets, properties and rights reasonably necessary or appropriate in order
to operate the Facilities and the Business, that are assignable in accordance
with their terms and that are not included in the Purchased Assets, other than
the Excluded Assets (such other assets, properties or rights, "ADDITIONAL
ASSETS"), then upon the request of Buyer, the Charter Entities agree to transfer
such Additional Assets to Buyer without any additional consideration; PROVIDED,
HOWEVER, that it is not the intent of this language that the Charter Entities
represent to Buyer that the Purchased Assets are all of the assets that are
reasonably necessary or appropriate to operate the Business or the Facilities.
The Charter Entities may retain copies of any or all of the Contracts
and Books and Records in Charter's discretion.
1.2 ASSUMED EXECUTORY CONTRACTS/PERMITS. As of the date hereof, the
Charter Entities are parties to certain contracts, leases, permits and licenses
which are necessary to the conduct of the Business relating to the Purchased
Assets (collectively the "Executory Contracts"). Promptly after execution of
this Agreement, Charter and the Charter Subs agree to deliver to Ramsay true and
complete copies of such Executory Contracts unless otherwise agreed to by
Ramsay, and Ramsay will designate in writing those Executory Contracts to be
assumed by Ramsay (the "Contracts"). A preliminary list of the Contracts which
Ramsay intends to assume is annexed hereto as EXHIBIT B and such list will be
updated no later than fifteen (15) days prior to the Closing Date. The Charter
Entities shall take all action reasonably necessary in order to assume and
assign such specified Contracts to Ramsay, or its designees, in accordance with
Sections 365(a) and (f) of the Bankruptcy Code, and shall pay all costs and
expenses associated with such assumption and assignment, except any cost of
curing the assigned Contracts. Upon Bankruptcy Court Approval (defined below),
which order shall include provisions authorizing the assumption and assignment
of the Contracts, such Contracts shall be assumed by Charter and the Charter
Subs and assigned to Ramsay, or its designees, and such assumption and
assignment shall be effective as of the closing of this transaction. The
assignment of the assumed Contracts to Ramsay, or its designees, shall be
contemporaneous with the Closing. Additionally, the Charter Entities shall
assign all Permits, to the extent permitted by law, which are necessary to the
conduct of the Business, to Ramsay.
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1.3 ASSUMED LIABILITIES. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing and as of the Closing Date (each
defined in section 3.1), Buyer shall assume and agree to perform and discharge
all of the following liabilities and obligations of the Charter Entities
relating to the Business or any of the Purchased Assets incurred in the ordinary
course of business (collectively, the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations of the Charter Entities
that arise from events occurring after the Closing (as defined in
Section 3.1) under the Contracts and the Permits; and
(b) all debts, liabilities and obligations that arise out of
the conduct of the Business or the ownership or operation of any of the
Purchased Assets after the Closing.
1.4 EXCLUDED ASSETS. Notwithstanding the generality of Section 1.1, the
Charter Entities shall retain from and after the Closing all of its right, title
and interest in and to, and shall exclude from the sale, conveyance, assignment
and transfer to Buyer, all of the following assets, properties and rights
(collectively, the "EXCLUDED ASSETS"):
(a) any and all cash owned or held by any and all of the
Charter Entities;
(b) if Buyer is not a licensed health care provider at the
time of Closing, any and all clinical supplies owned or held by any or
all of the Charter Entities that can only be transferred to a licensed
health care provider, such as prescription drugs; provided, however,
that such clinical supplies shall be promptly transferred to Buyer
upon receipt of appropriate licensure or to an appropriately licensed
assignee of Buyer;
(c) any and all accounts receivable of the Charter Entities
accrued through the Closing Date; and
(d) any and all assets that qualify as assets of the Charter
entities' bankruptcy estate that are not expressly Purchased Assets,
including any and all contractual rights of indemnification, legal
suits, claims, injunctions or other causes of action, and all expenses
and payments pertaining to the Business which have been prepaid or
advanced prior to the Closing Date.
1.5 EXCLUDED LIABILITIES. Notwithstanding the generality of Section
1.3, the Charter Entities shall retain all liabilities and obligations of the
Charter Entities (whether known or unknown, liquidated or unliquidated,
contingent or fixed) other than the Assumed Liabilities (collectively, the
"EXCLUDED LIABILITIES") and Buyer shall not assume any of such Excluded
Liabilities (regardless of whether any such liabilities or obligations are
disclosed in this Agreement).
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ARTICLE 2
PURCHASE PRICE
2.1 DEPOSIT. Buyer shall pay into escrow a total deposit of $682,400
(the "Deposit"). This Deposit shall consist of (a) $440,000 Buyer previously
paid as a deposit on or about April 26, 2000 to Pachulsky, Stang, counsel for
Charter, (b) an additional amount of $242,400, to be paid by Buyer at the time
of execution of this Agreement.
2.2 PURCHASE PRICE. Subject to the terms and conditions contained
herein, Buyer shall pay to Charter an aggregate purchase price for the Purchased
Assets in an amount equal to $1.00 (the "PURCHASE PRICE"), against which Charter
shall credit the amount of the deposit actually paid by Buyer to Charter under
Section 2.1. To the extent that there is a credit balance due to Buyer pursuant
to the terms of this Agreement, the credit balance shall be paid to Buyer at
Closing in immediately available funds by wire transfer to a bank account
designated in writing by Buyer prior to the Closing Date. Buyer shall pay the
Purchase Price to Charter at the Closing in immediately available funds by wire
transfer to a bank account designated in writing by Charter prior to the Closing
Date, or by any other method acceptable to both Charter and Buyer.
2.3 ALLOCATION OF PURCHASE PRICE. Charter and Buyer agree that the
Purchase Price shall be allocated among the Purchased Assets, tangible and
intangible, as set forth in EXHIBIT C hereof (the "Allocation"). Charter and
Buyer agree to report the sale and purchase of the Purchased Assets for federal,
state, municipal, local and foreign tax purposes in accordance with the
Allocation and not to take any position inconsistent with the Allocation on any
of their respective Tax returns, reports, information returns or similar
documents required to be filed with any Authority (including without limitation
IRS Form 8594).
ARTICLE 3
CLOSING
3.1 CLOSING DATE. The sale and purchase of the Purchased Assets shall
be consummated at a closing (the "CLOSING") to be held at 10:00 AM Eastern
Standard time, at the offices of Troutman Sanders, LLP. The Closing shall occur
within five (5) days after the satisfaction or waiver of all conditions
precedent specified in Article 6 (the "CLOSING DATE"). Notwithstanding the
previous sentence, the Closing Date must occur on or before June 20, 2000. If
the Closing does not occur by June 20, 2000, then this Agreement shall terminate
automatically in accordance with Section 8.1, unless Buyer and the Charter
Entities mutually agree in writing to extend the Closing Date.
3.2 DELIVERIES OF CHARTER. At the Closing, the Charter Entities shall
deliver to Buyer, in form and substance satisfactory to Buyer, the following:
(a) physical control of all of the Purchased Assets;
(b) duly executed originals of such bills of sale, deeds,
assignments and other instruments of sale, conveyance, transfer and
assignment as are necessary or appropriate to sell, convey, transfer
and assign to Buyer all of the Charter Entities' right, title and
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interest in and to all of the Purchased Assets in form and substance
reasonably satisfactory to both parties; and
(c) a certificate of the Charter Entities, dated as of the
Closing Date, certifying that:
(i) all conditions specified in Sections 6.2 and 6.3
have been fulfilled or that the satisfaction of any of such
conditions has been waived; and
(ii) the Charter Entities have obtained or taken all
consents, approvals, authorizations, waivers and other actions
required to be obtained or taken by the Charter Entities in
connection with the execution, delivery and performance of
this Agreement and the consummation of all transactions and
other commitments and obligations contemplated by this
Agreement;
(d) a certified copy of the Court Order providing Bankruptcy
Court Approval.
3.3 DELIVERIES OF BUYER. At the Closing, Buyer shall deliver or cause
to be delivered to Charter, in form and substance satisfactory to Charter, the
following:
(a) the Purchase Price (net of the amount of the Deposit);
(b) duly executed originals, in a form reasonably acceptable
to Buyer, of such instruments of assumption as are necessary or
appropriate for Buyer to assume all of the Assumed Liabilities and
Purchased Assets in form and substance reasonably satisfactory to both
parties;
(c) a certificate of Buyer, dated as of the Closing Date,
certifying that:
(i) all conditions specified in Sections 6.1 and 6.3
have been fulfilled or that the satisfaction of any of such
conditions has been waived; and
(ii) Buyer has obtained or taken all consents,
approvals, authorizations, waivers and other actions required
to be obtained or taken by Buyer in connection with the
execution, delivery and performance of this Agreement and the
consummation of all transactions and other commitments and
obligations contemplated by this Agreement;
(d) a certificate of the Secretary or an Assistant Secretary
of Buyer, dated as of the Closing Date, certifying that attached to
such certificate are true, correct and complete copies of (i) the
Articles of Incorporation of Buyer, (ii) the Bylaws of Buyer, and (iii)
resolutions of the Board of Directors of Buyer which authorize the
execution, delivery and performance by Buyer of this Agreement;
(e) a certificate of incumbency certified by the Secretary or
an Assistant Secretary of Buyer certifying the names and signatures of
the officers of Buyer authorized to execute this Agreement;
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(f) a certificate of existence for Buyer issued by the
Secretary of State of the State of the state of incorporation of the
Buyer as of a recent date prior to the Closing Date; and
(g) if applicable, the Transition Services Agreement (as
defined in Section 7.9).
3.4 TAX MATTERS. Charter and Buyer shall respectively pay taxes, fees,
levies, duties, charges or similar assessments (including without limitation
interest, penalties and additions) imposed by or payable to any Authority (each
a "TAX") as follows:
(a) only if required by applicable law or by the Bankruptcy
Court Approval (as defined in Section 6.3(c)), Charter shall pay all
transfer, personal property transfer, documentary stamp and other
similar taxes and all recording, filing and other fees and costs with
respect to the sale and purchase of any of the Purchased Assets;
(b) Buyer shall pay all sales and use taxes with respect to
the sale and purchase of any of the Purchased Assets; and
(c) Buyer shall bear responsibility for all income, real
property and other taxes associated with the Purchased Assets or the
Business accruing after the Closing Date.
3.5 EMPLOYEES. At the Closing, Buyer shall offer employment to
substantially all employees of Charter (other than employees on leave of
absence) who are employed directly in connection with the conduct of the
Business or the ownership or operation of any of the Purchased Assets and listed
on Schedule 4.1(i) of this Agreement (collectively, the "ASSIGNED EMPLOYEES"),
on substantially similar terms and conditions as such employees are employed by
Charter. Buyer shall bear all responsibility for any notices, severance payments
and liabilities under the Worker Adjustment and Retraining and Notification
("WARN") Act, 29 U.S.C. Sec. 2101 ET. seq., that may become due and owing in the
event of any decision or action by Buyer to close any of the Facilities after
the Closing.
Charter shall be responsible for benefits of the Charter employees at
the Facilities accrued as of the Closing Date, including, but not limited to,
accrued vacation and other paid days off.
ARTICLE 40
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF CHARTER.
(a) The Charter Entities are duly organized, validly existing
and in good standing under the laws of their respective states of
organization, and have the requisite power and authority to carry on
their business as now being conducted; and
(b) Subject to receipt of Bankruptcy Court Approval (as
defined in Section 6.3(c)), the Charter Entities have the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. Subject
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to receipt of Bankruptcy Court Approval (as defined in Section 6.3(c)),
the execution and delivery of this Agreement by the Charter Entities
and the consummation of the transactions contemplated by this Agreement
have been (or will have been prior to the Closing Date) duly authorized
by all necessary action of the Charter Entities' respective governing
bodies. This Agreement has been duly executed and delivered by the
Charter Entities and, assuming due execution and delivery by Buyer and
receipt of Bankruptcy Court Approval (as defined in Section 6.3(c)),
constitutes a valid and binding obligation of Charter, enforceable
against the Charter Entities in accordance with its terms.
4.2 REPRESENTATIONS AND WARRANTIES OF BUYER.
(a) Buyer is a duly organized, validly existing corporation in
good standing under the laws of the State of its incorporation and has
the requisite corporate power and authority to carry on its business as
now being conducted; and
(b) Buyer has the requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement by Buyer and the consummation of the transactions
contemplated by this Agreement have been (or will have been prior to
the Closing Date) duly authorized by all necessary corporate action on
the part of Buyer. This Agreement has been duly executed and delivered
by Buyer and, assuming due execution and delivery by the Charter
Entities and receipt of Bankruptcy Court Approval (as defined in
Section 6.3(c)), constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
ARTICLE 5
COVENANTS OF CHARTER PENDING CLOSING
5.1 ACCESS, INSPECTIONS AND AUDITS. Subject to the confidentiality
restrictions set forth in Section 7.5 and provided that there be no significant
disruption of the Business operations, the Charter Entities shall permit Buyer
and Buyer's directors, officers, employees, representatives, agents and advisors
to have full access at all reasonable times to and to conduct reasonable
inspections of any or all of the Purchased Assets and to any and all
information, data and documentation pertaining to the conduct of the Business or
the ownership or operation of any of the Purchased Assets, and to cause the
Charter Entities' respective directors, officers, employees, representatives,
agents and advisors to furnish to Buyer and Buyer's officers, employees,
representatives, agents and advisors such data and documentation relevant to the
conduct of Business or the ownership or operation any of the Purchased Assets as
Buyer may reasonably request.
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ARTICLE 6
CONDITIONS TO CLOSING
6.1 OF BUYER. All of the obligations of Buyer under Articles 1, 2 and 3
of this Agreement are subject to the fulfillment prior to or at the Closing of
each of the following conditions, any of which Buyer may waive in its sole
discretion:
(a) the Charter Entities shall have performed and complied in
all material respects with all agreements, commitments, covenants and
other obligations required by this Agreement to be performed or
complied with by the Charter Entities prior to or at the Closing;
(b) the Charter Entities shall have delivered to Buyer all of
the deliverables referenced in Section 3.2;
(c) Buyer shall have entered into a contract with Crescent
containing terms reasonably satisfactory to Buyer to acquire the Real
Estate Facilities and Buyer shall have acquired prior to the Closing
Date, or shall contemporaneously acquire, the Real Estate Facilities
from Crescent;
(d) no litigation of any kind relating to this Agreement or
the transactions contemplated hereby shall be pending or threatened in
writing, and no preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or by any federal or
state governmental or regulatory body, or any statute, rule, regulation
or executive order promulgated or enacted by any federal or state
governmental authority after the date of this Agreement, that: (i)
prohibits the consummation of the transactions contemplated by this
Agreement, (ii) challenges the Charter Entities' title to any Purchased
Asset(s) that are material to the operation of the Facilities, or (iii)
materially affects the Charter Entities' ability to transfer any
Purchased Asset(s) that are material to the operation of the Facilities
to Buyer in accordance with the terms of this Agreement, shall be in
effect;
(e) the representations and warranties of the Charter Entities
contained herein and in any schedule attached hereto shall be true and
correct at and as of the Closing Date as if made at and as of such
time;
(f) Buyer shall have completed its due diligence investigation
with respect to the Business, the results of which are satisfactory to
Buyer;
(g) Buyer shall have obtained financing in an amount
sufficient to fund the Purchase Price under this Agreement and the Real
Estate Purchase Agreement;
(h) Buyer shall have obtained the consent of its Board of
Directors to the transactions contemplated under this Agreement and the
Real Estate Purchase Agreement; and
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(i) Appropriate agencies of the federal government, including
the Department of Health and Human Services and the Department of
Justice, shall consent to the Medicare provider agreement between the
applicable Charter Entity and the Health Care Financing Administration
(HCFA) being assigned to the Buyer free and clear of all civil and
administrative monetary claims, including claims for civil fraud, under
or related to such agreement, which arise from any action or inaction
of such Charter Entity, its affiliates or predecessors prior to the
Closing Date.
6.2 OF CHARTER. All of the obligations of the Charter Entities under
Articles 1, 2 and 3 of this Agreement are subject to the fulfillment prior to or
at the Closing of each of the following conditions, any of which the Charter
Entities may waive in their respective sole discretion:
(a) Buyer shall have performed and complied in all material
respects with all agreements, commitments, covenants and other
obligations required by this Agreement to be performed or complied with
by Buyer prior to or at the Closing; and
(b) Buyer shall have delivered to Charter all of the
deliverables referenced in Section 3.3.
6.3 OF EACH PARTY. The respective obligations of each party under
Articles 1, 2 and 3 of this Agreement are subject to the fulfillment prior to or
at the Closing of each of the following conditions:
(a) if applicable, the waiting period (and any extension
thereof) applicable to the consummation of the transactions
contemplated by this Agreement under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), shall have
expired or been terminated;
(b) the release (by mutual consent and/or pursuant to an order
of the Bankruptcy Court which must not be restrained, enjoined or
stayed) of all liens, claims, encumbrances and interests in the
Purchased Assets, which liens, claims, encumbrances and interests shall
attach to the proceeds of the sale, in their respective order of
priority; and
(c) the entry by the Bankruptcy Court of an order, final
beyond appeal and which shall not be stayed, restrained or enjoined,
approving the sale of the Purchased Assets, and providing that: (i)
Charter is authorized to assign to Buyer and Buyer is authorized to
assume all Contracts being assumed pursuant to this Agreement, (ii)
Buyer is a "good faith" buyer, within the meaning of Section 363(m) of
the Bankruptcy Code (Title 11 of the United States Code, as amended),
(iii) Buyer is a bona fide purchaser for value, (iv) the Purchase Price
is fair and reasonable, (v) appropriate notice has been provided to all
persons or entities who hold liens, claims, encumbrances and interests
in the Purchased Assets, and (vi) the sale is free and clear of all
liens, claims, encumbrances and interests including claims of
Authorities (the "BANKRUPTCY COURT APPROVAL").
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ARTICLE 7
OTHER AGREEMENTS OF THE PARTIES
7.1 REASONABLE EFFORTS/FURTHER ASSURANCES. From the date hereof until
the Closing, upon the terms and subject to the conditions of this Agreement,
each party shall use all reasonable good faith efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary, proper or
advisable under applicable laws to consummate and make effective the
transactions contemplated by this Agreement, including without limitation
obtaining any necessary consent, approval, authorization or waiver from the
Bankruptcy Court. Notwithstanding anything else contained herein, Buyer shall
use its best efforts to obtain financing in an amount sufficient to fund the
Purchase Price. Upon the reasonable request of the other party, each party
agrees to take any and all actions, including without limitation the execution
of certificates or instruments, necessary or appropriate to give effect to the
terms and conditions set forth in this Agreement. Additionally, Charter agrees
to put forth reasonable business efforts in assisting Buyer in obtaining any
third party consent required to assign any of the Contracts and Permits that are
Purchased Assets material to the operation of the Business.
7.2 PUBLICITY. No party shall issue any press release, written public
statement or announcement relating to this Agreement or the transactions
contemplated by this Agreement without the written prior approval of the other
party in each instance, except to the extent such disclosure is required by
applicable law (in which case such party shall use all reasonable efforts to
give the other party prior notice thereof).
7.3 EXPENSES. Except as otherwise provided in this Agreement, Charter
and Buyer shall each bear its respective expenses incurred in connection with
the negotiation, execution, delivery or implementation of this Agreement or the
transactions contemplated by this Agreement, including without limitation all
accounting, legal, financial advisory and other expenses. Each party hereby
acknowledges that no broker, investment banker or other person is entitled to
any broker's, finder's or other similar fee or commission payable by such party
in connection with the transactions contemplated by this Agreement.
7.4 RELATIONSHIP OF THE PARTIES. The relationship between the Charter
Entities and Buyer established by this Agreement is solely that of vendor and
vendee and nothing contained herein shall be deemed to create a joint venture or
other fiduciary relationship between Charter and Buyer. Neither Charter nor
Buyer, nor their respective officers, directors, managers, employees,
representatives or agents, shall be deemed to be agent or servant of the other
party nor have the right or authority to enter into any contract, agreement,
commitment or other obligation in the name of or on behalf of the other party or
otherwise purport to bind the other party in any manner.
7.5 CONFIDENTIALITY.
(a) As used in this Agreement, the following terms shall have
the following meanings:
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(i) "TRADE SECRETS" of a party means information of
such party, including but not limited to technical or
non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a
process, financial data, financial plans, product plans, or a
list of actual or potential customers or suppliers, which: (A)
derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value
from its disclosure or use; and (B) is the subject of efforts
that are reasonable under the circumstances to maintain its
secrecy;
(ii) "CONFIDENTIAL INFORMATION" of a party means all
proprietary and confidential business information and data of
such party that does not constitute a Trade Secret and that is
not generally known by or readily ascertainable by or
available to, on a legal or authorized basis, the general
public. "Confidential Information" as used herein does not
include any information: (A) which is already known to the
receiving party; or (B) which before being divulged by the
disclosing party (1) has become generally know to the public
through no wrongful act of the receiving party or its
representatives, (2) has been received by the receiving party
from a third party without (to the receiving party's
knowledge) restriction on disclosure and without (to the
receiving party's knowledge) a breach by the third party of an
obligation of confidentiality, or (3) is independently
developed by the receiving party without use of the
Confidential Information received from a disclosing party; and
(iii) "EVALUATION MATERIALS" means all documents,
materials, data and information (whether oral, written or
otherwise) relating to this Agreement that are given or
disclosed by the parties to each other in the course of
pursuing the Agreement, including without limitation those
that contain Confidential Information or Trade Secrets and
those provided in connection with the filing under the HSR
Act.
(b) Each party (for purposes of this Section 7.5, the Charter
Entities shall be considered as one party) agrees that it, its
affiliates and their respective directors, officers, employees,
representatives, agents and advisors will use the Evaluation Material
and any Confidential Information or Trade Secrets of another party
solely for the purpose of evaluating and implementing this Agreement.
In any such use, the receiving party may disclose the Evaluation
Materials or any Confidential Information or Trade Secrets of another
party only to such directors, officers, employees, agents,
representatives and advisors who are involved in the receiving party's
evaluation and implementation of this Agreement, and then only on a
need to know basis.
(c) Each party agrees that it will not (and each party shall
take full responsibility for ensuring that all of its affiliates and
all of their respective officers, directors, employees, agents,
representatives and advisors do not) in any way disclose, communicate,
transfer or use (other than as allowed by Section 7.5(b)) the
Evaluation Material or any Confidential Information or Trade Secrets of
another party, without the
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<PAGE> 14
prior written consent in each instance of the other party. With respect
to Trade Secrets, the covenants in the preceding sentence shall apply
for as long as the underlying information or data remains a Trade
Secret; with respect to Confidential Information, these covenants shall
apply for four (4) years after the date of this Agreement; and with
respect to Evaluation Material that does not constitute either a Trade
Secret or Confidential Information, these covenants shall not apply.
All Evaluation Material (including tangible copies and computerized or
electronic versions thereof), except for that portion which consists of
analyses, compilations, comparisons, studies or other documents
prepared by the receiving party, shall remain the property of the
disclosing party. The parties agree to cooperate with each other's
reasonable confidentiality procedures as long as any covenant in this
Section remains in force.
(d) After the Closing, all Confidential Information, Trade
Secrets and Evaluation Materials disclosed by Charter to Buyer
hereunder, including without limitation all of the same as to the
Business, any of the Purchased Assets or the conduct, ownership or
operation thereof, shall automatically become the property of Buyer and
shall thereafter be Confidential Information, Trade Secrets and
Evaluation Material of Buyer (and shall be treated at all times
thereafter as if Buyer were the disclosing party thereof rather than
the receiving party thereof).
(e) Each party agrees that it will promptly return to the
disclosing party all Evaluation Material received from such disclosing
party, together with all Confidential Information and Trade Secrets of
such disclosing party, within five (5) days following the written
request of such disclosing party after any termination of this
Agreement under Section 8.1. The return of the Evaluation Material,
Confidential Information and Trade Secrets shall be accomplished by
personal delivery or forwarded by reputable couriers properly addressed
to the parties as set forth in Section 9.9. As an alternative, the
receiving party may destroy all such Evaluation Material, Confidential
Information and Trade Secrets, and certify to such disclosing party
that such destruction has been carried out. That portion of the
Evaluation Material which consists of analyses, comparisons, studies or
other documents prepared for confidential use by the receiving party
shall be held by the receiving party and kept confidential as provided
above, or shall be destroyed and such destruction certified to the
disclosing party.
(f) Each party agrees that if it becomes subject to a
subpoena or other legal requirement to disclose any of the Confidential
Information or Trade Secrets of another party or any Evaluation
Material, it will provide the other parties with prompt notice so that
the other parties may seek a protective order or other appropriate
remedy, as appropriate. If such protective order or other appropriate
remedy is denied or otherwise not obtained, the party required to
furnish the information shall furnish only that portion of the
Confidential Information, Trade Secrets and/or Evaluation Material
which is, in the reasonable opinion of its counsel, legally compelled,
and will cooperate with the other parties and their counsel to enable
the other parties to attempt to obtain a protective order or other
reliable assurance that confidential treatment will be accorded the
Confidential Information, Trade Secrets and/or Evaluation Material to
be disclosed.
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<PAGE> 15
7.6 RELIEF. The parties acknowledge that their failure to comply with
the provisions of Section 7.5 will give rise to damages which may be impossible
to measure accurately, and that injuries sustained from any such breach will be
incalculable and irremediable. Therefore, it is agreed that either party shall
be entitled to equitable relief, including without limitation an injunction or
order of specific performance, in any court of competent jurisdiction, in the
event of any breach by the other of Section 7.5. Should litigation be necessary
to enforce any provision hereof, the prevailing party shall be entitled to
recover all costs, including reasonable attorney's fees, incurred prior to suit
or after suit, and in all court proceedings, including appellate courts.
7.7 MAINTENANCE AND FURNISHING OF INFORMATION.
(a) The Charter Entities and Buyer agree that, for a period of
six (6) years after the Closing Date (or such longer period as may be
required by applicable Law), it shall not destroy or otherwise render
unavailable any books, records, documents, data or other information
relating principally to the conduct of the Business or the ownership or
operation of the Purchased Assets prior to the Closing Date (the
"INFORMATION"), without first offering the other party in writing the
opportunity to obtain possession thereof at such other party's sole
expense.
(b) The Charter Entities and Buyer agree to maintain easy and
ready access and to make available to the other party, at reasonable
times after reasonable request therefore and at the requesting party's
sole expense, any Information for the purpose of (i) preparing for,
prosecuting or defending any suit, action, litigation or
administration, arbitration or other proceeding or investigation (other
than one by or against the non-requesting party) by or against the
requesting party, (ii) preparing and filing any Tax return or election
relating to the Purchased Assets or the Assumed Liabilities and/or
preparing for or defending any examination of Tax or Tax return by any
Authority, or (iii) any other legitimate purpose ("AUTHORIZED
PURPOSE"). The party requesting such Information shall reimburse the
party providing such Information for out-of-pocket costs and expenses
incurred by the party providing such Information. Notwithstanding any
language in this Agreement to the contrary, Buyer shall provide copies
of patient records that are Purchased Assets to Charter, at Buyer's
cost, for the purposes of billing and resolving billing disputes.
(c) The Charter Entities and Buyer agree to make available to
the other party, from time to time as reasonably required, employees,
consultants, accountants and attorneys of such party for any Authorized
Purpose. The party requesting assistance under this Section 7.7(c)
shall reimburse the party providing such assistance for all
out-of-pocket costs and expenses incurred by such party.
(d) The access to files, books and records contemplated by
this Section 7.7 shall be during normal business hours and upon not
less than two (2) business days prior written request, shall be subject
to such reasonable limitations as the party having custody or control
thereof may impose to preserve the confidentiality of information
contained therein or to delete competitively sensitive information,
shall not extend to any material
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<PAGE> 16
subject to a claim of privilege unless expressly waived by the party
entitled to claim the same, and shall be subject to the confidentiality
requirements of Section 7.5.
7.8 HSR NOTIFICATION. If determined to be legally necessary by the
parties hereto, Charter and Buyer shall each promptly prepare and file a
notification with the United States Department of Justice (the "DOJ") and the
Federal Trade Commission (the "FTC") as required by the HSR Act. Charter and
Buyer shall cooperate with each other in connection with the preparation of such
necessary notification, including sharing information concerning sales and
ownership and such other information as may be needed to complete such
notification, and providing a copy of such notification to the other prior to
filing. Buyer shall pay the filing fee required under the regulations
promulgated pursuant to the HSR Act. In the event Charter and Buyer shall
receive a request for additional information or documentary material from the
DOJ or the FTC (i) Buyer shall be primarily responsible for responding to such
request and (ii) Charter shall not respond to such request or furnish any
additional information or documentary material without first notifying Buyer in
writing.
7.9 TRANSITION SUPPORT. At the request of buyer, for a period of up to
sixty (60) days following Closing, Charter will provide certain transition
support services to Buyer, pursuant to a "Transition Services Agreement" to be
negotiated in good faith and reasonably and mutually agreed upon by the parties
prior to Closing.
7.10 PATIENT BILLINGS.
7.10.1 BUYER RECEIVABLES. The Buyer shall be entitled to the
accounts receivable which arise from services provided to patients of the
Charter Facility subsequent to the Closing Date (the "BUYER Receivables"). The
Buyer Receivables shall include, without limitation, collectible capitation
payments for days elapsed after the Closing for covered lives ("COVERED LIVES"),
amounts prepaid by the patient to compensate for hospital days after the Closing
Date, and collectible receivables attributable to services rendered after the
Closing to non-capitated patients of the Charter Facility who were patients of
the Facilities before the Closing and patients of the Charter Facility after the
Closing (the "STRADDLE PATIENTS"). The Buyer shall have the exclusive right
subsequent to the Closing to receive capitation payments in connection with
Covered Lives and to bill for services rendered to Straddle Patients.
7.10.2 CHARTER ENTITIES' RECEIVABLES. To compensate the
Charter Entities for services rendered and medicine, drugs and supplies provided
on and prior to the Closing with respect to Straddle Patients and Covered Lives,
the following shall apply:
(i) CUT-OFF BILLINGS. To the extent that a Payor will
accept a cut-off billing, the Charter Entities shall prepare cut-off billings
for all Straddle Patients and Covered Lives as of the close of business of the
Closing. All payments which are received related to the cut-off billings will be
property of the Charter Entities.
(ii) 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 Buyer shall submit billings to such Payor for the entire portion of
such Straddle Patient's stay. The Buyer shall then remit to
15
<PAGE> 17
the Charter Entities within thirty (30) days after each receipt of payment with
respect to such billing the amount determined by multiplying the total payment
received for such Straddle Patient by a fraction, the numerator of which shall
be the number of days such Straddle Patient was a patient through and including
the Closing, and the denominator of which shall be the total number of days such
Straddle Patient was a patient, both before and after the Closing. If the Payor
of any Covered Lives cannot or does not for any reason accept cut-off billings,
then to the extent the Buyer receives capitation payments in connection with
days elapsed on or prior to the Closing, the Buyer shall remit to the Charter
Entities within thirty (30) days after the receipt thereof, monthly capitation
payments for months preceding the month in which the Closing occurs and for such
latter month, a PRO RATA amount of the monthly capitation payment based on the
number of days that have elapsed in the month in which the Closing occurs,
through and including the Closing.
7.10.3 OTHER PAYMENTS. If the Charter Entities or the Buyer
receives any amount from Medicare or Medicaid for cost-based patients or from
any other Payor which relates to services rendered by another party hereto, the
party receiving such amount shall immediately remit said full amount to such
other party.
7.11 PRORATIONS AND ADJUSTMENTS. Any prepaid expenses and
deposits of the Charter Entities shall be prorated as of the Closing and Buyer
shall reimburse the Charter Entities for the prorated amount of such prepaid
expenses and deposits within thirty (30) days of the Closing. The operation of
the Business and all expenses attributable thereto through the close of business
on the Closing Date shall be for the account of the Charter Entities and
thereafter shall be for the account of Ramsay. Unless specifically provided
otherwise in this Agreement, expenses such as power and utility charges,
property assessments, rents, license fees, dues, subscriptions and other
charges, employee obligations, ad valorem or personal property taxes and all
other items of income and expense relating to the Business shall be prorated
between the Charter Entities and Ramsay as of the Closing Date. All prorations
shall be made and the Purchase Price shall be adjusted insofar as feasible on
the Closing Date. In the event that the Charter Entities and Ramsay shall
receive bills after the Closing Date for expenses incurred prior to the Closing
Date that were not prorated in accordance with this Section 7.11, then the
Charter Entities or Ramsay, as the case may be, shall promptly notify the other
party as to the amount of the expense subject to proration and the responsible
party shall pay its portion of such expense (or, in the event such expense has
been paid on behalf of the responsible party, reimburse the other party for its
portion of such expense).
ARTICLE 8
TERMINATION
8.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing, as follows:
(a) by Buyer, if Buyer is prepared to close and all conditions
of the Charter Entities' obligations to close pursuant to Sections 6.2
and 6.3 have been satisfied and
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<PAGE> 18
Charter either fails to close in accordance with Article 3 or fails to
satisfy the conditions under 6.1(a) and 6.1(b);
(b) by Charter, if the Charter Entities are prepared to close
and all conditions to Buyer's obligations to close pursuant to Sections
6.1 and 6.3 have been satisfied and Buyer either fails to close in
accordance with Article 3 or fails to satisfy the conditions under 6.2;
(c) by Buyer, if the Charter Entities fail to cure any
material breach of this Agreement within ten (10) days after receiving
written notice thereof from Buyer;
(d) by Charter, if Buyer fails to cure any material breach of
this Agreement within ten (10) days after receiving written notice
thereof from Charter;
(e) by Buyer or Charter, if the Bankruptcy Court declines to
approve any or all of the provisions of this Agreement;
(f) by Buyer, if the Conditions contained in 6.1(c), (d), (e),
or (i) have not occurred, through no fault of Buyer;
(g) this Agreement shall automatically terminate if the
conditions in Section 6.3 hereof are not satisfied by June 20, 2000, or
such other date as the Buyer and the Charter Entities mutually agree in
writing and
(h) this Agreement shall automatically terminate in the event
that the Closing does not occur by June 20, 2000, for any reason other
than those stated in (a) through (g) above, unless Buyer and the
Charter Entities mutually agree in writing to extend the Closing Date.
8.2 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 8.1, the provisions of Section 7.3, Section 7.5 and Section
7.6 shall survive any such termination along with and any other provisions of
this Agreement which expressly or by implication survive such termination.
8.3 REFUND OF DEPOSIT Charter will refund to Buyer the amount of the
deposit actually paid by Buyer to Charter under Section 2.1, if this Agreement
is terminated or terminates automatically under Section 8.1(a), 8.1(c), 8.1(e),
8.1(f), or 8.1(g). If this Agreement is terminated for any reason other than
termination or automatic termination under Section 8.1(a), 8.1(c), 8.1(e),
8.1(f), or 8.1(g), Buyer will forfeit the Deposit, and, in addition, when Buyer
receives the refund of its deposit of $87,600 being held pursuant to the Real
Estate Purchase Agreement with Crescent, Buyer shall remit such $87,600 refund
to Charter.
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ARTICLE 9
MISCELLANEOUS
9.1 BULK SALES WAIVER. The Charter Entities hereby represent that state
bulk sales laws are not applicable to this transaction. Based thereon, the Buyer
and the Charter Entities waive any compliance with bulk sales laws.
9.2 ASSIGNMENT. Buyer may assign its rights under this Agreement to any
other party, without the consent of the Charter Entities, provided, however,
that such assignment does not obligate the Charter Entities to return to Buyer
the deposit paid pursuant to Section 2.1 other than as required by Section 8.3.
9.3 WAIVER; AMENDMENT. No waiver, termination or discharge of this
Agreement, or any of the terms or provisions hereof, shall be binding upon
either party unless confirmed in writing. No waiver by either party of any term
or provision of this Agreement or of any default hereunder shall affect such
party's rights thereafter to enforce such term or provision or to exercise any
right or remedy in the event of any other default, whether or not similar. This
Agreement may not be modified or amended except by a writing executed by both
parties.
9.4 INTERPRETATION. This Agreement shall not be construed more strictly
against either party hereto regardless of which party is responsible for its
preparation, it being agreed that this Agreement was fully negotiated by both
parties.
9.5 HEADINGS. The titles, captions and headings contained in this
Agreement are inserted for convenience of reference only and are not intended to
be a part of or to affect in any way the meaning or interpretation of this
Agreement.
9.6 REFERENCE WITH AGREEMENT. References in this Agreement to numbered
or lettered Articles, Sections, subsections, items, Exhibits, Appendices and
Schedules refer to Articles, Sections, subsections, items, Exhibits, Appendices
and Schedules of this Agreement unless otherwise expressly stated. The words
"herein," "hereof," "hereunder," "hereby," "this Agreement" and other similar
references shall be construed to mean and include this Agreement and all
Exhibits, Appendices and Schedules to this Agreement, all Schedules to such
Appendices and all amendments to any of them unless the context shall clearly
indicate or require otherwise.
9.7 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective heirs, representatives,
successors and permitted assigns.
9.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of Delaware, without regard to the principles of
conflicts of laws.
9.9 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or mailed, certified mail, postage prepaid as to
each of the parties hereto or by facsimile transmission, receipt acknowledged,
at the respective addresses and facsimile numbers set forth
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<PAGE> 20
on SCHEDULE 9.9 (or at such other address as to which any such party may have
notified the other party(ies) pursuant to the terms hereof).
9.10 COUNTERPARTS; FAX SIGNATURES. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute the same Agreement. Any signature page of
any such counterpart, or any electronic facsimile thereof, may be attached or
appended to any other counterpart to complete a fully executed counterpart of
this Agreement, and any telecopy or other facsimile transmission of any
signature shall be deemed an original and shall bind such party.
9.11 ENTIRE AGREEMENT. This Agreement, together with all Exhibits,
Appendices and Schedules to this Agreement (all of which are incorporated herein
by this reference), contains the entire agreement and understanding concerning
the subject matter hereof between the parties and specifically supersedes any
other agreement or understanding among the parties related to the subject matter
hereof.
9.12 SEVERABILITY. If any provision of this Agreement shall be held
void, voidable, invalid or inoperative, no other provision of this Agreement
shall be affected as a result thereof, and, accordingly, the remaining
provisions of this Agreement shall remain in full force and effect as though
such void, voidable, invalid or inoperative provision had not been contained
herein.
9.13 TIME IS OF THE ESSENCE. Time is of the essence for this Agreement.
IN WITNESS WHEREOF, the undersigned have caused their respective duly
authorized representatives to execute this Agreement as of the day and year
first above written.
"CHARTER"
CHARTER BEHAVIORAL HEALTH
SYSTEMS, LLC
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"CHARTER SUBS"
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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<PAGE> 21
"CHARTER ADVANTAGE, LLC"
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"CHARTER MANAGED CARE SERVICES, LLC"
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"BUYER"
------------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
20
<PAGE> 22
EXHIBIT A
CHARTER SUBS AND CORE FACILITIES
CHARTER SUB FACILITY
----------- --------
Manatee Palms
Manatee Adolescent Treatment Services
Kingsley Center
<PAGE> 23
EXHIBIT B
CONTRACTS
MANATEE PALMS
o State of Florida Department of Children & Families
o State of Illinois Department of Children & Family Services
o Cook County, Illinois
MANATEE ADOLESCENT TREATMENT SERVICES
o Florida Department of Juvenile Justice - 85 Beds (Level 6 & Level 8)
o Medicaid - Behavioral Health Overlay Services
THE KINGSLEY CENTER
o Florida Department of Juvenile Justice - 80 Beds Female Commitment
o Medicaid - Behavioral Health Overlay Services
Note: All other contracts or agreements material to the operation of the
Business are assumed to be included under this Exhibit B.
<PAGE> 24
EXHIBIT C
ALLOCATION OF PURCHASE PRICE
To be mutually agreed to by Charter and Ramsay.
<PAGE> 25
SCHEDULE 4.1(i)
EMPLOYEES
<PAGE> 26
SCHEDULE 9.9
NOTICE ADDRESSES
Ramsay: c/o Ramsay Youth Services, Inc.
Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida 33134
with a copy to:
Rebecca Orand, Esq.
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, FL 33131
