ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CHS/COMMUNITY HEALTH SYSTEMS, INC.
AND
FREEMAN-OAK HILL HEALTH SYSTEM
D/B/A FREEMAN HEALTH SYSTEM
March 5, 2026
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CHS/COMMUNITY HEALTH SYSTEMS, INC.
AND
FREEMAN-OAK HILL HEALTH SYSTEM
D/B/A FREEMAN HEALTH SYSTEM
March 5, 2026
4912-7765-4656.12
TABLE OF CONTENTS
1. |
PURCHASE OF ASSETS |
1 |
1.1 |
Assets |
1 |
1.2 |
Excluded Assets |
3 |
1.3 |
Assumed Liabilities |
4 |
1.4 |
Excluded Liabilities |
5 |
1.5 |
Purchase Price |
7 |
1.6 |
Net Working Capital, Estimates and Audits |
7 |
1.7 |
Transition Patients |
9 |
1.8 |
Prorations |
10 |
2. |
CLOSING |
11 |
2.1 |
Closing |
11 |
2.2 |
Actions of Seller at Closing |
11 |
2.3 |
Actions of Buyer at Closing |
12 |
2.4 |
Frustration of Closing Conditions |
13 |
3. |
REPRESENTATIONS AND WARRANTIES OF SELLER |
14 |
3.1 |
Existence and Capacity |
14 |
3.2 |
Powers; Consents; Absence of Conflicts With Other Agreements, Etc. |
14 |
3.3 |
Binding Agreement |
14 |
3.4 |
Financial Statements |
14 |
3.5 |
Absence of Certain Changes |
15 |
3.6 |
Licenses |
16 |
3.7 |
Medicare Participation/Accreditation |
16 |
3.8 |
Regulatory Compliance |
18 |
3.9 |
Equipment |
20 |
i
3.10 |
Real Property |
20 |
3.11 |
Title to Other Assets |
21 |
3.12 |
Employee Benefit Plans |
21 |
3.13 |
Litigation or Proceedings |
23 |
3.14 |
Environmental Laws |
23 |
3.15 |
Taxes |
24 |
3.16 |
Employee Relations |
25 |
3.17 |
The Contracts |
25 |
3.18 |
Supplies |
26 |
3.19 |
Insurance |
26 |
3.20 |
Third Party Payor Cost Reports |
27 |
3.21 |
Medical Staff Matters |
27 |
3.22 |
Condition of Assets |
27 |
3.23 |
Experimental Procedures |
27 |
3.24 |
Intellectual Property |
28 |
3.25 |
Compliance Program |
28 |
4. |
REPRESENTATIONS AND WARRANTIES OF BUYER |
28 |
4.1 |
Existence and Capacity |
28 |
4.2 |
Powers; Consents; Absence of Conflicts With Other Agreements, Etc. |
28 |
4.3 |
Binding Agreement |
29 |
4.4 |
Availability of Funds |
29 |
5. |
COVENANTS OF SELLER PRIOR TO CLOSING |
29 |
5.1 |
Information |
29 |
5.2 |
Operations |
30 |
5.3 |
Negative Covenants |
30 |
ii
5.4 |
Governmental Approvals |
31 |
5.5 |
Antitrust Matters |
31 |
5.6 |
Additional Financial Information |
32 |
5.7 |
Contract Consents |
32 |
5.8 |
No-Shop Clause |
32 |
5.9 |
Efforts to Close |
32 |
5.10 |
Employee List |
33 |
6. |
COVENANTS OF BUYER PRIOR TO CLOSING |
33 |
6.1 |
Governmental Approvals |
33 |
6.2 |
Antitrust Matters |
33 |
6.3 |
Title Commitments and Surveys |
34 |
6.4 |
Representations and Warranties Insurance |
35 |
6.5 |
Efforts to Close |
35 |
7. |
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER |
35 |
7.1 |
Representations/Warranties |
35 |
7.2 |
Governmental Approvals |
36 |
7.3 |
Title Policy |
36 |
7.4 |
Actions/Proceedings |
36 |
7.5 |
No Material Adverse Change |
36 |
7.6 |
Insolvency |
36 |
7.7 |
Material Consents |
36 |
7.8 |
Vesting/Recordation |
37 |
7.9 |
Information Services Agreement |
37 |
7.10 |
Closing Deliveries |
37 |
8. |
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER |
37 |
iii
8.1 |
Representations/Warranties |
37 |
8.2 |
Governmental Approvals |
37 |
8.3 |
Actions/Proceedings |
37 |
8.4 |
Insolvency |
37 |
8.5 |
Closing Deliveries |
38 |
9. |
SELLER’S COVENANT NOT TO COMPETE |
38 |
10. |
ADDITIONAL AGREEMENTS |
38 |
10.1 |
Allocation of Purchase Price |
38 |
10.2 |
Termination Prior to Closing |
38 |
10.3 |
Post-Closing Access to Information |
39 |
10.4 |
Preservation and Access to Records After the Closing |
39 |
10.5 |
Tax and Medicare Effect |
40 |
10.6 |
Reproduction of Documents |
40 |
10.7 |
Cooperation on Tax Matters |
40 |
10.8 |
Cost Reports |
40 |
10.9 |
Misdirected Payments, Etc. |
41 |
10.10 |
Employee Matters |
41 |
10.11 |
Indigent Care Policies |
42 |
10.12 |
Use of Controlled Substance Permits |
42 |
10.13 |
Medical Staff Matters |
42 |
10.14 |
Information Services Agreement |
43 |
10.15 |
Transition Services Agreement |
43 |
10.16 |
Billing and Collection Agreement |
43 |
10.17 |
License Agreement |
43 |
10.18 |
Access to Records Including as to Recovery and Audit Information |
43 |
iv
10.19 |
Continuation of Insurance |
43 |
10.20 |
Quality Reporting |
44 |
10.21 |
Telephone Access |
44 |
10.22 |
Guaranties |
44 |
10.23 |
Use of Excluded Marks |
44 |
10.24 |
Outreach Laboratory Services |
45 |
11. |
INDEMNIFICATION |
45 |
11.1 |
Indemnification by Buyer |
45 |
11.2 |
Indemnification by Seller |
45 |
11.3 |
Limitations |
46 |
11.4 |
Notice and Control of Litigation |
46 |
11.5 |
Notice of Claim |
47 |
11.6 |
Mitigation |
47 |
11.7 |
Exclusive Remedy |
47 |
11.8 |
Additional Matters |
48 |
11.9 |
Compliance Matters |
48 |
12. |
MISCELLANEOUS |
48 |
12.1 |
Schedules and Exhibits |
48 |
12.2 |
Additional Assurances |
49 |
12.3 |
Consented Assignment |
49 |
12.4 |
Consents, Approvals and Discretion |
49 |
12.5 |
Legal Fees and Costs |
49 |
12.6 |
Choice of Law |
50 |
12.7 |
Benefit/Assignment |
50 |
12.8 |
No Brokerage |
50 |
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12.9 |
Cost of Transaction |
50 |
12.10 |
Confidentiality |
50 |
12.11 |
Public Announcements |
51 |
12.12 |
Waiver of Breach |
51 |
12.13 |
Notice |
52 |
12.14 |
Severability |
52 |
12.15 |
Gender and Number |
52 |
12.16 |
Divisions and Headings |
52 |
12.17 |
Survival |
53 |
12.18 |
Affiliates |
53 |
12.19 |
Material Adverse Effect |
53 |
12.20 |
Waiver of Jury Trial |
53 |
12.21 |
Accounting Date |
54 |
12.22 |
No Inferences |
54 |
12.23 |
Limited Third Party Beneficiaries |
54 |
12.24 |
Entire Agreement/Amendment |
54 |
12.25 |
Risk of Loss |
54 |
12.26 |
Other Definitions |
55 |
vi
EXHIBITS
Description Exhibit
Seller Entities A
Buyer Entities B
Hospitals C
Limited Power of Attorney D
Information Technology Transition Services Agreement and BAA E
Hospital Transition Services Agreement F
Billing and Collection Agreement G
License Agreement for Policy and Procedure Manuals H
SCHEDULES
Description Schedule
Owned Real Property 1.1(a)(i)
Leased Real Property 1.1(a)(ii)
Contracts 1.1(g)
Excluded Assets 1.2
Capital Lease Obligations 1.3
Excluded Liabilities 1.4(c)
Estimated Net Working Capital 1.6
Financial Statements 3.4
Certain Post-Balance Sheet Results 3.5
Licenses 3.6
Medicare Participation/Accreditation 3.7
Regulatory Compliance 3.8
Real Property – Compliance with Laws 3.10(a)
Real Property – Zoning 3.10(b)
Real Property – Tenant Leases 3.10(c)
Real Property – Rent Roll 3.10(d)
Real Property – Eminent Domain 3.10(e)
Employee Benefit Plans 3.12
Litigation or Proceedings 3.13
Environmental Laws 3.14
Taxes 3.15
Employee Relations 3.16
Insurance 3.19
Third Party Payor Cost Reports 3.20
Medical Staff Matters 3.21
Americans with Disabilities Act 3.22
Intellectual Property 3.24
Compliance Program 3.25
No Brokerage 12.8
i
GLOSSARY OF DEFINED TERMS
Defined Term Section
Accounting Firm 1.6(c)
Accreditations 3.7(b)
ACO 1.2(c)
Acquired Company 1.1(k)
Affiliate 12.18
Aggregate Damage 12.25(a)
Agreement Introduction
Antitrust Laws 5.5
Assets 1.1
Assignment and Assumption Agreement 2.2(c)
Assignments of Leases 2.2(a)
Assumed Liabilities 1.3
Balance Sheet Date 3.4(a)
Basket Amount 11.3
Benefit Plans 3.12(a)
Billing and Collection Agreement 2.2(l)
Breach 3.8(b)
Business Associate Agreement 2.2(j)
Buyer Introduction
Buyer Employees 10.10(a)
Buyer Entities Recital B
Buyer Plans 10.10(a)
Buyer Indemnified Parties 11.2
Casualty Termination Notice 12.25(a)
CERCLA 3.14
CIN 1.2(c)
CIN Interest 1.1(k)
CJR 1.2(c)
Closing 2.1
Closing Date 2.1
CMS 3.7(g)
Compliance Matter 11.9
Contracts 1.1(g)
Decision Date 12.25(b)
Deeds 2.2(a)
DRG Transition Patients 1.7(a)
DSH 1.2(c)
Effective Time 2.1
Employee List 5.10
Environmental Laws 3.14
ERISA 3.12(a)
ETO/PTO 5.10
Excluded Assets 1.2
ii
Excluded Liabilities 1.4
Excluded Marks 1.2(g)
Facilities Recital D
Financial Statements 3.4
FTC 5.5
Fundamental Representations 12.17
GAAP 1.6(a)
Government Entity 3.8
Government Programs 3.7(a)
Hospital Leased Real Property 3.10
Hospitals Recital C
HQI Program 3.7(g)
Immaterial Contracts 3.17
Indemnified Party 11.4
Indemnifying Party 11.4
Independent Consultant 12.25(a)
Information Services Agreement 2.2(j)
Initial Employee Census Date 5.10
Intellectual Property 3.24
Interim Billings 1.7(b)
IQI 1.2(c)
Justice Department 5.5
Labcorp 10.24
Leased Real Property 1.1(a)
License Agreement 2.2(l)
Losses 11.1
MAC 1.4(e)
Material Adverse Effect 12.19
Material Consents 7.7
Medicare Transition Agreement 2.2(n)
MIC 1.4(e)
MSSP 1.7(c)
Net Working Capital 1.6(a)
Non-Fundamental Cap 11.3
Objections 6.3(c)
ORYX 3.7(g)
Owned Real Property 1.1(a)
Permitted Encumbrances 3.10
PHI 3.8(b)
PIP 1.7(c)
Practitioners 3.7(a)
PSC 1.4(e)
Purchase Price 1.5
QNet 3.7(g)
R&W Policy 6.4
RAC 1.2(c)
iii
RCRA 3.14
Real Property 1.1(a)
SARA 3.14
Seller Introduction
Seller Cost Reports 10.8
Seller Entities Recital A
Seller Guaranty 10.22
Seller Indemnified Parties 11.1
State Health Agency 3.6
Submittal Date 12.25(b)
Surveys 6.3(b)
Survival Period 12.17
SWDA 3.14
Tax Return 3.15(f)
Taxes 3.15(f)
Termination Notice 12.1
Title Commitments 6.3(a)
Title Company 6.3(a)
Title Evidence 6.3(c)
Title Policies 6.3(a)
Transition Patients 1.7
Transition Services 1.7
Transition Services Agreement 2.2(k)
WARN Act 3.16(c)
ZPIC 1.4(e)
iv
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of March 5, 2026, by and between CHS/COMMUNITY HEALTH SYSTEMS, INC., a Delaware corporation (“Seller”), and FREEMAN-OAK HILL HEALTH SYSTEM D/B/A FREEMAN HEALTH SYSTEM, a Missouri nonprofit corporation (“Buyer”).
RECITALS:
A. Seller owns or controls, directly or indirectly, the organizations listed on Exhibit A attached hereto (each a “Seller Entity” and together the “Seller Entities”).
B. Buyer owns or controls, directly or indirectly, the organizations listed on Exhibit B attached hereto (each a “Buyer Entity” and together the “Buyer Entities”).
C. The Seller Entities directly or indirectly own and operate or lease and operate each of the hospitals set forth on Exhibit C attached hereto (each a “Hospital” and together the “Hospitals”).
D. Seller desires to cause the Seller Entities to sell to the Buyer Entities and Buyer desires to cause the Buyer Entities to purchase substantially all of the assets of the Seller Entities which are directly or indirectly related to, necessary for, or used in connection with, the operation of the Hospitals, together with certain related businesses including medical office buildings, outpatient care facilities, physician clinics, medical clinics, specialty clinics, walk-in clinics, urgent care clinics and physician practices (collectively with the Hospitals, the “Facilities”), on the terms and conditions set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the premises and the mutual agreements, covenants, representations, and warranties hereinafter set forth and other good and valuable consideration, the receipt and adequacy of which are forever acknowledged and confessed, the parties hereto agree as follows:
(a) fee simple title to the real property described on Schedule 1.1(a)(i) hereto, together with all right, title and interest of the Seller Entities in and to all improvements, any construction in progress, any other buildings and fixtures thereon, and all rights, privileges and
4912-7765-4656.12
easements appurtenant thereto (collectively, the “Owned Real Property”), and leasehold title to the real property that is leased by the Seller Entities pursuant to the leases described on Schedule 1.1(a)(ii) (collectively, the “Leased Real Property”) (the Owned Real Property and the Leased Real Property are collectively referred to herein as the “Real Property”);
(b) all tangible personal property, including, without limitation, all major, minor or other equipment, vehicles, furniture and furnishings of the Seller Entities;
(c) all supplies and inventory used or held for use in respect of the Facilities;
(d) assumable deposits and prepaid expenses that have continuing value to the Buyer Entities;
(e) all claims of the Seller Entities against third parties to the extent such claims relate to the condition of the Assets and, to the extent assignable, all warranties (express or implied) and guaranties (express or implied) and rights and claims assertable by (but not against) the Seller Entities related to the Assets;
(f) to the extent legally transferable, all right, title and interest in the financial, patient, medical staff and personnel records relating to the Facilities (including, without limitation, all equipment records, medical administrative libraries, medical records, documents, catalogs, books, records, files, and current personnel records);
(g) all rights and interests in the contracts, commitments, leases, licenses and agreements listed on Schedule 1.1(g) hereto and all Immaterial Contracts (hereinafter defined) (the contracts being assigned are referred to herein collectively as the “Contracts”);
(h) all licenses and permits, to the extent legally assignable, held by the Seller Entities relating to the ownership, development, and operation of the Facilities (including, without limitation, any pending or approved approvals from any relevant Government Entity (as defined herein));
(i) the trade names, trademarks, service marks (or variations thereof), domain names, social media account handles (but not content), copyrights and related proprietary rights listed in Schedule 3.24, all goodwill associated therewith, and all applications or registrations associated therewith;
(j) to the extent legally transferable, all provider numbers;
(k) all of the issued and outstanding membership interests (the “CIN Interest”) in Northwest-Sparks Quality Alliance, LLC, a Delaware limited liability company d/b/a “Community Quality Alliance” (the “Acquired Company”);
(l) all Acquired Company receivables, but only to the extent included in the determination of Net Working Capital;
(m) all goodwill associated with the Facilities and the Assets;
2
(n) petty cash;
(o) other (non-patient) receivables; and
(p) all other property of every kind, character or description owned, leased or licensed by the Seller Entities and used or held for use in the business of the Facilities or the Assets.
(a) cash, cash equivalents and marketable securities (except petty cash);
(b) board-designated, restricted and trustee-held or escrowed funds (such as funded depreciation, debt service reserves, working capital trust assets, and assets and investments restricted as to use) and accrued earnings thereon;
(c) to the extent not included in the determination of Net Working Capital, all amounts payable to the Seller Entities in respect of third party payors pursuant to retrospective settlements including, without limitation, pursuant to Medicare, Medicaid and CHAMPUS/TRICARE cost reports filed or to be filed by the Seller Entities for periods prior to the Effective Time, retrospective payment of claims that are the subject of Medicare Recovery Audit Contractor (“RAC”) appeals, all payments associated with any Medicare Accountable Care Organizations (“ACO”), clinically integrated networks (“CIN”), or the Medicare Comprehensive Care for Joint Replacement Model (“CJR”), and all payments for periods prior to the Effective Time related to all Medicaid payments and programs, including but not limited to Hospital Access Payments, Disproportionate Share (“DSH”), Medical Education, inpatient and outpatient rate adjustments, cost settlement payments, and Inpatient Quality Incentive (“IQI”), and all appeals and appeal rights of the Seller Entities relating to such settlements, including cost report settlements, for periods prior to the Effective Time;
(d) all Seller Entity records relating to (i) litigation files and records, cost report records relating to periods of time prior to Closing, tax returns and minute books, and (ii) the Excluded Assets and Excluded Liabilities to the extent that the applicable Buyer Entity does not need the same in connection with the operation of the Facilities, as well as all records which by Law the Seller Entities are required to maintain in their possession;
(e) prepaid insurance, prepaid assets (including trust and insurance policies) dedicated to the Seller Entities’ benefit plans and any reserves or prepaid expenses related to Excluded Assets and Excluded Liabilities (such as prepaid legal expenses);
(f) all accounts receivable arising from the rendering of services to patients at the Facilities, billed and unbilled, recorded or unrecorded, with collection agencies or otherwise, accrued and existing in respect of services rendered prior to the Effective Time, including those amounts paid to Seller pursuant to Section 1.7;
(g) any and all names, symbols, trademarks, logos or other symbols used in connection with the Facilities and the Assets which include the names “Northwest,” “CHS,”
3
“Community Health Systems,” “HMA,” “Health Management Associates” or any variants thereof or any other names which are proprietary to Seller or its Affiliate (the “Excluded Marks”);
(h) any computer software and programs which are proprietary to Seller or its Affiliates;
(i) receivables from or obligations with Seller or its Affiliates;
(j) the Seller Entities’ insurance proceeds arising from pre-Effective Time incidents and the Seller Entities’ assets held in connection with any self-funded insurance programs and reserves, if any;
(k) any claims of the Seller Entities against third parties to the extent that such claims relate to the operation of the Facilities prior to the Effective Time or to the Excluded Assets or Excluded Liabilities;
(l) all of Seller’s or any Affiliate’s proprietary manuals, marketing materials, policy and procedure manuals, standard operating procedures and marketing brochures, data and studies or analyses;
(m) all rights in connection with and the assets of the Seller Entities’ employee benefit plans;
(n) all assets relating to home health or hospice operations;
(o) all national or regional contracts of Seller or any Affiliate which are made available to any of the Facilities by virtue of the Facilities being an Affiliate of Seller;
(p) the electronic funds transfer accounts of the Facilities;
(q) all rights of the Seller Entities in any contracts, commitments, leases and agreements which are not included in the Contracts;
(r) any claims against third party payors relating to underpayments or violation of prompt pay statutes with respect to periods prior to the Effective Time; and
(s) non-assumable deposits and prepaid expenses that have continuing value to the Seller Entities.
(a) all obligations accruing from and after the Effective Time with respect to the Contracts but only to the extent that such obligations (i) relate to periods on or after the Effective Time; (ii) do not arise out of or relate to any failure to perform, improper performance, warranty or other breach, default or violation by any of the Seller Entities or any of their respective Affiliates on or prior to the Effective Time; and (iii) do not arise out of or relate to any event, circumstance
4
or condition occurring or existing prior to the Effective Time that, with notice or lapse of time, would constitute or result in a breach or default thereof (whether known or unknown);
(b) the capital lease obligations set forth on Schedule 1.3 hereto;
(c) all obligations and liabilities as of the Effective Time in respect of accrued vacation or holiday pay of employees at the Facilities who are hired by the Buyer Entities as of the Effective Time, and related taxes, but only to the extent included in the determination of Net Working Capital; and
(d) all Acquired Company payables, but only to the extent included in the determination of Net Working Capital.
(a) any debt, obligation, expense or liability that is not an Assumed Liability or that arises out of or relates to any Excluded Asset;
(b) claims or potential claims for medical malpractice or general liability relating to acts or omissions asserted to have occurred prior to the Effective Time;
(c) those claims and obligations (if any) specified in Schedule 1.4 hereto;
(d) any debts, expenses, liabilities, or obligations associated with or arising out of any of the Excluded Assets;
(e) to the extent not included in the determination of Net Working Capital, any liabilities and obligations of the Seller Entities in respect of periods prior to the Effective Time arising under the terms of the Medicare, Medicaid, CHAMPUS/TRICARE, Blue Cross, or other third party payor programs, including, without limitation, any claims, recoupments, offsets or set-offs by any third party payor due to any overpayments, duplicate payments, fraud or incorrect billing; and including, without limitation, in respect of any cost report, any audit under the Medicare Recovery Audit Contractors (“RAC”) program, Medicaid Integrity Contractors (“MIC”) program, Medicare Zone Program Integrity Contractors (“ZPIC”) program, Medicare Program Safeguard Contractors program (“PSC”), or Medicare Administrative Contractors (“MAC”) program or any noncompliance with applicable Law or contractual obligations related to the billing or collection of services, any ACOs, CINs, CJR, and any liability arising pursuant to the Medicare, Medicaid (including, but not limited to, Hospital Access Payments, DSH, Medical Education, inpatient and outpatient rate adjustments, cost settlement payments, and IQI), CHAMPUS/TRICARE, Blue Cross, or any other third party payor programs as a result of the consummation of any of the transactions contemplated under this Agreement;
5
(f) federal, state or local tax liabilities or obligations of the Seller Entities in respect of periods prior to the Effective Time or resulting from the consummation of the transactions contemplated herein including, without limitation, any income tax, any franchise tax, any tax recapture, any sales and/or use tax, and any FICA, FUTA, workers’ compensation, and any and all other taxes or amounts due and payable as a result of the exercise by the employees at the Facilities of such employees’ right to vacation, sick leave, and holiday benefits accrued while in the employ of the Seller Entities (provided, however, that this clause (f) shall not apply to any and all taxes payable with respect to any employee benefits constituting Assumed Liabilities under Section 1.3(c) hereof);
(g) liability for any and all claims by or on behalf of the Seller Entities’ employees relating to periods prior to the Effective Time including, without limitation, liability for any compensation-related payments, pension, profit sharing, deferred compensation, equity or equity-related compensation, incentive compensation, fringe benefit, tuition reimbursement, severance, termination pay, change in control or retention payments, bonuses, accrued vacation, paid time off, or sick leave, or any other employee benefit plan of whatever kind or nature or any employee health and welfare benefit plans, liability arising out of or relating to the classification of any individual as an independent contractor, consultant, or otherwise, rather than as an employee, liability for any discrimination, harassment, and/or wrongful termination claim under state or federal Law, EEOC claim, ADA claim, ADEA claim, FMLA claim, PWFA claim, Title VII claim, EPA claim, USERRA claim, wage and hour claim, unemployment compensation claim, or workers’ compensation claim, any liabilities or obligations to former employees of the Seller Entities under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, liability for any violations of the Worker Adjustment and Retraining Notification (WARN) Act, and liability for any other claim arising out of or related to the employee’s employment or the termination thereof (provided, however, that this clause (g) shall not apply to any and all employee benefits constituting Assumed Liabilities under Section 1.3(c) hereof);
(h) any obligation or liability accruing, arising out of, or relating to any federal, state or local investigations and audits of, or claims or actions against, the Seller Entities or any of their Affiliates or any of their employees, medical staff, agents, vendors or representatives with respect to acts or omissions prior to the Effective Time;
(i) any civil or criminal obligation or liability accruing, arising out of, or relating to any acts or omissions of the Seller Entities, their Affiliates or, to the extent related to their services to the Seller Entities, their directors, officers, employees, contractors, vendors and agents alleged or claimed to have violated any constitutional provision, statute, ordinance or other Law, rule, regulation or order of any Government Entity;
(j) liabilities or obligations arising out of any breach by the Seller Entities prior to the Effective Time of any Contract;
(k) liabilities or obligations arising as a result of any breach by the Seller Entities at any time of any contract or commitment that is not expressly assumed by the Buyer Entities in this Agreement;
6
(l) any debt, obligation, expense, or liability of the Seller Entities arising out of or incurred solely as a result of any transaction of the Seller Entities occurring after the Effective Time;
(m) any liabilities or obligations of any of the Seller Entities arising out of or relating to any violation of any Laws, including, without limitation, any Healthcare Laws; and
(n) all liabilities and obligations relating to any oral agreements, oral contracts or oral understandings with any referral sources including, but not limited to, physicians, unless reduced to writing, identified on Schedule 1.1(g) hereto, and expressly assumed as part of the Contracts.
(a) Net Working Capital. As used herein, the term “Net Working Capital” shall mean the aggregate current assets of the Seller Entities conveyed to the Buyer Entities pursuant to Section 1.1 hereof (excluding those Excluded Assets which would otherwise be included in current assets), minus the aggregate current liabilities of the Seller Entities assumed by the Buyer Entities pursuant to Section 1.3 hereof (excluding those Excluded Liabilities which would otherwise be included in current liabilities) but only to the extent set forth on Schedule 1.6(b), all as determined in accordance with generally accepted accounting principles (“GAAP”). In any case with respect to the computation of Net Working Capital (i) the following shall be included in current assets: petty cash, prepaid expenses and deposits (to the extent assumable), supplies and inventory, and the Acquired Company receivables, and (ii) the following shall be included in current liabilities: accrued vacation or holiday pay, and the Acquired Company payables.
(b) Estimates and Adjustments. Attached hereto as Schedule 1.6 is a schedule of the mutually agreed upon Net Working Capital as of December 31, 2025, together with the principles, specifications and methodologies used in determining such Net Working Capital. At least ten (10) business days prior to Closing, Seller shall deliver to Buyer a reasonable estimate of Net Working Capital as of the end of the most recently ended calendar month prior to the Closing Date for which financial statements are available and containing reasonable detail and supporting documents showing the derivation of such estimate. The Net Working Capital shall be estimated following the same mutually agreed upon principles, specifications and methodologies used to determine the Net Working Capital as of December 31, 2025, as specified in Schedule 1.6, and shall be used for purposes of calculating the Purchase Price as of the Closing. Within ninety (90)
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days after the Closing, Seller shall deliver to Buyer its determination of the Net Working Capital as of the last day of the calendar month immediately preceding the Effective Time (following the same principles, specifications and methodologies used to determine the Net Working Capital as set forth on Schedule 1.6 and the estimated Net Working Capital as of the Closing). Each party shall have full access to the financial books and records pertaining to the Facilities to confirm or audit Net Working Capital computations. Should Buyer disagree with Seller’s determination of Net Working Capital, it shall notify Seller within sixty (60) days after Seller’s delivery of its determination of Net Working Capital. If Seller and Buyer fail to agree within thirty (30) days after Buyer’s delivery of notice of disagreement on the amount of Net Working Capital, such disagreement shall be resolved in accordance with the procedure set forth in Section 1.6(c), which shall be the exclusive remedy for resolving accounting disputes relative to the determination of Net Working Capital. The Purchase Price shall be increased or decreased based on actual Net Working Capital as of the last day of the calendar month immediately preceding the Effective Time, and within five (5) business days after determination thereof any increase shall be paid in cash by Buyer to Seller, and any decrease shall be paid in cash to Buyer by Seller.
(c) Dispute of Adjustments. In the event that Seller and Buyer are not able to agree on the actual Net Working Capital within thirty (30) days after Buyer’s delivery of notice of disagreement, Seller and Buyer shall each have the right to require that such disputed determination be submitted to PricewaterhouseCoopers, or if PricewaterhouseCoopers is not available for any reason or does not maintain its independent status, such other independent certified public accounting firm as Seller and Buyer may then mutually agree upon in writing (the “Accounting Firm”) for computation or verification in accordance with the provisions of this Agreement. The Accounting Firm shall review the matters in dispute and, acting as arbitrators, shall promptly decide the proper amounts of such disputed entries (which decision shall also include a final calculation of Net Working Capital). The submission of the disputed matter to the Accounting Firm shall be the exclusive remedy for resolving accounting disputes relative to the determination of Net Working Capital. The Accounting Firm’s determination shall be binding upon Seller and Buyer, and such Accounting Firm’s fees and expenses shall be borne equally by Seller and Buyer.
(d) Physical Inventory. If requested by Buyer at least ten (10) business days prior to the Closing, Seller shall cause a physical inventory to be taken of the inventory and supplies on hand at the Hospitals by employees or representatives of Seller or its Affiliates as near in time as possible to the Closing Date and with the results extended and adjusted through the Closing Date. Seller shall permit representatives or employees of Buyer to observe such inventory process. All inventory items shall be valued at cost on a first-in first-out basis. The parties acknowledge that the inventory to be taken pursuant to this Section 1.6(d) will not be conducted until immediately prior to the Closing Date and, as such, the results of such inventory may not be available until sometime after the Closing Date. Accordingly, the parties agree that for purposes of determining the estimated Net Working Capital as of the Closing Date, inventory with respect to the operation of the Hospitals shall be calculated as reflected by the latest available unaudited balance sheets of the Seller Entities if the results of such inventory are not available. For purposes of determining the actual Net Working Capital, inventory shall be valued as determined pursuant to this Section 1.6(d).
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(a) As soon as practicable after the Closing Date, there shall be delivered to both parties a statement itemizing the Transition Services provided by each of the parties to Transition Patients whose medical care is paid for, in whole or in part, by Medicare, Medicaid, TRICARE, Blue Cross or any other third party payor who pays on a DRG, case rate or other similar basis (the “DRG Transition Patients”). The Buyer Entities shall pay to the Seller Entities an amount equal to (i) the total DRG and outlier payments (including capital and any deposits, deductibles or co-payments received by the Buyer Entities or the Seller Entities) per the remittance advice received by the Buyer Entities on behalf of a DRG Transition Patient, multiplied by a fraction, the numerator of which shall be the total charges for the Transition Services provided to such DRG Transition Patient by the Seller Entities, and the denominator of which shall be the sum of the total charges for all services provided to such DRG Transition Patient by the Seller Entities and the Buyer Entities both up to and after the Effective Time, minus (ii) any deposits, deductibles or co-payments made or payable by such DRG Transition Patients to the Seller Entities.
(b) As of Effective Time, cut-off billings (“Interim Billings”) for all Transition Patients not covered by Section 1.7(a) shall be prepared and sent following the discharge of the patient from the Hospital. Any payments received by either the Buyer Entities or the Seller Entities for such Interim Billings are the property of the Seller Entities and shall be paid to the Seller Entities, when and as received by the Buyer Entities, within ten (10) business days of receipt.
(c) If the Buyer Entities receive any amounts from the Medicare, Medicaid, TRICARE or other third party payor program (including, but not limited to the Medicare Shared Savings Program (“MSSP”), Hospital Access Payments and Assessment Fees, inpatient rate adjustments, outpatient reimbursement adjustments, IQI, Medicaid cost settlement payments, DSH, Medical Education, periodic interim payments (“PIP”) and such amounts do not relate to those which were included in the determination of Net Working Capital, bi-weekly payments for Medicare bad debt, payments for costs paid for on a pass-through basis, such as capital costs, and MIPS or other MACRA-based payments) associated with the operation of the Hospitals or the Facilities prior to the Effective Time, the Buyer Entities shall tender the amount applicable to the period up to the Effective Time to the Seller Entities weekly. If the Seller Entities receive any amounts from the Medicare, Medicaid, TRICARE or any other third party payor program (including, but not limited to MSSP, Hospital Access Payments and Assessment Fees, inpatient rate adjustments, outpatient reimbursement adjustments, IQI, Medicaid cost settlement payments, DSH, Medical Education, PIP, bi-weekly payments for Medicare bad debt, payments for costs paid for on a pass-through basis, such as capital costs, and MIPS or other MACRA-based payments), associated with the operations of the Hospitals or any Facilities relating to periods after the Effective Time, the Seller Entities shall tender the same to the Buyer Entities weekly. It is the intent of the parties that the Buyer Entities and the Seller Entities shall receive any and all amounts related to any other Medicare, Medicaid, TRICARE or other third party payor program, such as MSSP, Hospital Access Payments and Assessment Fees, inpatient rate adjustments, outpatient
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reimbursement adjustments, IQI, Medicaid cost settlement payments, DSH, Medical Education, PIP, bi-weekly payments for Medicare bad debt, payments for costs paid for on a pass-through basis, such as capital costs, and MIPS or other MACRA-based payments applicable to the period of time the Hospitals or the Facilities were owned by such party, calculated as the payment multiplied by a fraction, the numerator of which shall be the number of days the Hospitals or the Facilities were owned by the party during the period attributable to the payment and the denominator of which shall be the total number of days attributable to the payment. In conjunction with a Medicare cost report, the Medicare Audit Contractor may apply biweekly payments to a party that are not applicable to its period of ownership. If this occurs, the parties agree to make payments to one another so that each party receives third party payments applicable to the period of time it owned the Hospitals or the Facilities in accordance with the methodology delineated above.
(d) Buyer shall cause the Acquired Company to make distributions of shared savings, care coordination fees and quality-based payments to participants as provided in the 2024 Distribution Plan, the 2025 Distribution Plan and the 2026 Distribution Plan, respectively, all of which have been provided by Seller to Buyer. It is the intent of the parties that Seller and Buyer shall receive any and all shared savings, care coordination fees and quality-based payments (and shall be responsible for any and all risk share payments, retroactive adjustments and all amounts owed or paid, after application of any reserves of the Acquired Company) applicable to the period of time the Hospitals or the Facilities were owned by such party, calculated as the payment (or deficit) multiplied by a fraction, the numerator of which shall be the number of days the Hospitals or the Facilities were owned by the party during the performance period attributable to the payment (or deficit), and the denominator of which shall be the total number of days attributable to the payment (or deficit). All distributions by the Acquired Company shall be in accordance with the timeframes and processes contemplated by the Acquired Company participating provider agreements. For purposes of clarity, the Acquired Company participants shall not be third party beneficiaries of this Agreement.
(e) All payments required by this Section 1.7 shall be made within ten (10) business days of a party’s receipt of payment with respect to a Transition Patient, accompanied by copies of remittances and other supporting documentation as reasonably required by the other party. In the event that the Buyer Entities and the Seller Entities are unable to agree on any amount to be paid under this Section 1.7, then such amount shall be determined through the binding process provided in Section 1.6(c) at the joint equal expense of the Buyer Entities and the Seller Entities.
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(a) Deeds containing special warranty of title, fully executed by each applicable Seller Entity in recordable form, conveying to each applicable Buyer Entity fee title to the Owned Real Property (the “Deeds”) (the exact legal description from the applicable Seller Entity’s vesting deed(s) to govern and be included in the Deeds (less and except any property conveyed by the applicable Seller Entity prior to the date hereof); provided, that, upon Buyer’s request, Seller also shall deliver a quit claim deed containing the legal description determined by the Surveys), and Assignments of Leases, fully executed by each applicable Seller Entity, assigning to each applicable Buyer Entity leasehold title to the Leased Real Property (the “Assignments of Leases”), subject only to the Permitted Encumbrances and the Assumed Liabilities;
(b) A General Assignment, Conveyance and Bill of Sale, fully executed by each applicable Seller Entity, conveying to each applicable Buyer Entity all of the Seller Entity’s right, title and interest in the Assets, free and clear of all liabilities, claims, liens, security interests and restrictions other than the Assumed Liabilities;
(c) An Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”), fully executed by the applicable Seller Entity, conveying to each applicable Buyer Entity the Seller Entity’s interest in the Contracts;
(d) Copies of corporate resolutions duly adopted by the Board of Directors of Seller and each Seller Entity, authorizing and approving the performance of the transactions contemplated hereby and the execution and delivery of this Agreement and the documents described herein, certified as true and of full force as of the Closing, by the appropriate officers of Seller and each Seller Entity;
(e) Certificate of the President or a Vice President of Seller, certifying as to the satisfaction of the condition precedent contained in Section 7.1 of this Agreement;
(f) Certificates of incumbency for the respective officers of Seller and each Seller Entity executing this Agreement and any other agreements or instruments contemplated herein or making certifications for the Closing dated as of the Closing Date;
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(g) Certificates of existence and good standing of Seller and each Seller Entity from the state in which it is incorporated or formed, dated the most recent practical date prior to the Closing;
(h) All Certificates of Title and other documents evidencing an ownership interest conveyed as part of the Assets;
(i) A standard form owner’s affidavit (modified as necessary to make factually accurate) as required by the Title Company (as defined in Section 6.3 hereof) to issue the Title Policies (as defined in Section 6.3 hereof) as described in and provided by Section 7.3 hereof;
(j) An Information Technology Transition Services Agreement in substantially the form attached hereto as Exhibit E (the “Information Services Agreement”) and the Business Associate Agreement, in substantially the form attached thereto (the “Business Associate Agreement”), fully executed by an Affiliate of Seller;
(k) A Hospital Transition Services Agreement in substantially the form attached hereto as Exhibit F (the “Transition Services Agreement”), fully executed by an Affiliate of Seller;
(l) A Clinic Billing and Collection Agreement in substantially the form attached hereto as Exhibit G (the “Billing and Collection Agreement”), fully executed by an Affiliate of Seller;
(m) A License Agreement for Policy and Procedure Manuals in substantially the form attached hereto at Exhibit H (the “License Agreement”), fully executed by an Affiliate of Seller;
(n) A Medicare Transition Agreement in a form reasonably acceptable to Seller and Buyer with respect to each Part A provider (each a “Medicare Transition Agreement”), fully executed by each applicable Seller Entity;
(o) A certification (in such form as may be reasonably requested by Buyer) conforming to the requirements of Treasury Regulations 1.1445-2(c)(3) and 1.897-2(h);
(p) An assignment of membership interest pursuant to which QHC of Springdale, Inc. assigns the CIN Interest to Buyer;
(q) Tax clearance letters from the Arkansas Department of Finance and Administration for each Seller Entity; and
(r) Such other instruments and documents as the parties reasonably agree are appropriate and necessary to effect the transactions contemplated hereby.
(a) An amount equal to the Purchase Price in immediately available funds;
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(b) The Assignment of Leases, fully executed by each applicable Buyer Entity, pursuant to which the Buyer Entities shall assume the future payment and performance of the leases of the Leased Real Property as provided in this Agreement;
(c) The Assignment and Assumption Agreements, fully executed by each applicable Buyer Entity, pursuant to which the Buyer Entities shall assume the future payment and performance of the Contracts and the Assumed Liabilities as provided in this Agreement;
(d) Copies of resolutions duly adopted by the Board of Directors of Buyer and each Buyer Entity authorizing and approving their respective performance of the transactions contemplated hereby and the execution and delivery of this Agreement and the documents described herein, certified as true and in full force as of the Closing, by the appropriate officers of Buyer and each Buyer Entity;
(e) Certificate of the President or a Vice President of Buyer, certifying as to the satisfaction of the condition precedent contained in Section 8.1 of this Agreement;
(f) Certificates of incumbency for the respective officers of Buyer and each Buyer Entity executing this Agreement and any other agreements or instruments contemplated herein or making certifications for the Closing dated as of the Closing Date;
(g) Certificates of existence and good standing of Buyer and each Buyer Entity from the state in which each is incorporated or formed, dated the most recent practical date prior to Closing;
(h) The Information Services Agreement and the Business Associate Agreement attached thereto, fully executed by Buyer or its Affiliates(s), as applicable;
(i) The Transition Services Agreements, fully executed by Buyer or its Affiliates, as applicable;
(j) The Billing and Collection Agreement, fully executed by Buyer or its Affiliates, as applicable;
(k) The License Agreement, fully executed by Buyer or its Affiliates(s), as applicable;
(l) A Medicare Transition Agreement for each Part A provider, fully executed by each applicable Buyer Entity; and
(m) Such other instruments and documents as the parties reasonably agree are appropriate and necessary to effect the transactions contemplated hereby.
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(a) are within its corporate powers, are not in contravention of corporate Law or of the terms of its organizational documents, and have been duly authorized by all appropriate corporate action;
(b) except as provided in Sections 5.4 and 5.5, do not require any approval or consent required to be obtained by Seller of, or filing required to be made by Seller with, any Government Entity or authority bearing on the validity of this Agreement which is required by Law or the regulations of any such agency or authority;
(c) assuming the receipt of any consents required pursuant to the Contracts, will neither conflict with, nor result in any breach, violation or contravention of, or the creation of any default, lien, charge, or encumbrance under, any indenture, agreement, lease, instrument or understanding to which it is a party or by which it is bound or to which any of the Assets may be subject;
(d) will not violate any statute, Law, rule, or regulation of any Government Entity to which it or the Assets may be subject; and
(e) will not violate any judgment, decree, writ or injunction of any court or Government Entity to which it or the Assets may be subject.
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(a) Unaudited Balance Sheet dated as of January 31, 2026 (the “Balance Sheet Date”);
(b) Unaudited Income Statement for the one-month period ended on the Balance Sheet Date; and
(c) Unaudited Balance Sheets and Income Statements for the fiscal years ended December 31, 2025 and 2024.
Except as set forth in Schedule 3.4, such Financial Statements have been (and the monthly financial statements delivered pursuant to Section 5.6 will be) prepared in accordance with GAAP, applied on a consistent basis throughout the periods indicated. Such Balance Sheets present fairly in all material respects (and, in the case of financial statements delivered pursuant to Section 5.6, will present fairly in all material respects) the financial condition of each Seller Entity as of the dates indicated thereon, and such Income Statements present fairly in all material respects (and, in the case of financial statements delivered pursuant to Section 5.6, will present fairly in all material respects) the results of operations of each Seller Entity for the periods indicated thereon. Except as disclosed on Schedule 3.4, none of the Seller Entities has any material liabilities of any nature (whether accrued, absolute, contingent or otherwise) that are of a type required to be disclosed or reflected in financial statements of a Seller Entity in accordance with GAAP except for (i) liabilities reflected or reserved against in the Financial Statements (including the notes thereto) and (ii) liabilities incurred in the ordinary course of business since the Balance Sheet Date.
(a) event, change or circumstance that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect (hereinafter defined);
(b) material damage, destruction, or loss (whether or not covered by insurance) affecting the Hospitals or the Facilities or other Assets with a net book value exceeding Fifty Thousand Dollars ($50,000.00), individually or in the aggregate;
(c) threatened employee strike, work stoppage, or labor dispute pertaining to the Hospitals or the Facilities;
(d) sale, assignment, transfer, or disposition of any item of property, plant or equipment included in the Assets having a value in excess of Twenty-Five Thousand Dollars ($25,000) (other than supplies), except in the ordinary course of business consistent with past practices;
(e) general increases in the compensation payable by the Seller Entities to any of their employees or independent contractors outside of the ordinary course of business, or any increase in, or institution of, any bonus, retention, severance, insurance, pension, profit-sharing or other employee benefit plan, severance pay, remuneration or arrangements made to, for or with such employees;
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(f) changes in the accounting methods or practices employed by the Seller Entities, or changes in depreciation or amortization policies;
(g) material changes in the scope of material patient care services or a reduction in the licensed bed count at any of the Facilities;
(h) material transaction pertaining to any of the Facilities by any Seller Entity outside the ordinary course of business;
(i) material change in the rates charged by the Seller Entities or for the professional services of the licensed providers whose practice activities are carried on via the Hospitals, other than those made in the ordinary course of business;
(j) entry into any other material transaction by any Seller Entity pertaining to the Hospitals outside the ordinary course of business (other than those contemplated by this Agreement);
(k) material adjustment or write-off in accounts receivable or reduction in reserves for accounts receivable with respect to the Hospitals outside the ordinary course of business;
(l) change in the composition of the medical staffs of the Hospitals, other than normal turnover occurring in the ordinary course of business; or
(m) agreement to do any of the foregoing, or any action or omission that would result in any of the foregoing.
(a) Each Hospital is qualified for participation in the Medicare, Medicaid and CHAMPUS/TRICARE programs (“Government Programs”), has current and valid provider contracts with such programs, is in compliance in all material respects with the conditions of participation in such programs, and has received all approvals or qualifications necessary for capital reimbursement for the Hospital. To the extent the Facilities bill Government Programs on behalf of physicians and other licensed or certified professional providers employed by any Seller Entity or who provide services to or at the Facilities on an independent contractor basis (each, a
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“Practitioner” and, collectively, the “Practitioners”), each Facility has, and for the past six (6) years has had, valid reassignments from such Practitioners that permit such Facility to bill Government Programs.
(b) Schedule 3.7(b) sets forth an accurate and complete list of all accreditations and certifications held by the Seller Entities and the Facilities (the “Accreditations”). Except as set forth in Schedule 3.7(b), the Hospital is duly accredited, with no contingencies, by The Joint Commission, through the period set forth on Schedule 3.7(b). Except as disclosed by Seller to Buyer on Schedule 3.7(b), each Hospital is duly accredited, with no contingencies, by The Joint Commission. Copies of the most recent accreditation letters from The Joint Commission pertaining to the Hospitals have been made available to Buyer. All such Accreditations are valid, unrestricted, in good standing and in full force and effect. To the knowledge of Seller, no event has occurred or other fact exists with respect to such Accreditations that allows or, after notice or the lapse of time or both, would allow revocation or termination of any such Accreditations, or would result in any other material impairment in the rights of any holder thereof. There is no pending or, to the knowledge of Seller, threatened proceeding by any accrediting body to revoke, cancel, rescind, suspend, restrict, modify or not renew any such Accreditation, and no such proceedings, surveys or actions are pending or, to the knowledge of Seller, threatened or imminent. Since the date of each most recent Accreditation survey, none of Seller Entities or the Facilities has made any material changes in policy or operations that, to the knowledge of Seller, would be reasonably likely to cause any Facility to lose such Accreditation.
(c) To the knowledge of Seller, all billing practices of the Seller Entities with respect to the Facilities to all third party payors, including the Medicare, Medicaid and CHAMPUS/TRICARE programs and private insurance companies, have been in compliance with all applicable Laws, regulations and policies of such third party payors and the Medicare, Medicaid and CHAMPUS/TRICARE programs, and neither the Seller Entities nor the Facilities have billed or received any payment or reimbursement in excess of amounts allowed by Law.
(d) Neither the Seller Entities nor any of their officers, directors, managing employees, service providers or controlling shareholders are excluded from participation in the Medicare, Medicaid or CHAMPUS/TRICARE programs, nor to Seller’s knowledge is any such exclusion threatened.
(e) Except as disclosed by Seller to Buyer (which disclosure references this Section 3.7), neither Seller nor the Seller Entities have received any written notice from any of the Medicare, Medicaid or CHAMPUS/TRICARE programs, or any other third party payor programs or any relator of any pending or, to Seller’s knowledge, threatened complaints, investigations or surveys relating to the Facilities. Seller has made available to Buyer copies of all accreditation survey reports, deficiency lists, statements of deficiency and plans of correction since December 31, 2024. The Seller Entities have taken or are taking all reasonable steps to correct all material deficiencies specified therein, if any.
(f) Except as disclosed by Seller to Buyer (which disclosure references this Section 3.7), no Seller Entity (i) is a party to a Corporate Integrity Agreement with the Office of Inspector General of the United Sates Department of Health and Human Services, (ii) has any reporting obligations pursuant to any settlement agreement entered into with any Government
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Entity, (iii) has been, to Seller’s knowledge, within the past five (5) years the subject of any Government Entity payer program investigation conducted by any federal or state enforcement agency, (iv) is and has been, to Seller’s knowledge, within the past five (5) years a defendant in any qui tam/False Claims Act litigation, (v) during the past five (5) years has been served with or received any search warrant, subpoena, civil investigative demand, or, to Seller’s knowledge, contact letter or telephone or personal contact by or from any federal or state enforcement agency, and (vi) has to Seller’s knowledge, during the past five (5) years received any written complaints from any employee, independent contractor, vendor, physician or other person or organization that would indicate that such Seller Entity has violated any material healthcare Law or regulation.
(g) The Seller Entities required to be registered have registered with the QNet Exchange (“QNet”) as required by The Centers for Medicare and Medicaid Services (“CMS”) under its Hospital Quality Initiative Program (the “HQI Program”) and Seller has provided to Buyer an accurate list of such registrations (referencing this Section 3.7). The Seller Entities have submitted all quality data required under the HQI Program to CMS or its agent, and all quality data required under the ORYX Core Measure Performance Measurement System (“ORYX”) to The Joint Commission, for all calendar quarters concluded during the last four (4) years, except for any quarter for which the respective reporting deadlines have not yet expired. All such submissions of quality data have been made in accordance in all material respects with applicable reporting deadlines and in the form and manner required by CMS and The Joint Commission, respectively. The Seller Entities have not received written notice of any reduction in reimbursement under the Medicare program resulting from their failure to report quality data to CMS or its agent as required under the HQI Program. Seller has provided Buyer with the HQI Program “validation results” for all calendar quarters concluded during the last four (4) years, except for any quarter for which the respective reporting deadlines have not yet expired. With respect to the operation of the Facilities, neither Seller nor any Seller Entity has any outstanding loan, grant or loan guarantee pursuant to the Hill-Burton Act (42 U.S.C. §291a, et seq.).
(a) Except as disclosed by Seller to Buyer (which disclosure references this Section 3.8), the Seller Entities are in compliance in all material respects with all applicable statutes, rules, regulations, and requirements of the Government Entities having jurisdiction over the Facilities and the operations of the Facilities. As used herein, “Government Entity” means any government or any agency, bureau, board, directorate, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local. The Seller Entities have timely and accurately filed all reports, data, and other information required to be filed with the Government Entities. Neither the Seller Entities nor any of their employees have committed a material violation of federal or state Laws regulating fraud, including Healthcare Laws. The Seller Entities’ contracts with physicians are in compliance in all material respects with all applicable state corporate practice of medicine and fee-splitting Laws and regulations. Except as set forth on Schedule 3.8(a), no Seller Entity has, during the last six (6) years, (i) received written notice of any violation, alleged violation or potential violation of, or liability under, any Healthcare Laws, or to the effect that any Seller Entity, or any Person acting on behalf of, any Seller Entity, is or could potentially be under investigation or inquiry with respect to any violation or alleged violation of any Healthcare Law, or (ii) been subject to any actual or
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alleged obligation to undertake, or to bear all or any portion of the cost of, any remedial action under any Healthcare Law.
(b) Except as set forth on Schedule 3.8, each Seller Entity is, and during the past three (3) years has been, in compliance in all material respects with HIPAA. The Seller Entities have undertaken surveys, audits, inventories, reviews, analyses and/or assessments of all areas of the Facilities to the extent legally required by the HITECH Act and the administrative simplification provisions of HIPAA. To the extent the Buyer has requested, the Seller Entities have provided to Buyer accurate and complete copies of the compliance policies and/or procedures and privacy notices of the Facilities relating to HIPAA. All of the Seller Entities’ and the Facilities’ respective workforces (as such term is defined in 45 C.F.R. § 160.103) with access to “protected health information” as defined in 45 C.F.R. § 160.103 (“PHI”) have received or are scheduled to receive, in accordance with the timeframes required by HIPAA and such Seller Entity’s providers or Facilities’ respective privacy policies, training with respect to compliance with HIPAA and applicable rules and regulations promulgated thereunder. Except as set forth on Schedule 3.8, with respect to the Facilities, during the past six (6) years (i) neither Seller nor any Seller Entity has received notice of, and there are no pending or, to the knowledge of Seller or any Seller Entity, threatened proceedings with respect to any alleged “breach” as defined in 45 C.F.R. § 164.402 (a “Breach”) or any other material violation of HIPAA by any Seller Entity or any of their respective “workforce” (as such term is defined under HIPAA); (ii) no Breach, or other material violation of HIPAA by any Seller Entity or their respective “workforce” has occurred; and (iii) no successful or suspected “security incident” as defined in 45 C.F.R. § 164.304 has occurred with respect to PHI in the possession or under the control of the Seller Entities or any third parties that handle or have access to PHI on behalf of the Seller Entities. The Seller Entities have entered into business associate agreements with all third parties acting as a business associate (as defined in 45 C.F.R. § 160.103) of any the Seller Entity to the extent required by HIPAA. No Seller Entity (A) is, to the knowledge of Seller, under investigation by any Government Entity for a violation of HIPAA (except as set forth on Schedule 3.8); or (B) has received any notices from the United States Department of Health and Human Services Office for Civil Rights, the U.S. Justice Department, the FTC or the Attorney General of any state or territory of the United States relating to any such violations (except as set forth on Schedule 3.8). During the past six (6) years, there has not been any incident that would trigger a notification or reporting requirement under any HIPAA business associate agreement or HIPAA, including a Breach or Security Breach with respect to any unsecured PHI maintained by or on behalf of the Seller Entities or any third parties that handle or have access to PHI on behalf of Seller Entities, in each case with respect to the Facilities (except as set forth on Schedule 3.8).
(c) The Seller Entities are and, for the last six (6) years, have been in material compliance with all applicable Privacy and Security Requirements. Except as set forth on Schedule 3.8(c), for the last six (6) years, the Seller Entities have not, and to the Seller’s knowledge no third party that processes Protected Data for or on behalf of any Seller Entity has, experienced any actual or suspected Security Breach, and the Seller has no knowledge of any notices, complaints, claims, causes of action, or losses from any person regarding such a Security Breach. The Seller Entities have not, and no third party that processes Protected Data for or on behalf of them has, to Seller’s knowledge, received any notices or complaints, nor is subject to any claims or causes of action, from any person (including any Government Entity) regarding the processing of Protected Data or compliance with applicable Privacy and Security Requirements. Each Seller
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Entity has implemented reasonable physical, technical and administrative safeguards that are reasonably designed to protect Protected Data from unauthorized access by any person, and to comply in all material respects with all applicable Privacy and Security Requirements.
(a) Except as set forth on Schedule 3.10(a), neither Seller nor any of the Seller Entities has received during the past three (3) years written notice from any Government Entity of a material violation of any applicable ordinance or other Law, order or regulation with respect to the Owned Real Property or the Hospital Leased Real Property, which violation has not been corrected;
(b) Except as set forth on Schedule 3.10(b), to the knowledge of the Seller, the Owned Real Property and the Hospital Leased Real Property and its operation are in material compliance with all applicable zoning ordinances (or is considered legally nonconforming or “grandfathered” thereunder;
(c) Except for the Permitted Encumbrances, (i) there are no tenants or other persons or entities occupying any space in the Real Property, other than pursuant to tenant leases described in Schedule 3.10(c), (ii) no tenants under such tenant leases have paid rent in advance for more than one month, (iii) no improvement credit or other tenant allowance of any nature is owed by any of the Seller Entities to any tenant pursuant to such tenant leases, and (iv) no landlord
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improvement work is required to be completed by any of the Seller Entities pursuant to such tenant leases, in each case, except as disclosed in Schedule 3.10(c);
(d) Attached to Schedule 3.10(d) is a “rent roll” which sets forth for those leases where a Seller Entity is landlord: (i) the names of then current tenants; (ii) the address of the property and the square footage leased; (iii) the expiration dates of the leases; (iv) the rental payments for the then current month under each of the leases; (v) a list of any then delinquent rental payments; (vi) a list of all tenant deposits and a description of any application thereof; and (vii) a list of all uncured material defaults by tenants or the Seller Entity under the leases known to Seller, and Seller has delivered to Buyer a true and complete copy of the leases listed on the rent roll;
(e) Except as set forth on Schedule 3.10(e), neither Seller nor any of the Seller Entities has received during the past three (3) years any written notice from any Government Entity of any existing, proposed or contemplated plans to modify or realign any street or highway, or any existing, proposed or contemplated eminent domain proceeding that would result in the taking of all or any part of the Owned Real Property or the Hospital Leased Real Property that would materially and adversely affect the current use of any part of the Owned Real Property or the Hospital Leased Real Property;
(f) Seller and the Seller Entities are not a “foreign person” within the meaning of Section 1445, (F) (3) of the Internal Revenue Code of 1986, as amended;
(g) Except for this Agreement and the Permitted Encumbrances, there are no outstanding options, including rights of first offer, rights of first refusal or reversion rights, to any person to purchase any Owned Real Property, and except as set forth on Schedule 3.10(g) or as specifically identified in the leases described on Schedule 1.1(a)(ii), there are no outstanding options, including rights of first offer, rights of first refusal or reversion rights, to any Seller Entity to purchase any Leased Real Property; and
(h) Schedule 1.1(a)(ii) contains a complete list of all leases of the Leased Real Property where any Seller Entity is a lessee, sublessee, tenant, or subtenant. Seller has made available to Buyer a true and complete copy of each lease document.
(a) Schedule 3.12 sets forth a true, complete and correct list of all “employee benefit plans,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), all specified fringe benefit plans as defined in Section 6039D of the Code, and all
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other bonus, incentive compensation, deferred compensation, profit sharing, stock option, severance, supplemental unemployment, layoff, salary continuation, retirement, pension, health, life insurance, disability, group insurance, vacation, holiday, sick leave, welfare plan or employment, change in control, confidentiality or non-competition agreement or any other similar plan, agreement, policy or understanding (whether oral or written, qualified or non-qualified) and any trust, escrow or other funding arrangement related thereto (collectively, the “Benefit Plans”), which is currently or has been sponsored, maintained or contributed to for or on behalf of the employees, former employees, independent contractors or directors (or any of their dependents) of the Seller Entities or pursuant to which the Seller Entities have any liability or obligation.
(b) To Seller’s knowledge, (i) each of the Benefit Plans is and has been maintained and administered in all material respects in compliance with its terms and applicable legal requirements (including ERISA), (ii) there have been no prohibited transactions for which there is not a statutory exemption, breaches of fiduciary duty or other breaches or violations of any Law applicable to the Benefit Plans that could subject Buyer to any liability, (iii) each Benefit Plan intended to be qualified under Section 401(a) of the Code has a current favorable determination letter (or, in the case of a master and prototype or regional prototype plan, a favorable opinion or notification letter, as applicable) or an application therefore is pending with the IRS, (iv) no event has occurred which could cause any of the Benefit Plans to become disqualified or fail to comply with the applicable requirements of Sections 401(a) of the Code, or that would otherwise cause a distribution therefrom that is otherwise eligible for rollover treatment under Section 408 of the Code to be ineligible to be rolled into an individual retirement account or a plan that is qualified under Section 401(a) or 403(b) of the Code.
(c) Except as set forth on Schedule 3.12, for the past six (6) years, neither Seller, the Seller Entities nor any ERISA Affiliate of Seller or the Seller Entities sponsors, has maintained, contributed to, or been required to contribute to an employee benefit plan that is (i) a “multiemployer plan,” as such term is defined in Section 3(37) of ERISA, (ii) subject to Title IV of ERISA, Sections 302 or 303 of ERISA or Sections 412 or 436 of the Code, or (iii) a multiple employer plan as defined in Section 413(c) of the Code. ERISA Affiliate shall mean any entity that would be treated as a single employer with Seller, the Seller Entities or any of their subsidiaries under the provisions of the Code and ERISA.
(d) Neither Seller, nor any ERISA Affiliate of Seller (i) has failed to timely pay premiums to the Pension Benefit Guaranty Corporation; (ii) withdrawn from any Benefit Plan that is subject to Title IV of ERISA, including any Benefit Plan to which the Seller or an ERISA Affiliate of Seller contributed to or was required to contribute to in the past three (3) years.
(e) None of the Benefit Plans listed on Schedule 3.12 that are “welfare benefit plans,” within the meaning of Section 3(1) of ERISA, provide for continuing benefits or coverage after termination or retirement from employment, except for COBRA rights under a “group health plan” as defined in Section 4980(B)(g) of the Code and Section 607 of ERISA. The consummation of the transactions contemplated hereby will not (i) result in an increase in or accelerate the vesting of any of the benefits available under any benefit plan, (ii) otherwise entitle any employee to severance pay or any other payment from Seller or the Seller Entities, or (iii) require the Buyer to offer COBRA rights or continuation coverage to any current or former employee of Seller or the Seller Entities solely as a result of the contemplated transactions.
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(f) Buyer will not incur any liability under any of the Benefit Plans, except as set forth in Section 1.3(c).
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(a) Except as set forth on Schedule 3.15, each Seller Entity has timely filed all federal, state and local Tax Returns required to be filed by it (all of which are true, correct and complete in all material respects) and has duly paid or made provision for the payment of all Taxes (including any interest or penalties and amounts due state unemployment authorities) which are owed by it (whether or not shown on any Tax Return) to the appropriate tax authorities. Except as set forth on Schedule 3.15, no Seller Entity is the beneficiary of any extension of time within which to file a Tax Return. Except as set forth on Schedule 3.15, no deficiencies for any of such Taxes have been asserted or to the knowledge of Seller or any Seller Entity, as applicable, threatened, and no audit or other administrative proceedings or court proceedings with respect to Taxes is currently pending or under way or to the knowledge of the Seller, threatened. Except as set forth on Schedule 3.15, there are no outstanding agreements by any Seller Entity for the extension of time for the assessment of any Taxes. There are no tax liens on any of the Assets and no basis exists for the imposition of any such liens. No claim has ever been made by an authority in a jurisdiction where any Seller Entity does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There is no dispute or claim concerning any Tax liability of any Seller Entity either (a) claimed or raised by a tax authority in writing or (b) as to which any of the directors and officers of Seller or any Seller Entity, as applicable, has knowledge.
(b) Each Seller Entity has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee or other third party, or has otherwise made adequate reserves for the payment of Taxes not yet due.
(c) Except set forth on Schedule 3.15, no Seller Entity has a sales/use or income tax nexus in any state or local tax jurisdiction where it does not currently pay taxes.
(d) None of the Seller Entities have claimed the Employee Retention Credit under the CARES Act.
(e) None of the Seller Entities is directly or indirectly responsible for the Taxes of any other person imposed on such Seller Entity as a transferee or successor, by Law, contract or otherwise.
(f) As used herein, “Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code § 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, relating to the Assets, the Facilities or the operation of the Facilities, including any interest, penalty or addition
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thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other person. “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
(a) Except as set forth on Schedule 3.16, all employees of the Facilities are employees of the Seller Entities. To Seller’s knowledge, there is no threatened employee strike, work stoppage, or labor dispute pertaining to the Facilities. Except as set forth on Schedule 3.16, no union representation question exists respecting any employees of the Seller Entities. No collective bargaining agreement exists or is currently being negotiated by the Seller Entities, no written demand has been received for recognition by a labor organization by or with respect to any employees of the Seller Entities, no union organizing activities by or with respect to any employees of the Seller Entities are, to the knowledge of Seller, taking place, and none of the employees of the Seller Entities is represented by any labor union or organization. There is no written unfair practice claim against the Seller Entities before the National Labor Relations Board, nor any strike, dispute, slowdown, or stoppage pending or threatened against or involving the Facilities, and none has occurred within the last three (3) years.
(b) Except as set forth in Schedule 3.16, the Seller Entities have complied in all material respects with all legal requirements relating to employment, employment practices, terms and conditions of employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, payment of employment, social security, and similar taxes, occupational safety and health, and plant closing. No Seller Entity is liable for the payment of any compensation, damages, taxes, fines, penalties, interest, or other amounts, however designated, for failure to comply with any of the foregoing legal requirements. Except as set forth on Schedule 3.16, there are no pending or, to the knowledge of Seller, threatened claims before the Equal Employment Opportunity Commission (or any comparable state civil or human rights commission or other entity), complaints before the Occupational Safety and Health Administration (or any comparable state safety or health administration or other entity), wage and hour claims, or the like.
(c) Schedule 3.16 states or will state the number of employees terminated by each Seller Entity within ninety (90) days prior to the Closing Date, laid off by each Seller Entity within the six (6) months prior to the Closing Date, or whose hours of work have been reduced by more than fifty percent (50%) by a Seller Entity in the six (6) months prior to the Closing Date, and contains a complete and accurate list of the following information for such employees: (i) the date of termination, layoff, or reduction in work hours; (ii) the reason for termination, layoff, or reduction in work hours; and (iii) the location to which the employee was assigned. In relation to the foregoing, except as set forth in Schedule 3.16, no Seller Entity has violated the Worker Adjustment and Retraining Notification Act (the “WARN Act”) or any similar state or local legal requirements.
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(a) The Contracts constitute legal, valid and binding obligations of the Seller Entities and, to the knowledge of Seller, the other parties with respect thereto, and are enforceable against the Seller Entities and, to the knowledge of Seller, the other parties with respect thereto in accordance with their terms;
(b) Each Contract constitutes the entire agreement by and between the respective parties thereto with respect to the subject matter thereof;
(c) Assuming the receipt of any consents required in connection with the assignment of the Contracts, all obligations required to be performed by the Seller Entities and, to the knowledge of Seller, the other parties with respect thereto prior to the date hereof under the terms of the Contracts have been performed, and no acts or omissions by the Seller Entities and, to the knowledge of Seller, the other parties with respect thereto have occurred or failed to occur which, with the giving of notice, the lapse of time or both would constitute a default by the Seller Entities and, to the knowledge of Seller, the other parties with respect thereto under the Contracts; and
(d) Except as expressly set forth on Schedule 1.1(g), none of the Contracts requires consent to the assignment and assumption of such Contracts by the Buyer Entities, and Seller will use commercially reasonable efforts to obtain any required consents prior to the Closing.
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(a) are within its corporate powers, are not in contravention of corporate Law or of the terms of its organizational documents, and have been duly authorized by all appropriate corporate action;
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(b) except as provided in Sections 6.1 and 6.2, do not require any approval or consent required to be obtained by Buyer of, or filing required to be made by Buyer with, any Government Entity bearing on the validity of this Agreement which is required by Law or the regulations of any such agency or authority;
(c) will neither conflict with, nor result in any breach or contravention of, or the creation of any lien, charge or encumbrance under, any indenture, agreement, lease, instrument or understanding to which it is a party or by which it is bound;
(d) will not violate any statute, Law, rule, or regulation of any Government Entity to which it may be subject; and
(e) will not violate any judgment, decree, writ, or injunction of any court or Government Entity to which it may be subject.
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(a) carry on their business pertaining to the Facilities in substantially the same manner as presently conducted and not make any material change in personnel, operations, finance, accounting policies, or real or personal property pertaining to the Facilities;
(b) use commercially reasonable efforts to maintain the Facilities and all material parts thereof in good operating condition, ordinary wear and tear excepted, in substantially the same manner as presently conducted and in the ordinary course of business and make repairs and acquire replacements in the ordinary course of business;
(c) use commercially reasonable efforts to perform all of their obligations under agreements relating to or affecting the Facilities or the Assets including, but not limited to, paying all payables in accordance with their contractual terms;
(d) use commercially reasonable efforts to keep in full force and effect present insurance policies or other comparable insurance pertaining to the Facilities;
(e) maintain, and timely renew, all material permits, licenses, and registrations pertaining to the Facilities and the Assets; and
(f) use commercially reasonable efforts to maintain and preserve their business organizations intact, retain their present employees at the Facilities and maintain their relationships with physicians, suppliers, customers, and others having business relations with the Facilities.
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(a) amend, modify, terminate or cancel any of the Contracts, or enter into any material new contract or commitment, except as provided herein or in the ordinary course of business consistent with past practice and the terms of all such contracts and commitments shall be commercially reasonable and at fair market value;
(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 at the Facilities, except in the ordinary course of business or in accordance with existing personnel policies;
(c) acquire (whether by purchase or lease) or sell, assign, lease, sublease, or otherwise transfer or dispose of any property, plant, equipment or other Assets except in the normal course of business with comparable replacement thereof when appropriate;
(d) materially alter any Owned Real Property, including the buildings, fixtures and other improvements located thereon, other than budgeted capital expenditures or routine replacement, maintenance or repairs;
(e) purchase capital assets or incur costs in respect of construction-in-progress in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate; or
(f) take any material action outside the ordinary course of business of the Facilities, except as may be required in order to consummate the transactions contemplated by this Agreement.
Seller shall add any new contracts or commitments to the Project Razorback 2.0 virtual data room on a monthly basis between the execution date and the Closing Date; provided, however, that if any contract or commitment involves payments of greater than One Million Dollars ($1,000,000), it shall be added to the virtual data room within ten (10) business days after execution.
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(a) Title Commitments. Within thirty (30) days after the date hereof, Buyer, at its expense, shall obtain current title commitments with respect to the Owned Real Property and the Hospital Leased Real Property (the “Title Commitments”), issued by First American Title Insurance Company (the “Title Company”), together with legible copies of all exceptions to title referenced therein, sufficient for the issuance of owner’s policies of title insurance for the Owned Real Property and leasehold policies of title insurance for the Hospital Leased Real Property (the “Title Policies”). Buyer shall promptly upon its receipt provide a copy of the Title Commitments and exception documents to Seller.
(b) Surveys. Within thirty (30) days after the date hereof, Buyer, at its expense, shall obtain current as-built surveys of the Owned Real Property and the Hospital Leased Real Property, prepared by a professional land surveyor selected by Buyer, certified to the appropriate Seller Entities, the appropriate Buyer Entities and the Title Company and made in conformance with 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys (the “Surveys”). Buyer shall promptly upon its receipt furnish a copy of the Surveys to Seller.
(c) Title Defects and Cure. The Title Commitments and the Surveys (to the extent obtained by Buyer pursuant to Section 6.3(a) and Section 6.3(b) above) are collectively referred to as “Title Evidence.” Buyer shall notify Seller within ten (10) days after its receipt of the last of the Title Evidence of any liens, claims, encroachments, exceptions or defects disclosed in the Title Evidence which do not constitute Permitted Encumbrances (collectively, “Objections”). Seller, at its sole cost and expense, shall cure the Objections on or before the Closing or Seller may elect to not cure the Objections and shall give written notice to Buyer within ten (10) days of its receipt of Buyer’s Objections of its decision, whereupon Buyer may waive such Objections and close or may terminate this Agreement, which election by Buyer shall be made by written notice to Seller within ten (10) days of Buyer’s receipt of Seller’s written notice. If Seller fails to timely give such notice, Seller shall be deemed to have elected not to cure the Objections, whereupon Buyer may waive such Objections and close or may terminate this Agreement, which election by Buyer shall be made by written notice to Seller within twenty (20) days following Seller’s receipt of Buyer’s written notice of the Objections. Upon termination of this Agreement under the terms of this Section 6.3(c), no party to this Agreement shall have any further claims under this Agreement against any other party, except for matters that expressly survive termination of this Agreement. Any matters shown by the Title Evidence to which Buyer does not object or which are waived by Buyer as herein provided shall be deemed to be Permitted Encumbrances. If this Agreement is not terminated, then in the event the Title Evidence discloses further defects, liens, encumbrances, adverse claims, restrictions, rights-of-way, easements or other matters relating to Seller’s title to the Owned Real Property or the Hospital Leased Real Property (and which are not caused by Buyer’s activities on the Owned Real Property or the
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Hospital Leased Real Property) which (i) do not constitute Permitted Encumbrances, and (ii) were created or first appeared in the public records after the respective effective date of the Title Commitments, Buyer shall have the right to review and object to the same within five (5) business days of receipt of notice thereof, in the same manner provided for in this Section. Notwithstanding anything contained in this Section 6.3(c) to the contrary, at the Closing, Seller shall cause all mortgages, deeds of trust, financing statements and other similar liens encumbering the Seller Entities’ fee interest in the Owned Real Property or leasehold interest in the Hospital Leased Real Property, and arising by, through or under the Seller Entities, or any of their Affiliates, to be released (other than liens for taxes and assessments not yet due and payable and any mechanic’s or materialmen’s liens relating to the Assumed Liabilities).
(d) Costs. Section 12.9 shall govern which party or parties hereto shall bear the costs and expenses of the Title Commitments, the Title Policies and the Surveys.
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(a) As of the Effective Time, Seller shall cause the Seller Entities to terminate all of the employees at the Facilities, and Buyer shall cause the Buyer Entities to offer or cause to be offered employment (subject to standard drug and related employment screening and background checks) to all active employees (including any employees who are on statutory family or medical leave, military leave, short-term disability, or other short-term leave of up to 90 days) who are in good standing as of the Effective Time in positions and at salary or base wage levels generally consistent with those provided by the Seller Entities as of the Effective Time. Nothing herein shall be deemed to affect or limit in any way normal management prerogatives of the Buyer Entities with respect to employees or to create or grant to any such employees third party beneficiary rights or claims of any nature. All such employees who accept such offers and
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commence employment with a Buyer Entity (together, the “Buyer Employees”) shall be credited with employment service with the Seller Entities for purposes of eligibility and vesting purposes (but not for purposes of benefit accrual) under Buyer’s or the Buyer Entities’ employee benefit plans or programs (the “Buyer Plans”), unless such service credit is not allowed pursuant to the express terms of any insurance policy (or policies) used to fund the benefits provided under such Buyer Plans, in which case such service credit will not be allowed just for such insured plan(s). Notwithstanding anything contained herein to the contrary, this Section 10.10(a) shall not apply to any physician employee of any Seller Entity who has entered into an employment agreement with any Seller Entity, and such persons shall not be deemed to be Buyer Employees.
(b) Buyer shall cause the Buyer Entities to offer or cause to be offered enrollment in the appropriate Buyer Plan that is a group health plan to any Buyer Employee together with the eligible dependents of such Buyer Employee beginning no later than the first day of the month immediately following the Effective Time. Seller shall be responsible for providing COBRA benefits for all former employees other than the Buyer Employees; Buyer shall be responsible for providing COBRA coverage for all Buyer Employees.
(c) Within the period of ninety (90) days prior to the Closing, the Seller Entities shall not violate WARN Act. Within ninety (90) days following the Closing Date, Buyer shall not cause an Employment Loss as defined in the WARN Act to 50 or more employees or violate any state or local requirements similar to the WARN Act. With respect to terminations of employees prior to the Closing, the Seller Entities shall be responsible for any legally required notifications. With respect to terminations of employees following the Closing, the Buyer Entities shall be responsible for any legally required notifications.
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(a) It is understood by the parties hereto that the information, documents, and instruments delivered to Buyer by Seller and its agents and the information, documents, and instruments delivered to Seller by Buyer and its agents are of a confidential and proprietary nature. Each of the parties hereto agrees that prior to the Closing it will maintain the confidentiality of all such confidential information, documents, or instruments delivered to it by each of the other parties hereto or their agents in connection with the negotiation of this Agreement or in compliance with the terms, conditions, and covenants hereof and will only disclose such information, documents, and instruments to its duly authorized officers, members, directors, representatives, and agents (including consultants, attorneys, and accountants of each party) and applicable Government Entities in connection with any required notification or application for approval or exemption therefrom. Each of the parties hereto further agrees that if the transactions contemplated hereby
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are not consummated, it will return all such documents and instruments and all copies thereof in its possession to the other parties to this Agreement.
(b) Seller acknowledges that the success of transactions contemplated under this Agreement after the Closing depends upon the continued preservation of the confidentiality of certain information possessed by Seller or its Affiliates, agents and representatives, that the preservation of the confidentiality of such information by the Seller is an essential premise of the bargain between Seller and Buyer, and that Buyer would be unwilling to enter into this Agreement in the absence of this Section 12.10. Accordingly, Seller hereby agrees that Seller will not, and Seller will cause its Affiliates, agents and representatives not to, at any time on or after the Closing Date, directly or indirectly, without the prior written consent of Buyer, disclose or use any confidential or proprietary information involving or relating to the Assets, the Facilities or the operations thereof; provided, however, that the information subject to the foregoing provisions of this sentence will not include any information generally available to, or known by, the public (other than as a result of disclosure in violation hereof); and provided, further, that the provisions of this Section 12.10 will not prohibit any retention of copies of records or disclosure (a) required by any applicable legal requirement so long as reasonable prior notice is given of such disclosure and a reasonable opportunity is afforded to contest the same or (b) made in connection with the enforcement of any right or remedy relating to this Agreement.
(c) Each of the parties hereto recognizes that any breach of this Section 12.10 would result in irreparable harm to the other party to this Agreement and its Affiliates (as defined in Section 12.18 below) and that therefore either Seller or Buyer shall be entitled to an injunction to prohibit any such breach or anticipated breach, without the necessity of posting a bond, cash, or otherwise, in addition to all of its other legal and equitable remedies. Nothing in this Section 12.10, however, shall prohibit the use of such confidential information, documents, or information for such Government Entity filings as in the opinion of Seller’s counsel or Buyer’s counsel are required by Law or Government Entity regulations or are otherwise required to be disclosed pursuant to applicable state Law.
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Seller: CHS/Community Health Systems, Inc.
4000 Meridian Boulevard
Franklin, TN 37067
Attn: Executive Vice President, Operations & Development
With a simultaneous copy to:
CHSPSC, LLC
4000 Meridian Boulevard
Franklin, TN 37067
Attn: General Counsel
Buyer: Freeman Health System
1102 W 32nd Street
Joplin, Missouri 64804
Attn: Chief Legal Officer
With a simultaneous copy to:
Armstrong Teasdale LLC
7700 Forsyth Blvd, Suite 18000
St. Louis, MO 63105
Attn: Steven E. Pozaric
or to such other address, and to the attention of such other person or officer as any party may designate, with copies thereof to the respective counsel thereof as notified by such party.
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(a) If, prior to the Closing, all or any part of a Hospital is destroyed or damaged by fire or the elements or by any other cause where such damage or destruction is in the aggregate (the “Aggregate Damage”) less than twenty percent (20%) of the Purchase Price, the parties’ duties and obligations under this Agreement shall not be affected and the Closing shall proceed as scheduled; provided, however, Seller shall assign, transfer and set over to Buyer or its designated
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Affiliate all of the applicable Seller Entity’s right, title and interest in and to any insurance proceeds on account of such damage or destruction and, if such insurance policy proceeds are insufficient to repair, restore and/or replace the Hospital or other affected Assets, 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 a Hospital is destroyed or damaged by fire or the elements or by any other cause where the Aggregate Damage exceeds twenty percent (20%) of the Purchase Price, Buyer may elect to (i) purchase such Hospital, and the Closing shall proceed as scheduled (provided, however, at the Closing, Seller shall assign, transfer and set over to Buyer all of Seller’s right, title and interest in and to any insurance proceeds on account of such damage or destruction loss plus the amount of any deductibles under such insurance policies) or (ii) terminate the Agreement as to all, but not less than all, of the Hospitals by the delivery of a written notice to Seller (the “Casualty Termination Notice”). If Buyer and Seller are unable to agree upon the amount of the Aggregate Damage, the amount of the Aggregate Damage shall be determined by a consulting firm mutually selected by Seller and Buyer (the “Independent Consultant”) pursuant to Section 12.25(b).
(b) If pursuant to Section 12.25(a), the amount of the Aggregate Damage (and any applicable Purchase Price adjustment) is to be determined by the Independent Consultant, within fifteen (15) calendar days after the occurrence of the damage to the Hospital at issue (the “Submittal Date”), each party shall submit to the other party and to the Independent Consultant its proposed Aggregate Damage (and any applicable Purchase Price adjustment) as a result of the event(s) contemplated by Section 12.25(a), along with a detailed description of the basis for such amount and any applicable adjustment. Within twenty (20) calendar days after the Submittal Date (the “Decision Date”), the Independent Consultant, acting as an expert and not as an arbitrator, shall determine the definitive amount of the Aggregate Damage (and any applicable adjustment to the Purchase Price), taking into account any submissions by Seller or Buyer by the Submittal Date. If the Aggregate Damage exceeds twenty percent (20%) of the Purchase Price, Buyer shall thereafter have the right to terminate this Agreement by delivery of a Casualty Termination Notice to Seller. The decision of the Independent Consultant shall be conclusive and binding as between Buyer and Seller, and the costs of such review shall be borne equally by Seller and Buyer. Upon any such determination of the adjustment to the Purchase Price in accordance with this Section 12.25, the parties shall, subject to the terms and conditions of this Agreement, consummate the transactions contemplated by this Agreement at a mutually agreeable time and place, in accordance with the provisions of this Agreement.
“Healthcare Laws” includes Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395hhh (the Medicare statute), the Ethics in Patient Referrals Act of 1989, as amended, 42 U.S.C. §1395nn (the “Stark Law”); Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396v (the Medicaid statute); the Federal Health Care Program Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); the Civil False Claims Act, as amended, 31 U.S.C. §§ 3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Anti-Kickback Act of 1986, 41 U.S.C. §§ 8701-8707; the Civil Monetary Penalties Law, 42 U.S.C. §§ 1320a-7a and 1320a-7b; the Exclusion Laws, 42 U.S.C. § 1320a-7; the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§ 1320d-1329d-8, as amended by the Health Information Technology for Economic and Clinical Health Act, enacted as Title XIII of the American Recovery and Reinvestment Act of 2009, Public
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Law 111-5 (collectively, “HIPAA”); Health Care Fraud, 18 U.S.C. § 1347; Criminal False Statements Related to Health Care Matters, 18 U.S.C. § 1035; Criminal False Claims Act, 18 U.S.C. § 286-287; Criminal Wire and Mail Fraud, 18 U.S.C. §§ 1341 and 1343; Criminal False Statement Act, 18 U.S.C. § 1001; Theft or Embezzlement in Connection with Health Care, 18 U.S.C. § 669; Obstruction of Criminal Investigations of Health Care Offenses, 18 U.S.C. § 1518; Criminal Conspiracy, 18 U.S.C. § 371; any Laws applicable to the CARES Act Provider Relief Funds; Laws applicable to the use, handling, control, storage, transportation and maintenance of controlled substances, pharmaceuticals or drugs; all applicable implementing regulations, rules, ordinances, judgments, and orders with respect to the foregoing; any similar or other state and local Laws; and all applicable federal, state and local licensing, certificate of need, regulatory and reimbursement Laws, and all other Laws applicable to healthcare service providers or other Persons providing the items and services similar to those provided by Seller Entities or the Facilities.
“Law” means any law, statute, regulation, ordinance, rule, common law, Order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any Governmental Authority, including local, state, federal and foreign criminal and civil laws and/or related regulations.
“Person” means any natural person, corporation, company, limited or general partnership, joint stock company, joint venture, association, limited liability company, limited liability partnership, trust company, land trust, business trust or other entity or organization whether or not a Government Entity
“Personal Information” means, to the extent regulated by applicable Privacy and Security Requirements, any data that that it is defined as “personal data,” “personally identifiable information,” “individually identifiable health information,” “protected health information,” “sensitive personal information,” “special category personal data” or “personal information” under any applicable Law and is regulated by such Law.
“Privacy and Security Requirements” means, to the extent applicable to the Seller Entities, any applicable Laws regulating the processing of Protected Data, including without limitation, HIPAA and its accompanying regulations.
“Protected Data” means Personal Information.
“Security Breach” means any security breach or breach of Protected Data under applicable Privacy and Security Requirements.
“Seller’s knowledge” (or such similar phrase (e.g., “to the knowledge of Seller”) means (i) all matters with respect to which Seller or any Seller Entity has received written notice from a Government Entity or third party or (ii) the actual knowledge of either the Regional Vice President of Operations or the Regional Vice President of Finance of Seller, in each case after reasonable inquiry of such person’s immediate subordinates; or (iii) the actual knowledge of any of the following officers of any Hospital: Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer, and/or Chief Nursing Officer and Chief Compliance Officer of Seller, in each case after reasonable inquiry of such person’s immediate subordinates).
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in multiple originals by their authorized officers, all as of the date first above written.
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CHS/COMMUNITY HEALTH SYSTEMS, INC. |
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By: /s/ R. Gabriel Ottinger |
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Name: R. Gabriel Ottinger |
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Title: Senior Vice President and Treasurer |
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(“Seller”) |
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FREEMAN-OAK HILL HEALTH SYSTEM |
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By: /s/ Matthew Fry |
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Name: Matthew Fry |
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Title: President and CEO |
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(“Buyer”) |
[Signature Page to Asset Purchase Agreement]