FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
FOR
▇▇▇▇▇▇▇ COUNTY GENERAL HOSPITAL
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT FOR ▇▇▇▇▇▇▇ COUNTY
GENERAL HOSPITAL (this "FIRST AMENDMENT"), is dated as of March 31, 1999, among
▇▇▇▇▇▇▇▇▇▇ Healthcare Corporation ("SELLER"), a California corporation,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ County General Hospital, Inc.("BCG"), a California
corporation and Associates Capital Group, LLC, a Georgia limited liability
company ("BUYER").
WITNESSETH:
WHEREAS, Seller, BCG and Buyer entered into that one certain Stock
Purchase Agreement For ▇▇▇▇▇▇▇ County General Hospital dated as of March 12,
1999 (the "STOCK PURCHASE AGREEMENT"); and
WHEREAS, the parties wish to amend certain sections of the Stock
Purchase Agreement to permit the Closing under such agreement to occur
effective March 31, 1999;
NOW, THEREFORE, for and in consideration of the foregoing premises and
the agreements and covenants hereinafter set forth and other good and valuable
consideration, the receipt and adequacy of all of which are acknowledged and
agreed, the parties hereto agree as follows:
I. Section 1.8 of the Stock Purchase Agreement is amended to read as
follows:
"1.8 PAYMENT OF WORKING CAPITAL AT CLOSING. (a) At Closing Buyer shall
deliver to Seller (i) $100,000 cash, (ii) a thirty (30) day promissory note in
the amount equal to the lesser of (A) sixty percent (60%) of BCG's Initial Net
Working Capital less $100,000 and (B) One Million Dollars ($1,000,000) less
$100,000 substantially in the form of APPENDIX 1.8 ("SHORT TERM NOTE"), and
(iii) a promissory note substantially in the form of Appendix A ("NOTE A") in
the original principal amount equal to the amount of BCG's Initial Net Working
Capital less the amount of cash paid in (i) above and the amount of the note in
(ii) above."
I. Section 1 of the Stock Purchase Agreement is amended to add SECTION 1.11
to read as follows:
"1.11 ADDITIONAL NOTE A ADJUSTMENT
(a) The parties acknowledge and agree that the effective date for
all transactions under this Agreement is the Effective Time pursuant to
Section 2.1 below. However, the parties have agreed to adjust the
balance of Note A as provided herein to reflect the economic benefits
and/or costs to the parties measured from 11.59 p.m., March 31, 1999
(the "Calculation Date") through the Closing Date ("Calculation
Period") arising from and with respect to the Assets and Assumed
Liabilities.
(b) No later than twenty (20) business days after the Closing
Date, Seller shall provide to Buyer a report (the "Calculation Report")
showing and reconciling all activity during the Calculation Period
involving and/or effecting the Assets and Assumed Liabilities. The
Calculation Report shall include, without limitation, the following
specific information:
(i) Cash collected by BCG during the Calculation Period from the
collection of accounts receivable or otherwise from the business
operations of BCG ("Cash Collected");
(ii) Detail of expenditures of cash during the Calculation Period
for trade payables, payroll and other obligations ("Expended
Cash");
(iii) The Calculation Report shall show the basis for Seller's
calculation of the adjustment to the balance of Note A and shall
constitute a request for or notice of payment due on account of
said adjustment. If the amount of Cash Collected is greater than
the sum of Expended Cash, then the principal balance of Note A
shall be decreased by said amount. If the amount of Cash Collected
is less than the sum of Expended Cash, then the principal balance
of Note A shall be increased by said amount.
(c) Buyer shall have ten (10) business days to audit the
Calculation Report to determine its accuracy and validity. After such
ten-day period, Buyer shall either accept the Calculation Report from
Seller or reject the Calculation Report. If Buyer rejects the
Calculation Report, the parties shall submit the matter to one of the
big five national certified public accounting firms jointly selected by
Buyer and Seller (the "Independent CPA Firm"). The Independent CPA Firm
shall make its determination based on the terms and conditions of this
Section 1.11, which determination shall be binding on the parties. The
costs of such Independent CPA Firm shall be shared equally between
Buyer, on the one hand, and Seller, on the other hand."
I. Section 2.2 of the Stock Purchase Agreement is amended to add the
following additional item:
"(h) The resignations of all officers and directors of BCG effective the
Effective Time."
I. Section 2.3 of the Stock Purchase Agreement is amended to read as
follows:
"2.3 ACTION OF BUYER AT CLOSING.
A. At the Closing, Buyer shall deliver to Seller the following:
(a) the Purchase Price, including :
(i) $100,000 cash,
(ii) Short Term Note,
(ii) Note A,
(iii) Note B,
(iv) Security Agreement (Short Term Note),
(v) Stock Pledge Agreement (Note A),
(vi) Security Agreement (Note B), and
(vii) a certificate of existence of Buyer from the State
of Georgia, dated the most recent practical date
prior to Closing
B. Buyer hereby covenants to deliver to Seller by May 15, 1999 the
following:
(a) the payment of the Short Term Note;
I. Section 3 of the Stock Purchase Agreement is amended to add SECTION 3.22
to read as follows:
"3.22 NO CONFLICT. The execution, delivery, and performance of this
Agreement and the other agreements contemplated hereby to which Seller
and BCG, or either of them, is a party and the consummation by Seller
and BCG of the transactions contemplated hereby and thereby does not and
will not (with or without the giving of notice or the lapse of time or
both) contravene, conflict with, or result in the violation of any
provision of the Scheduled Contracts or the Scheduled Leases, except as
may be described in Schedule 3.6 and Schedule 3.7."
I. Section 6.2 is hereby amended to add a clause "(v)" to read as follows:
"(v) any liability for violations of any Environmental Laws resulting
from underground storage tanks as disclosed in Schedule 3.17."
I. Section 6.4 LIMITATION ON CLAIMS clause (b) is hereby amended to read
as follows"
"(b) Notwithstanding the provisions of Section 6.4(a), any indemnified
claim having its basis in any of the following shall not be subject to
the thresholds established by such provisions: (A) a breach of the
representations, warranties, covenants and agreements made in 1.4(b)(2),
3.6, 3.7, 3.9, 3.14(c), 3.14(d), 3.14(e), 3.14(j), 3.15, 3.16, 3.17,
3.18, 3.19, 3.22 and 4.3, (B) fraud or intentional misrepresentation,
(C) a breach by Buyer to pay or observe any obligation of Seller assumed
by Buyer pursuant to the terms hereof and any agreement required herein,
(D) any breach by Buyer to pay the Purchase Price hereunder, (E) a
breach by Buyer or Seller of its obligation under Section 1.9 to pay any
post-Closing adjustment to the Purchase Price required by such Section,
or (F) solely with respect to all claims for indemnification arising
under Section 6.2 relating to underground storage tanks as disclosed in
Schedule 3.17, Seller shall have no liability to Buyer in excess of
$50,000 in the aggregate, the first $25,000 of which shall be payable to
Buyer in accordance with the procedures set forth in this Section 6, and
with respect to the remaining $25,000 of Seller's indemnification
obligation hereunder, Seller shall pay to Buyer one dollar for every
dollar Buyer is required to pay in damages up to a maximum of $25,000."
I. Section 7.6 of the Stock Purchase Agreement is deleted in its entirety.
I. There shall be added a new "SECTION 11.5 UNWINDING."to read as follows:
"SECTION 11.5 UNWINDING.
(a) Buyer and Seller shall cancel all obligations to the other
party and the transactions contemplated by the Stock Purchase
Agreement, as amended hereby, shall be rescinded as of the
Effective Time if:
(i) as to Seller, Buyer fails to perform its obligations
under Section 2.3.B of the amended Stock Purchase
Agreement; or
(ii) as to Buyer, Seller fails to perform its obligation
under Section 2.2 of the amended Stock Purchase Agreement.
(b) In the event Buyer elects to cancel as provided in (a) above,
(i) Seller shall return to Buyer $100,000 and the originally
executed Short Term Note, Note A and Note B, and (ii) Buyer shall
return to Seller possession of the Assets, and Buyer and Seller
Shall execute such other and further documents and take such acts
as are necessary to return the parties to the status quo prior to
the Closing, except for the retention by Seller of the $100,000 of
Buyer, whereupon this Agreement shall be terminated and of no
further force and effect.
(c) In the event Seller elects to cancel as provided in (a) above,
Buyer shall return to Seller possession of the Assets, the
irrevocable proxy and the ▇▇▇▇ of Sale and Agreement, and Buyer
and Seller Shall execute such other and further documents and take
such acts as are necessary to return the parties to the status quo
prior to the Closing, whereupon this Agreement shall be terminated
and of no further force and effect."
I. The parties hereto agree the Effective Time shall be 11:59 P.M.
(Central Time) March 31, 1999.
I. Defined terms used herein that are not otherwise defined herein shall
have the meaning given them in the Stock Purchase Agreement.
I. This First Amendment may be executed in multiple counterparts, each of
which shall be deemed an original and all shall be considered one and the same
agreement.
I. All terms and provisions of the Stock Purchase Agreement not modified by
this First Amendment are and shall remain in full force and effect.
The next page of this First Amendment is the Signature Page
First Amendment to Stock Purchase Agreement Page 1
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed in multiple originals by their duly authorized officers and
their corporate seals duly affixed hereto, all as of the day and year first
above written.
▇▇▇▇▇▇▇▇▇▇ HEALTHCARE CORPORATION
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: SENIOR VICE PRESIDENT
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COUNTY
GENERAL HOSPITAL, INC.
By: ▇.▇.▇▇▇▇▇▇▇▇▇
Title: VICE PRESIDENT
ASSOCIATES CAPITAL GROUP, L.L.C.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: MANAGING MEMBER
