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Exhibit 10.27
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), is made the 1st day of
May, 1997, by and among EASTWOOD HOSPITAL, INC., a Delaware corporation
("SELLER"), HEALTHCARE AMERICA, INC., a Delaware corporation ("SHAREHOLDER"),
NAHC OF TENNESSEE, INC., a Tennessee corporation ("BUYER"), and NEW AMERICAN
HEALTHCARE CORPORATION, a Tennessee corporation ("PARENT").
R E C I T A L S
A. Seller operates Eastwood Hospital, located on approximately 18 acres
of land at 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx, including a hospital comprised
of 243 licensed beds, a separate maintenance building, three medical office
buildings, on-site parking, and other related assets (the "HOSPITAL"), and
Shareholder owns and leases to Seller the real property relating to the
Hospital.
B. Seller operates and, in the case of items 1-4 below, Shareholder
owns the following additional assets, properties, businesses and interests in
and around Memphis, Tennessee and Olive Branch, Mississippi associated with the
Hospital:
1. a physicians office consisting of approximately 2,940 square
feet located at 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx.
2. a support office consisting of approximately 2,832 square feet
located at 0000 Xxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx.
3. a storage facility consisting of approximately 3,042 square
feet located at 0000 Xxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx.
4. approximately five acres of excess land located in the rear of
the main hospital building and fronting on Xxxxxx Street,
Memphis, Tennessee;
5. a clinic building leased in Olive Branch, Mississippi and
located at 0000 Xxxxxxxx Xxxxxx;
6. a clinic building leased in Dillard's Square, Memphis,
Tennessee and located at 0000 Xxxxxx, Xxxxx 0; and
7. a management services organization doing business as "Total
Practice Management."
The properties, operations and facilities described in paragraph B of these
Recitals are referred to as the "RELATED ASSETS".
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C. Shareholder owns all of the issued and outstanding securities of
Seller, and Parent owns all of the issued and outstanding securities of Buyer.
D. Except for the Excluded Assets described in Section 1.2, Seller and
Shareholder desire to sell and transfer to Buyer or its designee the Hospital,
the Related Assets and the Assets (as defined in Section 1.1), and Buyer or its
designee desires to purchase the same from Seller and Shareholder, subject to
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual terms, covenants,
agreements and conditions contained in this Agreement, acknowledged by each of
the undersigned, the undersigned agree as follows:
ARTICLE I. PURCHASE AND SALE
1.1 Purchase and Sale. Except as provided in Section 1.2, Seller and
Shareholder agree to sell, transfer, assign, convey and deliver to Buyer (or
Buyer's designee) and Buyer (or Buyer's designee) shall purchase from Seller and
Shareholder all right, title and interest of Seller or Shareholder in all of the
following assets utilized in the operation of the Hospital (collectively, the
"ASSETS"):
(1) Good and marketable fee simple (or leasehold with respect
to items noted as such on the exhibit, as the case may be), right, title and
interest in the Hospital and the Related Assets, as described in Exhibit 1.1(1),
subject only to the Permitted Exceptions, including, without limitation, all
interests in real property, including leaseholds, easements and improvements
thereon, plants, fixed assets, buildings, structures, fixtures (including fixed
machinery and fixed equipment) situated thereon or forming a part thereof and
all appurtenances, easements and rights-of-way, and air, mineral or other rights
related thereto (collectively, the "REAL ESTATE");
(2) All medical and other equipment, machinery, data
processing hardware and software, furniture, furnishings, appliances, vehicles
and other tangible personal property of every description and kind and all
replacement parts therefor which are either owned by Seller or used or
maintained or operated by Seller in connection with the Hospital and Related
Assets, wherever located, including but not limited to the items listed on
Exhibit 1.1(2) (collectively, the "EQUIPMENT AND FURNISHINGS"). Seller has
verified the existence of all individual items of Equipment and Furnishings
listed on Exhibit 1.1(2) with a value greater than $10,000. Seller has not
verified the existence of any other items of Equipment and Furnishings and does
not represent that the other items listed on such exhibit exist;
(3) All inventory of goods and supplies used or maintained in
connection with or located in the Hospital and Related Assets, including, but
not limited to, food, cleaning materials, disposables, linens, consumables,
office supplies, drugs and medical supplies (collectively, the "INVENTORY");
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(4) To the extent transferable, all patient accounts, notes
and other receivables, including those from third party payors, whether or not
written off, and to the extent a receivable is not transferable, the right to
receive from Seller the proceeds from such receivable (collectively, the
"RECEIVABLES");
(5) Subject to patient rights with respect to medical records,
all patient, medical, personnel, clinical and other records of the Hospital and
Related Assets (including both hard and microfiche copies), and all manuals,
books and records used in operating the Hospital and Related Assets, including
personnel policies and manuals, and computer software;
(6) To the extent transferable, all licenses, permits,
registrations, certificates, consents, accreditations, approvals and franchises,
held by Seller and Shareholder and all applications therefor, necessary to
construct, operate and conduct the business of the Hospital and Related Assets,
together with assignments thereof, if required, and all waivers which Seller or
Shareholder currently have, if any, of any requirements pertaining to such
licenses, permits, registrations, certificates, consents, accreditations,
approvals and franchises;
(7) All plans and surveys, including "as-built" plans, all
plats, specifications, engineers' drawings, and architectural renderings and
similar items relating to the Assets, and further including, without limitation,
those relating to utilities, easements and roads, which are in the possession of
Seller or its agents, employees or consultants;
(8) All goodwill and other intangible assets associated with
the Hospital and Related Assets including, but not limited to, the exclusive
rights to use the name "Eastwood Hospital" and all derivations thereof and the
other trade names listed on Exhibit 4.13(4) and, to the extent assignable by
Seller, all warranties (express or implied) and rights and claims assertable by
(but not against Seller) related to the operation of the Hospital and Related
Assets, and all telephone and facsimile numbers as currently used in the
operation of the Hospital and Related Assets;
(9) All prepaid assets;
(10) Seller's and Shareholder's rights and interests pursuant
to contracts for purchase or lease of real and personal property, rights of
first refusal, construction contracts, managed care and third party payor
contracts, contracts for purchase, sale or lease of equipment, goods or services
currently furnished or to be furnished at or to the Hospital and the other
facilities constituting the Related Assets of which Buyer will assume the future
performance after Closing pursuant to Section 1.3;
(11) All assets reflected on the Financial Statements, as
defined in Section 4.3(l), and any additions thereto up through the Closing less
deletions therefrom sold or consumed in the ordinary course of business;
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(12) Seller's interest in all property used in connection with
or for the benefit of the Hospital or Related Assets, other than Excluded
Assets, whether real, personal or mixed, tangible or intangible, arising or
acquired after the date of this Agreement and prior to Closing;
(13) All insurance proceeds arising in connection with damage
to the Assets occurring after the date of this Agreement and prior to the
Closing, provided that such damage has not been repaired to Buyer's reasonable
satisfaction prior to Closing and to the extent such proceeds have not been
expended for the repair and restoration of the Assets;
(14) All security or other deposits and prepayments made by
tenants of Seller or Shareholder pursuant to leases or subleases assumed by
Buyer;
(15) All of Seller's interests in Eastwood Preferred Provider
Organization, Inc. a Tennessee non-profit corporation ("EPPO"), which interests
are more completely described in Exhibit 4.1;
(16) All other property, other than Excluded Assets, of every
kind, character or description owned by Seller and/or Shareholder and used or
held for use in the business of the Hospital or the Related Assets, whether or
not reflected on the Financial Statements, wherever located and whether or not
similar to the items specifically set fort above, and all other businesses and
ventures directly or indirectly owned by Seller in connection with the
operations of the Hospital or the Related Assets; and
(17) All cash in and subsequent receipts of the Lockbox
Account (defined below) at or after Closing;
1.2 Excluded Assets. Seller is not selling and Buyer is not purchasing
or assuming obligations with respect to the following (collectively, the
"EXCLUDED ASSETS"):
(1) Cash, certificates of deposit, bank overdrafts and other
cash equivalents, except that Buyer will take possession of and own all cash and
subsequent receipts of the Lockbox Account (defined below) at Closing;
(2) All receivables from Shareholder or any affiliate of
Shareholder;
(3) All receivables, claims and other rights to payment from
Eastwood Medical Center, L.P., Regent Health Group, Inc., Xxxxx X. Xxxxxxxxx,
Xxxxxxx X. Xxxx and Xxxxxxx X. Xxxxxxxxxxx (collectively, the "PRIOR
OPERATORS");
(4) All corporate books and records of Seller and any document
reasonably related thereto, including all correspondence of Seller with the
Internal Revenue Service, provided that Buyer shall be provided copies of such
records which relate to the Assets;
(5) All insurance policies of Seller and claims arising
thereunder prior to Closing, subject to Section 6.5; and
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(6) Any other assets specifically identified on Exhibit 1.2
hereof.
All tangible Excluded Assets shall be removed from the Hospital by
Seller prior to Closing without damage or defacement to the Hospital or other
Assets.
1.3 Assumed Contracts, Leases and Liabilities. At Closing, Buyer will
assume and agree to pay or perform, as the case may be, all of the following
(collectively, the "ASSUMED LIABILITIES"):
(1) All obligations accruing after Closing with respect to
those contracts, purchase orders and leases which are described on Exhibit 1.3
hereto;
(2) All accrued compensation, vacation time, holiday and build
up of sick leave, together with all related taxes, for all of Seller's employees
who become employees of Buyer which have accrued prior to Closing; provided,
however, that Buyer's performance will extend only to granting a credit under
Buyer's fringe benefit policies for any accrued vacation, holiday and sick leave
build up that such employees have accrued under the Seller's fringe benefit
policies;
(3) All amounts payable under the Medicare and Medicaid
Programs applicable to cost reports filed for services rendered through the
Closing, including all terminating cost reports. Buyer will prepare all
terminating cost reports, and Seller will fully cooperate with Buyer in the
preparation of all terminating cost reports required as a result of this
transaction;
(4) All of Seller's current liabilities (except corporate
franchise and excise taxes but including real estate and personal property taxes
for the current year); and
(5) All obligations of Seller to remit payments payable to the
Prior Operators (to the extent received by Buyer) or to provide access to the
Prior Operators under Section 29 of that certain Settlement Agreement, Asset
Transfer and Release Agreement, dated September 16, 1994.
1.4 Excluded Liabilities. The obligations for which Seller shall remain
responsible shall include (and the following are not Assumed Liabilities)
(collectively, the "EXCLUDED LIABILITIES"):
(1) All of the Seller's long-term and bank or other funded
debt, including but not limited to all obligations pursuant to or related to the
following: all obligations secured by liens or security interests against any of
the Assets, in favor of Bank of Tokyo-Mitsubishi Trust Company ("BOT") or Texas
Commerce Bank National Association as Collateral Trustee (the "COLLATERAL
TRUSTEE"), but excluding any capital leases described on Exhibit 1.3;
(2) Liabilities, indebtedness, commitments or obligations,
claims, suits, mortgages, contingent liabilities and responsibilities of any
kind whatsoever arising from the Hospital or its operations relating to the
period prior to Closing, except for Assumed Liabilities;
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(3) Liabilities or obligations with respect to the ownership
or operation of any assets owned or operated by Seller or Shareholder other than
the Assets;
(4) Liabilities and obligations arising from or relating to
the Excluded Assets;
(5) The assets and liabilities of all employee benefit plans
except with respect to the vacation/holiday and sick leave assumed pursuant to
Section 1.3(2);
(6) All liabilities and commitments relating to the time
periods prior to and including Closing for all of the following: all impositions
of income tax and other taxes; except pursuant to Section 6.20, any liabilities
under environmental laws; except pursuant to Section 1.3(2) all employee (and
former employee) wages, salaries and benefits including, without limitation,
ERISA, and COBRA liabilities and obligations, and all obligations to give notice
of and to provide continuation health care coverage for employees, former
employees, and their dependents or any qualified beneficiary of such employees
in accordance with the requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (hereinafter referred to as "COBRA
COVERAGE"), including, without limitation, all liabilities, taxes, sanctions,
interest and penalties imposed upon, incurred by or assessed against Buyer or
any affiliated corporation within a controlled group relationship with Buyer (as
determined under Section 414 of the Internal Revenue Code), and any of their
employees, arising by reason of or relating to any failure to provide the COBRA
coverage.
(7) Any intercompany payables, any payables to Eastwood
Medical Center, L.P., and any liabilities or obligations connected to any
previous bankruptcy or reorganization of Eastwood Medical Center, L.P.; and
(8) Any liabilities or obligations of Seller or Shareholder
which are not specifically assumed by Buyer pursuant to this Agreement.
1.5 Additional Real Estate. Other than the Excluded Assets, the parties
hereto acknowledge and agree that it is their intent to transfer to Buyer all
real estate used in, usable with or related to the operation of the Hospital and
the Related Assets that is owned or leased directly by the Seller or
Shareholder, or by a direct or indirect affiliate of the Seller or Shareholder.
To the extent any tract or parcel of real estate (or buildings, improvements and
fixtures on or forming a part of the real estate or any easement, appurtenances,
rights of way, air, mineral or other rights), whether owned or leased,
identified on Exhibit 1.1(1) (or which should have been identified on such
Exhibit) is (1) misidentified, incorrectly described, or incorrectly identified
as being owned or leased by a particular entity, or (2) any such real estate,
whether owned or leased, which should have been included on Exhibit 1.1(1) is
inadvertently not included on Exhibit 1.1(1) and such errors are discovered
subsequent to execution of this Agreement, the parties agree that Exhibit 1.1(1)
shall be amended by mutual agreement prior to Closing to correct such errors and
such amended Exhibit shall then be deemed to be controlling in determining the
Real Estate subject to this Agreement.
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1.6 Nonassignability. Anything herein to the contrary notwithstanding,
the Agreement and any instruments executed pursuant hereto shall not constitute
an assignment of any claim, contract, license, lease, purchase order, or other
commitment (collectively referred to as a "COMMITMENT") if any attempted
assignment or transfer of the same without the consent of the other party
thereto or the applicable governmental agency would be ineffective or would
constitute a breach or violation thereof so that Buyer would not in fact receive
all of the rights and benefits of Seller thereunder. If by Closing any such
consent has not been obtained, and Buyer desires to have Seller's assistance in
obtaining such consent, Seller shall cooperate with Buyer in any reasonable
arrangement designed to provide for Buyer the benefits under any such Commitment
without causing a breach or violation of such Commitment; provided, however,
that any such Commitment shall be deemed to be an Excluded Asset and an Excluded
Liability until such consent for assignment to Buyer is obtained.
ARTICLE II. ACCOUNTS RECEIVABLE
2.1 Seller's Accounts Receivable. As provided in Section 1.1(4), Buyer
is purchasing all of Seller's accounts receivable, including patient accounts
receivable, long-term patient accounts receivable, income guarantee advances,
amounts receivable from third party payor programs, notes and other receivables,
whether or not written off, to the extent transferable. After the Closing,
Seller shall remit to Buyer any payments received by Seller with respect to the
accounts receivable and the right to the proceeds from accounts receivable
transferred pursuant to Section 1.1 (4) hereof. Any funds so collected will be
remitted to the Buyer within five (5) business days following receipt of such
payments.
ARTICLE III. PURCHASE PRICE
3.1 Purchase Price. Subject to the terms and conditions hereof, the
purchase price (the "PURCHASE PRICE") will be payable by Buyer to the Seller
for the Assets in cash or equivalent funds as provided in Section 8.1 hereof and
shall be an amount derived in the following manner:
(1) Twelve Million Two Hundred Ninety-Two Thousand and No/100
Dollars ($12,292,000.00);
(2) PLUS an amount equal to $4,750.00 multiplied by the number
of days occurring from and including April 12, 1997 through the date of Closing;
(3) MINUS the sum of (a) amounts deposited by Seller or
Shareholder in NationsBank Account #0112989124 (the "Local Depository
Account"), (b) amounts transferred from NationsBank Account #2141191410 (the
"Lockbox Account") into Shareholder's account and (c) amounts deposited in any
bank account other than the Local Depository Account or the Lockbox Account
related to the operations of the Seller, all for the period from and including
April 12, 1997 through the date of Closing;
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(4) PLUS the sum of all of Seller's disbursements by cash or
check from and including April 12, 1997 through the date of Closing, excluding
any disbursements to or for the benefit of Shareholder or any affiliate thereof.
(5) LESS Five Hundred Thousand Dollars and No/100 ($500,000)
by deposit of good funds into an interest bearing escrow account pursuant to the
terms of an escrow agreement (the "Escrow Agreement"), to be attached hereto as
Exhibit 3.1(5), which shall be for a term of one year after the Closing, the
purpose of which is to protect the Buyer from any breach of representations,
warranties and covenants contained herein or to satisfy any obligations of
Seller and Shareholder hereunder.
3.2 Taxes and Assessments, Prorations; Adjustments. Seller shall pay or
credit against the Purchase Price the amount of all delinquent real estate and
personal property taxes, including penalties and interest, and all special
assessments that are a lien as of the day of Closing. There shall be no
proration for unpaid real estate and personal property taxes and assessments not
yet due for the year of Closing. There shall be no proration of rents received
or paid, utilities or any other items.
3.3 [Intentionally Deleted]
3.4 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets in the manner set forth in Exhibit 3.4. The parties shall use
their best efforts to agree to the Purchase Price allocation no later than three
(3) days prior to Closing. The parties agree that this allocation will be used
by them for all purposes including tax, reimbursement and other purposes. Each
party hereto agrees that it will report the transaction in accordance with such
allocation, including under Section 1060 of the Internal Revenue Code of 1986,
as amended (the "Code"), and that it will not take a position inconsistent with
such allocation except with the written consent of the other party hereto.
3.5 Xxxxxxx Money Deposit. As a condition to the validity and
effectiveness of this Agreement, and in any event no later than two (2) business
days after the date of this Agreement, Buyer shall deliver an xxxxxxx money
deposit in cash of $100,000 (the "Xxxxxxx Money") to the Title Company
(hereinafter defined). Upon the Closing the Xxxxxxx Money shall be applied to
the Purchase Price. In the event the Closing does not occur as required pursuant
to this Agreement by reason of Buyer's default hereunder, then the Title Company
shall disburse the Xxxxxxx Money to Seller. The Title Company shall be
authorized, at Buyer's option, to invest the Xxxxxxx Money in such manner as
Buyer may direct; provided, however, that the Title Company shall invest the
Xxxxxxx Money only in such manner as will allow the Title Company to disburse
the Xxxxxxx Money upon two (2) days' notice. All interest or other earnings on
the Xxxxxxx Money shall become a part of the Xxxxxxx Money and be disbursed to
the party entitled to the Xxxxxxx Money.
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER
As inducements to Buyer to enter into this Agreement and to consummate
the transactions contemplated herein, Seller and Shareholder hereby jointly and
severally represent and warrant to Buyer, which representations and warranties
shall be true and correct on the date hereof, and on Closing, as if then
restated, and which shall survive Closing, as follows:
4.1 Organization, Qualification and Authority. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is in good standing and duly qualified to do business as a
foreign corporation in Tennessee. Shareholder is a corporation duly organized,
validly existing and in good standing in the State of Delaware. Each of Seller
and Shareholder has fall corporate power and authority to own, lease and operate
its facilities and assets as presently owned, leased and operated and to carry
on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in each state in which its operations make it
necessary to be so qualified, and has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement. Except
for Shareholder, no other person or entity owns or holds, has any interest in,
whether legal, equitable or beneficial, or has the right to purchase, any
capital stock or other security of Seller. Seller, directly or indirectly, owns
no capital stock, security, interest or other right, or any option or warrant
convertible into the same, of any corporation, partnership, joint venture or
other business enterprise except those listed on Exhibit 4.1, and the businesses
carried on by Seller have not been conducted, directly or indirectly, through
any entity except as described on Exhibit 4.1. Seller has the full right, power
and authority to execute, deliver and carry out the terms of this Agreement and
all documents and agreements necessary to give effect to the provisions of this
Agreement and to consummate the transactions contemplated on the part of Seller
hereby. Shareholder has the full right, power and authority to execute, deliver
and carry out the terms of this Agreement and all documents and agreements
necessary to give effect to the provisions of this Agreement, to consummate the
transactions contemplated on the part of Shareholder hereby, and to take all
actions necessary to permit or approve the actions of Shareholder taken in
connection with this Agreement. Subject to obtaining the approval of
Shareholder's board of directors, the execution, delivery and consummation of
this Agreement and all other agreements and documents executed in connection
herewith by Seller and Shareholder have been duly authorized by all necessary
action on the part of Seller and/or Shareholder. This Agreement and all other
agreements and documents executed in connection herewith by Seller and/or
Shareholder, upon due execution, delivery and authorization thereof, shall
constitute valid and binding obligations of each of Seller and Shareholder,
enforceable in accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity.
4.2 Absence of Default. Upon receipt of the consents specified in
Exhibit 4.2, the execution, delivery and consummation of this his Agreement and
all other agreements and documents executed in connection herewith by Seller
and/or Shareholder will not constitute a violation of, or be in conflict with,
and will not, with or without the giving of notice or the passage of time, or
both, result in a breach of, constitute a default under, or create (or cause the
acceleration of the maturity of) any debt, indenture, obligation or liability
affecting the Assets pursuant to, or
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result in the creation or imposition of any security interest, lien, charge or
other encumbrance upon any of the Assets under: (a) any term or provision of the
Certificate of Incorporation or corporate Bylaws of Seller or Shareholder; (b)
any contract, lease, purchase order, agreement, indenture, mortgage, pledge,
assignment, permit, license, approval or other commitment to which Seller and/or
Shareholder are a party or by which Seller and/or Shareholder or the Assets are
bound; (c) any judgment, decree, order, regulation or rule of any court or
regulatory authority, or (d) any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or governmental authority or
arbitration tribunal to which Seller, Shareholder and/or the Assets are subject
that would have a material adverse effect on the Assets after the Closing.
4.3 Financial Statements.
(1) Attached as Exhibit 4.3 are true and correct copies of the
unaudited Balance Sheets of Seller for the fiscal years ended December 31, 1995
and December 31, 1996, the related Statements of Revenue and Expenses for the
respective periods then ended along with the interim unaudited financial
statements of Seller for the four and two-month periods ending April 30, 1996
and February 28, 1997 (collectively, the "UNAUDITED FINANCIAL STATEMENTS"
together with the financial statements described in Section 4.3(2) shall be the
"FINANCIAL STATEMENTS"). The Financial Statements present fairly in all material
respects the financial position of Seller, the results of its operations and all
costs and expenses for the periods specified. The Financial Statements have been
prepared in conformity with generally accepted accounting principles on an
accrual basis, applied consistently for the periods involved. The Financial
Statements are in accordance with the books and records of Seller. Except as set
forth in Exhibit 4.3 or in the Financial Statements, Seller has no material
contingent liabilities or obligations.
(2) Seller shall cause to be prepared interim unaudited
monthly financial statements of Seller for each month since the most recent
delivered Unaudited Financial Statements, which shall be delivered to Buyer
within two (2) days after they are created (but the delivery shall be no later
than thirty days after the end of the month which the Unaudited Financial
Statement relates to), and after delivery shall be deemed a part of the
Unaudited Financial Statements.
(3) In conjunction with Buyer's preparation of financial
statements relating to prior periods and Buyer's filing in a timely manner
registration statements, private placement memoranda and periodic reports, if
any, pursuant to applicable federal and state securities laws after Closing,
Seller shall cooperate with Buyer, at Buyer's expense, in the preparation
thereof and shall make the books and records of the Seller available to Buyer
and Buyers auditors at reasonable times and in a manner so as to not unduly
interfere with Sellers operations, and otherwise cooperate with Buyer in order
to permit Buyer to conduct an audit of the Seller's financial statements for any
period prior to Closing and subsequent to October 7, 1994. Such audit, if any,
shall be at Buyer's expense. The books and records of Seller are in such order
and completeness so that an unqualified audit may be performed for such periods.
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4.4 Operations Since February 28. 1997. Except as set forth on Exhibit
4.4, since February 28, 1997, Seller has conducted its business only in the
ordinary course and there have been no:
(1) material adverse changes in the condition, financial or
otherwise, of the Assets, the business or prospects of, or in the results of
operations of, the Hospital, Related Assets or Seller;
(2) terminations of any contract, lease or other agreement to
which Seller is a party except by Seller;
(3) sales, leases, transfers or other dispositions by Seller
of any of the Assets, mortgages or pledges of or the imposition of any liens,
charges or encumbrances in excess of, in the aggregate, Fifty Thousand and
No/100 Dollars ($50,000.00) on any of the Assets or removal of any of the Assets
from the Real Estate, other than those made in the ordinary course of business;
(4) increases in the compensation payable by Seller to any
shareholders, employees, directors, independent contractors or agents, or any
increase in, or institution of, any bonus, insurance, pension, profit sharing or
other employee benefit plan, remuneration or arrangements made to, for or with
such employees, directors, any shareholder or independent contractors of the
Seller;
(5) capital expenditures, additions or betterments to the
Hospital or Related Assets in excess of $50,000.00 in the aggregate;
(6) Adjustments or write-offs of Receivables or reductions in
reserves for Receivables outside of the ordinary course of business;
(7) Changes in the accounting methods or practice employed by
Seller or change in depreciation or amortization policies;
(8) Issuance or sales by Seller or Shareholder, or contracts
or other commitments entered into by Seller or Shareholder, for the issuance or
sales of any shares of capital stock or securities convertible into or
exchangeable for capital stock of Seller;
(9) Strikes, work stoppages or other labor disputes adversely
affecting Seller's business operations; or
(10) Losses or other damages or destruction of or to any of
the Assets, whether or not covered by insurance, in excess of $50,000.00
individually or in the aggregate.
4.5 Taxes. All taxes, including, without limitation, income, property,
sales, use, franchise, added value, employees' income withholding and social
security taxes, license fees and taxes deposits and fees for waste disposal,
pharmaceutical, nursing facilities, and taxes on
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disproportionate share hospitals imposed by the United States, by any foreign
country or by any state, municipality, subdivision or instrumentality of the
United States or any foreign country, or by any other taxing authority, which
are due or payable by Seller and all interests and penalties thereon, whether
disputed or not, have been paid in full prior to delinquency and all tax returns
required to be filed in connection therewith have been accurately prepared and
timely filed (without any extension or waiver). All deposits required to be made
by Seller with respect to employees' withholding taxes have been duly made.
Seller is not delinquent in the payment of any tax, assessment or governmental
charge or deposit and Seller has no knowledge of any tax deficiency or claim
outstanding, proposed or assessed against it.
4.6 Employment. Except as disclosed in Exhibit 4.6 hereto, to Seller's
knowledge no person or party (including, but not limited to, any governmental
agency) has any claim or basis for any action or proceeding, against Seller (or
any officer, director, employee, agent or shareholder of Seller) arising out of
any statute, ordinance or regulation relating to wages, collective bargaining,
discrimination in employment or employment practices or occupational safety and
health standards (including, but not limited to, the Fair Labor Standards Act,
Title VII of the Civil Rights Act of 1964, as amended, the Occupational Safety
and Health Act, or the Age Discrimination in Employment Act of 1967 or the
Americans With Disabilities Act of 1990).
4.7 Licenses and Permits.
(1) Seller has all local, state and federal licenses, permits,
registrations, certificates; contracts, consents, accreditations and approvals
(collectively, "LICENSES AND PERMITS") necessary for Seller to occupy, operate
and conduct its business. To Seller's knowledge, there is no default under any
of such Licenses and Permits. To Seller's knowledge, there exists no grounds for
revocation, suspension or limitation of such Licenses or Permits. True and
correct copies of these Licenses and Permits have been previously provided to
Buyer and are listed on Exhibit 4.7(l). The most recent licensure surveys and
deficiency reports related to each of these items have also been previously
provided to Buyer and are listed on Exhibit 4.7(l). Seller is and at the Closing
Date will have duly registered with the Tennessee Department of Health and
Environment as a short term, acute care hospital authorized to operate 152 acute
care beds (8 of which are ICU) and 91 psychiatric beds. Except as described in
Exhibit 4.7(l), no notices have been received by Seller or Shareholder with
respect to complaints lodged with any regulatory authority or agency or with
respect to threatened, pending, or possible revocation, termination, suspension
or limitation of any of the Licenses and Permits nor to Seller's knowledge are
there any valid grounds for revocation, suspension or limitation.
(2) Seller has all certificates of need, exemptions or
non-review letters from the State of Tennessee necessary to operate its business
as it has been historically and currently conducted by Seller. Seller has
complied with the requirements, and conditions thereof. True and correct copies
of all unimplemented certificates of need, exemption and non-review letters
issued or related to the Hospital, Related Assets, or to Seller have been
previously provided to Buyer and are listed on Exhibit 4.7(2). True and correct
copies of all implemented certificates of need and non-review letters issued to
the Hospital, Related Assets, or to Seller have been previously provided to
Buyer and are listed on Exhibit 4.7(2). All implemented certificates of
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need and non-review letters have been implemented in substantial accordance with
their terms. All implemented certificates of need are clearly identified as such
on Exhibit 4.7(2), and no progress has been made on such unimplemented
certificates of need which would violate the terms or conditions of said
certificates of need.
4.8 JCAHO and Accreditations.
(1) The Hospital is duly accredited for operation of its
various beds by the Joint Commission on Accreditation of Healthcare
Organizations ("JCAHO"). Included in Exhibit 4.8 are each Certificate of
Accreditation, copies of the most recent JCAHO accreditation survey report, and
a list of deficiencies, if any.
(2) The Hospital's laboratory operated by Seller is duly
accredited by the Commission on Laboratory Accreditation of the College of
American Pathologists ("CAP"). Included in Exhibit 4.8 are copies of the most
recent letter and list of accredited services from CAP.
(3) The radiology facilities operated by Seller are duly
accredited by the American College of Radiology ("ACR"). Included in Exhibit 4.8
are copies of the most recent letter(s) and list(s) of accredited services from
ACR.
(4) Except as described in Exhibit 4.8(4), Seller and
Shareholder have received no notice with respect to any threatened, pending or
possible revocation, early termination, suspension or limitation of any of the
accreditations listed in this Section 4.8 nor are there any grounds for such
action.
4.9 Medicare, Medicaid, and Other Third-Party Payors.
(1) The Hospital is duly certified to participate, and does
participate in the Medicare Program and the Medicaid Programs in the States of
Tennessee (including TennCare), Arkansas and Mississippi (the "PROGRAMS").
Copies of its existing Medicare and Medicaid contracts (the "PROGRAM
AGREEMENTS") are included in Exhibit 4.9. The Hospital is and will be at the
time of Closing, in material compliance with all of the terms, conditions and
provisions of such contracts, as well as state and federal laws related thereto.
(2) Attached as part of Exhibit 4.9(2) is a copy of the
Hospital's most recent Statement of Deficiencies and Plan of Correction (Form
HCFA-2567) for the Hospital, if any.
(3) Except as set forth in Exhibit 4.9, no notice of any
offsets against future reimbursement has been received by Seller or Shareholder
nor, to Seller's or Shareholders knowledge, is there any valid basis therefor.
There are no pending appeals, adjustments, challenges, audits, litigation,
notices of intent to reopen or open cost reports with respect to the Programs
except as set forth in Exhibit 4.9. Neither the Hospital nor the Related Assets
has been subject to or threatened with loss of waiver of liability for
utilization review denials with respect to the Programs during the past twelve
(12) months, nor has it received notice of pending,
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threatened or possible decertification or other loss of participation in, any of
the Programs, except as set forth in Exhibit 4.9.
(4) All existing third party payor contract(s) are described
in Exhibit 4.9. The Hospital is and will be at the time of Closing, in
compliance with all of the terms, conditions and provisions of such contract(s),
except to the extent non-compliance would not have a material adverse effect on
the Hospital.
(5) Seller has previously furnished Buyer the Medicare and
Medicaid cost reports of Seller and Related Assets (to the extent applicable)
for the years ending June 30, 1995 and June 30, 1996. Except as reflected in
Exhibit 4.9, the cost reports are complete and accurate for the periods
indicated. All liabilities and contractual adjustments of the Hospital under any
third party payor or reimbursement programs have been properly reflected and
adequately reserved for in the Financial Statements. Seller has previously
furnished to Buyer true, accurate and correct statement of Seller's and
Shareholder's cost basis for property, plant, equipment, land and land
improvements.
(6) Seller and Shareholder have received no notice of any
violation of federal or state fraud and abuse or self-referral laws, except as
set forth in Exhibit 4.9(6), nor are Seller and Shareholder aware of any such
violations in connection with the operation of its business.
4.10 Peer Review. The Hospital (to the extent applicable) has entered
into one or more valid memorandums of understanding with the Hospital's peer
review organizations. A copy of each memorandum of understanding, if any, is
included in Exhibit 4.10.
4.11 Compliance with Zoning, Land Use and Other Laws. Seller has
received no notice of any violation of any zoning, land use, public health,
building code or other similar laws, ordinances and regulations applicable to
the Hospital or the Related Assets or to the ownership, occupancy and/or
operation thereof, and except as disclosed to Buyer there do not exist any
variances, conditional use permits, waivers, exemptions or violations relating
to the Real Estate with respect to any non-conforming use or other zoning, land
use or building codes matters.
4.12 Easements. To Seller's and Shareholder's knowledge, the Hospital
and the Related Assets have all easements and similar rights necessary to
continue operation of the business of the Hospital and the Related Assets as
currently conducted.
4.13 Title to Assets.
(1) Seller or Shareholder is, and at Closing will be, the only
record, legal and beneficial owner of and has, and at Closing will have, good
title to all the Assets other than the Real Estate, free and clear of all
mortgages, security interests, liens, leases, covenants, assessments, easements,
options, rights of refusal, restrictions, reservations, defects in the title,
encroachments, adverse claims and other encumbrances, except for the Permitted
Exceptions. The Assets, together with the Excluded Assets, include all assets
set forth on the Financial
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Statements, include all assets owned or leased by Seller and are all assets
utilized by Seller or Shareholder in the operation of the Hospital and the
Related Assets.
(2) The Real Estate described in Exhibit 1.1(1) includes all
real estate owned by Shareholder and used in connection with the Hospital and
the Related Assets. Shareholder is, and at Closing will be, the sole and
exclusive record, legal and equitable owner of and has, and at Closing will
have, good, marketable and insurable title in fee simple or leasehold, as the
case may be, to, all the Real Estate including the buildings, structures and
improvements situated thereon and appurtenances thereto, in each case free and
clear of all mortgages, liens, leases, assessments, easements, covenants,
options, rights of refusal, restrictions, reservations, defects in title,
encroachments and other encumbrances, whether or not the same render the title
to such Real Estate uninsurable or unmarketable, except for the items listed on
Exhibit 4.13(2) (the "PERMITTED EXCEPTIONS").
(3) The Hospital, the Related Assets and the other Assets,
together with the Excluded Assets, constitute all of the assets and business
operations related to the operation of the Hospital. Neither Seller nor
Shareholder has sold, exchanged or transferred any assets outside the
ordinary course of business in excess of $50,000 in the aggregate within the
last six months which were used by the Hospital or any businesses of Seller.
(4) The only names, tradenames or fictitious names under which
the business of the Hospital, Related Assets, and businesses of Seller have been
operated for the last five years are listed on Exhibit 4.13(4). Seller has
complied with all fictitious name filing statutes.
(5) Exhibit 4.13(5) lists all post office boxes and addresses
where accounts receivable sold to Buyer are to be paid and all names under which
payment is to be received. Seller hereby grants to Buyer effective as of Closing
the irrevocable power of attorney to execute and endorse any checks or receive
any payments with respect to any accounts receivable which are sold to Buyer.
4.14 Leases and Contracts.
(1) Exhibit 4.14 hereto sets forth a complete and accurate
list of all material contracts, agreements, purchase orders, leases, subleases,
options and commitments, oral or written, and all assignments, amendments,
schedules, exhibits and appendices thereof, affecting or relating to any Asset
or any interest therein, to which Seller or Shareholder is a party or by which
Seller or the Assets are bound or affected, including, without limitation,
service contracts, management agreements, equipment leases, leases of space, and
ground leases pertaining to any part of the Real Estate (collectively, the
"LEASES AND CONTRACTS"). (The agreements listed above shall be deemed material
if (i) one of the parties thereto is a physician, physician group or other
referral source or (ii) it involves payments in the aggregate of Ten Thousand
Dollars ($10,000) or greater.) Seller and Shareholder will provide or cause to
be provided to Buyer a copy of all written Leases and Contracts, and detailed
summary of the provisions of all oral Leases and Contracts, prior to Closing.
Except for Assumed Liabilities, all Leases and Contracts shall be retained and
paid or performed by Seller.
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(2) None of the Leases and Contracts has been modified,
amended, assigned or transferred, except as noted on Exhibit 4.14, and, to
Sellers knowledge, each is in full force and effect and is valid, binding and
enforceable in accordance with its respective terms;
(3) To Seller's knowledge and except as disclosed on Exhibit
4.14, no event or condition has happened or presently exists which constitutes a
default or breach or, after notice or lapse of time or both, would constitute a
default or breach by any party under any of the Leases and Contracts, and Seller
shall do no act nor omit to do any act which would cause such a default or
breach. To Seller's knowledge, there are no counterclaims or offsets under any
of the Leases and Contracts which are part of the Assumed Liabilities;
(4) None of the Leases and Contracts shall be amended in any
material respect between the date hereof and Closing without the prior written
consent of Buyer;
(5) Except as expressly identified on Exhibit 4.14, none of
the Leases and Contracts is: (i) a capitalized lease within the meaning of
generally accepted accounting principles; or (ii) a lease with a remaining term
of one (1) year or more from Closing and which cannot be canceled within thirty
(30) days at the option of Seller without penalty; or (iii) a lease containing
an option to purchase.
(6) All leases of office space or other space in the Hospital
or Related Assets to third parties are described in Exhibit 4.14. To Seller's
knowledge and except as set forth in Exhibit 4.14, all such leases are in full
force and effect and are not in default. Seller has no outstanding unperformed
obligations under any of such leases including without limitation any
obligations to make any repairs or improvements or renovations (whether such
improvements or renovations are to be made prior to or after Closing). Except as
set forth on Exhibit 4.14, there are no outstanding negotiations with any such
lessees regarding any matter relating to the leased space.
(7) All Leases and Contracts which are not Assumed Liabilities
will be terminated on or prior to Closing or will be retained by and at the sole
expense of Seller.
4.15 Environmental Matters.
(1) Hazardous Substances. As used in this Section, the term
"HAZARDOUS SUBSTANCES" means any hazardous or toxic substances, pollutants,
contaminants, materials or wastes, including but not limited to those
substances, pollutants, contaminants, materials, and wastes listed in the United
States Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances pursuant to 40 CFR Part
302, or such substances, materials and wastes which are regulated under any
federal environmental law or any applicable local or state environmental law,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") as supplemented and amended or
the Resource Conservation and Recovery Act, as amended ("RCRA"), 42 U.S.C.
ss.6901 et seq.; toxic substances as defined under the Toxic Substance Control
Act, 15 U.S.C. 2601 et seq; or any of the following: hydrocarbons, petroleum and
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petroleum products, asbestos, polychlorinated biphenyls, formaldehyde,
radioactive substances, flammables and explosives.
(2) Compliance with Laws and Regulations.
(a) All operations or activities upon, or any use or
occupancy of the Real Estate, or any portion thereof, by Seller, Shareholder or
any tenant or subtenant of Seller or Shareholder of any part of the Real Estate,
are and have been in all material respects in compliance with all laws,
regulations or orders relating to Hazardous Substances.
(b) The Real Estate is free of any lien imposed
pursuant to any laws, regulations or orders relating to Hazardous Substances.
(c) Except for uses and temporary storage of
Hazardous Substances reasonably necessary to the customary operation of a
hospital and in material compliance with all applicable federal, state and local
laws, statutes, ordinances, codes, rules, regulations, orders, decrees, and
other applicable requirements of governmental authorities and except as
disclosed on Exhibit 4.15, neither Seller, Shareholder, nor to Seller's
knowledge, any prior owners, operators, or occupants of the Real Estate have
allowed the manufacture, use, generation, voluntary transmission, storage or
presence of any Hazardous Substances over, in or upon the Real Estate.
(d) Except as disclosed on Exhibit 4.15, neither
Seller nor Shareholder has received any written communication that alleges that
Seller is not or was not in compliance with all applicable environmental laws.
(e) Seller and Shareholder have obtained all
environmental permits necessary for the operation of a hospital and related
activities, all such permits are in good standing and Seller is in compliance
with all terms and conditions of its environmental permits.
(f) Neither Seller nor Shareholder has installed or
permitted to be installed any asbestos or has knowledge of friable asbestos or
any other substance deemed hazardous by federal or state laws or regulations
respecting such material in or on the Real Estate except as disclosed on Exhibit
4.15.
(g) Except as disclosed on Exhibit 4.15, Seller and
Shareholder have not at any time engaged in, permitted or have knowledge of, nor
to the best knowledge of Seller and Shareholder, has any tenant or subtenant
engaged in or permitted any dumping, discharge, disposal, spillage, or leakage
(whether legal or illegal, accidental or intentional) of Hazardous Substances,
at, on, in or about the Real Estate.
(h) Except as disclosed on Exhibit 4.15, none of the
Real Estate, nor any part thereof, nor Seller, nor Shareholder is subject to any
pending or threatened investigation or inquiry by any governmental authority, or
any remedial or removal obligations under any applicable rules, regulations or
orders pertaining to health, safety or the environment.
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(i) Except as disclosed on Exhibit 4.15, to Seller's
and Shareholder's knowledge, no work, repairs, remedy, construction or capital
expenditures is required by any environmental or land use laws or regulations
with respect to the Real Estate in order for the continued lawful use of the
Real Estate as a hospital or the Related Assets on such Real Estate.
(j) Except as disclosed on Exhibit 4.15, to Seller's
and Shareholder's knowledge, the Real Estate is not listed nor has it ever been
listed on the National Priorities List or the Comprehensive Environmental
Response, Compensation and Liability Information System, both promulgated under
CERCLA, or any comparable state list.
(k) Except as disclosed on Exhibit 4.15, to the
knowledge of Seller and Shareholder, no petroleum hydrocarbons have migrated on
or below the surface of any portion of the Real Estate. Except as disclosed on
Exhibit 4.15, to the knowledge of Seller and Shareholder, there are no
underground storage tanks, or related pipes on any portion of the Real Estate.
To the extent there is known to be an underground storage tank on the Real
Estate (including any diesel storage tank associated with the medical office
building complex), Seller shall provide evidence satisfactory to Buyer that (i)
such tank has been tightness tested with all related lines, within the past six
months, or (ii) such tank and lines are currently leak-free as evidenced by
applicable tank detection systems. Any prior leaks have been remediated or
cleaned up in compliance with all federal, state and local laws. Seller shall
provide evidence satisfactory to Buyer that such tank(s) is registered with the
State of Tennessee and that Seller is in full compliance with all underground
storage tank laws and regulations. For any underground storage tanks which were
formerly located on the Real Estate, or which were closed in place, Seller shall
provide evidence satisfactory to Buyer that such tank(s) were removed, or
closed, in full compliance with all federal, state and local laws in effect at
the time of such removal or closure and that any reportable hydrocarbons in the
Real Estate were properly removed or treated in accordance with applicable
governmental requirements.
(1) To the knowledge of Seller and Shareholder, no
portion of the Real Estate has ever been used as a landfill, garbage or refuse
dump site, waste disposal facility, transfer station or other type of facility
for the processing, treatment or disposal of waste materials.
(m) Except for the temporary storage of Hazardous
Substances reasonably necessary for the customary operation of a hospital and in
compliance with all applicable federal, state and local laws, statutes,
ordinances, codes, rules, regulations, orders, and decrees, the Real Estate is
free of any Hazardous Substances in such quantities as would be in violation of
any applicable federal, state or local environmental law or regulation or which
would be required to be reported to any governmental agency.
(3) Seller and Shareholder shall promptly notify Buyer in
writing of their receipt of any notice of violation or noncompliance with any
applicable law, rule, regulation, standard or order, any threatened or pending
action of which it is aware by any regulatory agency or their governmental
authority, or any claims made by any third party of which it is aware relating
to Hazardous Substances on, emanations on or from, releases on or from, or
threats or
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threats of releases on or from any of the Real Estate which relate to the period
prior to Closing; and shall promptly furnish the Buyer with copies of any
correspondence, notices, or legal pleadings in connection therewith.
(4) Seller shall prior to Closing provide Buyer with a copy of
all environmental audits or reports, and any other engineering reports or
inspections which have been prepared relating to the Real Estate and are in the
possession of Seller, its employees, agents or consultants.
4.16 Miscellaneous Representations Relating to Real Estate.
(1) No part of the Real Estate is currently subject to
condemnation proceedings, and to Seller's knowledge, no condemnation or taking
is threatened or contemplated. To Seller's knowledge, there are no public
improvements which may result in special assessments against or otherwise affect
the Real Estate.
(2) Seller has furnished to Buyer complete copies of all
mechanical and structural studies or reports or assessments, engineering plans,
architectural drawings, soil studies, surveys and other similar documents which
have been prepared by or at the direction of Seller or Shareholder within the
last two (2) years relating to any of the Assets in the possession of Seller,
its employees, agents or consultants.
(3) All utilities serving the Hospital and the Related Assets
are, and shall be at Closing adequate to operate the Real Estate in the manner
it is currently operated. Any so-called tap fees, hook-up fees or other
associated charges accrued to date have been fully paid with respect to all
potable and industrial water and all gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and other
similar systems serving the Hospital and the Related Assets.
(4) Except for those tenants in possession of the Real Estate
under Leases and Contracts described in Exhibit 4.14, there are no parties in
possession of, or claiming any possession, adverse or not, to or other interest
in, any portion of the Real Estate as lessees, tenants at sufferance,
trespassers or otherwise. No tenant is entitled to any rebate, concession or
free rent, other than as set forth in the lease or contract with such tenant; no
commitments have been made to any tenant for repairs or improvements other than
for normal repairs and maintenance in the future; and no rents due under any of
the tenant Leases and Contracts have been assigned or hypothecated to, or
encumbered by, any person, except for assignments to be released at Closing.
4.17 Conditions of Assets. Except as set forth on Exhibit 4.17, to the
knowledge of Seller and Shareholder, all material components of all of the
Assets (a) are free from structural (including electrical and mechanical)
defects, and (b) are in good working order sufficient for purposes of Seller's
operation of the Hospital and Related Assets. Seller has received no written
recommendation from any insurer to repair or replace any of the Assets with
which Seller has not complied.
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4.18 Construction. There is no construction in progress with respect to
the Hospital or the Related Assets.
4.19 Litigation. Neither Seller nor Shareholder has received notice of
any violation of any law, rule, regulation, ordinance or order of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality (including, without limitation, legislation
and regulations applicable to the Medicare and Medicaid programs, environmental
protection, civil rights and public health and safety and occupational health).
Except as set forth in Exhibit 4.19, there are no lawsuits, proceedings,
actions, arbitrations, governmental investigations, claims, inquiries or
proceedings pending or, to the knowledge of Seller and Shareholder, threatened,
involving or related to the Seller, Shareholder (to the extent involving the
Hospital), or the Assets, and Seller and Shareholder have no knowledge of any
meritorious basis therefor.
4.20 Seller's Employees. Seller has furnished to Buyer: (a) a complete
list of all of Seller's employees and Shareholder's employees (based at the
Hospital or the Related Assets) and rates of pay, together with true and correct
copies of any and all employment contracts, fringe benefits and personnel
policies, (b) the employment dates and job titles of each such person, and (c)
categorization of each such person as a full-time or part-time employee of
Seller. Seller shall furnish Buyer with an updated list at Closing. Buyer shall
offer employment to substantially all of Seller's employees pursuant to Section
6.17. There are no employees of Shareholder based at the Hospital. Seller shall
be solely responsible for any notice which may be required under WARN, as
hereinafter defined, and Tenn. Code Xxx. ss.50-1-601 et. seq. for periods prior
to Closing and shall indemnify Buyer therefrom. For purposes of this paragraph,
"PART-TIME EMPLOYEE" means an employee who is employed for an average of fewer
than twenty (20) hours per week or who has been employed for fewer than six (6)
of the twelve (12) months preceding the date on which notice is required
pursuant to the "Worker Adjustment and Retraining Notification Act" ("WARN"), 29
U.S.C. ss.2102 et seq., and Tenn. Code Xxx. ss.50-1-601 et. seq. Except as
provided in Exhibit 4.20, Seller has no employment agreements with its employees
and all such employees are employed on an "at will" basis. Exhibit 4.20 lists
all ex-employees of Seller utilizing or eligible to use COBRA (health
insurance). Exhibit 4.20 sets forth a complete list of all of Seller's full and
part time employees who have been terminated within ninety (90) days before
Closing.
The Seller and Buyer agree that the unemployment experience of the
Seller will be transferred to the Buyer if such a transfer of unemployment
experience is allowed by law and elected by the Buyer. If the payroll of the
transferred hospital is reported in an unemployment insurance account with other
payroll prior to the date of transfer, the portion of the unemployment
experience transferred to the Buyer shall be the same portion as the transferred
hospital's state unemployment taxable payroll bears to the total state
unemployment taxable payroll of the Seller's unemployment insurance account.
Funds which are in group accounts for the purpose of paying reimbursable
unemployment benefits will be transferred to the Buyer if the Buyer elects such
transfer. Obligations to reimburse the state for unemployment benefits relating
to persons who do not become Buyer employees at Closing shall continue to be the
obligations of Seller.
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The Seller agrees to make available to the Buyer the records of
individual wages of all employees, as well as copies of state unemployment tax
returns, to the extent necessary for the Buyer to verify future unemployment tax
rates and to calculate the correct taxable payroll for the remainder of the
calendar year in which the transaction occurs.
4.21 Labor Relations. Neither Seller nor Shareholder (with respect to
Hospital based employees) is a party to any labor contract, collective
bargaining agreement, contract, letter of understanding (or to the knowledge of
Seller and Shareholder, any other arrangement, formal or informal) with any
labor union or organization which obligates Seller to compensate its employees
at prevailing rates or union scale, nor are any of Seller's employees
represented by any labor union or organization. There is no pending, or to the
knowledge of Seller and Shareholder, threatened labor dispute, work stoppage,
unfair labor practice complaint, strike, administrative or court proceeding or
order between Seller and any present or former employees (or a union) of Seller.
There is no pending, or to the knowledge of Seller and Shareholder, threatened
suit, action, investigation or claim between Seller, Shareholder (with respect
to Hospital based employees) and any present or former employees (or a union) of
Seller or Shareholder (with respect to Hospital based employees) not disclosed
on Exhibit 4.19. There has not been any labor union organizing activity at the
Hospital or the Related Assets or elsewhere with respect to employees of the
Hospital or the Related Assets within the last two (2) years.
4.22 Insurance. Seller has in effect and has continuously, since
October 7, 1994, maintained insurance coverage for its operations, personnel and
assets. Exhibit 4.22 sets forth a summary of the Seller's current insurance
coverage (listing type, carrier and limits). Exhibit 4.22 includes a list of any
pending insurance claims relating to Seller. Seller is not in default or breach
with respect to any provision contained in any such insurance policies, nor has
Seller failed to give any notice or to present any claim thereunder in due and
timely fashion. Seller will continue to maintain all its insurance policies and
coverage amounts in full force and effect until the Closing. All of such
policies are valid, outstanding, in full force and effect with insurers
unaffiliated with Seller, and enforceable with no premium arrearages. Complete
genuine copies of all policies and endorsements thereto have been provided to
Buyer. At no time has Seller been denied, or reduced or requested a reduction in
the scope of amount of, any insurance or indemnity bond coverage with respect to
the Assets. No insurance carrier has canceled or reduced, or given notice of its
intention to cancel or reduce, any insurance coverage with respect to the Assets
and, to the knowledge of Seller and Shareholder, there exist no grounds to
cancel or avoid any such policies or the coverage provided thereby. Seller has
received no written recommendation from any insurer to repair or replace any of
the Assets with which Seller has not complied.
4.23 Broker's or Finder's Fee. Other than Ernst & Young LLP, the fees
and expenses of which will be the sole responsibility of Seller and Shareholder,
Seller has not employed and is not liable for the payment of any fee to any
finder, broker or similar person in connection with the transactions
contemplated by this Agreement.
4.24 Medical Staff Seller has previously delivered to Buyer, to the
extent allowed by law, a true and correct copy of medical staff privilege and
membership application forms, a
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description of medical staff privileges, all current medical staff bylaws, rules
and regulations and amendments thereto, all credentials and appeals procedures
not incorporated therein, the name of each current member of the medical staff
of the Hospital, the age of each medical staff member to the knowledge of Seller
and Shareholder, the specialty, if any, of each medical staff member, and all
contracts with physicians, physician groups, or other members of the medical
staff of the Hospital, and Seller will update such information prior to the
Closing. There are no pending or, to the best knowledge of Seller and
Shareholder, any threatened appeals, challenges, disciplinary or corrective
actions, or disputes involving applicants, staff members, or health
professionals and neither Seller nor Shareholder know of any basis therefor.
4.25 Conflicts of Interest. Except as disclosed in Exhibit 4.25, no
shareholder, director, officer, employee or agent of Seller or Shareholder is
either a supplier of goods or services to Seller, or directly or indirectly
controls or is a shareholder, officer, director, employee or agent of any
corporation, firm, association, partnership or other business entity which is a
supplier of goods or services to Seller or a Related Entity or a party to any
contract or other agreement with Seller.
4.26 For Profit Status. At no time since its initial construction has
the Hospital been owned or operated by a non-profit entity (under Section
501(c)(3) of the Internal Revenue Code or other applicable sections) or other
entity eligible for loans or grants under the Xxxx-Xxxxxx program or any similar
program providing for the recovery of any public funds advanced under said
programs.
4.27 [Intentionally Deleted]
4.28 Intellectual Property; Computer Software. All trademarks, service
marks, trade names, patents, copyrights, inventions, processes and applications
therefor (whether registered or common law) owned by Seller are listed and
described in Exhibit 4.28 (collectively the "INTELLECTUAL PROPERTY"). No
proceedings have been instituted or pending or, to the knowledge of Seller and
Shareholder, threatened which challenge the validity of the ownership by Seller
of such Intellectual Property. Seller has not licensed anyone to use such
Intellectual Property and Seller and Shareholder have no knowledge of the use or
the infringement of any of such Intellectual Property by any other person.
Seller owns (or possesses adequate and enforceable licenses or other rights to
use) all Intellectual Property, and all computer software programs and similar
systems used in the conduct of its business except as set forth on Exhibit 4.28.
4.29 Inventories. The Inventory is, and on Closing will be, of a
quality and quantity presently usable in the ordinary course of business at the
Hospital and Related Assets, determined and valued consistent with generally
accepted accounting principles.
4.30 Motor Vehicles. All motor vehicles used in the business of Seller,
identified as either owned or leased, are listed in Exhibit 1.1(2) hereto. All
such vehicles are properly licensed and registered in accordance with applicable
law.
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4.31 Employee Benefit Plans.
(1) Except as set forth in Exhibit 4.31, Seller does not
maintain, and is not required to contribute to or otherwise participate in an
"employee benefit plan" or a "multi-employer plan" (as such terms are defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including without limitation, any pension, profitsharing, retirement, stock
purchase or stock option plan, or any other retirement, compensation, welfare or
fringe benefit plan, program or arrangement of any kind whatsoever, whether
formal or informal, providing for benefits for, or for the welfare of, any or
all of the employees of Seller, any member of a group defined in Section 414(b),
(c), (e), (m) or (o) of the Code to which Seller belongs or has belonged, or any
predecessor of Seller, or for the welfare of the beneficiaries of such employees
(each an "EMPLOYEE PLAN"). Seller shall be liable for any withdrawal liability
with regard to such employees under the Multi-Employer Pension Plan Amendments
Act of 1980. Seller has no liability for unpaid compensation or fringe benefits,
including without limitation accrued vacation, sick leave, post retirement
medical or other benefits, severance pay, or golden parachute payments within
the meaning of Section 280G of the Code, not disclosed on Exhibit 4.31.
(2) Except as specified in Section 1.3(2) relating to accrued
vacation and sick leave, and as set forth on Exhibit 4.31, Buyer will not be
liable and will not be responsible for any debt, obligation, contribution,
responsibility, withdrawal liability or other liability of Seller under any
Employee Plans, including, without limitation, any penalty, fee or funding
obligation. The Seller will be liable under the Employee Plans for all claims
due and unpaid at Closing and for all claims incurred before or after the
Closing, whether or not paid or presented before Closing, and for any
liabilities arising from any failure before or after the Closing to comply with
the requirements of ERISA, the Code, the Tennessee Code Annotated or regulations
thereunder.
(3) Seller has provided or caused to be provided notice of the
availability of COBRA coverage for all of its present and former employees, and
their dependents entitled to such notice because of a qualifying event occurring
on or before the Closing, and Seller shall be responsible for providing COBRA
coverage for all such employees, or their dependents, who elect or have elected
such coverage. All COBRA coverage has been and will be fully insured. The only
persons entitled to receive COBRA coverage or in the future elect COBRA coverage
as a result of a qualifying event occurring on or prior to Closing are persons
listed on Exhibit 4.20(a). Upon Closing, all of Seller's employees shall cease
participation in all Employee Plans maintained by Seller, except to the extent
provided herein or as to benefits owed such employees.
4.32 Compliance with Laws. Seller has complied with all existing laws,
rules, regulations, ordinances, orders, judgements and decrees applicable to its
business or the Assets in all ways other than those which in the aggregate have
and will have only an immaterial impact on its business and its operations and
prospects.
4.33 No Omissions or Misstatements. None of the information included in
this Agreement and Exhibits contains any untrue statement of a material fact or
is misleading in any material respect or omits to state any material fact
necessary in order to make any of the
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statements herein or therein not misleading. Copies of all documents referred to
in any Exhibit hereto have been delivered or made available to Buyer and, to
Seller's knowledge, constitute true, correct and complete copies thereof and
include all amendments, exhibits, schedules, appendices, supplements or
modifications thereto or waivers thereunder. The representations and warranties
of Seller and Shareholder set forth in this Agreement or in any document
delivered pursuant hereto shall not be affected or deemed waived by reason of
the fact that the Buyer knew or should have known that any such representation
or warranty is, or might be, inaccurate in any respect.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller and Shareholder to enter into this Agreement
and to consummate the transactions contemplated herein, Buyer and Parent hereby
jointly and severally represent and warrant to Seller and Shareholder, which
representations and warranties shall be true and correct on the date hereof, and
on Closing, as if then restated, and which shall survive Closing, as follows:
5.1 Organization, Qualification and Authority. Each of Parent and Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of its state of organization. Each of Parent and Buyer has the full
corporate power and authority to own, lease and operate its properties and
assets as presently owned, leased and operated and to carry on its business as
it is now being conducted, and is in good standing in Tennessee and has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement without the consent, approval or authorization
of, or obligation to notify, any person, entity or governmental agency. Each of
Parent and Buyer has the full right, power and authority to execute, deliver and
carry out the terms of this Agreement and all documents and agreements necessary
to give effect to the provisions of this Agreement and to consummate the
transactions contemplated on the part of Buyer or Parent hereby. Subject to
obtaining the approval of Buyer's board of directors, the execution, delivery
and consummation of this Agreement and all other agreements and documents
executed in connection herewith by Buyer or Parent have been duly authorized by
all necessary action on the part of Buyer or Parent. No other action on the part
of Buyer or Parent or any other person or entity is necessary to authorize the
execution, delivery and consummation of this Agreement and all other agreements
and documents executed in connection herewith. This Agreement and all other
agreements and documents executed in connection herewith by Buyer or Parent,
upon due execution, delivery and authorization thereof shall constitute valid
binding obligations of Buyer or Parent, enforceable in accordance with their
respective terms.
5.2 Absence of Default. The execution, delivery and consummation of
this Agreement and all other agreements and documents executed in connection
herewith by Buyer or Parent will not constitute a violation of, be in conflict
with, or, with or without the giving of notice or the passage of time, or both,
result in a breach of, constitute a default under, or create (or cause the
acceleration of the maturity of) any debt, indenture, obligation or liability or
result in the creation or imposition of any security interest, lien, charge or
other encumbrance upon any of the Assets
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under: (a) any term or provision of the Articles of Incorporation or Bylaws of
Buyer or Parent; (b) any Contract, lease, agreement, indenture, mortgage,
pledge, assignment, permit, license, approval or other commitment to which Buyer
is a party or by which Buyer or Parent is bound; (c) any judgment, decree,
order, regulation or rule of any court or regulatory authority, or (d) any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
court or governmental authority or arbitration tribunal to which Buyer or Parent
is subject.
5.3 Brokerage Fees. Buyer has not employed and is not liable for the
payment of any fee to any finder, broker or similar person in connection with
the transactions contemplated by this Agreement.
ARTICLE VI. COVENANTS OF PARTIES
6.1 Preservation of Business and Assets. From the date hereof until the
Closing, each of Seller and Shareholder shall use its commercially reasonable
efforts and shall do or cause to be done all such acts and things as may be
reasonably necessary to preserve, protect and maintain intact the Assets and the
business and operation of the Hospital and Related Assets as a going concern
consistent with prior practice and not other than in the ordinary course of
business, and to preserve, protect and maintain the good will of the Hospital's
and Related Assets' medical staff, suppliers, employees, clientele, patients,
tenants and others having business relations with Seller. Seller shall use its
commercially reasonable efforts to retain its employees in their current
positions up to Closing and shall use its commercially reasonable efforts to
obtain all documents called for by this Agreement. From and after the date of
this Agreement until Closing, Seller will maintain and keep the Assets in a
sanitary, well-maintained condition and in good order and repair, consistent
with past practice. Buyer, Parent, Seller and Shareholder shall use their
commercially reasonable efforts to the consummation of the transactions
contemplated by this Agreement. Until termination of this Agreement, Seller and
Shareholder agree that they will not sell or transfer, or negotiate the sale or
transfer of, either the Assets or any capital stock of Seller. From and after
the date of this Agreement until Closing, Seller shall pay no dividend, and
shall make no distribution or extraordinary payment to any of the Shareholder,
affiliate or any third party or pay any intercompany payable other than in the
ordinary course of business and Seller will not sell, discard, dispose of or
move any of the Assets, other than in the ordinary course of business. None of
the Leases and Contracts being assumed by Buyer shall be amended between the
date hereof and Closing without the prior written consent of Buyer, except for
renewals in the ordinary course of business.
6.2 Absence of Material Change. From the date hereof until the Closing,
neither Seller nor Shareholder shall make any material change in the business
and operation of the Hospital and Related Assets and in the utilization of the
Assets and shall not enter jointly or separately into any other significant
contract or commitment or any other transaction with respect thereto without the
prior written consent of Buyer, which shall not be unreasonably withheld.
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6.3 Access to Books and Records.
(1) From the date hereof until the Closing, Seller shall give
to Buyer and to Buyer's counsel, accountants, and other representatives, full
access during normal business hours to all of Seller's offices, properties,
books, contracts, commitments, records and affairs relating to the Assets so
that Buyer may inspect and audit them and shall furnish to Buyer a copy of all
documents and information concerning the properties and affairs of the Assets as
Buyer may reasonably request, subject to patient and physician confidentiality
rights. If any such books, records and materials are in the custody of third
parties, Seller shall direct such third parties to promptly provide them to
Buyer. Copies of documents furnished to Buyer by Seller will be promptly
returned by Buyer upon request if the transaction is not consummated. Seller
shall provide Buyer promptly with interim financial statements of Seller in
accordance with Section 4.3, and any other management reports as and when they
are available. Additionally, from the date hereof until Closing, Seller grants
Buyer full access to Seller's personnel and computers as is reasonably necessary
to assist Buyer in the transition to be prepared for the ownership change, to
the extent such access does not interfere with patient care.
(2) Following the Closing, for a period of four (4) years,
Buyer shall permit Seller's and Shareholder's representatives (including,
without limitation, their counsel and auditors), during normal business hours
and upon appropriate advance notice, to (i) have reasonable access to, and
examine and make copies of all books and records of the Hospital and Related
Assets, including all medical records and medical charts of any patient admitted
to the Hospital and Related Assets, which are transferred to Buyer hereunder and
(ii) have reasonable access to the Hospital's employees, relating to
transactions or events occurring prior to the Closing, to the maximum extent
permitted by law as long as such requests do not unreasonably interfere with the
operation of the Hospital. For a period not to exceed the earlier of (a) four
(4) years after the later of the receipt from Medicare of a Notice of Program
Reimbursement or the receipt from Medicare of a Notice of Reopening, and (b)
eight (8) years after the Closing, Buyer agrees that, prior to the destruction
or disposition of any such books or records, Buyer shall provide not less than
forty-five (45) days', nor more than ninety (90) days' prior written notice to
Seller and Shareholder of such proposed destruction or disposal. If Seller or
Shareholder desires to obtain any of such documents, it may do so by notifying
Buyer in writing at any time prior to the date scheduled for such destruction or
disposal. In such event, Buyer shall not destroy such documents and the parties
shall then promptly arrange for the delivery of such documents to Seller or
Shareholder or their successors or assigns. All out-of-pocket costs associated
with the delivery of the requested documents shall be paid by Seller or
Shareholder (as the case may be).
(3) Following the Closing, Seller shall permit Buyer and its
representatives (including, without limitation, their counsel and auditors),
during normal business hours, and upon appropriate advance notice, to have
reasonable access to, and examine and make copies of, all books and records of
Seller and its affiliates relating to the Hospital, Related Assets, or the other
Assets, which books and records, are retained by Seller and which relate to
transactions or events contemplated by this Agreement occurring prior to the
Closing, to the maximum extent permitted by law. For a period of three (3) years
after the Closing, Seller agrees that, prior to
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the destruction or disposition of any such books or records, Seller shall
provide not less than forty-five (45) days', nor more than ninety (90) days'
prior written notice to Buyer of such proposed destruction or disposal. If Buyer
desires to obtain any such documents, it may do so by notifying Seller in
writing at any time prior to the date scheduled for such destruction or
disposal. In such event, Seller shall not destroy such documents and the parties
shall then promptly arrange for the delivery of such documents to Buyer, its
successors or assigns. All out-of-pocket costs associated with the delivery of
the requested documents shall be paid by Buyer.
6.4 Consents. Seller shall use its commercially reasonable efforts to
obtain all consents required for the assignment of the Leases and Contracts
constituting Assumed Liabilities, and transfer of the Seller's interest in EPPO.
In the event Seller is unable to obtain any one or more consents required
pursuant to Section 11.6(l), and if the failure to obtain such consent
materially adversely affects the anticipated operations of the Assets (as
reasonably determined by Buyer), Buyer, at its sole option, may elect to
terminate this Agreement in its entirety.
6.5 Risk of Loss. In the event there is any damage to or loss of any of
the Assets (whether by fire, theft, vandalism or other cause or casualty),
between the date hereof and the Closing and Buyer reasonably determines that (i)
the amount necessary to repair the damage exceeds $600,000, and (ii) such damage
cannot be repaired within 60 days, Buyer, at its sole option, may elect to
terminate this Agreement in its entirety.
6.6 Condemnation. From the date hereof until the Closing, in the event
that any portion of the Assets becomes subject to or is threatened with any
condemnation or eminent domain proceedings which in Buyer's reasonable opinion
materially adversely affects the businesses or operations or prospects of any of
the Assets, then Buyer, at its sole option, may elect to terminate this
Agreement in its entirety.
6.7 Good Faith. All parties shall act in good faith and use their
commercially reasonable efforts to satisfy all conditions to their respective
obligations to close.
6.8 Preserve Accuracy of Representations and Warranties. Seller and
Shareholder shall refrain from taking any action which would render any
representations and warranty contained in Article IV hereof inaccurate as of
Closing. Seller and Shareholder will promptly notify Buyer of any lawsuit,
claim, audit, investigation, administrative action or other proceeding asserted
or commenced against Seller or its directors, officers, Shareholder or
affiliates, that may involve or relate in any way to Seller, Shareholder, the
Assets or the business and operations of Seller or the Assets. Each party hereto
shall promptly notify the other parties hereto of any facts or circumstances
which come to either's attention and which cause, or through the passage of time
may cause, any of that party's or the other party's representations and
warranties to be untrue or misleading at any time from the date hereof to
Closing.
6.9 Maintain Books and Accounting Practices. From the date hereof until
the Closing, Seller shall maintain its books of account in the usual, regular
and ordinary manner in accordance with generally accepted accounting principles
consistently applied and on a basis consistent with
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prior years and shall make no change in its accounting methods or practices or
the accounting methods or practices.
6.10 Indebtedness; Liens. Other than in the ordinary course of
business, from the date hereof until the Closing, with respect to the Assets,
including business operations conducted with the Assets, Seller shall not
create, incur, assume, guarantee or otherwise become liable or obligated with
respect to any indebtedness for borrowed money, nor make any loan or advance to,
or any investment in, any person or entity, nor create any lien, security
interest, mortgage, right or other encumbrance in any of the Assets, without
Buyer's prior written approval which will not be unreasonably withheld. Until
Closing, Seller shall make all payments required with respect to its long-term
debt, including, without limitation, any bonds, loans or other obligations as
described in Section 1.4(l) and fully and timely comply with and satisfy all its
obligations with respect thereto. Seller shall take all action necessary to
cause all collateral and security against the Assets to be fully released to
Buyer's satisfaction as contemplated hereunder, and Buyer will cooperate with
Seller in this regard.
6.11 Compliance with Laws and Regulatory Consents. From the date hereof
until the Closing, (a) Seller shall comply with all applicable statutes, laws,
ordinances and regulations, except to the extent non-compliance would not have a
material adverse effect on the assets or operations of Seller; (b) Seller shall
keep, hold and maintain all certificates, certificates of need, certificates of
exemption, accreditations, participations, licenses, and other permits necessary
for the business and operation of the Assets; (c) Seller and Shareholder shall
use their commercially reasonable efforts to obtain all consents, approvals,
exemptions and authorizations of third parties, whether governmental or private,
necessary to consummate the transactions contemplated by this Agreement; and (d)
Seller and Shareholder shall make and cause to be made all filings and give and
cause to be given all notices which may be necessary or desirable on its part
under all applicable laws and under its contracts, agreements and commitments in
order to consummate the transactions contemplated by this Agreement.
6.12 No Sale, Merger or Consolidation. From the date hereof until the
Closing, Shareholder shall not sell, pledge or transfer any of the capital stock
in Seller, and Seller shall not sell all or substantially all of its assets,
merge or consolidate with any other entity; neither of Seller and Shareholder
shall solicit any inquiries, proposals or offers relating to such transactions;
and both shall promptly notify Buyer orally, and confirm in writing, of all
relevant details relating to inquiries, proposals or offers which it may receive
relating to any of the matters referred to in this Section.
6.13 Maintain Insurance Coverage. From the date hereof until the
Closing, Seller shall maintain and cause to be maintained in full force and
effect, without change of coverage or insurance carrier unless approved of in
writing by the Buyer (which approval shall not be unreasonably withheld), the
existing insurance on the Assets and the operations of the Hospital and the
Related Assets and shall provide, upon request by Buyer, evidence satisfactory
to Buyer that such insurance continues to be in effect and that all premiums due
have been paid.
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Prior to Closing, Seller will obtain "tail" insurance coverage for a
malpractice and general liability insurance policy with limits no less than
$1,000,000.00 per occurrence and $3,000,000.00 in the aggregate and umbrella
coverage with limits no less than $9,000,000.00 from a carrier acceptable to
Buyer and naming Buyer as additional insured.
6.14 Medicare and Medicaid Reporting. From the date hereof until the
Closing, on behalf of the Hospital and Related Assets, Seller shall timely file
or cause to be filed all cost reports and other reports of every kind, nature or
description, required by law or by written or oral contract to be filed with
respect to the purchase of services by third party payors, including, but not
limited to, Medicare, Medicaid, and Blue Cross prior to Closing. Seller has paid
or properly estimated and recorded on its Financial Statements all liabilities
for contracted adjustments, discounts, refunds and other offsets in
connection with the filing of such reports and claims up to Closing; provided,
however, that if any material adverse adjustments or offsets regarding
operations on or after Closing are the result of the willful acts or omissions,
or gross negligence, of Seller and/or its employees, representatives or agents,
Seller and Shareholder shall provide indemnification to Buyer with respect
thereto pursuant to Section 13.2. Buyer shall prepare and file the terminating
cost reports for the Hospital. Seller shall assist the Buyer in any way needed
to complete the cost report in a timely manner. Seller will not amend any cost
report for any periods before and through Closing.
6.15 Current Return Filing. Seller shall be responsible for the
preparation and filing of the federal, state and local income tax returns for
all the tax periods of Seller ending on or before the Closing. Seller shall
prepare and timely file the Federal, state and/or local income tax returns and
shall pay such tax when due.
6.16 Performance. Seller, Shareholder, Parent and Buyer shall take
appropriate steps to satisfy their respective obligations, and the conditions to
Closing, including without limitation, the filing of Xxxx-Xxxxx-Xxxxxx notices,
if any, and the obtaining of necessary contracts and application for necessary
licenses and permits.
6.17 WARN Act. Prior to Closing, Seller will not temporarily or
permanently close or shut down any "single site of employment" or any "facility"
or any "operating unit" or any "workplace," department or service within a
single site of employment, as such terms are used in, and as would require
notice under, WARN and Tenn. Code Xxx. ss.50-1-601 et seq., and Seller and
Shareholder represent that there have been no such closures or shutdowns within
the period of at least 90 days before Closing. Buyer agrees to offer employment
to substantially all of Seller's employees on substantially the same terms and
conditions as provided by Seller, and Buyer agrees to hire at Closing all of
Seller's employees who accept such offer of employment. Within twenty-one (21)
days after the date hereof, Buyer will notify Seller of the specific employees
of Seller, not to exceed twenty (20) employees, who will not be offered
employment by Buyer. In reliance upon this covenant, Seller will not have any
obligation to comply with the WARN Act or Tennessee Code Xxx. ss.50-1-601 et
seg. in connection with the transactions contemplated by this Agreement. After
Closing, Buyer shall not take any action which will violate the WARN Act with
respect to the employees of the Hospital.
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6.18 Employee Plans. If any employees of Seller have existing vested
account balances in any employee pension benefit plan, including any 401(k)
plan, Seller and Shareholder will use reasonable efforts to assist such
employees who desire to roll over any of such vested account balances.
6.19 Power to Endorse Checks. As specified in Section 4.13(5), Buyer
has been granted the power, effective as of Closing, to execute and endorse for
payment all payments on accounts receivable sold to Buyer.
6.20 Environmental Assessment; Additional Environmental Inspections.
Seller and Shareholder shall permit Buyer prior to Closing to conduct an
environmental assessment on any of the Real Estate, in accordance with the
proposal submitted by Xxxxxxxx & Associates, dated August 8, 1996 and October
25, 1996 previously provided to Seller, the results of which shall be approved
or disapproved by Buyer within ten (10) days after its receipt thereof. Buyer
and Seller will share equally in the cost of such environmental assessment. If
such environmental assessment discloses the presence of any Hazardous Substances
on the Real Estate, including hydrocarbons, in quantities or concentrations
which require remediation or removal under Environmental Law, Buyer shall have
the right, subject to Seller's prior written approval, to conduct additional
investigation (including the taking of soil and groundwater samples). The cost
of such additional investigation shall be borne by Buyer. The results of such
additional investigation shall be approved or disapproved by Buyer with ten (10)
days of the receipt thereof. Buyer shall promptly deliver to Seller a copy of
any environmental assessment obtained by Buyer pursuant to the provisions
hereof. In the event that any remediation or removal is required pursuant to
Environmental Law for matters disclosed in reports furnished to Buyer by
Xxxxxxxx & Associates, Buyer shall bear the cost of such remediation or removal.
In the event that Buyer elects to remove any friable asbestos contained in the
Real Estate which remediation and removal is not required under Environmental
Law, the amount of the Purchase Price shall be increased by the amount of the
cost of such removal and such additional funds shall be placed into escrow
pursuant to Section 3.1(6) and the cost of the removal shall be paid from the
funds placed in escrow.
ARTICLE VII. TITLE AND SURVEY
7.1 Title Report and Policy. Seller has delivered to Buyer an ALTA
Commitment for Title Insurance issued by Lawyers Title Insurance Corporation
(the "TITLE COMPANY") setting forth the condition of title to each tract of Real
Estate (the "COMMITMENT"). At the Closing, Seller shall deliver to Buyer, at
Buyer's expense, an Owner Policy of Title Insurance in the form of the
Commitment in an amount equal to the Purchase Price allocated to the Real
Estate, as improved, and containing no additional exceptions other than the
Permitted Exceptions (the "Title Policy"). The Title Policy will also contain,
to the extent said endorsements can be provided without any expense to Seller:
(a) a so-called "tax parcel endorsement" listing all of the tax parcel
identification numbers affecting the Real Estate covered by the Policy and that
no other property is included in the Real Estate and that no other tax parcel
identification numbers affect such Real Estate, (b) a contiguity endorsement,
(c) a 3.1 zoning endorsement or its equivalent
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as then in use by the title company in form and substance acceptable to Buyer,
(d) extended coverage deleting all standard and general exceptions, (e)
affirmative coverage against any Xxxx-Xxxxxx or other similar lien under any
other law or act described in Section 4.26 of this Agreement, and (f) an owner's
comprehensive endorsement; provided, however, Buyer shall have the right to, at
its own expense, obtain any endorsements for which there is a charge by the
Title Company. At Closing, there shall be issued to Buyer, at Buyer's expense, a
modified title commitment so as to update the Commitment to the time of
recording so that there is no gap period. In the event Buyer requests, and at
Buyer's expense, the Title Company shall issue a mortgagee title policy in an
amount up to the Purchase Price which is allocated to the Real Estate as
improved, at simultaneous issue rates. Shareholder shall execute such
certificates and affidavits as may be reasonably required in connection with the
issuance of the Title Policy and endorsements, whether such endorsements are
obtained by Shareholder or Buyer.
7.2 Survey. Seller has delivered to Buyer, at Seller's expense, an
as-built survey of the Real Estate prepared by Xxxxx Engineering Inc. dated
August 28, 1996 (the "SURVEY"). Buyer has approved the Survey in all respects.
7.3 U.C.C. Searches. U.C.C. Financing Statement searches, local and
central, including fixtures, and federal and state tax lien and judgment
searches, with respect to Seller and Shareholder, including all "DBA's",
tradenames and fictitious names of Seller (including, but not limited to, all
names set forth in Exhibit 4.13(4)), from each of the jurisdictions in which
Seller does business or has done business within the preceding five (5) years
(the "UCC SEARCHES"), shall be obtained, at Seller's cost, and delivered to
Buyer within 10 days after the date hereof. The results shall be updated so that
said results do not predate Closing by more than 14 days.
7.4 Defects and Cure. Buyer shall notify Seller within 7 days of
receipt of the last UCC Search of any liens or claims disclosed in the UCC
Searches which either: (a) do not constitute Permitted Exceptions, or (b) even
if they constitute Permitted Exceptions, adversely affect the value of the
Assets or the financeability thereof in the reasonable opinion of Buyer
(collectively, "DEFECTS"). Seller, at its sole cost and expense, may elect to
not cure the objection and shall give written notice to Buyer within seven (7)
days of its receipt of Buyer's objections of its decision whereupon Buyer may
waive such objection and close or may terminate this Agreement, which election
shall be made within seven (7) days of receipt of notice from Seller. If Seller
fails to timely give such notice, Seller shall be deemed to have elected not to
cure the objection, whereupon Buyer may waive such objection and close or may
terminate this Agreement, which election by Buyer shall be made within ten (10)
days following notice of objection to Seller. Upon termination of this Agreement
under the terms of this Section 7.4, no party to this Agreement shall have any
further claims under this Agreement against any other party. Any Defect to which
Buyer does not object or which Buyer waives shall be deemed to be a Permitted
Exception.
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ARTICLE VIII. CLOSING
8.1 Closing. If all of the conditions to Closing set forth in Articles
IX and X hereof are satisfied, the closing shall occur on May 30, 1997, at the
offices of Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C., Nashville, Tennessee, or
at such other time or place as the parties may mutually agree. Upon transfer of
the assets and payment of the Purchase Price (the "CLOSING"), the Closing shall
be deemed to be effective and the transfer of the Assets shall be deemed to have
occurred as of 12:01 a.m. local time on the day of Closing. On the day of
Closing, the Collateral Trustee (for the account of Shareholder and Seller)
shall receive good funds in the amount of the Purchase Price.
8.2 Termination. Notwithstanding anything in this Agreement to the
contrary, this Agreement and the obligations of the parties hereunder may be
terminated on or prior to Closing as follows:
(a) By Seller (i) in the event the transactions contemplated
by this Agreement have been prohibited or enjoined by reason of any final
judgment, decree or order entered or issued by a court of competent jurisdiction
in litigation or proceedings involving either Buyer, Seller or Shareholder; (ii)
pursuant to Section 6.20 or 10.9; or (iii) in the event Buyer breaches or
violates any material provision of this Agreement or fails to perform any
material covenant or agreement to be performed by Buyer under the terms of this
Agreement, and Seller has provided written notice thereof to Buyer giving
reasonable specificity and Buyer has not cured same within ten (10) days and
such breach is not waived by Seller in writing.
(b) By Buyer (i) in the event the transactions contemplated by
this Agreement have been prohibited or enjoined by reason of any final judgment,
decree or order entered or issued by a court of competent jurisdiction in
litigation or proceedings involving either Buyer, Seller or Shareholder; (ii)
pursuant to Section 6.4, 6.5, 6.6 or 6.20; or (iii) in the event Seller or
Shareholder breach or violate any material provision of this Agreement or fail
to perform any material covenant or agreement to be performed by Seller and/or
Shareholder under the terms of this Agreement and Buyer has provided written
notice thereof to Seller and/or Shareholder giving reasonable specificity and
Seller and/or Shareholder have not cured same within ten (10) days and such
breach is not waived by Buyer in writing.
(c) By Buyer or Seller if the Closing hereunder shall not have
taken place by June 1, 1997, or, by such later date as shall be agreed upon by
an appropriate amendment to this Agreement if the parties agree in writing to an
extension, provided that a party shall not have the right to terminate under
this Section 8.2(c) if the conditions precedent to such party's obligation to
close have been fully satisfied and such party has failed or refused to close
after being requested in writing to close by the other party.
In the event of a termination pursuant to Section 8.2(a)(iii), the Xxxxxxx Money
shall be paid to Seller, or in the event of a termination for any other reason,
the Xxxxxxx Money shall be returned to Buyer.
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ARTICLE IX. SELLER'S AND SHAREHOLDER'S CONDITIONS TO CLOSE
The obligations of Seller and Shareholder under this Agreement are
subject to the satisfaction, on or prior to Closing, of the following conditions
(which may be waived specifically in writing by Seller in whole or in part):
9.1 Representations and Warranties True at Closing; Compliance with
Agreement. The representations and warranties of Buyer contained in this
Agreement (including the Exhibits hereto) or in any certificate or document
delivered to Seller and/or Shareholder pursuant hereto, shall be deemed to have
been made again at the Closing and shall then be true in all material respects;
and Buyer and Parent shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by them prior to or at Closing.
9.2 Regulatory Approvals. Buyer shall have obtained (at its own cost),
or shall have reasonable assurances that it will obtain (at its own cost), all
consents, licenses, permits, approvals, provider contracts, determinations or
certificates of need from the appropriate governmental agencies, including the
filing of Xxxx-Xxxxx-Xxxxxx notices, required for Buyer to acquire and operate
the Assets as contemplated hereunder. Buyer shall have filed a Xxxx-Xxxxx-Xxxxxx
notice with the Federal Trade Commission within 3 business days after the date
hereof.
9.3 No Action/Proceeding. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the transaction herein contemplated, and no governmental
agency or body shall have taken any other action or made any request of Seller
or Buyer as a result of which Seller reasonably and in good xxxxx xxxxx that to
proceed with the transactions hereunder would constitute a violation of law.
9.4 Compliance with Article XII. The Buyer shall have made to the
Seller and Shareholder the deliveries required by Article XII hereof.
9.5 Order Prohibiting Transaction. No order shall have been entered in
any action or proceeding before any court or governmental agency, and no
preliminary or permanent injunction by any court shall have been issued which
would have the effect of (a) making the transactions contemplated by this
Agreement illegal, (b) otherwise preventing consummation of such transactions,
or (c) imposing material limitations on the ability of Seller or Shareholder
effectively to sell the Assets. There shall have been no federal or state
statute, rule or regulations enacted or promulgated after the date of this
Agreement that would reasonably, directly or indirectly, result in any of the
consequences referred to in this Section.
9.6 Completion of Exhibits. All exhibits to this Agreement will be
completed to the mutual satisfaction of the parties.
9.7 Certain Approvals. This Agreement and the consummation of the
transactions contemplated hereunder shall have been approved by (a) the Board of
Directors of Shareholder
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within 5 business days after the date hereof and (b) the participants of Bank of
Tokyo within 10 business days after the date hereof.
9.8 Minimum Purchase Price. Shareholder shall have determined that the
Purchase Price, as calculated pursuant to Section 3.1, less the premium for the
tail insurance required pursuant to Section 10.8 and the other expenses payable
pursuant to Section 15.2, shall be not less than $11,592,000.
ARTICLE X. BUYER'S CONDITIONS TO CLOSE
The obligations of Buyer under this Agreement are subject to the
satisfaction, on or prior to Closing, of the following conditions (which may be
waived in writing by Buyer in whole or in part):
10.1 Representations and Warranties True at Closing: Compliance with
Agreement. The representations and warranties of Seller and Shareholder
contained in this Agreement (including the Exhibits hereto) or in any
certificate or document delivered to Buyer pursuant hereto, shall be deemed to
have been made again at the Closing and shall then be true in all material
respects; and Seller and Shareholder shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by it prior to or at Closing.
10.2 No Material Adverse Change. There shall have occurred no material
adverse change or change known to have a future material adverse effect on the
condition or prospects, financial or otherwise, of Seller or the Assets. There
shall not be any material claims, litigation or governmental proceedings pending
or threatened against Seller and/or Shareholder which would adversely affect the
Assets or the consummation of the transactions contemplated hereby at Closing.
10.3 Regulatory Approvals. Buyer shall have obtained (at its own cost),
or shall have reasonable assurances that it will obtain (at its own cost) within
30 days after the date hereof (a) certification for participation in the
Medicaid Programs of the states of Tennessee (including TennCare), Mississippi
and Arkansas, (b) certification from the appropriate agency of the federal
government for participation in the federal Medicare Program, (c) all other
consents, licenses, permits, approvals, material provider contracts,
determinations or certificates of need reasonably necessary in the judgment of
Buyer, and (d) any applicable waiting period required by Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act shall have expired and no other review, approval or
other action of the Federal Trade Commission or the Antitrust Division of the
United States Department of Justice shall be required in order to consummate the
transactions contemplated hereby.
10.4 No Action/Proceeding. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the transaction herein contemplated, and no governmental
agency or body shall have taken any other
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action or made any request of Seller or Buyer as a result of which Buyer
reasonably and in good xxxxx xxxxx that to proceed with the transactions
hereunder would constitute a violation of law.
10.5 Compliance with Articles VII and XI. The Seller and/or Shareholder
shall have made to Buyer the deliveries required by Articles VII and XI hereof
within the time periods required thereunder.
10.6 Order Prohibiting Transaction. No order shall have been entered in
any action or proceeding before any court or governmental agency, and no
preliminary or permanent injunction by any court shall have been issued which
would have the effect of (a) making the transactions contemplated by this
Agreement illegal, (b) otherwise preventing consummation of such transactions,
or (c) imposing material limitations on the ability of Buyer effectively to
acquire and hold Assets, or, in either case, to exercise rights of ownership
pursuant thereto. There shall have been no federal or state statute, rule or
regulations enacted or promulgated after the date of this Agreement that would
reasonably result, directly or indirectly, in any of the consequences referred
to in this Section.
10.7 Release of Liens. Seller shall obtain the full release of any
liens or security interests securing any of the indebtedness described in
Section 1.4(1).
10.8 Tail Insurance. Seller shall deliver evidence of its tail
insurance coverage required by Section 6.13 hereof.
10.9 Certain Approvals. This Agreement and consummation of the
transactions contemplated hereunder shall have been approved by (a) the Board of
Directors of Buyer within 5 business days after the date hereof, and (b) Buyer's
bank group within 10 business days after Buyer's receipt of the environmental
assessment and any additional inspections conducted pursuant to Section 6.20. If
all of such approvals are not obtained by May 15, 1997, Seller may terminate
this Agreement.
10.10 Completion of Exhibits. All exhibits to this Agreement will be
completed to the mutual satisfaction of the parties.
ARTICLE XI. OBLIGATIONS OF SELLER AND SHAREHOLDER AT CLOSING
At Closing, Seller and Shareholder shall deliver or cause to be
delivered to Buyer or Buyer's designee, at Seller's expense, the following in a
form and substance reasonably satisfactory to Buyer or Buyer's designee:
11.1 Documents Relating to Title. Seller or Shareholder shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered, to
Buyer or Buyer's designee:
(1) Special warranty deeds, in form satisfactory to Buyer or
Buyer's designee and the Title Company, and conveying to Buyer good, valid and
marketable title in fee simple
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to the Real Estate free and clear of all liens, mortgages, pledges,
encumbrances, security interests, covenants, easements, rights of way, equities,
options, rights of first refusal, restrictions, special tax or governmental
assessments, defects in title, encroachments and other burdens, except for
Permitted Exceptions.
(2) Special warranty bills of sales and assignments, in form
satisfactory to Buyer, warranting and conveying to Buyer good and valid title to
all Assets (other than Real Estate) free and clear of all liens, mortgages,
pledges, encumbrances, security interests, covenants, easements, rights of way,
equities, options, rights of first refusal, restrictions, special tax or
governmental assessments, defects in title, encroachments and other burdens,
except for Permitted Exceptions.
(3) Certificates of title to all vehicles which constitute
Assets endorsed by Seller (or its affiliates, as is appropriate) together with
completed originals of any forms required by the State of Tennessee to transfer
the same, free and clear of liens.
(4) An assignment to Buyer of each lease and contract (subject
to Buyer's assumption) constituting an Assumed Liability.
(5) Title Policy as specified in Section 7.1 hereof.
11.2 Possession. Seller shall deliver to Buyer full possession and
control of the Assets, free and clear of all liens, mortgages, pledges, security
interests, restrictions, encumbrances, mortgages, easements, liabilities, and
burdens of any kind whatsoever, except for Permitted Exceptions.
11.3 Opinion of Seller's Counsel. Seller shall deliver to Buyer and
its lender the favorable opinion of counsel for Seller and Shareholder, dated as
of Closing, in form and substance reasonably acceptable to Buyer and its lender.
11.4 Good Standing and Resolutions. Each of Seller and Shareholder
shall deliver to Buyer Certificates of Good Standing from the Secretary of State
of its state of organization, and from each jurisdiction in which it is
qualified to do business, certified copies of its Bylaws and Charter, and a
certified copy of the resolutions of the Board of Directors and Shareholder of
Seller authorizing the execution, delivery and consummation of this Agreement
and the execution, delivery and consummation of all other agreements and
documents executed in connection herewith by them, including all deeds, bills of
sale and other instruments required hereunder, sufficient in form and content to
meet the requirements of the law of the State of Tennessee relevant to such
transactions and certified by officers of Seller to be validly adopted and in
full force and effect and unamended as of Closing.
11.5 Closing Certificate. Seller shall deliver to Buyer a certificate
of an officer of Seller and of Shareholder, dated as of Closing, certifying that
(a) each covenant and obligation of Seller and/or Shareholder has been complied
with by such parties in all material respects, and
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(b) each representation and warranty of Seller and Shareholder is true and
correct on the Closing in all material respects as if made on and as of the
Closing.
11.6 Third Party Consents. Seller shall deliver to Buyer:
(1) Any consents, estoppels, approvals, releases, filings and
authorizations of third parties which are necessary for the execution, delivery
and consummation of this Agreement, and the transactions contemplated hereunder,
as set forth on Exhibit 11.6(l).
(2) To the extent obtainable after diligent efforts, the
consents required by Section 6.4;
(3) To the extent obtainable after diligent efforts, the
estoppel and attornment letters from tenants of the Real Estate and Related
Assets, in form of Exhibit 11.6(3).
11.7 Taxes and Other Payments. Seller or Shareholder shall deliver to
Buyer:
(1) Proof of cash payment directly to the tax authorities or
cash payment (or credit on the Purchase Price) to Buyer in the amount of all
delinquent real estate taxes and assessments which are a lien on the date of
Closing, general and special.
(2) A certificate of non-foreign status signed by the
appropriate party and sufficient in form and substance to relieve Buyer of all
withholding obligations under Section 1445 of the Code. In the event that Seller
or Shareholder cannot furnish such a certificate or is not entitled to rely upon
such a certificate under the provisions of Section 1445 and the regulations
thereunder, Seller or Shareholder shall take and/or permit Buyer or Buyer's
nominee to take any and all steps necessary to allow Buyer or Buyers nominee to
satisfy the requirements or Section 1445.
(3) Receipt or other evidence from the Commissioner of the
Tennessee Department of Revenue showing that all liability for sale and use
taxes and employment taxes due from Seller have been paid.
(4) Receipt or other evidence from the Tennessee Department of
Employment Security evidencing that all contributions under the Tennessee
unemployment compensation law due from Seller have been paid.
11.8 Releases and Other Matters. Seller or Shareholder shall deliver to
buyer releases of mortgages, security interests, etc. which are not Permitted
Exceptions.
11.9 Notice to Third-Party Payors. Seller shall deliver executed
notices of the sale of the Hospital, to be furnished to all third-party payors
including the Programs, in the form of Exhibit 11.9 hereto.
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11.10 Additionally Requested Documents: Post Closing Assistance. At the
reasonable request of Buyer at Closing and at any time or from time to time
thereafter without any additional cost or liability to Seller or Shareholder,
Seller and Shareholder shall cooperate with Buyer to put Buyer in actual
possession and operating control of the Assets, execute and deliver such further
instruments of sale, conveyance, transfer and assignment, as Buyer may
reasonably request in order to effectively sell, convey, transfer and assign the
Assets to Buyer, to execute and deliver such further instruments and to take
such other actions as Buyer may reasonably request to release Buyer from all
obligation and liability with regard to any obligation or liability retained by
Seller and/or Shareholder and to execute and deliver such further instruments
and to cooperate with Buyer as Buyer may reasonably request or to enable Buyer
to obtain all necessary health care or regulatory certifications, approvals,
consents and licenses, accreditations or permits.
ARTICLE XII. OBLIGATIONS OF BUYER AT CLOSING
At Closing, Buyer and Parent shall deliver or cause to be delivered to
Seller the following in a form and substance reasonably satisfactory to Seller
and Shareholder:
12.1 Purchase Price. Buyer and Parent shall deliver to the Collateral
Trustee for the account of Shareholder and Seller cash or other immediately
available funds in the aggregate amount of the Purchase Price as specified in
this Agreement.
12.2 Corporate Good Standing and Certified Board Resolutions. Each of
Buyer and Parent shall deliver to Seller a certificate of good standing from the
Secretary of State of its state of organization dated the most recent practical
date prior to Closing and a certified copy of the resolutions of the Board of
Directors of the Buyer and Parent approving this Agreement and consummation of
the transactions hereunder contemplated.
12.3 Opinion of Buyer's Counsel. Buyer shall deliver to Seller a
favorable opinion of counsel for Buyer, dated as of Closing, in form and
substance reasonably acceptable to Seller.
12.4 Assumption of Liabilities. Buyer shall assume and covenant to
fully perform and comply with all of the Assumed Liabilities by instruments
reasonably acceptable to Seller and Shareholder.
12.5 Closing Certificate. Buyer shall deliver to Seller a certificate
of an officer of the Buyer and Parent, dated as of Closing, certifying that (a)
each covenant and condition precedent of Buyer and Parent has been complied with
by such parties in all material respects and (b) each representation and
warranty of Buyer is true and correct on the Closing as if made on and as of the
Closing.
12.6 Seller's Employees. For Seller's employees who accept Buyer's
offer of employment, Buyer shall recognize the employee's length of service with
Seller (but not any predecessor) for eligibility and vesting under Buyer's
employee benefit programs, including vacation and pension.
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12.7 Health Insurance. Employees who accept Buyer's offer of employment
shall be entitled to such medical, dental, disability and life insurance and
other employee benefits as are comparable to those benefits currently provided
to employees of Parent in similar positions, without any exclusion for
preexisting conditions or evidence of insurability.
12.8 Transfer Taxes. Buyer shall pay all state and local sales taxes
and transfer taxes incurred in connection with the transactions contemplated
hereby and shall provide Seller with proof of payment thereof.
ARTICLE XIII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION
13.1 Survival. The covenants, obligations, representations and
warranties of Buyer, Parent, Seller and Shareholder contained in this Agreement,
or in any certificate or document delivered pursuant to this Agreement, shall be
deemed to be material and to have been relied upon by the parties hereto
notwithstanding any investigation prior to the Closing and shall survive the
date of Closing for a period of two (2) years after Closing, and shall not be
merged into any deeds or other documents delivered in connection with the
Closing; provided that claims relating to (a) Medicare and Medicaid cost reports
with respect to the period that the Hospital was owned or operated by the Prior
Operators, (b) title to Assets which constitute personal property, (c) lack of
corporate power and authority, (d) ERISA and employee benefit matters, and (e)
taxes (all of the foregoing claims specified in (a)-(e) being collectively the
"EXCLUDED CLAIMS") shall survive until sixty (60) days after the applicable
statute of limitations relating to the underlying claim, and shall be subject to
the limits on indemnification as set forth in Section 13.4(8).
13.2 Indemnification by Seller and Shareholder. Subject to Sections
13.4(7) and (8), Seller and Shareholder, jointly and severally, promptly shall
indemnify, defend and hold harmless (and upon demand shall reimburse) Buyer and
the directors, officers, shareholders, employees and agents of Buyer against any
and all claims, actions, demands, suits, proceedings, assessments, judgments,
losses, costs, and expenses (including reasonable cost of investigation, court
costs, legal fees and expenses incident to any of the foregoing or incurred in
attempting to avoid the same or oppose the imposition thereof or in enforcing
this indemnity) and other damages (individually a "LOSS" and collectively,
"LOSSES") resulting from (i) any breach by either Seller or Shareholder of any
of its covenants, obligations, representations or warranties contained in this
Agreement or any certificate or document of Seller and/or Shareholder delivered
pursuant to this Agreement (or which would not have been suffered or incurred if
such representation or warranty were true or had not been breached or such
covenant or obligation had been fully performed), and (ii) any claim which is
brought or asserted by any third party against Buyer for failure to pay or
perform any of the Excluded Liabilities or otherwise related to any of the
Excluded Liabilities.
13.3 Indemnification by Buyer and Parent. Subject to Section 13.4(7)
and (8), Buyer and Parent shall promptly indemnify, defend, and hold harmless
(and upon demand shall reimburse) Seller and Shareholder and the directors,
officers, shareholders, employees and agents of Seller and Shareholder against
any and all Losses resulting from (i) any breach by Buyer or
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Parent of any of its covenants, obligations, representations or warranties
contained in this Agreement or any certificate or document of Buyer delivered
pursuant to this Agreement (or which would not have been suffered or incurred if
such representation or warranty were true or had not been breached or such
covenant or obligation had been fully performed), (ii) any claim which is
brought or asserted by any third party(s) against Seller or Shareholder for
failure to pay or perform any of the Assumed Liabilities, and (iii) any claim
arising out of the ownership, licensing or operation of the Assets or the
conduct of the business of the Hospital after Closing, except for failure to
obtain consents for the assignment of the contracts and except those directly
resulting from a breach by the Seller of any representations or covenants of
this Agreement. Notwithstanding the foregoing, so long as Buyer maintains a
minimum net worth of $4,000,000 for a period of twelve (12) months after the
Closing, Parent shall have no liability for any claim for indemnification
hereunder.
13.4 Procedure for Indemnification.
(1) Notice. Within thirty (30) days after receipt of written
or actual notice of any action or claim (the "CLAIM") as to which it asserts a
right to indemnification, the party seeking indemnification hereunder (the
"INDEMNITEE") shall give written notice thereof (the "NOTICE") to the person
from whom indemnification is sought (the "INDEMNITOR), provided that the failure
of the Indemnitee to give the Indemnitor notice within the specified number of
days shall not relieve the Indemnitor of any of its obligations hereunder, but
may create a cause of action for breach for damages directly attributable to
such delay. Indemnitor shall be liable to Indemnitee with respect to Losses
only so long as Indemnitee gives Indemnitor written notice thereof prior to the
expiration of the survival periods set forth in Section 13.1.
(2) Third Party Claims.
(a) If any claim for indemnification by Indemnitee
arises out of a Claim by a person other than Indemnitee, the Indemnitor shall be
entitled to assume the defense thereof, by written notice to the Indemnitee
within fifteen days after receipt of the Notice. Indemnitor shall thereupon
undertake to take all steps or proceedings to defeat or compromise any such
Claim, including retaining counsel reasonably satisfactory to the Indemnitee.
Except as otherwise provided herein, all costs, fees and expenses with respect
to any such Claim shall be borne by Indemnitor. If the Indemnitor assumes the
defense of a Claim, it shall not settle such Claim unless such settlement
includes as an unconditional term thereof a release by the claimant of the
Indemnitee, reasonably satisfactory to the Indemnitee and except that Indemnitor
shall not, without the prior written consent of Indemnitee, directly or
indirectly require Indemnitee to take or refrain from taking any action, or make
any public statement, or consent to any settlement, which it reasonably
considers to be against its interest. Indemnitee shall have the right to
participate at its own expense, in such proceedings, but control of such
proceedings shall remain exclusively with Indemnitor.
(b) If the Indemnitor shall fail to notify the
Indemnitee of its desire to assume the defense of any such claim or action
within the prescribed period of time, then the Indemnitee may assume such
defense in such manner as it may deem appropriate, and the
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Indemnitor shall be bound by any determinations made or any settlements thereof
effected by the Indemnitee. The Indemnitor shall be permitted, at its own
expense, to join in such defense and to employ its own counsel but control of
such proceedings shall remain exclusively with Indemnitee.
(c) Indemnitor and Indemnitee agree to make available
to each other, their counsel and other representatives, all information and
documents reasonably available to them and reasonably requested by the other
which relate to any such claim or action, and to render to each other such
reasonable assistance as may be reasonably requested in order to insure the
proper and adequate defense of such claim or action, but any costs or expenses
related thereto shall be borne by Indemnitor; and provided that any failure
(after written notice with specificity and an opportunity to cure) shall not
relieve the Indemnitor of any of its obligations hereunder but may create a
cause of action for breach for damages directly attributable to such failure.
(3) Other claims. In the event of any Claim other than those
provided for in subsection (2) hereof, Indemnitee shall be entitled to
indemnification hereunder as provided herein.
(4) Payment of Claims. Amounts payable by the Indemnitor to
the Indemnitee under this Section 13.4 shall be payable by the Indemnitor (or
the escrow agent under the Escrow Agreement) as incurred by the Indemnitee. In
the event Indemnitor (or the escrow agent under the Escrow Agreement) fails to
pay, timely and fully, any such amounts, Indemnitee may pay such claim. In such
event, the Indemnitee may recover from the Indemnitor, in an addition to the
amount so paid but subject to the Cap, (i) interest on the amount claimed from
the date of payment at the rate of 8% per annum, and (ii) reasonable attorneys'
fees in connection with the enforcement of payment under this Section 13.4.
(5) No Set-Off. The Indemnitee's right to indemnification
under this Section 13.4 shall not be subject to set-off for any claim by the
Indemnitor against the Indemnitee.
(6) Claims by a Straddle Patient. Any claim by a patient
relating to professional negligence or similar matters involving a patient of
the Hospital served both prior to Closing and subsequent to Closing will be the
responsibility of either Buyer or Seller in accordance with the following
guidelines: (i) if it is a claim in which clearly the incident giving rise to
liability arose prior to Closing, Seller shall respond to the loss and defense
expenses; (ii) if it is a claim in which clearly the incident giving rise to
liability arose subsequent to Closing, Buyer shall respond to the loss and
defense expenses; and (iii) in the event that the incident giving rise to
liability as to time is not clear, Seller and Buyer will jointly defend the case
and each will fully cooperate with the other in such defense. Once the case is
closed, if Buyer and Seller cannot agree to the allocation of both indemnity and
expenses, then the matter shall be submitted to binding arbitration in
accordance with the rules and procedures of the American Arbitration
Association.
(7) Indemnification Threshold. The parties agree not to seek
recourse against, and shall not recover from, the others under this Article XIII
on account of any Loss arising out
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of (i) a breach of Seller's representations and warranties contained in Article
IV hereof, or (ii) a breach of Buyer's representations and warranties contained
in Article V hereof, unless and until the aggregate amounts thereof (including
all prior Losses) exceeds $50,000 (the "INDEMNIFICATION THRESHOLD"), but once it
exceeds the Indemnification Threshold recovery shall be with respect to the
entire amount of the Loss and not just for the excess above the Indemnification
Threshold. Notwithstanding the foregoing, the Indemnification Threshold shall
not be applicable if the indemnification claim is a Purchase Price adjustment
pursuant to Article III.
(8) Indemnification Caps. The maximum aggregate liability of
Seller and Shareholder for indemnification under this Agreement shall be equal
to One Million One Hundred Thousand Dollars ($1,100,000) (the "One Million One
Hundred Thousand Dollar Cap") for all indemnification claims except for Excluded
Claims or for a Purchase Price adjustment pursuant to Article III. The maximum
aggregate liability of Seller and Shareholder for a Purchase Price adjustment
pursuant to Article III or indemnification under this Agreement for Excluded
Claims shall not exceed the lesser of the Purchase Price or $12,292,000.00 (the
"PURCHASE PRICE CAP"). The maximum aggregate liability of Buyer and Parent for
indemnification pursuant to Section 13.3(i) hereof shall be equal to the
Purchase Price, for indemnification pursuant to Section 13.3(ii) hereof shall be
unlimited, and for indemnification pursuant to Section 13.3(iii) hereof shall be
equal to $4,000,000.00.
(9) Insurance Provisions. Notwithstanding the Indemnification
Threshold, the One Million One Hundred Thousand Dollar Cap and the Purchase
Price Cap, all proceeds received by Seller or Shareholder under any insurance
policy shall be paid over to Buyer to satisfy any Losses and shall not be
counted against the Indemnification Threshold, the One Million Four Hundred
Thousand Dollar Cap or the Purchase Price Cap.
13.5 Assignment by Buyer. No consent by Seller and/or Shareholder shall
be required for any assignment or reassignment of the rights of Buyer under this
Article XIII.
ARTICLE XIV. PRESERVATION OF HOSPITAL BUSINESSES
AND NONCOMPETE RESTRICTIONS
14.1 Covenant Not to Compete. Seller, Shareholder, and their respective
affiliates hereby covenant and agree with Buyer that during the "Noncompete
Period" within the "Noncompete Area" they shall not directly or indirectly, (a)
acquire, lease, manage, consult for, finance or own any part of (as member,
shareholder or partner) any health care facility which provides any services
similar to the services provided by the Hospital or what are normally provided
by a suburban hospital, including but not limited to skilled nursing,
obstetrics, psychiatric, alcohol/chemical dependency, rural health, primary
care, urgent care, ambulatory surgery, diagnostics, psychiatric counseling or
any other health related services (provided, however, that Shareholder's
interest as secured lender with respect to that certain medical office building
located at 000 Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxx, shall not be deemed to be a
violation of this Section 14.1) or (b) solicit for employment or employ any
person who at Closing became an employee of Buyer, or (c) solicit for employment
or participation in any management
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services organization, preferred provider organization or other organization or
entity, any physician, physician group, or other health care provider with whom
Buyer contracts in connection with the Hospital. The "Noncompete Period." shall
commence at the Closing and terminate on the second anniversary thereof. The
"Noncompete Area" shall mean the area within a fifty (50)-mile radius of the
Hospital. Ownership of less than five percent (5%) of the stock of a publicly
held company shall not be deemed a breach of this covenant.
14.2 Enforceability. In the event of a breach of Section 14.1 hereof,
Seller and Shareholder recognize that monetary damages shall be inadequate to
compensate Buyer and Buyer shall be entitled, without the posting of a bond or
similar security, to an injunction restraining such breach, with the costs
(including attorneys fees) of securing such injunction to be borne, jointly and
severally, by Seller and Shareholder. Nothing contained herein shall be
construed as prohibiting Buyer from pursuing any other remedy available to it
for such breach or threatened breach.
All parties hereto hereby acknowledge the necessity of protection
against the competition of Seller, Shareholder and their affiliates and that the
nature and scope of such protection has been carefully considered by the
parties. The period provided and the area covered are expressly represented and
agreed to be fair, reasonable and necessary. The consideration provided for
herein is deemed to be sufficient and adequate to compensate for agreeing to the
restrictions contained in Section 14.1 hereof. If, however, any court determines
that the foregoing restrictions are not reasonable, such restrictions shall be
modified, rewritten or interpreted to include as much of their nature and scope
as will render them enforceable.
ARTICLE XV. MISCELLANEOUS
15.1 Assignment. Following Closing, Buyer freely may assign any or all
rights or delegate any or all of its obligations under this Agreement without
the express written consent of Seller or Shareholder. No assignment shall
relieve the assignor of any liability or obligation hereunder. Neither Seller
nor Shareholder may assign any rights or delegate any obligations under this
Agreement without the prior written consent of Buyer, and any prohibited
assignment or delegation will be null and void.
15.2. Other Expenses. Except as otherwise expressly provided in this
Agreement, Seller and Shareholder shall pay all of their own expenses in
connection with the negotiation, execution and implementation of the
transactions contemplated by this Agreement and Buyer and Parent shall pay all
of their own expenses in connection with the negotiation, execution, and
implementation of the transactions contemplated by this Agreement. State and
local sales and use taxes incurred in connection with the transactions
contemplated under this Agreement shall be borne and timely paid by Buyer. Buyer
will pay the cost of all appraisals and shall pay all transfer taxes. Buyer will
pay the cost of the environmental assessment set out in Section 6.20.
15.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed
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to have been duly given: (a) if delivered personally or sent by facsimile, on
the date received, (b) if delivered by overnight courier, on the day after
mailing, and (c) if mailed, five (5) days after mailing with postage prepaid.
Any such notice shall be sent as follows:
To Seller and Shareholder:
Healthcare America, Inc.
0000 X. Xxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attn: President
with a copy to:
Xxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, XX 00000
To Buyer:
NAHC of Tennessee, Inc.
000 Xxxxxxxx Xxxxx
Xxxxx 000
P.O. Box 3689
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, President & CEO
with a copy to:
Xxxxxx X. Xxxx, XX
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
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15.4 Controlling Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Tennessee.
15.5 Headings. Any table of contents and paragraph headings in this
Agreement are for convenience of reference only and shall not be considered or
referred to in resolving questions of interpretation.
15.6 Benefit. Subject to Section 15.1 hereof, this Agreement shall be
binding upon and shall inure to the exclusive benefit of the respective heirs,
legal representatives, successors and assigns of the parties hereto and Buyer
shall require any of its successors to assume Buyer's obligations under this
Agreement. This Agreement is not intended to, nor shall it, create any rights in
any other party.
15.7 Partial Invalidity. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
15.8 Waiver. Neither the failure nor any delay on the part of any
party hereto in exercising any rights, power or remedy hereunder shall operate
as a waiver thereof, or of any other right, power or remedy; nor shall any
single or partial exercise of any right, power or remedy preclude any further or
other exercise thereof, or the exercise of any other right, power or remedy.
15.9 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
15.10 Interpretation; Knowledge. All pronouns and any variation
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the person or entity, or the context, may require.
Further, it is acknowledged by the parties that this Agreement including
exhibits has undergone several drafts with the negotiated suggestions of both;
and, therefore, no presumptions shall arise favoring either party by virtue of
the authorship of any of its provisions or the changes made through revisions.
15.11 Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire agreement between the parties hereto with regard to the
matters contained herein and it is understood and agreed that all previous
undertakings, negotiations and agreements between the parties are merged herein.
This Agreement may not be modified orally, but only by an agreement in writing
signed by Buyer, Parent, Seller and Shareholder. Except as expressly provided
herein, no waiver of any of the provisions of this Agreement shall be valid
unless it is in writing and signed by the party against which it is sought to be
enforced.
15.12 Further Assurance of Seller and Shareholder After Closing.
Subsequent to the Closing, Seller and Shareholder shall from time to time, at
Buyer's request and expense, execute and deliver such other instruments of
conveyance and transfer, and take such other action as
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Buyer may reasonably request, in order to more effectively sell, transfer,
assign and deliver and vest in Buyer the benefits of, title to and possession of
the Assets.
15-13 Legal Fees and Costs. In the event any party hereto elects to
incur legal expenses to enforce or interpret any provision of this Agreement,
the prevailing party will be entitled to recover such legal expenses, including,
without limitation, attorney's fees, costs and necessary disbursements, in
addition to any other relief to which such party shall be entitled.
15.14 Exclusivity. Buyer contemplates the expenditure of substantial
sums of time and money in connection with legal, accounting, financial, and due
diligence work to be performed in conjunction with the transactions contemplated
under this Agreement. For purposes of inducing Buyer to proceed with the
transactions, Seller and Shareholder shall not, directly or indirectly, without
Buyer's prior written consent, initiate or hold discussions with any person or
entity (other than Buyer) concerning a purchase, affiliation, or lease of all or
a material part of the Assets, directly or indirectly, whether by sale of
capital stock, merger, consolidation, sale or lease of material assets,
affiliation, joint venture, or other material transaction for the period of time
from the date hereof until the termination of this Agreement. Seller will
promptly notify Buyer by telephone and thereafter confirm in writing via fax, if
any such discussions or negotiations are sought to be initiated with, or any
such proposal or possible proposal is received directly or indirectly, by
Seller. In the event Seller receives an unsolicited offer related to a type of
transaction described in this paragraph, Seller shall promptly inform the person
making such unsolicited offer of the existence of its obligations under this
Section 15.14 but shall not disclose the contents of this Section or this
Agreement, and Seller shall reject such offer and promptly notify Buyer thereof.
15.15 Seller's Knowledge. Whenever the term "Seller's or Shareholder's
knowledge", or the like is used in this Agreement, the Seller or the Shareholder
(as the case may be) shall be deemed to have the knowledge of the persons listed
on Exhibit 15.15 without any duty of due inquiry.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"SELLER":
EASTWOOD HOSPITAL, INC.
By:
------------------------------------
Title:
---------------------------------
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"SHAREHOLDER":
HEALTHCARE AMERICA, INC.
By:
------------------------------------
Title:
---------------------------------
"BUYER":
NAHC OF TENNESSEE, INC.
By:
------------------------------------
Title:
---------------------------------
"PARENT":
NEW AMERICAN HEALTHCARE CORPORATION
By:
------------------------------------
Title:
---------------------------------
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