Exhibit 99.2

 

 

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

SOUTHERN HEALTH CORPORATION OF DAHLONEGA, INC. (“SELLER”),

AND

DURALL CAPITAL HOLDINGS, LLC (“BUYER”),

August 19, 2016

 

 

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TABLE OF CONTENTS

 

1.		PURCHASE OF PURCHASED ASSETS			2
1.1		Purchased Assets			2
1.2		Excluded Assets			3
1.3		Retained Liabilities			5
1.4		Assumed Liabilities			5
1.5		Environmental Report			6
1.6		Purchase Price			6
1.7		Prorations			7
1.8		Post Closing Adjustment			7
1.9		Earnest Money Escrow			8
1.10		Purchase Price Allocation			8
2.		CLOSING			8
2.1		Closing			8
2.2		Actions of Seller at Closing			9
2.3		Actions of Buyer at Closing			10
3.		REPRESENTATIONS AND WARRANTIES OF SELLER			11
3.1		Existence and Capacity			11
3.2		Powers; Consents; Absence of Conflicts with Other Agreements, Etc.			11
3.3		Binding Agreement			11
3.4		Financial Statements			12
3.5		Certain Post Financial Statement Date Results			12
3.6		Licenses			13
3.7		Certificates of Need			13
3.8		Medicare Participation/Accreditation			13
3.9		Regulatory Compliance			14
3.10		Equipment			15
3.11		Owned Real Property			15
3.12		Title; Sufficiency of Assets			16
3.13		Employee Benefit Plans			17
3.14		Litigation or Proceedings			17
3.15		Environmental Laws			17
3.16		Hill-Burton and Other Liens			18

 

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3.17		Taxes			18
3.18		Employee Relations			18
3.19		Agreements and Commitments			19
3.20		The Contracts			20
3.21		Inventory			20
3.22		Insurance			20
3.23		Medical Staff Matters			21
3.24		Experimental Procedures			21
3.25		Condition of Assets			21
3.26		Compliance Program			21
3.27		Disclosure			22
3.28		No Broker			22
3.29		No Additional Warranties			22
3.30		Other Information			22
3.31		Third Party Payor Cost Reports			23
3.32		Intellectual Property; Computer Software			23
3.33		Improper Payments			23
4.		REPRESENTATIONS AND WARRANTIES OF BUYER			23
4.1		Existence and Capacity			23
4.2		Powers; Consents; Absence of Conflicts With Other Agreements, Etc.			23
4.3		Binding Agreements			24
4.4		Available Capital			24
4.5		Litigation or Proceedings			24
4.6		Performance			24
5.		COVENANTS OF SELLER PRIOR TO CLOSING			24
5.1		Information			24
5.2		Operations			25
5.3		Negative Covenants			25
5.4		Governmental Approvals			26
5.5		Additional Financial Information			27
5.6		No-Shop Clause			27
5.7		Medical Staff Disclosure			27
5.8		Surveys			27

 

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6.		COVENANTS OF BUYER PRIOR TO CLOSING			27
6.1		Governmental Approvals			27
6.2		Title Commitment			27
7.		CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER			28
7.1		Representations/Warranties			28
7.2		Pre-Closing Confirmations			28
7.3		Title Commitment			29
7.4		Actions/Proceedings			29
7.5		Adverse Change			29
7.6		Insolvency			29
7.7		Consents			29
7.8		Vesting			29
7.9		Closing Deliveries			30
7.10		Governmental Authorizations			30
8.		CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER			30
8.1		Representations/Warranties			30
8.2		Actions/Proceedings			30
8.3		Closing Deliveries			30
9.		COVENANTS NOT TO COMPETE			31
9.1		Seller’s Covenant Not to Compete and Non-Solicitation			31
9.2		Remedies			31
10.		ADDITIONAL AGREEMENTS			32
10.1		Termination Prior to Closing			32
10.2		Post Closing Access to Information			32
10.3		Preservation and Access to Records After the Closing			32
10.4		Tax and Medicare Effect			33
10.5		Reproduction of Documents			33
10.6		Cooperation on Tax Matters			33
10.7		Patient Billings			34
10.8		Cost Reports			35
10.9		Employee Matters			35
10.10		Use of Hospital Forms, Policies and Records			36
10.11		Misdirected Payments, Etc.			36

 

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11.		INDEMNIFICATION			37
11.1		Indemnification by Buyer			37
11.2		Indemnification by Seller			37
11.3		Notice and Control of Litigation			37
11.4		Notice of Claim			38
11.5		Claims Period			38
11.6		Liability Limits			38
11.7		Effect of Taxes, Insurance and Other Sources of Reimbursement			39
12.		MISCELLANEOUS			39
12.1		Schedules and Other Instruments			39
12.2		Additional Assurances			39
12.3		Consents, Approvals and Discretion			40
12.4		Legal Fees and Costs			40
12.5		Choice of Law			40
12.6		Benefit/Assignment			40
12.7		No Brokerage			40
12.8		Cost of Transaction			41
12.9		Confidentiality			41
12.10		Public Announcements			41
12.11		Waiver of Breach			42
12.12		Notice			42
12.13		Severability			43
12.14		Gender and Number			43
12.15		Divisions and Headings			43
12.16		Survival			43
12.17		Waiver of Jury Trial			43
12.18		Accounting Date			43
12.19		No Inferences			43
12.20		No Third Party Beneficiaries			43
12.21		Enforcement of Agreement			44
12.22		Force Majeure			44
12.23		Entire Agreement/Amendment			44
12.24		Risk of Loss			44
12.25		Liquidated Damages			44
12.26		Construction			44
12.27		Waiver of Bulk Sales Law Compliance			45

 

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EXHIBITS
Description		Exhibit
Definitions			A
Escrow Agreement			B
General Assignment, Conveyance and Bill of Sale			C
Lease Assignments			D
Assignment and Assumption Agreement			E
SCHEDULES
Description		Schedule
Owned Real Property			1.1(a)
MOB Lease			1.1(b)
Leased Real Property			1.1(c)
Tangible Personal Property			1.1(d)
Leased Personal Property			1.1(e)
Contracts			1.1(i)
Permits			1.1(j)
Excluded Assets			1.2
Excluded Tangible Personal Property			1.2(k)
Consents			3.2(b)
Absence of Conflicts			3.2(c)
Financial Statements			3.4
Certain Post-Balance Sheet Results			3.5
Licenses			3.6
Certificates of Need			3.7
Medicare Participation/Accreditation			3.8
Regulatory Compliance			3.9
Notice of Violation of Real Estate Law			3.11(a)
Easements and Other Limitations			3.11(c)
Accessibility Laws			3.11(d)
Tenant Leases			3.11(e)
Rent Roll			3.11(f)
Eminent Domain			3.11(g)
Flood Hazards			3.11(h)
Encroachments			3.11(i)
Permitted Encumbrances			3.12
Employee Benefit Plans			3.13
Litigation or Proceedings			3.14
Environmental Laws			3.15
Hill Burton			3.16
Taxes			3.17
Employee Relations			3.18(a)

 

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Employee Laws			3.18(b)
Employment Loss			3.18(c)
Agreements and Commitments			3.19
Insurance			3.22
Medical Staff Matters			3.23
Material Defects			3.25
Compliance Program			3.26
Brokers			3.28
Third Party Payor Cost Reports			3.31
Intellectual Property			3.32
Governmental Consents (Buyer)			4.2
Litigation or Proceedings (Buyer)			4.5
Required Consents, Permits and Licenses			7.2

 

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GLOSSARY OF DEFINED TERMS

 

Description		Section
Accessibility Laws			3.11(d)
Accounts Payable			Exhibit A
Accounts Receivable			1.1(f)
Accrued Expenses			Exhibit A
Affiliate			Exhibit A
Agreement			Introduction
Assumed Liabilities			1.4
Assignment and Assumption Agreement			2.2(c)
Business Day			Exhibit A
Buyer			Introduction
Buyer Receivables			10.8(a)
Buyer Indemnified Parties			11.2
Buyer’s Knowledge or Knowledge of Buyer			Exhibit A
Buyer’s Representative			Exhibit A
Cap			11.6(b)
Claims Period			Exhibit A
Certificate of Need			3.7
CERCLA			3.15
Closing			2.1
Closing Date			2.1
Closing Documents			3.27
COBRA			1.4
Code			3.17
Compliance Program			3.26
Contracts			1.1(i)
Control			Exhibit A
Corporate Care Clinic			Recitals
DCH			3.6
Dawson Clinic			Recitals
Dahlonega Family Practice Clinic			Recitals
Deposits			1.2(e)
Employee Benefits Plans			3.13
Environmental Laws			3.15
EHR Funds			1.2(b)
ERISA			3.13
Escrow Agent			1.9
Escrow Agreement			1.9
Escrow Amount			1.9
Excluded Assets			1.2
Experimental Procedure			Exhibit A
Financial Statements			Exhibit A

 

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Financial Statement Date			3.4(b)
GAAP			3.4
Government Entity			3.9
Government Programs			1.1(f)
HIPAA			3.9
HITECH Act			3.9
Healthcare Facilities			Recitals
Hospital			Recitals
Hospital Forms			10.12
ICTF			1.2(b)
Indemnified Party			11.3
Indemnifying Party			11.3
Insolvency Event(s)			7.6
Intellectual Property			Exhibit A
Interim Statements			5.5
Inventory			1.1(g)
Lease Assignment			2.2(c)
Leased Personal Property			1.1(e)
Leased Real Property			1.1(c)
Liens			Exhibit A
Loss			11.1
Losses			11.1
Material Adverse Effect			Exhibit A
MOB			Recitals
Outside Date			2.1
Owned Real Property			1.1(a)
PTO			Exhibit A
Permits			1.1(j)
Permitted Encumbrances			Exhibit A
Person			Exhibit A
Personal Property Leases			1.1(e)
Provider Agreements			1.1(i)
Purchased Assets			1.1
Purchase Price			1.6
RCRA			3.15
Representatives			Exhibit A
Required Consents			7.2(b)
Responsible Officers of Buyer			Exhibit A
Responsible Officers of Seller			Exhibit A
Retained Receivables			1.2(b)
Retained Employees			10.11(a)
Retained Liabilities			1.3
Seller			Introduction
Seller Indemnified Parties			11.1
Seller’s Knowledge or Knowledge of Seller			Exhibit A
Seller’s Representative			Exhibit A

 

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Straddle Patients			10.8(a)
SunLink			Introduction
Surveys			5.8
Territory			9.1
Threshold			11.6(a)
Title Commitment			6.2
Title Company			6.2
WARN Act			3.18(c)

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of August 19, 2016, by and between (i) Southern Health Corporation of Dahlonega, Inc., a Georgia corporation (the “Seller”) (ii) Durall Capital Holdings, LLC, a Florida limited liability company (the “Buyer”).

RECITALS:

Whereas, Seller owns and operates Chestatee Regional Hospital and related healthcare facilities which consist of:

 

(a)

a licensed 49-bed general acute care hospital (including OP geri-pysch and IP geri-psych programs) located at 227 Mountain Drive, Dahlonega, Georgia 30533 known as Chestatee Regional Hospital (the “Hospital”),

 

(b)

Seller’s business in, and leasehold interest as lessee of, the Dawson Family Physicians Clinic which consists of physician offices and radiology located at 35 and 71 Lumpkin Campground Road S., Dawsonville, Georgia 30534 (the “Dawson Clinic”)

 

(c)

Seller’s business in, and leasehold interest as lessee of, the Dahlonega Family Practice Clinic located at 59 Tipton Drive, Dahlonega, Georgia 30533 (the “Dahlonega Family Practice Clinic”)

 

(d)

Seller’s business in, and leasehold interest as lessee of, the medical office building (“MOB”) at 199 Mountain Drive, Dahlonega, Georgia 30533 containing approximately 2432.21 square feet,

 

(e)

Seller’s business in, and leasehold interest as lessee of, the Corporate Care Clinic located at 59 Tipton Drive, Dahlonega, Georgia 30533 (the “Corporate Care Clinic”).

The Hospital, together with the Dawson Clinic, Dahlonega Family Practice Clinic, MOB and the Corporate Care Clinic are collectively referred to as the “Healthcare Facilities”; and

Whereas, Buyer desires to buy from Seller, and Seller desires to sell and transfer to Buyer, the Hospital and Seller’s business in, and leasehold interest as lessee of, the Dawson Clinic, Dahlonega Family Practice Clinic, the Corporate Care Clinic and the MOB;

Whereas, capitalized terms used in this Agreement not otherwise defined herein shall have the meanings set forth in Exhibit A hereto.

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NOW, THEREFORE, for and in consideration of the premises and the agreements, covenants, representations, and warranties hereinafter set forth and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. PURCHASE OF PURCHASED ASSETS

1.1 Purchased Assets. Subject to the terms and conditions of this Agreement, at the Closing (as defined in Section 2.1 hereof), Seller agrees upon payment by Buyer to Seller of the Purchase Price in accordance with Section 1.6, to sell, convey, transfer, assign and deliver to Buyer and Buyer agrees to purchase and acquire, the Healthcare Facilities including the leasehold interests and the tangible and intangible assets owned by Seller included therein, other than the Excluded Assets (hereinafter defined), which purchased and acquired assets shall include, without limitation, the following (the “Purchased Assets”):

(a) the approximately 8.8 acres, more or less, of owned Real Property of Seller located in Dahlonega, Georgia, shown as Tract 1 on the plat of survey prepared by ALTA Surv., LLC dated May 21, 2014 the metes and bounds of which are described on Schedule 1.1(a), together with all improvements, buildings and fixtures thereon, and all rights, privileges and easements appurtenant thereto (collectively, the “Owned Real Property”);

(b) all the leasehold rights and interests of Seller as lessee in the leased MOB located on real property adjacent to the Hospital campus in Dahlonega, Georgia under the lease Agreement referenced in Schedule 1.1(b);

(c) all of the leasehold and interests of Seller as lessee in the Dawson Clinic and the Dahlonega Family Practice Clinic (the lease interests of Seller in the MOB, the Dawson Clinic, the Dahlonega Family Practice Clinic and the Corporate Care Clinic under the lease agreements listed in Schedule 1.1(c), collectively the “Leased Real Property”);

(d) the tangible personal property, including, without limitation, the equipment, vehicles, furniture and furnishings, the current list and general location of which are set forth on Schedule 1.1(d);

(e) the rights and interests of Seller in the equipment and other personal property leased by Seller under the operating leases (“Personal Property Leases”) listed on Schedule 1.1(e) (the “Leased Personal Property”);

(f) all receivables generated by or pertaining to the business and operations of Seller and the rendering of healthcare services, including without limitation (but in each case exclusive of Retained Receivables) (i) receivables and reimbursement under Medicare, Medicaid, CHAMPUS/TRICARE (“Government Programs”), Blue Cross and other third party payors arising from the rendering of services to patients at the Healthcare Facilities, all patient, trade and other account receivables and assets included in working capital, credits, offsets, or reimbursements, together with any and all accrued interest thereon existing as of the close of business on the Closing Date; (ii) all claims for payment and/or reimbursement under Government Programs and other third party payors, in each case arising from the rendering of services to patients at the Healthcare Facilities or other actions of Seller prior to Closing (collectively, the “Accounts Receivable”);

 

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(g) the inventory, including supplies and spare parts, owned by Seller as of the Closing Date that are used or held for use in the operation of the Healthcare Facilities (the “Inventory”);

(h) the medical records of Seller in respect of the Hospital patients, on the Closing Date or discharged prior to Closing Date, and the medical records of the Dahlonega Family Practice Clinic, the MOB the Dawson Clinic and the Corporate Care Clinic for patient encounters prior to the Closing Date (except for records of patients belonging to a provider for whom the Hospital is acting merely as landlord or records of patients belonging to providers who at one time owned portions of the MOB), all financial, patient, medical staff and personnel records of Seller relating to the Healthcare Facilities including, without limitation, equipment records, medical administrative libraries, medical records, patient billing records, documents, catalogs, books, records, files, operating manuals and current personnel records;

(i) the rights and interests, to (i) Seller’s Medicare and Medicaid provider agreements (the “Provider Agreements”) and (ii) the rights and interests of Seller under contracts, commitments, leases and agreements of Seller listed on Schedule 1.1(i) (the “Contracts”);

(j) the licenses, permits, certificates, certificates of need, accreditations held by Seller relating to the ownership, development, and operation of the Healthcare Facilities (including, without limitation, any pending or approved governmental approvals and Seller’s Medicare provider number and other matters listed on Schedule 1.1(j)) (the “Permits”);

(k) the names “Chestatee Regional Hospital,” “Dawson Family Clinic,” “Dahlonega Family Practice,” “Corporate Care Clinic” and any other trade names, trademarks and service marks (or variations thereof) of Seller associated with the Healthcare Facilities (other than the trade names, trademarks, service marks and other Intellectual Property containing the words, “Southern Health,” “Southern Health Corporation of Dahlonega” “Crown Healthcare,” “Crown Healthcare Investments,” “SunLink,” or any iteration or variation of any thereof), all goodwill associated therewith, and all applications and registrations, if any, associated therewith;

(l) the other property, other than the Excluded Assets, of every kind, character or description owned by Seller and solely used or held solely for use in the business of the Hospital, wherever located;

(m) the rights and interests of Seller in operating and capitalized leases of personal property;

(n) the interest of Seller in property of the foregoing types, arising or acquired in the ordinary course of the business of Seller in connection with the Healthcare Facilities between the date hereof and the Closing.

1.2 Excluded Assets. Notwithstanding the generality of Section 1.2, those assets, properties and rights of Seller described below, together with any assets described on Schedule 1.2, shall be transferred to and retained by Seller or an Affiliate of Seller, as the case may be, on or prior to Closing (collectively, the “Excluded Assets”) and shall not be assets of Seller at Closing:

(a) all cash, cash equivalents, marketable securities and bank accounts;

 

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(b) all (i) claims and settlements made under cost reports filed, or to be filed, by or with respect to Seller for services rendered up to and including the Closing Date, (ii) amounts, claims, receivables and settlements owing, made or paid, or to be made or paid, to Seller pursuant to the Indigent Care Trust Fund of the State of Georgia (“ICTF”) for or in respect of all Seller’s fiscal years ending on or prior to June 30, 2016 and a share prorated in accordance with Section 1.7 to Closing Date of all amounts and settlements made or paid, or to be made or paid, to Seller for or in respect of the State of Georgia’s fiscal year ending June 30, 2017, (iv) credits, offsets, carryforwards or refunds with respect to Federal, State or local income taxes for periods prior to the Closing Date, and (v) intercompany receivables due from SunLink Health Systems, Inc. (“SunLink”) and/or its Affiliates, (all such in clauses (i)-(v), collectively, the “Retained Receivables”);

(c) the names “Southern Health,” “Southern Health Corporation of Dahlonega” “SunLink,” “Crown Healthcare,” “Crown Healthcare Investments” and all iterations thereof;

(d) all deposits, advances, and pre-paid expenses (collectively, the “Deposits”), all utilities to be transferred into Buyer’s name at Closing;

(e) all rights to, and defenses of, causes of action, lawsuits, judgments, claims and demands, of any nature available to or being pursued by or against the Seller existing on the Closing Date or arising from the Seller’s operations prior to the Closing Date whether or not booked and included as a receivable in Seller’s balance sheet and whether or not disclosed and all rights and defenses in respect of any obligations or liabilities not constituting Assumed Liabilities;

(f) the rights that accrue to Seller under this Agreement;

(g) any and all claims and defenses, of whatever nature relating to taxes (including without limitation any interest or penalties and amounts due state unemployment authorities) or insurance arising during or relating to any period prior to Closing;

(h) the charter documents of the Seller, minute books, stock ledgers, tax identification numbers, books of account and other constituent records relating to the corporate organization of the Seller and Seller’s records relating to the Excluded Assets (as defined below), as well as any records which by law Seller is required to maintain in its possession;

(i) all ownership and other rights in connection with and the assets of Seller’s or its Affiliates’ employee benefit plans, and contracts or agreements related thereto;

(j) all rights to proceeds from liability, medical malpractice, workers compensation and other insurance policies relating to claims arising or relating to any period prior to Closing whether or not Seller has an obligation to indemnify Buyer pursuant to Section 11.2 or otherwise in respect of matters covered thereby; and

 

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(k) the tangible personal property described on Schedule 1.2(k).

1.3 Retained Liabilities. In connection with the conveyance of the Purchased Assets to Buyer shall not assume, and Seller shall retain, all indebtedness and obligations of Seller existing at the Closing Date, (other than, in each case, the Assumed Liabilities) (collectively, the “Retained Liabilities”) consisting of: (i) indebtedness for borrowed money, capital leases or obligations for the deferred payment of the purchase price of property or services of Seller existing on or incurred prior to the Closing Date, (ii) liabilities disclosed or reserved against in the Financial Statements or incurred or accruing after the date of such Financial Statements consistent with Sections 5.2 and 5.3 hereof prior to Closing, (iii) claims or potential claims by Government Programs and/or Blue Cross in respect of cost reports filed by Seller, or to be filed, for periods prior to Closing relating to services rendered up and including to the Closing Date, (iv) liabilities and obligations of Seller and its Affiliates arising under the terms of the Government Programs, Blue Cross, or other third party payor programs relating to services rendered by Seller prior to Closing, (v) any liabilities or obligations to the extent arising with respect to any of the Excluded Assets, (vi) any civil or criminal obligation or liability resulting from any material violation by Seller prior to the Closing of federal, state or local law or resulting from any federal, state or local investigations of, or federal, state or local government claims or actions against, Seller with respect to acts or omissions of Seller prior to the Closing constituting a material violation of federal, state or local law, (vii) federal or state income tax liabilities of Seller, and (viii) except for the Assumed Liabilities, other liabilities existing at, or indebtedness or obligations of Seller undertaken or assumed, prior to Closing.

1.4 Assumed Liabilities. In connection with Buyer’s purchase of the Purchased Assets, Buyer shall assume at Closing: (a) Seller’s obligations in respect of payment of Accounts Payable and Accrued Expenses, including without limitation, accrued PTO for Seller’s employees and (b) the following indebtedness, commitments, liabilities and obligations of Seller and/or related to the Purchased Assets arising in or related to periods after Closing: (i) performance following the Closing of the obligations of Seller under the Real Property Leases, the Personal Property Leases and the Contracts; (ii) payment following the Closing of the obligations of Seller in respect of property taxes and utilities for the Owned Real Property, Leased Real Property, personal property and Leased Personal Property, (iii) performance following the Closing of the obligations of Seller under the Provider Agreements with respect to obligations incurred with respect to any period after the Closing; (iv) performance following the Closing of the obligations arising in or related to periods after Closing under all permits, approvals, licenses, qualifications, registrations, or certifications relating to the Purchased Assets; (v) performance following the Closing of any liabilities or obligations to former employees of Seller under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) accruing on or after the Closing Date, (vi) performance following the Closing of the obligations of Seller in respect of all obligations arising with respect to the period after Closing under all Physician Employment Agreements and (vii) performance and payment of all obligations or liabilities arising or incurred in respect of periods, or ownership or operations by Buyer of the Purchased Assets, following the Closing (amounts referred to in this Section 1.4(a) and (b), collectively, the “Assumed Liabilities”).

 

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1.5 Environmental Report. Promptly following the execution of this Agreement, Buyer shall be entitled at Buyer’s expense to obtain a current Phase I Environmental Site Assessment of the Owned Real Property including the Hospital, and at Buyer’s sole discretion, Leased Real Property, prepared by a firm selected by Buyer, and the scope, findings, and conclusions of such report shall be reasonably satisfactory to Buyer. Any such Phase I Environmental Site Assessment shall be obtained on or prior to August 15, 2016. If the Phase I Environmental Audit is not reasonably satisfactory to Buyer, Buyer shall immediately advise Seller in writing. In the event Buyer so advises Seller, Seller shall have the option of (i) terminating this Agreement without further liability to either party (except for Seller being entitled to be paid the Escrow Amount as liquidated damages and not as a penalty) or (ii) permitting Buyer to conduct at Buyer’s expense a Phase II Environmental Site Assessment promptly thereafter, to be completed no later than August 15, 2016, and if such Phase II Environmental Site Assessment is not reasonably satisfactory to Buyer, Buyer shall immediately notify Seller in writing and this Agreement shall terminate without liability to either party. Any such Phase I or Phase II Environmental Site Assessment shall conclusively be deemed satisfactory to Buyer if the reasonably estimated cost of any remediation is less than $250,000.

1.6 Purchase Price.

(a) Subject to the terms and conditions hereof, in reliance upon the representations and warranties of Seller herein set forth and as consideration for the sale and purchase of the Purchased Assets (hereinafter defined) as contemplated herein, the purchase price shall be an amount equal to (i) Fifteen Million and No/100 Dollars ($15,000,000) (ii) plus the amount of Accounts Receivable, (iii) plus the amount of Inventory at book value as of the Closing, (iv) plus the amount of Seller deposits, advances and prepaid expenses, (v) minus the amount as of Closing of Accounts Payable and Accrued Expenses (including, without limitation, PTO) and (vi) plus or minus the proration of items pursuant to Section 1.7 between Buyer and Seller at Closing (“Purchase Price”).

(b) For purposes of determining the amount of cash to be delivered at the Closing, a good faith estimate of the Purchase Price equal to (i) Fifteen Million and No/100 Dollars ($15,000,000) (ii) plus the estimated amount of Accounts Receivable, (iii) plus the estimated amount of Inventory at book value as of the Closing, (iv) plus the estimated amount of Seller’s deposits, advances and prepaid expenses, (v) minus the estimated amount as of Closing of Accounts Payable and Accrued Expenses (including, without limitation, PTO) constituting Assumed Liabilities and (vi) plus or minus the estimated proration of items pursuant to Section 1.7 between Buyer and Seller as of Closing (the amount so computed, the “Estimated Purchase Price”) shall be made by Seller prior to the Closing Date using the then most recent available month-end balance sheet of Seller (the “Closing Month End Balance Sheet”) adjusted through the most reasonably practical date prior to Closing. The Seller shall prepare such preliminary determination and shall deliver to Buyer a copy of such balance sheet and a schedule showing the calculation of the Estimated Purchase Price at least two (2) Business Days prior to the Closing Date. At Closing, Buyer shall pay the Estimated Purchase Price to Seller or its designee in

 

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immediately available funds by wire transfer to Seller plus (b) the sum of amounts referenced in clauses (ii), (iii) and (iv) of Section 1.6(a), (c) minus the amount referenced in clause (v) of Section 1.6(a) and (d) plus or minus the amount referenced in clause (vi) of Section 1.6(a)).

1.7 Prorations. Except as otherwise provided herein, Seller and Buyer shall prorate as of the Closing Date with respect to (a) ad valorem taxes and personal property taxes, if any, on the owned Purchased Assets based upon the amounts set forth in the current bills and the number of days in the taxable period prior to the Closing Date and in the same taxable period following the Closing Date, (b) ICTF payments made to the Buyer on account of indigent care provided by the Hospital in respect of the State of Georgia fiscal year 2017 (when received by Buyer after Closing) based on the number of days in such year prior to the Closing Date and following the Closing Date, (c) rents with respect to the Leased Real Property and the Leased Personal Property and (e) all utilities servicing any of the Healthcare Facilities, including water, sewer, telephone, electricity and gas service, based in each case upon number of days occurring prior to the Closing Date and following the Closing Date during the billing period for each such charge.

1.8 Post Closing Adjustment.

(a) As promptly as practicable but no later than thirty (30) days after the Closing Date, there will be an adjustment (the “Post Closing Adjustment”) to the Estimated Purchase Price to arrive at the Purchase Price to reflect the actual amount of Accounts Receivable, the actual amount of Inventory at book value, the actual amount of Seller’s deposits, advances and prepaid expenses, the actual amount of Accounts Payable and Accrued Expenses, in each case as of the Closing Date. Seller with the assistance of Healthcare Facilities’ staff shall cause to be prepared and delivered to Buyer within thirty (30) days after Closing, an unaudited balance sheet and income statement as of and for the period from the Financial Statement Date (hereinafter defined) to the Closing Date prepared in accordance with GAAP (except as to absence of footnotes and subject to audit adjustments and Seller’ normal accounting practices) (the “Closing Financials”), and a detailed calculation of the Post Closing Adjustment.

(b) Should Buyer dispute the amount of the Post Closing Adjustment, Buyer shall promptly advise Seller. If after thirty (30) days after delivery of Seller’s calculation thereof, Buyer and Seller are unable to agree upon the amount of the Post Closing Adjustment, Seller and Buyer shall engage an independent public accounting firm mutually acceptable to Seller and Buyer, which shall not then be regularly engaged by either (i) Buyer (or its Affiliates) or (ii) Seller (or its Affiliates) (the “Accountants”), to review the proposed Post Closing Adjustment and determine the amount thereof, such determination to be made as soon as practicable but no later than ninety (90) days after Closing. In making such review and determination the Accountants shall utilize the terms and provisions of this Agreement together with accounting policies and procedures consistent with those utilized by Seller in preparing the June 30, 2016 Financials. The decision of the Accountants shall be binding on Seller and Buyer. Buyer and Seller shall each pay one half of the reasonable fees and expenses of engagement of the Accountants unless such firm determines (x) that a net error in Seller’s favor was made in the proposed Post Closing Adjustment and such error was greater than five percent (5%) of the Post Closing Adjustment, as calculated by the Accountants, in which event Seller shall pay all fees and expenses of engagement of the

 

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Accountants or (y) no net error greater than five percent (5%) of the Post Closing Adjustment, as calculated by the Accountants, was made in Seller’s favor in the proposed Post Closing Adjustment, in which event Buyer shall pay all the fees and expenses of engagement of the Accountants.

In the event any Post Closing Adjustment is due from Buyer to Seller, Buyer shall upon demand pay to Seller the amount of the Post Closing Adjustment due Seller. In the event any Post Closing Adjustment is due from Seller to Buyer, Seller shall upon demand pay to Buyer in immediately available funds the additional amount of the Post Closing Adjustment due Buyer.

1.9 Earnest Money Escrow. Within two Business Days after execution of this Agreement by Buyer, Buyer shall deposit One Million Five Hundred Thousand Dollars ($1,500,000) as earnest money in escrow (the “Escrow Amount”) with an escrow agent designated by Seller and reasonably acceptable to Buyer (the “Escrow Agent”). Should the Closing fail to occur on or before the Outside Date, Seven Hundred Fifty Thousand Dollars ($750,000) of the Escrow Amount shall be nonrefundable to Buyer and shall be paid over to Seller by the Escrow Agent as liquidated damages unless the Closing fails to so occur by reason of the failure of material condition to Buyer’s obligation to close, which failure occurs solely by reason of Seller’s nonperformance of its material obligations under this Agreement. At Closing, the Escrow Amount will be credited against the cash portion of the Purchase Price payable at Closing. The Escrow Amount will be held by the Escrow Agent under the terms of an escrow agreement in substantially the form attached hereto as Exhibit D (the “Escrow Agreement”). Each of Buyer and Seller will bear one-half of the Escrow Agent’s fees and expenses.

1.10 Purchase Price Allocation. The Purchase Price shall be allocated among the Purchased Assets in accordance with their fair market values as mutually determined by Buyer and Seller. Buyer shall deliver a draft schedule to Seller setting forth the proposed fair market value of the assets and such allocation within six months after the Closing Date. Seller shall have thirty (30) days to provide Buyer, in writing, with any disagreements regarding such draft schedule as to fair market value or allocation thereof. Buyer and Seller agree to cooperate in good faith to resolve any such disagreements. Buyer and Seller shall file any tax returns and any other governmental filings on a basis consistent with such allocation of fair market value and in accordance with Code Section 1060, as finally determined by mutual agreement (the “Purchase Price Allocation Schedule”). Buyer and Seller shall exchange drafts of any information returns required by Code Section 1060, and any similar state statute that is applicable, at least thirty (30) days before filing such returns and shall discuss in good faith any modification suggested by the receiving party. The parties hereto shall make appropriate adjustments to the allocations on the Purchase Price Allocation Schedule to reflect any adjustments to the Purchase Price.

2. CLOSING.

2.1 Closing. Subject to the satisfaction or waiver by the appropriate party of all of the conditions precedent to Closing specified in Sections 7 and 8 hereof, the consummation of the transactions contemplated by and described in this Agreement (the “Closing”) shall take place at 10:00 a.m. local time, at the offices of Smith, Gambrell & Russell, LLP, Suite 3100 Promenade,

 

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1230 Peachtree Street NE, Atlanta, GA 30309 or such other location as agreed upon by the parties. The Closing shall occur on or before September 1, 2016 or on such other date as the parties may mutually designate in writing (the “Closing Date”) and Seller may, as and to the extent provided in Section 10.1, terminate this agreement if the Closing has not occurred by the close of business on September 30, 2016 (the “Outside Date”).

2.2 Actions of Seller at Closing. At the Closing and unless otherwise waived in writing by Buyer, Seller shall deliver to Buyer the following:

(a) Limited Warranty Deed(s), with covenants against grantors acts only, fully executed and in recordable form, conveying to Buyer good and marketable fee simple title to the Owned Real Property described in Schedule 1.1(a) subject only to the Permitted Encumbrances that Seller is not required to remove or cure pursuant to Section 6.2 unless Seller otherwise removes or cures any such encumbrance after objection thereto by Buyer pursuant to Section 6.2 (as used in this Agreement, “good and marketable fee simple title” shall mean insurable by a national Title Company at standard rates);

(b) General Assignment, Conveyance and Bill of Sale substantially in the form attached as Exhibit E, fully executed by Seller, conveying to Buyer good and valid title to the Seller Owned Real Property and owned Tangible and intangible personal property which are a part of the Purchased Assets, free and clear of Liens other than the Assumed Liabilities and Permitted Encumbrances referred to in Schedule 3.12;

(c) One or more Assignment of Leases Agreements substantially in the form attached hereto as Exhibit F (the “Lease Assignments”), fully executed by Seller, assigning and conveying to Buyer Seller’s interest in the Leased Real Property and Leased Personal Property;

(d) An Assignment and Assumption Agreements substantially in the form attached as Exhibit G (the “Assignment and Assumption Agreements”), fully executed by Seller, assigning and conveying to Buyer Seller’s interest in the Contracts and assignable Permits subject to Seller’s reservation of rights under Medicare and Medicaid provider agreements as provided herein;

(e) All instruments and documents reasonably required by the Title Company (as defined in Section 6.2 hereof) to issue the title policy by the Title Commitment at Closing, including, but not limited to, an affidavit of title in the form reasonably required by the Title Company in order to issue its extended coverage owner’s policy of title insurance without exception for mechanic’s, materialmen’s or other statutory liens, for unrecorded easements or for other rights of parties in possession except as otherwise disclosed thereon; an affidavit of seller’s residence; and a Seller’s Affidavit Regarding Brokers, in each case in the form reasonably required by the Title Company;

(f) Copies of resolutions duly adopted by the President or a Vice President of Seller, authorizing and approving its performance of the transactions contemplated hereby and the execution and delivery of this Agreement and the documents described herein, certified as true and of full force as of the Closing, by the appropriate officers of Seller;

 

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(g) Copies of resolutions duly adopted by the President or a Vice President of Seller authorizing and approving Seller’s 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;

(h) Certificates of the President or a Vice President of Seller, certifying that each covenant and agreement of Seller to be performed or prior to or as of the Closing pursuant to this Agreement has been performed in all material respects and the representations and warranties of Seller, considered as a whole, are true and correct in all material respects on the Closing Date, as if made on and as of the Closing;

(i) Certificates of incumbency for the officers of Seller executing this Agreement or making certifications for the Closing dated as of the Closing Date;

(j) The Escrow Agreement, executed by Seller; and

(k) Such other instruments and documents as are necessary and are reasonably requested by Buyer to effect the transactions contemplated hereby.

2.3 Actions of Buyer at Closing. At the Closing and unless otherwise waived in writing by Seller, Buyer shall deliver to Seller the following:

(a) The Estimated Purchase Price in cash by wire transfer in accordance with Section 1.6(b) hereof;

(b) Copies of resolutions duly adopted by the manager or members of Buyer, authorizing and approving Buyer’s performance of the transactions contemplated hereby and the execution and delivery of this Agreement and the documents described in this Agreement, certified as true and in full force as of the Closing, by the manager or members of Buyer;

(c) Certificate of the manager or members of Buyer, certifying that each covenant and agreement of Buyer to be performed prior to or as of the Closing pursuant to this Agreement has been performed in all material respects and the representations and warranties of Buyer, considered as a whole, are true and correct in all material respects on the Closing Date, as if made on and as of the Closing; Copies of resolutions duly adopted by the members of Buyer, authorizing and approving Buyer’s 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 manager or members of Buyer;

(d) Certificate of Incumbency for the manager or members of Buyer executing this Agreement or making certifications for the Closing dated as of the Closing Date;

(e) The Escrow Agreement executed by Buyer; and

(f) Such other instruments and documents as Seller may reasonably deem necessary to effect the transactions contemplated hereby

 

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3. REPRESENTATIONS AND WARRANTIES OF SELLER. Prior to execution of this Agreement, Seller has delivered to Buyer the Seller’s Schedules referencing items of disclosure relating to the representations and warranties of Seller contained in this Agreement. As of the date hereof, and (when read in light of the Schedules as and to the extent updated in accordance with the provisions of Section 12.1 hereof), as of the Closing Date, Seller represents and warrants to Buyer the following:

3.1 Existence and Capacity. Seller is a corporation, duly organized and validly existing in good standing under the laws of the State of Georgia. Seller has the requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to conduct its business as now being conducted.

3.2 Powers; Consents; Absence of Conflicts with Other Agreements, Etc. The execution, delivery, and performance of this Agreement by Seller, and all other agreements referenced herein, or ancillary hereto, to which Seller is a party, and the consummation of the transactions contemplated herein by Seller:

(a) are within its corporate powers, are not in contravention of law or of the terms of its organizational documents, and have been duly authorized by all appropriate corporate action;

(b) except as provided in Section 5.4 below or as set forth on Schedule 3.2(b), do not require any approval or consent of, or filing by Seller, or to Seller’s Knowledge, by Seller with, any governmental agency or authority bearing on the validity of this Agreement which is required by law or the regulations of any such agency or authority;

(c) except as may otherwise be set forth on Schedule 3.2(c), will neither conflict with, nor result in any breach or contravention of, or the creation of any lien, charge, or encumbrance under, any debt instrument or other indenture, agreement, lease, instrument or understanding to which it is a party or by which it is bound, other than a breach or contravention of any restriction or consent or notice requirement imposed under any change of control, assignment or other similar provision of a Contract which would not be reasonably likely to result in a Material Adverse Effect;

(d) will not violate in any material respect any statute, law, rule, regulation or any judgment, writ, injunction, decree, or order known to and binding on Seller of any governmental authority.

3.3 Binding Agreement. This Agreement and all agreements to which Seller will become a party pursuant hereto are and will constitute the valid and legally binding obligations of Seller and are and will be enforceable against Seller in accordance with the respective terms hereof or thereof except as such enforcement may be limited by laws affecting creditors’ rights generally and by general equitable principles.

 

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3.4 Financial Statements. Seller has delivered to or made available for inspection by Buyer true and correct copies of the Financial Statements of Seller covering Seller’s operation of the Healthcare Facilities, copies of which Financial Statements are attached as Schedule 3.4:

(a) Seller’s balance sheets, income statements, and statements of cash flows for the fiscal years ended June 30, 2015 and 2014 compiled from Seller’s books and records and from the audited balance sheets, income statements, and statements of cash flows of the SunLink for the corresponding fiscal years;

(b) Seller’s unaudited balance sheet as of, and income statement, and statement of cash flows for the nine month period ended, June 30, 2016 (the “Financial Statement Date”).

Such Financial Statements were prepared in the normal course of business based upon the books and records of the Healthcare Facilities as historically maintained and fairly represent, in accordance with generally accepted accounting principles (except as to the absence of footnotes and subject to year-end audit adjustments) (“GAAP”) in all material respects, Seller’s financial condition and results of operations as of the dates and for the periods indicated thereon.

3.5 Certain Post Financial Statement Date Results. Except as set forth in Schedule 3.5, since the Financial Statement Date referenced in Section 3.4 there has not been any:

(a) material damage, destruction, or loss in excess of $250,000 (not covered by insurance) affecting the tangible Purchased Assets;

(b) any Material Adverse Effect;

(c) to Seller’s Knowledge, threatened employee strike, work stoppage, or labor dispute pertaining to Seller or the Healthcare Facilities;

(d) sale, assignment, transfer, or disposition of any item of property, plant or equipment included in the Purchased Assets having a value in excess of One Hundred Fifty Thousand Dollars ($150,000) (other than supplies and inventory), except in the ordinary course of business which is not replaced by Seller with property, plant or equipment of comparable value prior to Closing;

(e) general increases in the compensation payable by Seller to any of its employees providing services to the Healthcare Facilities, or any increase in, or institution of, any bonus, insurance, pension, profit-sharing or other employee benefit plan, remuneration or arrangements made to, for or with such employees, except in the ordinary course of business;

(f) material changes in the composition of the medical staff of the Hospital, other than normal turnover occurring in the ordinary course of business;

(g) material changes in the rates charged by the Healthcare Facilities for their services, other than those made in the ordinary course of business;

 

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(h) material changes in accounting methods or practices or changes in depreciation or amortization policies, employed by Seller with respect to the Healthcare Facilities, except as otherwise required by law or regulations including regulations, requirements and guidelines issued by the Securities and Exchange Commission;

(i) transactions pertaining to the Healthcare Facilities by Seller outside the ordinary course of business.

3.6 Licenses. The Hospital is and will be duly licensed, as of the date of Closing, as an acute care hospital pursuant to the applicable laws of the State of Georgia. All departments of the Hospital which are required to be specially licensed are duly licensed by the Georgia Department of Community Health, or other appropriate licensing agency (“DCH”), except where the failure to be so licensed would not adversely affect in any material respect the ability of Seller to carry on the business of operating the Healthcare Facilities substantially in the manner as currently conducted. Seller has (i) all other material licenses, registrations, permits, and approvals which are necessary or required by law to operate the Healthcare Facilities or any ancillary services related thereto substantially as presently operated and (ii) made available for inspection by Buyer a list (Schedule 3.6) of all such licenses, registrations, permits and approvals owned or held by Seller relating to the ownership or operation of the Healthcare Facilities, all of which are now and as of the Closing shall be in good standing and not subject to meritorious challenge, except in any such case where the challenge would not reasonably be expected to have a materially adverse effect on Seller or the ability of Seller to operate the Healthcare Facilities substantially in the manner currently conducted. Seller shall cooperate reasonably and in good faith with the reasonable requests of Buyer to assist Buyer to transfer or obtain necessary licenses to operate the Healthcare Facilities substantially in the manner currently conducted.

3.7 Certificates of Need. Schedule 3.7 lists all certificate of need approvals held by Seller with respect to the Healthcare Facilities, which constitute all certificate of need approvals necessary for Seller to own and operate the Healthcare Facilities and the Purchased Assets and to carry on the Hospital’s business as currently conducted. Seller and the Facilities, as applicable, are, and at all times have been, in material compliance with the terms and conditions of any such certificates of need approvals. Each such certificate of need is valid and in good standing and not subject to meritorious challenge. Of the 49 licensed beds of the Hospital, 34 of which are licensed as medical surgical beds, 5 of which as intensive care beds and 10 of which as psychiatric beds. No Certificate of Need applications, requests for letters of nonreviewability or determination requests pertaining to the Healthcare Facilities are currently pending. As used herein, “Certificate of Need” means a written statement issued by the DCH evidencing community need for a new, converted, expanded or otherwise significantly modified health care facility, health service or capital expenditure.

3.8 Medicare Participation/Accreditation. The Healthcare Facilities are qualified for participation in the Government Programs through the provider contracts of Seller, are in material compliance with the conditions of participation in such programs, and have received all approvals or qualifications necessary for reimbursement thereunder. There is no Proceeding, survey, or other action pending, or, to Seller’s Knowledge, threatened, involving any of the Government Programs or any other third party payor programs, including the Healthcare

 

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Facilities’ participation in and the reimbursement received by Seller with respect to the Healthcare Facilities from the Government Programs or any other third party payor programs. “Proceeding” means any claim, action, arbitration, audit (including, without limitation, any audit by any Medicaid Integrity Contractor, Comprehensive Error Rate Testing, Zone Program Integrity Contractor or similar audits), hearing, investigation, litigation suit or other similar proceeding by or before a Governmental Authority. The services provided by the Hospital are duly accredited as part of The Joint Commission’s accreditation for the period specified on Schedule 3.8. Copies of the most recent accreditation letter from The Joint Commission pertaining to the Hospital has been made available for inspection by Buyer. The billing practices of Seller with respect to the Healthcare Facilities to all third party payors, including the Government Programs and private insurance companies, to Seller’s Knowledge: (i) have been in substantial compliance with applicable laws, regulations and mandatory policies of such third party payors including the Government Programs, and (ii) Seller has not billed or received any payment or reimbursement in excess of amounts allowed by law, except as and to the extent that liability for such overpayment is either immaterial or has been satisfied in connection with normal cost report settlements in the ordinary course of business. Seller has not been excluded from participation in the Government Programs nor to Seller’s Knowledge is any such exclusion threatened. Based upon and in reliance upon Seller’s review of (x) the “list of Excluded Individuals/Entities” on the website of the United States Health and Human Services Office of Inspector General (http://oig.hhs.gov/fraud/exclusions.html), and (y) the “List of Parties Excluded From Federal Procurement and Nonprocurement Programs” on the website of the United States General Services Administration (http://www.arnet.gov/epls/), none of the officers, directors or managing employees of Seller have been excluded from participation in the Government Programs. Except as set forth in a writing delivered by Seller to Buyer or as set forth on Schedule 3.8, Seller has not received any written notice pertaining to the Hospital from any of the Government Programs, or any other third party payor programs of any pending or threatened investigations or surveys (other than surveys in the ordinary course of business).

3.9 Regulatory Compliance. Except as set forth on Schedule 3.9, Seller is and, to the Knowledge of Seller, at all times within the five year period preceding the date hereof has been, in material compliance with applicable statutes, rules, regulations, and requirements of the Government Entities having jurisdiction over Seller and the operations of the Healthcare Facilities, including, but not limited to, the accreditation standards of an organization with deeming authorization under the Clinical Laboratory Improvement Amendments (CLIA) and the provisions of the Mammography Quality Standards Act (MQSA) and the regulations associated therewith in each case in which the failure to be in compliance would have a Material Adverse Effect on the Healthcare 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. Seller has timely filed, or by the due date will file, all material reports, data, and other information required to be filed with the Government Entities, except where the failure to so file would not have a Material Adverse Effect. To the Knowledge of Seller, neither Seller nor any of its employees, have committed any violation of federal or state laws regulating health care fraud, including but not limited to the federal Anti-Kickback Law, 42 U.S.C. §1320a-7b, the Physician Self-Referral Law, 42 U.S.C. §1395nn, as amended, and the False Claims Act, 31 U.S.C. §3729, et seq. To the

 

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Knowledge of Seller, Seller is in substantial compliance with the relevant administrative simplification provisions required under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), including the electronic data interchange regulations and the health care privacy and security regulations, as of the applicable effective dates for such requirements (Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111-5 (2009)).

3.10 Equipment. Since the Financial Statement Date, Seller has not sold or otherwise disposed of any item of equipment having a value in excess of One Hundred Fifty Thousand Dollars ($150,000) constituting any part of the Purchased Assets unless the same has been or is being replaced by an asset of comparable value.

3.11 Owned Real Property. With respect to the Owned Real Property:

(a) Except as described on Schedule 3.11(a), the Owned Real Property does not violate any applicable ordinance or other law, order, regulation, or requirement except any such violation which would not adversely affect in any material respect the use thereof as currently being used and has not received notice of condemnation or the like relating to any part of the Owned Real Property or the operation thereof;

(b) Seller has not received notice that the Owned Real Property or its operation violate any applicable zoning ordinances, nor, to Seller’s Knowledge, will the Buyer’s operation of an acute care hospital on the Owned Real Property as presently operated result in a violation of any applicable zoning ordinance or the termination of any applicable zoning variance now existing, and Seller has received no written notice that the buildings and improvements constituting the Owned Real Property are noncompliant in any material respect with any building codes;

(c) Except as described on Schedule 3.11(c), the Owned Real Property is subject to no easements, restrictions, ordinances, or such other limitations on title so as to make such property unusable for its current use or the title uninsurable or unmarketable or which materially restrict or impair the use, marketability or insurability of the Owned Real Property;

(d) Except as described on Schedule 3.11(d) and subject to any applicable “grandfathered” or other pre-existing rights and conditions under the Accessibility Laws (as hereafter defined), the Owned Real Property is in substantial compliance with the applicable provisions of the Rehabilitation Act of 1973, Title III of the Americans with Disabilities Act, and the provisions of any comparable state statute relative to accessibility (these laws are referred to, collectively, as the “Accessibility Laws”), and there is no pending, or, to Seller’s Knowledge, threatened litigation, administrative action or complaint (whether from state, federal or local government or from any other person, group or entity) relating to compliance of any of the Owned Real Property with the Accessibility Laws;

(e) Except as described on Schedule 3.11(e), there are no tenants or other persons or entities occupying any space in the Owned Real Property, other than pursuant to tenant leases described in Schedule 3.11(e) and, except as described on Schedule 3.11(e), no tenants have

 

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paid rent in advance for more than one month and no improvement credit or other tenant allowance of any material amount is owed to any tenant, nor is any landlord improvement work required, except as disclosed in Schedule 3.11(e);

(f) Schedule 3.11(f) sets forth a “rent roll” which sets forth for any leases to physicians at the Healthcare Facilities or other parties where Seller is the landlord: (i) the names of then current tenants; (ii) the rental payments for the then current month under each of the leases; (iii) a list of any then delinquent rental payments; (iv) a list of any material concessions granted to tenants; (v) a list of tenant deposits and a description of any application thereof, and (vi) a list of any uncured material defaults under the leases known to Seller;

(g) Except as described on Schedule 3.11(g), Seller has not received any written notice 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 that would materially and adversely affect the current use of any part of the Owned Real Property;

(h) Except as described on Schedule 3.11(h), the Owned Real Property is not located within a one hundred year flood plain or, to Seller’s Knowledge, an area identified by the Secretary of Housing and Urban Development as having “special flood hazards,” as such term is used in the National Flood Insurance Act of 1968, as amended and supplemented by The Flood Disaster Protection Act of 1973, and in regulations, interpretations and rulings thereunder; and

(i) Except as described on Schedule 3.11(i), to Seller’s Knowledge, the existing improvements located upon the Owned Real Property do not encroach upon adjacent premises or upon existing utility company easements and existing restrictions are not violated by the improvements located on the Owned Real Property.

3.12 Title; Sufficiency of Assets. As of the Closing, Seller shall own and hold good and marketable title to the Owned Real Property and good and valid title to all other owned Purchased Assets and a good and valid leasehold interest in the Leased Real Property and Leased Personal Property, subject to no mortgage, lien, pledge, security interest, conditional sales agreement, right of first refusal, option, restriction, liability, encumbrance, or charge other than the Permitted Encumbrances referenced on Schedule 3.12. The Purchased Assets consist of all the assets used to operate and are adequate for the purposes of operating the Healthcare Facilities in the manner in which it has been operated prior to Closing except for assets utilized by SunLink in its home office such as computers, copiers, licensed software, cost report records, etc. to provide accounting, financial and management services to Seller and other healthcare facilities owned by SunLink. Except as may be set forth in Schedule 3.12, to Seller’s Knowledge, there are no material facts or conditions affecting the Purchased Assets (exclusive of those affecting generally the healthcare industry or other healthcare facilities similarly situated with the Healthcare Facilities) which would reasonably be expected, individually or in the aggregate, to interfere with the use, occupancy or operation of the Purchased Assets substantially as currently used, occupied or operated, or their adequacy for such use.

 

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3.13 Employee Benefit Plans. Attached hereto is an accurate list (Schedule 3.13) of all “employee welfare benefit plans” and “employee pension benefit plans,” as such terms are defined by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and any other group employee benefit plan or similar agreement or arrangement maintained by or for the benefit of Seller (collectively, the “Employee Benefit Plans”) which relate to the Hospital. Neither Seller nor any Affiliate of Seller has taken any action, or omitted to take any action, with respect to the Employee Benefit Plans which reasonably would be expected to result in a Lien on any of the Purchased Assets.

3.14 Litigation or Proceedings. Schedule 3.14 contains an accurate list of all litigation pending with respect to the Seller or the Healthcare Facilities. Seller is not in default under any order of any court or federal, state, municipal, or other governmental department, commission, board, bureau, agency or instrumentality related to the Healthcare Facilities. Except as set forth in a writing delivered by Seller to Buyer or as set forth on Schedule 3.14, there are no claims, actions, suits, proceedings, or investigations pending, or, to the Knowledge of Seller, threatened against or related to the Healthcare Facilities, at law or in equity, or before or by any federal, state, municipal, or other governmental department, commission, board, bureau, agency, or instrumentality wherever located.

3.15 Environmental Laws. As of the Closing, except as set forth on Schedule 3.15 or as disclosed in the Phase I: (i) the Owned Real Property is in material compliance with applicable federal, state or local statutes, regulations, laws or orders pertaining to the protection of human health and safety or the environment (collectively, “Environmental Laws”), including, without limitation, the Comprehensive Environmental Response Compensation and Liability Act, as amended (“CERCLA”), and the Resource Conservation and Recovery Act, as amended (“RCRA”) and (iii) Seller has not received any notice alleging or asserting either a violation of any applicable Environmental Law or a legal obligation to investigate, assess, remove, or remediate any property that is a Purchased Asset under this Agreement, including but not limited to the Owned Real Property, under or pursuant to any Environmental Law. Except as set forth on Schedule 3.15 hereto, to Seller’s Knowledge, no Hazardous Substances have been, and through the Closing Date will not be, possessed, managed, processed, released, handled, disposed of on or released or discharged from or onto, or to Seller’s Knowledge, threatened, to be released from or onto, the Owned Real Property or Leased Real Property (including groundwater) by Seller in violation of any applicable Environmental Law. Except as set forth on Schedule 3.15 hereto, Seller has not allowed, and, to Seller’s Knowledge, no prior owners, operators or occupants of the Owned Real Property have allowed, any Hazardous Substances to be discharged, possessed, managed, processed, released, or otherwise handled on the Owned Real Property in a manner which is in violation of any Environmental Law not subsequently remedied, and Seller has complied in all material respects with Environmental Laws applicable to any part of the Owned Real Property. Seller shall promptly notify Buyer should Seller become aware of any lien, notice, litigation, or threat of litigation relating to any alleged or actual unauthorized release of any Hazardous Substance with respect to any part of the Owned Real Property. Except as set forth on Schedule 3.15, to Seller’s Knowledge, the physical plants located on the Owned Real Property do not contain regulated asbestos-containing material in any form. Without in any way limiting the generality of the foregoing, to Seller’s Knowledge, (a) all underground storage tanks located on

 

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the Owned Real Property and relevant information in Seller’s possession relating to the capacity, uses, dates of installation and contents of such tanks located on the Owned Real Property is identified in Schedule 3.15; (b) there are no, nor have there ever been, any collection dumps, pits, and disposal facilities or surface impoundments located on the Owned Real Property for the containment of Hazardous Substances except any identified in Schedule 3.15; and (iii) all existing underground storage tanks known to Seller have been maintained in material compliance with applicable Environmental Laws during Seller’s ownership.

3.16 Hill-Burton and Other Liens. Except as set forth on Schedule 3.16, the Healthcare Facilities are not subject to any loans, grants or loan guarantees pursuant to the Hill-Burton Act program, the Health Professions Educational Assistance Act, the Nurse Training Act, the National Health Planning and Resources Development Act, and the Community Mental Health Centers Act, as amended, or similar laws or acts relating to healthcare facilities. The transactions contemplated hereby will not result in any obligation on Buyer or any of its Affiliates to repay any of such loans, grants or loan guarantees.

3.17 Taxes. With respect to the Healthcare Facilities, except as otherwise set forth on Schedule 3.17, Seller has filed all federal, state and local tax returns required to have been filed by it (all of which are true and correct 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 shown due and payable on any tax returns for which Seller has liability to the appropriate tax authorities. Seller has withheld required amounts from its employees’ compensation in substantial compliance with applicable withholding and similar provisions of the Internal Revenue Code of 1986 (the “Code”), including employee withholding and social security taxes, and any and all other applicable laws. No deficiencies for any of such taxes have been asserted, or to Seller’s Knowledge, threatened, and no audit on any such returns is currently under way or, to Seller’s Knowledge, threatened. There are no outstanding agreements by Seller for the extension of time for the assessment of any such taxes. Except as set forth on Schedule 3.17, Seller has not taken and will not take any action in respect of any federal, state or local taxes (including, without limitation, any withholdings required to be made in respect of employees) which may have a Material Adverse Effect upon Seller, the Healthcare Facilities as of or subsequent to Closing. There are no tax liens on any of the Purchased Assets and, to Seller’s Knowledge; no basis exists for the imposition of any such liens (other than for liens that arise for taxes that are not yet due and payable).

3.18 Employee Relations.

(a) Except as set forth on Schedule 3.18(a) hereto, there has not been within the last three (3) years, there is not presently pending, or to Seller’s Knowledge, threatened, and no event has occurred or circumstance exists, in either case known to Seller, that could provide the basis for, any strike, slowdown, picketing, work stoppage, or employee grievance process, or any proceeding against or affecting Seller or the Healthcare Facilities relating to an alleged violation of any legal requirements pertaining to labor relations, including any charge, complaint, or unfair labor practices claim filed by an employee, union, or other Person with the National Labor Relations Board or any comparable governmental body, organizational activity, or other labor dispute against or affecting Seller. With respect to Seller employees, (i) no collective bargaining

 

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agreement exists or is currently being negotiated by Seller; (ii) to Seller’s Knowledge, no application for certification of a collective bargaining agent is pending; (iii) no demand on Seller has been made for recognition by a labor organization; (iv) to Seller’s Knowledge, no union representation question exists or union organizing activities are taking place; and (v) none of Seller employees is represented by any labor union or organization.

(b) To Seller’s Knowledge, Seller has complied in all material respects with applicable 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 related to the Healthcare Facilities, the non-compliance with which would reasonably be expected to result in any material liability. Except as set forth in Schedule 3.18(b), Seller is not liable for the payment of any compensation, damages, taxes, fines, penalties, interest, or other amounts, however designated, for failure to comply with any of the foregoing legal requirements. Except as set forth in Schedule 3.18(b), there are no pending or, to Seller’s Knowledge, threatened claims before the Equal Employment Opportunity Commission (or comparable state agency), complaints before the Occupational Safety and Health Administration (or comparable state agency), wage and hour claims, unemployment compensation claims, workers’ compensation claims, or the like related to the Hospital.

(c) Seller has made available for inspection by Buyer the personnel records of all of Seller’s employees who provide services at the Healthcare Facilities and the salary or wage records for such employees including records reflecting paid-time-off that is accrued or credited but unused or unpaid. Schedule 3.18(c) lists each employment, consulting, independent contractor, bonus, or severance agreement to which Seller is a party and which relates primarily to the operation of the Healthcare Facilities (copies of each having been made available for inspection by Buyer). Schedule 3.18(c) lists the employees who had an “employment loss,” as such term is defined in the Worker Adjustment and Retraining Notification Act (the “WARN Act”), within the ninety (90) days preceding the Closing; in relation to the foregoing, Seller has not violated the WARN Act or any similar state or local legal requirements. Except as set forth in Schedule 3.18(c), to Seller’s Knowledge, no officer, director, agent, employee, consultant, or independent contractor of Seller is bound by any contract that purports to limit the ability of such officer, director, agent, employee, consultant, or independent contractor to engage in or continue or perform any conduct, activity, duties or practice relating to the business of Seller.

3.19 Agreements and Commitments. Schedule 3.19 contains an accurate list of all contracts, leases, and agreements of Seller which to Seller’s Knowledge materially affect the Healthcare Facilities or the operation thereof and has made available for inspection by Buyer all such documents, including, without limitation, (a) Physician Employment Agreements, (b) agreements with health maintenance organizations, preferred provider organizations, or other alternative delivery systems, (c) joint venture or partnership agreements, (d) employment contracts or any other contracts, agreements, or commitments to or with individual employees or agents, (e) contracts or commitments materially affecting ownership of, title to, use of or any interest in real estate including any tenant leases, (f) equipment leases, (g) equipment maintenance agreements, (h) agreements with municipalities, (i) collective bargaining agreements or other contracts or

 

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commitments to or with any labor unions, labor organizations, or other employee representatives or groups of employees, (j) loan agreements, mortgages, liens, or other security agreements, (k) patent licensing agreements or any other agreements, licenses, or commitments with respect to patents, patent applications, trademarks, trade names, service marks, technical assistance, copyrights, or other like terms affecting Seller, the Healthcare Facilities, (l) contracts or commitments providing for payments based in any manner on the revenues or profits of Seller or the Healthcare Facilities, (m) agreements, licenses, or commitments relating to data processing programs, software, or source codes utilized in connection with the Healthcare Facilities, (n) contracts or commitments, whether in the ordinary course of business or not, which restrain, in any manner, the operations of the Healthcare Facilities (including, but not limited to, noncompetition agreements), and (o) contracts or commitments, whether in the ordinary course of business or not, which involve future payments, performance of services or delivery of goods or material, to or by the Healthcare Facilities. However, with respect to items (f), (g), (m), (n), and (o) above, Seller makes such representations only with respect to those involving future payments, performance of services or delivery of goods to or by Seller in an amount or value in excess of Fifty Thousand Dollars ($50,000) on an annual basis, and to the extent such commitments, contracts, leases and agreements are or are proposed to be Contracts to be assigned to and assumed by Buyer.

3.20 The Contracts. Schedule 1.1(i) sets forth a true and complete list of the Contracts constituting Assumed Liabilities. Seller has made available for inspection by Buyer true and correct copies of the Contracts. Seller represents and warrants with respect to the Contracts that:

(a) The Contracts constitute valid and legally binding obligations of Seller and are enforceable against Seller in accordance with their terms except as such enforcement may be limited by laws affecting creditors or contractors rights generally and by general equitable principles;

(b) Each Contract constitutes the entire agreement by and between the respective parties thereto with respect to the subject matter thereof; and

(c) All material obligations required to be performed by Seller under the terms of the Contracts prior to Closing have been or will have been performed in all material respects prior to Closing and each of such Contracts is in full force and effect without existing material default on the part of Seller.

3.21 Inventory. The Inventory constituting a part of the Purchased Assets is, in the opinion of the Responsible Officers, (i) substantially of a quality and quantity presently usable and salable in the ordinary course of business of the Healthcare Facilities and (ii) on the Closing Date, will be being maintained at levels sufficient in all material respects for the operation of the Healthcare Facilities in the ordinary course of business consistent with past practice.

3.22 Insurance. Seller has delivered to Buyer an accurate schedule (Schedule 3.22) disclosing the insurance policies covering the ownership and operations of the Healthcare Facilities (other than those related to any Employee Benefit Plans), which Schedule reflects the policies’ numbers, identity of insurers, amounts, and coverage. All of such policies are in full force and effect. Seller has given in a timely manner to its insurers all notices required to be given

 

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under its insurance policies with respect to all of the claims and actions covered by insurance, and no insurer has denied coverage of any such claims or actions. Except as set forth on Schedule 3.22, Seller has not (a) received any written notice or other communication from any such insurance company canceling or materially amending any of such insurance policies and to Seller’s Knowledge, no such cancellation or amendment is threatened or (b) failed to give any required notice or present any claim which is still outstanding under any of such policies with respect to Seller or the Healthcare Facilities.

3.23 Medical Staff Matters. Seller has made available for inspection by Buyer a true, correct and complete copy of the Hospital’s medical staff bylaws, rules and regulations. The physicians listed on Schedule 3.23 hereto are current members in good standing of the active Hospital medical staff with privileges to perform medical services at the Hospital. Except as set forth in Schedule 3.23, there are no adverse actions pending with respect to any of the physicians listed on Schedule 3.23 or with any applicant for privileges at the Hospital, and there are no pending, or to Seller’s Knowledge, threatened, disputes with any applicants, staff members, or health professional Affiliates associated with the Hospital, and Seller knows of no basis therefor. Except as set forth in Schedule 3.23, there is no pending appeal periods applicable to any applicant of the Hospital or any of the physicians listed on Schedule 3.23.

3.24 Experimental Procedures. During the past five (5) years Seller has not performed or permitted the performance of any Experimental Procedures involving patients in the Healthcare Facilities not authorized and conducted in accordance with the procedures of the applicable Institutional Review Board.

3.25 Condition of Assets. Except as set forth on Schedule 3.25, substantially all of the tangible Purchased Assets are generally in good condition, ordinary wear and tear excepted. Except as expressly set forth in this Agreement, or the instruments of transfer of the Purchased Assets, to Seller’s Knowledge, Schedule 3.25 lists any known noncompliance with applicable building and safety codes in the buildings, structures, facilities and major equipment.

3.26 Compliance Program. Seller has provided or made available for inspection by Buyer a copy of Seller’s current compliance program materials, other than materials subject to a legal privilege which Seller believes could be waived by such provision, including without limitation, all program descriptions, compliance officer and committee descriptions, ethics and risk area policy materials, training and education materials, auditing and monitoring protocols, reporting mechanisms, and disciplinary policies pertaining to the Healthcare Facilities. Except to the extent set forth on Schedule 3.26, Seller (a) is not a party to a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services, (b) has no reporting obligations pursuant to any settlement agreement entered into with any Governmental Entity, (c) has not, to Seller’s Knowledge, been the subject of any government payer program investigation conducted by any federal or state enforcement agency, (d) has not been a defendant in any qui tam/False Claims Act litigation, (e) has not been served with or received any search warrant, subpoena, civil investigative demand, or, to Seller’s Knowledge, any contact letter from any federal or state enforcement agency (except in connection with medical services provided to third parties who may be defendants or the subject of investigation into conduct unrelated to the operation of the Healthcare Facilities), and (f) has not received any complaints from employees,

 

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physicians, or any other Person that would indicate that Seller has violated any law or regulation. Schedule 3.26 includes a list of each audit and investigation conducted by Seller pursuant to its compliance program during the last three (3) years and related to or involving the Healthcare Facilities. For purposes of this Agreement, the term “compliance program” refers to provider programs of the type described in the compliance guidance published by the Office of Inspector General of the Department of Health and Human Services.

3.27 Disclosure. This Agreement and Schedules and all Closing Documents (as defined below) of Seller do not and will not include any untrue statement of a material fact relating to Seller, the Healthcare Facilities. Copies of all documents referred to in any Schedule, to the extent in Seller’s possession, have been made available for inspection by Buyer and constitute accurate copies thereof and include all amendments, exhibits, schedules, appendices, supplements or modifications thereto or waivers thereunder in Seller’s possession. The term “Closing Documents” means those documents executed and delivered by Seller at the Closing pursuant to Section 2 above.

3.28 No Broker. Except as set forth on Schedule 3.28, Seller has not engaged any broker, investment banker, financial advisor or other Person or entity on a contingency fee basis in connection with the transactions contemplated by this Agreement.

3.29 No Additional Warranties. THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN ARE THE ONLY REPRESENTATIONS OR WARRANTIES GIVEN BY THE SELLER. BUYER HEREBY ACKNOWLEDGES THAT, PRIOR TO THE CLOSING DATE, IT WILL HAVE CONDUCTED OR HAD THE OPPORTUNITY TO CONDUCT ITS OWN INSPECTION AND INVESTIGATION OF SELLER AND THE PURCHASED ASSETS AND EXCEPT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN THIS AGREEMENT, IS PURCHASING THE PURCHASED ASSETS WITH NO OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, EITHER ORAL OR WRITTEN, MADE BY SELLER OR ANY AGENT OR REPRESENTATIVE OF SELLER.

3.30 Other Information. Buyer agrees that neither Seller nor any directors, officers, managers, employees, attorneys, accountants, brokers, finders, investment advisors or bankers or other agents will have or be subject to any liability to Buyer or any other Person resulting from the provision to Buyer, or Buyer’s use of, any information, document, or material made available to Buyer by Seller in any “data room” (electronic or otherwise), management presentation or any other form in anticipation of the transactions contemplated by this Agreement, other than information, documents, or materials incorporated in or referenced in the representations and warranties contained herein. In connection with Buyer’s investigation of the Healthcare Facilities, Buyer may have received from or on behalf of Seller of budgets and/or oral estimates, projections, forecasts or plans with respect to future operation of the Healthcare Facilities. Buyer acknowledges that there are uncertainties inherent in such a budget and/or estimates, projections and other forecasts and plans, that Buyer is familiar with such uncertainties, that Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of any such budget, estimates, projections, forecasts or plans.

 

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3.31 Third Party Payor Cost Reports. Seller has duly filed all required cost reports for all the fiscal years through and including the fiscal year specified on Schedule 3.31. To Seller’s Knowledge, all of such cost reports accurately reflect the information required to be included thereon and such cost reports do not claim reimbursement in any amount in excess of the amounts to which Seller believes it is entitled by law or applicable agreements. Schedule 3.31 indicates which of such cost reports have not been audited and finally settled and a brief description of any and all notices of program reimbursement, proposed or pending audit adjustments, disallowances, appeals of disallowances, and, to the Seller’s Knowledge, any and all other unresolved claims or disputes in respect of such cost reports. Seller has established reserves believed to be adequate to cover any reasonably expected potential reimbursement obligations that Seller may have in respect of any such third party cost reports, and such reserves are set forth in the Financial Statements.

3.32 Intellectual Property; Computer Software. The material items of Intellectual Property currently owned, leased or licensed by Seller are listed in Schedule 3.32. No proceedings are pending, or to the Seller’s Knowledge, threatened, which challenge the validity of the ownership by Seller of such Intellectual Property and, to the Seller’s Knowledge, there is no basis therefor. Seller has not licensed anyone to use such Intellectual Property and to the Seller’s Knowledge, there is no use or infringement of any such Intellectual Property by any other person. To the Seller’s Knowledge, Seller owns (or possesses adequate and enforceable licenses or other rights to use) the items of Intellectual Property, and computer software programs and similar systems used in the conduct of its business except for Intellectual Property, and those items of software and similar items, owned or licensed by or to SunLink and held or made available for use by its hospital and other subsidiaries including Seller.

3.33 Improper Payments. To the Knowledge of Seller, neither it nor any of their respective directors, officers, employees or agents, have made any bribes, kickbacks or other illegal payments to, or received any such illegal payments from, customers, vendors, suppliers or other persons contracting with the Seller has not proposed or offered to make or receive any such illegal payments.

4. REPRESENTATIONS AND WARRANTIES OF BUYER. As of the date hereof, and, when read in light of any Schedules which have been updated in accordance with the provisions of Section 12.1 hereof, as of the Closing Date, Buyer represents and warrants to Seller the following:

4.1 Existence and Capacity. Buyer is a limited liability company, duly organized and validly existing in good standing under the laws of the State of Florida. Buyer has the requisite power and authority to enter into this Agreement and the other documents and agreements contemplated hereby and to perform its obligations thereunder and to conduct its business as now being conducted.

4.2 Powers; Consents; Absence of Conflicts With Other Agreements, Etc. The execution, delivery, and performance of this Agreement by Buyer and all other agreements referenced herein, or ancillary hereto, to which Buyer is a party and the consummation of the transactions contemplated therein by Buyer:

(a) are within its powers, are not in contravention of law or of the terms of its organizational documents, and have been duly authorized by all appropriate action;

 

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(b) except as provided in Buyer’s Schedule 4.2 to this Agreement, do not require any approval or consent of, or filing with, any governmental agency or authority bearing on the validity of this Agreement which is required by law or the regulations of any such agency or authority;

(c) will neither conflict with, nor result in any breach or contravention of, or the creation of any lien, charge or encumbrance under, any indenture, agreement, lease, instrument or understanding to which it is a party or by which it is bound; and

(d) will not violate any statute, law, rule, regulation or any judgment, writ, injunction, decree, or order of any governmental authority.

4.3 Binding Agreements. This Agreement and all agreements to which Buyer will become a party pursuant hereto are and will constitute the valid and legally binding obligations of Buyer and are and will be enforceable against Buyer in accordance with the respective terms hereof and thereof except as such enforcement may be limited by laws affecting creditors’ rights generally and by general equitable principles.

4.4 Available Capital. Buyer has funds in amounts sufficient to pay the Purchase Price to the Seller and will at the Closing have immediately available funds, which are sufficient to pay the cash portion of the Purchase Price.

4.5 Litigation or Proceedings. Other than as set forth on Schedule 4.5 hereto, there is no proceeding pending or, to the Knowledge of Buyer, threatened against Buyer (or any Affiliate thereof) (i) with respect to which there is a reasonable likelihood of a determination which, individually, or in the aggregate, would materially hinder or impair the consummation of the transactions contemplated by this Agreement or (ii) which seeks to enjoin or obtain damages in respect to the consummation of the transactions contemplated by this Agreement.

4.6 Performance. To the Knowledge of Buyer, there are no facts or circumstances that may reasonably be expected adversely to affect in any material respect Buyer’s ability to perform its obligations under this Agreement.

5. COVENANTS OF SELLER PRIOR TO CLOSING. Between the date of this Agreement and the Closing (or earlier termination of this Agreement):

5.1 Information. Seller shall afford Buyer access on a strictly confidential basis (i) to the officers and authorized representatives of Buyer to inspect the Purchased Assets at a time scheduled with Seller’s Representative, (ii) to inspect the books, and records of the Healthcare Facilities and the Responsible Officers of Seller at a time scheduled with Seller’s Representative; and (iii) at reasonable times, to inspect such additional financial and operating data, employee lists with length of service and rates of pay, and other information in Seller’s possession regarding the business, employees and properties of Seller pertaining to the Healthcare Facilities as Buyer may

 

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from time to time reasonably request. Buyer’s right of access and inspection shall be exercised in a strictly confidential manner so as not to interfere with the normal operations of the Healthcare Facilities or Seller, and shall be coordinated by Buyer’s Representative through Seller’s Representative.

5.2 Operations. Seller will:

(a) carry on its business pertaining to the Healthcare 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 Healthcare Facilities;

(b) maintain the Hospital and substantially all the parts thereof in normal operating condition, ordinary wear and tear excepted;

(c) perform its obligations under material agreements relating to or affecting the Healthcare Facilities;

(d) keep in full force and effect present insurance policies or other comparable insurance pertaining to the Healthcare Facilities; and

(e) use commercially reasonable efforts to maintain and preserve its business organizations at the Healthcare Facilities intact, retain its present employees and maintain its relationships with physicians, suppliers, customers, and others having business relations with the Seller.

5.3 Negative Covenants. Seller will not, without the prior written consent of Buyer (no such consent to be unreasonably withheld, delayed or conditioned):

(a) amend in any materially adverse respect or terminate any of the Contracts to be assigned to and assumed by Buyer, or, except in the ordinary course of business of the Healthcare Facilities, enter into any contract or commitment, or incur or agree to incur any liability of or relating to the Healthcare Facilities, except as provided herein or in the ordinary course of business of the Healthcare Facilities and in no event greater than Fifty Thousand Dollars ($50,000) per item and except that any new physician employment agreement shall require Buyer’s consent, no such consent to be unreasonably withheld or delayed;

(b) except in the ordinary course of Business, incur any material liability under any contract or commitment related to the Healthcare Facilities with physicians or other referral sources;

(c) except in the ordinary course of Business, increase benefits arrangements or compensation payable or to become payable, or make any bonus payment to or otherwise enter into one or more bonus agreements (including, without limitation, adopt any employee retention plan or severance plan other than such “stay or retention bonus” for one or more executives of Seller as may reasonably be deemed advisable by Seller) with any Seller employee, except in the ordinary course of business in accordance with existing personnel policies;

 

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(d) sell, assign, lease, or otherwise transfer or dispose of any property, plant, or material equipment pertaining to the Healthcare Facilities except in the normal course of business with comparable replacement of any non-obsolete or obsolescent equipment, so soled, assigned, leased or transferred;

(e) incur costs in respect of construction-in-progress pertaining to the Healthcare Facilities in excess of Fifty Thousand Dollars ($50,000) in the aggregate;

(f) take any material action outside the ordinary course of business of Seller except as required hereunder in connection herewith or required by law or regulation or as provided in any transition services plan mutually agreed upon with Buyer which, in any such case, would reasonably be expected to be materially adverse to the financial condition or operations of the Healthcare Facilities;

(g) sell, transfer, otherwise dispose of any material item of the Purchased Assets or reduce inventory of the Healthcare Facilities, except in any such case in the ordinary course of business;

(h) enter into a collective bargaining agreement;

(i) make charitable contributions on behalf of the Healthcare Facilities other than the provision of indigent and charity care services consistent with historic practices;

(j) without first obtaining Buyer’s consent (which consent may be withheld in Buyer’s sole discretion), convey any rights in the Owned Real Property, or enter into any option, lease, security documents, easement (other than any normal utility easements) or similar agreement, which in any such case grants to any person or entity (other than Buyer) any rights with respect to the Owned Real Property or any part thereof or any interest therein;

(k) change in any material respect accounting, collection or payment practices or policies in respect of the Healthcare Facilities, except as required by law or changes in GAAP; or

(l) enter into any agreement which is reasonably expected by Seller to have a Material Adverse Effect on the Healthcare Facilities.

5.4 Governmental Approvals. Seller shall (i) use commercially reasonable efforts to obtain governmental approvals (or exemptions therefrom), if any, which are necessary or required by Seller to allow Seller to perform its obligations under this Agreement; and (ii) cooperate reasonably with Buyer and its representatives and counsel as reasonably requested by Buyer in connection with Buyer obtaining any governmental approvals, licenses and permits (or exemptions therefrom) which are necessary for Buyer’s consummation of the transactions contemplated herein.

 

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5.5 Additional Financial Information. Within thirty (30) days following the end of each calendar month prior to Closing), Seller shall deliver to Buyer true and complete copies of the internal department financial and operational reports (collectively, the “Interim Statements”) of, or relating to, the Healthcare Facilities for each month then ended, together with a year to date summary. The Interim Statements will be based upon the books and records of Seller and fairly represent in accordance with GAAP in all material respects (except as to the absence of footnotes and subject to audit adjustments) its financial condition and results of operations as of the dates indicated thereon.

5.6 No-Shop Clause. Seller agrees that it will not, at any time following the date of this Agreement and prior to September 1, 2016 or termination of this Agreement: (i) sell, assign or otherwise dispose of, or enter into any binding agreement with any party (other than Buyer) to sell, assign, or otherwise dispose of, all or any significant portion of the Purchased Assets or any ownership interest in Seller or (ii) merge or consolidate the Seller with any other person other than an Affiliate of Seller unless.

5.7 Medical Staff Disclosure. Seller shall deliver to Buyer a written disclosure containing a brief description of any adverse actions by Seller taken against medical staff members or applicants of the Hospital during the past three (3) calendar years which Seller believes may reasonably be expected to result in claims or actions against Seller.

5.8 Surveys. Within five (5) Business Days after the execution of this Agreement by the parties hereto, Seller shall make available to Buyer copies of any existing survey in Seller’s possession of the Owned Real Property to Buyer. Buyer shall be entitled to obtain at Buyer’s expense current as-built surveys of the Owned Real Property (collectively, the “Surveys”).

6. COVENANTS OF BUYER PRIOR TO CLOSING. Between the date of this Agreement and the Closing:

6.1 Governmental Approvals. Buyer shall use commercially reasonable efforts to obtain all governmental approvals, licenses and permits (or exemptions therefrom) that are attainable prior to Closing, which are necessary or required to allow Buyer to perform its obligations under this Agreement and to assist and cooperate with Seller and its representatives and counsel in obtaining all governmental consents, approvals, and licenses which Seller deems necessary or appropriate and in the preparation of any document or other material which may be required by any governmental agency as a predicate to or as a result of the transactions contemplated herein.

6.2 Title Commitment. Buyer shall be responsible, at its expense, for obtaining such title commitment for the Owned Real Property (“Title Commitment”) issued by such title insurance company as shall be acceptable to Buyer and Seller (the “Title Company”). Buyer shall be entitled to make any reasonable objection to any title matters shown on the Title Commitment or Surveys by a written notice of objections delivered to Seller on or before August 15, 2016. Buyer agrees that each of the Permitted Encumbrances listed in Schedule 3.12 shall not be included in any such notice of objections, unless any such Permitted Encumbrance would materially impair the continued use and operation of the Healthcare Facilities in the manner

 

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currently operated by Seller. Seller shall have no obligation to remove or cure title objections, except for the following items, which shall be removed or cured by Seller by or at Closing: (i) any lien for taxes for calendar years prior to 2016 and (ii) any exceptions or encumbrances to title which are created by Seller after the date of this Agreement and not permitted by Section 5.3(j). As to any other exceptions or objections raised by Buyer, Seller shall have ten (10) Business Days from the receipt of Buyer’s notice of objections to have such exceptions or objections removed, or, if acceptable to Buyer, to provide affirmative title insurance protection for such exceptions reasonably satisfactory to Buyer. If Seller fails either to provide for the removal of such exceptions or objections or to obtain affirmative title insurance protection for such exceptions or objections reasonably satisfactory to Buyer in Buyer’s sole discretion within such ten (10) day period, then Buyer may elect to terminate this Agreement by delivering written notice to Seller no later than three (3) business days following such period. Buyer shall have the right at any time on or prior to the Closing Date to waive any objections that it may have made and, thereby, to preserve this Agreement in full force and effect. Buyer shall have the right to object to any adverse change in title (to the extent not arising by, through or under Buyer) which first appears of record after the date of this Agreement and on or prior to the Closing Date which change would materially adversely affect the use of the Healthcare Facilities in and for substantially the use to which such Healthcare Facilities are presently being employed or involve a loss in the fair market value (as reasonably determined by independent MAI appraisal by an appraiser mutually agreed by Seller and Buyer) of the Owned Real Property in excess of $500,000, and if Seller cannot or will not cure or satisfy any such objection (or any objection which Seller has previously undertaken to cure or satisfy) on or prior to the Closing Date, Buyer may either terminate this Agreement or waive such objection.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. Notwithstanding anything herein to the contrary, the obligations of Buyer to consummate the transactions described herein are subject to the fulfillment, on or prior to the Closing Date, of the following conditions precedent unless (but only to the extent) waived in writing by Buyer at the Closing:

7.1 Representations/Warranties. The representations and warranties of Seller contained in this Agreement, considered as a whole, shall be true in all material respects at Closing, when read in light of Schedules, if any, which have been updated in accordance with the provisions of Section 12.1 hereof (except for representations and warranties which by their express provisions are made as of an earlier date, in which case they shall be true and correct in all material respects as of such date), as though such representations and warranties had been made on and as of such Closing Date. Seller’s covenants set forth in this Agreement required to be complied with or performed on or before the Closing Date pursuant to the terms hereof shall have been duly complied with and performed in all material respects or waived by Buyer at or prior to Closing.

7.2 Pre-Closing Confirmations. Buyer, assuming its exercise of due diligence and commercially reasonable efforts to obtain, shall have, at its sole cost and expense, obtained documentation or other evidence reasonably satisfactory to Buyer that Buyer has:

(a) Received approval from Government Entities to the extent any such approval is required to complete the transactions herein contemplated (a list of those material approvals, which to Seller’s Knowledge are required, being attached as Schedule 7.2); and

 

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(b) Obtained the other consents and approvals set forth on Schedule 7.2 (the “Required Consents”) as may be legally or contractually required for the consummation of the transactions described herein if the failure to receive the same would result in a Material Adverse Effect.

7.3 Title Commitment. At the Closing, Buyer, assuming its exercise of due diligence and commercially reasonable efforts to obtain, shall, at its sole cost and expense, have obtained, from the Title Company a commitment to issue an owner’s title policy to Buyer on the Owned Real Property, on the Closing Date, assuming the payment of an amount no greater than its standard rate, its standard ALTA form owner’s policy of title insurance, insuring in the amount of the fair market value (as reasonably determined by independent appraisal) of the Owned Real Property that title to the Owned Real Property is vested of record in Buyer on the Closing Date, subject only to the Permitted Encumbrances that Seller is not required to remove or cure pursuant to Section 6.2, unless Seller otherwise removes or cures any such encumbrance (other than Permitted Encumbrances which Seller is not required to remove) after objection thereto by Buyer pursuant to Section 6.2.

7.4 Actions/Proceedings. No order, investigation, judgment or ruling shall have been issued by any court or governmental agency or body of competent jurisdiction restraining or prohibiting the transactions herein contemplated, and no such governmental agency or body shall have taken any other action, passed any law, or adopted any regulation which prohibits or renders illegal the consummation of the transactions contemplated by this Agreement.

7.5 Adverse Change. Since the date hereof, there shall not have occurred any event, change or occurrence that has had a Material Adverse Effect on Seller, and Seller shall not have suffered any material casualty loss or damage to the Purchased Assets in excess of $500,000 not covered by insurance.

7.6 Insolvency. Seller shall not (i) be in receivership or dissolution, (ii) have made any assignment for the benefit of creditors, (iii) have admitted in writing its inability to pay its debts as they mature, (iv) have been adjudicated a bankrupt, or (v) have filed a petition in voluntary bankruptcy, a petition or answer seeking reorganization, or an arrangement with creditors under the federal bankruptcy law or any other similar law or statute of the United States or any state, nor shall any such petition have been filed against Seller (individually, an “Insolvency Event”, and, collectively, “Insolvency Events”).

7.7 Consents. Buyer, assuming its exercise of due diligence and commercially reasonable efforts, shall have obtained all consents of third parties under the Contracts, if any, or from lessors in respect of the Leased Real Property, which are reasonably necessary to complete effectively the transactions herein contemplated shall have been obtained if the failure to obtain the same would result in a Material Adverse Effect.

7.8 Vesting. Seller shall have transferred and conveyed to Buyer, the Purchased Assets accompanied by such instruments of transfer necessary or appropriate to transfer to and effectively vest in Buyer all right, title, and interest of Seller in and to the Purchased Assets.

 

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7.9 Closing Deliveries. Seller shall have made the deliveries required to be made by it under Section 2.1 hereof.

7.10 Governmental Authorizations. Buyer shall have obtained all material licenses, permits, approvals, certificates of need and authorizations from governmental agencies or governmental bodies that are customarily obtainable prior to Closing and necessary or required for Buyer to complete the transactions contemplated by this Agreement and the operation of the Hospital by Buyer after the Closing if the failure to obtain the same would result in a Material Adverse Effect (a list of those material licenses, permits, approvals and authorizations which are to Seller’s Knowledge required, being attached as Schedule 7.2). Seller shall have obtained all material licenses, permits, approvals and authorizations from governmental agencies or governmental bodies that are necessary or required for completion by Seller of the transactions contemplated by this Agreement. All consents, waivers and estoppels of third parties which are reasonably necessary to complete effectively the transactions herein contemplated shall have been obtained in form and substance reasonably satisfactory to Buyer if the failure to obtain the same would result in a Material Adverse Effect.

8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. Notwithstanding anything herein to the contrary, the obligations of Seller to consummate the transactions described herein are subject to the fulfillment, on or prior to the Closing Date, of the following conditions precedent unless (but only to the extent) waived in writing by Seller at the Closing:

8.1 Representations/Warranties. The representations and warranties of Buyer contained in this Agreement, considered as a whole, shall be true and correct in all material respects as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date (except, in either case, for such representations and warranties which by their express provisions are made as of an earlier date, in which case they shall be true and correct as of such date). Each and all of the terms, covenants, and conditions of this Agreement to be complied with or performed by Buyer on or before the Closing Date pursuant to the terms hereof shall have been duly complied with and performed in all material respects or waived by Seller at or prior to Closing.

8.2 Actions/Proceedings. No order, injunction, judgment or ruling shall have been issued by any court or governmental agency or body of competent jurisdiction restraining or prohibiting the transactions herein contemplated, and no such governmental agency or governmental body shall have taken any action any other action, passed any law, or adopted any regulation which prohibits or renders illegal the consummation of the transactions contemplated by this Agreement.

8.3 Closing Deliveries. Buyer shall have made the deliveries required to be made by it under Section 2.2 hereof.

 

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9. COVENANTS NOT TO COMPETE.

9.1 Seller’s Covenant Not to Compete and Non-Solicitation. Seller hereby covenants that at all times from the Closing Date until the fifth (5th) anniversary of the Closing Date, Seller shall not, and shall cause SunLink and its Affiliates, and each of their successors and assigns, not to, directly or indirectly, (i) except as a consultant or contractor to or of Buyer (or any Affiliate of Buyer), own, lease, manage, operate, Control, or participate in any manner with the ownership, leasing, management, operation or Control of any business which offers services in competition with those services being provided by the Hospital as of the date of this Agreement within a fifty (50) mile radius of the Hospital campus (the “Territory”) without Buyer’s prior written consent (which Buyer may withhold in its discretion) or (ii) directly solicit for employment any Person who at Closing was an employee of Seller; provided, however, that the foregoing shall not prevent the operation by Seller, SunLink or any Affiliate of any pharmacy company, nursing home or home health agency, providing information technology consulting services or assisting or rendering services outside the Territory to any physician on the medical staff of any hospital of SunLink or its subsidiaries or Affiliates who may draw patients from within the Territory to the extent such services are customary and usual services provided to members of such hospital’s medical staff generally.

9.2 Remedies. In the event of a breach of this Section 9, the parties recognize that monetary damages would be inadequate to compensate the injured party and the injured party shall be entitled, without the posting of a bond or similar security, to an injunction restraining such breach. Nothing contained herein shall be construed as prohibiting the parties from pursuing any other remedy available to them for such breach or threatened breach. All parties hereto hereby acknowledge the necessity of protection against the competition of the other party and its Affiliates and that the nature and scope of such protection has been carefully considered by the parties. The parties further acknowledge and agree that the covenants and provisions of this Section 9 form part of the consideration under this Agreement and are among the inducements for the parties entering into and consummating the transactions contemplated herein. The period provided and the area covered are expressly represented and agreed to be fair, reasonable and necessary. The consideration provided for herein is deemed to be sufficient and adequate to compensate for agreeing to the restrictions contained in this Section 9. If, however, any court determines that the foregoing restrictions are not reasonable, such restrictions shall be modified, rewritten or interpreted to include as much of their nature and scope as will render them enforceable. The party who substantially prevails in an action to enforce this Section 9, shall be entitled to an award of costs and attorneys’ fees to be paid by the non-prevailing party. The Parties agree that in construing this Section 9 in an enforcement action, the court should seek to comport with the reasonable intent and expectations of the Parties and in favor of providing reasonable protection of all legitimate business interest of the Buyer; and further if a court finds that a contractually specified restraint of Section 9 is overly broad, restrictive, or otherwise violates laws applicable to the scope of the restrictive covenant, then the Parties agree that the court may modify the restraint provision and grant only the relief reasonably necessary to protect such interest, or interests, and to achieve the original intent of the Parties to the extent possible.

 

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10. ADDITIONAL AGREEMENTS.

10.1 Termination Prior to Closing. Notwithstanding anything herein to the contrary, this Agreement may be terminated at any time upon the occurrence of any one of the following: (i) on or prior to the Closing Date by mutual consent of Seller and Buyer; (ii) on the Closing Date by Buyer, if satisfaction of any material condition to Buyer’s obligations under Section 7 of this Agreement becomes impossible notwithstanding Buyer’s exercise of its due diligence and commercially reasonable efforts (unless the failure results in whole or in part from Buyer’s breaching any representation, warranty or covenant herein) and such condition shall not have been waived by Seller; (iii) on or prior to the Closing Date by Seller, if satisfaction of any material condition to Seller’s obligations under Section 8 of this Agreement becomes impossible with the exercise of its due diligence and commercially reasonable efforts (unless the failure results from Seller’s breaching any material representation, warranty, or covenant herein) and such condition shall not have been waived by Buyer; (iv) by Buyer if a Material Adverse Effect shall have occurred to the Healthcare Facilities which shall not have been remedied or cease to exist, in either case, within ten (10) Business Days after the occurrence thereof, or (v) by Seller if the Closing shall not have taken place for any reason other than solely Seller’s failure to perform its material obligations under this Agreement by September 30, 2016 unless extended by mutual agreement of Buyer and Seller in which event Seller shall be entitled to be paid the Escrow Amount (it being agreed by the parties that it would otherwise be difficult or impossible to determine Seller’s damages in such event).

10.2 Post Closing Access to Information. Seller and Buyer acknowledge that subsequent to Closing each party may need access to information or documents in the control or possession of the other party for the purposes of concluding the transactions herein contemplated, audits, compliance with governmental requirements and regulations, and the prosecution or defense of third party claims. Accordingly, Seller and Buyer agree that for a period of six (6) years after Closing each will make reasonably available to the other’s agents, independent auditors, counsel, and/or governmental agencies upon written request and at the expense of the requesting party such documents and information as may be available relating to Seller or the Purchased Assets for periods prior and subsequent to Closing to the extent necessary to facilitate concluding the transactions herein contemplated, audits, compliance with governmental requirements and regulations, and the prosecution or defense of claims.

10.3 Preservation and Access to Records After the Closing.

(a) After the Closing, Buyer shall, in the ordinary course of business and to the extent as required by law, keep and preserve in their original form the medical and billing records of patients in the Healthcare Facilities as of the Closing. For purposes of this Agreement, the term “records” includes all documents, electronic data and other compilations of information in any form. Buyer acknowledges that as a result of entering into this Agreement and operating the Healthcare Facilities it will gain access to patient and other information which is subject to rules and regulations regarding confidentiality. Buyer agrees to abide by any such rules and regulations relating to the confidential information it acquires. Buyer agrees to maintain the patient records of Seller which are located at the Healthcare Facilities at the Closing or at the Healthcare Facilities after Closing in accordance with applicable law (including, if applicable, Section 1861(v)(i)(I) of the Social Security Act (42 U.S.C. §1395(v)(l)(i)), the privacy and security requirements of the

 

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Administrative Simplification subtitle of the HIPAA and applicable state requirements with respect to medical privacy and requirements of relevant insurance carriers, all in a manner consistent with the maintenance of patient records generated at the Healthcare Facilities after Closing.

(b) Upon reasonable notice, during normal business hours, at no out-of-pocket cost or expense to Buyer, Buyer will afford to the representatives of Seller access to and copies of the patient medical and billing records of the Healthcare Facilities to the extent they relate to any services performed or bills rendered during any period prior to Closing for reasonable business purposes. Upon reasonable notice, during normal business hours and at no out-of-pocket cost or expense to Buyer, Buyer shall also make its officers and employees available to Seller at reasonable times and places after the Closing for the foregoing purposes. In addition, Seller shall be entitled, at Seller’s sole risk, to remove from the Healthcare Facilities copies of any such patient and/or billing records, but only for purposes of billing or pending litigation involving a patient to whom such records refer upon Buyer’s receipt of any required consents and authorizations. Any patient record so removed from the Healthcare Facilities shall be promptly returned to Buyer following its use by Seller. Any access to the Healthcare Facilities, their records or Buyer’s personnel granted to Seller in this Agreement shall be upon the condition that any such access not materially interfere with the normal business operations of Buyer.

10.4 Tax and Medicare Effect. None of the parties (nor such parties’ counsel or accountants) has made or is making any representations to any other party (nor such party’s counsel or accountants) concerning any of the tax or reimbursement effects of the transactions provided for in this Agreement as each party hereto represents that each has obtained, or may obtain, independent advice with respect to tax and reimbursement matters and upon which it, if so obtained, has solely relied.

10.5 Reproduction of Documents. This Agreement and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) the documents delivered at the Closing, and (c) financial statements, certificates and other information previously or hereafter furnished to Seller or to Buyer, may, subject to the provisions of Section 12.9 hereof, be reproduced by Seller and by Buyer by any photographic, photostatic or other similar process and Seller and Buyer may destroy any original documents so reproduced. Seller and Buyer agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial, arbitral or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Seller or Buyer in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

10.6 Cooperation on Tax Matters. Following the Closing, the parties shall cooperate fully with each other and shall make available to the other, as reasonably requested and at the expense of the requesting party, and to any taxing authority, all information, records or documents relating to tax liabilities or potential tax liabilities of Seller for all periods on or prior to the Closing and any information which may be relevant to determining the amount payable under this Agreement, and shall preserve all such information, records and documents (to the extent a part of the Purchased Assets delivered to Buyer at Closing) at least until the expiration of any applicable statute of limitations or extensions thereof.

 

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10.7 Patient Billings.

(a) Buyer Receivables. Buyer has purchased the Accounts Receivable and shall also be entitled to the accounts receivable which arise from services provided to patients of the Healthcare Facilities after the Closing Date (the “Buyer Receivables”). The Buyer Receivables shall include, without limitation amounts prepaid by patients to compensate for hospital days and collectible receivables attributable to services rendered on or after the Closing Date to patients of the Healthcare Facilities who were patients of the Healthcare Facilities prior to the Closing and patients of the Healthcare Facilities after the Closing (the “Straddle Patients”).

(b) Seller Receivables. To compensate Seller for services rendered and medicine, drugs and supplies provided by Seller prior to the Closing Date with respect to the Straddle Patients, the following shall apply:

(i) Cut-off Billings. To the extent that a payor will accept a cut-off billing, Seller shall prepare cut-off billings for all Straddle Patients as of the date immediately preceding the Closing Date. All payments which are received related to the cut-off billings will be property of Seller.

(ii) Cut-off Billings Not Accepted. If the payor of any Straddle Patient cannot or does not for any reason accept cut-off billings, then Buyer, to the extent Seller or Buyer has an agreement with such payor, shall submit billings to such payor for the entire portion of such Straddle Patient’s stay. To the extent applicable, Buyer shall provide to Seller a copy of all remittance advices or other documentation related thereto within fifteen (15) days after submitting claims for Straddle Patients to payors. To the extent Buyer or Seller is entitled to receive funds from such payor, Buyer or Seller, as the case may be, shall remit to the other within fifteen (15) days after each receipt of payment with respect to such billing the amount determined owing to it computed by:

 

(x)

multiplying the total payment received for such Straddle Patient by a fraction, (A) to determine any amounts due Seller, the numerator of which shall be the number of days such Straddle Patient was a patient on or prior to the Closing Date, (B) to determine any amounts due Buyer, the numerator of which shall be the number of days such Straddle Patient was a patient after the Closing Date, and (C) in either case of (A) or (B), the denominator of which shall be the total number of days such Straddle Patient was a patient, both before and after the Closing Date; and

 

(y)

and subtracting any deposits or co-payments made by the applicable patient to the Seller prior to Closing in the case of any amounts otherwise owing to Seller, or to Buyer after the Closing in the case of any amounts otherwise owing to Buyer, which were not applied to its respective cut-off billings.

 

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To the extent that Buyer or Seller does not have an agreement with such payor, then Buyer shall within fifteen (15) days after the date of discharge of any Straddle Patient, provide Seller with such assignments and documentation as may be necessary, including but not limited to remittance advices or other documentation related thereto, for Seller to submit billings to such payor for the entire portion of such Straddle Patient’s stay. Seller shall then remit to Buyer within fifteen (15) days after each receipt of payment with respect to such billing the amount determined by multiplying the total payment received for such Straddle Patient by a fraction, the numerator of which shall be the number of days such Straddle Patient was a patient following the Closing Date, and the denominator of which shall be the total number of days such Straddle Patient was a patient, both before and after the Closing Date.

10.8 Cost Reports. Within the time required by statute and regulation, Seller will prepare and file with respect to the Healthcare Facilities all facility and home office cost reports relating to periods ending prior to the Closing Date, including terminating cost reports for Medicare, Medicaid and other applicable governmental and private health benefit plans. Seller will provide copies of all such cost reports to Buyer. All amounts due to, or owed by, Seller for any such cost report settlements or adjustments will be for the account of Seller. Seller shall, within ten (10) Business Days after receipt of Buyer’s written request therefor, reimburse Buyer for any cost report adjustments or other Medicare, Medicaid or other governmental program or third party payor adjustments withheld from Buyer after the Closing Date consisting of overpayments, adjustments or other amounts owed by Seller for any period prior to the Closing Date. Buyer shall, within ten (10) Business Days after receipt of Seller’s written request therefor, reimburse Seller for any cost report adjustments or other Medicare, Medicaid or other governmental program or third party payor adjustments or payments paid to Buyer after the Closing Date consisting of underpayments, adjustments or other amounts owed to Seller for any period prior to the Closing Date.

10.9 Employee Matters.

(a) After the Closing Date, Buyer shall continue the employment of substantially all the active employees of the Healthcare Facilities in good standing as of the Closing Date, subject to Buyer’s normal employment qualifications for employment, in positions and at compensation levels reasonably consistent with those being provided by Seller immediately prior to the Closing Date (“Retained Employees”). Nothing herein shall be deemed to create or grant to any such employees of Seller third party beneficiary rights or claims of any kind or nature. Notwithstanding anything to the contrary in this Agreement, Buyer and Seller agree that Buyer shall continue employment of at least the minimum number of Seller’s employees as of the Closing, and upon such terms of employment, as necessary so as not to cause Seller to violate the WARN Act (defined below) in connection with the transition of the ownership of Seller from Seller to Buyer at the Closing. Buyer shall (i) promptly upon Closing place all Retained Employees under Buyer’s employee benefit plans and (ii) continue to recognize the Retained Employees’ accrued seniority for purposes of Buyer’s employee benefit plans to the extent allowed or authorized by terms, qualifications and limitations of said plans, and to the extent that such recognition does not require retroactive funding by Buyer for time or seniority accumulated by an employee of Seller prior to Closing.

 

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(b) Within the period of ninety (90) days before the Closing, Seller shall not, and within the ninety (90) days following the Closing, Buyer shall not: (1) permanently or temporarily shut down a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss during any thirty (30) day period at the single site of employment for fifty (50) or more employees, excluding any part-time employees; or (2) have a mass layoff at a single site of employment of at least thirty-three percent (33%) of the active employees and at least fifty (50) employees, excluding part-time employees. The terms “single site of employment,” “operating unit,” “employment loss” and “mass layoff” shall be defined as in the WARN Act. With respect to terminations of employees following the Closing, Buyer shall be responsible for any notification required under the WARN Act. In respect of the employees employed by Buyer, it shall provide such employees with employee benefits consistent with the benefits generally offered to similarly-situated employees of Affiliates of Buyer in the same geographic area as the Healthcare Facilities.

(c) Buyer will credit each eligible Retained Employee and their eligible dependents under applicable Buyer employee welfare benefit plans with any deductibles, co-payments or other cost-sharing amounts attributable to the Retained Employee or eligible dependent under the Seller’s employee welfare benefit plans, as the case may be, following receipt by Buyer of reasonable evidence of any such deductibles, co-payments and/or other cost-sharing amounts.

10.10 Use of Hospital Forms, Policies and Records. For a period of sixty (60) days following the Closing Date, Seller agrees to permit Buyer to continue to use all electronic and printed forms and policies (the “Hospital Forms”) historically used by Seller in connection with the operation of the Healthcare Facilities, regardless of whether such forms contain Seller’s trade names, trademarks and/or service marks.

10.11 Misdirected Payments, Etc. Seller covenants and agrees and Buyer covenants and agrees, to remit to the other, with reasonable promptness, any payments received, which payments are on or in respect of accounts or notes receivable owned by (or are otherwise payable to) the other. In addition, and without limitation, in the event of a determination by any governmental or third-party payor that payments to Seller prior to Closing resulted in an overpayment or other determination that funds previously paid by any program or plan to Seller must be repaid, Seller shall be responsible for repayment of said monies (or defense of such actions) if such overpayment or other repayment determination was for services rendered prior to Closing and Buyer shall be responsible for repayment of said monies (or defense of such actions) if such overpayment or other repayment determination was for services rendered by Buyer after Closing. In the event that, following Closing, Buyer or Seller suffers any offsets against reimbursement under any third-party payor or reimbursement programs due to it, consisting of amounts owing under any such programs by the other party or any of its Affiliates, the party owing such amounts shall promptly upon demand from the party suffering such offset pay to the party suffering such offset the amounts so offset.

 

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11. INDEMNIFICATION.

11.1 Indemnification by Buyer. Buyer shall defend, indemnify and hold harmless Seller and its Affiliates, and its and their respective officers and employees (collectively, “Seller Indemnified Parties”), from and against any and all losses, liabilities, damages, costs (including, without limitation, court costs) and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) (individually, a “Loss” and collectively, “Losses”) that such Seller Indemnified Party incurs as a result of (i) any material misrepresentation or breach of warranty by Buyer under this Agreement, (ii) any breach by Buyer of, or any failure by Buyer to perform, any covenant or agreement of, or required to be performed by, Buyer under this Agreement, unless waived by Seller at Closing, or (iii) any claim against Seller in respect of any failure of Buyer to performance the Assumed Liabilities, or (iv) any claim made against Seller by a third party associated with Buyer’s use of the Hospital Forms.

11.2 Indemnification by Seller. Seller shall defend, indemnify and hold harmless Buyer and its Affiliates, and its and their respective officers and employees (collectively, “Buyer Indemnified Parties”), from and against any and all Losses that such Buyer Indemnified Party incurs as a result of (i) any material misrepresentation or breach of warranty by Seller under this Agreement, (ii) any breach by Seller of, or any failure by Seller to perform, any covenant or agreement of, or required to be performed by, Seller under this Agreement, unless waived by Buyer at Closing, or (iii) any claim against Buyer in respect of any failure of Seller to perform the Retained Liabilities.

11.3 Notice and Control of Litigation. If any claim or liability is asserted in writing by a third party against a party entitled to indemnification under this Section 11 (the “Indemnified Party”) which would give rise to a claim under this Section 11, the Indemnified Party shall notify the Person giving the indemnity (the “Indemnifying Party”) in writing of the same within ten (10) days of receipt of such written assertion of a claim or liability. The Indemnifying Party shall have the right to assume the defense of any such claim and control such defense, settlement, and prosecution of any litigation with counsel reasonably satisfactory to the Indemnified Party. If the Indemnifying Party, within ten (10) days after notice of such claim, fails to agree in writing to defend such claim and actually assume the defense thereof, the Indemnified Party shall (upon further notice to the Indemnifying Party) have the right to undertake the defense, compromise, or settlement of such claim on behalf of and for the account and at the risk of the Indemnifying Party, subject to the right of the Indemnifying Party to assume the defense of such claim at any time prior to settlement, compromise, or final determination thereof. Anything in this Section 11.3 notwithstanding, the Indemnifying Party shall not, without the written consent of the Indemnified Party, settle or compromise any claim or consent to the entry of any judgment which does not include as an unconditional term thereof the giving by the claimant to the Indemnified Party of a release from all liability in respect of such claim. The foregoing rights and agreements shall be limited to the extent of any requirement of any third-party insurer or indemnitor. All parties agree to cooperate fully as necessary in the defense of such matters. Should the Indemnified Party fail to notify the Indemnifying Party in the time required above, the indemnity with respect to the subject matter of the required notice shall be limited to the damages that would have resulted absent the Indemnified Party’s failure to notify the Indemnifying Party in the time required above after taking into account such actions as could have been taken by the Indemnifying Party had it received timely notice from the Indemnified Party.

 

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11.4 Notice of Claim. If an Indemnified Party becomes aware of any breach of the representations or warranties of the Indemnifying Party hereunder or any other basis for indemnification under this Section 11, the Indemnified Party shall notify the Indemnifying Party in writing of the same as promptly as possible but in any event within ten (10) days after becoming aware of such breach or claim, specifying in detail the circumstances and facts which give rise to a claim under this Section 11. Should the Indemnified Party fail to notify the Indemnifying Party within the time frame required above, the indemnity with respect to the subject matter of the required notice shall be limited to the damages that would have nonetheless resulted absent the Indemnified Party’s failure to notify the Indemnifying Party in the time required above after taking into account such actions as could have been taken by the Indemnifying Party had it received timely notice from the Indemnified Party.

11.5 Claims Period. The Claims Periods hereunder shall begin on the date hereof and terminate as follows: (i) with respect to Buyer Losses arising under Section 11.2, the Claims Period shall continue until the first (1st) anniversary of the Closing Date and (ii) with respect to Seller Losses, the Claims Period shall until the first (1st) anniversary of the Closing Date; Notwithstanding the foregoing, if, prior to the close of business on the last day of the applicable Claims Period, an Indemnifying Party shall have been properly notified of a claim for indemnity hereunder and such claim shall not have been finally resolved or disposed of at the such date, such claim shall continue to survive and shall remain a basis for indemnity hereunder until such claim is finally resolved or disposed of in accordance with the terms hereof. Further notwithstanding the foregoing, the Claims Period with respect to Seller’s indemnity obligations (a) under the following Sections, shall survive until the second (2nd) anniversary of the Closing Date: Section 11.2(i) with respect to breach of Sections 3.9, 3.15 and 11.2(iv), (b) arising from Seller’s common law fraud, willful misconduct or criminal activity, shall survive the Closing for the applicable statute of limitations, and (c) under the following Sections, shall survive the Closing for the applicable statute of limitations: Section 11.2(i) with respect to breach of Sections 3.1, 3.2, 3.3, and 3.17, Section 11.2(ii) and Section 11.2(iii).

11.6 Liability Limits. Notwithstanding anything to the contrary set forth in this Agreement:

(a) Buyer Indemnified Parties shall not make a claim against the Seller for indemnification under this Agreement for Buyer Losses unless and until the aggregate amount of such Buyer Losses exceeds Two Hundred Fifty Thousand Dollars ($250,000) (the “Threshold”) in which event Buyer Indemnified Parties may claim indemnification for all Buyer Losses, in excess of One Hundred Twenty Thousand Dollars ($120,000);

(b) the maximum aggregate liability of the Seller for indemnification or any other claim under this Agreement or in connection with the transactions contemplated thereby shall not exceed One Million Dollars ($1,000,000) (the “Cap”);

(c) Buyer’s remedies for monetary damages in respect of any Loss on account of the breach by Seller of any representation, warranty or covenant contained in this Agreement or any deed, bill of sale or other agreement entered into connection herewith shall be the indemnification provided by Seller to Buyer pursuant to this Section 11; and

 

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(d) in no event shall either party be liable hereunder or in connection with the transactions contemplated hereby for any consequential, special, exemplary or punitive damages. Further notwithstanding anything herein to the contrary, neither the Threshold nor the Cap shall apply to any Indemnified Party’s claim for indemnity against Seller or Buyer arising from any common law fraud by Seller or Buyer.

11.7 Effect of Taxes, Insurance and Other Sources of Reimbursement. The amount of any Losses for which indemnification is provided under this Section 11, shall be reduced (a) to take account of any net tax benefit realized arising from the incurrence or payment of any such Loss, (b) by the insurance proceeds recoverable with respect to any such Loss, and (c) by any other amount recoverable from third parties by the Indemnified Party (or its Affiliates) with respect to any Loss. If any Indemnified Party shall have received any indemnification payment pursuant to this Section 11 with respect to any Loss, such Indemnified Party shall administratively file in good faith claims with any insurers to recover reimbursement for any such Losses under any applicable insurance policy and shall pursue such recovery in good faith. If any Indemnified Party shall have received any payment pursuant to this Section 11 with respect to any Loss and has or shall subsequently have received insurance proceeds or other amounts with respect to such Loss, then such Indemnified Party shall promptly pay over to the Indemnifying Party the amount so recovered (after deducting the amount of any reasonable out-of-pocket expenses incurred by it in procuring such recovery), but not in excess of the amount previously so paid by the Indemnifying Party. If any Indemnified Party shall have received any payment pursuant to this Section 11 with respect to any Loss and has or shall subsequently have a claim against a third party other than any insurer, such Indemnified Party shall, upon request and at the option of the Indemnifying Party either (i) pursue such claim in good faith by adequate proceedings and promptly pay over to the Indemnifying Party the amount so recovered (after deducting the amount of any reasonable out-of-pocket expenses incurred by it in procuring such recovery) including reasonable attorneys fees and disbursements or (ii) assign such claim to the Indemnifying Party and cooperate with and permit the Indemnifying Party to pursue such claim in the Indemnified Party’s name, place and stead.

12. MISCELLANEOUS.

12.1 Schedules and Other Instruments. Each Schedule and Exhibit to this Agreement shall be considered a part hereof as if set forth herein in full. From the date hereof until the Closing Date, Seller may update the Seller’s Schedules and or Buyer may update Buyer’s Schedules, subject to the other party’s approval rights described below. Any other provision herein to the contrary notwithstanding, the Seller’s Schedules and all other Schedules, Exhibits, or other instruments provided for herein and not delivered at the time of execution of this Agreement or which are incomplete at the time of execution of this Agreement shall be delivered or completed within ten (10) Business Days prior to the Closing. It shall be deemed a condition precedent to the obligations of the parties hereto that any material updating of Schedules, Exhibits, and/or related documents, instruments, books, and records shall meet with the good faith approval of the non-updating party, no such approval to be unreasonably withheld, delayed or conditioned.

12.2 Additional Assurances. The provisions of this Agreement shall be self operative and shall not require further agreement by the parties except as may be herein specifically provided

 

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to the contrary; provided, however, at the request of a party, the other party or parties shall execute such additional instruments and take such additional actions as the requesting party may reasonably deem necessary to effectuate this Agreement. In addition and from time to time after Closing, Seller shall execute and deliver such other instruments of conveyance and transfer, and take such other actions as Buyer reasonably may request, more effectively to convey and transfer full right, title, and interest to, vest the Purchased Assets in Buyer. Additionally, each party shall cooperate and use its best efforts to have its present directors, officers, and employees cooperate with the other party on and after Closing in furnishing information, evidence, testimony, and other assistance in connection with any action, proceeding, arrangement, or dispute of any nature by or against any third party with respect to matters pertaining to the items subject to this Agreement.

12.3 Consents, Approvals and Discretion. Except as herein expressly provided to the contrary, whenever this Agreement requires any consent or approval to be given by a party, or whenever a party must or may exercise discretion, the parties agree that such consent or approval shall not be unreasonably withheld or delayed and such discretion shall be exercised reasonably and in good faith.

12.4 Legal Fees and Costs. In the event a party elects to incur legal and other expenses to enforce any provision of this Agreement by judicial proceedings, the substantially prevailing party will be entitled to recover its reasonable out-of-pocket expenses of such enforcement, including, without limitation, reasonable attorneys’ fees and costs in addition to any other relief to which such party shall be entitled.

12.5 Choice of Law. This Agreement shall be construed in accordance with the laws of the State of Georgia. By execution of this Agreement, the parties acknowledge and agree that any dispute or claim either party has against the other arising out of or in any way connected with the rights, obligations, or responsibilities contained in the Agreement shall, to the extent such dispute or claim is not resolved through non-judicial means (such as business negotiations or alternative dispute resolution), be litigated in the Superior Court of Cobb County, Georgia or in a U.S. District Court in the State of Georgia, and, accordingly, the Buyer and Seller hereby freely and voluntarily consent to the jurisdiction and venue of the Superior Court of Cobb County, Georgia and of the U.S. District Court for the Northern District of Georgia, either as proper forum for resolution of any dispute or claim between the parties.

12.6 Benefit/Assignment. Subject to provisions herein to the contrary, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors, and assigns. No party may assign this Agreement without the prior written consent of the other parties, which consent shall not be unreasonably withheld.

12.7 No Brokerage. Subject to Section 3.28, Buyer and Seller each represent and warrant to the other that it has not engaged a broker, financial advisor or finder in connection with the transactions described herein. Each party agrees to be solely liable for and obligated to satisfy and discharge all loss, cost, damage, or expense arising out of claims for fees or commissions of any brokers, financial advisors or finders employed or alleged to have been employed by such party.

 

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12.8 Cost of Transaction. Whether or not the transactions contemplated hereby shall be consummated and except as set forth herein, the parties agree that, except as set forth in Sections 9, 11.1, 11.2, and 12.4: (i) Seller shall pay the fees, expenses, and disbursements of Seller and its agents, representatives, consultants, accountants and legal counsel incurred in connection with the subject matter hereof and any amendments hereto and (ii) Buyer shall pay the fees, expenses, and disbursements of Buyer and its agents, representatives, consultants, accountants and legal counsel incurred in connection with the subject matter hereof and any amendments hereto.

12.9 Confidentiality. It is understood by the parties hereto that the information, documents, and instruments delivered to Buyer by Seller and its agents and the information, documents, and instruments delivered to Seller by Buyer and its agents are of a confidential and proprietary nature. Each of the parties hereto agrees that prior to the Closing it will maintain the confidentiality of all such confidential information, documents, or instruments delivered to it by each of the other parties hereto or their agents in connection with the negotiation of this Agreement or in compliance with the terms, conditions, and covenants hereof and will only disclose such information, documents, and instruments to its duly authorized officers, members, directors, representatives, and agents (including consultants, attorneys, and accountants of each party) and applicable governmental authorities in connection with any required notification or application for approval or exemption therefrom. Each of the parties hereto further agrees that if the transactions contemplated hereby are not consummated, it will return all such documents and instruments and all copies thereof in its possession or under its Control to the other parties to this Agreement and keep their contents and other confidential information provided to it by the other party strictly confidential and not thereafter use such information for any purpose, except in any such case as may otherwise be required by law or in connection with litigation. Each of the parties hereto recognizes that any breach of this Section 12.9 would result in immediate and irreparable harm to the other party to this Agreement and its Affiliates 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 12.9, however, shall prohibit the use of such confidential information, documents, or information for such governmental filings as in the opinion of Seller’s counsel or Buyer’s counsel are required by law or governmental regulations or are otherwise required to be disclosed pursuant to applicable state law. With respect to the period prior to Closing, prior to any such disclosure by Buyer of the information, documents, and instruments delivered to Buyer by Seller and its agents, Buyer shall provide notice to Seller and cooperate reasonably and in good faith with Seller at Buyer’s expense to protect the confidentiality of such information to the fullest extent permitted by law. Nothing in this Agreement shall invalidate or affect the obligations of Buyer under any confidentiality or non-disclosure agreement between the parties.

12.10 Public Announcements. Seller and Buyer mutually agree that no party hereto shall release, publish, or otherwise make available to the public in any manner whatsoever any information or announcement regarding the transactions herein contemplated without the prior written consent of Seller’s and Buyer’s Representatives, except for information and filings reasonably necessary to be directed to governmental agencies to fully and lawfully effect the transactions herein contemplated or required in connection with securities and other laws. Further, the initial public announcements regarding the transaction herein contemplated shall be by joint announcement of Seller and Buyer.

 

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12.11 Waiver of Breach. The waiver by any party of a breach or violation of any provision of this Agreement shall not operate as, or be construed to constitute, a waiver of any subsequent breach of the same or any other provision hereof.

12.12 Notice. Any notice, demand, or communication required, permitted, or desired to be given hereunder shall be deemed effectively given when personally delivered, when received by receipted overnight delivery, or five (5) days after being deposited in the United States mail, with postage prepaid thereon, certified or registered mail, return receipt requested, addressed as follows:

 

Seller:		Southern Health Corporation of Dahlonega, Inc.
		c/o SunLink Health Systems, Inc.
		900 Circle 75 Parkway, Suite 1120
		Atlanta, GA 30339
		Attn.: Robert M. Thornton, Jr.
		Fax: 770-933-7010
With a copy to:		Smith, Gambrell & Russell, LLP
		Suite 3100 Promenade
		1230 Peachtree Street, N.E.
		Atlanta, Georgia 30309-3592
		Attn.: Howard E. Turner
		Fax: 404-685-6894
Buyer:		Durall Capital Holdings, LLC
With a copy to:		David Di Pietro, Esq.
		David Di Pietro & Associates
		Tower 101, 101 NE 3rd Ave.
		Suite 1410
		Ft. Lauderdale, FL 33301
		Fax: 954.337.3824

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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12.13 Severability. In the event any provision of this Agreement is held to be invalid, illegal or unenforceable for any reason and in any respect, such invalidity, illegality, or unenforceability shall in no event affect, prejudice, or disturb the validity of the remainder of this Agreement, which shall be and remain in full force and effect, enforceable in accordance with its terms.

12.14 Gender and Number. Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.

12.15 Divisions and Headings. The divisions of this Agreement into sections and subsections and the use of captions and headings in connection therewith are solely for convenience and shall have no legal effect in construing the provisions of this Agreement.

12.16 Survival. All of the representations, warranties and post closing obligations made by the parties in this Agreement or pursuant hereto in any certificate, instrument, or document shall survive the consummation of the transactions described herein, for a period of twenty-four months from Closing, except that representations and warranties of Seller under Sections 3.1, 3.2 and 3.3 shall survive the Closing for the applicable statute of limitations and representations and warranties under Section 3.9 shall survive for a period of twenty-four (24) months from Closing. All claims hereunder by Buyer or Seller post Closing shall be subject to and limited by the provisions of Section 11.

12.17 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE INCLUDING, BUT NOT LIMITED TO, THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN, COMMON LAW OR ANY APPLICABLE STATUTE OR REGULATIONS. EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY.

12.18 Accounting Date. The transactions contemplated hereby shall be effective for accounting purposes as of 12:01 a.m. on the Closing Date, unless otherwise provided herein or agreed in writing by Seller and Buyer.

12.19 No Inferences. Inasmuch as this Agreement is the result of negotiations between sophisticated parties of equal bargaining power represented by counsel, no inference in favor of, or against, either party shall be drawn from the fact that any portion of this Agreement has been drafted by or on behalf of such party.

12.20 No Third Party Beneficiaries. The terms and provisions of this Agreement are intended solely for the benefit of Buyer and Seller and their respective permitted successors or assigns, and it is not the intention of the parties to confer, and this Agreement shall not confer, third-party beneficiary rights upon any other person.

 

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12.21 Enforcement of Agreement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

12.22 Force Majeure. Whenever a period of time is prescribed herein for action to be taken by either Seller or Buyer, except for any obligation for the payment of money, neither shall be liable or responsible for, and there shall be excluded from the computation for any period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations or restrictions, or any other cause of any kind whatsoever which is beyond the reasonable control of either Seller or Buyer, as the case may be.

12.23 Entire Agreement/Amendment. This Agreement supersedes all previous contracts or understandings, including any offers, letters of intent, proposals or letters of understanding, and constitutes the entire agreement of whatsoever kind or nature existing between or among the parties respecting the within subject matter, and no party shall be entitled to benefits other than those specified herein. As between or among the parties, no oral statements or prior written material not specifically incorporated herein shall be of any force and effect. The parties specifically acknowledge that in entering into and executing this Agreement, the parties rely solely upon the representations and agreements contained in this Agreement and no others. All prior representations or agreements, whether written or verbal, not expressly incorporated herein are superseded, and no changes in or additions to this Agreement shall be recognized unless and until made in writing and signed by all parties hereto. This Agreement may be executed in two or more counterparts, each and all of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

12.24 Risk of Loss. Notwithstanding any other provision hereof to the contrary, the risk of loss in respect of casualty to the Purchased Assets shall be borne by Seller prior to the time of Closing and by Buyer thereafter.

12.25 Liquidated Damages. With respect to the liquidated damages specified in Section 1.9, the Seller and Buyer (i) agree that the injury caused by the failure of Buyer to close as contemplated by this Agreement would be difficult or impossible of accurate estimation, (ii) intend to provide for damages rather than a penalty and (iii) agree that the sum stipulated as liquidated damages in such section is a reasonable pre-estimate of the probable loss.

12.26 Construction. Unless the context of this Agreement otherwise clearly requires, (a) references to the plural include the singular, and references to the singular include the plural, (b) references to any gender include the other genders, (c) the words “include,” “includes” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation”, (d) the term “or” has the inclusive meaning represented by the phrase

 

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“and/or”, (e) the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, (f) the terms “day” and “days” mean and refer to calendar day(s) and (g) the terms “year” and “years” mean and refer to calendar year(s). Unless otherwise set forth herein, references in this Agreement to (i) any document, instrument or agreement (including this Agreement) (A) includes and incorporates all exhibits, schedules and other attachments thereto, (B) includes all documents, instruments or agreements issued or executed in replacement thereof and (C) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to time in accordance with its terms and in effect at any given time, and (ii) a particular law means such law as amended, modified, supplemented or succeeded, from time to time and in effect at any given time except in the case of representations and warranties, in which event law means such law as in force and effect at the time such representation or warranty is made. All Section, Exhibit and Schedule references herein are to Sections, Exhibits and Schedules of this Agreement, unless otherwise specified. This Agreement shall not be construed as if prepared by one of the parties, but rather according to its fair meaning as a whole, as if all parties had prepared it.

12.27 Waiver of Bulk Sales Law Compliance. Buyer hereby waives compliance by Seller with the requirements, if any, of Article 6 of the Uniform Commercial Code as in force in any state in which the Purchased Assets are located and all other similar laws applicable to bulk sales and transfers.

[Remainder of Page Intentionally Left Blank]

 

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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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EXHIBIT A

Definitions

Definitions. The following terms, as used in this Agreement, have the following meanings:

“Accounts Payable” means the current accounts payable of Seller arising from, among other things, the purchase of goods or services which relate to the Healthcare Facilities (exclusive of income tax and related amounts) as determined as of the Closing Date from the books and records of Seller.

“Accrued Expenses” means current liabilities for expenses accrued in accordance with GAAP and Seller’s normal accounting practices consistently applied, including for payroll and PTO (but exclusive of income taxes and related accounts) as determined as of the Closing Date from the books and records of Seller.

“Affiliate” of any specified Person means any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person.

“Business Day” means any day except Saturday, Sunday or any day on which banks are generally not open for business in Atlanta, Georgia.

“Buyer’s Knowledge” or “Knowledge of Buyer” means the actual knowledge (exclusive of any knowledge imputed to) of any officer, manager, member, director of Buyer, as such knowledge may exist as of the date hereof and as of the Closing Date.

“Buyer’s Representative” means Aaron Durall or his delegate pursuant to notice made in writing to Seller.

“Claims Period” means the period during which a claim for indemnification may be asserted hereunder by an Indemnified Party.

“Control” means, when used with respect to any specified Person, the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

“Experimental Procedure” means any human research project or study in which the data obtained are derived in any way through observation of, treatment of, manipulation of behavior of, or interviewing of, human subjects, except for the following: (a) gathering existing data in an anonymous form (e.g., review of existing medical records without recording identities of the subjects); (b) non-interventional observation of human behavior in a natural setting; (c) use of human tissues and specimens which are obtained for other purposes (e.g., anonymous use of tissues such as blood left over from clinical use); and (d) anonymous questionnaires which do not involve questions which, when answered, could lead to the identity of the subject; provided, however, that the exceptions described above are not applicable if they involve vulnerable populations, such as children, mentally or emotionally impaired subjects or prisoners.

 

Exh A-1

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“Financial Statements” means (a) the unaudited balance sheets of Seller at June 30, 2015, 2014, and 2013 and the unaudited statements of income and cash flows of Seller for each of the twelve-month periods then ended and (b) the unaudited balance sheet of Seller at December 31, 2015 and the unaudited statements of income and cash flows of Seller for the six-month period then ended, in each case, prepared in all material respects in accordance with GAAP (except as to the absence of footnotes and subject to audit adjustments) and Seller’s normal accounting practices.

“Intellectual Property” means the following: (a) trademarks and service marks, including all applications and registrations and the goodwill connected with the use of and symbolized by the foregoing; (b) copyrights, including all applications and registrations, and works of authorship, whether or not copyrightable; (c) trade secrets and confidential know-how; (d) patents and patent applications; (e) websites and internet domain name registrations; and (f) the rights of Seller to the name “Chestatee Regional Hospital” and all iterations thereof.

“Liens” mean all mortgages, liens, pledges, security interests, charges or encumbrances.

“Material Adverse Effect” means any state of facts, change, event, effect or occurrence (when taken together with all other states of fact, changes, events, effects or occurrences) that is materially adverse to the financial condition, results of operations and assets of the Healthcare Facilities, taken as a whole, provided, however, that no fact, change, event, effect or occurrence to the extent arising out of, resulting from, or attributable to the following shall be deemed to constitute a Material Adverse Effect or shall be taken into account when determining whether a Material Adverse Effect has occurred: (i) general economic conditions; (ii) any changes in GAAP, applicable Law or regulation, or the interpretation thereof; (iii) the taking by Seller of any specific action at the request or direction of Buyer; (iv) changes affecting acute care hospitals, nursing homes, physician clinics or home health industries generally, including any changes in the general level of profitability, reimbursement, prices of drugs, physician or nursing costs; or (v) any actions taken by Seller or any Affiliate that are required by this Agreement; provided that the fact, change, event, effect or occurrence described in the foregoing clauses (i) or (iv) are not materially disproportionately adverse to the financial condition, results of operations or to the Healthcare Facilities, considered as a whole, as compared to that of other persons similarly situated engaged in the operation of similar facilities to the Healthcare Facilities.

“Permitted Encumbrances” means (i) Liens for taxes not yet due and payable or being contested in good faith by appropriate procedures, (ii) statutory Liens of landlords, (iii) Liens of carriers, warehousemen, mechanics, materialmen, repairmen or other like Liens incurred in the ordinary course of business, (iv) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business, (v) zoning, building, or other restrictions, variances, covenants, rights of way, encumbrances, easements and other minor irregularities in title, none of which, individually or in the aggregate (x) interfere in any material respect with the present use of or occupancy of the affected realty or asset by Seller, (y) have more than an immaterial effect on the value thereof or its use or (z) would impair the ability of such parcel to be sold for its present use, and (vi) Liens referenced in Schedule 3.12.

 

Exh A-2

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“Person” means any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization or Government Entity.

“PTO” means accrued amounts for paid time-off (including without limitation vacation time) of Seller’s employees.

“Responsible Officers of Buyer” means                     .

“Responsible Officers of Seller” means Robert M. Thornton, Jr., Mark J. Stockslager and for periods up to and including Closing, the Chief Executive Officer and Chief Financial Officer of Seller.

“Representatives” means collectively Buyer’s Representative and Seller’s Representative Each Representative may be discharged and replaced by a substitute Representative by Seller or Buyer, as applicable, upon written notice to the other party.

“Seller’s Knowledge” or “Knowledge of Seller” with respect to a particular fact or other matter, means one or more of the Responsible Officers of Seller is actually aware of such fact or matter (exclusive of any knowledge imputed).

“Seller’s Representative” means Robert M. Thornton, Jr. or his delegate made by notice in writing to Buyer.

 

Exh A-3

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EXHIBIT C

FORM OF

GENERAL ASSIGNMENT, CONVEYANCE AND BILL OF SALE

This General Assignment, Conveyance and Bill of Sale (this “Bill of Sale”), is made and entered into this      day of             , 2016 by and among Southern Health Corporation of Dahlonega, Inc., a Georgia corporation (“Seller”), and Durall Capital Holdings, LLC, a Florida limited liability company (“Purchaser” and collectively with Seller, the “Parties”).

RECITALS:

WHEREAS, Purchaser and Seller entered into that certain Asset Purchase Agreement dated as of August     , 2016 (the “Purchase Agreement”), pursuant to which Seller has agreed to sell and Purchaser has agreed to purchase, all right, title and interest of Seller in and to the Purchased Assets; and

WHEREAS, pursuant to the Purchase Agreement, Seller desires to sell, assign, transfer and convey to Purchaser all of the Purchased Assets in accordance with the terms and conditions of the Purchase Agreement.

KNOW ALL PERSONS BY THESE PRESENTS, for and in consideration of the sum of the Purchase Price paid or payable to Seller by Purchaser, Seller does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, SET OVER and ASSIGN unto Purchaser, its successors and permitted assigns, all of Seller’s right, title and interest in and to the Purchased Assets, to have and to hold such Purchased Assets to Purchaser, its successors and permitted assigns, for its and their own use, forever.

This Bill of Sale is being executed in connection with, and is subject to all representations, warranties, covenants, terms and conditions set forth in the Purchase Agreement and shall neither add to nor detract from such representations, warranties, covenants, terms and conditions. In the event of any conflict between any of the terms and conditions of this Bill of Sale and the terms and conditions of the Purchase Agreement shall control.

Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings given to them in the Purchase Agreement.

This Bill of Sale, and any document or instrument required or permitted hereunder, may be executed in counterparts (including by means of facsimile or electronic transfer), each of which will be deemed an original and all of which together will constitute but one and the same instrument.

This Bill of Sale shall be governed by and construed in accordance with the internal laws of the State of Georgia without reference to its choice of law rules.

 

Exh C-1

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Purchaser agrees to take any and all additional actions and to execute, acknowledge and deliver any and all documents which Seller may reasonably request in order to effect the intent and purposes of this Bill of Sale and the transactions contemplated hereby.

IN WITNESS WHEREOF, Seller has caused this General Assignment, Conveyance and Bill of Sale to be effective as of 12:01 a.m. on the      day of             , 2016.

 

 

Exh C-2

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EXHIBIT D

FORM OF

LEASE ASSIGNMENTS

THIS ASSIGNMENT OF LEASE (this “Assignment”) is made as of the      day of             , 2016, by and among SOUTHERN HEALTH CORPORATION OF DAHLONEGA, INC., a Georgia limited liability company (“Assignor”) and DURALL CAPITAL HOLDINGS, LLC, a Florida limited liability company (“Assignee”).

W I T N E S S E T H:

WHEREAS, Mountain Drive Properties, LLC (the “Lessor”) and Assignor as lessee entered into that certain Lease Agreement dated July 1, 2016 (the “Lease Agreement”) with respect to the lease of the medical office building at 199 Mountain Drive Dahlonega, Georgia;

WHEREAS, Assignor and Assignee entered into that certain Asset Purchase Agreement dated as of August     , 2016 (the “Purchase Agreement”), pursuant to which Assignor has agreed to sell and Assignee has agreed to purchase from Assignor, substantially all of the assets of Assignor used solely or primarily in the operation of its home health agency (the “Transaction”);

WHEREAS, pursuant to the Purchase Agreement, Assignor desires, with Lessor’s consent being first obtained, to assign and transfer all of its rights, title and interest in, to and under the Lease Agreement to Assignee, and Assignee desires to accept said assignment and assume all of the obligations and duties of Assignor under the Lease Agreement under the terms and conditions hereinafter set forth; and

WHEREAS, Lessor is agreeable and hereby consents to the assignment of the Lease Agreement by Assignor to Assignee.

NOW, THEREFORE, for and in consideration of the above premises, the mutual covenants herein set forth, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Assignment. Assignor hereby assigns and transfers to Assignee all of Assignor’s rights, title and interest in, to and under the Lease Agreement.

2. Assumption. Assignee hereby accepts the foregoing assignment and transfer and assumes the obligations of Assignor under the Lease Agreement and agrees to perform and to observe all of the covenants and conditions therein contained on the part of tenant to be performed and to be observed and promises and agrees to pay all rents and additional rents to Lessor and to faithfully perform all covenants, stipulations, agreements and obligations under the Lease Agreement accruing after the Effective Time (as defined below).

3. Consent of Lessor. In consideration of the foregoing, Lessor hereby consents to the assignment of the Lease Agreement to Assignee, agrees to recognize Assignee as tenant and thereby establish direct privity of contract with Assignee and agrees to look solely to Assignee for any and all obligations or liabilities under the Lease Agreement accruing after the Effective Time.

 

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4. Effective Time. This Assignment shall be effective immediately as of 12:00:01 a.m., Eastern Standard Time, on              , 2016 (the “Effective Time”).

5. Lease Documents. Lessor acknowledges that attached hereto as Exhibit A is a true and complete copy of the Lease Agreement.

6. Release of Assignor. Lessor hereby releases Assignor from any and all obligations or liabilities accruing under the Lease Agreement after the Effective Time.

7. Headings. The section headings contained in this Assignment are for reference purposes only and shall not affect in any way the meaning or interpretation of this Assignment.

8. Counterparts. This Assignment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.

9. Time of the Essence. Time shall be of the essence with respect to the performance of any obligation or duty hereunder.

10. Governing Law. This Assignment and all matters relating hereto, shall be governed by and construed in accordance with the internal laws of the State of Georgia, excluding the application of its choice or conflicts of law provisions.

11. Parties in Interest. This Assignment shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.

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IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed this Assignment the day and year first above written.

 

 

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EXHIBIT E

FORM OF

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) dated              , 2016 is made and entered into by and between Southern Health Corporation of Dahlonega, Inc., a Georgia corporation (“Seller”), and Durall Capital Holdings, LLC, a Florida limited liability company (“Buyer”). Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Asset Purchase Agreement dated as of August     , 2016 (the “Purchase Agreement”) by and among Seller and Buyer.

W I T N E S S E T H:

WHEREAS, in accordance with the terms of the Purchase Agreement, Seller desires to assign all of its right, title and interest in and to the Contracts to Buyer, and Buyer desires to assume the Assumed Liabilities;

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions set forth herein and in the Purchase Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Assignment. Seller hereby assigns to Buyer all of its right, title and interest in and to the Contracts included in the Purchased Assets.

2. Assumption. Buyer hereby assumes and agrees to fully and promptly pay, perform and discharge the Assumed Liabilities.

3. Binding Effect. This Agreement will be binding upon and will inure to the benefit of the parties hereto and their respective successors and assigns.

4. Enforcement of Certain Rights. Nothing expressed or implied in this Agreement is intended, or will be construed, to confer upon or give any person other than the parties hereto, and their respective successors or permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, or result in such person being deemed a third party beneficiary of this Agreement.

5. Captions. The Section headings contained in this Agreement are inserted in this Agreement only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision of this Agreement.

6. Controlling Law. This Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of Georgia without reference to its choice of law rules.

 

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7. Further Assurances. Seller and Buyer agree, each at its own expense, to perform all such further acts and execute and deliver all such further agreements, instruments and other documents as the other party shall reasonably request to evidence more effectively the assignments and assumptions made by Seller and Buyer under this Agreement.

8. Inconsistencies with the Purchase Agreement. Notwithstanding anything to the contrary contained herein, the terms of this Agreement are subject to the terms, provisions, conditions and limitations set forth in the Purchase Agreement, and this Agreement is not intended to alter the obligations of the parties to the Purchase Agreement. In the event of any inconsistencies between the terms of this Agreement and the terms of the Purchase Agreement, the parties agree that the terms of the Purchase Agreement shall control.

9. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

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IN WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption Agreement as of the date first above written.

 

 

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AMENDMENT NO. 1

TO

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

SOUTHERN HEALTH CORPORATION OF DAHLONEGA, INC. (“SELLER”),

AND

DURALL CAPITAL HOLDINGS, LLC (“BUYER”),

August 19, 2016

 

 

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AMENDMENT NO. 1

TO

AGREEMENT FOR THE ASSET PURCHASE AGREEMENT

THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (the “Amendment”) is made and entered into as of August 19, 2016, by and between (i) Southern Health Corporation of Dahlonega, Inc., a Georgia corporation (the “Seller”) and (ii) Durall Capital Holdings, LLC, a Florida limited liability company (the “Buyer”).

W I T N E S S E T H:

WHEREAS, Buyer and Seller are parties to that certain Asset Purchase Agreement dated as of August     , 2016 (the “Agreement”);

WHEREAS, Buyer and Seller agree to amend the Agreement pursuant to the terms set forth herein; and

NOW THEREFORE, in consideration of the promises and the agreements, covenants, representations and warranties hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, Buyer and Seller agree as follows:

1. Amendments.

(a) Section 1.1(f) of the Agreement is hereby amended by deleting the parenthetical at the end thereof and inserting in lieu thereof the following additional clause:

“and (iii) promissory notes receivable (all receivables included in the foregoing clauses (i), (ii) and (iii), collectively “Accounts Receivable”);”

(b) Section 1.2(d) of the Agreement is hereby amended by deleting the current language thereof and inserting the following in lieu thereof so that it will read as follows:

“(d) all pre-paid expenses and rights thereto;”

(c) Section 1.5 of the Agreement is hereby amended by deleting the current language thereof and inserting the following in lieu thereof so that it will read as follows:

“1.5 Environmental Report. Buyer acknowledges that prior to execution of this Agreement Seller has made available for inspection by Buyer the 2011 Phase I Environmental Site Assessment prepared by Evergreen Environmental Services, LLC and Buyer has been afforded an opportunity to make such further environmental site assessment as it deemed appropriate of the Owned Real Property including the Hospital and Leased Real Property. Accordingly, the Owned Real Property including the Hospital and Leased Real Property shall conclusively be deemed satisfactory to Buyer.”

 

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(d) Section 1.6(a)(iv) of the Agreement is hereby amended by deleting the current language thereof and inserting the following in lieu thereof so that it will read as follows:

“(iv) plus the amount of Seller deposits and advances,”

(e) Section 1.6(b)(iv) of the Agreement is hereby amended by deleting the current language thereof and inserting the following in lieu thereof so that it will read as follows:

“(iv) plus the estimated amount of Seller’s deposits and advances,”

(f) Section 1.9 of the Agreement is hereby amended by deleting all of such section from the Agreement and inserting in lieu thereof the words “Intentionally Omitted” and Exhibit B is also deleted from the Agreement.

(g) Sections 2.2(j) and 2.3(e) of the Agreement are hereby amended by deleting both of such clauses from the Agreement and inserting in lieu of each thereof the words “Intentionally Omitted”.

(h) Section 10.1(v) of the Agreement is hereby amended by deleting all of such clause from the Agreement and inserting in lieu thereof the words “Intentionally Omitted”.

(i) Section 12.12 of the Agreement is hereby amended by inserting under the words “Durall Capital Holdings, LLC,” the following:

8411 West Oakland Park Boulevard

Suite 302

Sunrise, FL 33351

Attn.: Aaron Durall

Fax: (954) 747-9500

(j) The following terms are deleted from the Glossary of Defined Terms to the Agreement: Deposits, Escrow Agent, Escrow Agreement and Escrow Amount.

2. Defined Terms. All capitalized terms used in this Amendment which are not defined herein shall have the meanings set forth therefor in the Agreement.

3. Remaining Agreement Terms. Except as amended by this Amendment, any and all other terms of the Agreement shall remain in full force and effect.

4. Execution in Counterparts; Electronic Transmission. This Amendment may be executed in any number of counterparts with the same effect as if the signatures thereto were upon one instrument. Transmission by telecopier or other electronic means of an executed counterpart of this Amendment shall be deemed to constitute due and sufficient delivery of such counterpart.

 

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IN WITNESS WHEREOF, each of Buyer and Seller have caused this Agreement to be duly executed under seal as of the day and year first written above.

 

 

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