ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CHS/COMMUNITY HEALTH SYSTEMS, INC.
AND
THE HEALTH CARE AUTHORITY OF THE CITY OF HUNTSVILLE
January 20, 2026
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CHS/COMMUNITY HEALTH SYSTEMS, INC.
AND
THE HEALTH CARE AUTHORITY OF THE CITY OF HUNTSVILLE
January 20, 2026
TABLE OF CONTENTS
Page
1. |
PURCHASE OF ASSETS. |
1 |
1.1 |
Assets |
1 |
1.2 |
Excluded Assets |
3 |
1.3 |
Assumed Liabilities |
5 |
1.4 |
Excluded Liabilities |
5 |
1.5 |
Purchase Price |
8 |
1.6 |
Net Working Capital, Estimates and Audits |
8 |
1.7 |
Transition Patients; Medicaid Supplemental Programs; Medicaid Assessment Plan Tax |
10 |
1.8 |
Prorations |
11 |
2. |
CLOSING. |
12 |
2.1 |
Closing |
12 |
2.2 |
Actions of Seller at Closing |
12 |
2.3 |
Actions of Buyer at Closing |
13 |
3. |
REPRESENTATIONS AND WARRANTIES OF SELLER |
14 |
3.1 |
Existence and Capacity |
15 |
3.2 |
Powers; Consents; Absence of Conflicts With Other Agreements, Etc. |
15 |
3.3 |
Binding Agreement |
15 |
3.4 |
Financial Statements |
16 |
3.5 |
Absence of Certain Changes |
16 |
3.6 |
Licenses |
17 |
3.7 |
Government Programs, Accreditations, and Private Programs. |
18 |
3.8 |
Regulatory Compliance |
20 |
3.9 |
Equipment and Other Tangible Personal Property |
22 |
3.10 |
Real Property |
22 |
3.11 |
Title to and Sufficiency of Assets |
23 |
3.12 |
Employee Benefit Plans |
23 |
3.13 |
Litigation or Proceedings |
25 |
3.14 |
Environmental Laws |
25 |
3.15 |
Taxes |
26 |
1
TABLE OF CONTENTS
(continued)
Page
3.16 |
Employee Relations |
27 |
3.17 |
The Contracts |
27 |
3.18 |
Supplies |
28 |
3.19 |
Insurance |
28 |
3.20 |
Third Party Payor Cost Reports |
29 |
3.21 |
Medical Staff Matters |
29 |
3.22 |
Condition of Assets |
29 |
3.23 |
Experimental Procedures |
30 |
3.24 |
Intellectual Property |
30 |
3.25 |
Compliance Program |
30 |
3.26 |
Certificates of Need |
30 |
3.27 |
Subsidiaries |
31 |
4. |
REPRESENTATIONS AND WARRANTIES OF BUYER |
31 |
4.1 |
Existence and Capacity |
31 |
4.2 |
Powers; Consents; Absence of Conflicts With Other Agreements, Etc. |
31 |
4.3 |
Binding Agreement |
32 |
4.4 |
Availability of Funds |
32 |
5. |
COVENANTS OF SELLER PRIOR TO CLOSING |
32 |
5.1 |
Information |
32 |
5.2 |
Operations |
33 |
5.3 |
Negative Covenants |
33 |
5.4 |
Governmental Approvals |
34 |
5.5 |
Antitrust Matters |
34 |
5.6 |
Additional Financial Information |
35 |
5.7 |
No-Shop Clause |
35 |
5.8 |
Efforts to Close |
36 |
5.9 |
Contract Consents |
36 |
5.10 |
Employee List |
36 |
6. |
COVENANTS OF BUYER PRIOR TO CLOSING |
36 |
6.1 |
Governmental Approvals |
36 |
6.2 |
Antitrust Matters |
37 |
2
TABLE OF CONTENTS
(continued)
Page
6.3 |
Title Commitment and Surveys |
37 |
6.4 |
Efforts to Close |
38 |
7. |
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER |
38 |
7.1 |
Representations/Warranties |
38 |
7.2 |
Governmental Approvals |
39 |
7.3 |
Title Policy |
39 |
7.4 |
Actions/Proceedings |
39 |
7.5 |
No Material Adverse Change |
39 |
7.6 |
Insolvency |
39 |
7.7 |
Material Consents |
39 |
7.8 |
Vesting/Recordation |
40 |
7.9 |
Closing Deliveries |
40 |
8. |
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER |
40 |
8.1 |
Representations/Warranties |
40 |
8.2 |
Governmental Approvals |
40 |
8.3 |
Actions/Proceedings |
40 |
8.4 |
Insolvency |
40 |
8.5 |
Closing Deliveries |
41 |
9. |
SELLER’S RESTRICTIVE COVENANTS |
41 |
10. |
ADDITIONAL AGREEMENTS. |
41 |
10.1 |
Allocation of Purchase Price |
41 |
10.2 |
Termination Prior to Closing |
41 |
10.3 |
Post-Closing Access to Information |
42 |
10.4 |
Preservation and Access to Records After the Closing |
43 |
10.5 |
Tax Effect |
43 |
10.6 |
Reproduction of Documents |
43 |
10.7 |
Cooperation on Tax Matters |
44 |
10.8 |
Cost Reports. |
44 |
10.9 |
Misdirected Payments, Etc. |
44 |
10.10 |
Employee Matters |
45 |
10.11 |
Use of Controlled Substance Permits |
46 |
3
TABLE OF CONTENTS
(continued)
Page
10.12 |
Medical Staff Bylaws |
46 |
10.13 |
Information Technology Transition Services Agreement |
47 |
10.14 |
Hospital Transition Services Agreement |
47 |
10.15 |
Clinic Billing and Collection Support Services Agreement |
47 |
10.16 |
License Agreement for Policy and Procedure Manuals |
47 |
10.17 |
Medicare and Medicaid Transition Agreement |
47 |
10.18 |
Access to Records Including as to Recovery and Audit Information |
47 |
10.19 |
Continuation of Insurance |
47 |
10.20 |
Quality Reporting |
48 |
10.21 |
Telephone Access |
48 |
10.22 |
Guaranties |
48 |
10.23 |
CIN Entity |
48 |
10.24 |
Transition of Agreements with Subsidiaries |
48 |
11. |
INDEMNIFICATION. |
49 |
11.1 |
Indemnification by Buyer |
49 |
11.2 |
Indemnification by Seller |
49 |
11.3 |
Limitations |
49 |
11.4 |
Notice and Control of Litigation |
50 |
11.5 |
Notice of Claim |
51 |
11.6 |
Mitigation |
51 |
11.7 |
Survival |
51 |
11.8 |
Exclusive Remedy |
51 |
12. |
MISCELLANEOUS. |
52 |
12.1 |
Schedules and Exhibits |
52 |
12.2 |
Additional Assurances |
52 |
12.3 |
Consented Assignment |
52 |
12.4 |
Consents, Approvals and Discretion |
53 |
12.5 |
Legal Fees and Costs |
53 |
12.6 |
Choice of Law |
53 |
12.7 |
Benefit/Assignment |
53 |
12.8 |
No Brokerage |
53 |
4
TABLE OF CONTENTS
(continued)
Page
12.9 |
Cost of Transaction |
53 |
12.10 |
Confidentiality |
54 |
12.11 |
Public Announcements |
55 |
12.12 |
Waiver of Breach |
55 |
12.13 |
Notice |
55 |
12.14 |
Severability |
56 |
12.15 |
Gender and Number |
56 |
12.16 |
Divisions and Headings |
56 |
12.17 |
Affiliates |
56 |
12.18 |
Material Adverse Effect |
56 |
12.19 |
Waiver of Jury Trial |
57 |
12.20 |
No Inferences |
57 |
12.21 |
Limited Third Party Beneficiaries |
57 |
12.22 |
Entire Agreement/Amendment |
57 |
12.23 |
Risk of Loss |
57 |
12.24 |
Other Definitions. |
58 |
5
EXHIBITS
Description Exhibit
Seller Entities A
Limited Power of Attorney B
Information Technology Transition Services Agreement C
Hospital Transition Services Agreement D
Clinic Billing and Collection Support Services Agreement E
License Agreement for Policy and Procedure Manuals F
Medicare and Medicaid Transition Agreement G
SCHEDULES
Description Schedule
Owned Real Property 1.1(a)(i)
Leased Real Property 1.1(a)(ii)
Contracts 1.1(g)
Provider Numbers 1.1(j)
Items Connected to Facilities and Assets 1.1(p)
Excluded Assets 1.2
Finance Leases 1.3(b)
Excluded Liabilities 1.4
Net Working Capital 1.6
Financial Statements – Condition of Seller Entities 3.4(b)
Absence of Certain Changes 3.5
Licenses 3.6
Accreditations and Certifications 3.7(b)
Conditions of Participation 3.7(c)
Investigations and Audits 3.7(f)
HQI Program 3.7(g)
Regulatory Compliance – HIPAA Compliance 3.8(a)
Regulatory Compliance – HIPAA Breaches 3.8(b)
Real Property 3.10
Real Property – Violations 3.10(a)
Real Property – Zoning 3.10(b)
Real Property – Tenant Allowances 3.10(c)
Real Property – Rent Roll 3.10(d)
Real Property – Eminent Domain 3.10(e)
Real Property – Options 3.10(f)
Employee Benefit Plans – List of Plans 3.12(a)
Employee Benefit Plans – ERISA 3.12(c)
Litigation or Proceedings 3.13
Environmental Laws 3.14
Taxes 3.15
Employee Relations – Employees 3.16(a)
vi
Employee Relations – Compliance 3.16(b)
Employee Relations – Terminations 3.16(c)
Contracts – Performance 3.17(c)
Contracts – Notice of Termination 3.17(e)
Insurance 3.19
Third Party Payor Cost Reports 3.20
Medical Staff Matters 3.21
Condition of Assets 3.22
Intellectual Property 3.24
Compliance Program 3.25
Certificates of Need 3.26
Partial Subsidiaries 3.27
Material Consents 7.7
Non-Competition 9
Termination Notice Disclosure 11.2
Brokerage 12.8
vii
GLOSSARY OF CERTAIN DEFINED TERMS
Defined Term Section
Accounting Firm 1.6(c)
Accreditations 3.7(b)
ACOs 1.2(c)
ADA 1.4(g)
Affiliate 12.17
Agreement Introduction
Antitrust Laws 5.5
Applications 3.26
Assessment Tax 1.7(d)
Assets 1.1
Assignment and Assumption Agreement 2.2(c)
Assignments of Leases 2.2(a)
Assignments of Ownership Interests 2.2(p)
Assumed Liabilities 1.3
Basket Amount 11.3
Balance Sheet Date 3.4(a)i
Benefit Plans 3.12(a)
Breach 3.8(b)
Business Associate Agreement 2.2(j)
Buyer Introduction
Buyer Employees 10.10(a)
Buyer Plans 10.10(a)
Buyer Indemnified Parties 11.2
CERCLA 3.14
Certificate of Need 3.26
CINs 1.2(c)
CJR 1.2(c)
Clinic Billing and Collection Support Services Agreement 2.2(l)
Closing 2.1
Closing Date 2.1
Closing Net Working Capital 1.6(b)
CMS 1.2(c)
COBRA 1.4(g)
Code 3.12(a)
Contracts 1.1(g)
Deeds 2.2(a)
DRG 1.7(a)
DRG Transition Patients 1.7(a)
DSH 1.7(c)
Effective Time 2.1
EEOC 1.4(g)
EIN 1.2(t)
Employee List 5.10
Environmental Laws 3.14
viii
End Date 10.2
Estimated Net Working Capital 1.6(b)
ERISA 3.12(a)
ERISA Affiliate 3.12(c)
Excluded Assets 1.2
Excluded Contracts 1.2(q)
Excluded Liabilities 1.4
Excluded Marks 1.2(g)
Exemption Certificate 3.26
Facilities Recitals
Financial Statements 3.4(a)
FMLA 1.4(g)
FTC 5.5
Fundamental Representations 11.7
GAAP 1.6(a)
Government Entity 12.24
Government Programs 3.7(a)
Hazardous Substances 3.14
Healthcare Laws 12.24
HIPAA 12.24
HQI Program 3.7(g)
Hospital Recitals
Hospital Transition Services Agreement 2.2(k)
HSR Act 5.5
Immaterial Contracts 3.17(a)
Indemnified Party 11.4
Indemnifying Party 11.4
Information Technology Transition Services Agreement 2.2(j)
Initial Employee Census Date 5.10
Intellectual Property Assets 0
Interim Billings 1.7(b)
Justice Department 5.5
Knowledge of Seller 12.24
Law 12.24
Leased Real Property 1.1(a)
License Agreement for Policy and Procedure Manuals 2.2(m)
Loss(es) 11.1
MAC 1.4(e)
MACRA 1.7(c)
Material Adverse Effect 12.18
Material Consents 7.7
Medicaid Supplemental Programs 1.2(c)
Medical Staff Members 3.21
Medicare and Medicaid Transition Agreement 2.2(n)
MIC 1.4(e)
MIPS 1.7(c)
ix
Net Working Capital 1.6(a)
Non-Fundamental Cap 11.3
Objections 6.3(c)
OIG 3.7(f)
ORYX 3.7(g)
OSHA 3.16(b)
Owned Real Property 1.1(a)
Partial Subsidiaries 3.27(a)
Permits 1.1(h)
Permitted Encumbrances 3.10
Person 12.24
PIP 1.7(c)
PHI 3.8(b)
Practitioner(s) 3.6
Private Programs 3.7(c)
PSC 1.4(e)
Purchase Price 1.5
QNet 3.7(g)
RAC 1.4(e)
RCRA 3.14
Real Property 1.1(a)
SARA 3.14
Seller Introduction
Seller Cost Reports 10.8
Seller Entity/Entities Recitals
Seller Guaranty 10.22
Seller Indemnified Parties 11.1
State Health Agency 3.6
Stark Law 12.24
Surveys 6.3(b)
Survival Period 11.7
Tax or Taxes 3.15
Tax Return 3.15
Termination Notice 12.1
TIN 1.2(t)
Title Commitment 6.3(a)
Title Company 6.3(a)
Title Evidence 6.3(c)
Title Policy 6.3(a)
Transition Patients 1.7
Transition Services 1.7
WARN Act 1.4(p)
ZPIC 1.4(e)
x
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of January 20, 2026, by and between CHS/COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (“Seller”), and THE HEALTH CARE AUTHORITY OF THE CITY OF HUNTSVILLE, d/b/a HUNTSVILLE HOSPITAL HEALTH SYSTEM, an Alabama health care authority (“Buyer”).
RECITALS:
A. Seller owns or controls, directly or indirectly, the entities listed on Exhibit A attached hereto (each a “Seller Entity” and collectively the “Seller Entities”).
B. Crestwood Healthcare, L.P., a Delaware limited partnership and one of the Seller Entities owns and operates Crestwood Medical Center in Huntsville, Alabama (the “Hospital”).
C. Each of the Seller Entities desires to sell to Buyer, and Buyer desires to purchase, substantially all of the respective assets of the Seller Entities which are directly or indirectly related to, necessary for, or used in connection with, the operation of the Hospital, together with certain related businesses of the Seller Entities, including but not limited to medical office buildings, outpatient care facilities, physician practices, ambulatory surgery/surgical centers, freestanding emergency departments, ancillary services, land and buildings (collectively with the Hospital, the “Facilities”), on the terms and conditions set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and the mutual agreements, covenants, representations, and warranties hereinafter set forth and other good and valuable consideration, the receipt and adequacy of which are forever acknowledged and confessed, the parties hereto agree as follows:
(a) indefeasible fee simple title to the real property described on Schedule 1.1(a)(i) hereto, together with all right, title and interest of the Seller Entities in and to all improvements, any construction in progress, any other buildings and fixtures thereon, and all rights, privileges and easements appurtenant thereto (collectively, the “Owned Real Property”), and leasehold title (as lessee, sublessee, tenant, or subtenant) to the real property that is leased, subleased, or otherwise licensed by the Seller Entities pursuant to the leases, subleases or licenses described on Schedule 1.1(a)(ii) (collectively, the “Leased Real Property”) (the Owned Real Property and the Leased Real Property are collectively referred to herein as the “Real Property”);
(b) all tangible personal property, including, without limitation, all equipment, machinery, tools, devices, vehicles, furniture, furnishings and trade fixtures of the Seller Entities;
(c) all supplies and inventory used or held for use in respect of the Assets and Facilities, including, but not limited to, all pharmaceuticals;
(d) assumable deposits and prepaid expenses;
(e) all claims of the Seller Entities against third parties, to the extent such claims relate to the condition of the Assets or Facilities and, to the extent assignable, all warranties (express or implied) and rights and claims assertable by (but not against) the Seller Entities related to the Assets and Facilities;
(f) all right, title and interest in the financial, accounting, patient, medical staff, personnel and employee records (including, but not limited to, each employee’s Form I-9, E-Verify confirmation, background check results and licensure verification) relating to the Assets and Facilities or provision of clinical care to patients in any Seller Entity’s possession, custody or control, in any media retained or stored (including, without limitation, all equipment records, architectural plans, drawings, specifications, blueprints, medical administrative libraries, medical records, documents, catalogs, books, ledgers, records, files and current personnel records);
(g) all rights and interests in the contracts, commitments, leases and agreements relating to the Facilities and Assets together with the Immaterial Contracts (hereinafter defined), except for contracts which are exclusively available to Seller or its Affiliates (as defined in Section 12.17) (the contracts being assigned are referred to herein as the “Contracts” and listed in Schedule 1.1(g) hereto);
(h) all licenses, registrations, permits, certificates, authorizations, approvals, orders, and variances obtained from any Government Entity (the “Permits”), to the extent legally assignable, held by the Seller Entities relating to the ownership, development, and operation of the Assets and Facilities (including, without limitation, any pending or approved governmental approvals from any Government Entity);
(i) the trade names, trademarks, service marks (or variations thereof), domain names and copyrights listed in Schedule 3.24, all goodwill associated therewith, and all applications or registration associated therewith, including, but not limited to, any and all names, symbols, trademarks, logos or other symbols that include “Crestwood Medical Center;”
(j) to the extent legally transferable, all provider numbers listed in Schedule 1.1(j);
(k) to the extent legally transferable, all Certificates of Need issued to and held by any of the Seller Entities;
(l) all goodwill associated with the Facilities and the Assets;
(m) petty cash;
2
(n) the telephone numbers used in connection with the business or operation of the Facilities and the Assets;
(o) all computer hardware and data processing equipment and all computer software not proprietary to any Seller Entity (or their Affiliates) and to the extent transferable located at the Facilities that are used or held for use in the operation of the Facilities and the Assets and all rights in warranties of any manufacturer or vendor with respect thereto (but expressly excluding any such items provided to the Seller Entities by their Affiliates);
(p) whether or not reflected in the financial statements, wherever located and whether or not similar to the items specifically set forth, all other businesses and ventures owned by the Seller Entities in connection with the Facilities and Assets listed in Schedule 1.1(p);
(q) all property of the foregoing types arising or acquired by the Seller Entities between the date hereof and the Closing Date;
(r) all of the membership interests and other equity ownership interests in the Subsidiaries (as defined in Section 3.27 and listed on Schedule 3.27) held by the Seller Entities; and
(s) all other property of every kind, character or description owned, leased or licensed by the Seller Entities and used or held for use in the business or operation of the Facilities or the Assets.
(a) cash, cash equivalents and marketable securities (except petty cash);
(b) board-designated, restricted and trustee-held or escrowed funds (such as funded depreciation, debt service reserves, working capital trust assets, and assets and investments restricted as to use) and accrued earnings thereon;
(c) all amounts payable to the Seller Entities in respect of third party payors pursuant to retrospective settlements including, without limitation, pursuant to Medicare, Medicaid and CHAMPUS/TRICARE cost reports filed or to be filed by the Seller Entities for periods prior to the Effective Time, retrospective payment of claims that are the subject of Centers for Medicare and Medicaid Services (“CMS”) Recovery Audit Contractor appeals, all payments associated with any Medicare accountable care organizations (“ACOs”), clinically integrated networks (“CINs”), or the Medicare Comprehensive Care for Joint Replacement Model (“CJR”), and all payments for periods prior to the Effective Time related to all Medicaid programs, including, but not limited to, the Upper Payment Limit (UPL) program, Access, General Fund Appropriation for Rural Hospitals, Disproportionate Share (DSH), and the Distribution Pool (collectively, the “Medicaid Supplemental Programs”), and all appeals and appeal rights of the Seller Entities relating to such settlements, including cost report settlements, for periods prior to the Effective Time;
3
(d) all Seller Entity records relating to (i) litigation files and records, cost report records relating to periods of time prior to the Effective Time (as defined in Section 2.1), Tax Returns (as defined in Section 3.15) and minute books; and (ii) the Excluded Assets and Excluded Liabilities to the extent that Buyer does not need the same in connection with the operation of the Facilities, as well as all records which by law the Seller Entities are required to maintain in their possession;
(e) prepaid insurance, prepaid assets dedicated to the Seller Entities’ Benefit Plans (as defined in Section 3.12) and any reserves or prepaid expenses related to Excluded Assets and Excluded Liabilities (such as prepaid legal expenses);
(f) all accounts receivable arising from the rendering of services to patients at the Facilities, billed and unbilled, recorded or unrecorded, with collection agencies or otherwise, accrued and existing in respect of services rendered prior to the Effective Time;
(g) any and all names, symbols, trademarks, or logos that include the names “CHS,” “Community Health Systems” or any variants thereof or any other names which are proprietary to Seller or its Affiliates, including, without limitation, those listed in Schedule 1.2 (the “Excluded Marks”);
(h) any computer software and programs which are proprietary to Seller or its Affiliates;
(i) receivables from or obligations with Seller or its Affiliates;
(j) the Seller Entities’ insurance proceeds arising from pre-Effective Time incidents and the Seller Entities’ assets held in connection with any self-funded insurance programs and reserves, if any;
(k) any claims of the Seller Entities against third parties, to the extent that such claims relate to the operation of the Facilities or the Assets prior to the Effective Time or to the Excluded Assets or Excluded Liabilities;
(l) all of Seller’s or any Affiliate’s proprietary manuals, marketing materials, policy and procedure manuals, standard operating procedures and marketing brochures, data and studies or analyses;
(m) all Benefit Plans and rights in connection with and the assets of the Benefit Plans and any other benefit plan, program, or arrangement that is sponsored, maintained, contributed to or required to be contributed to by the Seller Entities’ or any of their Affiliates;
(n) all assets solely relating to home health or hospice operations;
(o) all national or regional contracts of Seller or any Affiliate which are made available to any of the Facilities only by virtue of the Facilities being an Affiliate of Seller;
(p) the electronic funds transfer accounts of the Facilities;
4
(q) all rights of the Seller Entities in any contracts, commitments, leases and agreements which are not included in the Contracts (the “Excluded Contracts”);
(r) any claims against third party payors relating to underpayments or violation of prompt pay statutes with respect to periods prior to the Effective Time;
(s) all policies of any insurance issued to or held by any of the Seller Entities or under which any of the Seller Entities is an insured; and
(t) any and all federal tax identification numbers (“TIN”) and employer identification numbers (“EIN”) of any of the Seller Entities.
(a) all obligations accruing from and after the Effective Time with respect to the Contracts, but only to the extent that such obligations (i) relate to periods on or after the Effective Time; (ii) do not arise out of or relate to any failure to perform, improper performance, warranty or other breach, default or violation by any of the Seller Entities or any of their respective Affiliates on or prior to the Effective Time; and (iii) do not arise out of or relate to any event, circumstance or condition occurring or existing prior to the Effective Time that, with notice or lapse of time, would constitute or result in a breach or default thereof (whether known or unknown);
(b) the finance lease (as defined by Accounting Standards Codification Topic 842 in GAAP) obligations set forth in Schedule 1.3(b) hereto; and
(c) all obligations and liabilities as of the Effective Time in respect of accrued vacation and holiday benefits of employees at the Facilities who are hired by Buyer as of the Effective Time, and related payroll Taxes of such employees, but only to the extent included in the determination of Net Working Capital.
(a) any debt, obligation, expense or liability that is not an Assumed Liability or that arises out of or relates to any Excluded Asset;
(b) any claims or potential claims for medical malpractice, professional negligence, or general liability relating to acts or omissions asserted or alleged to have occurred prior to the Effective Time;
5
(c) those claims and obligations (if any) specified in Schedule 1.4 hereto;
(d) any debts, expenses, liabilities, obligations associated with or arising out of any of the Excluded Assets;
(e) any liabilities and obligations of the Seller Entities in respect of periods prior to the Effective Time arising under the terms of the Medicare, Medicaid, CHAMPUS/TRICARE, Blue Cross, or other third party payor programs, including, without limitation, any claims, recoupments, offsets or set-offs by any third party payor due to any overpayments, duplicate payments, fraud or incorrect billing; and including, without limitation, in respect of any cost report, any audit under the Medicare Recovery Audit Contractors (“RAC”) program, Medicaid Integrity Contractors (“MIC”) program, Medicare Zone Program Integrity Contractors (“ZPIC”) program, Medicare Program Safeguard Contractors program (“PSC”), or Medicare Administrative Contractors (“MAC”) program or any noncompliance with applicable Law or contractual obligations related to the billing or collection of services, any ACOs, CINs, CJR, and any liability arising pursuant to the Medicare, Medicaid (including, but not limited to, the Medicaid Supplemental Programs), CHAMPUS/TRICARE, Blue Cross, or any other third party payor programs as a result of the consummation of any of the transactions contemplated under this Agreement;
(f) any federal, state or local Tax liabilities or obligations of the Seller Entities in respect of periods prior to the Effective Time or resulting from the consummation of the transactions contemplated herein including, without limitation, any income Tax, any franchise Tax, any Tax recapture, any sales and/or use Tax, and any FICA, FUTA, workers’ compensation, and any and all other Taxes or amounts due and payable as a result of the exercise by the employees at the Facilities of such employees’ right to vacation, sick leave, and holiday benefits accrued while in the employ of any of the Seller Entities (provided, however, that this clause (f) shall not apply to any and all Taxes payable with respect to any employee benefits constituting Assumed Liabilities under Section 1.3(c) hereof);
(g) any liabilities associated with any Benefit Plan, including, but not limited to, any liability for any and all claims by, on behalf of, or with respect to the Seller Entities’ employees relating to periods prior to the Effective Time including, without limitation, liability for payments or benefits owed under any Benefit Plan, any withdrawal liability owed or allegedly owed by the Seller Entities, as well as any compensation-related payments, pension, profit sharing, deferred compensation, equity or equity-related compensation, incentive compensation, fringe benefit, tuition reimbursement, severance, termination pay, change in control or retention payments, bonuses or any other employee benefit plan of whatever kind or nature or any employee health and welfare benefit plans, liability for any Equal Employment Opportunity Commission (“EEOC”) claim, Americans with Disabilities Act (“ADA”) claim, Family and Medical Leave Act (“FMLA”) claim, wage and hour claim, unemployment compensation claim, or workers’ compensation claim, and any liabilities or obligations to former employees of the Seller Entities under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) or the Employment Retirement Income Security Act of 1974, as amended (“ERISA”), and any regulations promulgated thereunder (provided, however, that this clause (g) shall not apply to any and all employee benefits constituting Assumed Liabilities under Section 1.3(c) hereof);
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(h) any obligation or liability accruing, arising out of, or relating to any federal, state or local investigations of, or claims or actions against, the Seller Entities or any of their Affiliates or any of their employees, medical staff, agents, vendors or representatives with respect to acts or omissions prior to the Effective Time;
(i) any civil or criminal obligation or liability accruing, arising out of, or relating to any acts or omissions of the Seller Entities, their Affiliates or, to the extent related to their services to the Seller Entities, any of the Seller Entities’ partners, members, managers, directors, officers, employees, contractors, vendors, and agents alleged or claimed to have violated any Law of any Government Entity;
(j) any liabilities or obligations arising out of or relating to any breach of any Contract by any of the Seller Entities prior to the Effective Time;
(k) any liabilities or obligations arising out of or relating to any breach by any of the Seller Entities at any time of any contract or commitment that is not expressly assumed by Buyer in this Agreement;
(l) any debt, obligation, expense, or liability of the Seller Entities arising out of or incurred solely as a result of any transaction of any of the Seller Entities occurring after the Effective Time;
(m) any liabilities or obligations of any of the Seller Entities arising out of or relating to any violation of any Laws, including, without limitation, any Healthcare Laws;
(n) all liabilities and obligations arising out of or relating to any oral agreements, oral contracts or oral understandings with any referral sources including, but not limited to, physicians, unless reduced to writing, identified in Schedule 1.1(g) hereto, and expressly assumed by Buyer as part of the Contracts;
(o) any liability of any Seller Entity to repay any indebtedness of any Seller Entity whenever incurred, including, specifically, any obligation with respect to loans received by any Seller Entity under the Paycheck Protection Program enacted as part of the Coronavirus Aid, Care, Economic, and Relief Act (“CARES Act”); or to repay any moneys received by any Seller entity from the Public Health and Social Services Emergency Fund established under the CARES Act, the Coronavirus Preparedness and Response Supplemental Appropriations Act (P.L. 116-123), the Families First Coronavirus Response Act (P.L. 116-127), or the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139); or any advances received from the CMS Accelerated and Advance Payments Fund or any other federal legislation making appropriations for the coronavirus response and related activities with respect to any Seller Entity providing any care for individuals with possible or actual cases of COVID 19; and
(p) with respect to employees terminated prior to or as of the Effective Time, any liability or obligation of any Seller Entity arising out of or relating to the Worker Adjustment and Retraining Notification Act of 1988, as amended (“WARN Act”) and any regulations promulgated thereunder, and any similar state or local Laws related to plant closings, relocations, mass layoffs and employment losses.
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(a) Net Working Capital. As used herein, the term “Net Working Capital” shall mean (i) petty cash, prepaid expenses and deposits, and supplies and inventory, minus (ii) accrued liabilities for vacation and holiday benefits for employees of the Seller Entities who are hired by Buyer, all as determined in accordance with generally accepted accounting principles (“GAAP”). For the avoidance of doubt, “Net Working Capital” shall exclude all Excluded Assets and Excluded Liabilities.
(b) Estimates and Adjustments. Attached hereto as Schedule 1.6 is a schedule of the mutually agreed upon Net Working Capital as of November 30, 2025, together with the principles, specifications and methodologies used in determining such Net Working Capital. At least ten (10) business days prior to the Closing Date, Seller shall deliver to Buyer a reasonable estimate of Net Working Capital as of the end of the most recently ended calendar month prior to the Closing Date for which financial statements are available (the “Estimated Net Working Capital”) and containing reasonable detail and supporting documents showing the derivation of such estimate. The Estimated Net Working Capital shall be estimated following the same mutually agreed upon principles, specifications and methodologies used to determine the Net Working Capital as specified in Schedule 1.6, and shall be used for purposes of calculating the Purchase Price at the Closing. Within ninety (90) days after the Closing Date, Seller shall deliver to Buyer Seller’s determination of the Net Working Capital as of the last day of the calendar month immediately preceding the Effective Time (following the same principles, specifications and methodologies used to determine the Net Working Capital as set forth in Schedule 1.6) and the estimated Net Working Capital as of the Closing Date (the “Closing Net Working Capital”). Each party shall have full access to the financial books and records pertaining to the Facilities and Assets to confirm or audit Net Working Capital computations. Should Buyer disagree with Seller’s determination of the Closing Net Working Capital, Buyer shall notify Seller within sixty (60) days after Seller’s delivery of Seller’s determination of the Closing Net Working Capital. If Seller and Buyer fail to agree within thirty (30) days after Buyer’s delivery of notice of disagreement on the amount of the Closing Net Working Capital, such disagreement shall be resolved in accordance with the procedure set forth in Section 1.6(c), which shall be the exclusive remedy for resolving accounting disputes relative to the determination of the Closing Net Working Capital. The Purchase Price shall be increased or decreased based on actual Net Working Capital as of the last day of the calendar month immediately preceding the Effective Time, as finally determined pursuant to this Section 1.6(b) or Section 1.6(c), and within five (5) business days after
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determination thereof, any increase from the Estimated Net Working Capital shall be paid in cash by Buyer to Seller, and any decrease from the Estimated Net Working Capital shall be paid in cash to Buyer by Seller.
(c) Dispute of Adjustments. In the event that Seller and Buyer are not able to agree on the actual Net Working Capital within thirty (30) days after Buyer’s delivery of notice of disagreement, Seller and Buyer shall each have the right to require that such disputed determination be submitted to an independent certified public accounting firm as Seller and Buyer may then mutually agree upon in writing (the “Accounting Firm”) for computation or verification in accordance with the provisions of this Agreement. In resolving items that are in dispute in determining the actual Net Working Capital, the Accounting Firm shall (i) review the matters in dispute and make a final determination of the disputed items in accordance with the provisions, guidelines and procedures set forth in this Agreement, (ii) acting as arbitrators, shall promptly decide the proper amounts of such disputed entries (which decision shall also include a final calculation of Net Working Capital) and its determination shall be limited to the amount of the dispute, (iii) render a final resolution in writing to Buyer and Seller (which final resolution shall be requested by Buyer and Seller to be delivered not more than sixty (60) days following submission of such disputed items to the Accounting Firm), which final resolution, absent manifest error, shall be final, conclusive, binding and non-appealable by and on Buyer and Seller, and (iv) not engage in independent factual investigation, not hear evidence from either Buyer or Seller outside the presence of both Buyer and Seller, and not engage in ex parte communications with Buyer or Seller. The submission of the disputed matter to the Accounting Firm shall be the exclusive remedy for resolving accounting disputes relative to the determination of Net Working Capital. The fees and disbursements of the Accounting Firm shall be borne by (i) Buyer in the proportion that the aggregate dollar value of the disputed items submitted to the Accounting Firm that are unsuccessfully disputed by Buyer bears to the aggregate value of all such items so disputed and (ii) Seller in the proportion that the aggregate dollar value of the disputed items submitted to the Accounting Firm that are unsuccessfully disputed by the Seller bears to the aggregate value of all such items so disputed.
(d) Physical Inventory. As of the date hereof and through the Effective Time, Seller shall ensure the Facilities maintain inventory and supplies on hand in the ordinary course of business and consistent with past practices of the Facilities. As close as practicable prior to the Closing Date, but no more than thirty (30) days prior to the Closing Date, Seller shall cause a physical inventory to be taken of the inventory and supplies on hand at the Facilities by employees or representatives of Seller or its Affiliates as near in time as possible to the Closing Date and with the results extended and adjusted through the Closing Date. Seller shall give Buyer not less than three (3) business days’ prior written notice of the precise date and time of such physical inventory. Seller shall permit representatives or employees of Buyer to observe such inventory process and make test counts of inventory and receive copies of the records related to such physical inventory. Before the Closing Date, Seller shall remove items of inventory that, based upon such physical inventory, have been determined by the parties to be outdated, unusable or obsolete. All inventory items shall be valued at cost. The parties acknowledge that the inventory to be taken pursuant to this Section 1.6(d) will not be conducted until immediately prior to the Closing Date and, as such, the results of such inventory may not be available until sometime after the Closing Date. Accordingly, the parties agree that, for purposes of determining the estimated Net Working Capital as of the Closing Date, inventory with respect to the operation of the Facilities shall be calculated
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as reflected by the latest available unaudited balance sheets of the Seller Entities if the results of such inventory are not available. For purposes of determining the actual Net Working Capital, inventory shall be valued as determined pursuant to this Section 1.6(d). Notwithstanding anything contained herein to the contrary, Seller shall provide a complete and accurate inventory of all controlled substances at the Facilities as of the Closing Date.
(a) As soon as practicable after the Closing Date and discharge of Transition Patients, there shall be delivered to both parties a statement itemizing the Transition Services provided by each of the parties to Transition Patients whose medical care is paid for, in whole or in part, by Medicare, Medicaid, TRICARE, Blue Cross or any other third party payor who pays on a Diagnosis-Related Group (“DRG”) case rate or other similar basis (the “DRG Transition Patients”). Buyer shall pay to the Seller Entities an amount equal to (i) the total DRG and outlier payments (including capital and any deposits, deductibles or co-payments received by Buyer or the Seller Entities) per the remittance advice received by Buyer on behalf of a DRG Transition Patient, multiplied by a fraction, the numerator of which shall be the total charges for the Transition Services provided to such DRG Transition Patient by the Seller Entities, and the denominator of which shall be the sum of the total charges for all services provided to such DRG Transition Patient by the Seller Entities and Buyer both up to and after the Effective Time, minus (ii) any deposits, deductibles or co-payments made or payable by such DRG Transition Patients to the Seller Entities.
(b) As of the Effective Time, cut-off billings for services rendered prior to the Effective Time (“Interim Billings”) for all Transition Patients not covered by Section 1.7(a) shall be prepared and sent following the discharge of the patient from the Hospital. Any payments received by either Buyer or the Seller Entities for such Interim Billings are the property of the Seller Entities and shall be paid to the Seller Entities, when and as received by Buyer, within thirty (30) calendar days of receipt.
(c) If Buyer receives amounts related to any Medicare, Medicaid, Medicaid Managed Care, TRICARE or other third-party payor program (such as Medicare disproportionate share (“DSH”) payments, periodic interim payments (“PIP”), bi-weekly payments for Medicare bad debt, payments for costs paid on a pass-through basis, such as capital costs, Merit-based Incentive Payment System (“MIPS”) or other Medicare Access and CHIP Reauthorization Act (“MACRA”)-based payments, and all Medicaid payments and programs, including, but not limited to, the Medicaid Supplemental Programs), associated with the operation of the Facilities prior to the Effective Time, Buyer shall tender the amount applicable to the period prior to the Effective Time to the Seller Entities within thirty (30) calendar days of receipt. If the Seller Entities receive amounts related to any Medicare, Medicaid, Medicaid Managed Care, TRICARE or other third-party payor program (such as Medicare DSH payments, PIP payments, bi-weekly payments for
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Medicare bad debt, payments for pass-through costs, such as capital costs, MIPS or other MACRA-based payments, and all Medicaid payments and programs, including, but not limited to, the Medicaid Supplemental Programs), associated with the operation of the Facilities relating to periods after the Effective Time, the Seller Entities shall tender the same to Buyer within thirty (30) calendar days of receipt. It is the intent of the parties that Buyer and the Seller Entities shall receive any and all amounts related to any other Medicare, Medicaid, Medicaid Managed Care, or other third-party payor program (such as Medicare DSH payments, PIP payments, bi-weekly payments for Medicare bad debt, pass-through costs payments (including capital costs), and all Medicaid payments and programs, including, but not limited to, the Medicaid Supplemental Programs) applicable to the period of time the Facilities were owned by such party, calculated as the payment multiplied by a fraction, the numerator of which shall be the number of days the Facilities were owned by the party during the period attributable to the payment and the denominator of which shall be the total number of days attributable to the payment. In conjunction with a Medicare cost report, the MAC may apply bi-weekly payments to a party that are not applicable to its period of ownership. If this occurs, the parties agree to make payments to one another so that each party receives third party payments applicable to the period of time it owned the Facilities in accordance with the methodology delineated above.
(d) It is the understanding of the parties that the State of Alabama invoices the Medicaid Assessment Plan Tax (the “Assessment Tax”) on a quarterly basis and that such tax relates to the quarter in which the tax is due. It is the intent of the parties that Buyer and the Seller Entities shall be liable for the Assessment Tax applicable to the period of time the Facilities were owned by such party, calculated as the tax multiplied by a fraction, the numerator of which shall be the number of days the Facilities were owned by the party during the period attributable to the Assessment Tax and the denominator of which shall be the total number of days attributable to the Assessment Tax. If a party remits an Assessment Tax payment and is not liable for the entire payment in accordance with the methodology delineated above, the parties agree to make payments to one another so that each party covers the Assessment Tax applicable to the period of time it owned the Facilities in accordance with the methodology delineated above.
(e) All payments required by this Section 1.7 shall be made within thirty (30) calendar days of a party’s receipt of payment with respect to a Transition Patient, accompanied by copies of remittances and other supporting documentation as reasonably required by the other party. In the event that Buyer and the Seller Entities are unable to agree on any amount to be paid under this Section 1.7, then such amount shall be determined through the binding process provided in Section 1.6(c) at the joint equal expense of Buyer and the Seller Entities.
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(a) Deeds containing special warranty of title, fully executed by each applicable Seller Entity in recordable form, conveying to Buyer indefeasible fee simple title to the Owned Real Property (the “Deeds”), and Assignments of Leases, fully executed by each applicable Seller Entity, assigning to Buyer leasehold title to the Leased Real Property (the “Assignments of Leases”), subject only to the Permitted Encumbrances and the Assumed Liabilities;
(b) A General Assignment, Conveyance and Bill of Sale, fully executed by each applicable Seller Entity, conveying to Buyer all of the Seller Entity’s right, title and interest in the Assets, free and clear of all liabilities, claims, liens, security interests and restrictions other than the Permitted Encumbrances and the Assumed Liabilities;
(c) An Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”), fully executed by the applicable Seller Entity, conveying to Buyer the Seller Entity’s interest in the Contracts;
(d) Copies of corporate resolutions duly adopted by the Board of Directors of Seller and each Seller Entity, authorizing and approving the performance of the transactions contemplated hereby and the execution and delivery of this Agreement and the documents described herein, certified as true and of full force as of the Closing, by the appropriate officers of Seller and each Seller Entity;
(e) Certificate of the President or a Vice President of Seller, certifying as to the satisfaction of the condition precedent contained in Section 7.1 of this Agreement;
(f) Certificates of incumbency for the respective officers of Seller and each Seller Entity executing this Agreement and any other agreements or instruments contemplated herein or making certifications for the Closing dated as of the Closing Date;
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(g) Certificates of existence and certificates of compliance or good standing of Seller and each Seller Entity from the state in which it is incorporated or formed and from the State of Alabama (for each of the Seller Entities and the Subsidiaries), dated the most recent practical date prior to the Closing Date;
(h) All Certificates of Title and other documents evidencing an ownership interest conveyed as part of the Assets;
(i) A standard form owner’s affidavit (modified as necessary to make factually accurate) as required by the Title Company (as defined in Section 6.3 hereof) to issue the Title Policy (as defined in Section 6.3 hereof) as described in and provided by Section 7.3 hereof;
(j) An Information Technology Transition Services Agreement in substantially the form attached hereto as Exhibit C (the “Information Technology Transition Services Agreement”) and the Business Associate Agreement, in substantially the form attached thereto (the “Business Associate Agreement”), fully executed by an Affiliate of Seller;
(k) A Hospital Transition Services Agreement in substantially the form attached hereto as Exhibit D (the “Hospital Transition Services Agreement”), fully executed by an Affiliate of Seller;
(l) A Clinic Billing and Collection Support Services Agreement in substantially the form attached hereto as Exhibit E (the “Clinic Billing and Collection Support Services Agreement”), fully executed by an Affiliate of Seller;
(m) A License Agreement for Policy and Procedure Manuals in substantially the form attached hereto at Exhibit F (the “License Agreement for Policy and Procedure Manuals”), fully executed by Seller;
(n) A Medicare and Medicaid Transition Agreement in substantially the form attached hereto as Exhibit G (the “Medicare and Medicaid Transition Agreement”), fully executed by the applicable Seller Entities;
(o) A certification (in such form as may be reasonably requested by Buyer) conforming to the requirements of Treasury Regulations 1.1445-2(c)(3) and 1.97-2(h);
(p) An assignment of each ownership interest in a Subsidiary (the “Assignments of Ownership Interests”), fully executed by the appropriate Seller Entity, conveying to Buyer such Seller Entity’s interest in such ownership interest free and clear of all liens, but subject to any rights, restrictions or obligations under the governing documents of the Subsidiaries; and
(q) Such other instruments and documents as the parties reasonably agree are appropriate and necessary to effectuate the transactions contemplated hereby.
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(a) An amount equal to the Purchase Price in immediately available funds;
(b) The Assignment of Leases, fully executed by Buyer, pursuant to which Buyer shall assume the future payment and performance of the leases of the Leased Real Property as provided in this Agreement;
(c) The Assignment and Assumption Agreements, fully executed by Buyer, pursuant to which Buyer shall assume the future payment and performance of the Contracts and the Assumed Liabilities as provided in this Agreement;
(d) Copies of resolutions duly adopted by the Board of Directors of Buyer authorizing and approving its performance of the transactions contemplated hereby and the execution and delivery of this Agreement and the documents described herein, certified as true and in full force as of the Closing Date, by the appropriate officers of Buyer;
(e) Certificate of the Chief Executive Officer of Buyer, certifying as to the satisfaction of the condition precedent contained in Section 8.1 of this Agreement;
(f) Certificates of incumbency for the respective officers of Buyer executing this Agreement and any other agreements or instruments contemplated herein or making certifications for the Closing dated as of the Closing Date;
(g) Certificates of existence and certificate of compliance of Buyer from the State of Alabama, dated the most recent practical date prior to Closing Date;
(h) The Information Technology Transition Services Agreement and the Business Associate Agreement attached thereto, fully executed by Buyer;
(i) The Hospital Transition Services Agreement, fully executed by Buyer;
(j) The Clinic Billing and Collection Support Services Agreement, fully executed by Buyer;
(k) The License Agreement for Policy and Procedure Manuals, fully executed by Buyer;
(l) The Medicare and Medicaid Transition Agreement, fully executed by Buyer;
(m) The Assignments of Ownership Interests, fully executed by Buyer; and
(n) Such other instruments and documents as the parties reasonably agree are appropriate and necessary to effectuate the transactions contemplated hereby.
2.4 Frustration of Closing Conditions. No party may rely on the failure of any condition set forth in Sections 2, 7 or 8 of this Agreement to be satisfied if such failure was caused, in and of itself, by such party’s failure to use commercially reasonable efforts to cause the Closing to occur, as required by Sections 5.8 and 6.4.
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(a) are within its corporate powers, are not in contravention of corporate Law or of the terms of its organizational documents, and have been duly authorized by all appropriate corporate action;
(b) except as contemplated by Section 5.4, do not require any notice, filing, approval, consent, registration or Permit to be made to or obtained from any Government Entity in connection with the execution and delivery of this Agreement and the performance of the transactions contemplated hereby which is required by Law or the regulations of any such Government Entity;
(c) assuming the receipt of any consents required pursuant to the Contracts, do not and will not conflict with, result in any breach, violation or contravention of, or the creation of any default, lien, charge, or encumbrance under, any indenture, agreement, lease, instrument or understanding to which it is a party or by which it is bound or to which any of the Assets may be subject;
(d) will not violate any Law of any Government Entity to which it or any of the Assets may be subject; and
(e) will not violate any judgment, decree, writ or injunction of any court or Government Entity to which it or any of the Assets may be subject.
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(a) Seller has delivered to Buyer copies of the following financial statements of the Seller Entities (collectively, “Financial Statements”), which Financial Statements are maintained on an accrual basis:
i. Unaudited Balance Sheet dated as of November 30, 2025 (the “Balance Sheet Date”);
ii. Unaudited Income Statement for the eleven (11)-month period ended on the Balance Sheet Date; and
iii. Audited Balance Sheets and Income Statements for the fiscal years ended December 31, 2024 and 2023.
(b) Except as set forth in Schedule 3.4(b), such Financial Statements have been (and the monthly financial statements delivered pursuant to Section 5.6 will be) prepared in accordance with GAAP, applied on a consistent basis throughout the periods indicated. Such Balance Sheets present fairly in all material respects (and, in the case of financial statements delivered pursuant to Section 5.6, will present fairly in all material respects) the financial condition of each Seller Entity as of the dates indicated thereon, and such Income Statements present fairly in all material respects (and, in the case of financial statements delivered pursuant to Section 5.6, will present fairly in all material respects) the results of operations of each Seller Entity for the periods indicated thereon.
(a) event, change or circumstance that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect (hereinafter defined);
(b) material damage, destruction, or loss (whether or not covered by insurance), individually or in the aggregate, affecting the Facilities or other Assets with a net book value exceeding Fifty Thousand Dollars ($50,000.00);
(c) actual or threatened employee strike, work stoppage, or labor dispute pertaining to the Facilities or any Seller Entity;
(d) sale, assignment, transfer, or disposition of any item of property, plant or equipment included in the Assets having a value in excess of Fifty Thousand Dollars ($50,000) (other than supplies), except in the ordinary course of business consistent with past practices;
(e) general increases in the compensation payable by the Seller Entities to any of their employees or independent contractors outside of the ordinary course of business, or any
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increase in, or institution of, any bonus, retention, severance, insurance, pension, profit-sharing or other employee benefit plan, remuneration or arrangements made to, for or with such employees;
(f) adjustments or write-offs in accounts receivable or reductions in reserves for accounts receivable outside the ordinary course of business;
(g) changes in the accounting methods or practices employed by the Seller Entities, or changes in depreciation or amortization policies;
(h) material changes in the scope of patient care services or a reduction in the staffed or licensed bed count at any of the Facilities;
(i) material transaction pertaining to any of the Facilities by Seller or any Seller Entity outside the ordinary course of business;
(j) changes in the Hospital’s medical staff bylaws;
(k) any acquisition by any Seller Entity of stock, membership interest, partnership interest or other equity of any other Person or any agreement for such acquisition, any sale of any stock, membership interest, partnership interest or other equity of any Seller Entity or Subsidiary (other than transfers of ownership interests in Subsidiaries by Persons that are not Affiliates of the Seller Entities), or the granting of any right or option to any Person to acquire any ownership interest in any Seller Entity or Subsidiary (other than rights or options granted with respect to a Subsidiary by Persons that are not Affiliates of the Seller Entities); or
(l) any commitment to make capital expenditures in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate, except in the ordinary course of business consistent with past practice or as set forth in an approved budget.
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(a) The Hospital is qualified for participation in the Medicare, Medicaid, TRICARE and any other applicable state or federal healthcare program (collectively, the “Government Programs”), and has had for the past six (6) years current and valid provider contracts with such Government Programs, is, and for the past six (6) years has been, in compliance in all material respects with the conditions of participation in such Government Programs, and has received all approvals or qualifications necessary for reimbursement for the Hospital. To the extent the Facilities bill Government Programs on behalf of Practitioners, each Facility has, and for the past six (6) years has had, valid reassignments from such Practitioners that permit such Facility to bill Government Programs.
(b) Schedule 3.7(b) sets forth an accurate and complete list of all accreditations and certifications held by the Seller Entities and the Facilities (the “Accreditations”). Except as set forth in Schedule 3.7(b), the Hospital is duly accredited, with no contingencies, by The Joint Commission, through the period set forth on Schedule 3.7(b). Copies of the most recent accreditation letters from The Joint Commission pertaining to the Hospital have been made available to Buyer. All such Accreditations are valid, unrestricted, in good standing and in full force and effect. To the Knowledge of Seller, no event has occurred or other fact exists with respect to such Accreditations that allows or, after notice or the lapse of time or both, would allow revocation or termination of any such Accreditations, or would result in any other material impairment in the rights of any holder thereof. There is no pending or, to the Knowledge of Seller, threatened proceeding by any accrediting body to revoke, cancel, rescind, suspend, restrict, modify or not renew any such Accreditation, and no such proceedings, surveys or actions are pending or, to the Knowledge of Seller, threatened or imminent. Since the date of each most recent Accreditation survey, none of Seller Entities or the Facilities has made any material changes in policy or operations that, to the Knowledge of Seller, would be reasonably likely to cause any Facility to lose such Accreditation.
(c) The Seller Entities are parties to, or are otherwise entitled to bill under, current payor agreements with certain private nongovernmental payors or programs, including any applicable private insurance payor or program, self-insured employer or third-party payor (“Private Programs”), under which Seller Entities directly or indirectly receive payments. Except as set forth in Schedule 3.7(c), the Seller Entities are, and for the past six (6) years have been, in compliance in all material respects with the conditions of participation in the Government Programs and Private Programs and with the terms of all payor agreements.
(d) All billing practices of the Seller Entities with respect to the Facilities to all third party payors, including the Government Programs and Private Programs, are, and for the past
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six (6) years have been, in compliance with all applicable Laws and policies of such Government Programs and Private Programs, and neither the Seller Entities nor the Facilities have, during for the past six (6) years, billed or received any payment or reimbursement in excess of amounts allowed by Law or the billing guidelines of any Government Program or Private Program. No Government Program or Private Program has, during the past six (6) years, (i) indicated in writing to Seller or any Seller Entity its intent to cancel or otherwise substantially and adversely modify its relationship with a Seller Entity or (ii) advised Seller or any Seller Entity (whether orally or in writing) of any material problem or dispute that remains unresolved. During the last six (6) years, no Seller Entity submitted any claims that are cause for civil penalties under, or mandatory or permissive exclusion from, any Government Program, Private Program, or under the terms of any payor agreement. During the last six (6) years, the Seller Entities have maintained such records as required by applicable Laws or third-party payor policies supporting the provision of services billed under all Government Programs and Private Programs. During the last six (6) years, none of the Seller Entities or any of their respective employees, officers, directors or agents (or any former employee, officer, director or agent) has committed a violation of any Law relating to billing, payments and reimbursements under any Government Program or any Private Program.
(e) Neither the Seller Entities nor any of their officers, directors, employees, service providers, partners, members or shareholders are excluded from participation in the Government Programs, nor to Seller’s Knowledge is any such exclusion threatened. None of the current officers, directors, agents, or managing employees (as such term is defined in 42 U.S.C. § 1320a-5(b)) of Seller or any Seller Entity, or any such person in the last six (6) years while employed or engaged by such entity, have been excluded from a Government Program, been subject to sanction pursuant to 42 U.S.C. § 1320a-7a or § 1320a-8 or been convicted of a crime described at 42 U.S.C. § 1320a-7b, nor are any such exclusions, sanctions or charges pending or, to Seller’s Knowledge, threatened. No Seller Entity, or any of their employees, officers, or directors have during the last six (6) years been convicted of, charged with, to Seller’s Knowledge investigated for, or has engaged in conduct that would constitute, an offense related to Medicare or any other Government Program or, convicted of, charged with, to Seller’s Knowledge investigated for or engaged in conduct that would constitute a violation of any Law, including, without limitation, Healthcare Laws, related to fraud, theft, embezzlement, breach of fiduciary duty, kickbacks, bribes, other financial misconduct, obstruction of an investigation or controlled substances.
(f) Except as set forth in Schedule 3.7(f), neither Seller nor the Seller Entities have received, within the past six (6) years, any written notice from any Government Entity, any of the Government Programs, Private Programs or any other third party payor programs of any pending or, to Seller’s Knowledge, threatened investigations, audits, surveys or violations relating to the Facilities or the Permits. Except as set forth in Schedule 3.7(f), neither Seller nor any Seller Entity (i) is a party to a Corporate Integrity Agreement with the Office of Inspector General of the United Sates Department of Health and Human Services (“OIG”), (ii) has any reporting obligations pursuant to any settlement agreement entered into with any Government Entity, (iii) has been, to Seller’s Knowledge, within the past six (6) years the subject of any Government Program investigation conducted by any Government Entity, (iv) is nor has been, to Seller’s Knowledge, within the past six (6) years, a defendant in any qui tam/False Claims Act litigation, (v) during the past six (6) years has been served with or received any search warrant, subpoena, civil investigative demand, or, to Seller’s Knowledge, contact letter or telephone or personal contact by or from any
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Government Entity, and (vi) has, during the past six (6) years, received any substantiated written complaints from any employee, independent contractor, vendor, physician or other person or organization that would indicate that such Seller Entity has violated or is in violation of any material Law, including Healthcare Laws.
(g) The Seller Entities required to be registered have registered with the QNet Exchange (“QNet”) as required by CMS under its Hospital Quality Initiative Program (the “HQI Program”) and are listed in Schedule 3.7(g). The Seller Entities have submitted all quality data required under the HQI Program to CMS or its agent, and all quality data required under the ORYX Core Measure Performance Measurement System (“ORYX”) to The Joint Commission, for all calendar quarters concluded prior to the date of this Agreement, except for any quarter for which the respective reporting deadlines have not yet expired. All such submissions of quality data have been made in accordance with applicable reporting deadlines and in the form and manner required by CMS and The Joint Commission, respectively. The Seller Entities have not received notice of any reduction in reimbursement under the Medicare program resulting from their failure to report quality data to CMS or its agent as required under the HQI Program. Seller has provided Buyer with the HQI Program “validation results” for all calendar quarters concluded prior to the date of this Agreement, except for any quarter for which the respective reporting deadlines have not yet expired.
(h) Each Seller Entity is in compliance in all material respects with all applicable Laws regarding the selection, deselection and credentialing of its employed and independent contractor physicians and other Practitioners, including verification of licensing status and eligibility for reimbursement under Government Programs and Private Programs.
(i) All off-campus locations of the Hospital that are treated by Hospital as being a provider-based location or department of Hospital (i) were in operation and billing the Medicare program under the outpatient prospective payment system for covered outpatient department services prior to November 2, 2015, or are of a type that are not subject to the moratorium as of such date, (ii) are in compliance with the site-neutral programs of Section 603 of the Bipartisan Budget Act of 2015 and CMS Regulations 42 C.F.R. § 413.65 and (iii) have been reported as practice locations on Hospital’s Medicare application. All on-campus locations of Hospital that are required to be included on the CMS Medicare Enrollment Application have been reported.
(a) Except as set forth in Schedule 3.8(a), Seller Entities are and have been during the past six (6) years in compliance in all material respects with and not in breach or violation of or default under all applicable Laws including all Healthcare Laws of any Government Entities having jurisdiction over the Facilities, the Assets, and the Seller Entities’ ownership and operation of the Facilities and the Assets. The Seller Entities have timely and accurately filed all reports, data, and other information required to be filed with the Government Entities. Except as set forth on Schedule 3.8(a), no Seller Entity has, during the last six (6) years, (i) received written notice, correspondence or communication of any violation, alleged violation or potential violation of, or liability under, any Healthcare Laws, or to the effect that any Seller Entity, or any Person acting on behalf of, any Seller Entity, is or could potentially be under investigation or inquiry with
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respect to any violation or alleged violation of any Healthcare Law, or (ii) been subject to any actual or alleged obligation to undertake, or to bear all or any portion of the cost of, any remedial action under any Healthcare Law.
(b) Each Seller Entity is, and during the past six (6) years has been, in compliance in all material respects with HIPAA. The Seller Entities have undertaken surveys, audits, inventories, reviews, analyses and/or assessments of all areas of the Facilities required by the HITECH Act and the administrative simplification provisions of HIPAA. All of the Seller Entities’ and the Facilities’ respective workforces (as such term is defined in 45 C.F.R. § 160.103) with access to “protected health information” as defined in 45 C.F.R. § 160.103 (“PHI”) have received or are scheduled to receive, in accordance with the timeframes required by HIPAA and such Seller Entity’s providers or Facilities’ respective privacy policies, training with respect to compliance with HIPAA and all rules and regulations promulgated thereunder. Except as set forth on Schedule 3.8(b), with respect to the Facilities, during the past six years (i) neither Seller nor any Seller Entity has received written notice of, and there are no pending or, to the Knowledge of Seller or any Seller Entity, threatened proceedings with respect to any alleged “breach” as defined in 45 C.F.R. § 164.402 (a “Breach”) or any other material violation of HIPAA by any Seller Entity or any of their respective “workforce” (as such term is defined under HIPAA); (ii) no Breach, or other material violation of HIPAA by any Seller Entity or their respective “workforce” has occurred; and (iii) no successful or suspected “security incident” as defined in 45 C.F.R. § 164.304 has occurred with respect to PHI in the possession or under the control of the Seller Entities or any third parties that handle or have access to PHI on behalf of the Seller Entities. The Seller Entities have entered into business associate agreements with all Persons acting as a business associate (as defined in 45 C.F.R. § 160.103) of any Seller Entity to the extent required by HIPAA. No Seller Entity (x) is, to the Knowledge of Seller, under investigation by any Government Entity for a violation of HIPAA; or (y) has received, within the past three (3) years, any notices from the United States Department of Health and Human Services Office for Civil Rights, the U.S. Justice Department, the Federal Trade Commission (“FTC”) or the Attorney General of any state or territory of the United States relating to any such violations. During the past six (6) years, there has not been any incident that would trigger a notification or reporting requirement under any HIPAA business associate agreement or HIPAA, including a Breach with respect to any unsecured PHI maintained by or on behalf of the Seller Entities or any third parties that handle or have access to PHI on behalf of Seller Entities, in each case with respect to the Facilities.
(c) During the past six (6) years, no Seller Entity or any of their respective Affiliates, employees, independent contractors, officers or directors, has, on behalf of any Seller Entity or with respect to the Facilities, (i) violated any of the Healthcare Laws in any material respect; (ii) presented or caused to be presented a claim for a medical or other item or service that was not provided as claimed (other than claims submitted in error that have been corrected in the ordinary course of business and that individually or in the aggregate would not be considered material in any fiscal year), or is for a medical or other item or service where such Person knew or should have known the claim was false or fraudulent, or (iii) presented or caused to be presented a claim to any Government Program for a designated health service furnished pursuant to a prohibited referral by a physician pursuant to the Stark Law.
(d) Except in material compliance with all applicable Laws, none of Seller Entities are party to any Contract (including any joint venture or consulting agreement) related to
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any Seller Entity, Facility, or the Assets with any physician, immediate family member of a physician, or other Person that is in a position to make or influence referrals to or otherwise generate business for any Seller Entity or Facility.
(a) Except as set forth in Schedule 3.10(a), neither Seller nor any of the Seller Entities has received during the past three (3) years written notice from any Government Entity of a material violation of any applicable Law with respect to the Owned Real Property, which violation has not been corrected;
(b) Except as set forth in Schedule 3.10(b), to the Knowledge of Seller, the Owned Real Property and its operation are in material compliance with all applicable zoning ordinances (or is considered legally nonconforming or “grandfathered” thereunder);
(c) Except for the Permitted Encumbrances, (i) there are no tenants or other persons or entities occupying any space in the Real Property, other than pursuant to tenant leases described in Schedule 3.10(c), (ii) no tenants under such leases have paid rent in advance for more than one month, (iii) no improvement credit or other tenant allowance of any nature is owed by any of the Seller Entities to any tenant pursuant to such tenant leases, and (iv) no landlord improvement work is required to be completed by any of the Seller Entities pursuant to such tenant leases, in each case, except as disclosed in Schedule 3.10(c);
(d) Attached to Schedule 3.10(d) is a “rent roll” which sets forth for those leases where a Seller Entity is landlord: (i) the names of then current tenants; (ii) the address of the property and the square footage leased; (iii) the expiration dates of the leases; (iv) the rental
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payments for the then current month under each of the leases; (v) a list of all then delinquent rental payments; (vi) a list of all tenant deposits and a description of any application thereof; and (vii) a list of all uncured material defaults by tenants or Seller under the leases known to Seller, and Seller has delivered to Buyer a true and complete copy of each lease listed on the rent roll;
(e) Except for the matters set forth on Schedule 3.10(e), neither Seller nor any of the Seller Entities has received during the past three (3) years any written notice from any Government Entity of any existing, proposed or contemplated plans to modify or realign any street or highway, or any existing, proposed or contemplated eminent domain proceeding that would result in the taking or encumbrance of all or any part of the Owned Real Property or that would materially and adversely affect the current use of any part of the Owned Real Property;
(f) Except as set forth on Schedule 3.10(f) or in the leases described on Schedule 3.10(c), there are no outstanding options, including rights of first offer, rights of first refusal or reversion rights, to any Person to purchase any Owned Real Property, and except as set forth on Schedule 3.10(f) or in the leases described on Schedule 1.1(a)(ii), there are no outstanding options, including rights of first offer, rights of first refusal or reversion rights, to any Seller Entity to purchase any Leased Real Property; and
(g) Schedule 3.10(g) contains a complete list of all leases for each such Leased Real Property where Seller or any Seller Entity is a lessee, sublessee, tenant, or subtenant. Seller has delivered to Buyer a true and complete copy of each such lease document, and in the case of any oral lease, a written summary of the material terms of such lease.
(a) Schedule 3.12(a) sets forth a true, complete and correct list of all “employee benefit plans,” as defined in Section 3(3) of ERISA, all specified fringe benefit plans as defined in Section 6039D of the Internal Revenue Code of 1986, as amended (the “Code”), and all other bonus, incentive compensation, deferred compensation, profit sharing, stock option, severance, supplemental unemployment, layoff, salary continuation, retirement, pension, health, life insurance, disability, group insurance, vacation, holiday, sick leave, welfare plan or employment, change in control, confidentiality or non-competition agreement or any other similar plan, agreement, policy or understanding (whether oral or written, qualified or non-qualified) and any trust, escrow or other funding arrangement related thereto (collectively, the “Benefit Plans”), which is currently or has been sponsored, maintained or contributed to for or on behalf of the employees, former employees, independent contractors or directors (or any of their dependents) of the Seller Entities or pursuant to which Seller or the Seller Entities have any liability or obligation.
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With respect to each Benefit Plan, Seller has provided Buyer (to the extent applicable) accurate and complete copies of the summary plan description and summaries of any material modifications thereto.
(b) To Seller’s Knowledge, (i) each of the Benefit Plans is and has been maintained and administered in all material respects in compliance with its terms and applicable legal requirements (including ERISA and the Code), (ii) there have been no prohibited transactions, breaches of fiduciary duty, or other breaches or violations of any law applicable to the Benefit Plans that could subject Buyer to any liability, (iii) each Benefit Plan intended to be qualified under Section 401(a) of the Code is so qualified and has a current favorable determination letter (or, in the case of a master and prototype or regional prototype plan, a favorable opinion or notification letter, as applicable) or an application therefore is pending with the IRS, and (iv) no event has occurred which could cause any of the Benefit Plans to become disqualified or fail to comply with the applicable requirements of Section 401(a) of the Code, or that would otherwise cause a distribution therefrom that is otherwise eligible for rollover treatment under Section 408 of the Code to be ineligible to be rolled into an individual retirement account or a plan that is qualified under Section 401(a) of the Code.
(c) Except as set forth in Schedule 3.12(c), for the past six (6) years, neither Seller, the Seller Entities nor any ERISA Affiliate of Seller or the Seller Entities sponsors, has maintained, contributed to, been required to contribute to, or ceased having an obligation to contribute to an employee benefit plan that is (i) a “multiemployer plan,” as such term is defined in Section 3(37) of ERISA, (ii) subject to Title IV of ERISA, Sections 302 or 303 of ERISA or Sections 412 or 436 of the Code, (iii) a multiple employer plan as defined in Section 413(c) of the Code, or (iv) a multiple employer welfare arrangement (as defined in Section 3(40) of ERISA). “ERISA Affiliate” shall mean any entity that would be treated as a single employer with Seller, the Seller Entities or any of their subsidiaries under the provisions of the Code and ERISA.
(d) None of the Benefit Plans listed in Schedule 3.12(a) that are “welfare benefit plans,” within the meaning of Section 3(1) of ERISA, provide for continuing benefits or coverage after termination or retirement from employment, except for COBRA rights under a “group health plan” as defined in Section 4980(B)(g) of the Code and Section 607 of ERISA.
(e) Neither the execution, delivery or performance of this Agreement nor the consummation of the transactions contemplated by this Agreement (whether alone or in combination with any other event, including, but not limited to, a termination of employment) shall (i) entitle any current or former employee, independent contractor, officer, director or other service provider to any payment or any increase in payment under any Benefit Plan, or (ii) accelerate the time of payment, funding or vesting of any benefit under any Benefit Plan, in each case except as provided under the terms of the Benefit Plans. No payments or benefits under any agreement with the Seller or the Seller Entities, individually or in combination with any other payment or benefit, will constitute the payment of an “excess parachute payment” within the meaning of Section 280G of the Code or in the imposition of an excise Tax under Section 4999 or Section 409A of the Code.
(f) Other than the employee benefits constituting Assumed Liabilities under Section 1.3(c) hereof, Buyer shall not have any liability under any of the Benefit Plans.
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(a) Except as set forth in Schedule 3.16(a), all employees of the Facilities are employees of the Seller Entities. To Seller’s Knowledge, there is no threatened employee strike, work stoppage, or labor dispute pertaining to the Facilities. Except as set forth in Schedule 3.16(a), no union representation question exists respecting any employees of the Seller Entities. No collective bargaining agreement exists or is currently being negotiated by the Seller Entities, no written demand has been received for recognition by a labor organization by or with respect to any employees of the Seller Entities, no union organizing activities by or with respect to any employees of the Seller Entities are, to the Knowledge of Seller, taking place, and none of the employees of the Seller Entities is represented by any labor union or organization. There is no written unfair practice claim against the Seller Entities before the National Labor Relations Board, nor any strike, dispute, slowdown, or stoppage pending or, to the Knowledge of Seller, threatened against or involving the Facilities, and none has occurred within the last three (3) years.
(b) Except as set forth in Schedule 3.16(b), the Seller Entities have complied in all material respects with all Laws relating to employment, employment practices, terms and conditions of employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, overtime pay, benefits, payment of employment, social security, and similar Taxes, occupational safety and health, classification as an employee or an independent contractor, and plant closings and mass layoffs. No Seller Entity is liable for the payment of any compensation, damages, Taxes, fines, penalties, interest, or other amounts, however designated, for failure to comply with any of the foregoing legal requirements. Except as set forth in Schedule 3.16, there are no pending or, to the Knowledge of Seller, threatened claims before the EEOC (or any comparable state civil or human rights commission or other entity), complaints before the Occupational Safety and Health Administration (“OSHA”) (or any comparable state safety or health administration or other entity), wage and hour claims, lawsuits or arbitrations against any Seller Entity brought by any current or former employee, independent contractor, or director, or the like.
(c) Schedule 3.16(c) states or will state the number of employees terminated by each Seller Entity within ninety (90) days prior to the Closing Date, laid off by each Seller Entity within the six (6) months prior to the Closing Date, or whose hours of work have been reduced by more than fifty percent (50%) by a Seller Entity in the six (6) months prior to the Closing Date, and contains a complete and accurate list of the following information for such employees: (i) the date of termination, layoff, or reduction in work hours; (ii) the reason for termination, layoff, or reduction in work hours; and (iii) the location to which the employee was or is assigned. Except as set forth in Schedule 3.16(c), no Seller Entity has violated the WARN Act or any similar state or local legal requirements.
(a) Seller has made available to Buyer true and correct copies of the Contracts (other than Immaterial Contracts) set forth on Schedule 1.1(g), and has given, and will give, the agents, employees and representatives of Buyer access to the originals of the Contracts to the extent originals are available. “Immaterial Contracts” are commitments, contracts and agreements (other than real property leases) which individually involve future payments, performance of services or
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delivery of goods or materials, to or by Seller or any Seller Entity, of any amount or value less than Fifty Thousand Dollars ($50,000) on an annual basis and that are not with physicians or other referral sources. Seller represents and warrants with respect to the Contracts that:
(b) The Contracts constitute legal, valid and binding obligations of the Seller Entities and, to the Knowledge of Seller, the other parties with respect thereto, and are enforceable against the Seller Entities and, to the Knowledge of Seller, the other parties with respect thereto in accordance with their terms. Each Contract constitutes the entire agreement by and between the respective parties thereto with respect to the subject matter thereof.
(c) Assuming the receipt of any consents required in connection with the assignment of the Contracts and except as set forth in Schedule 3.17(c), (i) all obligations required to be performed by the Seller Entities and, to the Knowledge of Seller, the other parties with respect thereto prior to the date hereof under the terms of the Contracts have been performed, (ii) no acts or omissions by the Seller Entities and, to the Knowledge of Seller, the other parties with respect thereto have occurred or failed to occur which, with the giving of notice, the lapse of time or both would constitute a default by the Seller Entities and, to the Knowledge of Seller, the other parties with respect thereto under the Contracts, and (iii) no Seller Entity is in material breach and there is no pending, or to the Seller’s Knowledge, threatened material breach or default under any Contract.
(d) Except as expressly set forth in Schedule 1.1(g), (i) none of the Contracts require notice of or consent to the assignment and assumption of such Contracts by Buyer, and Seller will use commercially reasonable efforts to obtain any required consents prior to the Closing and (ii) the assignment of the Contracts to and assumption of such Contracts by Buyer will not result in any penalty or premium, or variation of the rights, remedies, benefits or obligations of any party thereunder.
(e) Except as set forth on Schedule 3.17(e), no party has given written notice of its intent to terminate, not renew, or materially change any material Contract.
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(a) For purposes of this Agreement, the term “Subsidiaries” means those corporations, partnerships and limited liability companies in which any Seller Entity owns or holds not less than a majority of the common stock, partnership interests or membership interests of such entity and that are listed on Schedule 3.27.
(b) Schedule 3.27 sets forth for each Subsidiary: (1) its name and jurisdiction of incorporation or organization; (2) the ownership interest held by the applicable Seller Entity and which will be assigned to Buyer; and (3) its directors and officers, general partners or managers, as the case may be.
(c) Seller has delivered to Buyer accurate and complete copies, as applicable, of the articles of incorporation, charter, bylaws, operating agreement, partnership agreement, or shareholders or membership agreement, as amended to date, of each Subsidiary.
(d) The applicable Seller Entity has title to the ownership interest of the respective Subsidiaries. Except as set forth on Schedule 3.27, Seller has the right to sell, assign, transfer and deliver the same to Buyer, free and clear of all claims, security interests, liens, pledges, charges, escrows, options, proxies, rights of first refusal, preemptive rights, mortgages, hypothecations, prior assignments, title retention agreements, indentures, security agreements or any other limitation, encumbrance or restriction of any kind, except those arising under applicable federal or state securities laws.
(a) are within its powers, are not in contravention of Law or of the terms of its organizational documents, and have been duly authorized by all appropriate action;
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(b) except as contemplated by Section 6.1, do not require any approval or consent required to be obtained by Buyer of, or filing required to be made by Buyer with, any governmental agency or authority bearing on the validity of this Agreement which is required by Law or the regulations of any such agency or authority;
(c) will neither conflict with, nor result in any breach or contravention of, or the creation of any lien, charge or encumbrance under, any indenture, agreement, lease, instrument or understanding to which it is a party or by which it is bound;
(d) will not violate any Law of any Government Entity to which it may be subject; and
(e) will not violate any judgment, decree, writ, or injunction of any court or Government Entity to which it may be subject.
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(a) use commercially reasonable efforts to carry on their business pertaining to the Facilities in substantially the same manner as presently conducted and not make any material change in personnel, operations, finance, accounting policies, or real or personal property pertaining to the Facilities;
(b) use commercially reasonable efforts to maintain the Facilities and Assets and all parts thereof in good operating condition, ordinary wear and tear excepted, in substantially the same manner as presently conducted and in the ordinary course of business and make repairs and acquire replacements in the ordinary course of business;
(c) use commercially reasonable efforts to perform all of their obligations under agreements relating to or affecting the Facilities or the Assets, including pay and fully perform all known liabilities and obligations as they become due and payable, other than those disputed in good faith;
(d) use commercially reasonable efforts to keep in full force and effect present insurance policies or other comparable insurance pertaining to the Facilities;
(e) continue to pay all Taxes in the ordinary course of business when due;
(f) maintain and preserve their business organizations intact, use commercially reasonable efforts to retain their present employees at the Facilities and maintain their relationships with physicians, other Practitioners, Medical Staff Members, suppliers, customers, and others having business relations with the Facilities;
(g) comply in all material respects with all Laws and all Contracts; and
(h) maintain, and timely renew, all Permits pertaining to the Facilities and the Assets.
(a) amend, modify, terminate or cancel any of the Contracts, or enter into any new contract or commitment, except as provided herein or in the ordinary course of business consistent with past practice or if such amended or new Contract can be terminated without cause or penalty upon notice of ninety (90) days;
(b) (i) increase compensation payable or to become payable or make any bonus payment to or otherwise enter into one or more bonus agreements with any Practitioner or referral source of the Facilities or any employee of the Seller Entities at the Facilities, except in the ordinary course of business or in accordance with existing personnel policies, (ii) enter into any employment (excluding any agreements to replace or fill existing positions), consulting or retention agreements,
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except in the ordinary course of business consistent with past practices, (iii) grant or increase any rights to change-in-control, severance, or termination payment or benefits to, or enter into any change-in-control, or severance agreement with any employee of any Seller Entity at the Facilities or any other Person, including any director, manager, officer, or consultant at the Facilities, or (iv) establish, adopt, enter into, amend, modify or terminate any Benefit Plan, except to the extent required by applicable Laws or in the ordinary course of business;
(c) acquire (whether by purchase or lease) or sell, assign, lease, or otherwise transfer or dispose of any property, plant, equipment, or other Assets except in the normal course of business with comparable replacement thereof when appropriate;
(d) sell or lease any of the Owned Real Property, or sublease any of the Leased Real Property, except, in each case, in the ordinary course of business;
(e) materially alter any Owned Real Property, including the buildings, fixtures and other improvements located thereon, other than budgeted capital expenditures or routine replacement, maintenance or repairs;
(f) purchase capital assets or incur costs in respect of construction-in-progress in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate, except in the ordinary course of business consistent with past practice or as set forth in an approved budget; or
(g) take any material action outside the ordinary course of business of the Facilities, except as may be required in order to consummate the transactions contemplated by this Agreement.
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(a) Title Commitment. Within thirty (30) days after the date hereof, Buyer, at its expense, shall obtain a current title commitment with respect to the Owned Real Property (the “Title Commitment”), issued by Fidelity National Title Insurance Company (the “Title Company”), together with legible copies of all exceptions to title referenced therein, sufficient for the issuance of an owner’s policy of title insurance for the Owned Real Property (the “Title Policy”). Buyer shall promptly upon its receipt provide a copy of the Title Commitment and exception documents to Seller.
(b) Surveys. Within thirty (30) days after the date hereof, Buyer may, at its expense, obtain current as-built ALTA/NSPS surveys of the Owned Real Property (the “Surveys”) or such portions thereof as Buyer elects. Buyer shall promptly upon its receipt furnish a copy of the Surveys to Seller.
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(c) Title Defects and Cure. The Title Commitment and the Surveys (in each case, to the extent obtained by Buyer pursuant to Sections 6.3(a) and (b)) are collectively referred to as “Title Evidence.” Buyer shall notify Seller within ten (10) days after its receipt of the last of the Title Evidence of any liens, claims, encroachments, exceptions or defects disclosed in the Title Evidence which do not constitute Permitted Encumbrances (collectively, “Objections”). Seller, at its sole cost and expense, shall cure the Objections on or before the Closing or Seller may elect to not cure the Objections and shall give written notice to Buyer within ten (10) days of its receipt of Buyer's Objections of its decision, whereupon Buyer may waive such Objections and close or may terminate this Agreement, which election by Buyer shall be made by written notice to Seller within ten (10) days of Buyer’s receipt of Seller’s written notice. If Seller fails to timely give such notice, Seller shall be deemed to have elected not to cure the Objections, whereupon Buyer may waive such Objections and close or may terminate this Agreement, which election by Buyer shall be made by written notice to Seller within twenty (20) days following Seller’s receipt of Buyer’s written notice of the Objections. Upon termination of this Agreement under the terms of this Section 6.3(c), no party to this Agreement shall have any further claims under this Agreement against any other party, except for matters that expressly survive termination of this Agreement. Any matters shown by the Title Evidence to which Buyer does not object or which are waived by Buyer as herein provided shall be deemed to be Permitted Encumbrances. Notwithstanding anything contained in this Section 6.3(c) to the contrary, at the Closing, Seller shall cause all mortgages, deeds of trust, financing statements and other similar liens encumbering the Seller Entities’ fee interest in the Owned Real Property, and arising by, through or under the Seller Entities or any of their Affiliates, to be released (other than liens for Taxes and assessments not yet due and payable and any mechanic's or materialmen's liens relating to the Assumed Liabilities).
(d) Costs. Section 12.9 shall govern which party or parties hereto shall bear the costs and expenses of the Title Commitment, the Title Policy and the Surveys.
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Seller hereby covenants that at all times from the Closing Date until the third (3rd) anniversary of the Closing Date, Seller and its Affiliates shall not, directly or indirectly, own, control, operate, lease or manage an acute care hospital or ambulatory or other type of surgery center or any other business or facility that competes with the Facilities within a forty (40) mile radius of the Hospital; provided, however, the foregoing restrictions shall not apply to the activities set forth in Schedule 9. In the event of a breach of this Section 9, Seller recognizes 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 by Seller. 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 such protection and that the nature and scope of such protection has been carefully considered by the parties. Seller further acknowledges and agrees that the covenants and provisions of this Section 9 form part of the consideration under this Agreement and are among the inducements for Buyer entering into and consummating the transactions contemplated herein. 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 this Section 9. 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.
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(a) As of the Effective Time, Seller shall cause the Seller Entities to terminate all of the employees at the Facilities, and Buyer shall offer or cause to be offered employment (subject to Buyer’s standard employment screening and background checks and other Buyer hiring requirements for each such job position) to all active employees of the Seller Entities (including any employees who are on statutory family or medical leave, military leave, short-term disability, or other short-term leave of up to 90 days) who are in good standing immediately prior to the Effective Time in positions and at salary or base wage levels generally consistent with those provided by the Seller Entities immediately prior to the Effective Time, except as provided below in this Section 10.10(a). Notwithstanding the foregoing, nothing herein shall be deemed to affect or limit in any way normal management prerogatives or hiring policies and practices of Buyer with respect to employees or to create or grant to any such employees third party beneficiary rights or claims of any nature. All employees who pass Buyer’s standard employment screening and background checks and satisfy Buyer’s hiring requirements, who accept such offers, and who commence employment with Buyer (collectively, the “Buyer Employees”) shall be credited with employment service with the Seller Entities for purposes of eligibility and vesting purposes to the same extent as any such employee was entitled, before the Closing, to credit for such service under any Benefit Plan that is similar to a Buyer Plan (as defined below), in which such employee participated or was eligible to participate immediately prior to the Closing (but not for purposes of benefit accrual or to duplicate any benefit) under Buyer’s employee benefit plans or programs (the “Buyer Plans”), unless such service credit is not allowed pursuant to the express terms of any insurance policy (or policies) used to fund the benefits provided under such Buyer Plans, in which case such service credit will not be allowed just for such insured plan(s). In advance of the Closing, Seller shall provide to Buyer such information as is necessary for Buyer to determine the appropriate amount of employment service to credit to each of the Buyer Employees. Notwithstanding anything contained in this Section 10.10(a) to the contrary, this Section 10.10(a) shall not apply to any physician, nurse practitioner, or physician assistant employee of any Seller Entity who has entered into an employment agreement with any Seller Entity, and such persons shall not be deemed to be Buyer Employees.
(b) Notwithstanding anything contained herein to the contrary, the compensation and benefits of any physician employee of any Seller Entity who becomes an employee of Buyer or an Affiliate of Buyer at or immediately following Closing shall be substantially similar to the compensation and benefits in the applicable employment agreement provided by Seller to Buyer with respect to such physician prior to Closing; provided, however, that any compensation paid by Buyer or an Affiliate of Buyer to such physician employee shall, at all times, be subject to Buyer’s determination that such compensation and benefits are commercially reasonable and consistent with fair market value. Nothing herein shall preclude Buyer or an Affiliate of Buyer from adjusting compensation as necessary in accordance with such determination at any time. Buyer shall bear sole responsibility for any liability resulting from any claims by any such physician employees arising out of or related to any such benefit or compensation changes.
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(c) Buyer shall offer or cause to be offered enrollment in the appropriate Buyer Plan that is a group health plan to any Buyer Employee together with the eligible dependents of such Buyer Employee.
(d) Within the period of ninety (90) days prior to the Closing, the Seller Entities shall not violate the WARN Act, 29 U.S.C. § 2101 et seq. and/or the regulations thereunder. With respect to terminations of employees prior to the Effective Time, the Seller Entities shall be responsible for any legally required notifications. With respect to terminations of employees following the Effective Time, Buyer shall be responsible for any legally required notifications.
(e) This Section 10.10 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement. Nothing contained in this Section 10.10 or any other provision of this Agreement, express or implied: (i) shall be construed to establish, amend, or modify any benefit plan, program, agreement or arrangement, including any Benefit Plan or Buyer Plan; (ii) is intended to confer upon any current or former employee any right to employment or continued employment for any period of time, or any right to a particular term or condition of employment; or (iii) is intended to confer upon any person (including, for the avoidance of doubt, any current or former employee, director, officer or other service provider or any participant in a Benefit Plan, Buyer Plan or other plan, policy, program, agreement or arrangement providing benefits or compensation) any right as a third-party beneficiary of this Agreement.
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(a) It is understood by the parties hereto that the information, documents, and instruments delivered to Buyer by Seller and its agents and the information, documents, and instruments delivered to Seller by Buyer and its agents are of a confidential and proprietary nature. Each of the parties hereto agrees that, prior to the Closing, it will maintain the confidentiality of all such confidential information, documents, or instruments delivered to it by each of the other parties hereto or their agents in connection with the negotiation of this Agreement or in compliance with the terms, conditions, and covenants hereof and will only disclose such information, documents, and instruments to its duly authorized officers, members, directors, representatives, and agents (including consultants, attorneys, and accountants of each party) and applicable governmental authorities in connection with any required notification or application for approval or exemption therefrom. Each of the parties hereto further agrees that if the transactions contemplated hereby are not consummated, it will return all such documents and instruments and all copies thereof in its possession, including, but not limited to, any PHI and any personally identifiable information and/or any confidential, proprietary or otherwise sensitive information to the other parties to this Agreement.
(b) Seller acknowledges that the success of transactions contemplated under this Agreement after the Closing depends upon the continued preservation of the confidentiality of certain information possessed by Seller or its Affiliates, agents and representatives, that the preservation of the confidentiality of such information by the Seller is an essential premise of the bargain between Seller and Buyer, and that Buyer would be unwilling to enter into this Agreement in the absence of this Section 12.10. Accordingly, Seller hereby agrees that Seller will not, and Seller will cause its Affiliates, agents and representatives not to, at any time on or after the Closing Date, directly or indirectly, without the prior written consent of Buyer, disclose or use any confidential or proprietary information involving or relating to the Assets, the Facilities or the operations thereof; provided, however, that the information subject to the foregoing provisions of this sentence will not include any information generally available to, or known by, the public (other than as a result of disclosure in violation hereof); and provided, further, that the provisions of this Section 12.10 will not prohibit any retention of copies of records or disclosure (a) required by any applicable legal requirement so long as reasonable prior notice is given of such disclosure and a reasonable opportunity is afforded to contest the same or (b) made in connection with the enforcement of any right or remedy relating to this Agreement.
(c) Each of the parties hereto recognizes that any breach of this Section 12.10 would result in irreparable harm to the other party to this Agreement and its Affiliates (as defined in Section 12.17 below) and that therefore either Seller or Buyer shall be entitled to an injunction
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to prohibit any such breach or anticipated breach, without the necessity of posting a bond, cash, or otherwise, in addition to all of its other legal and equitable remedies. Nothing in this Section 12.10, however, shall prohibit the use of such confidential information, documents, or information for such governmental filings as in the opinion of Seller’s counsel or Buyer’s counsel are required by Law or governmental regulations or are otherwise required to be disclosed pursuant to applicable state Law.
Seller and Seller Entities: CHS/Community Health Systems, Inc.
4000 Meridian Boulevard
Franklin, TN 37067
Attn: Executive Vice President, Operations & Development
With a simultaneous copy to: CHSPSC, LLC
4000 Meridian Boulevard
Franklin, TN 37067
Attn: General Counsel
Buyer: The Health Care Authority of the City of Huntsville
101 Sivley Road
Huntsville, AL 35801
Attention: Jeff Samz, CEO
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With a simultaneous copy to: Baker, Donelson, Bearman, Caldwell &
Berkowitz, PC
Blackwell Medical Tower, Suite 2
201 Sivley Road
Huntsville, AL 35801
Attention: Joe Campbell, Esq.
or to such other address, and to the attention of such other person or officer as any party may designate, with copies thereof to the respective counsel thereof as notified by such party.
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“Government Entity” means any federal, state, municipal, or local government, quasi-government, or authority or any agency, bureau, board, directorate, commission, court, department, branch, official, political subdivision, tribunal or other instrumentality of any government, quasi-government, or authority.
“Healthcare Laws” includes Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395hhh (the Medicare statute), the Ethics in Patient Referrals Act of 1989, as amended, 42 U.S.C. §1395nn (the “Stark Law”); Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396v (the Medicaid statute); the Federal Health Care Program Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); the Civil False Claims Act, as amended, 31 U.S.C. §§ 3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Anti-Kickback Act of 1986, 41 U.S.C. §§ 8701-8707; the Civil Monetary Penalties Law, 42 U.S.C. §§ 1320a-7a and 1320a-7b; the Exclusion Laws, 42 U.S.C. § 1320a-7; the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§ 1320d-1329d-8, as amended by the Health Information Technology for Economic and Clinical Health Act, enacted as Title XIII of the American Recovery and Reinvestment Act of 2009, Public Law 111-5 (collectively, “HIPAA”); Health Care Fraud, 18 U.S.C. § 1347; Criminal False Statements Related to Health Care Matters, 18 U.S.C. § 1035; Criminal False Claims Act, 18 U.S.C. § 286-287; Criminal Wire and Mail Fraud, 18 U.S.C. §§ 1341 and 1343; Criminal False Statement Act, 18 U.S.C. § 1001; Theft or Embezzlement in Connection with Health Care, 18 U.S.C. § 669; Obstruction of Criminal Investigations of Health Care Offenses, 18 U.S.C. § 1518; Criminal Conspiracy, 18 U.S.C. § 371; any Laws applicable to the CARES Act Provider Relief Funds; Laws applicable to the use, handling, control, storage, transportation and maintenance of controlled substances, pharmaceuticals or drugs; all applicable implementing regulations, rules, ordinances, judgments, and orders with respect to the foregoing; any similar or other state and local Laws; and all applicable federal, state and local licensing, certificate of need, regulatory and reimbursement Laws, and all other Laws applicable to healthcare service providers or other Persons providing the items and services similar to those provided by Seller Entities or the Facilities.
“Knowledge of Seller” or “Seller’s Knowledge” or any other similar knowledge qualification with respect to any representation, warranty or other statement in this Agreement means (i) all matters with respect to which Seller or any Seller Entity has received written notice from a Government Entity or third party or (ii) the actual knowledge of any of the following officers of the Hospital: Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer, Chief Operating Officer, Chief Medical Officer, and/or Chief Nursing Officer, as well as the President, Region 1 Operations and Chief Compliance Officer of Seller, in each case after reasonable inquiry of such person’s immediate subordinates.
“Law” or “Laws” means any federal, state, local or foreign law, statute, code, ordinance, order, rule, regulation, code, directive, requirement, judgment, binding administrative guidance or interpretation, policy, constitutional provision, accreditation, standard ruling or decree of any Government Entity.
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“Person” means any individual, partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or other association or entity, including any Government Entity.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in multiple originals by their authorized officers, all as of the date first above written.
CHS/COMMUNITY HEALTH SYSTEMS, INC.
By: /s/ R. Gabriel Ottinger
Name: R. Gabriel Ottinger
Title: Senior Vice President and Treasurer
(“Seller”)
THE HEALTH CARE AUTHORITY OF THE CITY OF HUNTSVILLE
By: /s/ Jeff Samz
Name: Jeff Samz
Title: Chief Executive Officer
(“Buyer”)
[Signature Page to Asset Purchase Agreement]