1
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement") is made and entered into by and
among MHM SERVICES, INC., a Delaware corporation (hereinafter referred to as
"Seller"), and POUDRE VALLEY HEALTH CARE, INC., a Colorado corporation
(hereinafter referred to as "Purchaser").
In consideration of the agreements herein contained, the parties agree as
follows:
1. Conveyance. Seller agrees to sell and convey and Purchaser agrees to
purchase and take title to that certain parcel of real estate commonly known as
Mountain Crest Behavioral Healthcare System lying and being in Ft. Xxxxxxx,
Colorado, and being more particularly described in Exhibit A attached hereto,
including all improvements, fixtures, rights, privileges, easements,
hereditaments and appurtenances thereto, together with all right, title and
interest of Seller in and to the land lying in the bed of any street, road,
avenue or alley, open or proposed, public or private, in front of or adjoining
said property to the center line thereof (hereinafter collectively referred to
as the "Property"). The Property shall include all fixtures, furnishings,
equipment, and other assets comprising the facility known as Mountain Crest
Behavioral Health Care System located at 0000 Xxxxxxx Xxxxx, Xxxx Xxxxxxx,
Xxxxxxxx (the "Facility"), but excluding equipment owned by HHG Colorado, Inc.,
not to exceed a value of $50,000.00. The Property shall include the medical
records of the hospital which Purchaser agrees shall be maintained in conformity
with applicable laws and regulations, including those of patient confidentiality
and patient access. At "Closing" (as defined below), Seller and Purchaser shall
mutually agree upon an allocation of the "Purchase Price" (as defined below)
among the various items of real and personal property constituting the Property
being conveyed under this Agreement.
2. Liabilities. At Closing, Seller will have paid or reserved adequate
funds to pay all accrued liabilities, whether or not then due and payable. All
outstanding leases, subleases, management contracts, medical director contracts,
medical staff relationships and any other agreements affecting the operation of
the Facility will be surrendered and canceled except: (i) those agreements
which, by their terms are not cancelable as of the Closing, which agreements and
the liabilities arising thereunder shall be assumed by Purchaser; and (ii) those
agreements and medical staff relationships which may not be terminated without
jeopardizing the care then being rendered to patients, unless Purchaser makes
adequate arrangements for the substitution of such agreements and relationship
with the patient's consent, as necessary. Seller shall be responsible for all
other liabilities not specifically assumed by Purchaser, and Seller hereby
agrees to indemnify and hold Purchaser harmless as to all such liabilities. At
Closing, employees of the hospital who are represented by the Seller as "at
will" employees will become "at will" employees of the Purchaser.
2
3. Purchase Price and Payment. The purchase price of the Property
(hereinafter referred to as the "Purchase Price") shall be the sum of
$5,320,000, which Purchase price shall be paid as follows:
3.1. Xxxxxxx Money. A deposit of $532,000 (hereinafter referred to
as the "Xxxxxxx Money") has been paid by Purchaser upon execution of that
certain Letter of Intent between the parties. The Xxxxxxx Money shall be applied
to the cash portion of the Purchase Price due at Closing. This deposit, to be
referred to as the "Xxxxxxx Money Deposit" is refundable only to the extent the
transaction does not close due to: (1) conditions, not previously known or
apparent, discovered during the due diligence examination which cannot or will
not be cured by Seller or waived by Purchaser; or (2) the inability of either
party to satisfy all the conditions of paragraph 13. If, through no fault of
Purchaser this transaction does not proceed to Closing, Seller agrees to refund
within ten (10) business days the Xxxxxxx Money Deposit. Refund of the Xxxxxxx
Money Deposit shall be in the form of check or certified funds.
3.2. Remainder of Purchase Price. The balance of the Purchase Price,
less credit for the Xxxxxxx Money and such other credits, prorations and
adjustments as are provided herein, shall be paid at Closing by certified funds
or wire delivery of funds through the Federal Reserve System to an account
designated in writing by Seller.
4. Closing; Deed. This transaction shall be closed by delivery by Seller
to Purchaser of a properly executed special warranty deed as described in
paragraph 6 below (hereinafter referred to as the "Deed") conveying the
Property, against receipt by Seller of the Purchase Price and upon performance
of all of the other obligations incurred under this Agreement, at the offices of
Mt. Crest Hospital, or at such other location in Ft. Xxxxxxx, Colorado as may be
chosen by Purchaser, at a specific time and date selected by Purchaser
(hereinafter referred to as the "Closing Date") giving notice thereof to Seller
at least five (5) days prior to the selected time. Provided, in no event shall
Closing be later than thirty-five (35) days after the Date of This Agreement,
subject to adjournment by Seller to permit Seller to remove title objections
under paragraph 7 hereof. Patients in the Hospital as of the date of Closing
will be discharged from the care of MHM of Colorado, Inc., and readmitted to the
care of Purchaser, effective as of 12:01 a.m. the day after Closing.
5. Consulting Agreement. At Closing, Purchaser and Seller shall enter into
a consulting agreement in the form attached as Exhibit C for a period of one
year beyond the Closing date for $50,000 per month. Under this contract, Seller
will provide the same level of management support services to Purchaser as it
has provided to the Facility under its ownership
2
3
6. Warranties of Seller.
6.1 At Closing, Seller shall convey "good and marketable, fee simple
title" to the Property to Purchaser, subject to the following exceptions
(hereinafter referred to as the "Permitted Exceptions"):
(a) Liens for ad valorem taxes not yet due and payable;
(b) The standard printed exceptions as set forth in the
"Title Policy" (as hereinafter defined);
(c) Those exceptions shown on Exhibit B attached hereto and
by this reference made a part hereof (which are the
title exceptions appearing in Seller's existing owner's
title insurance policy); and
(d) Any other title exceptions discovered and waived by
Purchaser as hereinafter provided.
"Good and marketable, fee simple title" shall be such title as is acceptable to
and insurable by Chicago Title Insurance Company or a similar national title
underwriter (hereinafter referred to as the "Title Company"), at standard rates
on American Land Title Association Owner's Policy Form B-1992 (hereinafter
referred to as the "Title Policy") free and clear of all exceptions except the
Permitted Exceptions.
6.2. Seller, without inquiry or investigation, represents that it
has no actual knowledge of: any pending, threatened or contemplated
condemnation, assessment, or similar proceedings affecting the Hospital; any
defaults under any agreements affecting the Hospital; any litigation pending,
threatened or contemplated, affecting title to the Hospital; any violations or
noncompliance with any applicable codes, laws, orders, rules or regulations,
federal or state, relating to building, fire, safety, environment, sanitation,
or zoning; the presence of any hazardous substances, asbestos, or asbestos
containing materials (as defined in 40 C.F.R. 61.141), solid wastes, or other
substances known or suspected to pose a threat to health or the environment.
6.3. Seller represents and warrants to Purchaser that all financial
information provided by Seller (or its subsidiary, MHM of Colorado, Inc.) to
Purchaser is complete and accurate in all material respects.
6.4. Seller has taken all requisite actions and obtained all
required approvals necessary for the consummation of the transaction and has
full authority to consummate the Transaction contemplated.
3
4
7. Title Objections.
7.1. Purchaser shall have twenty (20) days after the Date of This
Agreement in which to search title to the Property and in which to furnish
Seller with a written statement of any title objections affecting the
marketability of said title other than the Permitted Exceptions. Should
Purchaser fail to notify Seller of any such title objections within the
aforesaid time period, Purchaser shall be deemed to have waived all objections
to the title to the Property. Seller shall have twenty (20) days after receipt
of 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 five (5) 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 on or before the
later of (i) the Closing Date, or (ii) three (3) days following such notice,
accepting the Deed subject to such title objections and without reduction of the
Purchase Price, except that liens affecting the Property which were created or
allowed by Seller and which are dischargeable by the payment of money shall be
paid at Closing out of the Purchase Price if this option is elected; or (b) to
cancel this Agreement and receive a refund of the Xxxxxxx Money, in which event
neither Seller nor Purchaser shall have any further rights, duties or
obligations under this Agreement, 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 liens, leases and
encumbrances except to the extent any such liens, leases and encumbrances are in
conjunction with requirements listed in paragraph 6 above. The acceptance of the
Deed 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 Agreement, except those (if any) pursuant to any
provision hereof which are herein specifically stated to survive the Closing.
Deeds to secure debt encumbering the property which are to be paid by Seller
from the Purchase Price at the Closing shall not constitute valid title
objections.
7.2. Seller shall deliver to Purchaser any copies of the
instruments, notices, agreements, items of record, or other documents referred
to in Exhibit B which Seller has available. In the event that Purchaser
determines the "Permitted Exceptions" as defined in paragraph 6.1(c) above are
not acceptable to it, within the time period specified in paragraph 7.1,
Purchaser shall have the right to object to such matters, as set forth in
paragraph 7.1.
8. Survey. Purchaser or its agents or designees shall have the privilege
of going on the Property prior to Closing to make surveys, soil tests,
environmental tests, hydrological studies, and other tests and inspections of
the Property. Any survey shall
4
5
be performed by a Colorado Registered Land Surveyor selected by Purchaser, a
Purchaser's sole expense, with the survey so made indicating the number of acres
comprising the Property to the nearest one-hundredth of an acre (hereinafter
referred to as the "Survey"). Purchaser hereby covenants and agrees to
indemnify, defend and hold Seller harmless from any loss, liability, cost,
claims, damages, demands, actions, causes of action, liens, claims of lien and
suits resulting from Purchaser's activities under this paragraph except and
unless such loss, liability, damage or claim is the result of Seller's
negligence. The preceding indemnity shall survive the termination, rescission,
cancellation and consummation of this Agreement. The Purchaser shall promptly
restore the Property to its condition on the date hereof to the extent
practicable after all such tests or surveys, with Purchaser's obligation so to
restore to survive any termination of this Agreement. The legal description to
be used in the Deed shall be the legal description attached hereto as Exhibit A.
If Purchaser so desires, Seller shall execute a quitclaim deed conveying the
Property pursuant to a legal description prepared from the Survey.
9. Closing Costs. Each party will pay its own legal, accounting and other
fees and expenses incident to the contemplated transaction, provided that
Purchaser shall pay the State of Colorado property transfer tax applicable to
this transaction, the costs of recording the deed, the cost of the Title Policy,
the cost of the Survey, and any intangible taxes or similar taxes due as a
result of this transaction, and further provided that Seller shall pay the cost
of recording any documents necessary to cure title objections.
10. Apportionment of Taxes. All city, state and county ad valorem taxes
(hereinafter collectively referred to as the "Taxes") for the calendar year of
Closing shall be prorated and accounted for between Seller and Purchaser at
Closing based on the latest millage rate and assessment available. Should such
proration be inaccurate based on the actual bills when received, either party
shall be entitled to receive, on demand, a payment from the other correcting
such malapportionment. The foregoing prorations shall increase or decrease the
cash portion of the Purchase Price. The provisions of this paragraph shall
survive the Closing.
11. Casualty Loss. In the event of material damage to or material
destruction of the Property by fire or other casualty prior to the Closing,
which material damage or material destruction has not been repaired or restored
by the Closing Date, Purchaser may, at its option, elect: (i) not to close the
transaction contemplated hereby, in which event the Xxxxxxx Money shall be
refunded to Purchaser and no party shall have any further rights or obligations
hereunder, or (ii) to close the transaction contemplated hereby and receive the
instruments required herein from Seller, irrespective of such damage or
destruction and without reduction of the Purchase Price, but with Seller's right
to applicable insurance proceeds, if any. Damage or destruction in an amount in
excess of $500,000 shall be deemed "material" for the purposes of this
Paragraph.
5
6
12. Condemnation. Seller agrees to give Purchaser written notice of any
action or proceeding for condemnation of any part of Property by friendly
acquisition or statutory proceeding, which may result in the taking of all or
any part of Property. Upon such notification, Purchaser shall have the right, to
be exercised within ten (10) days after receipt of such notice, to rescind this
Agreement and receive a refund of Xxxxxxx Money. If Purchaser does not elect to
rescind, this Agreement shall remain in full force and effect and Seller will
credit Purchaser at Closing with any moneys received by Seller by reason of such
taking. Provided Purchaser does not rescind, Seller will assign at Closing all
of the Seller's interest in and to any condemnation award or offers, relating to
the Property.
13. Conditions and Purpose. The Closing shall be subject to the following
conditions precedent:
(a) Purchaser shall have obtained all governmental and
regulatory approvals necessary for the consummation of
the proposed transaction; and
(b) Purchaser shall have reviewed and approved any pending
medical staff contracts or other medical staff
commitments which it may choose to assume. Likewise, all
payor contracts which Purchaser may choose to assume
shall have been reviewed and approved; and
(c) Seller shall have consummated those certain transactions
with Charter Hospital of Fort Xxxxxxx, Inc. and HHG
Colorado, Inc, relating to the assets; and
(d) All of Seller's representations shall be true as of
Closing.
14. Closing Documents. At Closing, the following documents, in addition to
the other documents called for herein, shall be executed and/or delivered.
14.1. Affidavit of Seller. At Closing, Seller shall provide to
Purchaser and the Title Company a title affidavit sufficient to induce the Title
Company to issue the Title Policy without exception for mechanics and
materialmen's liens or the rights of parties in possession not shown by the
public records.
14.2. Authority of Seller. Seller shall deliver to Purchaser
satisfactory evidence of its due and proper authority and power to perform its
obligations hereunder and to execute and deliver all documents required hereby.
6
7
14.3. Authority of Purchaser. Purchaser shall deliver to Seller
satisfactory evidence of its due and proper authority and power to perform its
obligations hereunder and to execute and deliver all documents required hereby.
14.4. Miscellaneous Documents. Seller and Purchaser shall execute and
deliver such other documents as may be reasonably required by Purchaser or
Seller to close this transaction in accordance with the terms and conditions set
forth in this Agreement.
15. Assignment. Purchaser shall have no right to assign its rights or
obligations under this Agreement to any other party whether by direct or
indirect transfer or assignment.
16. Brokerage Commission. Seller and Purchaser hereby represent and
warrant that no party is entitled, as a result of the actions of Seller or
Purchaser to a real estate commission or other fee resulting from the execution
of this Agreement or the transaction contemplated hereby; and Seller and
Purchaser hereby agree to indemnify, defend and hold each other harmless from
and against any and all costs, damages and expenses (including reasonable
attorneys' fees) resulting directly or indirectly from any such claim arising
out of the actions of or contract with Seller or Purchaser, as the case may be.
The representations, warranties and indemnities contained in this paragraph
shall survive the rescission, cancellation, termination or consummation of this
Agreement.
17. Notices. Any notice or communication shall be in writing and shall be
sent either by: (a) personal delivery service with charges therefor billed to
shipper; (b) expedited delivery service with charges therefor billed to shipper;
(c) facsimile transmission provided a confirmation copy is mailed pursuant to
subparagraph (d) below; or (d) United States Mail, postage prepaid, registered
or certified mail, return receipt requested. Any notice or communication sent as
above provided shall be deemed given or delivered: (a) upon receipt if
personally delivered (provided that such delivery is confirmed by the courier
delivery service); (b) if sent by United States Mail, on the date appearing on
the return receipt, or if there is not date on such return receipt, the receipt
date shall be presumed to be the postmark appearing on such return receipt; or
(c) on the date of actual delivery by any expedited delivery service or actual
receipt if sent by facsimile transmission (provided receipt is confirmed as
provided above). Any notice or communication required or permitted hereunder
shall be addressed as follows:
To Seller: MHM Services, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, President
7
8
With a copy to:
Xxx Xxxxxxxxx, Esquire
MHM Services, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
To Purchaser: Poudre Valley Health Care, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx, President
With a copy to:
Xxxxx X. Xxxx, Esquire
000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000
18. Remedies.
18.1. Remedies of Seller. In the event of Purchaser's default under
this Agreement, the Xxxxxxx Money shall be paid to or retained by Seller as full
liquidated damages, this Agreement shall, except as expressly set forth
elsewhere herein, be null and void, and none of the parties hereto shall have
any further rights or obligations hereunder. It is hereby agreed that, without
resale, Seller's damages will be difficult to ascertain and that the Xxxxxxx
Money constitutes a reasonable liquidation thereof and is intended not as a
penalty, but as full liquidated damages. Seller agrees that in the event of a
default by Purchaser, it shall not initiate any proceeding to recover damages
from Purchaser in excess of the Xxxxxxx Money, and Purchaser agrees that in the
event of its default, it shall not initiate any proceeding challenging Seller's
right to retain or receive the full amount of the Xxxxxxx Money as liquidated
damages.
18.2. Remedies of Purchaser. In the event of Seller's default under
this Agreement, Purchaser agrees to provide Seller with written notice of such
default specifying the nature of such default. Seller shall have ten (10) days
from the date of receipt of said notice to cure such default. In the event
Seller does not cure such default within such 10-day period, Purchaser's sole
remedies shall be to obtain specific performance of Seller's obligations under
this Agreement or to terminate this Agreement, in which event Seller shall
refund the Xxxxxxx Money, this Agreement shall terminate and the parties hereto
shall have no further rights or obligations hereunder except for any rights or
obligations hereunder which, by their terms, survive any
8
9
termination of this Agreement. No other remedy shall be available for Seller's
breach of this Agreement.
19. Confidentiality and Non-Circumvention.
19.1. The parties hereto agree that the existence and contents of
this Agreement and the nature and status of the transactions and related matters
described in this Agreement are confidential. The timing and content of any
announcements, press releases, or other public statements concerning the
proposed transactions and related matters will occur upon, and be determined in
advance by, mutual agreement and consent of the parties. The foregoing
notwithstanding, nothing herein shall prohibit any party to this letter from
making any public disclosure regarding this letter and the nature and status of
the transactions contemplated herein if, in the opinion of counsel to such
parties, such disclosure is required under applicable laws and advance notice of
the proposed disclosure is given to the other party in sufficient time for it to
raise any objections it may have.
19.2. Each party hereto agrees to treat any information concerning
the other party (whether prepared by such other party, its advisors or
otherwise) which is furnished as a result of the transaction contemplated herein
(herein collectively referred to as the "Evaluation Material") in accordance
with the provisions of this Agreement and to take or abstain from taking certain
other actions herein set forth. The term "Evaluation Material" does not include
information which (i) is already in the party's possession, provided that such
information is not known by such party to be subject to another confidentiality
agreement with or other obligation of secrecy to the other party or any
individual or entity, or (ii) become generally available to the public other
than as a result of a disclosure by the receiving party or its directors,
officers, employees, agents or advisors, or (iii) becomes available to a party
on a non-confidential basis from a source other than one of the parties hereto,
or its advisors, provided that such source is not known by the receiving party
to be bound by a confidentiality agreement with or other obligation of secrecy
to the other party.
19.3. Each party hereby agrees that the Evaluation Material will be
used solely for the purpose of evaluating the transactions contemplated in this
Agreement and that such information will be kept confidential; provided,
however, that (i) any such information may be disclosed to a party's directors,
officers, partners and employees and representatives of such party's advisors
who need to know such information for the purpose of evaluating the contemplated
transaction (it being understood that such individuals shall be informed by the
party hereto of the confidential nature of such information and shall be
directed to treat such information confidentially), and (ii) any disclosure of
such information may be made to which the disclosing party consents in writing.
9
10
19.4. In the event that the parties do not proceed with the
transactions which are the subject of this Agreement within a reasonable time,
each party shall promptly redeliver to the other parties all written material
containing or reflecting any information in the Evaluation Material of such
other party and will not retain any copies, extracts or other reproductions in
whole or in part of such written material. All documents, memoranda, notes and
other writings whatsoever prepared by the parties or their respective advisors
based on the information in the Evaluation Material shall be destroyed, and such
destruction shall be certified in writing to the appropriate other party by an
authorized officer supervising such destruction.
19.5. Under no circumstances will Purchaser, directly or indirectly,
seek to circumvent Seller by dealing directly with HHG Colorado, Inc., Charter
Hospital of Ft. Xxxxxxx, Inc., Horizon Mental Health Services, Inc. or Magellan
Health Services, Inc.
20. Miscellaneous.
20.1. Entire Agreement. This Agreement constitutes the entire
agreement between the parties. No representation, promise or inducement not
included herein shall be binding upon any party.
20.2. No Oral Modifications. This Agreement shall not be modified or
amended except by an instrument in writing executed by or on behalf of Purchaser
and Seller.
20.3. Binding Effect. The provisions of this Agreement shall inure
to the benefit of and shall be binding upon the parties and their respective
heirs, successors and assigns and the legal representatives of their estates, as
may apply except as otherwise provided in paragraph 15 of this Agreement.
20.4. Closing. The word "Closing" or words of similar import as used
in this Agreement shall be construed to mean the originally fixed time and
Closing Date specified herein or any adjourned time and date provided herein or
agreed to in writing by the parties.
20.5. Time of Essence. Time is of the essence in this Agreement.
20.6. Delivery of Possession. Possession of the Property shall be
granted to Purchaser no later than Closing.
20.7. Calculation of Time. If the time period by which any right,
option or election provided under this Agreement must be exercised, or by which
any act required must be performed, or by which the Closing must be held,
expires on a Saturday,
10
11
Sunday or legal holiday, then such time period shall be automatically extended
through the close of business on the next regular business day.
20.8. Counterparts. This Agreement may be executed in any number of
counterparts, any one of which shall be deemed an original, and all of which
shall constitute one and the same Agreement.
20.9. Captions. Captions contained in this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement nor the intent of any provision
hereof.
20.10. Governing Law. This Agreement shall be governed by and
construed under the laws of the State in which the Property is located.
20.11. Xxxxxxx Money. The Xxxxxxx Money shall be applied in
accordance with the terms of this Agreement.
20.12. Date of This Agreement. The "Date of This Agreement" means
the last date upon which this Agreement was executed and accepted by Purchaser
or Seller, as the case may be.
20.13. No Recordation. It is expressly agreed and understood that
upon the filing for record of this Agreement by or through the act or effort of
Purchaser, or its successors, in any manner whatsoever, as an exhibit or
attachment to any other instrument so filed, or otherwise, in the office of the
clerk of the superior court of the county in which the Property lies, then, and
in such event, at the option of Seller, Purchaser shall be in default hereunder
and Seller shall be entitled to receive all of the Xxxxxxx Money paid hereunder
as liquidated damages by reason of such default, and this Agreement shall be
null and void and of no further force and effect.
20.14. Inspection of Property. Purchaser represents and warrants
that Purchaser has fully inspected or will fully inspect the Property before
Closing and therefore agrees to purchase the Property wholly "as is," it being
agreed that except as specifically set forth herein, Seller has made no
warranties or representations whatsoever pertaining to the Property, the
condition thereof, the value thereof, or any other matter with respect to the
Property.
20.15. No Waiver. No failure of any party to exercise any power
given such party hereunder or to insist upon strict compliance by any other
party with its obligations hereunder, and no custom or practice of the parties
at variance with the terms hereof shall constitute a waiver or any party's right
to demand exact compliance with the terms hereof.
11
12
20.16. Construction of Agreement. All 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.
20.17. After Closing, Purchaser will cooperate with Seller in
providing access to such documents and records of the Hospital pertaining to
matters occurring prior to Closing as Seller shall reasonably request in
connection with financial reporting, costs reports, litigation, tax filings, and
similar matters.
IN WITNESS WHEREOF, the parties hereto set their respective hands and
affix their seals on the day and year indicated below.
PURCHASER:
POUDRE VALLEY HEALTH CARE, INC.
By: /s/ XXXXX X. XXXXXX
-------------------------------
Its:
Date Executed: 2/25/98
---------------------
SELLER:
MHM SERVICES, INC.
By: [SIG]
-------------------------------
Its:
Date Executed: 2/23/98
----------------------
12
13
FIRST AMENDMENT TO
AGREEMENT OF SALE DATED FEBRUARY 25, 1998
In consideration of the mutual promises hereby exchanged, and for other good and
valuable consideration the receipt of which is hereby acknowledged, Poudre
Valley Hospital, Inc. and MHM Services, Inc., the parties to that certain
Agreement of Sale dated February 25, 1998 (the "Agreement"), hereby amend the
Agreement pursuant to paragraph 20.2 thereof to substitute MHM of Colorado,
Inc., a Delaware corporation, for MHM Services, Inc. as Seller under the
Agreement.
By the signature of its authorized officer below, MHM of Colorado, Inc.
acknowledges and agrees to its substitution as a party to the Agreement. MHM of
Colorado, Inc. hereby assumes all duties and obligations of Seller under the
Agreement, and covenants and agrees to fulfill all such duties and obligation.
It further is acknowledged that MHM of Colorado, Inc. shall be entitled to all
rights and benefits of Seller under the Agreement.
IN WITNESS WHEREOF, the parties hereto set their respective hands and affixed
their seals on the day and year indicated below.
POUDRE VALLEY HOSPITAL, INC. MHM SERVICES, INC.
By: [SIG] By: [SIG]
------------------------ ----------------------------
Its: Its: VICE PRESIDENT
Dated: 3/30/98 Dated: 3-26-98
--------------------- -------------------------
MHM of COLORADO, INC.
By: [SIG]
----------------------------
Its:
Dated: 3-26-98
--------------------------
14
SECOND AMENDMENT
TO
AGREEMENT OF SALE DATED FEBRUARY 25, 1998
In consideration of the mutual promises hereby exchanged, and for other
good and valuable consideration the receipt of which is hereby acknowledge,
Poudre Valley Health Care, Inc. and MHM of Colorado, the parties to that certain
Agreement of Sale dated February 25, 1998 (the "Agreement"), hereby amend the
Agreement pursuant to paragraph 20.2 thereof to substitute PVHS/Mountain Crest
Behavioral Health Services, Inc. as Purchaser under the Agreement, provided that
Poudre Valley Healthcare hereby guarantees performance by PVHS/Mountain Crest
Behavioral Health Services, Inc. of its obligations under the Agreement.
1. By the signature of its authorized officer below, PVHS/Mountain Crest
Behavioral Health Services, Inc. acknowledges and agrees to its substitution as
a party to the Agreement. PVHS/Mountain Crest Behavioral Health Services, Inc.
hereby assumes all duties and obligations of Purchaser under the Agreement, and
covenants and agrees to fulfill all such duties and obligations.
2. It further is acknowledged that PVHS/Mountain Crest Behavioral Health
Services, Inc. shall be entitled to all rights and benefits of Purchaser under
the Agreement.
3. Subject to Paragraph 4 below, Purchaser acknowledges satisfactory
completion of its "Due Diligence" inspection of the property to be conveyed or
transferred, and the satisfaction of all conditions precedent to the transaction
save completion of a survey of the property. Purchaser represents that it has
been informed by the surveyor that the survey will be completed by Thursday,
April 2, 1998. Purchaser agrees to notify Seller immediately upon receipt of the
survey. No later than the next business day following receipt of the survey,
Purchaser shall either inform Seller in writing, by facsimile and overnight
delivery service, of any objections to the survey and/or title or shall notify
Seller it has no such objections and shall acknowledge removal of matters of
title and survey as contingencies to closing.
4. It is acknowledged that closing on the purchase and sale transaction
contemplated hereby will be held at the offices of North American Title Company,
000 Xxxx Xxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxx, no later than Friday, April 10,
1998, subject to Purchaser receiving by that date the following items:
- Licensure from the State of Colorado Department of Health and Public
Environment;
- Acknowledgment from HCFA that the corporation purchasing Mt. Crest
will be able to use the current provider number;
15
- Pharmacy Licensure;
- Licensure for 2710 Lock-up;
- Assumption of ADAT license;
- DEA License.
Purchaser agrees it will keep Seller fully informed of its progress in
obtaining approvals as to these items, and will notify Seller immediately upon
receiving either an approval or a denial as to each such item. In the event any
such item is not completed by April 10, 1998, the parties shall negotiate in
good faith such agreements or measures as will allow closing to occur and
Purchaser to operate the Hospital in normal course absent such items.
5. It is further agreed that Purchaser shall have until April 8, 1998, to
notify Seller of any Medical Director or Managed Care contracts it
determines not to assume.
6. Seller represents and warrants that there are no malpractice or similar
claims pending or, to the best of Seller's knowledge, threatened against the
hospital except:
- Xxxxxxxxx Xxxxx v. Xx. Xxxxxxx Xxxxxx and Mt. Crest Hospital
(District Court, Larimer County, Colorado, Case No. 96-CV-746), in
which summary judgment was entered in Mt. Crest's favor on December
12, 1997 and the complaint dismissed as to it. Plaintiff's appeal
from this order (Case No. 98-CA-142) was dismissed on February 2,
1998, and plaintiff has sought to refile an appeal. A copy of the
Complaint, order of summary judgment, and plaintiff's pending motion
to reinstate its appeal have been furnished to Purchaser.
- Incidents listed on the attached Loss Run Report (Attachment A)
prepared by Campania Management Company, Inc. Seller's insurance
broker.
7. Seller agrees to indemnify and hold Purchaser harmless from any and all
claims and liabilities of Seller as to the following matters arising from
Seller's operation of the Hospital prior to, and up to the time of, transfer of
the Hospital to Purchaser: (i) any and all Medicare Cost Reports (or other
reimbursement reports) filed by or on behalf of Seller, including its
terminating cost report to be filed after closing; (ii) any cost report
liabilities of Seller enforcement of which is sought against Purchaser by reason
of
2
16
assignment to it and use of Seller's federal provider number; (iii) any claims
for malpractice or negligence; (iv) any accounts payable of Seller, whether or
not recorded on its books; (v) any contractual obligation or liabilities, except
as may be expressly assumed by Purchaser; and (vi) any and all other liabilities
and claims of Seller not expressly assumed by Purchaser.
8. It is represented that Seller, and its officers and directors, and to
the best knowledge of the Seller, its physician employees have not engaged in
any activities which are prohibited under federal Medicare and Medicaid
statutes, 42 U.S.C. Section 1320a-7, 1320a-7(a) and 1320a-7b, the federal
CHAMPUS statute, or the regulations promulgated pursuant to such statutes, or
related state or local statutes or regulations, or which are prohibited by rules
of professional conduct.
POUDRE VALLEY HEALTH CARE, INC. MHM OF COLORADO INC.
By: [SIG] By: [SIG]
------------------------- ----------------------------
Its: President/Chief Executive Officer Its: President
Dated: April 8, 1998 Dated: 4/7/98
---------------------- -------------------------
PVHS/MOUNTAIN CREST BEHAVIORAL
SERVICES, INC.
By: [SIG]
----------------------------
Its: Director
Dated: April 8, 1998
-------------------------
3
