-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S0oNeoKhsdC9B7fHtUVGC3BVURbh2FZ73NmdOLV5qcStpnXvgxmZYLGvHX8o02rw dyTOFs/n0Mv2+g31GBk1PQ== 0000950144-99-011937.txt : 19991019 0000950144-99-011937.hdr.sgml : 19991019 ACCESSION NUMBER: 0000950144-99-011937 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991001 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991018 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVINCE HEALTHCARE CO CENTRAL INDEX KEY: 0001044942 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062] IRS NUMBER: 621710772 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-23639 FILM NUMBER: 99729887 BUSINESS ADDRESS: STREET 1: 105 WESTPARK DR STREET 2: STE 400 CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6153701377 MAIL ADDRESS: STREET 1: 105 WESTPARK DR SUITE 180 STREET 2: 105 WESTPARK DR SUITE 180 CITY: BRENTWOOD STATE: TN ZIP: 37207 8-K 1 PROVINCE HEALTHCARE COMPANY 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 18, 1999 (October 1, 1999) ------------------------------ PROVINCE HEALTHCARE COMPANY (Exact name of registrant as specified in its charter) Delaware 0-23639 62-1710772 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification Number) 105 Westwood Place Suite 400 Brentwood, Tennessee 37027 (Address of principal executive offices) (Zip Code) (615) 370-1377 (Registrant's telephone number, including area code) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS As of October 1, 1999, Province Healthcare Company (the "Company"), through certain limited partnerships that are subsidiaries of the Company, acquired Trinity Valley Medical Center in Palestine, Texas and Minden Medical Center in Minden, Louisiana, from Tenet Healthcare Corporation ("Tenet"). Palestine Principal Healthcare Limited Partnership and PHC-Minden, L.P. acquired Trinity Valley Medical Center and Minden Medical Center, respectively, from S.C. Cal, Inc. and AHM Minden Hospital, Inc., each a subsidiary of Tenet. The aggregate purchase price for the hospitals was approximately $77.0 million, with anticipated subsequent post-closing adjustments for net working capital, capital lease obligations assumed by the Company and certain employee benefit obligations. Trinity Valley Medical Center and Minden Medical Center reported net revenues of $35.1 million and $25.6 million, respectively, as of May 31, 1999. Pursuant to the terms of the Asset Sale Agreement, as amended (the "Asset Sale Agreement"), Palestine Principal Healthcare Limited Partnership acquired substantially all of the assets of Trinity Valley Medical Center. These assets included the 153-bed general acute care hospital facility, the real property on which the hospital is located and related facilities. Also, pursuant to the terms of the Asset Sale Agreement, PHC-Minden, L.P. acquired substantially all of the assets of Minden Medical Center. These assets included the 121-bed general acute care hospital facility, the real property on which the hospital is located and related facilities. The Company intends to continue operating Trinity Valley Medical Center and Minden Medical Center as general acute care hospital facilities. To finance the acquisition of both facilities, the Company borrowed approximately $77.3 million pursuant to the terms of its Amended and Restated Credit Facility with a syndicate of banks led by First Union National Bank, as Agent. As a result of the acquisition of these two facilities, the Company now owns or leases 15 general acute care hospitals in eight states with a total of 1,284 licensed beds. The Company also provides management services to 49 primarily non-urban hospitals in 17 states and Puerto Rico, with a total of 3,526 licensed beds. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired The Company anticipates that the audited combined financial statements of Trinity Valley Medical Center and Minden Medical Center as of and for the fiscal year ended May 31, 1999, will be filed by amendment within sixty days of October 18, 1999. (b) Pro Forma Financial Information. The Company anticipates that pro forma financial statements, giving effect to the asset purchase of Trinity Valley Medical Center and Minden Medical Center as if such transaction had occurred on September 30, 1999, as to the balance sheet, and on January 1, 1998, as to the income statement, will be filed by amendment within sixty days of October 18, 1999. 3 (c) Exhibits: 2.1 Asset Sale Agreement, dated July 23, 1999, between Tenet Healthcare Corporation and Province Healthcare Company. 2.2 Amendment No. 1 to Asset Sale Agreement, dated September 29, 1999, between Tenet Healthcare Corporation and Province Healthcare Company. 99.1 Copy of the press release, dated October 1, 1999, relating to the completion of the acquisition of Trinity Valley Medical Center and Minden Medical Center. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PROVINCE HEALTHCARE COMPANY By: /s/ Brenda B. Rector ------------------------------ Brenda B. Rector Vice President and Controller Date: October 18, 1999 EX-2.1 2 ASSET SALE AGREEMENT 1 EXHIBIT 2.1 ASSET SALE AGREEMENT between TENET HEALTHCARE CORPORATION, a Nevada corporation and PROVINCE HEALTHCARE COMPANY, a Delaware corporation DATED: July 23, 1999 2 LIST OF SCHEDULES
SCHEDULE DESCRIPTION A-1 Subsidiaries A-2 Acute Care Hospitals A-3 MOBs A-4 Other Businesses 1.2 Interim Balance Sheet 1.9(a) Owned Real Property 1.9(b) Leased Real Property 1.9(c) Personal Property 1.9(d) Licenses 1.9(e) Leases 1.9(f) Contracts 1.9(g) Prepaids 1.9(m) Names of Hospitals 1.10(d) Non-Operating Proprietary Assets - Computer 1.10(o) Other Non-Operating Assets 1.11(c) Capital Leases 1.11(i) Other Assumed Obligations 1.14 Material Structural Defects 2.6(a) Compliance with Law 2.7(b) Real Property Encumbrances 2.8(b) JCAHO Accreditation Periods
3 2.8(d) Audit Periods 2.8(g) Medical Staff Matters 2.8(h) Terminated Employees 2.10 Financial Statements 2.12 Employee Benefits 2.12(c) Seller Plans Audits 2.14 Personnel List 2.15 Insurance 3.4 Third Party Consents - Purchaser 3.5 Brokers - Purchaser 3.7 Legal Proceedings - Purchaser 7.10 Permitted Title Exceptions 11.1(b) Allocation of Purchase Price
4 LIST OF EXHIBITS
EXHIBIT DESCRIPTION 1.6.1 Bills of Sale 1.6.2 Real Estate Assignments 1.6.3 Limited Warranty Deeds 1.6.8 Transitional Services Agreements 1.6.9 Business Services Agreement 4.13 Environmental Survey 6.5 Opinion of Purchaser's Counsel 7.8 Opinion of Seller's In-House Counsel 12.2 Guarantee
5 ASSET SALE AGREEMENT This Asset Sale Agreement (the "Agreement") is made and entered into as of the 23rd day of July, 1999 (the "Effective Date") by and between Tenet Healthcare Corporation, a Nevada corporation ("Seller"), and Province Healthcare Company, a Delaware corporation ("Purchaser"). RECITALS: A. Through the wholly-owned subsidiary corporations and wholly-owned partnerships identified on Schedule A-1 (the "Subsidiaries"), Seller (I) engages in the business of delivering acute care services to the public through the acute care hospitals identified on Schedule A-2 (the "Acute Care Hospitals"), (II) owns and operates certain medical office buildings incident to the operation of the Acute Care Hospitals as specifically identified on Schedule A-3 (the "MOBs"), and (III) owns and operates other healthcare businesses incident to the operation of the Acute Care Hospitals as specifically identified on Schedule A-4 (the "Other Businesses") (the Acute Care Hospitals, MOBs and the Other Businesses are referred to herein collectively as the "Hospitals"). B. Purchaser desires to purchase, indirectly through wholly-owned limited partnerships (the "Purchaser Partnerships"), from the Subsidiaries, and Seller desires to cause the Subsidiaries to sell to Purchaser, substantially all of the assets with respect to the operation of the Hospitals, for the consideration and upon the terms and conditions contained in this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants contained in this Agreement, and for their mutual reliance, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS; SALE AND TRANSFER OF ASSETS; CONSIDERATION; CLOSING 1.1 Definitions. The terms listed below are defined elsewhere in this Agreement and, for ease of reference, the section containing the definition of each such term is set forth opposite such term.
TERM SECTION ---- ------- Accounts Receivable............................................................ss.1.10(l) Acute Care Hospital............................................................Recitals Agency Settlement..............................................................ss.11.2(a)
6 Aggregate Amount...............................................................ss.10.2.2(viii) Agreement......................................................................Preamble Assets.........................................................................ss.1.9 Assumed Obligations............................................................ss.1.11 Audit Periods..................................................................ss.2.8(d) Bills of Sale..................................................................ss.1.6.1 Breaching Party................................................................ss.8.1(b) Cash Purchase Price............................................................ss.1.2 CEO............................................................................ss.2.10 CFO............................................................................ss.2.10 Claim Notice...................................................................ss.10.4(a) Closing Date...................................................................ss.1.5 Closing........................................................................ss.1.5 Code...........................................................................ss.2.12(b) Competing Business.............................................................ss.4.14 Confidentiality Agreement......................................................ss.5.6 Consultant.....................................................................ss.4.13 Contracts......................................................................ss.1.9(f) COO............................................................................ss.2.10 Damages........................................................................ss.10.2.1 Disclosure Schedule............................................................ss.2 Document Retention Period......................................................ss.9.2(a) DOJ............................................................................ss.4.12 DON............................................................................ss.2.10 Effected Hospital..............................................................ss.1.5 Effective Date.................................................................Preamble Effective Time.................................................................ss.1.5 Environmental Laws.............................................................ss.2.6(c) Environmental Permits..........................................................ss.2.6(b) Environmental Survey...........................................................ss.4.13 Excluded Liabilities...........................................................ss.1.12 Final Balance Sheet............................................................ss.1.4 Financial Statements...........................................................ss.2.10 Fraction.......................................................................ss.11.3(a) FTC............................................................................ss.4.12 Governmental Program Transition Payments.......................................ss.11.3 Hospitals......................................................................Recitals Hospitals' Employees...........................................................ss.5.3(a) HSR Act........................................................................ss.2.3(b) Indemnified Party..............................................................ss.10.4 Indemnifying Party.............................................................ss.10.4(a) Indemnity Notice...............................................................ss.10.4(b) Independent Auditor............................................................ss.1.4 Independent Real Property Auditor..............................................ss.1.13(b)
7 Interim Balance Sheet..........................................................ss.1.2 Inventory......................................................................ss.1.9(h) Leased Real Property...........................................................ss.1.9(b) Leases.........................................................................ss.1.9(e) Licenses.......................................................................ss.1.9(d) MOBs...........................................................................Recitals Nondefaulting Party............................................................ss.8.1(b) Non-Operating Assets...........................................................ss.1.10 Notice Period..................................................................ss.10.4(a) Omitted Liabilities............................................................ss.2.10 Other Businesses...............................................................Recitals Owned Real Property............................................................ss.1.9(a) Permitted Exceptions...........................................................ss.7.10 Personal Property..............................................................ss.1.9(c) Post-Closing Adjustment Date...................................................ss.1.4 Prepaids.......................................................................ss.1.9(g) Purchaser Indemnitees..........................................................ss.10.2.1 Purchaser Partnerships.........................................................Recitals Purchase Price.................................................................ss.1.2 Purchaser......................................................................Preamble Purchaser's Plan...............................................................ss.5.3(d) Real Estate Assignments........................................................ss.1.6.2 Real Property..................................................................ss.1.9(b) Receivable Records.............................................................ss.1.10(m) Reconciliation.................................................................ss.11.3(a) Relevant Claim.................................................................ss.10.2.2(viii) Retained Management Employees..................................................ss.5.3(a) Seller.........................................................................Preamble Seller Business Service Area...................................................ss.4.14 Seller Tax Claims..............................................................ss.10.2.1 Subsidiaries' Cost Reports.....................................................ss.11.2(a) Subsidiaries...................................................................Recitals Surveys........................................................................ss.4.9 Termination Date...............................................................ss.8.1(f) Third Party Claim..............................................................ss.10.4(a) Title Commitment...............................................................ss.4.9 Title Company..................................................................ss.4.9 Title Instruments..............................................................ss.4.9 Title Policy...................................................................ss.4.9 Transition Services............................................................ss.11.3 Transitional Services Agreement................................................ss.1.6.8 WARN...........................................................................ss.1.11(d)
1.2 Purchase Price. Subject to the terms and conditions of this Agreement, the aggregate purchase price to be paid by Purchaser to Seller for the purchase of 3 8 the Assets shall be (a) Seventy-Seven Million Dollars ($77,000,000) (the "Purchase Price"), plus or minus (b) the amount of Net Working Capital (as defined below) on the Closing Date, minus (c) the amount of Seller's capital lease obligations with respect to the Hospitals, if any, that are assumed by Purchaser pursuant to Section 1.11 of this Agreement, minus (d) twenty-nine and forty-four one hundredths percent (29.44%) of the Sick Pay Amount (the sum of (a), (b), (c) and (d) being referred to for purposes of this Agreement as the "Cash Purchase Price"). For purposes of this Agreement, "Net Working Capital" shall be defined as an amount equal to the difference between the (i) current assets of the Subsidiaries with respect to the operation of the Hospitals, which for purposes of this calculation shall include only (a) the value of the Prepaids, (b) the value of the Inventory, and (c) other current assets associated with the Hospitals to the extent they have value, and (ii) the current liabilities of the Subsidiaries with respect to the operation of the Hospitals, which for purposes of this calculation shall only include, to the extent assumed, (a) Accounts Payable, (b) Accrued Expenses, (c) Accrued Payroll, (d) Accrued Paid Time Off, and (e) Other Current Liabilities (as such terms are utilized on the Interim Balance Sheet). For purposes of this Agreement, "Sick Pay Amount" shall be defined as the amount of accumulated sick pay and extended sick pay obligations of the Subsidiaries and any affiliate of Seller to the Hired Employees. At least three (3) calendar days but no more than ten (10) calendar days prior to the Closing Date, Seller shall prepare and deliver to Purchaser the latest available unaudited balance sheet of the Subsidiaries with respect to the operation of the Hospitals (the "Interim Balance Sheet"). The Interim Balance Sheet shall include a calculation of Net Working Capital and the Sick Pay Amount and shall be attached hereto as Schedule 1.2. The amounts set forth in the Interim Balance Sheet shall be subject to adjustment as provided in Sections 1.3 and 1.4 below. The Cash Purchase Price shall be payable by wire transfer of immediately available funds to Seller to the account(s) specified by Seller to Purchaser in writing, subject to the terms of Section 1.7.1 below. 1.3 Inventory. Seller shall cause an inventory to be taken of the Inventory by employees or representatives of Seller or its affiliates, with said inventory to be taken in accordance with the Subsidiaries' respective policies and procedures, as near in time as possible to the Closing Date and with the results extended and adjusted through the Closing Date. Seller shall permit representatives or employees of Purchaser to observe such inventory process. The cost of conducting the inventory shall be borne by Seller. All inventory items shall be valued at the lesser of cost or current market value. The parties acknowledge that the inventory to be taken pursuant to this Section 1.3 will not be conducted until immediately prior to the Closing Date and, as such, the results of such inventory will not be available until some time after the Closing Date. Accordingly, the parties agree 4 9 that for purposes of the Interim Balance Sheet, Net Working Capital shall include the value of the Inventory with respect to the operation of the Hospitals as reflected by the latest available unaudited balance sheet of the applicable Subsidiary. For purposes of the Final Balance Sheet, the portion of Net Working Capital attributable to the Inventory shall be the value of the Inventory as determined pursuant to this Section 1.3. 1.4 Post-Closing Adjustment to Purchase Price. Within ninety (90) calendar days after the Closing Date, the final unaudited balance sheet of the Hospitals as of the Closing Date (the "Final Balance Sheet"), which shall include a calculation of Net Working Capital and the Sick Pay Amount as of the Closing Date, shall be prepared by Seller and delivered to Purchaser. The Interim Balance Sheet and the Final Balance Sheet shall be prepared in a manner consistent with the terms of Section 2.10. If Purchaser disputes any entry on the Final Balance Sheet that affects the calculation of Net Working Capital, Purchaser shall notify Seller in writing (which writing shall contain Purchaser's determination of the amount of the disputed entry) within twenty (20) business days after Purchaser's receipt of the Final Balance Sheet from Seller. If the difference between Seller's and Purchaser's respective calculations of Net Working Capital is equal to or less than one percent (1%) of the amount of Seller's calculation, Seller's calculation shall be conclusive and binding as between Purchaser and Seller. If the difference between Seller's and Purchaser's respective calculations is greater than one percent (1%) of Seller's calculation, and Purchaser and Seller cannot resolve such dispute within thirty (30) business days after Purchaser notifies Seller in writing of such dispute, then KPMG Peat Marwick, independent certified public accountants (the "Independent Auditor"), shall review the matter in dispute and, acting as experts and not as arbitrators, shall promptly decide the proper amounts of such disputed entries (which decision shall also include a final recalculation of the Purchase Price). Such decision of the Independent Auditor shall be conclusive and binding as between Purchaser and Seller, and the costs of such review shall be borne by both Seller and Purchaser in proportion to the relevant amount each party's determination has been modified. Within twenty-five (25) business days after Purchaser's receipt of the Final Balance Sheet from Seller or, if disputed by Purchaser, within five (5) business days after the earlier of (a) the date Purchaser and Seller finally resolve such dispute and recalculate the Purchase Price accordingly, or (b) the date of receipt of a decision from the Independent Auditor (the "Post-Closing Adjustment Date"), either (i) Seller shall pay Purchaser in cash or in other immediately available funds the amount of any decrease in the Purchase Price, or (ii) Purchaser shall pay Seller in cash or in other immediately available funds the amount of any increase in the Purchase Price. If Purchaser or Seller, as the case may be, shall fail to make such payment to the other on the Post-Closing Adjustment Date, then the party failing to receive such amount due to it shall be entitled to receive interest on such unpaid amount at a per annum rate equal to the prime rate reported by the Wall Street Journal under 5 10 "Money Rates" on the Post-Closing Adjustment Date plus two percent (2%) (or the maximum rate allowed by law, whichever is less) from such defaulting party, such interest accruing on each calendar day after the Post-Closing Adjustment Date until payment of such amount and all interest thereon is made. 1.5 Closing Date. The consummation of the transactions contemplated by this Agreement ("Closing") shall take place at 9:00 a.m. on September 30, 1999, at the offices of Tenet HealthSystem, 14001 Dallas Parkway, Dallas, Texas 75420 or such other date, time and place as the parties shall mutually agree ("Closing Date"); provided that all conditions precedent and other matters required to be completed as of the Closing Date have been or will be completed on such date. The date set forth in the preceding sentence shall be extended to a date no later than May 31, 2000 with respect to the Closing of any Hospital (an "Effected Hospital") with respect to which it is reasonably anticipated that the Closing will be delayed due to any notice received by Purchaser or Seller from, or any action initiated by, a governmental party. The Closing with respect to each Hospital, shall be deemed to have occurred and to be effective as between the parties as of 12:01 a.m. (determined by reference to the local time zone in which such Hospital is located) on the next day after the Closing Date (the "Effective Time"). The parties acknowledge and agree that, as contemplated by Articles 6 and 7 hereof, there may be one or two Closings. To the extent a first Closing occurs which does not include an Effected Hospital, such first Closing shall be conducted and the provisions of this Agreement shall be construed to take into account the omission of the Effected Hospital, including, without limitation, (a) the Cash Purchase Price paid at the first Closing shall be reduced by the amount of the Purchase Price allocated to the Effected Hospital pursuant to Section 11.1(b) and (b) any references in the Agreement to the "Closing Date" shall be a reference to such first date of Closing with respect to the Hospital which is the subject of such first Closing. Any such second Closing shall be conducted and the provisions of this Agreement shall be construed to take into account the fact that the first Closing has occurred, including, without limitation, (x) the Cash Purchase Price paid at the second Closing shall take into account the amount of the Purchase Price allocated to the Effected Hospital pursuant to Section 11.1(b) and (y) any references in the Agreement to the "Closing Date" shall also be a reference to the date of the second Closing with respect to the Effected Hospital. Any other actions required by this Agreement to be taken in connection with a Closing shall be construed to be required to be taken both in connection with the first Closing and the second Closing. 1.6 Items to be Delivered by Seller at Closing. At or before the Closing, Seller shall cause each Subsidiary to deliver to Purchaser the following, duly executed by Seller and such Subsidiary where appropriate: 1.6.1 General Assignment, Bill of Sale and Assumption of Liabilities in the form of Exhibit 1.6.1 attached hereto (the "Bills of Sale"); 6 11 1.6.2 Assignment and Assumption of Real Estate Leases in the form of Exhibit 1.6.2 attached hereto (the "Real Estate Assignments"); 1.6.3 Limited Warranty Deed(s) (or such other deed comparable to limited warranty deed(s) as is applicable to the jurisdiction at issue) in the form of Exhibit 1.6.3 attached hereto; 1.6.4 favorable original certificates of good standing, or comparable status, of Seller and the Subsidiary, issued by the State of Nevada with respect to Seller and the respective states of incorporation and organization of such Subsidiary, dated no earlier than a date which is seven (7) calendar days prior to the Closing Date; 1.6.5 an opinion of Seller's in-house counsel in substantially the form attached hereto as Exhibit 7.8; 1.6.6 a certificate of the President or any Vice President of Seller certifying to Purchaser (i) the accuracy in all material respects of the representations and warranties set forth in Article 2 hereof and compliance with Seller's covenants set forth in this Agreement, (ii) that all material consents and approvals that are required from any person, entity, governmental body or regulatory agency in connection with the consummation of the transactions contemplated by this Agreement by Seller and the Subsidiaries have been obtained, and (iii) that all of the conditions contained in Article 6 have been satisfied or waived; 1.6.7 a certificate of the corporate Secretary of Seller (and of the corporate Secretary of each Subsidiary and the corporate Secretary of each general partner of any Subsidiary which is a partnership) certifying to Purchaser (i) the incumbency of the officers of Seller (and of each Subsidiary and of each such general partner) on the Effective Date and on the Closing Date and bearing the authentic signatures of all such officers who shall execute this Agreement and any additional documents contemplated by this Agreement and (ii) the due adoption and text of the resolutions of the Board of Directors of Seller, the sole director of each corporate Subsidiary, the sole director of the general partner(s) of each partnership Subsidiary and of the shareholder(s) and/or partners, as applicable of each Subsidiary authorizing (a) the transfer of the Assets and Assumed Obligations by each Subsidiary to Purchaser and (b) the execution, delivery and performance of this Agreement and all ancillary documents and instruments by Seller and each Subsidiary, and that such resolutions have not been amended or rescinded and remain in full force and effect on the Closing Date; 1.6.8 if requested by Purchaser, the Transitional Services Agreements, which shall be in the form of Exhibit 1.6.8 attached hereto (the "Transitional Services Agreements"); 7 12 1.6.9 the Business Services Agreement, which shall be in the form of Exhibit 1.6.9 attached hereto (the "Business Services Agreement"), pursuant to which Purchaser will bill and collect Seller's accounts receivable for sixty (60) days following the Closing Date; 1.6.10 UCC termination statements for any and all financing statements (which do not correspond to an Assumed Obligation) filed with respect to the Assets; and 1.6.11 such other instruments, certificates, consents or other documents as may be reasonably necessary to carry out the transactions contemplated by this Agreement and to comply with the terms hereof. 1.7 Items to be Delivered by Purchaser at Closing. At or before the Closing, Purchaser shall execute and deliver or cause to be delivered to Seller the following, duly executed by Purchaser where appropriate: 1.7.1 payment of the Cash Purchase Price based upon the Interim Balance Sheet (subject to adjustment as described in Section 1.4), plus any amount which Purchaser is required to reimburse Seller pursuant to Section 1.11(e), as adjusted to reflect the prorations provided in Section 1.8 of this Agreement. 1.7.2 a certificate of the President or any Vice President of Purchaser certifying to Seller (i) the accuracy in all material respects of the representations and warranties set forth in Article 3 hereof and compliance with Purchaser's covenants set forth in this Agreement, (ii) that all material consents and approvals that are required from any person, entity, governmental body or regulatory agency in connection with the consummation of the transactions contemplated by this Agreement by Purchaser have been obtained, and (iii) that all of the conditions contained in Article 7 have been satisfied or waived, and a similar certificate from each of the Purchaser Partnerships; 1.7.3 a certificate of the corporate Secretary of Purchaser certifying to Seller (i) the incumbency of the officers of Purchaser on the Effective Date and on the Closing Date and bearing the authentic signatures of all such officers who shall execute this Agreement and any additional documents contemplated by this Agreement and (ii) the due adoption and text of the resolutions of the Board of Directors of Purchaser authorizing the execution, delivery and performance of this Agreement and all ancillary documents and instruments by Purchaser, and that such resolutions have not been amended or rescinded and remain in full force and effect on the Closing Date, and a similar certificate from each of the Purchaser Partnerships; 1.7.4 an opinion of Purchaser's counsel in substantially the form attached hereto as Exhibit 6.5; 8 13 1.7.5 favorable original certificate of good standing, or comparable status, of Purchaser, issued by the Delaware Secretary of State dated no earlier than a date which is seven (7) calendar days prior to the Closing Date, and a similar certificate with respect to each of the Purchaser Partnerships from its respective state of organization; 1.7.6 if requested by Purchaser, the Transitional Services Agreements; 1.7.7 the Business Services Agreement, and 1.7.8 such other instruments, certificates, consents or other documents as may be reasonably necessary to carry out the transactions contemplated by this Agreement and to comply with the terms hereof. 1.8 Prorations and Utilities. To the extent not otherwise prorated pursuant to this Agreement, or as reflected in Net Working Capital on the Interim Balance Sheet or the Final Balance Sheet, Purchaser and Seller shall prorate (as of the Effective Time), if applicable, current real estate and personal property lease payments, current real estate and personal property taxes, current assessments and other similar charges against real estate, plus all other income and expenses which are normally prorated upon the sale of assets of a going concern. As to power and utility charges, "final readings" as of the Closing Date shall be ordered from the utilities; the cost of obtaining such "final readings," if any to be paid for equally by Seller and Purchaser. 1.9 Transfer of Seller Assets. On the Closing Date, Seller shall cause each Subsidiary to assign, transfer, convey and deliver to Purchaser, and Purchaser shall acquire, all of each Subsidiary's right, title and interest in and to the following assets and properties, as such assets shall exist on the Closing Date with respect to the operation of any Hospital, such transfer being deemed to be effective at the Effective Time (collectively, the "Assets"): (a) all of the real property that is owned by such Subsidiary and used with respect to the operation of any Hospital, including, without limitation, the real property described in Schedule 1.9(a) (such description to include a legal description and address), together with all buildings, improvements and fixtures located thereupon and all construction in progress (collectively, the "Owned Real Property"); (b) all of the real property that is leased by such Subsidiary and used with respect to the operation of any Hospital, including, without limitation, the leased real property described in Schedule 1.9(b) (the "Leased Real Property") (the Owned Real Property and the Leased Real Property are collectively referred to herein as the "Real Property"); 9 14 (c) all of the tangible personal property owned by such Subsidiary with respect to the operation of any Hospital, including all equipment, furniture, fixtures, machinery, vehicles, office furnishings, and leasehold improvements (the "Personal Property"), including, without limitation, the Personal Property described in Schedule 1.9(c); (d) all of such Subsidiary's rights, to the extent assignable or transferable, to all licenses, permits, approvals, certificates of need, certificates of exemption, franchises, accreditations and registrations and other governmental licenses, permits or approvals issued to such Subsidiary with respect to the operation of any Hospital (the "Licenses"), including, without limitation, the Licenses described in Schedule 1.9(d); (e) all of such Subsidiary's interest, to the extent assignable or transferable, in and to all real property and personal property leases with respect to the operation of any Hospital (the "Leases"), including, without limitation, those leases described in Schedule 1.9(e); (f) all of such Subsidiary's interest in and to all contracts and agreements (including, but not limited to, purchase orders) with respect to the operation of any Hospital (the "Contracts"), including, without limitation, those Contracts described in Schedule 1.9(f); (g) all of those advance payments, prepayments, prepaid expenses, deposits and the like which exist as of the Closing Date, subject to the prorations provided in Section 1.8 of this Agreement, which were made with respect to the operation of any Hospital and with respect to which Purchaser will receive the benefit after the Closing Date (the "Prepaids"), the current categories and amounts of which are set forth on Schedule 1.9(g); (h) except as excluded by Sections 1.10(e) and 1.10(j), all inventories of supplies, drugs, food, janitorial and office supplies and other disposables and consumables located at any of the Hospitals, or used with respect to the operation of any of the Hospitals (the "Inventory"); (i) all documents, records, operating manuals, files and computer software with respect to the operation of any of the Hospitals, including, without limitation, all patient records, medical records, employee records, financial records with respect to the operation of any of the Hospitals, equipment records, construction plans and specifications, and medical and administrative libraries; (j) to the extent assignable, all rights in all warranties of any manufacturer or vendor in connection with the Personal Property; (k) all goodwill of the businesses evidenced by the Assets; 10 15 (l) all insurance proceeds arising in connection with property damage to the Assets occurring after the Effective Date and on or prior to the Closing Date, to the extent not expended on the repair or restoration of the Assets; (m) the names, symbols and telephone numbers used with respect to the operation of any of the Hospitals, including, without limitation, the names of the Hospitals set forth on Schedule 1.9(m) and all variants thereof; and (n) any current assets of the Subsidiaries with respect to the operation of any of the Hospitals (which are not otherwise specifically described above in this Section 1.9) which are included in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4; PROVIDED, HOWEVER, that the Assets shall not include the Non-Operating Assets as defined in Section 1.10. Except as set forth below in Section 1.10, the Assets comprise substantially all of the property and assets used in the conduct of the businesses and operation of the Hospitals, including without limitation, all of the tangible personal property of the Subsidiaries used in the conduct and operation of the Hospitals. 1.10 Non-Operating Assets. Notwithstanding anything to the contrary in Section 1.9, Seller and the Subsidiaries shall retain all assets owned directly or indirectly by them (or any of their respective affiliates) which are not among the Assets, including, without limitation, the following assets of Seller or any Subsidiary (collectively, the "Non-Operating Assets"): (a) cash and short-term investments; (b) all intercompany receivables of Seller or any Subsidiary with any of their affiliates; (c) any current assets of the Subsidiaries with respect to the operation of any of the Hospitals which are not included in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4; (d) computer software, programs and hardware which is proprietary to Seller and/or its respective affiliates, data processing system manuals and licensed software materials, as more particularly described in Schedule 1.10(d); (e) all of Seller's or any affiliate of Seller's proprietary manuals, marketing materials, policy and procedure manuals, standard operating procedures and marketing brochures, data and studies or analyses; 11 16 (f) any asset which would revert to the employer upon the termination of any Seller Plan, including assets representing a surplus or overfunding of any Seller Plan; (g) all national or regional contracts of Seller or any affiliate thereof which are made available to any of the Hospitals by virtue of the Hospitals being an affiliate of Seller; (h) the names "Tenet Healthcare Corporation", "Tenet", "Tenet HealthSystem", "OrNda HealthCorp", and any other names or symbols not used exclusively at any of the Hospitals, all abbreviations and variations thereof and service marks, symbols and logos related thereto, together with any promotional material, stationery, supplies or other items of inventory bearing such names or symbols or abbreviations or variations thereof; (i) all current contracts between any Subsidiary and any affiliate of Seller with respect to the operation of any Hospital, except those approved in writing by Seller and Purchaser to be assigned to Purchaser after the Closing Date; (j) the portions of Inventory, Prepaids and other Assets disposed of, expended or canceled, as the case may be, by any Subsidiary after the Effective Date and on or prior to the Closing Date in the ordinary course of business; (k) assets owned and provided by vendors of services or goods to any of the Hospitals; (l) all accounts, notes, interest and other receivables of Seller and any Subsidiary, and all claims, rights, interests and proceeds related thereto, including all accounts and other receivables, and cost report settlements related thereto, arising from the rendering of services to inpatients and outpatients at any Hospital, billed and unbilled, recorded and unrecorded, for services provided by Seller or any Subsidiary while owner of the Assets whether payable by private pay patients, private insurance, third party payors, Medicare, Medicaid, CHAMPUS, Blue Cross, or by any other source ("Accounts Receivable"); (m) all documents, records, correspondence, work papers and other documents relating to the Accounts Receivable, the Subsidiaries' Cost Reports or Subsidiaries' Agency Settlements (the "Receivable Records"); (n) all claims, rights, interests and proceeds with respect to state or local tax refunds (including but not limited to property tax) resulting from periods ending on or before the Closing Date, and the right to pursue appeals of same; and 12 17 (o) any assets identified in Schedule 1.10(o). 1.11 Assumed Obligations. On the Closing Date, Seller and the Subsidiaries shall assign, and Purchaser shall assume and agree to discharge after the Closing, the following liabilities and obligations of Seller and/or any Subsidiary and only the following liabilities and obligations (collectively, the "Assumed Obligations"): (a) all current liabilities of the Subsidiaries with respect to the operation of any of the Hospitals on or prior to the Closing Date which are included in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4; (b) the Contracts, but only to the extent of the obligations arising thereunder with respect to events or periods after the Closing Date including, without limitation, any Contract not disclosed on Schedule 1.9(f) which requires payment by any Subsidiary during the remaining term of such instrument equal to or less than $10,000 (a "Minor Contract"), provided that the existence of such Minor Contract comes to Purchaser's attention no later than the date which is one year after the Closing Date. (c) the Leases, including the capital lease obligations of Seller with respect to the Hospitals listed on Schedule 1.11(c), but only to the extent of the obligations arising thereunder with respect to events or periods after the Closing Date including, without limitation, any Lease not disclosed on Schedule 1.9(e) which requires payment by any Subsidiary during the remaining term of such Lease equal to or less than $10,000 (a "Minor Lease"), provided that the existence of such Minor Lease comes to Purchaser's attention no later than the date which is one year after the Closing Date. (d) any and all obligations of Seller and the Subsidiaries under the Worker Adjustment and Retraining Notification Act ("WARN") with respect to the operation of the Hospitals as a result of (i) the consummation of the transaction contemplated by this Agreement (provided that Seller and the Subsidiaries have, with respect to the operation of the Hospitals, complied with WARN on or prior to the Closing Date), (ii) the acts of Purchaser or any affiliate of Purchaser after the Closing Date or (iii) Purchaser's breach of its covenant with respect to the Hired Employees as set forth in Section 5.3; (e) the Sick Pay Amount and all accrued vacation and holiday pay liabilities of the Subsidiaries (and their respective affiliates) with respect to the Hired Employees; provided, however, if Seller or any Subsidiary satisfies any portion of such obligations and liabilities existing at the Closing by payment to a Hired Employee, then Purchaser shall reimburse Seller in the amount of such payment at Closing; 13 18 (f) all unpaid real and personal property taxes, if any, that are attributable to the Assets on or prior to the Closing Date, subject to the prorations provided in Section 1.8; (g) all utilities being furnished to the Assets, subject to the prorations provided in Section 1.8; (h) any tax liability of Seller or any Subsidiary (other than for income taxes) incurred as a result of the consummation of the transaction contemplated by this Agreement; and (i) any other obligations and liabilities identified in Schedule 1.11(i). 1.12 Excluded Liabilities. Notwithstanding anything to the contrary in Section 1.11, Purchaser shall not assume or become responsible for any of Seller's or the Subsidiaries' duties, obligations or liabilities that are not assumed by Purchaser pursuant to the terms of this Agreement, the Bills of Sale or the Real Estate Assignment(s), regardless of whether such obligation or liability is known or unknown, fixed or contingent, and regardless of whether such liability arises from contract, tort or otherwise (the "Excluded Liabilities"), and Seller and the Subsidiaries shall remain fully and solely responsible for all debts, liabilities, contract obligations, expenses, obligations and claims of any nature whatsoever related to the Assets or the Hospitals unless assumed by Purchaser under this Agreement, in the Bills of Sale or in the Real Estate Assignment(s). The Excluded Liabilities shall include, without limitation: (a) any current liabilities of the Subsidiaries with respect to the operation of any of the Hospitals on or prior to the Closing Date (i) which are not included in Net Working Capital, as determined pursuant to Sections 1.2 and 1.4 and (ii) which are not otherwise specifically included in the Assumed Obligations; (b) all liabilities arising out of or relating to any act, omission, event or occurrence connected with the use, ownership or operation of any of the Hospitals or any of the Assets on or prior to the Closing Date, other than as specifically included in the Assumed Obligations; (c) all liabilities arising out of or relating to any act, omission, event or occurrence connected with Seller, the Subsidiaries or the operations or activities of Seller or any of the Subsidiaries, other than as specifically included in the Assumed Obligations; (d) all liabilities of Seller or any of the Subsidiaries in connection with claims of professional malpractice to the extent arising out of or relating to acts, omissions, events or occurrences on or prior to the Closing Date; 14 19 (e) all liabilities of Seller or any of the Subsidiaries with respect to its or their 401(k) plans, Section 125 plans and other Seller Plans and all administrative costs associated with such welfare benefit plans arising on or prior to the Closing Date; (f) all liabilities of Seller and/or any Subsidiary relating to the Subsidiaries' Cost Reports with respect to periods ending on or prior to the Closing Date, including, without limitation, recapture of previously reimbursed expenses and depreciation; (g) all liabilities of Seller or any of the Subsidiaries for violations of any law, regulation or rule to the extent arising from acts or omissions on or prior to the Closing Date, including, without limitation, those pertaining to Medicare and Medicaid fraud or abuse; and (h) all liabilities of Seller or any of the Subsidiaries for commissions or fees owed to any finder or broker in connection with the transactions contemplated hereunder. 1.13 Risk of Loss. (a) The risk of loss or damage to any of the tangible property, transfer of which is contemplated in this Agreement, shall remain with Seller or any Subsidiary until the Closing and Seller and any Subsidiary shall maintain its insurance policies covering the Assets, Personal Property, Owned Real Property and the Hospitals through the Closing. (b) With respect to the Real Property, if prior to the Closing, all or any part of the Owned Real Property is destroyed or damaged by fire or the elements or by any other cause where such damage in or destruction is less than $5,000,000, the parties' duties and obligations under this Agreement shall not be affected and the Closing shall proceed as scheduled; provided, however, Seller or any Subsidiary shall assign, transfer and set over to Purchaser all of Seller's or such Subsidiary's right, title and interest in and to insurance proceeds on account of such damage or destruction and, if such insurance policy proceeds are insufficient to repair, restore and/or replace the Owned Real Property, the difference between the cost to repair, restore and/or replace and the amount of such proceeds shall be deducted from the Purchase Price. If prior to the Closing, all or any part of the Owned Real Property for a Hospital is destroyed or damaged by fire or the elements or by other cause in an amount exceeding $5,000,000, Purchaser may elect (i) to purchase such Owned Real Property and the Closing shall proceed as scheduled (provided, however, at the Closing Seller shall assign, transfer and set over to Purchaser all of Seller's right, title and interest in and to any insurance proceeds on account of such damage or destruction loss plus the 15 20 amount of any deductibles under such insurance policies), (ii) if the casualty occurs with respect to Owned Real Property not located on a main campus of a Hospital, Purchaser may elect not to purchase the Owned Real Property for such Hospital and, in such event, an appropriate adjustment to the Purchase Price shall be made by Purchaser and Seller or (iii) if the casualty occurs with respect to Owned Real Property located on the main campus of a Hospital, Purchaser may elect to not purchase such Hospital. If Purchaser and Seller are unable to agree upon the amount of the adjustment described in Section 1.13(b)(ii) within ten (10) business days after Purchaser notifies Seller in writing of its election to choose the option set forth in Section 1.13(b)(ii), then Ernst & Young, LLP, independent certified public accountants (the "Independent Real Property Auditor") shall review the matter in dispute, and acting as experts and not as arbitrators, shall promptly decide the proper amount of the adjustment to the Purchase Price. Such decision of the Independent Real Property Auditor shall be conclusive and binding as between Purchaser and Seller, and the costs of such review shall be borne by both Seller and Purchaser in proportion to the relevant amount each party's determination of the adjustment contemplated by Section 1.13(b)(ii) has been modified. With respect to any Assets other than Owned Real Property which are destroyed or damaged by fire or the elements or by any other cause prior to the Closing, Seller shall assign, transfer and set over to Purchaser all of Seller's or any Subsidiary's right, title and interest to any insurance proceeds on account of such damage or destruction and shall reimburse Purchaser for any deductible Purchaser is required to pay in connection with the receipt of such insurance proceeds. 1.14 Disclaimer of Warranties. Except as expressly set forth in Article 2 hereof, the Assets transferred to Purchaser will be sold by Seller and the Subsidiaries and purchased by Purchaser in their physical condition on the Closing Date, "AS IS," WITH NO WARRANTY OF HABITABILITY OR FITNESS FOR HABITATION, with respect to the Real Property, land, buildings and improvements, and WITH NO WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, with respect to the physical condition of the Personal Property and Inventory, any and all of which warranties (both express and implied) Seller hereby disclaims. All of the foregoing real and personal property shall be further subject to normal wear and tear on the land, buildings, improvements and equipment and normal and customary use of the inventory and supplies in the ordinary course of business up to the Closing. Notwithstanding the foregoing, except as disclosed in Schedule 1.14, to Seller's knowledge there are no material structural defects in the Assets. 16 21 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER As an inducement to Purchaser to enter into this Agreement and to consummate the transactions contemplated by this Agreement, Seller hereby represents, warrants and covenants to Purchaser as to the following matters, except as disclosed in the disclosure schedule as of the Effective Date, as may be amended pursuant to the terms of this Agreement (the "Disclosure Schedule") hereby delivered by Seller to Purchaser. Except as otherwise provided herein, Seller shall be deemed to remake all of the following representations, warranties and covenants as of the Closing: 2.1 Authorization. Seller has full corporate power and authority to enter into this Agreement, and Seller and each Subsidiary has, or will have prior to the Closing, full power and authority to carry out the transactions contemplated hereby. 2.2 Binding Agreement. All corporate and other actions required to be taken by Seller and each Subsidiary to authorize their respective execution, delivery and performance of this Agreement, all documents executed by each of Seller and any Subsidiary which are necessary to give effect to this Agreement, and all transactions contemplated hereby, have been duly and properly taken or obtained, or will be duly and properly taken or obtained, by Seller and each Subsidiary, as applicable, prior to the Closing Date. No other corporate or other action on the part of the Seller or any Subsidiary, as applicable, is necessary to authorize the execution, delivery and performance of this Agreement, all documents necessary to give effect to this Agreement and all transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Seller and, assuming due and valid execution by Purchaser, this Agreement constitutes, or will constitute prior to Closing, a valid and binding obligation of Seller enforceable in accordance with its terms. 2.3 Organization and Good Standing; No Violation. (a) Except with respect to the Subsidiaries which are partnerships, each of Seller and the Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada with respect to Seller and in the state of its incorporation (which is indicated in Schedule A-1) with respect to each Subsidiary. Each Subsidiary which is a partnership is duly organized and validly existing under the laws of the state of its organization (which is indicated in Schedule A-1). Each of Seller and the Subsidiaries has full power and authority to own, operate and lease its properties and to carry on its businesses as now conducted. 17 22 (b) Neither the execution and delivery by Seller of this Agreement nor the consummation of the transactions contemplated hereby by Seller or any of the Subsidiaries nor compliance with any of the provisions hereof by Seller or any of the Subsidiaries, will (i) violate, conflict with or result in a breach of any provision of Seller's or any of the Subsidiaries' articles of incorporation or bylaws, respectively or other organizational documents with respect to Subsidiaries which are partnerships, (ii) violate any order, writ, injunction, ruling or law of any court or governmental authority, United States or foreign, or cause the suspension or revocation of any governmental license or authorization applicable to or binding upon or affecting Seller, any of the Subsidiaries, any of the Assets or the operation of the businesses of the Hospitals or (iii) except for the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder (the "HSR Act"), and as otherwise described in Section 2.3(b) of the Disclosure Schedule, require any consent, approval or authorization of, or notice to, or declaration, filing or registration with, any governmental or regulatory authority. 2.4 Contracts and Leases. (a) Schedule 1.9(e) includes a list of all Leases in respect of Real Property and Personal Property with respect to the operation of any Hospital (i) which (A) require lease payments by any Subsidiary during the remaining term of such Lease in excess of $10,000, or (B) either have a remaining term in excess of twelve (12) months or cannot be terminated by the applicable Subsidiary upon notice of ninety (90) calendar days or less, or (ii) to which any physician or other health care provider (other than Seller or any Subsidiary) is a party. (b) Schedule 1.9(f) includes a list of all Contracts with respect to the operation of any Hospital (i) which (A) require the payment by any Subsidiary during the remaining term of such instrument in excess of $10,000, or (B) either have a remaining term in excess of twelve (12) months or cannot be terminated by the applicable Subsidiary upon notice of ninety (90) calendar days or less, or (ii) to which any physician or other health care provider (other than Seller or any Subsidiary) is a party. With respect to the operation of the Hospitals, neither Seller nor any affiliate of Seller, including the Subsidiaries, is a party to any agreement with any physician or other health care provider which has not been evidenced in writing or disclosed in writing or electronic media to Purchaser prior to the Effective Date. (c) True and correct copies of the Leases and the Contracts described in Schedules 1.9(e) and 1.9(f) have previously been furnished to Purchaser. 18 23 2.5 Required Consents. Neither Seller nor any Subsidiary is a party to or bound by, nor are any of the Assets subject to, any mortgage, lien, deed of trust, or any lease, agreement or instrument, or any order, judgment or decree which (a) requires the consent of another to the execution of this Agreement, (b) requires the consent of another to consummate the transactions contemplated by this Agreement, or (c) makes unduly burdensome the consummation of the transactions contemplated by this Agreement. The consummation of the transactions contemplated by this Agreement will not result in a breach of any term or provision of, or constitute (with or without notice or lapse of time or both) a default under, any agreement or instrument to which Seller or any Subsidiary is a party, or which is binding on Seller or any Subsidiary, or to which the Assets are subject. The consummation of the transactions contemplated by this Agreement will not give any other party to any such agreement or instrument a right to cancel or terminate the same, a right to modify or amend the terms thereof, or result in an acceleration of the maturity or performance of any obligation under any such agreement or instrument. No such breach, default, cancellation, termination, modification or amendment or acceleration described in this Section 2.5 would prevent Seller or any Subsidiary from consummating the transactions contemplated by this Agreement, or would result in the creation of any lien, security interest, encumbrance, charge, loss or liability on any assets of Seller or any Subsidiary, including without limitation the Assets. 2.6 Compliance With Laws and Contracts. (a) Except as set forth in Schedule 2.6(a), Seller and each Subsidiary, with respect to the operation of the Hospitals, are in compliance with all applicable laws, statutes, ordinances, orders, rules, regulations, policies, guidelines, licenses, certificates, certificates of need, judgments or decrees of all judicial or governmental authorities (federal, state, local, foreign or otherwise), except where the failure to be in such compliance would not have a material adverse effect on the Assets or the business of any particular Hospital. Neither Seller nor any Subsidiary, with respect to the operation of the Hospitals, has been charged with or given notice of, and to the best knowledge of Seller, neither Seller nor any Subsidiary, with respect to the operation of the Hospitals, is under investigation with respect to, any violation of, or any obligation to take remedial action under, any applicable (i) law, statute, ordinance, rule, regulation, policy or guideline promulgated, (ii) license, certificate or certificate of need issued, or (iii) order, judgment or decree entered, by any federal, state, local or foreign court or governmental authority relating to any Hospital or the business of any particular Hospital. (b) To Seller's knowledge, Seller's and each Subsidiary's ownership and operation of the respective Hospitals and the Assets are and have been in compliance with all Environmental Laws (as defined in Section 2.6(c)), except where the failure to be in such compliance would not have a material adverse 19 24 effect on the Assets or the business of any particular Hospital. Each Subsidiary has obtained all licenses, permits and approvals necessary or required under all applicable Environmental Laws (the "Environmental Permits") for the ownership and operation of its respective Hospitals and the Assets. All such Environmental Permits are in effect and, to Seller's knowledge, no action to revoke or modify any of such Environmental Permits is pending. There is not now pending or, to Seller's knowledge, threatened, any claim, investigation or enforcement action by any governmental authority (whether judicial, executive or administrative) concerning Seller's or any Subsidiary's potential liability under Environmental Laws in connection with the ownership or operation of the Hospitals or the Assets. To Seller's knowledge, there has not been a release or threatened release of any Hazardous Substance at, upon, in, under or from the Hospitals or the Assets at any time. At no time during each Subsidiary's ownership of its respective Real Property, and to Seller's knowledge at no time during others' ownership of the Real Property, have any Hazardous Substances been present on the Real Property except as may be utilized as a matter of course in hospital operations and in accordance with applicable Environmental Laws. (c) For the purposes of this Agreement, the term "Environmental Laws" shall mean all state, federal or local laws, ordinances, codes or regulations relating to Hazardous Substances or to the protection of the environment, including, without limitation, laws and regulations relating to the storage, treatment and disposal of medical and biological waste. For purposes of this Agreement, the term "Hazardous Substances" shall mean (i) any hazardous or toxic waste, substance, or material defined as such in (or for the purposes of) any Environmental Laws, (ii) asbestos-containing material, (iii) medical and biological waste, (iv) polychlorinated biphenyls, (v) petroleum products, including gasoline, fuel oil, crude oil and other various constituents of such products, and (vi) any other chemicals, materials or substances, exposure to which is prohibited, limited or regulated by any Environmental Laws. (d) Seller and each Subsidiary have performed all obligations relating to the Assets and the business of the Hospitals, and are not in breach or default, nor do any circumstances exist which with or without notice or lapse of time, or both, would result in breach or default, nor is there any claim of such breach or default with respect to any obligation to be performed, under any contract, lease, guaranty, indenture, loan agreement, document or other agreement or arrangement relating to the Assets or the business of the Hospitals, including the Leases and Contracts. 20 25 2.7 Title; Sufficiency. (a) Each Subsidiary has good and marketable fee simple or leasehold title, as the case may be, to its respective Real Property. Each Subsidiary has good and valid title to its respective Personal Property. (b) The Real Property and the Personal Property is held by each respective Subsidiary free and clear of all liens, pledges, claims, charges, security interests or other encumbrances and is not, in the case of the Real Property, subject to any rights-of-way, building or use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever except, with respect to such properties, (i) liens for current real property taxes and assessments, (ii) mechanics', carriers', workmen's, repairmen's and other statutory liens, rights of way, building or use restrictions, exceptions, easements, covenants, variances, reservations and other limitations of any kind, if any, which do not materially impair or interfere with the ordinary business operations of any particular Hospital or for which, in respect of matters affecting title to the Real Property, title insurance coverage has been obtained and in respect of liens are either not in default or Seller has taken action to bond over same to the extent required to preclude such Real Property, or any portion thereof, being subject to foreclosure or sale in satisfaction of the claim secured by such lien, and (iii) other such encumbrances as are set forth in Schedule 2.7(b). None of the Real Property is subject to a pending, or to Seller's knowledge threatened, condemnation or similar proceeding. (c) The Inventory with respect to each Hospital is, and at the Closing will be, maintained in such quantities as is consistent with such Hospital's historical practices. (d) The Assets and the Non-Operating Assets comprise substantially all of the property and assets used in the conduct of the businesses and operation of the Hospitals. 2.8 Certain Representations With Respect to the Hospitals. (a) All licenses, certifications, certificates of need and contracts which are necessary to operate the business of each respective Hospital by each respective Subsidiary are valid and in good standing. (b) The Hospitals are duly accredited by the Joint Commission on Accreditation of Healthcare Organizations ("JCAHO") for the periods set forth in Schedule 2.8(b). With respect to each Hospital, Seller has previously delivered to Purchaser or will deliver prior to Closing a true and complete copy of the most recent JCAHO accreditation survey report and deficiency list, if any; the most recent Statement and Deficiencies and Plan of 21 26 Correction on Form HCFA-2567; the most recent state licensing report and list of deficiencies, if any; the most recent fire marshall's survey and deficiency list, if any, and the corresponding plans of correction or other responses. (c) The Hospitals are certified for participation in the Medicare, Medicaid and CHAMPUS programs, have current and valid provider contracts with each of such programs, are in substantial compliance with the conditions of participation of each of such programs and have received all approvals or qualifications necessary for capital reimbursement of the Assets. Neither Seller nor any of the Subsidiaries have received notices from the regulatory authorities which enforce the statutory or regulatory provisions in respect of any of the Medicare, Medicaid or CHAMPUS programs of any pending or threatened investigations with respect to the operation of the Hospitals. (d) Notices of Program Reimbursement have been issued by the applicable fiscal intermediary with respect to the cost reports of the Hospitals for Medicare, Medicaid (if required) and Blue Cross (if required) through the periods set forth in Schedule 2.8(d)(the "Audit Periods"). Each of such reports was timely filed. To the knowledge of Seller, (i) neither Seller nor any Subsidiary has received notice of any dispute between any Hospital and the applicable governmental agency or private entity, or their intermediaries or representatives, regarding such cost reports for periods subsequent to the periods specified in Schedule 2.8(d), and (ii) there are no pending or threatened claims by any of such programs against any Hospital with respect to the Audit Periods or any period thereafter. (e) With respect to the operation of the Hospitals, neither Seller nor any Subsidiary has any outstanding loan, grant, loan guarantee or other financial obligation pursuant to the Hill-Burton Act (42 USC Section 291a, et seq.). (f) Seller has previously delivered to Purchaser, with respect to each Hospital, a copy of the blank forms generally used with respect to medical staff privilege and membership application or delineation or privilege; all current medical staff bylaws, rules and regulations and amendments thereto; and all written contracts with physicians, physicians groups, or other members of the medical staff of each Hospital. (g) Except as set forth in a writing delivered by Seller to Purchaser which specifically makes reference to this Section, there are no pending or threatened disciplinary or corrective actions or appeals with respect to the medical or other staff members of any Hospital. Schedule 2.8(g) sets forth a complete and accurate list of (a) the name of each member of the medical 22 27 staff of the Hospitals as of the Effective Date, and (b) the specialty, if any, of each medical staff member. Notwithstanding the foregoing provisions of this Section 2.8(g), Seller shall not be required to disclose any information pursuant to this Section 2.8(g) where such disclosure is prohibited by state law. (h) Schedule 2.8(h) sets forth a complete and accurate list of the name of each employee at each of the Hospitals whose employment has been terminated since April 22, 1999 except for those employees whose employment has been terminated for cause or who have voluntarily resigned or retired. 2.9 Brokers and Finders. Other than Merrill Lynch, neither Seller, any Subsidiary, nor any affiliate thereof, nor any officer or director thereof, has engaged any finder or broker in connection with the transactions contemplated hereunder. 2.10 Financial Statements. The unaudited financial statements of each Subsidiary with respect to the operation of the Hospitals dated May 31, 1999 attached as Schedule 2.10, the Interim Balance Sheet and the Final Balance Sheet (collectively the "Financial Statements") have been or will be prepared from the books and records of each Subsidiary. The balance sheets included in the Financial Statements fairly present, or will fairly present, the financial position of each Subsidiary with respect to the operation of the Hospitals as of the respective dates thereof and the other financial statements included therein present or will present fairly the results of operations for the periods indicated, in each case in conformity with generally accepted accounting principles consistently applied during such periods, except that the Financial Statements (a) are subject to cost report and other year-end audit adjustments, (b) do not contain footnotes, (c) were prepared without physical inventories except for the Final Balance Sheet for which a physical inventory will be taken in accordance with Section 1.3, (d) do not contain an unaudited statement of cash flow, (e) are not restated for subsequent events, (f) do not contain a statement of construction in process, and (g) may not fully reflect the following liabilities (the "Omitted Liabilities"): (i) vacation, holiday and similar accruals and accruals in respect of Seller's and the Subsidiaries' self-insured employee health benefits, (ii) liabilities payable in connection with workers' compensation claims, (iii) liabilities payable pursuant to any employee welfare benefit plan (within the meaning of Section 3(1) of the Employee Retirement Security Act of 1974, as amended ("ERISA")), maintained by Seller or its affiliates on account of any of the Hospitals' employees, the chief executive officers of the Hospitals ("CEOs"), the chief financial officers of the Hospital ("CFOs"), the chief operating officers of the Hospitals ("COOs") and the directors of nursing of the Hospitals ("DONs"), (iv) federal, state and local income or franchise taxes and (v) bonuses payable to the CEOs, CFOs, COOs and DONs. 23 28 2.11 Legal Proceedings. There are no claims, proceedings or investigations pending or, to the best knowledge of Seller, threatened relating to or affecting Seller with respect to the operation of the Hospitals, any Subsidiary or any of the Assets before any court or governmental body (whether judicial, executive or administrative) in which an adverse determination would have a material adverse effect on the Assets or the business condition of any particular Hospital. Neither Seller with respect to the operation of the Hospitals nor any Subsidiary is subject to any judgment, order, decree or other governmental restriction specifically (as distinct from generically) applicable to it or its assets, including the Assets, which would have a material adverse effect on the Assets or the business condition (financial or otherwise) of any particular Hospital. 2.12 Employee Benefits. (a) Schedule 2.12 contains a list of (i) each pension, profit sharing, bonus, deferred compensation, or other retirement plan or arrangement of Seller or any Subsidiary with respect to the operation of the Hospitals, whether oral or written, which constitutes an "employee pension benefit plan" as defined in Section 3(2) of ERISA, (ii) each medical, health, disability, insurance or other plan or arrangement of Seller or any Subsidiary with respect to the operation of the Hospitals, whether oral or written, which constitutes an "employee welfare benefit plan" as defined in Section 3(1) of ERISA, and (iii) each other employee benefit or perquisite provided by Seller or any Subsidiary with respect to the operation of the Hospitals, in which any employee of Seller or any Subsidiary participates in his capacity as such (collectively, the "Seller Plans"). Copies of the summary plan descriptions and brochures with respect to the Seller Plans have previously been furnished to Purchaser. (b) With respect to each Seller Plan, to Seller's knowledge, neither Seller nor any Subsidiary has any direct or indirect, actual or contingent liability, other than to make payments for contributions, premiums or benefits when due in the ordinary course, all of which payments that are due having been made. Neither the Hospitals nor any of the Assets are subject to any lien under ERISA or the Internal Revenue Code of 1986, as amended (the "Code"). (c) All of the Seller Plans have been administered in material compliance with ERISA and the applicable provisions of the Code. There are no "accumulated funding deficiencies" within the meaning of ERISA or the Code or any federal excise tax or other liability on account of any deficient fundings in respect of the Seller Plans. No reportable event(s) (within the meaning of ERISA) or prohibited transaction(s) (within the meaning of the Code), has occurred in respect of any of the Seller Plans that would result in any material liability to Seller or any Subsidiary. Other than claims for 24 29 benefits, there are not pending or, to Seller's knowledge, threatened any claims relating to the Seller Plans by any employee of Seller or any Subsidiary with respect to the operation of the Hospitals, alleging a breach or breaches of fiduciary duties or violations of other applicable state or federal law which could result in liability on the part of Seller, any Subsidiary or any of the Seller Plans under ERISA or any other law that would have a material adverse effect on Seller or any Subsidiary. To Seller's knowledge, none of the Seller Plans discriminates in operation in favor of employees who are officers or who are highly compensated, except as permitted under the Code and ERISA. To Seller's knowledge, all returns, reports, disclosure statements and premium payments required to be made under ERISA and the Code with respect to any of the Seller Plans have been timely filed or delivered, except where any such failure to file or deliver would not have a material adverse effect on Seller. Except as disclosed in Schedule 2.12(c), none of the Seller Plans have been audited or investigated by either the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation within the last five (5) years, and there are no outstanding issues with reference to any of the Seller Plans pending before such governmental agencies. (d) The American Medical International, Inc. Pension Plan is fully funded as calculated in accordance with Financial Accounting Standard Board requirements. 2.13 Taxes and Tax Returns. The Subsidiaries have duly filed all federal, state and local tax returns required to be filed by them (all of which are true and correct in all material respects) and have duly paid or made provision for the payment of all taxes (including any interest or penalties) which are due and payable, whether or not in connection with such returns. Seller (with respect to the operation of the Hospitals) and the Subsidiaries have withheld proper and accurate amounts from their employees' compensation, and made deposits of all such withholdings, in material compliance with all withholding and similar provisions of the Code and any and all other applicable laws. 2.14 Personnel. (a) Schedule 2.14 sets forth a complete list (as of the date set forth therein) of names, positions and current annual salaries or wage rates, bonus and other compensation and/or benefit arrangements, accrued sick and vacation days, and period of service credited for vesting as of the date thereof of all full-time and part-time employees of Seller and the Subsidiaries with respect to the operation of the Hospitals and indicating whether such employee is a part-time or full-time employee. 25 30 (b) There are no labor union or collective bargaining agreements in effect with respect to the employees of Seller or any of the Subsidiaries with respect to the operation of the Hospitals. There is no unfair labor practice complaint against Seller or any of the Subsidiaries pending, or to the best knowledge of Seller threatened, before the National Labor Relations Board with respect to the operation of the Hospitals. There is no labor strike, arbitration, dispute, slowdown or stoppage, and no union organizing campaign, pending, or to the best knowledge of Seller threatened, by or involving the employees of Seller or any of the Subsidiaries with respect to the operation of the Hospitals. 2.15 Insurance. Seller and the Subsidiaries maintain, and have maintained, without interruption, at all times during the Subsidiaries' respective ownership of the Hospitals, self-insurance or policies or binders of insurance covering such risks and events, including personal injury, property damage, malpractice and general liability, to provide adequate and sufficient insurance coverage for all the assets and operations of the Hospitals. Schedule 2.15 contains a list of all such insurance maintained by Seller and the Subsidiaries with respect to the operation of the Hospitals as of the Effective Date. 2.16 Solvency. Neither Seller nor any Subsidiary is insolvent and neither Seller nor any Subsidiary will be rendered insolvent as a result of any of the transactions contemplated by this Agreement. For purposes hereof, the term "solvency" means that: (i) the fair salable value of Seller's and each Subsidiary's tangible assets is in excess of the total amount of its respective liabilities (including for purposes of this definition all liabilities, whether or not reflected on a balance sheet prepared in accordance with generally accepted accounting principles, and whether direct or indirect, fixed or contingent, secured or unsecured, and disputed or undisputed); (ii) Seller and each Subsidiary is able to pay its respective debts or obligations in the ordinary course as they mature; and (iii) Seller and each Subsidiary has capital sufficient to carry on its respective businesses and all businesses which it is respectively about to engage. 2.17 No Untrue or Inaccurate Representations or Warranties. The representations and warranties of Seller contained in this Agreement, and each exhibit, schedule, certificate or other written statement delivered pursuant to this Agreement or in connection with the transactions contemplated hereby, are accurate, correct and complete, and in the aggregate do not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements and information contained therein not misleading. References in this Agreement to "knowledge of Seller", the "best knowledge of Seller", "known to Seller" or "upon Seller knowing" mean the actual knowledge of the CEOs, CFOs, DONs, physical plant managers of the Hospitals and business office managers of the Hospitals without independent investigation. 26 31 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER As an inducement to Seller to enter into this Agreement and to consummate the transactions contemplated by this Agreement, Purchaser hereby represents, warrants and covenants to Seller as to the following matters as of the Effective Date and, except as otherwise provided herein, shall be deemed to remake all of the following representations, warranties and covenants as of the Closing: 3.1 Authorization. Purchaser has full corporate power and authority to enter into this Agreement and has, or will have prior to the Closing, full corporate power and authority to carry out the transactions contemplated hereby. 3.2 Binding Agreement. All corporate and other actions required to be taken by Purchaser to authorize the execution, delivery and performance of this Agreement, all documents executed by Purchaser which are necessary to give effect to this Agreement, and all transactions contemplated hereby, have been duly and properly taken or obtained or will be duly and properly taken or obtained by Purchaser prior to the Closing Date. No other corporate or other action on the part of Purchaser is necessary to authorize the execution, delivery and performance of this Agreement, all documents necessary to give effect to this Agreement and all transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser and, assuming due and valid execution by Seller, this Agreement constitutes, or will constitute prior to Closing, a valid and binding obligation of Purchaser enforceable in accordance with its terms. 3.3 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has full corporate power and authority to own, operate and lease its properties and to carry on its business as now conducted. 3.4 No Violation. Neither the execution and delivery by Purchaser of this Agreement nor the consummation of the transactions contemplated hereby nor compliance with any of the provisions hereof by Purchaser will (i) violate, conflict with or result in a breach of any provision of the Articles of Incorporation, Bylaws or other organizational documents of Purchaser, (ii) violate any order, writ, injunction, ruling or law of any court or governmental authority, United States or foreign, applicable to Purchaser, or cause the suspension or revocation of any governmental license or authorization applicable to or binding upon or affecting Purchaser, or (iii) except for the applicable requirements of the HSR Act, and as otherwise described on Schedule 3.4 attached hereto, require any consent, approval or authorization of, or notice to, or declaration, filing or registration with, any governmental or regulatory authority. 27 32 3.5 Brokers and Finders. Except as described on Schedule 3.5, neither Purchaser nor any affiliate thereof nor any officer or director thereof has engaged any finder or broker in connection with the transactions contemplated hereunder. 3.6 Representations of Seller. Purchaser acknowledges that it is purchasing the Assets on as "AS IS" basis (as more particularly described in Section 1.14), and that Purchaser is not relying on any representation or warranty (expressed or implied, oral or otherwise) made on behalf of Seller other than as expressly set forth herein. 3.7 Legal Proceedings. Except as described on Schedule 3.7, there are no claims, proceedings or investigations pending or, to the best knowledge of Purchaser, threatened relating to or affecting Purchaser or any affiliate of Purchaser before any court or governmental body (whether judicial, executive or administrative) in which an adverse determination would materially adversely affect the properties, business condition (financial or otherwise) of Purchaser or any affiliate of Purchaser. Neither Purchaser nor any affiliate of Purchaser is subject to any judgment, order, decree or other governmental restriction specifically (as distinct from generically) applicable to Purchaser or any affiliate of Purchaser which materially adversely affects the condition (financial or otherwise), operations or business of Purchaser or any affiliate of Purchaser. 3.8 Solvency. Purchaser is not insolvent and will not be rendered insolvent as a result of any of the transactions contemplated by this Agreement. For purposes hereof, the term "solvency" means that: (i) the fair salable value of Purchaser's tangible assets is in excess of the total amount of its liabilities (including for purposes of this definition all liabilities, whether or not reflected on a balance sheet prepared in accordance with generally accepted accounting principles, and whether direct or indirect, fixed or contingent, secured or unsecured, and disputed or undisputed); (ii) Purchaser is able to pay its debts or obligations in the ordinary course as they mature; and (iii) Purchaser has capital sufficient to carry on its businesses and all businesses which it is about to engage. 3.9 No Knowledge of Seller's Breach. Neither Purchaser nor any of its affiliates has knowledge of any breach of any representation or warranty by Seller or of any other condition or circumstance that would excuse Purchaser from its timely performance of its obligations hereunder. If information comes to Purchaser's attention on or before the Closing Date (whether through Seller or otherwise and whether before or after the Effective Date) which indicates that Seller has breached any of its representations and warranties under this Agreement, Purchaser must immediately notify Seller of such information, and Purchaser's failure to so notify Seller shall constitute a waiver by Purchaser of Seller's breach, if any, of any representation or warranty. If information comes to Purchaser's attention on or before the Closing Date (whether through Seller or otherwise and whether before or after the Effective Date) which would excuse 28 33 Purchaser from its timely performance of its obligations hereunder, Purchaser must immediately notify Seller if any such information comes to its attention on or before the Closing Date, and Purchaser's failure to so notify Seller shall constitute a waiver of such condition or circumstances insofar as it would excuse Purchaser from its timely performance of its obligations hereunder. 3.10 Ability to Perform. Purchaser has the ability to obtain funds in cash in amounts equal to the Purchase Price by means of credit facilities or otherwise and will at the Closing have immediately available funds in cash, which are sufficient to pay the Purchase Price and to pay any other amounts payable pursuant to this Agreement and to consummate the transactions contemplated by this Agreement. 3.11 No Untrue or Inaccurate Representations or Warranties. The representations and warranties of Purchaser contained in this Agreement, and each exhibit, schedule, certificate or other written statement delivered pursuant to this Agreement, or in connection with the transactions contemplated hereby, are accurate, correct and complete, and in the aggregate do not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements and information contained therein not misleading. References in this Agreement to "knowledge of Purchaser", the "best knowledge of Purchaser", "known to Purchaser" or "upon Purchaser knowing" mean the actual knowledge of the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of Purchaser, without independent investigation. ARTICLE 4 COVENANTS OF SELLER 4.1 Access and Information; Inspections. From the Effective Date until Closing, Seller shall, and shall cause the Subsidiaries to, afford to the officers and agents of Purchaser (which shall include accountants, attorneys, bankers and other consultants and agents of Purchaser) full and complete access during normal business hours to and the right to inspect the plants, properties, books, accounts, records and all other relevant documents and information with respect to the assets, liabilities and business of the Hospitals. From the Effective Date until Closing, Seller shall, and shall cause the Subsidiaries to, furnish Purchaser with such additional financial and operating data and other information in Seller's or any Subsidiary's possession as to businesses and properties of the Hospitals as Purchaser or its representatives may from time to time reasonably request, without regard to where such information may be located. Purchaser's right of access and inspection shall be exercised in such a manner as not to interfere unreasonably with the operations of the Hospitals. Such access may include consultations with the personnel of Seller or the Subsidiaries provided, however, that Purchaser shall not consult with or contact in any manner any physicians on the medical staff at any of 29 34 the Hospitals without Seller's prior written consent. Further, Purchaser may, at its sole cost and expense (except as otherwise provided in Section 12.12), undertake environmental, mechanical and structural surveys of the Hospitals. Purchaser acknowledges that it shall coordinate its inspection activities contemplated by this Section 4.1 through David R. Mayeux or his designee. 4.2 Preserve Accuracy of Representations and Warranties. Seller shall, and shall cause the Subsidiaries to, refrain from any action or inaction that would render any representation or warranty contained in Article 2 of this Agreement inaccurate as of the Closing Date. 4.3 Conduct of Business. On and after the Effective Date and prior to the Closing, and except as otherwise consented to or approved by an authorized officer of Purchaser or required by this Agreement, Seller shall, and shall cause each Subsidiary to, with respect to the operation of the Hospitals: (a) carry on its respective businesses with respect to the operation of the Hospitals 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; (b) maintain each Hospital and all parts thereof and all other Assets in operating condition in a manner consistent with past practices, ordinary wear and tear excepted; (c) perform all of its obligations under agreements relating to or affecting each Hospital, its respective operations or the Assets; (d) keep in full force and effect present insurance policies or other comparable self-insurance; and (e) use its reasonable commercial efforts to maintain and preserve its respective business organizations intact, retain its respective present employees at each Hospital and maintain its respective relationships with physicians, suppliers, customers and others having business relationships with each Hospital and take such actions as are necessary and use its reasonable commercial efforts to cause the smooth, efficient and successful transition of business operations and employee and other relations to the Purchaser as of Closing. 4.4 Negative Covenants. From the Effective Date until Closing, with respect to the operation of the Hospitals, Seller shall not, and Seller shall cause each Subsidiary to not, without the prior written consent of Purchaser or except as may be required by law: 30 35 (a) amend or terminate any of the Contracts, enter into any new contract or commitment, or incur or agree to incur any liability, except in the ordinary course of business (which ordinary course of business shall include renewals of any Contract), and in no event with respect to any such contract, commitment or liability as to which the total to be paid in the future under the contract, commitment or liability exceeds $50,000; (b) increase compensation payable or to become payable or make any bonus payment to or otherwise enter into one or more bonus agreements with any employee, except in the ordinary course of business in accordance with Seller's and any Subsidiary's customary personnel policies; (c) create, assume or permit to exist any new debt, mortgage, deed of trust, pledge or other lien or encumbrance upon any of the Assets; (d) acquire (whether by purchase or lease) or sell, assign, lease, or otherwise transfer or dispose of any property, plant or equipment, except in the ordinary course of business with comparable replacement thereof; (e) except with respect to previously budgeted expenditures, purchase capital assets or incur costs in respect of construction in progress; (f) take any action outside the ordinary course of business; or (g) reduce Inventory except in the ordinary course of business. 4.5 Required Approvals. Seller shall reasonably cooperate with Purchaser and its representatives and attorneys: (i) in obtaining all consents, approvals, authorizations, clearances, certificates of need and licenses required to carry out the transactions contemplated by this Agreement (including, without limitation, those of governmental and regulatory authorities) or which Purchaser reasonably deems necessary or appropriate, and (ii) in the preparation of any document or other material which may be required by any governmental agency as a predicate to or result of the transactions contemplated herein; provided, however, that it shall be Purchaser's responsibility to obtain the certificates of need and licenses required to carry out the transactions contemplated by this Agreement. As soon as practicable after the Effective Date, Seller will make all governmental filings required to be made by it in order to consummate the transactions contemplated herein (including all filings under the Hart-Scott-Rodino Act, as more particularly described below). 4.6 Additional Financial Information. Within thirty (30) calendar days following the end of each calendar month prior to Closing, Seller shall deliver to Purchaser complete copies of the unaudited balance sheet and related unaudited statements of income relating to each Subsidiary with respect to the operation of the Hospitals for each month then ended, together with a year-to-date compilation 31 36 and the notes, if any, related thereto, which presentation shall be consistent with the provisions of Section 2.10 which are applicable to the Financial Statements. 4.7 No-Shop. (a) From and after the Effective Date until the earlier of the Closing or the termination of this Agreement, Seller shall not, and shall cause the Subsidiaries to not, without the prior written consent of Purchaser: (i) offer for sale or lease the assets of the Hospitals or the Assets or of any stock or other securities or other interest owned by Seller or its affiliates in any Subsidiary; (ii) solicit offers to buy all or any portion of any of the Hospitals or the Assets, or any stock or other securities or other interest owned by Seller or its affiliates in any Subsidiary; (iii) hold discussions with any party (other than Purchaser) looking toward such an offer or solicitation or looking toward a merger or consolidation of any Subsidiary; or (iv) enter into any agreement with any party (other than Purchaser) with respect to the sale or other disposition of any of the Hospitals or the Assets or of any stock or other securities or other interest owned by Seller or its affiliates in any Subsidiary, or with respect to any merger, consolidation, or similar transaction involving any Subsidiary. Seller shall promptly advise Purchaser of any inquiry, proposal, solicitation or communication of any kind relating to, or contemplating any of the foregoing. Notwithstanding the foregoing, this Section 4.7 shall not be construed to prohibit Seller from engaging in discussions regarding corporate transactions involving its or its affiliates' stock or securities, including macro-level mergers, reorganizations or other transactions, so long as the terms thereof do not contemplate the sale or lease or other disposition of the Hospitals or the Assets. (b) Any reference in this Agreement to an "affiliate" shall mean any Person directly or indirectly controlling, controlled by or under common control with a second Person; provided, however, an "affiliate" shall not include the stockholders of Seller or any officer or director of any Person. The term "control" (including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. A "Person" shall mean any natural person, partnership, corporation, limited liability company, association, trust or other legal entity. 4.8 Seller's Efforts to Close. Seller shall use its reasonable commercial efforts to satisfy all of the conditions precedent set forth in Articles 6 and 7 to its or Purchaser's obligations under this Agreement to the extent that Seller's action or inaction can control or influence the satisfaction of such conditions. 32 37 4.9 Title Matters. Prior to the Closing Date, Seller shall deliver to Purchaser (a) a preliminary binder or title commitment(s) (the "Title Commitment") sufficient for the issuance of an A.L.T.A. Extended Coverage Owner's Title Insurance Policy with respect to the Owned Real Property (the "Title Policy"), issued by Chicago Title Insurance Company (the "Title Company"), together with true, correct and legible copies of all instruments referred to therein as conditions or exceptions to title (the "Title Instruments") and (b) A.L.T.A. surveys of the Owned Real Property complying with the Minimum Standard Detail Requirements for ALTA/ASCM Land Title Surveys for the Owned Real Property (the "Surveys"). Section 12.12 shall govern which party or parties hereto shall bear the costs and expenses of the Title Commitment, the Title Policy and the Surveys. 4.10 Termination of Hospitals' Employees. Upon the Effective Time, the Hospitals' Employees (other than the Retained Management Employees) shall cease to be employees of Seller and Seller's affiliates including the Subsidiaries, and shall be removed from such entities' respective payrolls. Seller shall, and shall cause the Subsidiaries to, terminate effective as of the Effective Time the active participation of all of the Hospitals' Employees (other than the Retained Management Employees) in all of the Seller Plans, and shall cause each Seller Plan to comply with all applicable laws. After the Effective Time, Seller shall, and shall cause the Subsidiaries to, timely make or cause to be made by their affiliates appropriate distributions to, or for the benefit of, all of the Hospitals' Employees (other than the Retained Management Employees) prior to the Effective Time in respect of the Seller Plans which are in force and effect with respect to the Hospitals' Employees (other than the Retained Management Employees) at the Hospitals immediately prior to the Effective Time in accordance with ERISA, the Code and the terms and conditions of the Seller Plans; provided, however, no such distribution shall be required to the extent it is among the Assumed Obligations. 4.11 Termination Cost Reports. Seller shall, and shall cause the Subsidiaries to, file all Medicare, Medicaid, CHAMPUS, Blue Cross and any other termination cost reports required to be filed as a result of the consummation of (a) the transfer of the Assets to Purchaser and (b) the transactions contemplated by this Agreement. All such termination cost reports shall be filed by Seller or the applicable Subsidiary in a manner that is consistent with current laws, rules and regulations. 4.12 Hart-Scott-Rodino Act Filings. Seller will (a) take promptly all actions necessary to make the filings required of Seller or its affiliates under the HSR Act on July 30, 1999 or as soon thereafter as practicable, (b) comply at the earliest practicable date with any request for additional information received by Seller or its affiliates from the Federal Trade Commission (the "FTC") or Antitrust Division of the Department of Justice (the "DOJ") pursuant to the HSR Act, and (c) cooperate with Purchaser in connection with Purchaser's filings under the HSR Act and in connection with resolving any investigation or other regulatory inquiry concerning 33 38 the transactions contemplated by this Agreement commenced by either the FTC or the DOJ. All fees and expenses of Seller incurred in connection with Seller's filing under the HSR Act shall be borne by Seller. 4.13 Environmental Survey. Seller shall promptly obtain from an environmental consulting firm (the "Consultant") a written environmental survey of the Owned Real Property (the "Environmental Survey") and shall deliver the Environmental Survey to Purchaser, which survey shall be identified on Exhibit 4.13 hereto. Section 12.12 shall govern which party or parties hereto shall bear the costs and expenses of the Environmental Survey. 4.14 Noncompetition. As an inducement to Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, neither Seller, any Subsidiary, nor any of their affiliates, nor any of their successors, shall, for a period of two (2) years following the Closing Date, without the prior written consent of Purchaser, directly or indirectly, invest in, own, manage, operate, control or participate in the ownership, management, operation or control of, or serve as a consultant or lender to, any Competing Business within the Seller Business Service Area. For purposes of this Agreement, the term "Competing Business" means the business of owning and operating general acute care hospitals, and the term "Seller Business Service Area" means the area within a thirty (30) mile radius of Trinity Valley Medical Center and a twenty-five (25) mile radius of Minden Medical Center. Notwithstanding the foregoing, the following shall be excluded from the foregoing provisions of this Section 4.14: (a) the general acute care hospital activities of Seller and its affiliates as of the Closing Date (other than the activities of the Hospitals) and (b) Seller's or any affiliate of Seller's acquisition and operation of a general acute care hospital within the Seller Business Service Area after the Closing Date so long as such hospital was acquired in a transaction in which the amount of consideration allocated to such hospital is less than ten percent (10%) of the total consideration necessary to consummate such transaction; provided, however, nothing in this Section 4.14 shall prevent Seller from acquiring, operating or managing East Texas Medical Center Regional Healthcare System and its affiliated hospitals, as a whole. Seller shall cause each of its affiliates, and any successors to its affiliates, to comply with the obligations imposed by this Section 4.14. In the event that the provisions contained in this Section 4.14 shall ever be deemed to exceed the time or geographic limits or any other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum extent permitted by applicable law. 4.15 Enforceability. Seller hereby acknowledges that the covenant contained in Section 4.14 above is a condition precedent to Purchaser's entering into this Agreement, and that such restrictions are reasonable and necessary to protect the legitimate interests of Purchaser following the Closing. Seller also hereby acknowledges that any violation of Section 4.14 would result in irreparable injury to Purchaser and the remedy at law for any breach of Section 4.14 would be 34 39 inadequate. Seller specifically acknowledges and agrees that Purchaser shall be entitled to an equitable accounting of all earnings, profits and other benefits arising from such breach and further agrees to pay the reasonable fees and expenses, including attorneys' fees, incurred by Purchaser in enforcing the restrictions contained in Section 4.14. 4.16 Cooperation. After the Effective Date, Seller's human resources department will give reasonable assistance to Purchaser's (and its affiliates') human resources department with respect to the transition of the Hospitals' Employees from the Seller Plans to Purchaser's (and its affiliates') employee pension benefit plans and employee health or welfare benefit plans. ARTICLE 5 COVENANTS OF PURCHASER 5.1 Purchaser's Efforts to Close. Purchaser shall use its reasonable commercial efforts to satisfy all of the conditions precedent set forth in Articles 6 and 7 to Purchaser's or Seller's obligations under this Agreement to the extent that Purchaser's action or inaction can control or influence the satisfaction of such conditions. 5.2 Required Approvals. Purchaser (a) shall use its reasonable best efforts to secure, as promptly as practicable, before the Closing Date, all consents, approvals, authorizations, clearances, certificates of need and licenses required to carry out the transactions contemplated by this Agreement (including, without limitation, those of governmental and regulatory authorities) and to cause all of its covenants and agreements to be performed, satisfied and fulfilled; and (b) will provide such other information and communications to governmental and regulatory authorities as Seller or such authorities may reasonably request. 5.3 Certain Employee Matters. (a) Purchaser covenants and agrees that it shall make offers of employment (in substantially equivalent positions) to all of the persons who are employees of (i) the Subsidiaries with respect to the operation of the Hospitals or (ii) any affiliate of Seller which employs individuals at any of the Hospitals, (whether such employees are full time employees, part-time employees, on short-term disability or on leave of absence pursuant to Seller's policies, the Family and Medical Leave Act of 1993 or other similar local law, but excluding those employees who have been granted long-term disability benefits) as of the Closing Date (the "Hospitals' Employees"). Notwithstanding the foregoing, Purchaser acknowledges that Seller has the right, but is not required, to retain any management-level Hospital Employee who does not accept Purchaser's employment offer made under this Section 35 40 5.3(a), which individuals will remain employed by Seller or its applicable affiliate as of the Effective Time (the "Retained Management Employees"). Any of the Hospitals' Employees who accept an offer of employment with Purchaser as of or after the Effective Time shall be referred to herein as the "Hired Employees". Purchaser covenants and agrees that it shall continue to employ in comparable positions that number of the Hired Employees as shall be necessary to avoid any liability of Seller under WARN. Purchaser shall ensure that the terms and conditions of employment (including level of compensation and benefits, including without limitation health insurance plans containing a waiver of pre-existing conditions clause) of each of the Hired Employees after the Closing Date are substantially equivalent to that provided the Hospitals' Employees as of the Effective Date. (b) Purchaser shall give all Hired Employees full credit for accumulated sick pay as reflected by the Sick Pay Amount and for all of the accrued vacation and holiday pay of such employees, either by (i) crediting such employees the accrued time off reflected in the employment records of Seller as of the Closing Date or (ii) by making full payments to such employees of the amounts which such employees would have received had they taken their accrued or accumulated holiday or vacation time, provided, however, that no payment to such employees shall be required with respect to accumulated sick time except to the extent required by Seller's policies with respect to accumulated sick time. (c) After the Closing Date, Hired Employees shall be eligible for a medical and hospital plan sponsored by Purchaser. Hired Employees shall be given credit for periods of employment with the Subsidiaries and Seller's affiliates, as applicable, on or prior to the Closing Date for purposes of determining eligibility to participate and amount of benefits (including without limitation vesting of benefits), and preexisting condition limitations will be waived with respect to Hired Employees and their covered dependents unless such preexisting condition limitations were applicable on or prior to the Closing Date. In addition, if on or prior to the Closing Date a Hired Employee or his covered dependents paid any amounts towards a deductible or out-of-pocket maximum in Seller's (or its affiliate's) medical and health plan's current fiscal year, such amounts shall be applied toward satisfaction of the deductible or out-of-pocket maximum in the current fiscal year of Purchaser's medical and health plan that covers Hired Employees following the Closing Date. (d) Within two (2) years after Closing, Purchaser's Plan shall (i) be amended to provide for a plan-to-plan transfer from Seller's (or its affiliate's) plan with respect to the Hospitals' Employees (other than the Retained Management Employees) that is qualified under Section 401(a) and 401(k) of the Code, (ii) accept a transfer of assets from the above plan, (iii) file any 36 41 required returns relating to the transfer with the Internal Revenue Service, and (iv) be amended to provide protected withdrawal and distribution rights relating to the transferred assets in accordance with Section 411(d)(6) of the Code. For purposes of this Agreement, "Purchaser's Plan" shall mean a retirement plan qualified under Section 401(a) of the Code that is sponsored by Purchaser or one of its controlled group or affiliated service group members, as defined in Section 414 of the Code. (e) Any applicable employee of Seller or any Subsidiary with respect to the operation of the Hospitals who is identified as a current or former participant (and any eligible dependent thereof) of the Seller Plans who is eligible to receive continuation coverage (within the meaning of Section 4980B of the Code and Part 6 of Subtitle B of Title 1 of ERISA) will remain covered through Seller's and its affiliates' COBRA provider. Immediately following the Closing Date and as a result of the transactions contemplated by this Agreement, Seller, its affiliates and the Subsidiaries shall not offer COBRA benefits with respect to any of the Seller Plans to former employees (and their dependents) who are employed by Purchaser at any Hospital as of the date such employees become eligible for Purchaser's medical and dental plans. Seller, its affiliates and the Subsidiaries will thereby be released of COBRA responsibility and liability for such employees. (f) After the Closing, Purchaser's human resources department will give reasonable assistance to Seller's (and its affiliates') human resources department with respect to Seller's, Seller's affiliates' and the Subsidiaries' post-Closing administration of Seller's, Seller's affiliates' and the Subsidiaries' pre-Closing employee pension benefit plans and employee health or welfare benefit plans for the Hospitals' Employees (other than the Retained Management Employees). 5.4 Use of Business Names. Purchaser covenants that it and its affiliates shall not use in their respective trades or businesses the names "Tenet Healthcare Corporation", "Tenet", "Tenet HealthSystem", "OrNda HealthCorp", and any other names or symbols not used exclusively at any of the Hospitals on or prior to Closing, any abbreviations or variations thereof or service marks, symbols or logos related thereto, nor any promotional material, stationery, supplies or other items of inventory bearing either such names, symbols or abbreviations or variations thereof. 5.5 Non-Operating Assets. As soon as practicable after the Closing, Purchaser shall deliver to Seller or Seller's designee any Non-Operating Assets found at any of the Hospitals after the Closing Date, without imposing any charge on Seller for Purchaser's storage or holding of same after the Closing Date. 37 42 5.6 Confidentiality. Purchaser shall, and shall cause its employees, representatives and agents to, hold in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of Purchaser's counsel, by other requirements of law, all Confidential Information (as hereinafter defined), and Purchaser shall not disclose the Confidential Information to any person, except as otherwise may be reasonably necessary to carry out the transactions contemplated by this Agreement, including any business or diligence review by or on behalf of Purchaser. For the purposes hereof, "Confidential Information" shall mean all information of any kind concerning Seller, any Subsidiary or the business of the Hospitals, in connection with the transactions contemplated by this Agreement except information (i) ascertainable or obtained from public or published information, (ii) received from a third party not known by Purchaser to be under an obligation to Seller or any Subsidiary to keep such information confidential, (iii) which is or becomes known to the public (other than through a breach of this Agreement), or (iv) which was in Purchaser's possession prior to disclosure thereof to Purchaser in connection herewith. The rights of Seller under this Section 5.6 shall be in addition and not in substitution for the rights of Seller under that certain Confidentiality Agreement between Seller and Purchaser, dated February 18, 1999 (the "Confidentiality Agreement"), which Confidentiality Agreement shall survive Closing. 5.7 Enforceability. Purchaser hereby acknowledges that the covenant contained in Section 5.6 above is a condition precedent to Seller's entering into this Agreement, and that such restrictions are reasonable and necessary to protect the legitimate interests of Seller following the Closing. Purchaser also hereby acknowledges that any violation of Section 5.6 would result in irreparable injury to Seller and the remedy at law for any breach of Section 5.6 would be inadequate. Purchaser specifically acknowledges and agrees that Seller shall be entitled to an equitable accounting of all earnings, profits and other benefits arising from such breach and further agrees to pay the reasonable fees and expenses, including attorneys' fees, incurred by Seller in enforcing the restrictions contained in Section 5.6. 5.8 Hart-Scott-Rodino Act Filings. Purchaser shall (a) take promptly all actions necessary to make the filings required of Purchaser or its affiliates under the HSR Act on July 30, 1999 or as soon thereafter as practicable, (b) comply at the earliest practicable date with any request for additional information received by Purchaser or its affiliates from the FTC or the DOJ pursuant to the HSR Act, and (c) cooperate with Seller in connection with Seller's or its affiliates' filings under the HSR Act and in connection with resolving any investigation or other regulatory inquiry concerning the transactions contemplated by this Agreement commenced by either the FTC or the DOJ. All filing fees imposed in connection with Purchaser's filings under the HSR Act shall be borne by Purchaser. 38 43 5.9 Acknowledgement Regarding Year 2000 Compliance. Purchaser acknowledges that (i) all Year 2000 compliance efforts of Seller and the Subsidiaries with respect to the Assets will terminate on the Closing Date, (ii) notwithstanding anything to the contrary contained herein, Seller makes no representation or warranty regarding Year 2000 compliance with respect to any of the Assets and (iii) Purchaser releases Seller and the Subsidiaries from all liability with respect to Year 2000 compliance relating to the Assets. As used herein, the term "Year 2000 compliance" includes the ability to perform any of the following functions: (i) to consistently handle date information before, at and after January 1, 2000, including accepting date input, providing date output, and performing calculations on dates or portions of dates; (ii) to function accurately without interruption (or disruption of other software or systems) before, at and after January 1, 2000, without any change in operations associated with the advent of the new century; (iii) to respond to two-digit date input in a way that resolves any ambiguity as to century; and (iv) to store and provide output of date information in ways that are unambiguous as to century. 5.10 Waiver of Bulk Sales Law Compliance. Purchaser hereby waives compliance by Seller and the Subsidiaries with the requirements, if any, of Article 6 of the Uniform Commercial Code as in force in any state in which the Assets are located and all other similar laws applicable to bulk sales and transfers. 5.11 Preserve Accuracy of Representations and Warranties. Purchaser shall refrain from any action or inaction that would render any representation or warranty contained in Article 3 inaccurate as of the Closing Date. ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER Seller's and the Subsidiaries' obligation to sell the Assets and to close the transactions as contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions on or prior to the Closing Date unless specifically waived in writing by Seller in whole or in part at or prior to the Closing. Notwithstanding the foregoing, the conditions precedent to the obligations of Seller contained in this Article 6 shall operate on a Hospital by Hospital basis. In the event all conditions precedent to the obligations of Seller contained in this Article 6 have been met, performed or fulfilled in respect of either of the Hospitals, then Seller shall be obligated to go forward to consummate the sale of such Hospital irrespective of the absence of such obligation in respect of the other Hospital. Accordingly, a failure to satisfy a condition precedent set forth in this Article 6 that is specific to one or more Hospital(s)to be sold by Seller under this Agreement shall not automatically constitute a failure to satisfy such condition precedent as to other Hospitals to be sold by Seller hereunder to which such condition does not apply. 39 44 6.1 Warranties True and Correct. Each of the representations and warranties made by Purchaser and set forth in this Agreement and in the exhibits and schedules attached hereto shall be true and correct in all material respects when made and as of the Closing Date. 6.2 Signing and Delivery of Instruments. Purchaser shall have executed and delivered all documents, instruments and certificates required to be executed and delivered pursuant to the provisions of this Agreement. Purchaser acknowledges that Purchaser shall not satisfy the condition precedent set forth in this Section 6.2 (as it relates to the delivery of the Purchase Price) unless Purchaser initiates the wire transfer of the Cash Purchase Price to Seller, and provides to Seller a Federal Reserve wire reference number with respect thereto, on or before 12:00 noon (Pacific time) on the Closing Date. 6.3 Unfavorable Action or Proceeding. On the Closing Date, no orders, decrees, judgments or injunctions of any court or governmental body shall be in effect, and no claims, actions, suits, proceedings, arbitrations or investigations shall be pending or threatened, which challenge or seek to challenge, or which could prevent or cause the rescission of, the consummation of the transactions contemplated in this Agreement. 6.4 Performance of Covenants. Purchaser shall have in all material respects performed or complied with each and all of the obligations, covenants, agreements and conditions required to be performed or complied with by it on or prior to Closing. 6.5 Opinion of Counsel for Purchaser. Seller shall have received the favorable opinion of Purchaser's counsel, dated the Closing Date, in substantially the form set forth in Exhibit 6.5 attached to this Agreement. 6.6 Hart-Scott-Rodino Filings. All filings required to be made and notices required to be given pursuant to the HSR Act shall have been made, all approvals or consents required thereby shall have been obtained and the waiting periods required thereby, if any, shall have expired or terminated. 6.7 Consents, Approvals and Authorizations. The parties shall have obtained all material consents, licenses, approvals, permits, certificates of need, waivers and authorizations from governmental agencies or bodies and third parties that are necessary or required for completion of the transactions contemplated by this Agreement. 6.8 Exhibits and Schedules. The provisions of all exhibits and schedules attached to this Agreement that were not attached at the Effective Date or to the extent updated after the Effective Date, shall be acceptable to Seller in its reasonable discretion. 40 45 ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER Purchaser's obligation to purchase the Assets and to close the transactions contemplated by this Agreement shall be subject to the satisfaction of each of the following conditions on or prior to the Closing Date unless specifically waived in writing by Purchaser in whole or in part at or prior to the Closing. Notwithstanding the foregoing, the conditions precedent to the obligations of Purchaser contained in this Article 7 shall operate on a Hospital by Hospital basis. In the event all conditions precedent to the obligations of Purchaser contained in this Article 7 have been met, performed or fulfilled in respect of either of the Hospitals, then Purchaser shall be obligated to go forward to consummate the purchase of such Hospital irrespective of the absence of such obligation in respect of the other Hospital. Accordingly, a failure to satisfy a condition precedent set forth in this Article 7 that is specific to one or more Hospital(s)to be sold to Purchaser under this Agreement shall not automatically constitute a failure to satisfy such condition precedent as to other Hospitals to be sold to Purchaser hereunder to which such condition does not apply. 7.1 Warranties True. Each of the representations and warranties made by Seller and set forth in this Agreement and in the Disclosure Schedule, exhibits and schedules attached hereto shall be true and correct in all material respects when made and as of the Closing Date. 7.2 Consents, Approvals and Authorizations. The parties shall have obtained all material consents, licenses, approvals, permits, certificates of need, waivers and authorizations from governmental agencies or bodies and third parties that are necessary or required for completion of the transactions contemplated by this Agreement or the operation of the business of the Hospitals. 7.3 Signing and Delivery of Instruments. Seller and the Subsidiaries shall have executed and delivered all documents, instruments and certificates required to be executed and delivered pursuant to all of the provisions of this Agreement. 7.4 Performance of Covenants. Seller and the Subsidiaries shall have in all material respects performed or complied with each and all of the obligations, covenants, agreements and conditions required to be performed or complied with by Seller and the Subsidiaries on or prior to Closing. 7.5 Unfavorable Action or Proceeding. On the Closing Date, no orders, decrees, judgments or injunctions of any court or governmental body shall be in effect, and no claims, actions, suits, proceedings, arbitrations or investigations shall be pending or threatened, which challenge or seek to challenge, or which could 41 46 prevent or cause the rescission of, the consummation of the transactions contemplated in this Agreement. 7.6 Hart-Scott-Rodino Filings. All filings required to be made and notices required to be given pursuant to the HSR Act shall have been made, all approvals or consents required thereby shall have been obtained and the waiting periods required thereby, if any, shall have expired or terminated. 7.7 Governmental Concurrences. Purchaser shall have obtained assurances from all of the necessary governmental authorities, in form and substance reasonably satisfactory to Purchaser, that Purchaser will be granted all material governmental approvals, licenses, clearances, certifications and/or provider numbers necessary or appropriate for the continued, uninterrupted operation of the Hospitals following the Closing, except for any such assurance, approval, license, clearance or certification which would not have a material adverse effect on the operation of any particular Hospital following the Closing. Purchaser shall have received approvals, consents or commitments from Medicare, Medicaid, and the fiscal intermediary with respect to each Hospital, to the extent any such approvals, consents or commitments are reasonably needed, for Purchaser's continued participation in each program and providing satisfactory assurances that there shall be no material interruptions in program payments. 7.8 Opinion of Counsel. Purchaser shall have received the favorable opinion of Seller's in-house counsel dated the Closing Date, in substantially the form attached hereto as Exhibit 7.8. 7.9 Exhibits and Schedules. The provisions of the Disclosure Schedule and all exhibits and schedules attached to this Agreement that were not attached at the Effective Date or to the extent updated after the Effective Date, shall be acceptable to Purchaser in its reasonable discretion. 7.10 Title Insurance Policy. Purchaser shall have received a fully effective Title Policy issued to Purchaser by the Title Company covering the Owned Real Property in the amount of the full insurable value of the Owned Real Property (which amount shall be set forth in Schedule 11.1(b)). The Title Policy shall show fee simple title to the Owned Real Property vested in Purchaser, subject only to: (i) current real estate taxes not yet due and payable; and (ii) the permitted title exceptions listed in Schedule 7.10 hereto (the "Permitted Exceptions"). The Title Policy shall have all standard and general exceptions deleted so as to afford full "extended form coverage." 7.11 Environmental Survey. Purchaser shall have received the Environmental Survey referred to in Section 4.13. 7.12 Real Estate Surveys. Purchaser shall have received the Surveys referred to in Section 4.9. 42 47 ARTICLE 8 TERMINATION 8.1 Termination. This Agreement may be terminated at any time prior to Closing: (a) by the mutual written consent of the parties; (b) by either Purchaser or Seller (the "Nondefaulting Party") if a material breach of any provision of this Agreement has been committed by the other party (the "Breaching Party") and such breach has not been (i) waived in writing by the Nondefaulting Party or (ii) cured by the Breaching Party to the reasonable satisfaction of the Nondefaulting Party within fifteen (15) business days after service by the Nondefaulting Party upon the Breaching Party of a written notice which describes the nature of such breach; (c) by Purchaser if any of the conditions in Article 7 have not been satisfied as of the Closing Date or if satisfaction of any such condition is or becomes impossible (other than through the failure of Purchaser to comply with its obligations under this Agreement) and Purchaser has not waived such condition in writing on or before the Closing Date; (d) by Seller if any of the conditions in Article 6 have not been satisfied as of the Closing Date or if satisfaction of any such condition is or becomes impossible (other than through the failure of Seller to comply with its obligations under this Agreement) and Seller has not waived such condition in writing on or before the Closing Date; (e) by the mutual written consent of the parties if it is reasonably anticipated that the Closing will be delayed due to any notice received by Purchaser or Seller from, or any action initiated by, a governmental party; (f) by either Purchaser or Seller if the Closing has not occurred (other than through the failure of any party seeking to terminate this Agreement to comply fully with its obligations under this Agreement) on or before October 31, 1999 (the "Termination Date"); provided, however, if the Closing is delayed as a result of any notice received by Purchaser or Seller from, or any action initiated by, a governmental party, then the Termination Date shall be May 31, 2000. 8.2 Termination Consequences. If this Agreement is terminated pursuant to Section 8.1, all further obligations of the parties under this Agreement shall terminate, except that the obligations in Sections 5.6, 12.3, 12.8, and 12.12 shall survive. 43 48 8.3 Costs. In the event of a termination of this Agreement pursuant to Section 8.1 hereof, (a) each party shall pay the costs and expenses incurred by it in connection with this Agreement, except as provided in Section 12.12, and (b) nothing shall prevent either party from pursuing any of its legal rights or remedies that may be granted to any such party by law against any other party to this Agreement. ARTICLE 9 POST-CLOSING MATTERS 9.1 Non-Operating Assets and Excluded Liabilities. Subject to Section 11.2 hereof, any asset (including Accounts Receivable) or any liability, all other remittances and all mail and other communications that are determined by the parties' agreement, or, absent such agreement, determined by litigation, to be or otherwise relate to an Excluded Asset or an Excluded Liability and that is or comes into the possession, custody or control of Purchaser (or its successors in interest or assigns, or its respective affiliates) shall forthwith be transferred, assigned or conveyed by Purchaser (or its respective successors in interest or assigns and its respective affiliates) to Seller at Seller's cost. Until such transfer, assignment and conveyance, Purchaser (and its respective successors in interest and assigns and its respective affiliates) shall not have any right, title or interest in or obligation or responsibility with respect to such asset or liability except that Purchaser shall hold such asset in trust for the benefit of Seller. Purchaser (and its respective successors in interest and assigns and its respective affiliates) shall have neither the right to offset amounts payable to Seller under this Section 9.1 against, nor the right to contest its obligation to transfer, assign and convey to Seller because of, outstanding claims, liabilities or obligations asserted by Purchaser against Seller including but not limited to pursuant to the post-Closing Purchase Price adjustment of Section 1.4 and the indemnification provisions of Section 10.2. The terms of this Article 9 shall not be subject to the time limitations contained in Section 10.1 of this Agreement. 9.2 Preservation and Access to Records After the Closing. (a) From the Closing Date until seven (7) years after the Closing or such longer period as required by law (the "Document Retention Period"), Purchaser shall keep and preserve all medical records, patient records, medical staff records and other books and records of the Subsidiaries and the Hospitals existing as of the Closing relating to tax or other liabilities of Seller prior to the Closing, but excluding any records which are among the Non-Operating Assets. Purchaser will afford to the representatives of Seller, including its counsel and accountants, full and complete access to, and copies of, such records with respect to time periods on or prior to the Closing Date 44 49 (including, without limitation, access to records of patients treated at the Hospitals on or prior to the Closing Date) during normal business hours after the Closing Date, to the extent reasonably needed by Seller (or its affiliates) for business purposes. Purchaser acknowledges that, as a result of entering into this Agreement and operating the Hospitals, it will gain access to patient records and other information which are subject to rules and regulations concerning confidentiality. Purchaser shall abide by any such rules and regulations relating to the confidential information it acquires. Purchaser shall maintain the patient and medical staff records at the Hospitals in accordance with applicable law and the requirements of relevant insurance carriers. After the expiration of the Document Retention Period, if Purchaser intends to destroy or otherwise dispose of any of the documents described in this Section 9.2(a), Purchaser shall provide written notice to Seller of Purchaser's intention no later than thirty (30) calendar days prior to the date of such intended destruction or disposal. Seller shall have the right, at its sole cost, to take possession of such documents during such forty-five (45) calendar day period. If Seller does not take possession of such documents during such forty-five (45) calendar day period, Purchaser shall be free to destroy or otherwise dispose of such documentation upon the expiration of such forty-five (45) day period. (b) Purchaser shall give full cooperation to Seller and its affiliates and its insurance carriers in respect of the defense of claims by third parties against Seller or any Subsidiary, in respect of events occurring on or prior to the Closing with respect to the operation of the Hospitals. Such cooperation shall include, without limitation, making the Hired Employees available for interviews, depositions, hearings and trials. Such cooperation shall also include making all of its employees available to assist in the securing and giving of evidence and in obtaining the presence and cooperation of witnesses (all of which shall be done without payment of any fees or expenses to Purchaser or to such employees). In addition, Seller and its affiliates shall be entitled to remove from the Hospitals originals of any such records, but only for purposes of pending litigation involving the persons to whom such records refer, as certified in writing prior to removal by counsel retained by Seller or any of its affiliates in connection with such litigation. Any records so removed from the Hospitals shall be promptly returned to Purchaser following Seller's (or its applicable affiliate's) use of such records. (c) In connection with (i) the transition of the Hospitals pursuant to the transaction contemplated by this Agreement, (ii) Seller's and the Subsidiaries' rights to the Non-Operating Assets, (iii) Seller's and the Subsidiaries' obligations under the Excluded Liabilities and (iv) Seller's preparation of the Final Balance Sheet pursuant to Section 1.4, Purchaser shall after the Closing Date give Seller, Seller's affiliates and their respective representatives access during normal business hours to Purchaser's books, 45 50 accounts and records and all other relevant documents and information with respect to the assets, liabilities and business of the Hospitals as representatives of Seller and Seller's affiliates may from time to time reasonably request, all in such manner as not to unreasonably interfere with the operations of the Hospitals. Seller acknowledges that it shall coordinate its activities contemplated by this Section 9.2(c) through Brenda Rector, or her designee. (d) Purchaser and its representatives shall be given access by Seller during normal business hours to the extent reasonably needed by Purchaser for business purposes to all documents, records, correspondence, work papers and other documents retained by Seller or any Subsidiary pertaining to any of the Assets or with respect to the operation of the Hospitals on or prior to the Closing Date, all in such manner as to not interfere unreasonably with Seller's and each Subsidiary's business. Such documents and other materials shall be, at Seller's option, either (i) copied by Seller for Purchaser at Purchaser's expense, or (ii) removed by Purchaser from the premises, copied by Purchaser and promptly returned to Seller. ARTICLE 10 SURVIVAL AND INDEMNIFICATION 10.1 Survival. Except as expressly set forth in this Agreement to the contrary, all representations, warranties, covenants, agreements and indemnifications of Purchaser and Seller, respectively, contained in this Agreement or in any document delivered pursuant hereto shall be deemed to be material and to have been relied upon by Purchaser and Seller, respectively, and shall continue to be fully effective and enforceable following the Closing Date for two years and shall thereafter be of no further force and effect, except that the indemnifications contained in Sections 10.2.1(iii), 10.2.1(iv), 10.2.1(vii) and 10.3.1(iv) shall continue to be fully effective and enforceable following the Closing Date without any time limitation; provided, however, that if there is an outstanding notice of a claim at the end of such two year period in compliance with the terms of Section 10.4, such applicable period shall not end in respect of such claim until such claim is resolved. 10.2 Indemnification of Purchaser by Seller. 10.2.1 Indemnification. Seller shall keep and save Purchaser, and its directors, officers, employees, agents and other representatives (collectively, "Purchaser Indemnitees"), forever harmless from and shall indemnify and defend Purchaser against any and all obligations, judgments, liabilities, penalties, violations, fees, fines, claims, losses, costs, demands, damages, liens, encumbrances and expenses including reasonable attorneys' fees (collectively, "Damages"), 46 51 whether direct or consequential and no matter how arising, to the extent, connected with or arising or resulting from (i) any breach of any representation or warranty of Seller under this Agreement, (ii) any breach or default by Seller of any covenant or agreement of Seller under this Agreement, (iii) the Excluded Liabilities, (iv) the Non-Operating Assets, (v) other than Purchaser's obligations under Section 1.11(h), all federal, state and local income, franchise or excise taxes relating to Seller or any Subsidiary ("Seller Tax Claims"), (vi) any professional or general liability claim arising out of the business operations of the Hospitals on or prior to the Closing Date, (vii) any claim, proceeding, investigation, judgment, order, decree or governmental restriction of the type described in Section 2.11, whether or not material to the Assets or any of the Hospitals, and which arises from acts or omissions prior to the Closing Date; and (viii) any act, conduct or omission of Seller or any Subsidiary, or any event or circumstance pertaining to Seller or any Subsidiary, that has accrued, arisen, occurred or come into existence at any time on or prior to the Closing Date. No provision in this Agreement shall prevent Seller from pursuing any of its legal rights or remedies that may be granted to Seller by law against any person or legal entity other than Purchaser. To receive the benefit of indemnification from Seller pursuant to this Section 10.2, any Purchaser Indemnitee (other than Purchaser) must direct its claim to Purchaser so that Purchaser can tender such claim to Seller in accordance with Section 10.4. 10.2.2 Indemnification Limitations. (a) Seller shall be under no liability to indemnify Purchaser under Section 10.2.1 and no claim under Section 10.2.1 of this Agreement shall: (i) be made unless notice thereof shall have been given by or on behalf of Purchaser to Seller in the manner provided in Section 10.4; (ii) be made to the extent that any loss may be recovered under a policy of insurance in force on the date of loss; provided, however, that this Section 10.2.2(ii) shall not apply to the extent that coverage under the applicable policy of insurance is denied by or otherwise cannot be recovered from the applicable insurance carrier after the use of commercially reasonable efforts to effect such recovery; (iii) be made to the extent that such claim relates to a liability arising out of or relating to any act, omission, event or occurrence connected with: (A) the use, ownership or operation of any of the Hospitals, or 47 52 (B) the use, ownership or operation of any of the Assets, after the Closing Date; other than as specifically included in the Excluded Liabilities; (iv) be made to the extent that such claim (or the basis therefor) is set forth in the Disclosure Schedule, any Exhibit or Schedule to this Agreement; (v) be made to the extent that Purchaser had knowledge of (A) any breach of a representation and warranty by Seller (as contemplated by Section 3.9) or (B) other indemnifiable event, on or prior to the Closing Date, and did not notify Seller of such knowledge as contemplated by this Agreement; (vi) be made to the extent such claim relates to an obligation or liability for which Purchaser has agreed to indemnify Seller pursuant to Section 10.3; (vii) be made to the extent that such claim would not have arisen but for a voluntary act, omission or transaction carried out by Purchaser or its affiliates after the Effective Date; and (viii) accrue to Purchaser unless and only to the extent that (A) the actual liability of Seller in respect of any single claim under Section 10.2.1 exceeds Five Thousand Dollars ($5,000) (a "Relevant Claim") and (B) the total actual liability of Seller in respect of all Relevant Claims with respect to any particular Hospital in the aggregate exceeds one-half percent (0.5%) of the portion of the Purchase Price attributable to any such particular Hospital pursuant to Schedule 11.1(b) (the "Aggregate Amount"), in which event Purchaser shall be entitled to seek indemnification under Section 10.2.1 for all Relevant Claims with respect to such particular Hospital, including those Relevant Claims comprising the Aggregate Amount. Notwithstanding the foregoing, the limitation set forth in this subsection 10.2.2(a)(viii) shall not apply to claims for indemnification pursuant to (A) Section 10.2.1(iii) which are based upon liabilities described in Section 1.12(a), (e), (f) or (h), and (B) Section 10.2.1(i) which are based upon a breach of the representations and warranties made in Section 2.13. (b) Notwithstanding any other provision of this Agreement to the contrary, the maximum aggregate liability of Seller to Purchaser under this Agreement shall not exceed the Purchase Price. (c) If Purchaser is entitled to recover any sum (whether by payment, discount, credit or otherwise) from any third party in respect of any 48 53 matter for which a claim of indemnity could be made against Seller hereunder, Purchaser shall use its reasonable endeavors to recover such sum from such third party and any sum recovered will reduce the amount of the claim. If Seller pays to Purchaser an amount in respect of a claim, and Purchaser subsequently recovers from a third party a sum which is referable to that claim, Purchaser shall forthwith repay to Seller so much of the amount paid by it as does not exceed the sum recovered from the third party less all reasonable costs, charges and expenses incurred by Purchaser in obtaining payment in respect of that claim and in recovering that sum from the third party. 10.3 Indemnification of Seller by Purchaser. 10.3.1 Indemnification. Purchaser shall keep and save Seller and the Subsidiaries, and their respective directors, officers, employees, agents and other representatives (collectively, "Seller Indemnitees"), forever harmless from and shall indemnify and defend Seller and the Subsidiaries against any and all Damages, whether direct or consequential and no matter how arising, in any way related to, connected with or arising or resulting from (i) any breach of any representation or warranty of Purchaser under this Agreement, (ii) any breach or default by Purchaser under any covenant or agreement of Purchaser under this Agreement, (iii) cost reports (and all claims with respect thereto) relating to Purchaser with respect to Medicare, Medicaid, CHAMPUS or Blue Cross programs or any other third-party payor for all periods beginning after the Closing Date, (iv) the Assumed Obligations, (v) any professional or general liability claim arising out of the business operations of the Hospitals after the Closing Date, (vi) any other obligation or liability specifically assumed by Purchaser in this Agreement, (vii) liabilities to the Hired Employees arising out of actions of Purchaser based wholly or in part upon the contents of the personnel records of such employees, (viii) involuntary termination of the Hired Employees after the Closing Date, which termination would constitute a "mass layoff" or a "plant closing" within the meaning of WARN, and (ix) any act, conduct or omission of Purchaser, or any event or circumstance pertaining to Purchaser, that has accrued, arisen, occurred or come into existence at any time. No provision in this Agreement shall prevent Purchaser from pursuing any of its legal rights or remedies that may be granted to Purchaser by law against any person or legal entity other than Seller or any affiliate of Seller. To receive the benefit of indemnification from Purchaser pursuant to this Section 10.3, any Seller Indemnitee (other than Seller or a Subsidiary) must direct its claim to Seller so that Seller can tender such claim to Purchaser in accordance with Section 10.4. 10.3.2 Indemnification Limitations. (a) Purchaser shall be under no liability to indemnify Seller under 10.3.1 and no claim under Section 10.3.1 of this Agreement shall: 49 54 (i) be made unless notice thereof shall have been given by or on behalf of Seller to Purchaser in the manner provided in Section 10.4; (ii) be made to the extent that any loss may be recovered under a policy of insurance in force on the date of loss; provided, however, that this Section 10.3.2(ii) shall not apply to the extent that coverage under the applicable policy of insurance is denied by or otherwise cannot be recovered from the applicable insurance carrier after the use of commercially reasonable efforts to effect such recovery; (iii) be made to the extent that such claim relates to a liability arising out of or relating to any act, omission, event or occurrence connected with: (A) the use, ownership or operation of any of the Hospitals, or (B) the use, operation or ownership of any of the Assets, on or prior to the Closing Date, other than as specifically included in the Assumed Obligations; and (iv) be made to the extent such claim relates to an obligation or liability for which Seller has agreed to indemnify Purchaser pursuant to Section 10.2. (b) If Seller or any Subsidiary is entitled to recover any sum (whether by payment, discount, credit or otherwise) from any third party in respect of any matter for which a claim of indemnity could be made against Purchaser hereunder, Seller shall, and shall cause the applicable Subsidiary to, use its reasonable endeavors to recover such sum from such third party and any sum recovered will reduce the amount of the claim. If Purchaser pays to Seller an amount in respect of a claim, and Seller or any Subsidiary subsequently recovers from a third party a sum which is referable to that claim, Seller shall forthwith repay to Purchaser so much of the amount paid by it as does not exceed the sum recovered from the third party less all reasonable costs, charges and expenses incurred by Seller or any Subsidiary in obtaining payment in respect of that claim and in recovering that sum from the third party. 10.4 Method of Asserting Claims. All claims for indemnification by any person entitled to indemnification hereunder (the "Indemnified Party") under this Article 10 will be asserted and resolved as follows: (a) In the event any claim or demand, for which a party hereto (an "Indemnifying Party") would be liable for the Damages to an Indemnified 50 55 Party, is asserted against or sought to be collected from such Indemnified Party by a person other than Seller, Purchaser or their affiliates (a "Third Party Claim"), the Indemnified Party shall deliver a notice of its claim (a "Claim Notice") to the Indemnifying Party within thirty (30) calendar days after the Indemnified Party receives notice of such Third Party Claim; provided, however, that notice shall be provided to the Indemnifying Party within fifteen (15) calendar days after receipt by the Indemnified Party of a complaint, petition or institution of other formal legal action. If the Indemnified Party fails to provide the Claim Notice within such applicable time period after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party will not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party demonstrates that it has been prejudiced thereby; but in no event will the Indemnified Party be entitled to indemnification from the Indemnifying Party if the Indemnified Party does not provide notice of a Third Party Claim within ninety (90) days after the Indemnified Party receives notice of such Third Party Claim. The Indemnifying Party will notify the Indemnified Party within thirty (30) calendar days after receipt of the Claim Notice (the "Notice Period") whether the Indemnifying Party desires, at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against such Third Party Claim. (i) If the Indemnifying Party notifies the Indemnified Party within the Notice Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 10.4(a), then the Indemnifying Party will have the right to defend, at its sole cost and expense, such Third Party Claim by all appropriate proceedings, which proceedings will be prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party. The Indemnifying Party will have full control of such defense and proceedings, including any compromise or settlement thereof. Notwithstanding the foregoing, the Indemnified Party may, at its sole cost and expense, file during the Notice Period any motion, answer or other pleadings that the Indemnified Party may deem necessary or appropriate to protect its interests or those of the Indemnifying Party and which is not prejudicial, in the reasonable judgment of the Indemnifying Party, to the Indemnifying Party. Except as provided in Section 10.4(a)(ii) hereof, if an Indemnified Party takes any such action that is prejudicial and causes a final adjudication that is adverse to the Indemnifying Party, the Indemnifying Party will be relieved of its obligations hereunder with respect to the portion of such Third Party Claim prejudiced by the Indemnified Party's action. If requested by the Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense of the Indemnifying Party, to cooperate with the 51 56 Indemnifying Party and its counsel in contesting any Third Party Claim that the Indemnifying Party elects to contest, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the person asserting the Third Party Claim, or any cross-complaint against any person (other than the Indemnified Party or any of its affiliates). The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this Section 10.4(a)(i), and except as specifically provided in this Section 10.4(a)(i), the Indemnified Party will bear its own costs and expenses with respect to such participation. The Indemnifying Party shall give sufficient prior notice to the Indemnified Party of the initiation of any discussions relating to the settlement of a Third Party Claim to allow the Indemnified Party to participate therein. (ii) If the Indemnifying Party fails to notify the Indemnified Party within the Notice Period that the Indemnifying Party desires to defend the Indemnified Party pursuant to this Section 10.4(a), or if the Indemnifying Party gives such notice but fails to prosecute diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Notice Period, then the Indemnified Party will have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings will be promptly and reasonably prosecuted by the Indemnified Party to a final conclusion or will be settled at the discretion of the Indemnified Party. The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party agrees, at the sole cost and expense of the Indemnifying Party, to cooperate with the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the person asserting the Third Party Claim, or any cross-complaint against any person (other than the Indemnifying Party or any of its affiliates). Notwithstanding the foregoing provisions of this Section 10.4(a)(ii), if the Indemnifying Party has notified the Indemnified Party with reasonable promptness that the Indemnifying Party disputes its liability to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this Section 10.4(a)(ii) or of the Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party will reimburse the Indemnifying 52 57 Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. Subject to the above terms of this Section 10.4(a)(ii), the Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this Section 10.4(a)(ii), and the Indemnifying Party will bear its own costs and expenses with respect to such participation. The Indemnified Party shall give sufficient prior notice to the Indemnifying Party of the initiation of any discussions relating to the settlement of a Third Party Claim to allow the Indemnifying Party to participate therein. (b) In the event any Indemnified Party should have a claim against any Indemnifying Party hereunder that either (i) does not involve a Third Party Claim being asserted against or sought to be collected from the Indemnified Party or (ii) is a Seller Tax Claim, the Indemnified Party shall deliver an Indemnity Notice (as hereinafter defined) to the Indemnifying Party. (The term "Indemnity Notice" shall mean written notification of a claim for indemnity under Article 10 hereof (which claim does not involve a Third Party Claim or is a Seller Tax Claim) by an Indemnified Party to an Indemnifying Party pursuant to this Section 10.4, specifying the nature of and specific basis for such claim and the amount or the estimated amount of such claim.) The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that an Indemnifying Party demonstrates that it has been prejudiced thereby. (c) If the Indemnifying Party does not notify the Indemnified Party within thirty (30) calendar days following its receipt of a Claim Notice or an Indemnity Notice that the Indemnifying Party disputes its liability to the Indemnified Party hereunder, such claim specified by the Indemnified Party will be conclusively deemed a liability of the Indemnifying Party hereunder and the Indemnifying Party shall pay the amount of such liability to the Indemnified Party on demand, or on such later date (i) in the case of a Third Party Claim, as the Indemnified Party suffers the Damages in respect of such Third Party Claim, (ii) in the case of an Indemnity Notice in which the amount of the claim is estimated, when the amount of such claim becomes finally determined or (iii) in the case of a Seller Tax Claim, within fifteen (15) calendar days following final determination of the item giving rise to the claim for indemnity. If the Indemnifying Party has timely disputed its liability with respect to such claim, as provided above, the Indemnifying Party and the Indemnified Party agree to proceed in good faith to negotiate a resolution of such dispute, and if not resolved through negotiations within sixty (60) days, such dispute will be resolved pursuant to Section 12.17 hereof. 53 58 (d) The Indemnified Party agrees to give the Indemnifying Party reasonable access to the books and records and employees of the Indemnified Party in connection with the matters for which indemnification is sought hereunder, to the extent the Indemnifying Party reasonably deems necessary in connection with its rights and obligations hereunder. (e) The Indemnified Party shall assist and cooperate with the Indemnifying Party, in any reasonable manner requested by the Indemnifying Party, in the conduct of litigation, the making of settlements and the enforcement of any right of contribution to which the Indemnified Party may be entitled from any person or entity in connection with the subject matter of any litigation subject to indemnification hereunder. In addition, the Indemnified Party shall, upon request by the Indemnifying Party or counsel selected by the Indemnifying Party (without payment of any fees or expenses to the Indemnified Party or an employee thereof, other than reasonable out-of-pocket expenses), attend hearings and trials, assist in the securing and giving of evidence, assist in obtaining the presence or cooperation of witnesses, and make available its own personnel; and shall do whatever else is necessary and appropriate in connection with such litigation. The Indemnified Party shall not make any demand upon the Indemnifying Party or counsel for the Indemnifying Party in connection with any litigation subject to indemnification hereunder, except a general demand for indemnification as provided hereunder, unless to fail to do so would materially prejudice the Indemnified Party's rights in respect of such claim for indemnification. If the Indemnified Party shall fail to perform such obligations as Indemnified Party hereunder or to cooperate fully with the Indemnifying Party in Indemnifying Party's defense of any suit or proceeding, such cooperation to include, without limitation, attendance at all depositions and the provision of all documents relevant to the defense of any claim, then the Indemnifying Party shall be released from its obligations under this Agreement with respect to that suit or proceeding and any other claims which had been raised in such suit or proceeding to the extent the Indemnifying Party can demonstrate it has been prejudiced thereby. (f) Following indemnification as provided for hereunder, the Indemnifying Party shall be subrogated to all rights of the Indemnified Party with respect to all persons or entities relating to the matter for which indemnification has been made. 10.5 Exclusive. Any dispute arising under this Agreement or in connection with or as a result of the transactions contemplated by this Agreement or any Damages or injury alleged to be suffered by either party as a result of the actions or failure to act by any other party shall, unless otherwise specifically stated in this Agreement, be governed solely and exclusively by the provisions of this Article 10. 54 59 10.6 Reduction of the Purchase Price. If Seller pays any sum to Purchaser in respect of a claim under Article 10, the Purchase Price and total consideration received by Seller for the sale of the Assets shall be deemed to be reduced by the amount of such payment. ARTICLE 11 TAX AND COST REPORT MATTERS 11.1 Tax Matters; Allocation of Purchase Price. (a) After the Closing, the parties shall cooperate fully with each other and shall make available to each other, as reasonably requested, all information, records or documents relating to tax liabilities or potential tax liabilities attributable to Seller or any Subsidiary with respect to the operation of the Hospitals for all periods on or prior to the Closing Date and shall preserve all such information, records and documents at least until the expiration of any applicable statute of limitations or extensions thereof. The parties shall also make available to each other as reasonably required, and at the reasonable cost of the requesting party (for out-of-pocket costs and expenses only), personnel responsible for preparing or maintaining information, records and documents in connection with tax matters. (b) The Purchase Price shall be allocated among the various classes of the Assets and between each of the Hospitals in accordance with Schedule 11.1(b) which shall be agreed upon by the parties no later than the Closing Date, and provided further the Purchase Price allocated to Trinity Valley Medical Center in the aggregate shall be $44,000,000, and to Minden Medical Center in the aggregate shall be $33,000,000. Seller and Purchaser hereby agree to allocate the Purchase Price in accordance with Schedule 11.1(b), to be bound by such allocations for all purposes, to account for and report the purchase and sale of the Assets contemplated hereby for all purposes (including, without limitation, financial reporting, accounting and federal and state tax purposes) in accordance with such allocations, and not to take any position (whether in financial statements, tax returns, cost report or tax audits, or otherwise), which is inconsistent with such allocations without the prior written consent of the other party. In this regard, the parties agree that, to the extent required, they will each properly prepare and timely file Form 8594 in accordance with Section 1060 of the Code. 11.2 Cost Report Matters. (a) Seller shall, and shall cause the Subsidiaries to, prepare and timely file all cost reports relating to the periods ending on or prior to the Closing Date or required as a result of the consummation of the transactions 55 60 described herein, including, without limitation, those relating to Medicare, Medicaid, Blue Cross and other third party payors which settle on a cost report basis (the "Subsidiaries' Cost Reports"). Purchaser shall forward to Seller any and all correspondence relating to the Accounts Receivable, the Subsidiaries' Cost Reports or rights to settlements and retroactive adjustments on the Subsidiaries' Cost Reports ("Agency Settlements") within five (5) business days of receipt by Purchaser. Purchaser shall not reply to any such correspondence without Seller's written approval. Purchaser shall remit any receipts relating to the Accounts Receivable, the Subsidiaries' Cost Reports or the Agency Settlements within five (5) business days after receipt by Purchaser (except those receipts to be retained by Purchaser pursuant to Section 11.3) and will forward any demand for payments within five (5) business days. Purchaser (and its respective successors in interest and assigns and its respective affiliates) shall have neither the right to offset amounts payable to Seller under this Section 11.2 against, nor the right to contest its obligation to transfer, assign and convey to Seller because of, outstanding claims, liabilities or obligations asserted by Purchaser against Seller including but not limited to pursuant to the post-closing Purchase Price adjustment of Section 1.4 and the indemnification provisions of Section 10.2. Seller shall retain all rights to the Subsidiaries' Cost Reports and to the Accounts Receivable including, without limitation, any payables resulting therefrom or receivables relating thereto and the right to appeal any Medicare determinations relating to the Agency Settlements and the Subsidiaries' Cost Reports. Seller will furnish copies of the Receivables Records to Purchaser upon request and allow Purchaser and its representatives reasonable access to such documents. (b) Upon reasonable notice and during normal business office hours, Purchaser will cooperate with Seller and the Subsidiaries in regard to the preparation, filing, handling, and appeals of the Subsidiaries' Cost Reports. Upon reasonable notice and during normal business office hours, Purchaser will cooperate with Seller and the Subsidiaries in connection with any cost report disputes and/or other claim adjudication matters relative to governmental program reimbursement. Such cooperation shall include the providing of statistics and obtaining files at the Hospitals and the coordination with Seller and the Subsidiaries pursuant to adequate notice of Medicare and Medicaid exit conferences or meetings. Purchaser will, upon reasonable notice, during normal business office hours and at the sole cost and expense of Seller, and subject to applicable law regarding confidentiality of patient records, provide Seller and the Subsidiaries reasonable access to all records of the Hospitals and will allow Seller, the Subsidiaries and their respective representatives to copy any documents relating to the Subsidiaries' Cost Reports and appeals thereof. 56 61 11.3 Transition Services. To compensate Seller and the Subsidiaries for services rendered and medicine, drugs, and supplies provided on or before the Closing Date at any of the Hospitals (the "Transition Services") with respect to patients whose medical care is paid for, in whole or in part, by Medicare, Medicaid, CHAMPUS, Blue Cross or any other third party payor who pays on a DRG, case rate or other similar arrangement, and who are admitted to any of the Hospitals on or before the Closing Date but who are not discharged until after the Closing Date ("Governmental Program Transition Patients"), the parties shall take the following action: (a) As soon as practicable after the Closing Date, Seller shall deliver to Purchaser a statement itemizing the inpatient hospital Transition Services provided by the Subsidiaries with respect to the operation of the Hospitals on or prior to the Closing Date to Governmental Program Transition Patients. For the Transition Services, Purchaser shall pay to Seller an amount equal to the DRG and outlier payments, the case rate payment or other similar payment received by Purchaser on behalf of a Governmental Program Transition Patient, multiplied by a fraction (the "Fraction"), the numerator of which shall be the total charges for the Transition Services provided to such Governmental Program Transition Patient by Seller and the Subsidiaries and the denominator of which shall be the sum of the total charges for the Transition Services provided to such Governmental Program Transition Patient by Seller and the Subsidiaries plus the total charges for the Transition Services provided to such Governmental Program Transition Patient by Purchaser after the Closing Date. The parties shall reconcile the payments within ninety (90) calendar days after both the tentative and final Medicare cost report settlement and any other payor settlement affecting the Governmental Program Transition Patients (the "Reconciliation"). (b) Subject to Section 11.3(d), payments made pursuant to Section 11.3(a) shall be made to Seller monthly, on the twenty-fifth (25th) day of each month, for payments received by Purchaser during the previous month, accompanied by copies of remittances and other supporting documentation as is reasonably requested by Seller. Any other payments required to be made by Seller to Purchaser, or by Purchaser to Seller, as the case may be, as a result of (i) the Reconciliation, (ii) a notice of program reimbursement with respect to the operations of any Hospital or (iii) other notice from a governmental agency or third party payor with respect to Transition Services shall be made within thirty (30) calendar days after the Reconciliation or the receipt of any such notice, as applicable. In the event that Purchaser and Seller are unable to agree on the amount to be paid to Seller or Purchaser, as the case may be, under this Section 11.3, then such amount shall be determined by the Independent Auditor at their joint expense. 57 62 (c) The parties acknowledge that all charges for outpatient and other cost-based services shall be made (i) by Seller and the Subsidiaries for all periods on or prior to the Closing Date and (ii) by Purchaser for all periods after the Closing Date. (d) Notwithstanding the first sentence of Section 11.3(b), Purchaser shall make a distribution to Seller within three (3) business days if at any time during the applicable calendar month the funds to be distributed to Seller pursuant to Section 11.3(a) exceed One Hundred Fifty Thousand Dollars ($150,000). The amount of such distribution shall be all amounts payable to Seller pursuant to Section 11.3(a) which have not been previously distributed to Seller. All such distributions shall be made by wire transfer of immediately available funds to Seller to the account(s) specified by Seller to Purchaser in writing from time to time. (e) Purchaser (and its respective successors in interest and assigns and its respective affiliates) shall have neither the right to offset amounts payable to Seller under this Section 11.3 against, nor the right to contest its obligation to transfer, assign and convey to Seller because of, outstanding claims, liabilities or obligations asserted by Purchaser against Seller including but not limited to pursuant to the post-closing Purchase Price adjustment of Section 1.4 and the indemnification provisions of Section 10.2. ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1 Further Assurances and Cooperation. Seller shall, and shall cause the Subsidiaries to, execute, acknowledge and deliver to Purchaser any and all other assignments, consents, approvals, conveyances, assurances, documents and instruments reasonably requested by Purchaser at any time and shall take any and all other actions reasonably requested by Purchaser at any time for the purpose of more effectively assigning, transferring, granting, conveying and confirming to Purchaser, the Assets. After consummation of the transaction contemplated herein, the parties agree to reasonably cooperate with each other in regards to all matters arising from the transition of ownership of the Assets and the business of the Hospitals from Seller and the Subsidiaries to Purchaser. 12.2 Successors and Assigns. All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided, however, that no party hereto may assign any of its rights or delegate any of its duties 58 63 under this Agreement without the prior written consent of the other party, except that Purchaser may assign any of its rights or delegate any of its duties under this Agreement to any Purchaser Partnership upon Seller's receipt of Purchaser's guarantee of such Purchaser Partnership's obligations, in the form set forth as Exhibit 12.2. 12.3 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York as applied to contracts made and performed within the State of New York. 12.4 Amendments. This Agreement may not be amended other than by written instrument signed by the parties hereto. 12.5 Exhibits, Schedules and Disclosure Schedule. Subject to Section 7.9, final copies of the Disclosure Schedule and all exhibits and schedules referred to in this Agreement shall be provided to Purchaser by Seller no later than July 30, 1999; provided, however, if Purchaser does not provide Seller with written notice that such Disclosure Schedule, exhibits or schedules are not acceptable to Purchaser in its reasonable discretion by August 6, 1999, Purchaser shall be deemed to have waived its rights under Section 7.9 with regard to such Disclosure Schedule, exhibit or schedules. Such Disclosure Schedule, exhibits and schedules shall be incorporated by reference herein. From the Effective Date until the Closing, the parties agree that Seller may update the Disclosure Schedule and either party may update the schedules as necessary, subject to the terms of Sections 6.8 and 7.9 of this Agreement. Any matter disclosed in this Agreement or in the Disclosure Schedule with reference to any Section of this Agreement shall be deemed a disclosure in respect of all sections to which such disclosure may apply. 12.6 Notices. Any notice, demand or communication required, permitted, or desired to be given hereunder shall be deemed effectively given when personally delivered, when received by telegraphic or other electronic means (including facsimile) or overnight courier, or five (5) calendar days after being deposited in the United States mail, with postage prepaid thereon, certified or registered mail, return receipt requested, addressed as follows: If to Seller: Tenet Healthcare Corporation c/o Tenet HealthSystem 14001 Dallas Parkway Dallas, Texas 75240 Attention: David R. Mayeux Facsimile No.: (972) 789-2385 59 64 With a copy to: Tenet Healthcare Corporation c/o Tenet HealthSystem 14001 Dallas Parkway Dallas, Texas 75240 Attention: William A. Barrett, Esq. Facsimile No.: (972) 789-6164 With a copy to: McDermott, Will & Emery 2049 Century Park East Suite 3400 Los Angeles, California 90067 Attention: Ira J. Rappeport, Esq. Facsimile No.: (310) 277-4730 If to Purchaser: Province Healthcare Company 105 Westwood Place, Suite 400 Brentwood, Tennessee 37027 Attention: General Counsel Facsimile No.: (615) 370-4710 With a copy to: Waller Lansden Dortch & Davis, PLLC 511 Union Street, Suite 2100 Nashville, Tennessee 37219 Attention: George W. Bishop III, Esq. Facsimile No.: (615) 244-6804 or at such other address as one party may designate by notice hereunder to the other parties. 12.7 Headings. The section and other headings contained in this Agreement and in the Disclosure Schedule, exhibits and schedules to this Agreement, and the terms defined in this Agreement are included for the purpose of convenient reference only and shall not restrict, amplify, modify or otherwise affect in any way the meaning or interpretation of this Agreement or the Disclosure Schedule, exhibits and schedules hereto. 12.8 Confidentiality and Publicity. The parties hereto shall hold in confidence the information contained in this Agreement, and all information related to this Agreement, which is not otherwise known to the public, shall be held by each party hereto as confidential and proprietary information and shall not be disclosed without the prior written consent of the other party. Accordingly, Purchaser and Seller shall not discuss with, or provide nonpublic information to, any third party (except for such party's attorneys, accountants, directors, officers and employees, the directors, officers and employees of any affiliate of any party hereto, and other consultants and professional advisors) concerning this transaction prior to the 60 65 Closing, except: (i) as required in governmental filings or judicial, administrative or arbitration proceedings, including without limitation the filings to be made by the parties with respect to the HSR Act; (ii) pursuant to public announcements made with the prior written approval of Seller and Purchaser; or (iii) as otherwise required by applicable law. The rights of Seller under this Section 12.8 shall be in addition and not in substitution for the rights of Seller under the Confidentiality Agreement, which shall survive Closing. 12.9 Fair Meaning. This Agreement shall be construed according to its fair meaning and as if prepared by all parties hereto. 12.10 Gender and Number; Construction. All references to the neuter gender shall include the feminine or masculine gender and vice versa, where applicable, and all references to the singular shall include the plural and vice versa, where applicable. Unless otherwise expressly provided, the word "including" followed by a listing does not limit the preceding words or terms and shall mean "including, without limitation." 12.11 Third Party Beneficiary. None of the provisions herein contained are intended by the parties, nor shall they be deemed, to confer any benefit on any person not a party to this Agreement. 12.12 Expenses and Attorneys' Fees. Except as otherwise provided in this Agreement, each party shall bear and pay its own costs and expenses relating to the preparation of this Agreement and to the transactions contemplated by, or the performance of or compliance with any condition or covenant set forth in, this Agreement, including without limitation, the disbursements and fees of their respective attorneys, accountants, advisors, agents and other representatives, incidental to the preparation and carrying out of this Agreement, whether or not the transactions contemplated hereby are consummated. The parties expressly agree that: (a) all costs of the Title Commitment and the Title Policy shall be paid by Seller up to an amount equal to the amount that would have been incurred if the Title Policy were a standard coverage owner's policy of title insurance (which policy does not provide insurance for title exceptions which would be disclosed by a physical inspection or survey of the land in question), and the remaining costs of the Title Policy, if any, shall be borne by Purchaser; (b) all costs of the Surveys shall be borne by Purchaser; (c) all costs of the Environmental Survey shall be borne by Purchaser; and (d) all documentary transfer taxes and recording charges in connection with the conveyance of the Assets to Purchaser shall be borne by Seller. If any action is brought by any party to enforce any provision of this Agreement, the prevailing party shall be entitled to recover its court costs, arbitration expenses and reasonable attorneys' fees. 61 66 12.13 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement, binding on all of the parties hereto. 12.14 Entire Agreement. This Agreement, the Disclosure Schedule, the exhibits and schedules, and the documents referred to herein contain the entire understanding between the parties with respect to the transactions contemplated hereby and supersede all prior or contemporaneous agreements, understandings, representations and statements, oral or written, between the parties on the subject matter hereof, and shall be of no further force or effect. 12.15 No Waiver. Any term, covenant or condition of this Agreement may be waived at any time by the party which is entitled to the benefit thereof but only by a written notice signed by the party expressly waiving such term or condition. The subsequent acceptance of performance hereunder by a party shall not be deemed to be a waiver of any preceding breach by the other party of any term, covenant or condition of this Agreement, other than the failure of such party to perform the particular duties so accepted, regardless of such party's knowledge of such preceding breach at the time of acceptance of such performance. The waiver of any term, covenant or condition shall not be construed as a waiver of any other term, covenant or condition of this Agreement. 12.16 Severability. If any term, provision, condition or covenant of this Agreement or the application thereof to any party or circumstance shall be held to be invalid or unenforceable to any extent in any jurisdiction, then the remainder of this Agreement and the application of such term, provision, condition or covenant in any other jurisdiction or to persons or circumstances other than those as to whom or which it is held to be invalid or unenforceable, shall not be affected thereby, and each term, provision, condition and covenant of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 12.17 Arbitration. Any disagreement, dispute or claim arising out of or relating to this Agreement which cannot be settled by the parties hereto shall be settled by arbitration in accordance with the following provisions: 12.17.1 Forum. Forum for arbitration shall be New York, New York. 12.17.2 Law. Governing law shall be the law of the State of New York. 12.17.3 Selection. The number of arbitrators shall be three (3), unless the parties hereto are able to agree on a single arbitrator. In the absence of such agreement within ten (10) business days after the initiation of an arbitration proceeding, Seller shall select one (1) arbitrator and Purchaser shall select one (1) arbitrator, and those two arbitrators shall then select within ten (10) business days a third arbitrator. If those two (2) arbitrators are unable to select a third arbitrator 62 67 within such ten (10) business day period, a third arbitrator shall be appointed by the commercial panel of the American Arbitration Association. The decision in writing of at least two (2) of the three (3) arbitrators shall be final and binding upon the parties. 12.17.4 Administration. Arbitration shall be administered by the American Arbitration Association. 12.17.5 Rules. Rules of arbitration shall be the Commercial Arbitration Rules of the American Arbitration Association, as modified by any other instructions that the parties hereto may agree upon at the time, except that each party hereto shall have the right to conduct discovery in any manner and to the extent authorized by the Federal Rules of Civil Procedure as interpreted by the federal courts in New York. The arbitrators shall not modify the terms of this Agreement. 12.17.6 Award. The award rendered by arbitration shall be final and binding upon the parties hereto, and judgment upon the award may be entered in any court of competent jurisdiction in the United States. 12.18 Time is of the Essence. Time is of the essence for all dates and time periods set forth in this Agreement and each performance called for in this Agreement. 12.19 Unemployment Experience. Seller and Purchaser agree that the unemployment experience of Seller will be transferred to Purchaser if such a transfer of unemployment experience is allowed by law and elected by Purchaser. If the payroll of the transferred facility is reported in an unemployment insurance account with other payroll prior to the date of transfer the portion of the unemployment experience transferred to Purchaser shall be the same portion as the transferred facility's state unemployment taxable payroll bears to the total state unemployment taxable payroll of Seller's unemployment insurance account. Funds which are in group accounts for the purpose of paying reimbursable unemployment benefits will be transferred to Purchaser if Purchaser elects such transfer, provided such funds are included in Net Working Capital. Seller agrees to make available to Purchaser the records of individual wages of all employees, as well as copies of state unemployment tax returns, to the extent necessary for Purchase to verify future unemployment tax rates and to calculate the correct taxable payroll for the remainder of the calendar year in which the transaction occurs. /// THIS SECTION INTENTIONALLY LEFT BLANK SIGNATURE PAGE IS NEXT PAGE 63 68 IN WITNESS WHEREOF, this Agreement has been entered into as of the day and year first above written. PURCHASER: PROVINCE HEALTHCARE COMPANY, a Delaware corporation By:/s/ Howard T. Wall ---------------------------------- Name: Howard T. Wall ------------------------------- Its: Senior Vice President -------------------------------- SELLER: TENET HEALTHCARE CORPORATION, a Nevada corporation By: /s/ David R. Mayeux --------------------------------- Name: David R. Mayeux ------------------------------- Its: Executive Vice President -------------------------------- 64 EX-2.2 3 AMENDMENT NO.1 TO ASSET AGREEMENT 1 EXHIBIT 2.2 AMENDMENT NO. 1 TO ASSET SALE AGREEMENT This Amendment No. 1 to Asset Sale Agreement (the "Amendment") is made and entered into as of September 29, 1999, by and between Tenet Healthcare Corporation, a Nevada corporation ("Seller") and Province Healthcare Company, a Delaware corporation ("Purchaser"). RECITALS A. Seller and Purchaser have entered into that certain Asset Sale Agreement dated as of July 23, 1999 (the "Agreement") pursuant to which Purchaser is acquiring substantially all of the assets with respect to the operation of the Hospitals from the Subsidiaries. B. Seller and Purchaser desire to amend the Agreement to address certain matters that have arisen since the Effective Date of the Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants contained in this Agreement, and for their mutual reliance, the parties hereto agree as follows: 1. Defined Terms. Except to the extent it is specifically indicated to the contrary in this Amendment, defined terms used in this Amendment shall have the same meanings as in the Agreement. 2. Purchase Price. The first portion of Section 1.2 of the Agreement shall be deleted in its entirety up to item (a) and replaced with the following: "Subject to the terms and conditions of this Agreement, the aggregate purchase price to be paid by Purchaser to Seller for the purchase of the Assets, including the purchase of a fee interest in the Birthing Center (as hereinafter defined), shall be". 3. Items to be Delivered by Seller at Closing. A new Section 1.6.12 of the Agreement shall read as follows: "the Employee Leasing Agreements, which shall be in the form of Exhibit 1.6.12 attached hereto (the "Employee Leasing Agreements"), pursuant to which Seller, one of the Subsidiaries or an affiliate of Seller shall lease the Hospital Employees to Purchaser, as contemplated by Section 5.3(a) of this Agreement". 4. Items to be Delivered by Purchaser at Closing. A new Section 1.7.9 of the Agreement shall read as follows: "the Employee Leasing Agreements." 5. Transfer of Seller Assets. Section 1.9 of the Agreement shall be amended by adding the following to the end of paragraph (b): ", except that Seller shall sublease that certain Leased Real Property more commonly known as the Birthing Center (the "Birthing Center"), 2900 South Loop 256, Palestine, Texas, as 2 more fully described at Exhibit 1.9(b)-1 hereto, to Purchaser or its designated affiliate in accordance with that certain Sublease Agreement, substantially in the form attached hereto as Exhibit 1.9(b)-2 (the "Sublease Agreement"), until such time as Seller (a) shall acquire fee title to the Birthing Center and shall transfer such fee interest to Purchaser or its designated subsidiary, or (b) shall cause the owner of the Birthing Center to convey the Birthing Center to Purchaser or Purchaser's designated affiliate, subsequent to the Closing Date as set forth more fully herein at Section 1.9.1. Seller and Purchaser shall use commercially reasonable efforts to act expeditiously to enter into the Sublease Agreement as soon after the Closing Date as practicable and until the Sublease Agreement is so executed shall be entitled to the material benefits and subject to the material obligations contemplated in Exhibit 1.9(b)-2. If the owner of the Birthing Center refuses to execute the Sublease Agreement based on any provision of the Sublease Agreement, Seller and Purchaser shall modify the Sublease Agreement as required by the owner provided such modifications do not materially alter Seller's or Purchaser's rights or obligations under the Sublease Agreement. 6. Transfer of the Birthing Center. A new Section 1.9.1 shall be added to the Agreement as follows: "Seller shall use commercially reasonable efforts to act expeditiously in (a) acquiring fee title to the Birthing Center or (b) causing the owner of the Birthing Center to convey fee title of the Birthing Center to Purchaser or Purchaser's designated affiliate. In either event, Purchaser will succeed to fee simple ownership of the Birthing Center at no additional cost or expense to Purchaser. If Seller acquires fee title to the Birthing Center, within thirty (30) days of acquiring such title, or as otherwise agreed to by the parties to this Agreement, Seller shall transfer fee title to the Birthing Center to Purchaser. This transfer, or a conveyance by the current owner, shall occur in accordance with the terms and conditions of the Agreement, as though the Birthing Center were Owned Real Property prior to the original Closing Date except that the Closing Date shall be defined, for purposes of the sale of the Birthing Center, as the date of Purchaser's or Purchaser's designated affiliate's acquisition of fee title to the Birthing Center, or as otherwise agreed to by the parties. Any and all representations and warranties as to Owned Real Property under this Agreement shall pertain to the Birthing Center upon such transfer or conveyance. Any and all prorations pertaining to such transfer or conveyance shall be calculated using the new Closing Date". 7. Assumed Obligations. Section 1.11(d) of the Agreement shall be amended by deleting subsections (i), (ii) and (iii) in their entirety and replacing them with the following: "(i) the acts of Purchaser or any affiliate of Purchaser after the Transition Date or (ii) Purchaser's breach of its covenant with respect to the Hired Employees as set forth in Section 5.3". 2 3 8. Excluded Liabilities. (a) Section 1.12(e) of the Agreement shall be deleted in its entirety and replaced with the following: "subject to reimbursement by Purchaser to the extent contemplated by the Employee Leasing Agreement, all liabilities of Seller or any of the Subsidiaries with respect to its or their 401(k) plans, Section 125 plans and other Seller Plans and all administrative costs associated with such welfare benefit plans arising on or prior to the Transition Date;". (b) A new Section 1.12(i) of the Agreement shall be added as follows: "any financial impact on Seller's Subsidiaries', Purchaser's or either of Purchaser's Partnerships' Disproportionate Share payments from Medicare resulting from the failure to maintain a minimum number of beds at Minden Medical Center prior to the Effective Time". 9. Termination of Hospitals' Employees. (a) The phrase "Upon the Effective Time" contained in the first sentence of Section 4.10 of the Agreement shall be replaced in its entirety with the phrase "Upon 12:01 a.m. (determined by reference to the local time zone in which the Hospital is located) on January 1, 2000 (the "Transition Time")". (b) The phrase "the Effective Time" shall be replaced with the phrase "the Transition Time" each time it appears in the second and third sentences of Section 4.10 of the Agreement. 10. Certain Employee Matters. Section 5.3 of the Agreement shall be deleted in its entirety and replaced with the following: "5.3 Certain Employee Matters. (a) During the period (the "Transition Period") commencing at the Effective Time and ending immediately prior to January 1, 2000 (such date being the "Transition Date"), each Hospital Employee (as defined in paragraph (b) of this Section 5.3) shall remain an employee of its employer as of the Effective Time (whether such employer is Seller, one of the Subsidiaries or an affiliate of Seller), subject to normal personnel actions occurring in the ordinary course of business. During the Transition Period, or until such earlier time as any such Hospital Employee ceases to be an employee of such employer, each such Hospital Employee shall be leased to Purchaser from Seller or the employing Subsidiary or affiliate, on substantially the terms and conditions as are set forth in the Employee Leasing Agreements. During the Transition Period, each leased Hospital Employee shall 3 4 continue to participate in all Seller Plans on the same basis as in effect immediately prior to the Effective Time, subject to the terms of the Employee Leasing Agreements. (b) Purchaser covenants and agrees that it shall make offers of employment effective as of the Transition Date (in substantially equivalent positions) to all of the persons who are employees of (i) the Subsidiaries with respect to the operation of the Hospitals or (ii) any affiliate of Seller which employs individuals at any of the Hospitals as of the Transition Time (whether such employees are full time employees, part-time employees, on short-term disability or on leave of absence pursuant to Seller's policies, the Family and Medical Leave Act of 1993 or other similar local law, but excluding those employees who have been granted long-term disability benefits as of the Closing) (the "Hospitals' Employees"). Notwithstanding the foregoing, Purchaser acknowledges that Seller has the right, but is not required, to retain any management-level Hospital Employee who does not accept Purchaser's employment offer made under this Section 5.3(b), which individuals will remain employed by Seller or its applicable affiliate as of the Transition Time (the "Retained Management Employees"). Any of the Hospitals' Employees who accept an offer of employment with Purchaser as of or after the Transition Time shall be referred to herein as the "Hired Employees." Purchaser covenants and agrees that it shall continue to employ in comparable positions that number of the Hired Employees as shall be necessary to avoid any liability of Seller or any of its affiliates under WARN. Purchaser shall ensure that the terms and conditions of employment (including level of compensation and benefits, including without limitation health insurance plans containing a waiver of pre-existing conditions clause) of each of the Hired Employees on and after the Transition Date are substantially equivalent to that provided the Hospitals' Employees as of the Effective Date. (c) Purchaser shall give all Hired Employees full credit for accumulated sick pay as reflected by the Sick Pay Amount and for all of the accrued vacation and holiday pay of such employees, either by (i) crediting such employees the accrued time off reflected in the employment records of Seller as of day immediately prior to the Transition Date or (ii) by making full payments to such employees of the amounts which such employees would have received had they taken their accrued or accumulated holiday or vacation time, provided, however, that no payment to such employees shall be required with respect to accumulated sick time except to the extent required by Seller's policies with respect to accumulated sick time. 4 5 (d) On and after the Transition Date, Hired Employees shall be eligible for a medical and hospital plan sponsored by Purchaser. Hired Employees shall be given credit for periods of employment with the Subsidiaries and Seller's affiliates, as applicable, on or prior to the Transition Date for purposes of determining eligibility to participate and amount of benefits (including without limitation vesting of benefits), and preexisting condition limitations will be waived with respect to Hired Employees and their covered dependents unless such preexisting condition limitations were applicable prior to the Transition Date. In addition, if prior to the Transition Date a Hired Employee or his covered dependents paid any amounts towards a deductible or out-of-pocket maximum in Seller's (or its affiliate's) medical and health plan's current fiscal year, such amounts shall be applied toward satisfaction of the deductible or out-of-pocket maximum in the current fiscal year of Purchaser's medical and health plan that covers Hired Employees on and following the Transition Date. (e) Within two (2) years after Closing, Purchaser's Plan shall (i) be amended to provide for a plan-to-plan transfer from Seller's (or its affiliate's) plan with respect to the Hospitals' Employees (other than the Retained Management Employees) that is qualified under Section 401(a) and 401(k) of the Code, (ii) accept a transfer of assets from the above plan, (iii) file any required returns relating to the transfer with the Internal Revenue Service, and (iv) be amended to provide protected withdrawal and distribution rights relating to the transferred assets in accordance with Section 411(d)(6) of the Code. For purposes of this Agreement, "Purchaser's Plan" shall mean a retirement plan qualified under Section 401(a) of the Code that is sponsored by Purchaser or one of its controlled group or affiliated service group members, as defined in Section 414 of the Code. (f) Any applicable employee of Seller or any Subsidiary with respect to the operation of the Hospitals who is identified as a current or former participant (and any eligible dependent thereof) of the Seller Plans who is eligible to receive continuation coverage (within the meaning of Section 4980B of the Code and Part 6 of Subtitle B of Title 1 of ERISA) will remain covered through Seller's and its affiliates' COBRA provider. On and immediately following the Transition Date and as a result of the transactions contemplated by this Agreement, Seller, its affiliates and the Subsidiaries shall not offer COBRA benefits with respect to any of the Seller Plans to former employees (and their dependents) who are employed by Purchaser at any Hospital as of the date such Hired Employees become eligible for Purchaser's medical and dental plans. Seller, its affiliates and the Subsidiaries 5 6 will thereby be released of COBRA responsibility and liability for such employees. (g) On and after the Transition Date, Purchaser's human resources department will give reasonable assistance to Seller's (and its affiliates') human resources department with respect to Seller's, Seller's affiliates' and the Subsidiaries' post-Transition Date administration of Seller's, Seller's affiliates' and the Subsidiaries' pre-Transition Date employee pension benefit plans and employee health or welfare benefit plans for the Hospitals' Employees (other than the Retained Management Employees)." 11. Indemnification of Purchaser by Seller. (a) Section 10.2.1 of the Agreement shall be amended by adding the following after the phrase "attorneys' fees" in the first sentence of the Agreement: "and, only for the purposes of any indemnification claim triggered by Section 1.12(i), interest actually paid on any indebtedness incurred directly in connection with an event triggering indemnification." (b) The phrase "Section 1.12(a), (e), (f) or (h)" contained in Section 10.2.2(a)(viii) of the Agreement shall be replaced in its entirety with the phrase "Section 1.12(a), (e), (f), (h) or (i)". 12. Indemnification of Seller by Purchaser. Section 10.3.1 of the Agreement shall be amended by changing the term "Closing Date" in subsection (viii) to the term "Transition Date". 13. Governing Law. Section 12.3 of the Agreement shall be amended by changing the phrase "New York" to "California" throughout. 14. Arbitration. Section 12.17 of the Agreement shall be amended by changing the phrase "New York" to "California" throughout, except that the first phrase "New York" in Section 12.17.1 shall be changed to "Los Angeles". 15. Effect on Agreement; General Provisions. Except as set forth in this Amendment, the terms and provisions of the Agreement are hereby ratified and declared to be in full force and effect. This Amendment shall be governed by the provisions of the Agreement regarding choice of law, attorneys' fees, and successors and assigns. This Amendment shall become effective upon its execution, which may occur in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Captions and paragraph headings are used herein for convenience only, are not a part of this Amendment or the Agreement as amended by this Amendment and shall not be used in construing either document. Other than the reference to the Agreement contained in the first recital of this Amendment, each reference to the Agreement 6 7 and any agreement contemplated thereby or executed in connection therewith, whether or not accompanied by reference to this Amendment, shall be deemed a reference to the Agreement as amended by this Amendment. IN WITNESS WHEREOF, the parties have caused this Amendment to be executed in multiple originals by their authorized officers, all as of the day and year first above written. PURCHASER: PROVINCE HEALTHCARE COMPANY, a Delaware corporation By: /s/ Howard T. Wall, III ------------------------------- Name: Howard T. Wall, III Title: Vice President SELLER: TENET HEALTHCARE CORPORATION, a Nevada corporation By: /s/ Paul O'Neill ------------------------------- Name: Paul O'Neill Title: Vice President 7 EX-99.1 4 PRESS RELEASE DATED 10/01/99 1 EXHIBIT 99.1 PROVINCE LOGO NEWS RELEASE FOR IMMEDIATE RELEASE CONTACT: MERILYN H. HERBERT VICE PRESIDENT, INVESTOR RELATIONS (615)370-1377 PROVINCE HEALTHCARE PURCHASES TWO HOSPITALS Brentwood, TN, October 1, 1999 - Province Healthcare Company (Nasdaq: PRHC) announced today that it has acquired Trinity Valley Medical Center in Palestine, Texas and Minden Medical Center in Minden, Louisiana from Tenet Healthcare Corporation. Trinity Valley Medical Center is a 153-bed facility with revenues of approximately $35.1 million and Minden Medical Center is a 121-bed hospital with revenues of approximately $25.6 million, both as of May 31, 1999. Province purchased the hospitals from Tenet Healthcare Corporation for approximately $77 million. Martin S. Rash, President and Chief Executive Officer of Province Healthcare, commented, "Trinity Valley Medical Center is located in Palestine, Texas where we own the other hospital in the community. By serving as the sole provider in the market we will be able to add services currently unavailable but badly needed by the community. The Palestine market has a service area population in excess of 100,000." Minden Medical Center is a full-service hospital serving northwest Louisiana. Located approximately 30 minutes east of Shreveport, this facility is the only hospital in a service area population of approximately 64,000. Rash added, "These acquisitions reaffirm our commitment to providing high quality healthcare to attractive non-urban communities." Province Healthcare is a provider of health care services in attractive non-urban markets in the United States. The Company owns or leases 15 general acute care hospitals in eight states with a total of 1,284 licensed beds. The Company also provides management services to 49 primarily non-urban hospitals in 17 states and Puerto Rico with a total of 3,526 licensed beds. CONTACT: MERILYN H. HERBERT, PROVINCE HEALTHCARE COMPANY (PRHC) AT (615)370-1377 -MORE- 2 PROVINCE HEALTHCARE PURCHASES TWO HOSPITALS 2 Except for historical information contained herein, the statements in this release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. Those risks include, among others, risks associated with general economic and business conditions, the effect of future governmental regulations, including the recently enacted Balanced Budget Act of 1997, changes in Medicare and Medicaid reimbursement levels, and the Company's ability to implement successfully its acquisition and development strategy and to obtain financing therefor. Those and other risks are described in the Company's filings with the Securities and Exchange Commission (SEC), copies of which are available from the SEC or may be obtained upon request from the Company. # # # -----END PRIVACY-ENHANCED MESSAGE-----