SUN CITY CARDIAC CENTER
ASSOCIATES
SUN CITY CARDIAC CENTER,
INC.
Dated as of September 29,
2009
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DEFINITIONS;
INTERPRETATION
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1
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1.1
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Definitions
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1
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1.2
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Interpretation
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8
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SALE OF ASSETS
AND CERTAIN RELATED MATTERS
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8
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2.1
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Sale and
Transfer of the Assets
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8
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2.2
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Excluded
Assets
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9
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FINANCIAL
ARRANGEMENTS
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10
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3.1
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Purchase
Price
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10
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3.2
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Assumed
Liabilities
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10
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3.3
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Excluded
Liabilities
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10
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3.4
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Post Closing
Purchase Price Adjustment
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11
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3.5
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Allocation of
Purchase Price
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13
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3.6
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Prorations and
Utilities
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13
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3.7
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Tax
Proration
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13
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3.8
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Interest
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13
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3.9
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Banner Interim
Management Agreement
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13
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CLOSING
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13
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4.1
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Closing
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13
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4.2
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Deliveries of
Seller at Closing
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14
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4.3
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Deliveries of
Buyer at Closing
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15
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4.4
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Additional
Acts
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15
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REPRESENTATIONS
AND WARRANTIES OF SELLER
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15
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5.1
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Status of
Seller
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15
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5.2
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Powers;
Consents; Absence of Conflicts With Other Agreements,
Etc.
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16
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5.3
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Binding
Agreement
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16
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5.4
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[Intentionally
Left Blank]
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16
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5.5
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Financial
Statements
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16
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5.6
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Contracts; No
Defaults
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17
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5.7
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Real
Property
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17
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5.8
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Title
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17
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5.9
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Condition of
Assets
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18
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5.10
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Zoning
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18
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5.11
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Intellectual
Property
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18
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5.12
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Insurance
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19
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5.13
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Litigation or
Proceedings
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19
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5.14
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Governmental
Authorizations; Compliance
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19
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5.15
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Regulatory
Compliance; Improper Payments
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19
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5.16
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HIPAA
Matters
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20
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5.17
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Compliance
Program
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20
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5.18
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Medicare
Participation; Accreditation
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20
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5.19
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Intentionally
Omitted
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21
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5.20
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Reimbursement
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21
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5.21
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Medical Staff
Matters
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21
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5.22
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Statutory
Funds
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22
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5.23
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Controlled
Substances
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22
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5.24
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Intentionally
Omitted
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22
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i
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5.25
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Tax
Liabilities
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22
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5.26
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ERISA
Compliance
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22
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5.27
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Employees and
Employee Relations
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23
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5.28
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Environmental
Matters
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24
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5.29
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Medical
Waste
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24
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5.30
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Brokers
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24
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5.31
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Absence of
Certain Changes
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24
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5.32
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SCCC.
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26
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5.33
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No Other
Representations.
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26
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5.34
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Statements and
Other Documents Not Misleading
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26
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REPRESENTATIONS
AND WARRANTIES OF BUYER
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26
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6.1
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Authority of
Buyer
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26
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6.2
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Powers;
Consents; Absence of Conflicts With Other Agreements,
Etc.
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26
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6.3
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Binding
Agreement
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27
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6.4
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Litigation
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27
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6.5
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Brokers
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27
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6.6
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Buyer’s
Acknowledgement
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27
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6.7
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Statements and
Other Documents Not Misleading
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27
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CONDITIONS
PRECEDENT TO OBLIGATIONS OF BUYER
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27
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7.1
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Seller’s
Deliverables
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27
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7.2
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Compliance with
Agreement
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27
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7.3
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Representations
and Warranties
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28
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7.4
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Action/Proceeding
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28
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7.5
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Consents and
Approvals
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28
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7.6
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Absence of
Certain Changes
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28
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7.7
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Releases
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28
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7.8
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Payments to
SCCC
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28
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CONDITIONS
PRECEDENT TO OBLIGATIONS OF SELLER
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28
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8.1
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Buyer’s
Deliverables
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28
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8.2
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Compliance with
Agreement
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28
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8.3
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Action/Proceeding
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28
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8.4
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Representations
and Warranties
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29
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ADDITIONAL
AGREEMENTS AND COVENANTS
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29
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9.1
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Post-Closing
Access to Information
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29
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9.2
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Employee
Matters.
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29
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9.3
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[RESERVED]
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30
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9.4
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Notices and
Consents
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30
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9.5
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Notice of
Developments and Consents
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30
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9.6
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Affirmative
Covenants of Seller
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31
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9.7
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Negative
Covenants of Seller
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31
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9.8
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Noncompetition
Agreement
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32
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9.9
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Insurance
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33
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9.10
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Misdirected
Payments
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33
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9.11
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Use of
Controlled Substance Permit
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33
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INDEMNIFICATION
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34
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10.1
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Indemnification
by Seller
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34
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10.2
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Indemnification
by Buyer
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34
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10.3
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Survival/Indemnity Period
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35
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ii
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10.4
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Limitations
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35
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10.5
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Notice and
Procedure
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36
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10.6
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Exclusive
Remedy
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37
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10.7
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Disregarding
Materiality Exceptions
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37
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TERMINATION
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37
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11.1
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Termination
Events
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37
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11.2
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Effect of
Termination
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38
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GENERAL
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38
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12.1
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Notice
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38
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12.2
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Confidentiality; Public Announcement
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40
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12.3
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Cost of
Transaction
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40
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12.4
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Choice of Law;
Waiver of Jury Trial
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40
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12.5
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Benefit/Assignment
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41
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12.6
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Waiver of
Breach
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41
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12.7
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Severability
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41
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12.8
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Entire
Agreement/Amendment; Counterparts
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41
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12.9
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Further
Assurances
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41
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12.10
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No Third Party
Beneficiaries
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41
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12.11
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Divisions and
Headings
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41
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12.12
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No
Inferences
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42
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iii
THIS ASSET
PURCHASE AGREEMENT (“ Agreement ”) is made
and entered into as of September 29, 2009, by and among SUN CITY
CARDIAC CENTER ASSOCIATES, an Arizona general partnership (“
Seller ”), and BANNER HEALTH, an Arizona nonprofit
corporation (“ Buyer ” and collectively with the
Seller, the “ Parties ” and each a “
Party ”). Sun City Cardiac Center, Inc., MedCath
Partners, LLC and MedCath Incorporated are parties to this
Agreement solely for the purposes of Section 9.8 and
Article X hereof.
WHEREAS ,
Seller and/or Seller-Related Parties own and operate a business
(the “ Business ”) providing cardiac services at
and from its location at 10415 W Thunderbird Blvd, Sun City,
Arizona (the “ Center ”);
WHEREAS ,
Buyer owns and operates Banner Boswell Medical Center, Sun City,
Arizona, and desires to add the Center to its operations;
and
WHEREAS ,
Buyer desires to acquire substantially all the assets of Seller
and/or Seller-Related Parties primarily or exclusively used and/or
useful in the Business, and Seller and the Seller-Related Parties
desire to sell those assets to Buyer, all as more fully set forth
below.
NOW ,
THEREFORE , for and in consideration of the premises, and
the agreements, covenants, representations and warranties set forth
below, and other good and valuable consideration, the receipt and
adequacy all of which are forever acknowledged, the parties hereby
agree as follows:
1. DEFINITIONS; INTERPRETATION
1.1
Definitions Capitalized terms used in this Agreement
shall have the following meanings:
“ Accrued
PTO ” has the meaning set forth in
Section 3.2(a) .
“
Affiliate ” means as to the Person in question, any
Person that directly or indirectly controls, is controlled by, or
is under common control with the Person in question and any
successors or assigns of such Persons; and the term
“control” means possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person whether through ownership of voting
securities, by contract or otherwise. For purposes of this
Agreement, “Affiliates” of Seller shall include,
without limitation, the Seller-Related Parties and MedCath
Corporation.
“ Agency
Settlements ” has the meaning set forth in
Section 2.1(vii) .
“
Agreement ” has the meaning set forth in the
Preamble.
“
Assets ” has the meaning set forth in
Section 2.1 .
“
Assignment and Assumption Agreement ” has the meaning
set forth in Section 4.2(b) .
“ Assumed
Contracts ” has the meaning set forth in
Section 2.1(iv) .
“ Assumed
Liabilities ” has the meaning set forth in
Section 3.2(a) .
1
“ Banner
Interim Management Agreement ” has the meaning set forth
in Section 3.9 .
“ Balance
Sheet Date ” means August 31, 2009.
“ Benefit
Plans ” means all “employee benefit plans,”
as defined in Section 3(3) of ERISA, all “specified
fringe benefit plans” as defined in Section 6039D of the
Code and the rules and regulations promulgated thereunder, and all
other stock purchase, stock option, equity-based, retention bonus,
bonus, incentive compensation, deferred compensation, profit
sharing, severance, change in control, supplemental unemployment,
layoff, salary continuation, retirement, pension, health, life
insurance, disability, group insurance, vacation, holiday, sick
leave, fringe benefit, welfare and other employee benefit plans or
employment (including severance and change in control) agreements,
programs, policies or other arrangements (whether formal or
informal, oral or written, qualified or non-qualified, and whether
or not subject to ERISA), including any funding mechanism therefor
or otherwise, (i) which are currently, or at any time within
the last six years were, maintained or contributed to by Seller or
any ERISA Affiliate, (ii) under which any employee or former
employee of Seller or any ERISA Affiliate has any present or future
right to benefits or (iii) under which Seller or any ERISA
Affiliate has any present or future liability.
“ Bill of
Sale ” has the meaning set forth in
Section 4.2(a) .
“
Business ” has the meaning set forth in the
Recitals.
“
Business Intellectual Property ” means the
Intellectual Property Assets used by Seller in the
Business.
“
Buyer ” has the meaning set forth in the
Preamble.
“ Buyer
Basket ” has the meaning set forth in
Section 10.4(a)(i) .
“ Buyer
Indemnified Parties ” has the meaning set forth in
Section 10.1 .
“ Cap
” has the meaning set forth in
Section 10.4(a)(iii) .
“ Cash
Purchase Price ” has the meaning set forth in
Section 3.1 .
“
Center ” has the meaning set forth in the
Preamble.
“
Claims ” has the meaning set forth in
Section 10.5(a) .
“
Closing ” has the meaning set forth in
Section 4.1 .
“ Closing
Cash Payment Amount ” has the meaning set forth in
Section 3.1 .
“ Closing
Date ” has the meaning set forth in
Section 4.1 .
“ Closing
Date Accrued PTO ” means the Accrued PTO as of the
Effective Time for employees who are hired by Buyer as of
Closing.
“ Closing
Date Working Capital ” means an amount equal to the Value
of Inventory.
2
“ CMS
” means the Centers for Medicare and Medicaid
Services.
“
COBRA ” means Title I, Subtitle B, Part 6, of
ERISA.
“
Code ” means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder.
“
Competing Business ” has the meaning set forth in
Section 9.8(a) .
“
Confidential Information ” has the meaning set forth
in Section 12.2 .
“
Contracts ” has the meaning set forth in
Section 5.6 .
“ Covered
Entities ” has the meaning set forth in
Section 5.16(a) .
“ Draft
Computation ” has the meaning set forth in
Section 3.4(b) .
“
Effective Time ” has the meaning set forth in
Section 4.1 .
“
Employees ” has the meaning set forth in
Section 5.27(b) .
“
Encumbrances ” means any mortgages, liens,
restrictions, agreements, claims, easements, encroachments, rights
of way, building use, exceptions, variances, reservations, pledges,
security interests, conditional sales agreements, rights of first
refusal, options, obligations, restrictions, liabilities, charges
or limitations of any nature.
“
Environmental Claim ” means any claim, action, cause
of action, investigation or notice (in each case in writing or, if
not in writing, to the Knowledge of Seller) by any Person alleging
potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from the presence,
or release or threat of release into the environment, of any
Materials of Environmental Concern at any location of the Business,
whether or not owned or operated by Seller.
“
Environmental Laws ” means, as they exist on the date
hereof, all applicable United States federal, state, local and
non-U.S. laws, regulations, codes and ordinances relating to
pollution or protection of human health (as relating to the
environment or the workplace) and the environment (including
ambient air, surface water, ground water, land surface or
sub-surface strata), including laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern, including, but not limited to, Comprehensive
Environmental Response, Compensation and Liability Act (“
CERCLA ”), 42 U.S.C. § 9601 et seq., Resource
Conservation and Recovery Act (“ RCRA ”), 42
U.S.C. § 6901 et seq., Toxic Substances Control Act (“
TSCA ”), 15 U.S.C. § 2601 et seq., Occupational
Safety and Health Act (“ OSHA ”), 29 U.S.C.
§ 651 et seq., the Clean Air Act, 42 U.S.C. § 7401 et
seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., each as
may have been amended or supplemented, and any applicable
environmental transfer statutes or laws.
“
Equipment Lease ” has the meaning set forth in
Section 4.2(j) .
“
ERISA ” means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated
thereunder.
3
“ ERISA
Affiliate ” means (a) any company, entity, trade or
business that is required to be aggregated with Seller under Code
Sections 414(b), (c) or (m); and (b) any other
company, entity, trade or business that has adopted or is
participating in any Benefit Plan related to Seller.
“
Excluded Assets ” has the meaning set forth in
Section 2.2 .
“
Excluded Contracts ” has the meaning set forth in
Section 2.1(iv) .
“
Excluded Liabilities ” has the meaning set forth in
Section 3.3 .
“ Federal
Healthcare Programs ” means the Medicare, Medicaid and
TRICARE programs.
“ Federal
Privacy Regulations ” means the regulations contained in
45 C.F.R. Parts 160 and 164, as amended.
“ Federal
Transaction Regulations ” means the regulations contained
in 45 C.F.R. Parts 160 and 162, as amended.
“
Financial Statements ” has the meaning set forth in
Section 5.5(a) .
“
Firm ” has the meaning set forth in
Section 3.4(b) .
“
GAAP ” means generally accepted accounting principles
applied on a consistent basis.
“
Governmental Authority ” means any nation or
government, any state, local authority or other political
subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of government,
including any governmental authority, bureau, agency, department,
board, commission or instrumentality of the United States, any
State of the United States or any political subdivision thereof,
any contractor of a governmental or quasi-governmental entity, and
any tribunal or arbitrator(s) of competent jurisdiction, and any
self-regulatory organization.
“
Governmental Authorization ” means any approval,
certificate of authority, certificate of need, accreditation,
license, registration, permit, franchise, right, or other
authorization issued, granted, given or otherwise made available by
or under the authority of any Governmental Authority or pursuant to
any law.
“ Health
Care Laws ” has the meaning set forth in
Section 5.15(a) .
“
HIPAA ” means the Health Insurance Portability and
Accountability Act of 1996, as codified at 42 U.S.C.
Sections 1320d through d-8.
“ Hired
Employees ” shall have the meaning set forth in
Section 9.2(c) .
“
Indebtedness ” shall mean any long-term indebtedness
(including the current portion thereof), any indebtedness for
borrowed money, including from a bank or other financial
institution, any intercompany or related party indebtedness,
capital lease obligations, any guaranty, and letters of
credit.
“
Indemnitee ” has the meaning set forth in
Section 10.5(a) .
“
Indemnitor ” has the meaning set forth in
Section 10.5(a) .
4
“
Intellectual Property Assets ” means all intellectual
property rights (common law, statutory or otherwise), including
patents (including all reissues, divisions, continuations and
extensions), trademarks, service marks, trade names, copyrights,
and registrations and applications for any and all of the
foregoing, internet domain names, formulae, algorithms, designs,
inventions, methodologies, specifications, know-how, trade secrets,
computer software programs and code (both object and source),
development tools and proprietary information, technologies and
processes, and all documentation and media describing or relating
to the above, in any format, whether hard copy or machine-readable
only.
“
Interest Commencement Date ” has the meaning set forth
in Section 3.8 .
“
Knowledge ”, “ Known ” or similar
terms, whether or not capitalized, shall mean (a) with respect
to a natural Person, if (i) the Person is actually aware of
the fact or matter, or (ii) a prudent Person in a similar
position would be expected to discover or otherwise become aware of
the fact or matter in the course of conducting a reasonable
investigation regarding the accuracy of the representations and
warranties made herein; (b) with respect to Seller, if any of
the Persons identified on Schedule 1.1 has
knowledge of that fact or other matter (as set forth in
(a) above) and (c) with respect to Buyer, if any of the
Persons identified on Schedule 1.2 has knowledge of
that fact or other matter (as set forth in (a) above). A
Person shall be deemed to have conducted a reasonable investigation
if he or she makes inquiry of Persons actively employed by that
entity who have principal responsibility for those
matters.
“
Lease ” and “ Leased Real Property
” shall have the meanings set forth in
Section 5.7(a) .
“
Losses ” has the meaning set forth in
Section 10.1 .
“
Material Adverse Effect ” means any event, occurrence,
fact, condition, change or effect that (i) is, or is
reasonably likely in the future to be, individually or in the
aggregate, materially adverse to the business, operations, results
of operations, condition (financial or otherwise), properties
(including intangible properties), rights, obligations or assets of
Seller with respect to the Business, provided that none of the
following (individually or in combination) shall be deemed to
constitute, or shall be taken into account in determining whether
there has been, a Material Adverse Effect: (1) any adverse
effect resulting from changes in U.S. economic conditions;
(2) any adverse effect resulting from general changes or
developments in the industry in which Seller operates the Business;
(3) any adverse effect resulting from the announcement,
execution or delivery of this Agreement or the pendency or
consummation of the transactions contemplated hereby; (4) any
adverse effect resulting from any change in GAAP or the
interpretation thereof or any change in applicable laws;
(5) the failure by Seller to take any action prohibited by
this Agreement; unless, in the case of the foregoing clauses
(1) and (2), such changes or developments referred to therein
would materially disproportionately impact Seller with respect to
the operation of the Business relative to other industry
participants; or (ii) materially impairs or delays, or is
reasonably likely to materially impair or delay, the ability of
Seller to consummate the transactions contemplated by this
Agreement or to perform its obligations under this
Agreement.
“
Materials of Environmental Concern ” means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances
and hazardous wastes, medical waste, toxic substances, petroleum
and petroleum products and by-products, asbestos-containing
materials, PCBs, and any other chemicals, pollutants, substances or
wastes, in each case regulated under any Environmental
Law.
“ MedCath
Partners ” means MedCath Partners, LLC, a North Carolina
limited liability company.
“ Medical
Waste ” includes, but is not limited to,
(a) pathological waste, (b) blood, (c) sharps,
(d) wastes from surgery or autopsy, (e) dialysis waste,
including contaminated disposable equipment and
5
supplies,
(f) cultures and stocks of infectious agents and associated
biological agents, (g) contaminated animals, (h) isolation
wastes, (i) contaminated equipment, (j) laboratory waste
and (k) various other biological waste and discarded materials
contaminated with or exposed to blood, excretion, or secretions
from human beings or animals. “Medical Waste” also
includes any substance, pollutant, material, or contaminant listed
or regulated under the Medical Waste Tracking Act of 1988, 42
U.S.C. § 6992, et seq. (“ MWTA ”), and
applicable state law.
“ Medical
Waste Law ” means the following, including regulations
promulgated and orders issued thereunder, all as may be amended
from time to time: the MWTA, the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 USCA § 2501 et seq., the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA §
1401 et seq., The Occupational Safety and Health Act, 29 USCA
§ 651 et seq., the United States Department of Health and
Human Services, National Institute for Occupations Self-Safety and
Health Infectious Waste Disposal Guidelines, Publication No.
88-119, and any other federal, state, regional, county, municipal,
or other local laws, regulations, and ordinances insofar as they
purport to regulate Medical Waste, or impose requirements relating
to Medical Waste.
“
Objection Notice ” has the meaning set forth in
Section 3.4(b) .
“ OIG
” has the meaning set forth in Section 5.17
.
“
Ordinary Course ” has the meaning set forth in
Section 5.31 .
“
Party ” has the meaning set forth in the
Preamble.
“
Permitted Encumbrances ” means (1) any
Encumbrances for ad valorem Taxes which are to be prorated pursuant
to Section 3.7 and which are not yet due and payable or
which are being contested in good faith and for which full reserves
for the amount assessed have been recorded and paid to Buyer,
(2) Encumbrances imposed by applicable law and incurred in the
ordinary course of business for obligations not yet due and payable
(which do not significantly differ from such Encumbrances normally
imposed by law upon Seller in the ordinary course of business) to
lessors, carriers, warehousemen, laborers, materialmen and the
like, (3) rights of lessors under personal property leases to
which any Company is a party, (4) rights of licensors under
licenses to which Seller is a party; and (5) easements,
zoning, rights of way and similar Encumbrances on any real property
owned or occupied by Seller which do not individually or in the
aggregate materially impact Seller’s use of the Real
Property.
“
Person ” means any individual, corporation, company,
body corporate, association, partnership, limited liability
company, firm, joint venture, trust or Governmental
Authority.
“
Prohibited Activities ” has the meaning set forth in
Section 9.8(a) .
“
Provider Agreements ” has the meaning set forth in
Section 5.18 .
“
Provider Numbers ” has the meaning set forth in
Section 5.18 .
“
Purchase Price ” has the meaning set forth in
Section 3.1 .
“ Real
Estate Laws ” means all applicable zoning and other land
use and similar laws, codes, ordinances, rules, regulations and
orders, including the Americans With Disabilities Act (other than
Environmental Laws).
6
“ Real
Property ” means real property used by Seller in the
operation of the Business, including easements appurtenant
benefiting Seller or the Business, together with all buildings,
improvements and fixtures thereon, all easements and other
appurtenances and rights thereto and together with any rights or
interests of Seller in any adjacent streets, rights of way or
drainage areas serving the Business.
“
Restricted Territory ” means Sun City, Arizona; Sun
City West, Arizona; and all areas within a 5 mile radius of the
Center.
“
SCCC ” means Sun City Cardiac Center, Inc., an Arizona
corporation.
“
Seller ” has the meaning set forth in the
Preamble.
“ Seller
Basket ” has the meaning set forth in
Section 10.4(a)(ii) .
“ Seller
Indemnified Parties ” has the meaning set forth in
Section 10.2 .
“ Seller
Parties ” has the meaning set forth in
Section 3.3(a) .
“
Seller-Related Parties ” means each of SCCC, MedCath
Partners, and MedCath Incorporated.
“
Separation Date ” has the meaning set forth in
Section 9.2(d) .
“ Target
Accrued PTO ” means an amount equal to Fifty Seven
Thousand Eight Hundred Eighty Nine and 32/100 Dollars ($57,889.32),
which is the aggregate amount of Accrued PTO for each employee of
Seller and its Affiliates in respect of the Business as of
August 29, 2009. Schedule 1 sets forth the
calculation of the Target Accrued PTO.
“ Target
Working Capital ” means an amount equal to One Hundred
Sixty Thousand Three Hundred Three and No/100 Dollars
($160,303.00).
“ Tax
Allocation ” has the meaning set forth in
Section 3.5 .
“
Taxes ” means (i) any and all federal, state,
local, foreign and other net income, gross income, gross receipts,
sales, use, ad valorem, unclaimed property, transfer, franchise,
profits, license, lease, rent, service, service use, withholding,
payroll, employment, excise, severance, privilege, stamp,
occupation, premium, property, windfall profits, alternative
minimum, estimated, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
with respect thereto, (ii) any liability for payment of
amounts described in clause (i) as a result of transferee
liability or otherwise through operation of law, and (iii) any
liability for the payment of amounts described in clauses
(i) or (ii) as a result of any tax sharing, tax indemnity
or tax allocation agreement or any other express or implied
agreement to indemnify any other Person.
“ Tax
Return ” means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
“ Third
Party Intellectual Property Assets ” has the meaning set
forth in Section 5.11(b) .
“ Value
of Inventory ” has the meaning set forth in
Section 3.4(a) .
“ WARN
Act ” means the Worker Adjustment and Retraining
Notification Act, as amended.
7
1.2
Interpretation In this Agreement, unless the context
otherwise requires:
(a) References
to this Agreement are references to this Asset Purchase Agreement
and to the Schedules and Exhibits hereto;
(b) References
to Articles and Sections are references to articles and sections of
this Agreement;
(c) References
to any Party to this Agreement shall include references to its
successors and permitted assigns;
(d) References
to a judgment shall include references to any order, writ,
injunction, decree, determination or award of any court or
tribunal;
(e) The
terms “hereof,” “herein,”
“hereby,” and any derivative or similar words will
refer to this entire Agreement;
(f) References
to any document (including this Agreement) are references to that
document as amended, consolidated, supplemented, novated or
replaced by the Parties from time to time;
(g) References
to any law are references to that law as of the date hereof and the
Closing Date, and all rules and regulations promulgated
thereunder;
(h) The
word “including” shall mean including, without
limitation; and
(i) References
to a gender include all other genders, and references to the
singular refer to the plural and vica versa, as the context so
requires.
2. SALE
OF ASSETS AND CERTAIN RELATED MATTERS
2.1 Sale
and Transfer of the Assets . Subject to the terms and
conditions of this Agreement, Seller agrees to sell, transfer,
assign, convey and deliver to Buyer, and Buyer agrees to purchase
and acquire at Closing all assets, tangible and intangible, real,
personal or mixed, other than the Excluded Assets, owned or leased
by Seller or any Affiliate of Seller and used primarily or
exclusively in the Business, including, without limitation, the
following items (collectively, the “ Assets
”):
(i) all
equipment, whether movable or attached to the Real Property,
vehicles, furniture and furnishings identified in
Schedule 2.1(i) ;
(ii) all
supplies and inventory;
(iii) subject
to applicable law, all originals or copies of current financial,
patient, medical staff and personnel records relating to the
Business and personnel employed or engaged by Buyer at the
Closing;
(iv) all
right, title and interest of Seller in, to or under all
commitments, contracts, leases, purchase orders and agreements
outstanding in respect of the Business or that otherwise relate to
the Assets other than the contracts described in
Section 2.2 or identified on
Schedule 2.1(iv) as being the “
Excluded Contracts ” (collectively, the “
Assumed Contracts ”);
8
(v) Seller’s
goodwill in respect of the Business;
(vi) all
“prepaid but not yet earned” revenue of
Seller;
(vii) rights
to settlements and retroactive adjustments, positive or negative if
any, for periods starting on or after the Effective Time arising
under the terms of the Medicare program, the TRICARE program or the
Medicaid program of any state, including AHCCCS, and against any
third party payor programs which settle upon a basis other than an
individual claims basis (“ Agency Settlements
”); and
(viii) Seller’s
right to use all Business Intellectual Property Assets.
2.2
Excluded Assets . Notwithstanding anything herein to the
contrary, the following assets that are associated with
Seller’s operations of the Business are not intended by the
Parties to be a part of the Assets and shall be excluded from such
purchase and the definition of the Assets (collectively, the
“ Excluded Assets ”):
(i) all
cash and cash equivalents;
(ii) all
rights to Agency Settlements, if any, for periods ending on or
prior to the Effective Time;
(iii) Seller’s
records books, minute books, tax records, and any records that by
law Seller is required to retain in its possession (copies of which
shall be given to Buyer);
(iv) all
assets, rights, funds, contracts, agreements and insurance policies
in connection with any Benefit Plan described on
Schedule 5.26 ;
(v) all
of Seller’s insurance policies and proceeds and any tax
refunds arising in connection with the Business;
(vi) all
accounts receivable relating to services rendered by Seller prior
to the Effective Time, which it will be the sole obligation of
Seller to collect;
(vii) Seller’s
Provider Numbers and other licenses and Governmental
Authorizations;
(viii) all
claims, causes of action and judgments in favor of Seller relating
to the Business or the Assets;
(ix) all
of Seller’s deferred charges, advance payments, prepaid and
deferred items (including prepaid rent), credits, rebates due from
suppliers, security and other deposits (including without
limitation any deposits with respect to the Leased Real Property),
claims for refunds, rights of offset, and credits of all kinds with
respect to the Business;
(x) all
managed care contracts and medical director agreements;
(xi) all
accounting and outpatient billing systems, software and related
computers;
(xii) all
other systems, software and related computers used by MedCath
Incorporated on an enterprise wide basis to manage its businesses,
including without limitation, the Business; and
9
(xiii) those
other assets set forth on Schedule 2.2
.
3. FINANCIAL ARRANGEMENTS
3.1
Purchase Price . Subject to the terms and conditions
hereof, in reliance upon the representations, warranties, covenants
and agreements of Seller and Seller-Related Parties herein set
forth and as consideration for the sale and purchase of the Assets
as herein contemplated, Buyer shall assume the Assumed Liabilities
and shall pay to Seller a cash purchase price (the “ Cash
Purchase Price ”) equal to (i) Sixteen Million Eight
Hundred Eighty Seven Thousand Nine Hundred Forty Seven and No/100
Dollars ($16,887,947.00) (the “ Closing Cash Payment
Amount ”) plus (ii) the amount, if any, by
which the Closing Date Working Capital exceeds the Target Working
Capital, minus (iii) the amount, if any, by which the
Target Working Capital exceeds the Closing Date Working Capital,
minus (iv) the amount, if any, by which the Closing
Date Accrued PTO exceeds the August Accrued PTO, and plus
(v) the amount, if any, by which the August Accrued PTO
exceeds the Closing Date Accrued PTO (the “ Purchase
Price ”). On the Closing Date, Buyer shall wire transfer
to an account designated by Seller an amount equal to the Closing
Cash Payment Amount. There shall be an adjustment to the Cash
Purchase Price as provided in Section 3.4
hereof.
3.2 Assumed
Liabilities . As of the Closing Date, Buyer shall assume
and agree to pay, perform and discharge in accordance with their
respective terms only the following obligations and liabilities of
Seller or the Seller-Related Parties in respect of the Business
(collectively, the “ Assumed Liabilities ”):
(i) the obligations and liabilities first arising during and
relating to the period after Closing under the Assumed Contracts,
and (ii) the obligations and liabilities of Seller as of the
Closing Date for accrued and unpaid vacation, sick and personal
leave (“ Accrued PTO ”) for those employees of
Seller as are hired by Buyer. Notwithstanding anything above to the
contrary, Buyer shall not be liable for (x) uncured defaults
in performance of the Assumed Liabilities for periods prior to
Closing; and (y) unpaid amounts in respect of the Assumed
Liabilities that are past due as of Closing in accordance with the
terms of the obligation and not accrued on the books of
Seller.
3.3
Excluded Liabilities . Except as expressly provided to
the contrary in Section 3.2 above, under no circumstance
shall Buyer be obligated to pay or assume, and none of the Assets
shall be or become liable for or subject to, any liability of
Seller, Seller’s Affiliates, or Seller-Related Parties
whether fixed or contingent, recorded or unrecorded, known or
unknown, and whether or not set forth on the Schedules hereto
(collectively, the “ Excluded Liabilities ”).
Without limiting the foregoing, Buyer shall not be obligated for
any of the following liabilities:
(a) any
obligation or liability accruing, arising out of, or relating to
acts or omissions of Seller or any of its Affiliates, or any of
their respective medical staff, employees, agents, vendors or
representatives (collectively with Seller, the “ Seller
Parties ”) in connection with the Assets, or the
operation of the Business, in each case occurring prior to
Closing;
(b) any
obligation or liability accruing, arising out of, or relating to
any breach of any Assumed Contract by any of the Seller Parties
prior to Closing;
(c) any
obligation or liability accruing, arising out of, or relating to
any Excluded Contract;
(d) any
accounts payable (including the current portion thereof) or
Indebtedness;
(e) any
liability or obligation for severance with respect to employees of
Seller or its Affiliates;
10
(f) any
obligation or liability accruing, arising out of, or relating to
any federal, state or local investigations, claims or actions with
respect to acts or omissions (or suspected or alleged acts or
omissions) of Seller, any of its Affiliates or any of their
respective employees, medical staff, agents, or vendors prior to
Closing;
(g) any
civil or criminal obligation or liability accruing, arising out of,
or relating to any acts or omissions of Seller, any of its
Affiliates or any of their respective directors, officers,
employees and agents claimed to violate any laws;
(h) any
liabilities or obligations of Seller or any of its Affiliates of
every kind and nature, known and unknown, arising under the terms
of the Federal Healthcare Programs or any other third-party payor
programs or health insurers, in respect of, arising out of or as a
result of (i) periods on or prior to Closing; and (ii) the
consummation of the transactions contemplated hereby, including
claims for overpayments or other excessive reimbursement or
non-covered services or any penalties or sanctions relating
thereto;
(i) any
(i) Taxes arising or resulting from or in connection with
Seller’s ownership and/or operation of the Business and the
Assets for periods ending on or prior to the Closing Date and
(ii) any income Taxes resulting from or payable in connection
with the sale of the Assets pursuant to this Agreement;
(j) except
for the Accrued PTO, any liability with respect to Seller’s
employees relating to periods on or prior to Closing, including
liability for (A) any compensation, accrued payroll, Benefit
Plan (as described on Schedule 5.26 ) benefits,
pension, profit sharing, deferred compensation, or any other
employee health and welfare benefit plans, liability for any EEOC
claim, wage and hour claim, unemployment compensation claim or
workers’ compensation claim or personnel policy, including
those relating to any termination of employment, and all employee
wages and benefits, (B) any payroll taxes, or (C) any
liability arising on or prior to the Closing Date under the WARN
Act;
(k) liabilities
for expenses incurred by Seller incidental to the preparation of
this Agreement, the preparation or delivery of materials or
information requested by Buyer, or the consummation of the
transactions contemplated hereby, including all broker, counsel and
accounting fees or any account payable that is attributable to
legal and accounting fees and similar costs incurred by Seller
which are directly related to the sale of any of the
Assets;
(l) liabilities
arising from or in connection with (i) any order of any
Governmental Authority, (ii) the violation of any law,
(iii) the violation of any integrity or compliance agreement
of any Federal Healthcare Program, each of the foregoing involving
Seller or relating to or arising in connection with the Business or
the use, operation, ownership or possession of the Assets prior to
Closing;
(m) liabilities
relating to any of the Excluded Assets; and
(n) any
other liability, fixed or contingent, known or unknown, relating to
or arising out of the ownership, operation or use of the Business
or the Assets prior to the Closing unless expressly included as an
Assumed Liability.
3.4 Post
Closing Purchase Price Adjustment .
(a) On
September 30, 2009, Seller shall conduct its customary fiscal
year end physical inventory of the supplies and inventory on hand
at the Center. Buyer shall be entitled to observe
11
such inventory
count. Based on such physical inventory, the value of inventory and
supplies shall be determined by applying Seller’s normal
accounting methodologies and procedures, and Seller shall prepare a
schedule thereof (the “ Value of Inventory ”).
The amount of the Value of Inventory shall be increased or
decreased, as appropriate, to reflect the value of any additions
to, or deletions from, the inventory and supplies of the Center
between the date of the physical inventory and the Effective
Time.
(b) Within
30 days after the Closing Date, Seller shall prepare, and
deliver to Buyer, (i) Seller’s determinations of the Closing
Date Working Capital, (ii) Seller’s calculation of the
Closing Date Accrued PTO, and (iii) Seller’s calculation
of the actual Cash Purchase Price based upon such Closing Date
Working Capital and Closing Date Accrued PTO (collectively, the
“ Draft Computation ”). Seller will make
available to Buyer and its auditors all records and work papers
used in preparing the Draft Computation. If Buyer disagrees with
any aspect of the Draft Computation, Buyer may, within 30 days
after receipt of the Draft Computation, deliver a notice (an
“ Objection Notice ”) to Seller setting forth
Buyer’s determination of the Closing Date Working Capital
and/or Closing Date Accrued PTO and Buyer’s calculation of
the actual Cash Purchase Price. If Buyer does not deliver an
Objection Notice to Seller within 30 days after receipt of the
Draft Computation, then the Parties will be deemed to have agreed
to the Draft Computation and such computations shall be deemed to
be finally determined as set forth therein. Seller and Buyer shall
use reasonable efforts to resolve any disagreements as to the Draft
Computation and the Objection Notice, but if they do not obtain a
final resolution within 30 days after Seller has received the
Objection Notice, Seller and Buyer shall jointly retain an
independent accounting firm mutually agreed upon by Buyer and
Seller (the “ Firm ”) to resolve any remaining
disagreements. Seller and Buyer shall direct the Firm to render a
determination within 30 days after its retention and Seller,
Buyer and their respective agents shall cooperate with the Firm
during its engagement. The Firm may consider only those items and
amounts in the Draft Computation or Objection Notice which Seller
and Buyer are unable to resolve and in resolving any such
disagreements the Firm shall act as experts and not as arbitrators.
In resolving any disputed item, the Firm may not assign a value to
any item greater than the greatest value for such item claimed by
either party or less than the smallest value for such item claimed
by either party. The Firm’s determination shall be based
solely on written submissions by Seller and Buyer (i.e., not on
independent review) and on the definitions included herein. The
determination of the Firm shall be conclusive and binding upon
Seller, Buyer and the Sellers. Until the Firm makes its
determination, the costs and expenses of the Firm shall be borne
equally by Seller, on the one hand, and Buyer (on behalf of the
Sellers in accordance with their respective Allocation
Percentages), on the other hand; provided that, when the Firm makes
its determination, any costs and expenses (including costs and
expenses previously advanced) of the party whose determination of
the actual Cash Purchase Price was closest to the Firm’s
determination of the same shall be paid by the other
party.
(c) Post-Closing
Adjustment Payment.
(i)
Payment by the Buyer . If the final Cash Purchase Price as
determined in accordance with Section 3.4(b) is greater
than the Closing Cash Payment Amount, then within five
(5) business days after the final determination of the final
Cash Purchase Price, Buyer shall pay to Seller, by wire transfer or
delivery of other immediately available funds, an amount equal to
the product of such difference plus simple interest thereon from
the Closing Date to the date of payment at an interest rate equal
to 5.0% per annum; and
(ii)
Payment by Seller . If the final Cash Purchase Price is less
than the Closing Cash Payment Amount, then within five
(5) business days after the determination thereof, Seller
shall pay to Buyer, by wire transfer or delivery of other
immediately available funds, an amount equal to such difference
plus simple interest thereon from the Closing Date to the date of
payment at an interest rate equal to 5.0% per annum; and
12
(iii)
Dispute . If, pursuant to this Section 3.4 ,
there is a dispute as to the final determination of the final Cash
Purchase Price, Buyer, on the one hand, and Seller, on the other
hand, shall promptly pay to the other, as appropriate, such amounts
as are not in dispute, together with interest thereon, pending
final determination of such dispute pursuant to this
Section 3.4 .
3.5
Allocation of Purchase Price . The Parties agree that
Seller shall prepare an allocation of the Purchase Price (and all
other capitalized costs) among the Assets in accordance with
Section 1060 of the Code (and any similar provisions of state,
local or foreign law, as appropriate) (“ Tax
Allocation ”) and in accordance with the allocation
methodology set forth on Exhibit 3.5 . Within
120 days after the Closing Date, Seller shall deliver the Tax
Allocation to Buyer for review. Buyer shall notify Seller in
writing within thirty (30) days after receipt of the Tax
Allocation of any disagreement or objections Buyer may have with
the Tax Allocation which objection may be based only on the Tax
Allocation not having been prepared in a manner consistent with the
methodology set forth on Exhibit 3.5 , in which case
Buyer and Seller shall use good faith efforts to reach agreement.
In the event Buyer and Seller fail to agree within thirty
(30) days after Buyer so notifies Seller, then Buyer and
Seller shall promptly engage an accounting firm of national
reputation to resolve the dispute within sixty (60) days of
the engagement. Buyer and Seller shall report, act and file all Tax
Returns (including, but not limited to IRS Form 8594) in all
respects and for all purposes consistent with the Tax Allocation as
finally determined pursuant to this Section 3.5 .
Neither Buyer nor Seller shall take any position (whether in
audits, Tax Returns, or otherwise) that is inconsistent with the
Tax Allocation as finally determined pursuant to this
Section 3.5 , unless required to do so by applicable
law.
3.6
Prorations and Utilities . To the extent not otherwise
prorated pursuant to this Agreement, Buyer and Seller shall prorate
as of the Closing Date, any and all current real estate and
personal property lease payments, charges against the real estate,
power and utility charges and all other income and expenses that
are normally prorated upon the sale of a going concern.
3.7 Tax
Proration . Buyer and Seller shall prorate as of the
Closing Date any amounts with respect to (i) ad valorem taxes
on the Assets and (ii) property taxes on the Assets. If
current year tax assessments are not available, payments for ad
valorem and property taxes shall initially be determined based on
the previous year’s taxes and shall later be adjusted to
reflect the current year’s taxes when the tax bills are
finally rendered.
3.8
Interest . Unless otherwise provided herein to the
contrary, any payment required to be made by any Party pursuant to
this Agreement (including pursuant to Article 10 ), if
not paid on the date that payment is required to be made hereunder
(the “ Interest Commencement Date ”), shall
include interest from the Interest Commencement Date to the day
such payment is made, computed at a rate equal to the prime rate as
published in The Wall Street Journal on the Interest
Commencement Date plus two percent. The imposition of interest
shall not excuse the failure to make that payment.
3.9 Banner
Interim Management Agreement . Concurrently with the
Closing, Buyer and SCCC shall enter into an Interim Management
Agreement (the “ Banner Interim Management Agreement
”) providing for Buyer’s performance of services in
connection with the day-to-day operations of the Business for the
period set forth in that agreement.
4.1
Closing . The consummation of the sale and purchase of
the Assets and the other transactions contemplated by and described
in this Agreement (“ Closing ”) shall take place
at the offices of Mariscal Weeks McIntyre & Friedlander, P.A.,
2901 North Central, Suite 200, Phoenix, Arizona, or such other
place as shall be mutually agreed upon in writing by the Parties,
at 10:00 a.m., local time, on
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the first
business day following the satisfaction or waiver by the
appropriate Party of all the conditions to Closing specified in
Articles 7 and 8 hereof, or on another date as the
Parties may mutually designate (the “ Closing Date
”). Closing shall be effective as of the close of business as
of the Closing Date or at such other time as the Parties agree (the
“ Effective Time ”). Notwithstanding the
foregoing, the Parties anticipate a Closing Date of
September 29, 2009 with an Effective Time of 5:00 p.m. on
September 30, 2009.
4.2
Deliveries of Seller at Closing . At Closing and unless
otherwise waived in writing by Buyer, Seller shall deliver to Buyer
the following:
(a) a
Bill of Sale (the “ Bill of Sale ”), fully
executed by Seller, the form of which is attached hereto as
Exhibit 4.2(a) ;
(b) an
Assignment and Assumption Agreement (the “ Assignment and
Assumption Agreement ”), fully executed by Seller, the
form of which is attached hereto as Exhibit 4.2(b)
;
(c) a
copy of resolutions duly adopted by the board of directors or other
authorized governing body of Seller authorizing and approving the
transactions contemplated hereby, Seller’s performance of the
transactions contemplated hereby and the execution, delivery and
performance of this Agreement and the documents described herein to
which Seller is a party, certified as true and of full force as of
Closing by an appropriate officer of Seller;
(d) the
signature and incumbency of the officers of Seller authorized to
execute and deliver this Agreement and the other agreements and
documents that Seller is required to deliver on or before the
Closing Date pursuant to this Agreement, certified as true and
accurate as of Closing by an appropriate officer of
Seller;
(e) a
certificate of an officer of Seller certifying that each covenant
and agreement of Seller to be performed prior to or as of Closing
pursuant to this Agreement has been performed in all material
respects and that each of the representations and warranties of
Seller set forth herein is true and correct in all material
respects (except with respect to representations and warranties
that contain materiality or Material Adverse Effect qualifiers,
which representations and warranties shall be true and correct in
all respects) as of the Closing Date or, if made as of a specified
date, only as of such date;
(f) a
certificate of existence and good standing (or its functional
equivalent) of Seller from the Arizona Corporation Commission, to
the extent applicable, dated the most recent practical date prior
to Closing;
(g) an
assignment of the lease agreement for the Sun City, Arizona
Business facility located at 10415 W Thunderbird Blvd (the “
Business Lease Agreement ”) fully executed by the
Lessor and by Seller as Lessee, in substantially the form attached
hereto as Exhibit 4.2(g) ;
(h) the
Banner Interim Management Agreement in the form attached hereto as
Exhibit 4.2(h) ;
(i)
[Intentionally Omitted];
(j) the
Equipment Lease Agreement (the “ Equipment Lease
”) between Buyer and MedCath Partners in the form attached
hereto as Exhibit 4.2(j) ; and
(k) Memorandum
of Lease, in recordable form, for the Business Lease
Agreement.
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4.3
Deliveries of Buyer at Closing . At Closing and unless
otherwise waived in writing by Seller, Buyer shall deliver to
Seller the following:
(a) the
Closing Cash Payment Amount;
(b) the
Bill of Sale, the Assignment and Assumption Agreement, the Business
Lease Agreement and the corresponding Memorandum of Lease, the
Banner Interim Management Agreement, and the Equipment Lease
Agreement, each fully executed by Buyer;
(c) the
signature and incumbency of the officers of Buyer authorized to
execute and deliver this Agreement and the other agreements and
documents that Buyer is required to deliver on or before the
Closing Date pursuant to this Agreement, certified as true and
accurate as of Closing by an appropriate officer of
Buyer;
(d) a
certificate of an authorized officer of Buyer certifying that each
covenant and agreement of Buyer to be performed prior to or as of
Closing pursuant to this Agreement has been performed in all
material respects and that each of the representations and
warranties of Buyer set forth herein is true and correct in all
material respects (except with respect to representations and
warranties that contain materiality or Material Adverse Effect
qualifiers, which representations and warranties shall be true and
correct in all respects) as of the Closing Date or, if made as of a
specified date, only as of such date; and
(e) a
certificate of existence and good standing of Buyer from the
Arizona Corporation Commission, dated the most recent practical
date prior to Closing.
4.4
Additional Acts . From time to time after Closing,
Seller and Buyer shall execute and deliver other instruments of
conveyance and transfer, and take other actions as the other may
reasonably request, to convey and transfer more effectively full
right, title and interest to, to vest in, and to place Buyer in
legal and actual possession of any and all of the Assets, and to
pay to the appropriate Party hereto any payments received, as
contemplated by and in accordance with the terms of this Agreement.
In addition, the Parties will provide reasonable assistance to each
other by making records and personnel available in connection with
collection of accounts receivable and resolution of disputes and
similar matters, whether the matter arose before or after the
closing.
5. REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date
hereof, except as disclosed in the Schedules, Seller represents and
warrants to Buyer the following, but only with respect to the
Business, except as expressly noted otherwise, as of the date
hereof:
5.1 Status
of Seller . Seller is a general partnership validly
existing under the laws of the State of Arizona. Seller is duly
qualified or licensed to transact business in all jurisdictions
where required and in which it conducts business except where
failure to be so qualified would not have a Material Adverse
Effect. Seller has the requisite power and authority to enter into
this Agreement, perform its obligations hereunder and to conduct
its businesses as now being conducted. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
partnership action on the part of Seller.
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5.2 Powers;
Consents; Absence of Conflicts With Other Agreements, Etc.
The execution, delivery and performance of this Agreement and all
other agreements referenced in or ancillary hereto by Seller, and
the consummation of the transactions contemplated herein by
Seller:
(a) are
within Seller’s powers and are not in contravention of the
terms of any of its governing documents or any amendments
thereto;
(b) except
as set forth on Schedule 5.2 , will neither
constitute a violation of or a default under, or conflict with, any
term or provision of any Contract (as defined in Section 5.6
), or any other restriction of any kind to which Seller is a party
or by which Seller is bound, nor permit the acceleration of the
maturity of the Assumed Liabilities, or the creation of any
Encumbrance affecting any Assets;
(c) except
as set forth on Schedule 5.2 , do not require
Seller to obtain any approval or consent of, or give notice to or
make any filing with any Governmental Authority bearing on the
validity of this Agreement that is required by law or the
regulations of any such Governmental Authority; it being
acknowledged that Buyer’s intent is to take steps reasonably
necessary or appropriate to obtain any required licenses and
Governmental Authorizations to operate the Business;
(d) will
not violate any statute, law, rule or regulation of any
Governmental Authority to which Seller or the Assets may be
subject, the violation of which would have a Material Adverse
Effect; it being acknowledged that Buyer’s intent is to take
steps reasonably necessary or appropriate to obtain any required
licenses and Governmental Authorizations to operate the Business;
and
(e) will
not violate any judgment of any court or Governmental Authority to
which Seller or any Assets may be subject.
5.3 Binding
Agreement . This Agreement and all agreements contemplated
by this Agreement to which Seller is or shall become a party are
and will constitute the valid and legally binding obligation of
Seller and will be enforceable against Seller in accordance with
the respective terms hereof or thereof, except as enforceability
may be restricted, limited or delayed by applicable bankruptcy or
other laws affecting creditors’ rights generally and except
as enforceability may be subject to general principles of
equity.
5.4
[Intentionally Left Blank]
5.5
Financial Statements .
(a)
Schedule 5.5(a) hereto contains copies of the
following financial statements of Seller in respect of the Business
(the “ Financial Statements ”): (i) balance
sheets dated as of September 30, 2006, 2007 and 2008 and as of
the Balance Sheet Date and (ii) income statements for the
fiscal years ended September 30, 2006, 2007 and 2008 and for
the portion of 2009 ended on the Balance Sheet Date. The Financial
Statements have been prepared in accordance with GAAP, applied on a
consistent basis throughout the periods indicated. The Financial
Statements fairly present the financial condition and results of
operations of the Seller in respect of the Business as of the dates
and for the periods indicated thereon.
(b) With
the exception of the liabilities set forth on the Financial
Statements, the liabilities set forth on
Schedule 5.5(b) , and the liabilities incurred
in the ordinary course of the business of Seller since the date of
the most recent Financial Statements, Seller has no Knowledge of
any material
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liabilities
with respect to the Business of any kind that are to be reflected
on a balance sheet pursuant to GAAP.
5.6
Contracts; No Defaults . Attached hereto as
Schedule 5.6 is a list of all contracts,
agreements, commitments or obligations related to the Business or
the Assets (other than with respect to Excluded Assets), whether
written or oral, express or implied, to which Seller is a party or
by which Seller, the Business or the Assets are bound,
(i) that limits the right of the Seller or the Business to
engage in or to compete with any person or entity in any business;
(ii) for the purchase or sale of supplies, services, equipment, or
other items, or for the performance of services for others in
excess of Twenty-five Thousand and No/100 Dollars ($25,000) in any
one instance or over time and which may not be terminated on no
more than ninety (90) days’ notice; (iii) for the
lease of any property, tangible or intangible; or
(iv) otherwise material to the Assets or the operations of the
Business (the “ Contracts ”). Seller has
provided to Buyer true and complete copies of the Contracts. There
is not, under any of the Contracts, any existing default, event of
default or other event which, with or without due notice or lapse
of time or both, would constitute a default or event of default on
the part of Seller, except defaults, events of default and other
events as to which requisite waivers or consents have been obtained
or where the failure to obtain such requisite waiver or consent
would not be reasonably likely to cause a Material Adverse Effect.
Except as noted in Schedule 5.6 , all Contracts
are in full force and effect, to Seller’s Knowledge, there
has been no threatened cancellation, termination or nonrenewal
thereof, there are no outstanding disputes thereunder, each is with
an unrelated third party and was entered into on an arm’s
length basis in the ordinary course of business, and all will
continue to be binding in accordance with their terms as of the
Closing Date.
(a) Seller
owns no real property used by Seller in the operation of the
Business. A list and general description of the use of all
Business-related real property leased by Seller as lessee from any
third parties under any oral or written lease or license (each, a
“ Lease ”), is contained on
Schedule 5.7(a) hereto (the “ Leased
Real Property ”). Seller has a good and valid leasehold
interest in all of the Leased Real Property, free and clear of all
Encumbrances other than Permitted Encumbrances. There are no
agreements or amendments, oral or written, pertaining to the Leased
Real Property other than as set forth in the Leases referenced on
Schedule 5.7(a) . The Leased Real Property
constitutes all of the real property used by Seller in the
operation of the Business.
(b) To
Seller’s Knowledge, the Leased Real Property is in material
compliance with all Real Estate Laws. Seller has not received any
notice of violation from any Governmental Authority of any Real
Estate Law on the use, occupancy or operation of the Leased Real
Property. To Seller’s Knowledge, no Real Estate Law or any
restrictive covenant of record prohibits, limits or conditions the
use or operation of the Leased Real Property as currently used or
operated. To Seller’s Knowledge, Seller has all easements,
servitudes, and rights of way necessary for reasonable access to
the Leased Real Property. All utilities serving the Leased Real
Property are adequate to operate the Business in the manner it is
currently operating. Seller has received no written notice of any
action to alter the zoning or zoning classification or to condemn,
requisition or otherwise take all or any portion of the Leased Real
Property.
(a) Except
as disclosed on such Schedule 5.8 , Seller has
(i) good and marketable title to all of the owned Assets, free
and clear of all Enc
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