2020-10-05 RM ExhibitsExhibit I�/
Book 1= -Page 20.1k
NEW HANOVER COUNTY BOARD OF COMMISSIONERS
PROCLAMATION OF STATE OF EMERGENCY: ISAIAS
Section 1: Pursuant to New Hanover County Code Chapter 17, Article III, Section 17.71 and
Section 17.72, and North Carolina General Statutes Chapter 166A, Article 1A,
166A-19.22, the New Hanover County Board of Commissioners has determined
that a State of Emergency as defined in the New Hanover County Code Section
17.71 exists throughout New Hanover County.
Section 2: Therefore, the New Hanover County Board of Commissioners proclaims the
existence of a State of Emergency in New Hanover County.
Section 3: The New Hanover County Board of Commissioners hereby orders all county -wide
law enforcement officers, employees and emergency management personnel to
cooperate in the enforcement and implementation of the provisions of the
county/municipal emergency ordinances.
Section 4: Emergency protective measures shall be announced as necessary.
Section 5: This proclamation shall become effective Monday, August 3, 2020 at 12:00 p.m.
Adopted this the 3rd day of August 2020, at W•00 a.m.
(SEAL)
Juli Olson -Roseman, C air
Board of County Commissioners
K4"d_t�-a. Ojcw�
Ky erleigh G. C welll
Clerk to the Board
NEW HANOVER COUNTYxhikitj rPage
e
L
BOARD OF COMMISSIONERS
230 Government Center Drive, Suite 175, Wilmington, NC 28403
P: (910) 798-7149 1 F: (910) 798-7145 1 NHCgov.com
Jonathan Barfield, Jr., Chairman I Julia Olson-Boseman, Vice -Chairwoman
Patricia Kusek, Commissioner I Woody White, Commissioner I Rob Zapple, Commissioner
TERMINATION OF
STATE OF EMERGENCY
IN THE COUNTY OF NEW HANOVER
WHEREAS, on Monday, August 3, 2020, due to the approaching Hurricane Isaias, the New Hanover County
Board of Commissioners determined and proclaimed a local state of emergency for the County of New
Hanover; and
WHEREAS, the New Hanover County Board of Commissioners has determined that a state of emergency
no longer exists in the County of New Hanover;
NOW THEREFORE BE IT RESOLVED that the above -referenced proclamation of a local state of emergency
and all of the restrictions and orders therein are hereby terminated effective October 5, 2020.
ADOPTED this the 51h day of October, 2020.
(SEAL)
&02Y" / 1: 1�e
ilson-111r"sean, Chair
0"-V�K berleigh G. rowell
Clerk to the Board
Exhibit
Book Page 2�
NEW HANOVER COUNTY BOARD OF COMMISSIONERS
INDIGENOUS PEOPLES' DAY PROCLAMATION
WHEREAS, Indigenous Peoples' Day was first proposed in 1977 by a delegation of Native Nations
to the International Conference on Discrimination Against Indigenous Populations in the
Americas; and
WHEREAS, a growing number of American cities have recognized the second Monday of October
as "Indigenous Peoples' Day", reimaging Columbus Day as an opportunity to celebrate indigenous
resiliency; and
WHEREAS, New Hanover County recognizes the historical importance of the Indigenous Peoples'
lands that later became known as the Americas, including the lands which became known as
North Carolina; and
WHEREAS, the state of North Carolina recognizes the fact that New Hanover County is built upon
lands first inhabited by the Indigenous Peoples of this region; and
WHEREAS, this County values the many contributions made to our community through
Indigenous Peoples' knowledge, stewardship of these lands, labor, technology, science,
philosophy, arts, and the deep cultural contribution that has substantially shaped the character
of the County.
NOW, THEREFORE, BE IT PROCLAIMED by the New Hanover County Board of Commissioners that
the second Monday of October 2020 will be recognized as "Indigenous Peoples' Day" in New
Hanover County. Public institutions, businesses, and organizations are strongly encouraged to
recognize and support Indigenous Peoples' Day, reaffirming the County's commitment to
demonstrating appreciation of North Carolina's first peoples.
ADOPTED this the 5th day of October, 2020.
NEW VER COUNTY
Jul' Olson -Bo eman, &air
ATTEST:
1 C.
Ky erleigh G. Cr ell, Clerk to the Board
IV
Exhibit n O2
Book .Page ve
New Hanover County Board of Commissioners
National Cybersecurity Awareness Month Proclamation
WHEREAS, New Hanover County must be diligent in taking actions and measures to ensure and enhance
security, and identify, prevent, protect against, and respond to cyber threats to security and privacy; and
WHEREAS, the prevalence of malware, cyberattacks, and other virtual threats targeted at internet users
and the County's information technology infrastructure are increasing by the day, and ransomware
attacks on government infrastructure and services nationwide have spiked; and
WHEREAS, critical infrastructure sectors are increasingly reliant on information systems and technology
to support financial services, energy, telecommunications, transportation, utilities, health care, and
emergency response systems; and
WHEREAS, monitoring accounts, being conscientious of what is shared online, keeping computer software
up to date, creating unique passwords and changing them regularly per the County Password Policy,
installing anti-virus programs and firewalls, and using mobile devices safely are ways to provide protection
from phishing, viruses, malware, and loss of sensitive data; and
WHEREAS, the "STOP. THINK. CONNECT." campaign serves as the national cybersecurity public awareness
campaign with this year's theme "Do Your Part. #BeCyberSmart.",which is implemented through several
agencies working together to increase the understanding of cyber threats and empowering citizens,
students, and employees to be safer and more secure online; and
WHEREAS, maintaining the security of the County's network is a shared responsibility in which each
employee has a critical role to play and awareness of computer security essentials will improve the
security of the County's information, infrastructure, and economy.
NOW, THEREFORE, BE IT PROCLAIMED by the New Hanover County Board of Commissioners that October
2020 be recognized as "Cybersecurity Awareness Month" in New Hanover County.
ADOPTED this the 5th day of October, 2020.
NEW HANOVER COUNTY
1 son-Bosem n, Chair
ATTEST:
1�� C 0
.,X�d
Ky berleigh G. COWwell, Clerk to the Board
Exhibit
Book Page - ?PQ,_�
NEW HANOVER COUNTY BOARD OF COMMISSIONERS
NATIONAL BREAST CANCER AWARENESS MONTH PROCLAMATION
WHEREAS, it is estimated that more than 11,315 women in North Carolina will be diagnosed with
breast cancer in 2020. Of these 11,315 women, 1,501 will die from the disease, and approximately 260
of the diagnosed cases will be in New Hanover County; and
WHEREAS, one in eight North Carolina women are at risk for developing breast cancer within their
lifetime. Breast cancer is the second most common form of cancer and the second leading cause of
cancer death for women in the United States; and
WHEREAS, with routine mammogram screening and follow-up testing, the disease can be detected
early and can be more effectively treated; and
WHEREAS, being aware of the health information, education, treatment, and support available can
help individuals receive appropriate care and access resources to improve their quality of life; and
WHEREAS, community organizations, local health departments, churches, and job sites can play a key
role in educating the public, members, or employees about breast cancer; and
WHEREAS, October is designated as National Breast Cancer Awareness Month; and
WHEREAS, the Pink Ribbon is the internationally recognized symbol of breast cancer awareness; and
WHEREAS, the County encourages people to recognize that breast cancer is treatable and that routine
screening and early detection can save lives.
NOW, THEREFORE, BE IT PROCLAIMED by the New Hanover County Board of Commissioners that
October 2020 will be recognized as "National Breast Cancer Awareness Month" in New Hanover
County. The Board of Commissioners encourages the citizens to wear pink ribbons in recognition of
breast cancer and in honor of women who are courageously fighting the battle with breast cancer. The
Board further encourages women to consult with their health care providers about regular screenings
and to promote early detection of breast cancer by having regular clinical breast examinations, getting
regular mammograms, and practicing monthly breast self-examination.
ADOPTED this the 5th day of October, 2020.
�I
NEW HANOVER COUNTY
2, lelz
Julia n-Boseman, Chair
ATTEST:
4 Q()'t4�
Ky erleigh G. Cr ell, Clerk to the Board
Exhibit nn
Book Page :1�
NEW HANOVER COUNTY BOARD OF COMMISSIONERS
NATIONAL SUBSTANCE ABUSE AWARENESS MONTH PROCLAMATION
WHEREAS, prevention and recovery from substance use disorder is possible through sound prevention,
education, intervention, and quality treatment; and
WHEREAS, the 2018 National Survey on Drug Use and Health reported approximately 20.3 million people
over the age of 12 had a substance use disorder in the past year; and
WHEREAS, an estimated 19.1 percent of the adult population in the U.S. had a mental illness in the past
year; and
WHEREAS, symptoms of mental illness can be masked or exacerbated by substance use, both sharing
common factors and risks, that should be assessed and treated together when possible; and
WHEREAS, risk for developing substance use is elevated for individuals who have had a high number of
traumatic or challenging experiences in childhood, therefore needing increased access to prevention,
education, intervention, and treatment; and
WHEREAS, the development of substance use disorder and mental disorders are serious public health
concerns that evidence -based prevention can prevent and reduce, and quality treatment can heal; and
WHEREAS, educating family, friends, and our community about how substance use disorder affects all
residents in New Hanover County is essential to combat misconceptions and build effective grassroots
and professional services solutions.
NOW, THEREFORE, BE IT PROCLAIMED by the New Hanover County Board of Commissioners that
October 2020 will be recognized as "National Substance Abuse Awareness Month" in New Hanover
County, and that all residents are invited to reflect and raise awareness on the role substance use
disorder plays in community health. The Board commends this observance to all residents and urges that
all residents and community organizations join in this observance.
ADOPTED this the 5th day of October, 2020.
NEW HANOVER COUNTY
/�'? . 4X 1
Ju is son-Boseman, Chair
ATTEST:
44y��. .�
Ky berleigh G. owell, Clerk to the Board
Exhibit
fi
Book -n-Page.."
NEW HANOVER COUNTY BOARD OF COMMISSIONERS
NATIONAL 4-H WEEK PROCLAMATION
WHEREAS, 4-H youth across the nation are leading efforts to solve problems in their communities and
make a difference for their futures; and
WHEREAS, 4-H is the largest youth development organization in North Carolina and the largest in the
nation with over six million participants; and
WHEREAS, 4-H in North Carolina claims 261,210 youth members and 16,789 volunteers, while New
Hanover County 4-H program numbers more than 100 members and more than 21 volunteers; and
WHEREAS, 4-H as part of the NC Cooperative Extension System of NC State University and NCA&T State
University is a program where youth learn through opportunities that provide them hands-on
experiences in 4 -H's mission mandates of science, engineering, technology, healthy living, and
citizenship; and
WHEREAS, 4-H has connected youth and their communities with the innovative research and resources
from our nation's 106 land-grant universities and colleges for more than 101 years.
NOW, THEREFORE, BE IT PROCLAIMED by the New Hanover County Board of Commissioners that
October 4-10, 2020 will be recognized as "National 4-H Week" in New Hanover County. The Board urges
the people of this County to take advantage of the opportunity to become more aware of this special
program that enhances our young people's interests in their futures as part of New Hanover County 4-H
Youth Development and to recognize the unique partnership between the County and the state
university system.
ADOPTED this the 51h day of October, 2020.
NEW HANOVER COUNTY
Juli son -Bose n, Chair
ATTEST: �A
Kym erleigh G. Croldell, Clerk to the Board
WL
NEW HANOVER COUNTY BOARD OF COMMISSIONERS Exhibit
Book _ PaaeX
RESOLUTION
DISPOSAL OF SURPLUS PROPERTY
WHEREAS, New Hanover County owns certain personal property itemized on attached Exhibit A that is no longer
functional for governmental purposes; and
WHEREAS, the New Hanover County Board of Commissioners is desirous of declaring the property surplus and
disposing of the property as authorized by North Carolina General Statute (NCGS)160A-Article 12; and
WHEREAS, following the Board's approval, the Board wishes to allow non-profit organizations the opportunity to
inspect and purchase the property prior to being sold by public auction; and
WHEREAS, all remaining property will be disposed of according to the procedures prescribed in Chapter 160A -
270(c) which authorizes the disposal of personal property electronically using an existing private or public
electronic auction service; and
WHEREAS, items not sold by electronic auction will be disposed of using any other method authorized in the NCGS
160A -Article 12 including discarding the items.
NOW, THEREFORE, BE IT RESOLVED by the New Hanover County Board of Commissioners as follows:
1. The personal property itemized on the attached Exhibit A is hereby declared to be surplus property.
2. The Chief Financial Officer's designated representative, pursuant to the provisions of G.S. 160A-270 (c), is
hereby authorized to dispose of the personal property listed by electronic public auction and any property
not sold by electronic means may be disposed of using any other method authorized by the NCGS 160A -
Article 12, and that said representative be further authorized and directed to execute necessary
documents, transfer title, add/delete items from the surplus list, and perform all necessary functions
associated with this disposal.
3. Non-profit organizations will be given the opportunity to inspect and purchase the property prior to being
sold by public auction.
4. All surplus property will be sold "as is," all sales will be final. New Hanover County makes no express or
implied warranties of merchantability of any surplus property, or part thereof, or its fitness for any
particular purpose regardless of any oral statements that may be made concerning the surplus property
or any part thereof.
5. A notice summarizing this resolution and the sale of the surplus property shall be advertised on the
county's website and/or in the Wilmington Star News at least ten (10) days prior to the electronic public
auction.
ADOPTED this the 5th day of October, 2020.
N1750V
/�
Julia on-Boseman, Chair
ATTEST:
Ky erleigh G. Cro%eell, Clerk to the Board
Exhibit
Book Page
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Book It
X
--'age
New Hanover County Monthly Collection Report for August 2020
Current Year 2020-2021
Scroll/Billed
Abatements
Adjustments
Real Estate
Personal Property
Motor Vehicles
Combined
$ 149,945,569.96
$ (1,078.29)
$ 743.67
$ 9,666,370.01
$ (70.82)
$ 470.54
$ 2,221,002.26
$
$
$
161,832,942.23
(1,149.11)
1,214.21
Total Taxes Charged
Collections to Date
*Refunds
Write-off
$
$
$
149,945,235.34
10,476,742.93
17,035.52
$
$
9,666,769.73
10,564.25
$
$
2,221,002.26
2,221,002.26
$
$
$
$
161,833,007.33
12,708,309.44
17,035.52
_
Outstanding Balance
$
139,485,527.93
$
9,656,205.48
$
-
$
149,141,733.41
Collection Percentage
_
6.98
_
0.11
$
100.00
$
7.84
YTD Interest Collected
$
996.72
6,690,147.51
Collections to Date
$
4,207.28
$
5,204.00
$
11.94
$
202,947.65
*Refunds
$
1,206.11
$
521.33
Total 2020-2021 Collections YTD
12,696,477.92
Prior Years 2010-2019
Real Estate
Personal Property
Motor Vehicles
Combined
Scroll
$
1,802,044.87
$
4,498,965.32
$
402,846.95
$
6,703,857.14
Abatements
$
-
$
(13,709.63)
$
-
$
(13,709.63)
Adjustments
$
-
$
-
$
_
$
_
Total Levy
$
1,802,044.87
$
4,485,255.69
$
402,846.95
$
6,690,147.51
Collections to Date
$
180,685.24
$
22,250.47
$
11.94
$
202,947.65
*Refunds
$
1,206.11
$
521.33
$
-
$
1,727.44
Write-off
$
-
$
-
$
_
$
_
Outstanding Balance
$
1,622,565.74
$
4,463,526.55
$
402,835.01
$
6,488,927.30
YTD Interest Collected
$
17,403.25
$
1,867.64
$
23.39
$
19,294.28
Total Prior Year Collections YTD
220,514.49
Grand Total All Collections YTa
12,916,352.41
Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COUNTY
CleQ to the Board
I a
AV
Date
Exhibit
Book.- Page' D.g
New Hanover County Debt Service Monthly Collection Report for Augsut 2020
Current Year 2020-2021
Total z24)23 Collections Yi`b
4
Prior Years 2010-2019
Real Estate
Personal
Property
Motor Vehicles
Combined
Scroll/Billed
$
19,785,958.25
$
1,275,575.78
$
293,077.32
$
21,354,611.35
Abatements
$
(142.29)
$
(9.35)
$
-
$
(151.64)
Adjustments
$
98.14
$
62.10
$
-
$
160.24
Total Taxes Charged
$
19,785,914.10
$
1,275,628.53
$
293,077.32
$
21,354,619.95
Collections to Date
$
1,378,239.25
$
1,376.90
$
293,077.32
$
1,672,693.47
*Refunds
26,862.13
*Refunds
$
-
$
-
$
$
Write-off
Write-off
$
-
$
-
$ _
$
_
Outstanding Balance
$
18,407,674.85
$
1,274,251.63
$
-
$
19,681,926.48
Collection Percentage
1,792.30
6.97
307.29
0.11
$
100.00
7.83
YTD Interest Collected
$
129.47
$
553.98
Total z24)23 Collections Yi`b
4
Prior Years 2010-2019
Real Estate
Personal
Property
Motor Vehicles
Combined
Scroll
$
183,590.02
$
280,155.74
$ -
$
463,745.76
Abatements
$
-
$
(1,881.76)
$
(1,881.76)
Adjustments
$
-
$
_
Total Levy
$
183,590.02
$
278,273.98
$ -
$
461,864.00
Collections to Date
$
22,761.60
$
4,100.53
$
$
26,862.13
*Refunds
$
-
$
-
$ -
$
-
Write-off
$
-
$
-
$ _
$
_
Outstanding Balance
$
160,828.42
$
274,173.45
$ -
$
435,001.87
YTD Interest Collected
$
1,792.30
$
307.29
$ -
$
2,099.59
Total Prior Year Collections YTD
*Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COUfffY
C it
Cle to the Board
d0Ace
Date
$ 28,961.72
Exhibit
Book v age
New Hanover County Fire District Monthly Collection Renew fnr ot,aiecr 7r7n
Current Year 2020-2021
Real Estate
Personal Property
Motor Vehicles
Combined
Scroll/Billed
$
9,010,119.52
$
758,317.66
$
169,089.92
$
9,937,527.10
Abatements
$
(11.19)
$
-
$
(11.19)
Adjustments
$
4,841.81
$
(9.06)
$
_
$
4,832.75
Total Taxes Charged
$
9,014,961.33
$
758,297.41
$
169,089.92
$
9,942,348.66
Collections to Date
$
662,005.73
$
161.50
$
169,089.92
$
831,257.15
*Refunds
$
-
$
_
$
$
Write-off
$
-
$
_
$
_
$
Outstanding Balance
$
8,352,955.60
$
758,135.91
$
-
$
9,111,091.51
Collection Percentage
$
7.34
$
0.02
$
100.00
$
8.36
YTD Interest Collected
$
155.09
$
332.71
$
487.80
;Total 2020-2021 Collections YTD
$ 831,744.95
Prior Years 2010-2019
Real Estate
Personal Property
Motor Vehicles
Combined
Scroll
$
113,568.63
$
248,623.36
$
24,031.75
$
386,223.74
Abatements
$
(599.97)
$
-
$
(599.97)
Adjustments
$
_
$
_
$
Total Levy
$
113,568.63
$
248,023.39
$
24,031.75
$
385,623.77
Collections to Date
$
9,265.62
$
1,111.56
$
1.42
$
10,378.60
*Refunds
$
-
$
_
$
$
Write-off
$
-
$
_
$
_
$
Outstanding Balance
$
104,303.01
$
246,911.83
$
24,030.33
$
375,245.17
YTD Interest Collected
$
1,012.18
$
157.77
$
3.09
$
1,173.04
Total Prior Year Collections YTD
11,551.64
Grand Total All; Collections YTD $ 843,296.59
"Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COU
�(qwL "19 0_'to4m�
ClerW to the Board
5_ ��
Date
Approving the Asset Purchase Agreement and Transactions Described Therein among New
Hanover County, New Hanover Regional Medical Center, Novant Health, Inc. and Novant
Health New Hanover Regional Medical Center, LLC
Recitals
WHEREAS, New Hanover County owns the hospital, medical facilities and other assets used by
New Hanover Regional Medical Center (NHRMC) to operate as a health care system governed by
the County -appointed NHRMC Board of Trustees (BOT); and
WHEREAS, County and NHRMC are parties to that certain lease agreement pursuant to which
New Hanover County leases the hospital, medical facilities and other assets to NHRMC for the
purposes of operating the health system (NHRMC Lease); and
WHEREAS, certain industry trends, challenges, opportunities and related discussions as to the
best course forward for NHRMC have led to the New Hanover County Board of Commissioners
passing a resolution in September of 2019 to move forward in exploring potential future options
for NHRMC through a request for proposal (RFP) process in accordance with State Law (N.C.G.S
§ 131E -13(d)(1)-(2)), and the BOT passing a corresponding resolution endorsing such
County/NHRMC exploration in that same month; and
WHEREAS, following these resolutions, the Board of Commissioners held a public hearing,
consistent with N.C.G.S § 131E -13(d)(3), on October 15, 2019 to receive comments related to
the resolution and also, jointly with the BOT, appointed a 21 -member Partnership Advisory
Group (PAG) that includes: nine community members reflective of the community's diversity of
individuals and interests; five members of the BOT; five physicians as selected by the Physician
Advisory Committee; and the NHRMC CEO and County Manager, to explore the best way to
improve the region's access to high-quality healthcare; and
WHEREAS, the PAG developed a comprehensive RFP that was issued by and on behalf of the
County and NHRMC, consistent with N.C.G.S § 131E -13(d)(2), on January 13, 2020, and received
responses from six health care organizations by the due date of March 16, 2020, with a variety
of detailed proposals, all which were well vetted by the PAG with analyses and input from
financial, legal and strategic advisors to NHRMC and the County; and
WHEREAS, at its May 18, 2020 meeting, upon the recommendation from the PAG and BOT, the
Board of Commissioners endorsed (in alphabetical order) the following respondents for further
due diligence and letter of intent discussions (such narrowing was preliminary, pending further
public input at the public hearing on June 22, 2020): Atrium Health, Duke Health, and Novant
Health, Inc. (Novant Health); and authorized the County and NHRMC to have direct partnership
due diligence and letter of intent discussions with each of these three organizations as part of
WHEREAS, in accordance with this Board of Commissioners authorization, the PAG and PAG
Support Team engaged in further analyses of the Atrium Health, Duke Health and Novant Health
proposals and the respective ability of each such respondent to meet the needs of the region
key goals and objectives tied to NHRMC's Strategic Plan, including through multiple virtual and
actual site visits; and
all six proposals and receive further community input, consistent with N.C.G.S § 131E -13(d)(5) -
WHEREAS,
on July 13, 2020, the Board of Commissioners, upon recommendation from the PAG
and BOT, adopted a resolution to eater Into a letter of intent (the 1-01) with Movant Health, and
such resolution set forth requirements for the nese of net transaction proceeds designed to
protect such proceeds for the benefit of the community in perpetuity (attached to the LOI as
Exhibit ); and
WHEREAS, FIR C, the County, and movant Health entered into such LOI on July 13, 2020® and
WHEREAS, following execution of the 1-01, NHRMC, the County, and Novant Health engaged in
of the 1-01; and
Purchase Agreement negotiations, and the County published the agreement for public review
and comment on September 18, 2020 in accordance with N.C.G.S § 131E -13(d)(8) (such draft
together with the current exhibits and schedules attached thereto, the "APA"); and
WHEREAS, the Board of Commissioners held a public hearing on September 28, 2020, to receive
public comment on the APA, as well as the corresponding termination of the NHRMC Lease, as
i
such action is contem,,,*lated and a
of the NHRMC Lease, and heard comments related to the use of net proceeds (addressed in
Exhibit C to the APA and referred to previously as Exhibit D to the 1-01) and nonprofit bylaws for
the New Hanover Community Endowment (Community Endowment) that would be established
under the use of net proceeds framework; and
EES, the APA addresses governance matters, including certain NHRMC successor
local/ regional board controls, and sets forth the initial successor Local Board in Schedule .2(b
to the APA® and
EES, in addition to the APA® certain other documents will be required to effectuate the
Transaction as further set forth and defined in the APA (collectively, the `transaction Documents);
and
WHEREAS, Novant Health, through Novant Health New Hanover Regional Medical Center, LLC,
an affiliate of Novant Health (Buyer), desires to acquire from NHRMC and the County, and
NHRMC and the County desire to sell to Buyer, substantially all of the assets used with respect
to the operation of the hospitals and other medical facilities within the health system governed
by 6e BOT in ex*�,,;Rnge for the cor"eration and upon the terms and -cdiiditicn&-,,et-f�,-rti-rin-the
APA (the Transaction); and
WHEREAS, in order to secure the future of the existing hospital and other medical facilities and
and its associated expanded program needs, the Board of Commissioners has determined that
the Transaction will result in substantial services commitments to and financial investments in
the hospital's current strategic plan and all of its related goals and objectives, including
Improving Access to Care and Wellness, Advancing the Value of Care, Promoting Health Equity,
Supporting and Maintaining Staff, Partnering with Providers, Driving Quality of Care, Growing
the Level & Scope of Care, and Strategic Positioning as a Novant Health systern hub in this region
with expanded UNC Health & UNC School of Medicine Programs, all as further delineated in the
APA; and
WHEREAS, the County will use, invest, direct, grant and manage the net proceeds of the
Transaction (Net Proceeds) exclusively for public benefit purposes as generally described in
Exhibit C to the APA, including $100 Million in a general escrow account to address trailing
$200 Million in an NHRMC Transition Stabilization Escrow, $50 Million in a Mental and
WHEREAS, the Board of Commissioners has further determined it in the best interest of the
Counto and citizens thereof to facilitate the Nertim"j,
County intends to grant the remaining portion of the Net Proceeds following all other
distributions referenced above and in Exhibit C to the APA for the benefit and support of the
community; and
WHEREAS, the Board of Commissioners has identified the five individuals to serve as the
County's initial appointments to the governing board of the Community Endowment, and
recognizes that the individuals identified for the new local successor hospital board (referred to
as the "Local Board" in the APA), made up of our area's community members, will be given the
auth
IN
WHEREAS, the BOT has reviewed the APA and found such APA, and the Transaction described
therein, tobefavorable toNHRh8Cand inthe best interest ofNHRK4C and the County, and has
recommended the APA and Transaction for the approval of the Board of Commissioners; and
WHEREAS, the PAG has reviewed the APA and found that the Transaction are in the public
interest concluding that the Transaction will meet the health-related needs of medically
underserved groups, such as low-income persons, racial and ethnic minorities, and disabled
persons.
WHEREAS.theBoardofConnmnisskznenshasrevevvedtheAPAandtheTransactimnandheUeves
that the APA and the Transaction are in the public interest, concluding that the Transaction will
meet the health-related needs of medically underserved groups, such as low-income persons,
racial and ethnic minorities, and disabled persons, and desires to authorize the approval ofthe
APA and the Transaction as the newt critical step towards ensuring that both the current and
future needs of our growing region are rne1 as we would then be better able to fund and to
drne|y implement advancements in healthcare accessibility, quality, affordability, and equity for
all now and into the future; and
WHEREAS, upon closing of the Transaction, the NHRMC Lease will be terminated; and
WHEREAS, upon closing oJthe Transaction the outstanding revenue bonds issued 6«the County
for the benefit of NHRMC will be called, clefeased and redeemed.
Resolutions
NOW THEREFORE, BE IT RESOLVED, the Board of Commissioners hereby approves the APA,
substantially in the form published on September 18i 2030 and submitted to the Board of
Commissioners, and further approves the Transaction consistent with the terms described in
such APA, finding the Transaction tobeinthe best interests ofthe County and the community;
and
BE IT FURTHER RESOLVED, that the Board ofCommissioners does hereby approve and direct the
Net Proceeds of the Transaction otherwise accruing to the County be granted and distributed as
of and following Closing as outlined in Exhibit Cto the APA, including tothe Community
Endowment, NHAMC Foundation, as well as those accounts established for the NHRK4C
Transition Stabilization Escrow, the Mental and Behavioral Health Fund, and the County's
Revenue Stabilization Fund, all as further identified and described in Exhibit C and other
provisions ofthe APA; and
BE IT FURTHER RESOLVED, that the Board of Commissioners does hereby appoint the following
five individuals to serve as the County's initial appointees to the governing bm6v of the
Community Endowment, with accompanying term limits to ensure for staggered terms of the
initial seated board, with each appointee eligible to serve up to three consecutive terms:
4
• Mr. Spence Broadhurst 0fWilmington (appointed for a three-year term),
• DrVirginia Adams ofWilmington (appointed for athree-year tenm\
• Ms. Hannah Gage ofWilmington (appointed for athree-year 1errn\,
• Mr. Stedman Stevens ofWilmington (appointed for otwo-year ierrn\,
• Ms. Shannon VVindoxv of Wilmington /appointed for a two-year term); and
BE0[FURTHER RESOLVED, the Board ofCommissioners hereby approves those individuals set
forth in Schedule 5.20(b) to the APA as the initial Trustees of the Local Board upon Closing VJthe
Transaction, all as defined and provided for in the APA; and
BE IT FURTHER RESOLVED, the Chair mfthe Board ofCommissioners ishereby authorized and
directed to execute the APA on behalf of the County and Board of Commissioners; and
BE IT FURTHER RESOLVED, the County Manager, the County Attorney, the County Chief Financial
Officer, and any person authorized or designated to act on behalf ofany of the foregoing, are
authorized and directed, on behalf of the County and the Board of Commissioners, to develop,
finalize, execute and deliver the Transaction Documents, and all other certificates, instruments,
amendments, agreements, filings, and other documents ancillary to the APA or Transaction
Documents, and to take, orcause to betaken, all other such actions as may be reasonably
necessary and desirable to effectuate, and cause the consummation and closing of, the
Transaction; and
BE IT FURTHER RESOLVED, the County Manager, the County Attorney, the County Chief Financial
Officer, and any person authorized or designated to act on behalf of any of the foregoing, are
authorized and directed, on behalf of the County and the Board of Commissioners, to engage
any advisors, consultants, or counsel as may be reasonably necessary and desirable to address
and manage any and all matters of the County associated with or arising as o result of the
Transaction following the Closing; and
BE0[FURTHER RESOLVED, the County Manager, the County Attorney, the County Chief Financial
Officer, and any person authorized ordesignated toacionbehalfofonyoftheforegoing, are
authorized and directed, on behalf of the County and the Board of Commissioners, to effectuate
the granting and distribution of the Net Proceeds in a manner consistent with Exhibit C to the
APA, and to those accounts established for the Community Endowment, NHRMC Foundation,
the NMRK4CTransiUnn Stabilization Escrow, the Mental and Behavioral Health Fund, and the
County'sRevenueStabi|izationFund,a||esfurtheridenhfiedanddescribedinEwhibitCandother
provisions ofthe APA; and
BE IT FURTHER RESOLVED, the Board ofCommissioners approves and authorizes the termination
of the NHRMC Lease, which such termination shall become effective contemporaneous with the
Closing ofthe Transaction; and
BE IT FURTHER RESOLVED, the Board of Commissioners hereby authorizes and approves the
5
redemption and defeasance of all outstanding revenue bonds issued by the County in
conjunction with the Closing of the Transaction consistent with the terms of the APA, including
(i) 2006 Variable Rate Hospital Revenue Bonds, (ii) 2008 Hospital Revenue Bonds, (iii) 2011
Hospital Revenue Refunding Bonds, U»\2O13Hospital RevenueRefunding Bonds, and (v)2U17
Hospital Revenue Bonds, for the benefit of NHRK8C and hereby authorizes and directs the
County Manager and the County Chief Financial Officer to do, orcause to be done, all things
necessary tocall, defeaseand redeem such revenue bonds; and
BE IT FURTHER RESOLVED, that all the acts ofthe County Manager, County Attorney and County
Chief Financial Officer, aswell as of any person authorized or designated to act on behalf of the
such individuals or the County, which acts vvnu|d have been authorized by the foregoing
resolutions, except that such acts were taken prior to the adoption of such resolutions, are
hereby severally ratified, confirmed, approved, and affirmed as acts on behalf mfthe Board of
Commissioners and the County.
ADOPTED this the 5tmday ofOctober, 2020.
NEW HANOVER COUNTY
KyWberleigh G.krowell, Clerk to the Board
6
Execution Version
ASSET PURCHASE AGREEMENT
by and among
NEW HANOVER COUNTY,
NEW HANOVER REGIONAL MEDICAL CENTER,
NOVANT HEALTH NEW HANOVER REGIONAL MEDICAL CENTER, LLC
and,
solely for purposes of Section 5.28,
NOVANT HEALTH, INC.
DATED. OCTOBER 5, 2020
TABLE OF CONTENTS
Page
Article I
SALE AND TRANSFER OF ASSETS; CONSIDERA'T'ION; CLOSING.......................2
1.1
Purchase Price....................................................................................................................2
1.2
Post -Closing Adjustment to Purchase Price......................................................................4
1.3
Closing Date......................................................................................................................5
1.4
Transfer of Seller Assets....................................................................................................5
1.5
Excluded Assets.................................................................................................................8
1.6
Assumed Obligations.......................................................................................................10
1.7
Excluded Liabilities.........................................................................................................10
1.8
Cash Management with Respect to Non -Transferable Governmental Patient
Receivables......................................................................................................................12
1.9
Escrow Amount...............................................................................................................12
1.10
Physical Inventory ...........................................................................................................13
1.11
Prorations.........................................................................................................................13
1.12
Intended Tax Treatment and Allocation of the Purchase Price........................................13
1.13
Withholding.....................................................................................................................14
Article 2
REPRESENTATIONS AND WARRANTIES OF SELLERS........................................14
2.1
Authorization...................................................................................................................14
2.2
Binding Agreement..........................................................................................................
14
2.3
Organization and Good Standing; No Conflict; Subsidiaries; Joint Ventures.................15
2.4
Contracts and Leases.......................................................................................................16
2.5
Consents and Notices.......................................................................................................18
2.6
Compliance with Laws....................................................................................................18
2.7
Environmental Matters....................................................................................................
18
2.8
Property............................................................................................................................19
2.9
Healthcare Matters...........................................................................................................21
2. t0
Title to Assets; Sufficiency and Condition of Assets......................................................30
2.11
Financial Statements; Indebtedness.................................................................................
30
2.12
Legal Proceedings............................................................................................................31
2.13
Employee Benefits...........................................................................................................
31
2.14
Personnel..........................................................................................................................33
2.15
Insurance..........................................................................................................................
35
2.16
Solvency...........................................................................................................................35
117
Taxes................................................................................................................................35
TABLE OF CONTENTS
(continued)
Page
2.18
Absence of Changes.........................................................................................................37
2.19
Intellectual Property; IT Systems.....................................................................................37
2.20
Unlawful Payments..........................................................................................................40
2.21
COVID-19 Matters..........................................................................................................40
2.22
Brokers and Finders.........................................................................................................40
2.23
Disclaimer of Warranties.................................................................................................41
Article 3
REPRESENTATIONS AND WARRANTIES OF BUYER...........................................41
3.1
Authorization...................................................................................................................41
3.2
Binding Agreement .....................
3.3
Organization and Good Standing.....................................................................................41
3.4
No Conflict............................................................................................
3.5
Brokers and Finders.........................................................................................................42
3.6
Legal Proceedings............................................................................................................42
3.7
Ability to Perform............................................................................................................42
3.8
Solvency... ........ ......... - ........................................................................42
3.9
Representations of Sellers................................................................................................42
3.10
No Other Representations or Warranties.........................................................................42
Article 4
COVENANTS OF SELLER............................................................................................42
4.1
Access and information; Inspections...............................................................................42
4.2
Conduct of Business......................................................................................... ..43
4.3
Negative Covenants.........................................................................................................44
4.4
Required Governmental Approvals.................................................................................45
4.5
Insurance Policies and Surety Bonds...............................................................................46
4.6
Sellers' Efforts to Close...................................................................................................46
4.7
Consents...........................................................................................................................47
4.8
Closing Date Business Employees... ..... ..........................................................................
47
4.9
Termination Cost Reports................................................................................................
48
4.10
Confidentiality.................................................................................................................48
4.11
Bond Defeasance.............................................................................................................48
4.12
Use of Net Proceeds.........................................................................................................49
4.13
No Shop...........................................................................................................................49
4.14
Cooperation. ........... .........................................................................................................
50
TABLE OF CONTENTS
(continued)
Page
4.15
Notification of Certain Matters........................................................................................
50
Article 5
COVENANTS OF BUYER.............................................................................................50
5.1
Buyer's Efforts to Close..................................................................................................50
5.2
Required Governmental Authorizations..........................................................................
50
5.3
Excluded Assets...............................................................................................................51
5.4
Confidentiality........................................................................................... ..
51
5.5
Title Matters.....................................................................................................................
51
5.6
Inspection; Repair and Restoration; Insurance................................................................53
5.7
Consents...........................................................................................................................53
5.8
R&W Insurance Policy....................................................................................................53
5.9
...............................
Capital Commitments.................................................................... ...
53
5.10
Improving Access to Care and Wellness.........................................................................54
5.11
Advancing the Value of Care...........................................................................................56
5.12
Promoting Health Equity...... ...........................................................................................
56
5.13
Certain Employee Matters...............................................................................................58
5.14
Medical Staff....................................................................................................................
59
5.15
Partnering with Providers................................................................................................
59
5.16
Driving Quality of Care Throughout the Continuum.......................................................61
5.17
Growing the Level and Scope of Care.............................................................................62
5.18
Investing to Ensure Long -Term Financial Security .........................................................63
5.19
Strategic Positioning........................................................................................................63
5.20
Local Board Governance.................................................................................................
64
5.21
Local Representation on Buyer's Governing Boards and Councils.................................66
5.22
Right of First Refusal.......................................................................................................66
5.23
Statutory Requirements....................................................................................................67
5.24
Timing and Duration of Post -Closing Commitments......................................................
67
5.25
Insurance Ratings.............................................................................................................67
5.26
Casualty...................................................................................................... .... 67
5.27
Transferred Seller Bank Accounts...................................................................................68
5.28
Novant Health Guarantee.................................................................................................68
Article 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER..................................68
6.1
No Orders; Illegality........................................................................................................
68
TABLE OF CONTENTS
(continued)
Page
6.2
Representations and Warranties.......................................................................................68
6.3
Performance of Covenants. .... .........................................................................................
69
6.4
Required Governmental Authorizations..........................................................................69
6.5
Material Adverse Effect...................................................................................................69
6.6
Amendments to Governing Documents of Seller Subsidiaries........................................69
6.7
Changes to Governing Boards and Amendments to Governing Documents of
Certain Seller Subsidiaries...............................................................................................69
6.8
Items to be Delivered by Sellers at Closing.....................................................................69
Article 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS ...............................
72
7.1
No Orders; Illegality.................................................................................... .................
. . 72
7.2
Representations and Warranties.......................................................................................72
7.3
Performance of Covenants...............................................................................................
72
7.4
Required Governmental Authorizations..........................................................................72
7.5
Items to be Delivered by Buyer at Closing......................................................................72
Article8
TERMINATION..............................................................................................................74
8.1
Termination......................................................................................................................74
8.2
Termination Consequences..............................................................................................74
Article 9
POST -CLOSING MATTERS.........................................................................................75
9.1
Post -Closing Receipt of Assets or Excluded Assets........................................................75
9.2
Preservation and Access to Records After the Closing....................................................76
9.3
Change and Use of Restricted Names..............................................................................77
9.4
Post -Closing Discovery of Contracts...............................................................................77
9.5
Medicare Bad Debts.........................................................................................................77
9.6
AAP Program Funds........................................................................................................78
9.7
License to Use Billing Information..................................................................................78
9.8
Remittances......................................................................................................................79
9.9
Agreement Not to Compete.............................................................................................
79
9.10
Agreement Not to Interfere with the Healthcare Businesses...........................................79
9.11
Closing of Financials.......................................................................................................80
9.12
Archive Copy of VDR.....................................................................................................
80
9.13
Survival............................................................................................................................80
Article 10
INDEMNIFICATION; COMPLIANCE MATTERS......................................................80
10.1
Survival,_-, .......................................................... __ .............................................
.......... 80
TABLE OF CONTENTS
(continued)
Page
10.2
Sellers' Indemnification of Buyer..................................................................................1.81
10.3
Indemnification of Sellers by Buyer................................................................................82
10.4
Payment of Claims...........................................................................................................82
10.5
Method of Asserting Claims for Indemnification ............................................................83
10.6
Repatriation......................................................................................................................87
10.7
Liquidated Damages........................................................................................................
88
10.8
Specific Performance_... .................................................................................................
89
109
Exclusive..........................................................................................................................89
Article I 1
TAX; COST REPORT MATTERS; HITECH PAYMENTS; COMPLIANCE
MATTERS.......................................................................................................................
89
11.1
Tax Matters......................................................................................................................
89
11.2
Cost Report Matters.........................................................................................................
92
11.3
HITECH Payments..........................................................................................................93
11.4
CMS Reporting, Payment Adjustments and Share Savings/Bundled Payments
Reconciliation..................................................................................................................
94
11.5
Waiver Program Payments..............................................................................................95
11.6
Compliance Matters.........................................................................................................95
Article 12
MISCELLANEOUS PROVISIONS................................................................................96
12.1
Further Assurances and Cooperation...............................................................................
96
12.2
Assignment; Successors and Assigns..............................................................................96
12.3
Governing Law; Jurisdiction............................................................................................96
12.4
Amendments....................................................................................................................97
12.5
Exhibits and Disclosure Schedules..................................................................................97
12.6
Notices.............................................................................................................................
98
12.7
Headings..........................................................................................................................99
12.8
Confidentiality and Publicity ...........................................................................................99
12.9
Construction.....................................................................................................................99
12.10
Number; Construction......................................................................................................99
12.11
Third -Party Beneficiary.................................................................................................100
12.12
Expenses and Attorneys' Fees.......................................................................................100
12.13
Counterparts...................................................................................................................100
12.14
Entire Agreement...........................................................................................................100
12.15
No Waiver...... ........................................................................ ..................................
101
TABLE OF CONTENTS
(continued)
Page
12.16 Severability ............................................ ..........101
12,17 Definitions.....................................................................................................................101
12.18 Time is of Essence...................................................................................................118
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
1.1
Hospitals
1.2
Other Businesses
1.4(a)
Owned Real Property
1.4(b)
Tenant Leases
1.4(c)
Personal Property
1.4(d)
NPIs and Licenses
1.4(e)
Lessor Leases
1.4(f)(i)
Capital Leases
1.4(f)(ii)
Personal Property Leases
1.4(g)
Material Contracts
1.4(p)
Acquired Intellectual Property
1.4(r)
Transferred Bank Accounts
1.4(w)
Joint Venture Interests
1.4(x)
Subsidiary Interests
1.5(c)
Restricted bunds
1.5(e)
Excluded Contracts
1.5(t)
Other Excluded Assets
1.7(1)
Excluded Liabilities
1.12(b)(1)
Purchase Price Allocation
1.12(b)(2)
Allocation Schedule Methodology
2.3(c)
Subsidiaries
2.3(d)
Joint Venture Entities
2.5(a)
Contract and Lease Consents
2.5(b)
Consents - Governmental
2.6
Compliance with Laws
2.7
Environmental Matters
2.8(b)
Personal Property
2.8(d)
Permitted Exceptions
2.8(e)
Notice from Governmental Entity
2.9(a)
Healthcare Laws
2.9(d)
HIPAA
2.9(e)
Governmental Permits
2.9(f)
Accreditations and Certifications
2.9(g)
Government Programs
2.9(h)
Compliance with Government Programs and Private Programs
2.9(i)
Medical Staff Matters
2.9(k)
Government Reporting Obligations
29(m)
Cost Reports
29(w)
MSSP
2.9(x)
Insurer Applications
2.9(aa)
Applications
2.9(bb)
Financial Relationships
2.11(a)
Financial Statements
2.11(b)
Indebtedness
2.12
Legal Proceedings
2.13(a)
Seller Plans
2.13(c)
Multiemployer Plans
2.14(a)
Business Employees
2.14(c)
Labor and Employment Laws
2.14(e)
Employee Proceedings
2.15
Insurance
2.18
Absence of Changes
2.19(a)
Intellectual Property
2.19(b)
Ownership of IP
2.19(g)
Software Ownership
2.19(i)
Exclusive Ownership
2.190)
Work for Hire
2.21
Provider Relief Funds
3.6
Buyer Legal Proceedings
4.5(a)
Claims-Made Insurance Policies
4.5(b)
Transferred Insurance Policies and Surety Bonds
4.7(a)
Consents and Notices
5.13
Transferred Plans
5.15(1)
Contracted Third-Party Providers
5.15(1)
Connectivity and Analytics Services
5.16(c)
Quality Improvement Initiatives
5.20(b)
Initial Trustees of the Local Board
5.23
Statutory Requirements
6.4
Required Governmental Authorizations
6.6(b)
Corporate Actions
6.8(m)
County Lease Subleases
6.8(n)
Required Contract Consents
6.8(p)
Terminated Contracts
6.8(bb)(i)
Unwritten Employment Agreements
6.8(bb)(ii)
Unwritten Leases
12.17(a)
Permitted Encumbrances
12.17(b)
Provider Needs Assessment
12.17(c)
Strategic Plan
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
A
Form Estimated Closing Statement
B
Form Escrow Agreement
C
Use of Net Proceeds
D
New Hanover Academic and Clinical Affiliation Agreement Term Sheet
E
Buyer Governing Documents
F
Novant Governing Documents
G
Form Bill of Sale
H
Form Assignment and Assumption Agreement
Forms of Lease Assignment Agreements
7
Form Special Warranty Deed
K
Form Power of Attorney
L
Form Custodial Agreement
M
Form Intellectual Property Assignment
N
Endowment Governance Structure
O
Form Transition Services Agreement
P
Net Working Capital
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into as of the 5" day of
October, 2020 (the "Effective Date"), by and among New Hanover County, North Carolina ("County"),
New Hanover Regional Medical Center, a North Carolina nonprofit corporation, on behalf of itself and its
Subsidiaries and Affiliates (other than the NHRMC Foundation, Pender and Material Affiliations)
(collectively, "NHRMC"), on the one hand, and Novant Health, Inc., a North Carolina nonprofit
corporation ("Novant Health"), and Novant Health New Hanover Regional Medical Center, LLC
("Buyer"), a North Carolina limited liability company, on the other hand.
RECITALS:
WHEREAS, NHRMC engages in the business of delivering acute care services to the public (i) at
facilities set forth on Schedule 1.1 (each, a "Hospital" and, collectively, the "Hospitals") and (ii) also
through those physician practices, urgent care centers, imaging centers, ambulatory surgical facilities,
medical office buildings and other ancillary businesses that are used or held for use as part of, or in
conjunction with or in support of, the operations of the Hospitals and which are set forth on Schedule 1.2
(the "Other Businesses") (the Hospitals and the Other Businesses are referred to in this Agreement,
collectively, as the "Healthcare Businesses");
WHEREAS, the County owns the Hospitals and other assets used in conjunction with the
operation of the Healthcare Businesses, and leases them to NHRMC to operate the Healthcare Businesses
as a healthcare system; and
WHEREAS, NHRMC is governed by a Board of Trustees appointed by the County ("NHRMC
Board");
WHEREAS, discussions regarding certain industry trends, challenges, opportunities, and related
matters as to the best course forward for the Healthcare Businesses led to the County Commissioners of
New Hanover County ("County Commissioners") passing a resolution in September 2019 to move
forward in exploring potential future options for NHRMC through a request for proposals process
("RFP") in accordance with North Carolina Law, and to the NHRMC Board passing a corresponding
resolution endorsing and joining such County exploration in that same month;
WHEREAS, on March 16, 2020, six health care organizations, including Novant Health
("Respondents"), responded to the comprehensive RFP with a variety of proposals, all of which were
well vetted by the Partnership Advisory Group ("PAG"), a joint subcommittee of the County
Commissioners and NHRMC Board, with analyses and input from financial, legal, and strategic advisors;
WHEREAS, in accordance with North Carolina Law, a public hearing was held on June 22, 2020,
regarding the proposals received in response to the RFP;
WHEREAS, in conjunction with the PAG's evaluation of the proposals, the corresponding due
diligence and discussions with the finalists, the PAG recommended the NHRMC Board and County
Commissioners approve and authorize the execution of a nonbinding letter of intent with Novant Health
("LOI" ), and the NHRMC Board and County Commissioners, each having reviewed all of the work of
the PAG and the proposals, and having considered the best interests of the County and the community,
concurred with such recommendations;
WHEREAS, on July 7, 2020, the NHRMC Board adopted a resolution to enter into the LOI with
Novant Health;
WHEREAS, on July 13, 2020, the County Commissioners adopted a resolution to enter into the
LOI with Novant Health;
WHEREAS, Sellers and Buyer entered into such LOI on July 13, 2020;
WHEREAS, Novant Health, through Buyer, an Affiliate of Novant Health, desires to acquire
from Sellers, and Sellers desire to sell to Buyer, substantially all of the assets used with respect to the
operation of the Healthcare Businesses, in exchange for the consideration and upon the terms and
conditions set forth in this Agreement; and
WHEREAS, the County Commissioners will use, invest, direct and manage the proceeds of the
Transactions exclusively for public benefit purposes; and
WHEREAS, Novant Health is a party to this Agreement for purposes of guaranteeing Buyer's
obligations hereunder;
WHEREAS, capitalized terms are defined in Section 12.17 (or a cross-reference to such
definition is set forth therein).
NOW, THEREFORE, in consideration of the foregoing premises, which are hereby made a part
of this Agreement, and the mutual promises and covenants contained in this Agreement, the receipt and
sufficiency of which are hereby acknowledged, and for their mutual reliance, the parties agree as follows;
ARTICLE 1
SALE AND TRANSFER OF ASSETS;
CONSIDERATION; CLOSING
1.1 Purchase Price.
(a) Subject to the terms and conditions of this Agreement, the cash purchase price to
be paid by Buyer to Sellers in exchange for the Assets and other rights and benefits conferred by this
Agreement and the other Transaction Documents (the "Purchase Price") shall equal (i) One Billion Five
Hundred Million Dollars ($1,500,000,000) ("Base Cash Consideration"), minus (ii) the Closing
Liabilities Amount, minus (iii) the Seller Transaction Expenses Amount, minus (iv) the Indebtedness
Amount, minus (v) the amount (if any) by which the Net Working Capital Target exceeds Closing Net
Working Capital, plus (vi) the amount (if any) by which Closing Net Working Capital exceeds the Net
Working Capital Target (the amount in either clause v or clause (vi), the "Closing Net Working
Capital Adjustment"), plus (vii) the Cash Amount.
(b) At least five Business Days, but no more than ten Business Days, prior to the
Closing Date, Sellers shall prepare and deliver to Buyer a statement, substantially consistent with the
form set forth on Exhibit A ("Estimated Closing Statement"), setting forth in reasonable detail Sellers'
reasonable and good faith estimates of (i) the Estimated Closing Liabilities Amount, (ii) the Estimated
Seller Transaction Expenses Amount, (iii) the Estimated Indebtedness Amount, (iv) the Estimated
Closing Net Working Capital, (v) the resulting calculations of the Estimated Closing Net Working Capital
Adjustment and the Estimated Purchase Price and (vi) the Estimated Cash Amount. Following the
delivery of the Estimated Closing Statement, Sellers shall promptly provide Buyer reasonable access to
the books and records and work papers used by Sellers in preparing the Estimated Closing Statement for
purposes of assisting Buyer in its review of the Estimated Closing Statement. Prior to the Closing Date,
the parties shall cooperate in good faith to answer any questions and resolve any issues reasonably raised
by Buyer in connection with Buyer's review of the Estimated Closing Statement. Sellers shall consider in
good faith any comments or objections to any amounts set forth on the Estimated Closing Statement
provided to them by Buyer before the Closing and if, before the Closing, Sellers and Buyer agree in
writing at least two days before the Closing Date to make any modification to the Estimated Closing
Statement, then the Estimated Closing Statement as so modified shall be deemed to be the Estimated
Closing Statement for purposes of calculating the Estimated Closing Payment. If the parties fail to agree
upon any amounts set forth in the Estimated Closing Statement at least two days before the Closing Date,
then, subject to the satisfaction or waiver (if permissible) of the conditions set forth in Articles 6 and 7 at
the Closing, the Closing shall proceed at such time and on such date as otherwise contemplated by
Section 1.3 and the Estimated Closing Payment set forth in the Estimated Closing Statement delivered by
Sellers pursuant to Section 1.1(b) with such modifications as have been agreed by the parties shall be used
for the Closing.
(c) The parties shall work together in good faith to prepare a funds flow spreadsheet
(the "Funds Flow Memorandum") reflecting: (i) the aggregate amount to be paid at the Closing by
Buyer to Sellers, as reflected on the Estimated Closing Statement, (ii) the amounts to be paid at the
Closing by Buyer to (A) any creditors who are owed any portion of the Indebtedness Amount set forth on
Schedule 2.1 1(b), as reflected on the Estimated Closing Statement, (B) any third party who is owed any
portion of the Seller Transaction Expenses Amount, as reflected on the Estimated Closing Statement, and
(C) the amount to be paid to the Title Company pursuant to Section 5.5(e), if any, and (iii) wire transfer
instructions for each payment to be made at the Closing as set forth in the Funds Flow Memorandum.
(d) Subject to the terms and conditions of this Agreement, at the Closing, Buyer shall
pay, by wire transfer of immediately available funds pursuant to the wire instructions set forth on the
Funds Flow Memorandum:
(i) to the Escrow Agent, (A) the Adjustment Escrow Amount into an escrow
account (the "Adjustment Escrow Account") and (B) the General Escrow Amount into an
escrow account (the "General Escrow Account"), each to be held by the Escrow Agent in
accordance with the terms of the Escrow Agreement;
(i) on behalf and at the direction of Sellers, to the Endowment, an amount
equal to the Estimated Closing Payment, minus (A) the NHRMC Transition Stabilization Escrow
Amount, minus (B) the County Revenue Stabilization Fund Amount, minus (C) the Mental and
Behavioral Health Fund Amount and minus (D) the Bond Defeasance Escrow Amount.
(iii) (A) to the Transition Escrow Agent, the NHRMC Transition
Stabilization Escrow Amount, (B) to the County Revenue Stabilization Fund, the County
Revenue Stabilization Fund Amount, (C) to the Mental and Behavioral Health Fund, the Mental
and Behavioral Health Fund Amount and (D) to the Bond Defeasance Escrow Agent, the Bond
Defeasance Escrow Amount.
(iv) on behalf of the applicable obligor, to each of the holders of outstanding
Indebtedness that are listed on Schedule 2.11 b , cash in the amount set forth in the holder's
respective Payoff Letter;
(v) on behalf of the applicable obligors, the Seller Transaction Expenses
Amount to the applicable recipients identified in the Estimated Closing Statement, net of any
applicable withholding Taxes; and
(vi) to the Title Company, the amount required by the terms of Section
5.5(e), if any.
12 Post -Closing Adjustment to Purchase Price.
(a) Within 120 calendar days after the Closing Date, Buyer shall prepare and deliver
to Sellers a statement, substantially consistent with the form set forth on Exhibit A (the "Closing
Statement") setting forth (i) Buyer's calculation of the Closing Liabilities Amount, Seller Transaction
Expenses Amount, Indebtedness Amount and Closing Net Working Capital, (ii) the resulting calculations
of the Closing Net Working Capital Adjustment and the Purchase Price and (iii) Buyer's calculation of
the Cash Amount and any resulting payment among the parties. Buyer shall give Sellers reasonable and
timely access, during normal business hours and upon reasonable advance notice, to review the books and
records and work papers relating to the Healthcare Businesses and to such employees and representatives
of Buyer as shall be reasonably necessary for Sellers to review the calculations contemplated in this
Section 1.2.
(b) If Sellers dispute the calculation of the Closing Liabilities Amount, Seller
Transaction Expenses Amount, Indebtedness Amount, Cash Amount or Closing Net Working Capital as
of the Effective Time or the resulting calculations of the Closing Net Working Capital Adjustment and the
Purchase Price, Sellers shall notify Buyer in writing within 60 calendar days after Sellers' receipt of the
Closing Statement from Buyer (the "Objection Statement"), which Objection Statement shall specify the
items to which each such objection relates and the basis for each such objection, and which shall include
Sellers' alternative calculation of the Closing Liabilities Amount, Seller Transaction Expenses Amount,
Indebtedness Amount, Cash Amount or Closing Net Working Capital as of the Effective Time and the
resulting calculations of the Closing Net Working Capital and the Purchase Price. If Sellers do not deliver
an Objection Statement to Buyer prior to such date, the Closing Statement and the calculations set forth
therein shall be final, binding and nonappealable. Sellers and Buyer shall negotiate in good faith to
resolve any objections of the type described above and set forth in the Objection Statement; provided,
however, that any discussions relating thereto shall be governed by Rule 408 of the Federal Rules of
Evidence and any similar state rule(s), and evidence of such discussions shall not be admissible in any
future Proceedings between Sellers and Buyer. If Sellers and Buyer cannot resolve such objection within
30 days after delivery of the Objection Statement, then Sellers and Buyer shall instruct the Independent
Accountants to select one of their partners experienced in health -care -related purchase price adjustment
disputes to review the matters set forth in the Objection Statement that remain in dispute and promptly
decide the proper amounts of such disputed issues (which decision shall also include a recalculation of the
Purchase Price). If issues in dispute are submitted to the Independent Accountants for resolution, Sellers,
on the one hand, and Buyer, on the other hand, shall furnish to the Independent Accountants and the other
party or parties such workpapers and other documents and information relating to the disputed issues as
the Independent Accountants may request and that are available to such party or its Affiliates, will be
afforded the opportunity to present to the Independent Accountants one position paper relating to the
determination within 15 days of the submission of the dispute to the Independent Accountants, and the
opportunity to respond to the Independent Accountants' questions and the items furnished by the other
party regarding the dispute. In resolving the items in the Objection Statement that are still in dispute and
in determining the recalculation of the Purchase Price, the Independent Accountants shall (i) not assign to
any item in dispute a value that is (A) greater than the greatest value for such item assigned by Buyer, on
the one hand, or Sellers, on the other hand, or (B) less than the smallest value for such item assigned by
Buyer, on the one hand, or Sellers, on the other hand, (ii) make a final determination of the disputed items
in accordance with the provisions, guidelines and procedures set forth in this Agreement, (iii) act as an
expert and not as an arbitrator, (iv) render a final resolution in writing to Buyer and Sellers (which final
resolution shall be requested by Buyer and Sellers to be delivered not more than 60 days following
submission of such disputed items to the Independent Accountants), which final resolution, absent
manifest error, shall be final, conclusive, binding and nonappealable on Buyer and Sellers, and (v) not
engage in independent factual investigation, not hear evidence from either Buyer or Sellers outside the
presence of both Buyer and Sellers, and not engage in ex parte communications with Buyer or Sellers.
The Purchase Price as finally determined pursuant to this Section 1.2(b) is referred to herein as the "Final
Purchase Price." The costs of the Independent Accountants shall be borne one-half by Sellers (jointly
and severally), on the one hand, and one-half by Buyer, on the other hand; provided, however, that such
costs shall be paid by Buyer to the Independent Accountants, and one-half of such costs shall be included
in the Seller Transaction Expenses Amount for purposes of determining the Final Purchase Price.
(c) If the Final Purchase Price exceeds the Estimated Purchase Price, then (i) Buyer
shall promptly (but in any event within five Business Days after the final determination thereof) pay to an
account designated by Sellers the amount of such excess by wire transfer of immediately available funds,
and (ii) Sellers and Buyer shall jointly instruct the Escrow Agent to pay to Sellers from the Adjustment
Escrow Account an amount equal to the Adjustment Escrow Amount by wire transfer of immediately
available funds.
(d) if the Estimated Purchase Price exceeds the Final Purchase Price, then, within
five Business Days after the final determination thereof, Sellers and Buyer shall jointly instruct the
Escrow Agent to pay from the Adjustment Escrow Amount an amount equal to such excess to Buyer by
wire transfer of immediately available funds. If any funds remain in the Adjustment Escrow Amount,
Sellers and Buyer shall also, simultaneously with the joint instruction for Buyer's distribution, jointly
instruct the Escrow Agent to pay to Sellers such remaining funds from the Adjustment Escrow Amount
through a wire transfer to an account or accounts designated by Sellers pursuant to the terms of the
Escrow Agreement. If such excess is more than the Adjustment Escrow Amount, Sellers shall promptly
(but in any event within no more than five Business Days) pay the amount by which the excess is more
than the Adjustment Escrow Amount to Buyer by wire transfer of immediately available funds to an
account designated by Buyer (for which obligation Sellers shall be jointly and severally liable). Sellers
shall fund such payment, if any, out of the Purchase Price.
(e) The parties shall treat any payment made pursuant to this Section 1.2 as an
adjustment to the Purchase Price for all Tax purposes to the maximum extent permitted by Law.
Payments to be made pursuant to this Section 12 shall not include interest.
1.3 CIosing Date. The consummation of the Transactions (the "Closing") shall take place
remotely by e-mail through the exchange of PDF documents or other electronic transmissions
commencing at 10:00 a.m., Eastern Time, on the last day of the month during which the last of the
conditions set forth in Article 6 and Article 7 (other than those conditions that by their terms are to be
satisfied at the Closing) have been satisfied or waived, or at such other date and/or at such other location
as the parties may mutually designate in writing (the "Closing Date"). Unless otherwise agreed in
writing by the parties, the Closing shall be effective for accounting purposes as of 12:00:01 a.m, on the
day immediately following the Closing Date or such other time as mutually agreed to by the parties (the
"Effective Time") and the Closing shall be deemed to have occurred as of the Effective Time,
1.4 Transfer of Seller Assets. On the Closing Date and effective as of the Effective Time,
Sellers shall assign, transfer, convey and deliver to Buyer, and Buyer shall acquire, free and clear of all
Encumbrances, other than Permitted Encumbrances, all of Sellers' right, title and interest in and to the
following rights, properties and assets (in each case, to the fullest extent assignable or transferrable)
(collectively, the "Assets"), but in all cases excluding the Excluded Assets:
(a) fee simple title to all of the real property owned by any Seller or any of Sellers'
Affiliates (other than the NHRMC Foundation, Pender and Material Affiliations) used in the operation of
the Healthcare Businesses (including those properties listed on Schedule 1.4(a)), including all
improvements, fixtures and construction in progress located thereon, and all rights, privileges and
easements appurtenant to any of the foregoing (collectively, the "Owned Real Property"; provided,
however, that solely for the purposes of Article 2 and Section 5.5, "Owned Real Property" shall further
include all real property owned by Pender);
(b) all of Sellers' right, title and interest in and to all real property leases, subleases,
license agreements and other occupancy agreements pursuant to which a Seiler leases, subleases, licenses,
or otherwise occupies real property as a tenant, subtenant, licensee or occupant used in the Healthcare
Businesses (each, a "Tenant Lease" and, collectively, the "Tenant Leases") (the real property that is
subject to the Tenant Leases being referred to as the "Leased Real Property" and, together with the
Owned Real Property, the "Real Property"); the parties hereby acknowledge and agree that the term
"Tenant Leases" includes all real property leases, subleases, license agreements and other occupancy
agreements pursuant to which any Subsidiary or Affiliate of Sellers or any Joint Venture Business leases,
subleases, licenses or otherwise occupies real property as a tenant, subtenant, licensee or occupant used in
the Healthcare Businesses; a list of all such Tenant Leases is set forth in Schedule 1.4(b);
(c) all of the tangible personal property, including equipment (including medical
equipment), furniture, fixtures, machinery, vehicles, office furnishings, computer hardware, and leasehold
improvements, owned by Sellers and that are used or held for use in the operation of the Healthcare
Businesses (the "Personal Property"), including the Personal Property listed on Schedule 1.4(c);
(d) all of Sellers' rights to the National Provider Identifiers ("NPIs"), Medicare,
Medicaid and TRICARE provider numbers and agreements, licenses, Orders, grants, authorizations,
consents, permits, approvals, applications, certificates of need, certificates of exemption, franchises,
acereditations, certifications, registrations and other governmental licenses, permits or approvals issued to
Sellers and used with respect to the operation, development or expansion of the Healthcare Businesses
(the "Licenses"), including the NPIs and Licenses listed on Schedule 1.4(d);
(e) all of Sellers' right, title and interest in and to all real property leases under which
any Seller is the lessor, sublessor or licensor relating to the operation of the Healthcare Businesses (each,
a "Lessor Lease" and, collectively, the "Lessor Leases"); the parties hereby acknowledge and agree that
the term "Lessor Leases" includes all real property leases under which any Subsidiary or Affiliate of
Sellers is the lessor, sublessor or licensor relating to the operation of the Healthcare Businesses; a list of
all Lessor Leases is set forth in Schedule 1.4(e);
(f) all of Sellers' interest in and to: (i) all capital leases relating to the operation of
the Healthcare Businesses (each, a "Capital Lease"), including those Capital Leases listed on Schedule
1.4(fl(i); and (ii) all other personal property leases (other than the Capital Leases) relating to the operation
of the Healthcare Businesses (each, a "Personal Property Lease"), including those Personal Property
Leases listed on Schedule 1.4(f)(ii);
(g) all of Sellers' interest in and to all contracts and agreements other than the Tenant
Leases, the Lessor Leases, the Capital Leases or the Personal Property Leases associated with, or to which
any Seller is a party in support or furtherance of, the operation of the Healthcare Businesses (the
"Contracts"), including those Contracts listed on Schedule 1.4(g) and the Transferred Insurance Policies
and Surety Bonds; provided, however, the term "Contracts" as used in this Agreement shall exclude the
Excluded Contracts;
(h) except as excluded by Section 1.5(f), all supplies, drugs, food, linens, janitorial
and office supplies and other disposables and consumables owned by any Seller and used in the
Healthcare Businesses or located on the Real Property (the "Inventory");
G) except for Non -Transferable Governmental Patient Receivables, all accounts
receivable of Sellers, and all claims, rights, interests and proceeds related thereto, arising from the
rendering of services or provision of medicine, drugs or supplies to patients of, or otherwise from the
operations of, the Healthcare Businesses prior to the Effective Time (the "Accounts Receivable");
0) to the extent any Accounts Receivable are prohibited by applicable Law from
being transferred to Buyer (the "Non -Transferable Governmental Patient Receivables"), an amount in
cash equal to the amount collected in respect of such Non -Transferable Governmental Patient
Receivables, which shall be payable as and when the amounts of such Non -Transferable Governmental
Patient Receivables are collected;
(k) except for the Excluded Records, subject to the terms of the Custodial
Agreement, all documents, records, operating manuals and files that are used or held for use in the
operation of the Healthcare Businesses, including patient records, medical records, copies of employee
records relating to Hired Employees, financial records, facility records, medical staff records, property
records, equipment records, construction plans and specifications, and medical and administrative
libraries,
(1) all rights in all warranties of any manufacturer or vendor in connection with the
Personal Property;
(m) any claims, causes of action or rights against third parties related to the
Healthcare Businesses, the Assets or the Assumed Obligations, contractual or otherwise, arising before or
after the Effective Time;
(n) all insurance proceeds arising in connection with damage to the Assets occurring
before the Effective Time to the extent not expended for the repair or restoration of such Assets;
(o) the telephone numbers that are used or held for use in the operation of the
Healthcare Businesses;
(p) (i) all Intellectual Property that is used or held for use and necessary to the
operation of the Healthcare Businesses as currently conducted, including all Intellectual Property
Agreements, and (ii) all right, title and interest of any Seller and any of its Affiliates to the use of the
names set forth on Schedule 1 *V) and any derivatives or variations thereof (the "Acquired Names");
(q) all of those advance payments, prepayments, prepaid expenses, deposits and the
like that exist as of the Closing Date and were made with respect to the operation of the Healthcare
Businesses (the "Prepaid Expenses");
(r) the Cash Amount and all bank accounts of Sellers used in the Healthcare
Businesses, all of which are set forth on Schedule 1*0 (the "Transferred Seller Bank Accounts"),
including any deposits in any such accounts as of the Closing Date that are included in the Cash Amount;
(s) all of Sellers' rights to appoint all of the board of directors of the New Hanover
Regional Medical Center Foundation, Inc. ("NHRMC Foundation");
(t) to the extent not included in any of the foregoing, any current assets included in
the determination of Closing Net Working Capital,
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(u) all HITECH Payments pertaining to Sellers and the Healthcare Businesses for the
federal fiscal year or the calendar year (depending on what was used as the attestation period) in which
the Effective Time occurs and all subsequent federal fiscal years or calendar years, as applicable,
excluding the portion of the HITECH Payments pertaining to the calendar year in which the Effective
Time occurs to which Sellers have a right under Section 11.3;
(v) any writings, documents and other items that are protected from discovery by the
attorney-client privilege, the attorney -work -product doctrine or any other cognizable privilege or
protection, other than the Excluded Records;
(w) Sellers' equity and membership interests in all Joint Ventures related to the
Healthcare Businesses, including the Joint Ventures set forth on Schedule l Aw
(x) Sellers' equity and membership interests in all Subsidiaries related to the
Healthcare Businesses, including the Subsidiaries set forth on Schedule 1.4(x);
(y) the Books and Records, including all of Sellers' corporate record books, minute
books and Tax records relating to the Joint Ventures;
(z) all unclaimed property of any third party as of the Effective 'Time, including
property which is subject to applicable escheat Laws;
(aa) Sellers' Graduate Medical Education/Residence Programs and similar medical
professional training programs;
(bb) any receipts or refunds (i) relating to disproportionate share payments with
respect to time periods prior to the Effective Time or (ii) relating to GPO fee sharebacks, rebates or
discounts that are related to the purchase of inventory, equipment or other assets prior to the Effective
Time;
(cc) the Transferred Plans and any associated funds, accounts and assets thereof; and
(dd) all goodwill of Sellers associated with the Healthcare Businesses or the Assets.
1.5 Excluded Assets. Notwithstanding anything to the contrary in Section 1.4,Sellers shall
retain all assets owned directly or indirectly by them (or any of Sellers' Affiliates) which are not included
in the Assets, including the following assets of Sellers (collectively, the "Excluded Assets"):
(a) any receipts or refunds (i) relating to bad debt reimbursements with respect to
services furnished prior to the Effective Time; (ii) relating to the Provider Relief Funds or (iii) relating to
the Disaster Relief Funds;
(b) any current or long-term assets not related to the Healthcare Businesses;
(c) all Restricted Cash that cannot be transferred to Buyer, the amounts and sources
of which are described on Schedule 1.5(c);
(d) except for the Transferred Plans and any associated funds, accounts and assets,
all Seller Plans and the funds and accounts of all employee retirement, pension, deferred compensation,
health, welfare or benefit plans and programs, including assets representing a surplus or overfunding of
any Seller Plan;
(e) all agreements, contracts, commitments, leases, purchase orders and other
arrangements set forth on Schedule 1.5(e) (the "Excluded Contracts");
(f) the portions of Inventory and other Assets disposed of, or expended, as the case
may be, by Sellers after the Effective Date and prior to the Effective Time in the ordinary course of
business;
(g) Subject to Section 1. 11, all claims, rights, interests and proceeds with respect to
Tax payments, refunds, and credits (including property Tax refunds and charity Tax credits) related to the
Healthcare Businesses or the Assets with respect to periods ending prior to the Effective Time, and the
right to pursue appeals of same;
(h) all of Sellers' corporate record books, minute books and Tax records, except for
those relating to the Joint Ventures;
(i) all bank accounts of the County not related to the Healthcare Businesses;
0) all claims, causes of action, choses in action, rights of recovery, rights of set off
and rights of recoupment of Sellers and their Affiliates with respect to the Excluded Assets and the
Excluded Liabilities, and any payments, awards or other proceeds resulting therefrom;
(k) any writings, documents and other items that are protected from discovery by the
attorney-client privilege, the attorney -work -product doctrine or any other cognizable privilege or
protection and (i) that are directly related to the Transactions or (ii) relate principally to the Excluded
Assets or Excluded Liabilities (collectively, the "Excluded Records");
(1) any receipts or refunds relating to the Seller Cost Reports, Agency Settlements,
or Waiver/Supplemental Payment Program Receivables (whether resulting from an appeal by Sellers or
otherwise) with respect to time periods prior to the Effective Time,
(m) subject to the terms of the Custodial Agreement, all documents, records,
correspondence, work papers and other documents other than patient records, relating to the Seller Cost
Reports or Agency Settlements, but excluding records relating to the provision of patient care;
(n) all rights to HITECH Payments pertaining to Sellers or Healthcare Businesses for
all federal fiscal years or calendar years (depending on what was used as the attestation period) ending
prior to the Effective Time, and the portion of the HITECH Payments pertaining to the calendar year in
which the Effective Time occurs to which Sellers have a right under Section 11.3;
(o) any Licenses that are not transferrable to Buyer pursuant to applicable Laws;
(p) any Non -Transferable Governmental Patient Receivables;
(q) the rights of Sellers and their Affiliates under this Agreement;
(r) all of the assets of, and all of Sellers' right, title, and interest in or to, OWP4 and
Iron Gate;
(s) all cash equivalents, marketable securities and other investments of the
Healthcare Businesses; and
(t) any Contracts or other assets identified in Schedule 1.50).
1.6 Assumed Obligations. At the Effective Time, and except for the Excluded Liabilities,
Sellers shall assign, and Buyer shall assume, the future payment and performance of the following
Liabilities of Sellers with respect to the operation of the Healthcare Businesses (collectively, the
"Assumed Obligations"):
(a) all Liabilities relating to the period after the Effective Time arising under the
Assumed Contracts, but only to the extent that such Liabilities are not Excluded Liabilities, were incurred
in the ordinary course of business and do not arise from any failure by any Seller or any of its Affiliates to
perform, improper performance, warranty or other default, breach or violation by any Seller or any of its
Affiliates on or before the Effective Time;
(b) Subject to Section 1. 11, any and all obligations with respect to the Real Property
arising after the Effective Time or relating to the ownership or operation of the Real Property after the
Effective Time (excluding any Liabilities that accrue before the Effective Time, regardless of whether
payment thereof is not due until after the Effective Time, which shall remain the obligation of Sellers);
(c) any and all obligations of Sellers under the Worker Adjustment and Retraining
Notification Act (and any state -equivalent statute) (collectively, "WARN") as a result of (i) the
consummation of the Transactions, (ii) the acts of Buyer or any Affiliate(s) of Buyer on and after the
Effective Time (taking into account, or otherwise including, any employee terminations prior to the
Effective Time), (iii) Buyer's breach of its covenant with respect to the Hired Employees as set forth in
Section 5.13 or (iv) Seller's termination of any Closing Date Business Employee to whom Buyer fails to
offer employment as of the Effective Time;
(d) Subject to Section 1.1I, all real and personal property Taxes, if any, that are
attributable to the Assets, and all utilities furnished to the Assets (excluding any Liabilities that accrue
before the Effective Time, regardless of whether payment thereof is not due until after the Effective Time,
which shall remain the obligation of Sellers);
(e) any Liabilities under any change -of -control, retention, bonus, termination,
severance, employment or similar agreement assumed by Buyer and providing for payments to any Hired
Employee as a result of Buyer's termination of his or her employment at any time following the Effective
Time (the `Buyer Severance Obligations");
(f) Accrued Paid Time Off carried over pursuant to Section 5.I3 to the extent
included in the calculation of Closing Net Working Capital;
(g) the Transferred Plans and any associated funds, accounts and assets thereof; and
(h) all current Liabilities included in the calculation of Closing Net Working Capital.
1.7 Excluded Liabilities. Notwithstanding anything to the contrary in Section 1.6, Buyer
shall not be responsible to pay, perform, discharge or assume any other Liabilities of any Seller or any of
its Affiliates or Joint Ventures, any Liabilities related to the pre -Closing ownership or operation of the
Healthcare Businesses or any Liabilities related to the Excluded Assets or any acts or omissions of any
Seller or any of their Affiliates or Joint Ventures other than the Assumed Obligations (the "Excluded
Liabilities"). For the avoidance of doubt, Excluded Liabilities include:
to
(a) all Liabilities of Sellers with respect to any long-term debt, guarantees of debt,
accrued interest or net interest rate swap Liabilities of Sellers, other than Sellers' Liabilities arising under
the Capital Leases on or after the Effective Time;
(b) all Liabilities of Sellers relating to the Seller Cost Reports, Agency Settlements
and/or Waiver/Supplemental Payment Program Receivables (whether resulting from an appeal by Sellers
or otherwise) with respect to time periods ending prior to the Effective Time;
(c) all Liabilities of Sellers relating to the Excluded Assets;
(d) all Seller Taxes;
(e) except for the Accrued Paid Time Off, Buyer Severance Obligations, Transferred
Plans or as otherwise set forth in Section 5.13, all Liabilities under or in connection with the Seller Plans
and/or any plans ever maintained by and/or contributed to by Sellers, the Healthcare Businesses or the
Joint Venture Businesses or in which the current and/or former employees of Sellers, the Healthcare
Businesses or the Joint Venture Businesses participate or have ever participated, including (i) all benefits
and administrative costs associated with any such plans, (ii) all Liabilities under any change of control,
retention, bonus, termination, severance, employment or similar plan or agreement providing for
payments to current or former employees of Sellers and (iii) all Liabilities imposed by Law and/or
contract, including withdrawal Liability arising under or with respect to such plans;
(f) any Liabilities under or in connection with the Transferred Plans that pertain to
events, matters or actions occurring or arising before the Closing;
(g) any Liabilities under any change -of -control, retention, bonus, termination,
severance, paid time off, leave, employment or similar plan or agreement providing for payments to (i)
any Hired Employee as a result of the consummation of the Transactions or (ii) any Non -Offered
Employee as a result of any Seller's termination of his or her employment at any time following the
Effective Time;
(h) all Liabilities of any Seller for commissions or fees owed to any finder or broker
in connection with the Transactions;
(i) all Liabilities associated with Provider Relief Funds, Disaster Relief Funds and
the AAP Program;
0) all Seller Transaction Expenses;
(k) any Liability arising out of any Proceeding pending as of the Closing;
(1) any Liability set forth on Schedule 1.7(l);
(m) any Liability arising out of or relating to the ownership or use of the assets of any
Joint Venture before the Effective Time, whether fixed or contingent, recorded or unrecorded, known or
unknown, currently existing or hereafter arising;
(n) any Liability arising out of any Proceeding commenced after the Closing and
arising out of or relating to any occurrence or event happening prior to the Closing; and
(o) any Liability arising out of or resulting from any Sellers' compliance or
noncompliance with any Law or Order of any Governmental Entity.
1.8 Cash Management with Respect to Non -Transferable Governmental Patient Receivables.
Sellers and their Affiliates hereby appoint and authorize Buyer to act as their respective collection agent
with respect to the Non -Transferable Governmental Patient Receivables. In connection therewith, Sellers
and Buyer shall use each of Sellers' existing bank accounts set forth in Schedule 1.4(r) ("Bank
Accounts") that receive any direct deposits, wires or other electronic transfers from any Government
Program as "lock box" accounts for the deposit of all collections of Non -Transferable Governmental
Patient Receivables, and such accounts shall be maintained by Sellers in accordance with this Section 1.8
until all Non -Transferable Governmental Patient Receivables are collected and deposited in such lock box
accounts. After the Closing, all cash, checks, drafts or other similar items of payment with respect to all of
the Non -Transferable Governmental Patient Receivables shall continue to be deposited into such lock box
accounts. At or before the Closing, Sellers shall instruct the banks that maintain such lockbox accounts to
transfer automatically on a daily or other periodic basis (as determined by Buyer) all available funds held
in such lockbox accounts or other depository accounts to an account or accounts designated by Buyer. If
any Seller comes into possession or control of any payments with respect to any Non -Transferable
Governmental Patient Receivables, such Seller shall promptly (and in any event within two Business
Days of request) deposit such payments into such lockbox accounts or other depository accounts specified
by Buyer.
(a) Signature Cards. Sellers shall execute and deliver all signature cards and other
documentation, and cooperate with Buyer to effect all changes in the Bank Accounts as reasonably
requested by Buyer.
(b) Misdirected Payments. If, following the Closing, any Government Program,
Private Program, customer, patient, vendor, supplier or other third party misdirects goods or payments to
any Seller in respect of any Assets, then Sellers shall promptly notify Buyer and forward such misdirected
goods or payments to Buyer (or, if such payment is from a Government Program, then to the lockbox
account in accordance with this Section 1.8).
1.9 Escrow Amount. On or prior to the Closing Date, Sellers and Buyer shall enter into an
escrow agreement (the "Escrow Agreement") with the Escrow Agent in a form substantially and
materially similar to that set forth in Exhibit B. The Adjustment Escrow Account shall be maintained
until final determination of the Final Purchase Price in accordance with this Agreement. The General
Escrow Account shall be maintained, pursuant to the terms of the Escrow Agreement, for a period of 48
months following the Closing ("Escrow Period"). The Escrow Agent's fee and costs shall be paid by
Buyer; provided, that any obligation for indemnification or for other fees and expenses of the Escrow
Agent arising out of a dispute giving rise to indemnification or out-of-pocket expenses incurred on
account of a party's noncompliance with this Agreement or the Escrow Agreement shall be borne by the
party determined by a court of competent jurisdiction to be responsible for causing the Damage or
Liability against which the Escrow Agent is entitled to indemnification or reimbursement or, if no such
determination is made, then equally by Sellers and Buyer. Any interest accruing on the Escrow Amount
shall be paid pro rata to the Sellers, collectively on the one hand, and Buyer, on the other hand, based on
the percentage of the Adjustment Escrow Amount and General Escrow Amount, respectively, paid to
such parties.
1.10 Physical Inventory. Between 10 and 15 days preceding the Closing Date, Sellers shall
perform a physical inventory of each material warehouse or other facility holding a material quantity of
Inventory used in the Healthcare Businesses in a manner consistent with its past practice to verify the
levels and amounts of the Inventory. Sellers shall give Buyer not less than 10 days' prior written notice
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before conducting each such physical inventory. Sellers shall permit Buyer's Representatives to observe
such physical inventory and will be permitted to make test counts of Inventory and receive copies of the
records related to such physical inventory. In connection with such physical inventory, Sellers and Buyer
shall jointly determine if any items of Inventory are unusable or obsolete, which unusable or obsolete
items of Inventory shall be excluded from the calculation of the value of the Inventory calculated pursuant
to this Section 1.10. Before the Closing Date, Sellers shall remove items of Inventory that, based upon
such physical inventory, have been determined by the parties to be unusable or obsolete. The value of the
Inventory shall be determined by applying the lower of market or cost to each item of Inventory as of the
date of such physical inventory and Sellers shall prepare a schedule thereof, which shall be used in
calculating Closing Net Working Capital; provided, that the value of the inventory (for purposes of
calculating Closing Net Working Capital) shall be increased or decreased, as appropriate, to reflect the
value of any additions to, or the value of deletions from (as determined by the physical inventory), the
Inventory between the date(s) of such physical inventory and the Effective Time.
1.11 Prorations, Except as otherwise provided herein or as settled at the Closing or in
connection with the post -Closing adjustments to the Purchase Price as set forth in Section 1.2, within 90
days after the Closing Date, Sellers and Buyer shall prorate as of the Effective Time any amounts that
become due and payable on or after the Closing Date with respect to (a) ad valorem Taxes, if any, on the
Assets (which shall be prorated as of the Closing Date) and (b) real and personal property Taxes on the
Assets (which shall be prorated as of the Closing Date). Any such amounts which are not available within
90 days after the Closing Date shall be similarly prorated as soon as practicable thereafter. For the
avoidance of doubt, any items that are included in the calculation of Closing Net Working Capital shall be
deemed finally settled and shall not be subject to any further prorations or adjustments pursuant to this
Section 1.11.
1.12 Intended Tax Treatment and Allocation of the Purchase Price.
(a) Sellers and Buyer agree and acknowledge that, for U.S. federal Income Tax
purposes, and for purposes of any corresponding provision under state or local Tax law, the sale by
Sellers of the Assets to Buyer in exchange for the Purchase Price hereby is intended to be treated as
follows: (i) the purchase by Buyer and sale by NHRMC of NHRMC's equity or membership interests in
the Joint Ventures is intended to be treated as a taxable sale and acquisition of partnership interests
pursuant to Section 741 of the Code; (ii) the purchase by Buyer and sale by NHRMC of NHRMC's equity
interests in the Disregarded Entities is intended to be treated as a taxable sale and purchase of an
undivided interest in the underlying assets of each of the Disregarded Entities pursuant to Treasury
Regulations Section 301.7701-3 and Section 1001 of the Code; and (iii) the purchase by Buyer and sale
by Sellers of the remaining Assets (including the equity or membership interests of the Seller
Subsidiaries) not included in clauses i and Liij is intended to be treated as a taxable sale and purchase of
an undivided interest in such Assets pursuant to Section 1001 of the Code (the "Intended Tax
Treatment").
(b) The parties agree that the Purchase Price, including any Assumed Obligations
and along with any other items treated as taxable consideration for the Assets for Tax purposes (the
"Allocable Consideration"), shall be allocated separately among the Assets acquired from each Seller as
described on Schedule 1.12(b)(1) (the "Purchase Price Allocation"), and in accordance with the
methodology set forth on Schedule 1.12(b)(2) (the "Allocation Schedule Methodology"), which is
consistent with Section 1060 of the Code and the Treasury Regulations promulgated thereunder. Buyer
shall deliver a draft allocation schedule to each Seller within 180 days following the date when the Final
Purchase Price is determined under this Agreement consistent with the Allocation Schedule Methodology
(each, a "Purchase Price Allocation Schedule"). Sellers shall provide any comments to Buyer within 30
days of receipt thereof (the "Allocation Review Period"). Sellers shall be deemed to have accepted such
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Purchase Price Allocation Schedule if Sellers do not provide any comments to Buyer during such
Allocation Review Period. If Sellers provide any comments to such Purchase Price Allocation Schedule
within such Allocation Review Period, the parties will negotiate in good faith to resolve any such
comment(s). If Buyer and Sellers are unable to agree on any timely raised comments by Sellers to a draft
Purchase Price Allocation Schedule, then Buyer and Sellers shall engage the Independent Accountants to
resolve the matter, and the Independent Accountants' determination shall be final and binding on the
parties. The fees and expenses of the Independent Accountants shall be borne by each party in the
percentage inversely proportionate to the percentage of the total items submitted for dispute that are
resolved in such party's favor.
(c) The parties shall prepare and file all Tax Returns in a manner consistent with the
final Purchase Price Allocation Schedules and the Intended Tax Treatment, and shall not take a position
on any Tax Return or agree to any proposed settlement or adjustment with respect thereto with any
Governmental Entity inconsistent with such final Purchase Price Allocation Schedules and the Intended
Tax Treatment without the written consent of the other parties unless required to do so by applicable Law.
(d) To the extent requested by Buyer at least 14 Business Days before the Closing
Date, Buyer and Sellers shall cooperate in good faith to (i) allocate the Owned Real Property Purchase
Price among the Owned Real Property to be transferred at Closing pursuant to the terms of Section 1.4(a)
and (ii) prepare a schedule reflecting such mutually agreed-upon allocation of the Owned Real Property
Purchase Price (the "Owned Real Property Allocation Schedule"). As used herein, the term "Owned
Real Property Purchase Price" means the portion of the Purchase Price allocable to the Owned Real
Property to be transferred at Closing pursuant to the terms of Section 1.4 a , as reasonably determined by
Buyer and Sellers.
1.13 Withholding. Buyer shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement all amounts required under the Code or any applicable
provision of any state, local or foreign Tax Law to be deducted and withheld. To the extent that any such
amount is so deducted and withheld by Buyer, such amount shall be treated for all purposes of this
Agreement as having been paid to the Person to whom such amount was deducted and withheld.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to Buyer as set forth in Article 2;
2.1 Authorization. Each Seller has full power and authority to enter into this Agreement and
the other Transaction Documents and to carry out the Transactions.
2.2 Binding Agreement. All corporate actions required to be taken by Sellers to authorize the
execution, delivery and performance of this Agreement, the other Transaction Documents and the
Transactions have been duly and properly authorized, taken or obtained by Sellers. No other action on
the part of Sellers is necessary to authorize the execution, delivery and performance of this Agreement,
the other Transaction Documents or the Transactions. This Agreement and the other Transaction
Documents have been (or will be when executed and delivered) duly and validly executed and delivered
by Sellers and, assuming due and valid execution by Buyer, this Agreement and other Transaction
Documents constitute (or will constitute) a valid and binding obligation of Sellers enforceable in
accordance with their terms, subject to (i) applicable bankruptcy, reorganization, insolvency, moratorium
and other Laws affecting creditors' rights generally from time to time in effect and (ii) limitations on the
enforcement of equitable remedies.
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2.3 Organization and Good Standin • No Conflict,• Subsidiaries, Joint Ventures.
(a) Each Seller is a North Carolina county, corporation, or limited liability company,
as the case may be, and is duly organized, validly existing and in good standing under the Laws of the
State of North Carolina. Each Seller is properly registered to do business as a foreign corporation or
foreign limited liability company in each jurisdiction in which such foreign registration is required. Each
Seller has full power and authority to own, operate and lease its properties (including the Real Property)
and to carry on its businesses as now conducted.
(b) Neither the execution and delivery by Sellers of this Agreement or any
Transaction Document to which they are party nor the consummation of the Transactions by Sellers will
(i) violate, conflict with or result in a breach of any provision of any Seller's articles of incorporation,
articles of organization, bylaws, limited liability company agreement or operating agreement,
stockholders agreement, or other similar organizational, governance, or constitutive document; or (ii)
violate any Order or Law applicable to any Seller, the Assets or the Healthcare Businesses.
(c) Schedule 2.3(c) sets forth a true, correct and complete list of each Seller
Subsidiary, including for each (i) its jurisdiction of formation or incorporation, (ii) if it has outstanding
equity or membership interests, its authorized stock, membership interests or equity interests and, as of
the date hereof and as of the Closing, the owner(s) of all of its issued and outstanding shares of stock or
other equity or membership interests and (iii) the states in which it is qualified to transact business as a
foreign entity. Each Seller Subsidiary is duly organized, formed or incorporated, validly existing and in
good standing under the Laws of its jurisdiction of organization, formation or incorporation. Each Seller
Subsidiary has all requisite entity power and authority to own, operate or lease its respective properties
and assets and to carry on the Healthcare Businesses as now being conducted by it. Each Seller
Subsidiary is legally qualified to transact business as a foreign entity as set forth on Schedule 2.3(c) and is
in good standing in all jurisdictions where the nature of its properties and the conduct of its business as
now conducted require such qualification. None of the Seller Subsidiaries owns, holds or has the right or
obligation (contingent or otherwise) to acquire any equity ownership interest in, or make any loan or
capital contribution to, any Person other than in another Seller Subsidiary. All of the shares of capital
stock or other equity or membership interests of the Seller Subsidiaries are duly authorized and validly
issued and are fully paid and nonassessable and held free and clear of any Encumbrances (other than
Permitted Encumbrances pursuant to the Securities Act and state securities Laws). To the extent a Seller
Subsidiary has authorized capital stock or other equity interests, (x) there are no outstanding options,
warrants, convertible securities, preemptive rights, rights of first refusal or offer, subscription rights,
conversion rights or exchange rights that require any of the Seller Subsidiaries to issue or sell any of its
capital stock or other equity interests (or securities convertible into or exchangeable or exercisable for
shares of its capital stock or other equity interests), and (y) there are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect to any Seller Subsidiary.
(d) Schedule 2.3(d) sets forth a true, correct and complete list of each Person other
than the Seller Subsidiaries in which any Seller or any Seller Subsidiary, directly or indirectly, owns any
equity, membership, or similar interest in, or any interest convertible into or exchangeable or exercisable
for any equity, membership, or similar interest, including for each (i) its jurisdiction of formation or
incorporation, (ii) if it has outstanding equity interests, its authorized stock or equity interests and, as of
the date hereof and as of the Closing, the owner(s) of all of its issued and outstanding shares of stock or
other equity interests and (iii) the states in which it is qualified to transact business as a foreign entity
(each such Person, a "JV Entity"). Each JV Entity is duly organized, formed or incorporated, validly
existing and in good standing under the Laws of its jurisdiction of organization, formation or
incorporation. Each 7V Entity has all requisite entity power and authority to own, operate or lease its
respective properties and assets and to carry on the Healthcare Businesses as now being conducted by it.
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Each JV Entity is legally qualified to transact business as a foreign entity as set forth on Schedule 2.3(d)
and is in good standing in all jurisdictions where the nature of its properties and the conduct of its
business as now conducted require such qualification. None of the JV Entities owns, holds or has the
right or obligation (contingent or otherwise) to acquire any equity ownership interest in, or make any loan
or capital contribution to, any Person other than as set forth on Schedule 2.3(d). All of the shares of
capital stock or other equity interests of the JV Entities are duly authorized and validly issued and are
fully paid and nonassessable and held free and clear of any Encumbrances (other than Permitted
Encumbrances pursuant to the Securities Act and state securities Laws). There are no outstanding
options, warrants, convertible securities, preemptive rights, rights of first refusal or offer, subscription
rights, conversion rights or exchange rights that require any of the JV Entities to issue or sell any of its
capital stock or other equity interests (or securities convertible into or exchangeable or exercisable for
shares of its capital stock or other equity interests). There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect to any JV Entity.
2.4 Contracts and Leases.
(a) With the exception of the Excluded Contracts, (i) Schedule 1.4(b) sets forth a
true, correct and complete list of all Tenant Leases and (ii) Schedule 1.4(e) sets forth a list of a true,
correct and complete list of all Lessor Leases. With the exception of the Excluded Contracts, Schedule
1.4 i sets forth a true, correct and complete list of all Capital Leases and Schedule_ 1A(fl(ii) sets forth a
true, correct and complete list of all Personal Property Leases, in each case, which require lease payments
by or to any Seller with respect to the operation of the Healthcare Businesses during the remaining term
of such Capital Lease or Personal Property Lease in excess of $100,000. As used herein, the term
"Leases" shall collectively refer to all Tenant Leases, Lessor Leases, Capital Leases and Personal
Property Leases; and each of the "Leases" shall be referred to herein as a "Lease".
(b) Schedule 1.4(x) sets forth, by subpart, an accurate and complete list of the
following Contracts (except for Excluded Contracts) to the extent such Contracts bind or affect any of the
Assets or any Seller is a party to or is bound by such Contract in connection with the Healthcare
Businesses or the Assets (collectively, the "Material Contracts"):
(i) all Contracts involving aggregate consideration in excess of $250,000 or
requiring performance by any party thereto more than one year from the Effective Date;
(ii) all Contracts with any Physician, Practitioner, Referral Source or
licensed healthcare facility, whether on an employment or independent contractor basis;
(iii) all Contracts for medical direction, the provision of professional
healthcare services or medical supervision of the performance of healthcare services at the
Healthcare Businesses or Facilities;
(iv) all Contracts that cannot be cancelled without penalty or without more
than 60 days' notice;
(v) all Contracts that relate to the acquisition of any business, a material
amount of stock or assets of any other Person or any real property (whether by merger, sale of
stock, sale of assets or otherwise);
(vi) all Contracts that contain noncompetition or nonsolicitation provisions
restricting the conduct of the Healthcare Businesses, or restricting the conduct of any Person
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potentially competing with the Healthcare Businesses, in any geographic area or during any
period of time;
(vii) all Contracts granting any exclusive rights, rights of first refusal, rights
of first negotiation or similar rights to any Person;
(viii) except for agreements relating to trade receivables, all Contracts relating
to Indebtedness (including guarantees), or imposing an Encumbrance on any Asset;
(ix) all managed care or Third -Party Payor agreements
(x) all Contracts between or among any of Sellers on the one hand and any
Affiliate of any Seller on the other hand;
(xi) all collective bargaining agreements or Contracts with any labor
organization, union or association;
(xii) all employment or retention agreements with any officer or manager of
the Healthcare Businesses (other than those described in clause ii) above);
(xiii) all Contracts pursuant to which material payments are required upon a
sale of substantially all the assets that constitute the Healthcare Businesses;
(xiv) all Contracts that provide for severance pay or any other material post -
employment payment by, or financial obligation of, any Seller in excess of $50,000;
(xv) all joint venture, partnership or similar Contracts that involve the sharing
of profits or revenues with any third party;
(xvi) all Contracts for the sale of any of the Assets or for the grant to any
Person of any option, right of first refusal or preferential or similar right to purchase any of the
Assets;
(xvii) all Contracts that provide for the assumption of any Tax, environmental
or other Liability of any Person;
(xviii) all Intellectual Property Contracts that (A) involve payments either
annually of greater than $50,000 or during the remaining term of greater than $150,000 and/or
(B) are material to the operation of the Healthcare Businesses, taken as a whole;
(xix) all Lessor Leases, Tenant Leases and Capital Leases;
(xx) all Personal Property Leases that involve payments either annually of
greater than $50,000 or during the remaining term of greater than $150,000;
(xxi) all Contracts related to the construction of improvements or alterations at
any Real Property, including all Contracts related to architectural or engineering services, general
contractor or subcontractor services, construction management or consulting services, grading
services and/or the supplying of construction labor, materials or construction supplies
(collectively, "Construction Contracts"); and
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(xxii) all confidentiality agreements, nondisclosure agreements or similar
agreements with (A) any third party that has had any discussions or negotiations with any Seller
regarding the potential acquisition of the Hospitals, the Healthcare Businesses or any substantial
portion thereof since January 1, 2017 or (B) any third party with whom any Seller has had any
discussions or negotiations regarding the acquisition of such third party or any substantial portion
of its business or any joint venture or similar joint business arrangement since January 1, 2017.
(c) Sellers have made available to Buyer true and complete copies of each Material
Contract and each Lease. Each Material Contract and Lease is the valid and legally binding obligation of
each applicable Seller (or each applicable Subsidiary or Affiliate of Sellers) and, to the knowledge of
Sellers, of each other party thereto. Each Material Contract and Lease constitutes the entire agreement by
and between the respective parties thereto with respect to the subject matter thereof. In all material
respects, all obligations required to be performed by the applicable Seller (or each applicable Subsidiary
or Affiliate of Sellers) under the terms of each Material Contract and Lease have been performed to the
extent such obligations are required to have been performed, and no act or omission by the applicable
Seller (or applicable Subsidiary or Affiliate of Sellers) has occurred or failed to occur, which, with the
giving of notice, the lapse of time, or both, would constitute a default under any Material Contract or
Lease. There is no material default under any Material Contract or Lease by Sellers (or applicable
Subsidiary or Affiliate of Sellers) and, to the knowledge of Sellers, no fact or circumstance exists that is
reasonably likely to lead to a material default under any Material Contract or Lease. No security deposit
or portion thereof deposited with respect to any Lease has been applied in respect of a breach or default
under a Lease that has not been redeposited in full.
2.5 Consents and Notices.
(a) Except as set forth on Schedule 2.5 a , no Seller is a party to or bound by, nor are
any of the Assets subject to, any Encumbrance (other than a Permitted Encumbrance), Lease, Material
Contract or Order that requires the consent of any Person to the execution of this Agreement or the
consummation of the Transactions by Sellers. Without limiting the foregoing, Schedule 2.5(a) sets forth
each of the Leases and Material Contracts for which consent is required to assign such Leases and
Material Contracts to Buyer and/or to effectuate the Transactions (the "Contract and Lease Consents").
(b) Except as set forth on Part I of Schedule 2.5(b), no Seller is required to give any
notice to, make any filing with, or obtain any material authorization, consent or approval of any
Governmental Entity in order for the parties to consummate the Transactions. Seller further
acknowledges that Part II of Schedule 2.5(b) includes other notices, consents and approvals that will be
required of Governmental Entities as a result of the consummation of the Transaction.
2.6 Compliance with Laws. Except as set forth in Schedule 2.6 or as set forth in a writing
delivered by Sellers to Buyer that specifically makes reference to this Section 2.6, if any, with respect to
the Healthcare Businesses, Sellers are, and have been at all times during the last six years, in compliance
with all applicable Laws in all material respects. Except as set forth in Schedule 2.6, with respect to the
Healthcare Businesses, within the past six years, Sellers have not been charged with or given notice of,
and to the knowledge of Sellers, Sellers are not under investigation with respect to any material violation
of, or any obligation to take remedial action under, any (i) Law, (ii) Governmental Permit or
Accreditation issued to any Seller or (iii) Order.
2.7 Environmental Matters. Sellers' ownership and operation of the Healthcare Businesses
and the Assets are, and have been at all times during the last six years, in compliance in all material
respects with all Environmental Laws. Sellers have obtained all Governmental Permits necessary or
required under Environmental Laws (the "Environmental Permits") for the ownership and operation of
the Healthcare Businesses and the Assets. All such Environmental Permits are in effect and, to Sellers'
knowledge, no action to revoke or modify any of such Environmental Permits has been taken or is
pending. Except as set forth in Schedule 2.7, there is not now pending or, to Sellers' knowledge,
threatened any claim, investigation or enforcement action by any Governmental Entity concerning
Sellers' potential Liability under Environmental Laws in connection with the ownership or operation of
the Healthcare Businesses or the Assets. To Sellers' knowledge, there has not been a release or
threatened release of any Hazardous Substance at, upon, in, under or from the Owned Real Property or
Leased Real Property at any time, during the last six years, except in compliance with applicable
Environmental Laws. Except as set forth on Schedule 2.7, to Sellers' knowledge, there are presently no,
and there have not been in the last six years, on any Owned Real Property and Leased Real Property,
(i) any above -ground or underground storage tanks for the storage of Hazardous Substances, (ii) asbestos -
containing material, (iii) materials or equipment containing polychlorinated biphenyls or (iv) landfills,
surface impoundments or disposal areas. During the last six years, Sellers have not been, or, to Sellers'
knowledge, been alleged to be, a "potentially responsible party" under the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. §9610, et SeMi .) ("CERCLA"), or any other
corresponding state Laws with respect to the operation of the Healthcare Businesses. With respect to the
operation of the Healthcare Businesses, no Seller or any of its Affiliates have within the last six years
transported, released, treated, stored, disposed of, arranged for or permitted the disposal of any Hazardous
Substance in a manner that has given or would give rise to any Liability pursuant to Environmental Laws.
Sellers have made available to Buyer complete copies and final results of any written reports, studies,
analyses, tests or monitoring possessed by any Seller or any of its Affiliates or any of their
Representatives that either (i) pertain to Hazardous Substances that are or at any time during the last six
years were present in, on or under any Owned Real Property or Leased Real Property or (ii) otherwise
concern compliance by any Seller or any of its Affiliates with Environmental Laws during the last six
years.
2.8 Property.
(a) Schedules 1.4(a) and 1.4 set forth an accurate and complete list of all Owned
Real Property and Leased Real Property, including the name, physical address, and brief description of
each parcel of Owned Real Property and Leased Real Property, and, with respect to the Leased Real
Property, all leases, subleases, licenses, amendments, extensions, renewals, guaranties, memoranda of
lease and other agreements related thereto and all amendments to any of the foregoing. Schedule 1A(e)
sets forth an accurate and complete list of all Lessor Leases, including the name, physical address and
brief description of the real property subject to any such Lessor Lease, and all leases, subleases, licenses,
amendments, extensions, renewals, guaranties, memoranda of lease and other agreements related thereto
and all amendments to any of the foregoing. Sellers have delivered to Buyer copies of all title insurance
policies, surveys and other documentation in the possession, custody or control of Sellers or any of their
Representatives relating to the Owned Real Property.
(b) Schedule 2.8(b) includes an accurate and complete list of the Personal Property
having a book value in excess of $100,000 individually as of the Interim Balance Sheet Date. Except as
disclosed on Schedule_ . 2.8(b), since the Interim Balance Sheet Date, none of Sellers or any of their
Subsidiaries have sold or otherwise disposed of any item or items of Personal Property having a book
value in excess of $100,000 individually, other than Inventory items sold, used or disposed of in the
ordinary course of business.
(c) Each Seller (and, if applicable, each Subsidiary and Affiliate of Sellers) has good
and marketable fee simple title to all of its respective Owned Real Property and an effective leasehold
interest in its respective Leased Real Property, and each Seller and Seller Subsidiary has title to its
respective Personal Property.
IE
(d) The Real Property is held by Sellers or one of their Subsidiaries or Affiliates, as
applicable, free and clear of all Encumbrances except (i) liens for real property Taxes and assessments
(A) not yet due or payable or (B) being contested in accordance with applicable Law and set forth on
Schedule 2.$(b), (ii) mechanics', carriers', workmen's, repairmen's and other statutory liens (A) not yet
due or payable or (B) being contested in accordance with applicable Law and set forth on Schedule
2.8(b), (iii) rights of way, building or use restrictions, exceptions, easements, agreements, covenants,
variances, reservations and other limitations of record, to the extent, in each case, any such matter does
not, individually or in the aggregate, materially affect the operation of the Healthcare Businesses, (iv) the
Tenant Leases and the Lessor Leases, including the rights of tenants under the Lessor Leases, (v) zoning
regulations and other Laws affecting the Real Property, (vi) with respect to the Owned Real Property
only, matters that would be revealed by a current and accurate survey or physical inspection of the Real
Property, or by a current or accurate lien search, to the extent, in each case, any such matter does not,
individually or in the aggregate, materially affect the operation of the Healthcare Businesses, (vii) matters
arising as a result of the acts or omissions of Buyer or any of its Affiliates, agents, employees, contractors
or representatives, (viii) standard printed exceptions set forth in title policies, (ix) any other matters
disclosed by the Title Commitment or the Surveys and (x) other such encumbrances as are set forth in
Schedule 2.8(d) (collectively, the "Permitted Exceptions"). The Personal Property is held by Sellers
free and clear of all Encumbrances except Permitted Encumbrances.
(e) Except as set forth on Schedule 2.8 e , none of Sellers or any of their
Subsidiaries or Affiliates have received written notice from any Governmental Entity of, and there is not
any pending or, to the knowledge of Sellers, threatened (i) condemnation or other Proceedings affecting
the Owned Real Property or any part thereof, or the Leased Real Property or any part thereof; or (ii) any
violation of any Laws (including zoning and land use ordinances, building codes and similar
requirements) with respect to the Real Property or any part thereof, which have not heretofore been cured_
(f) The Real Property comprises all of the real property owned, leased or used in
connection with the operation of the Healthcare Businesses. The Real Property is adequate and suitable to
conduct the Healthcare Businesses as the Healthcare Businesses are operated as of the Closing Date.
(g) All buildings, structures, improvements, fixtures, utilities, building systems and
equipment, parking areas, and all components thereof, included in or located at, in or upon the Real
Property (collectively, the "Improvements") are in reasonably good condition and repair, and have been
maintained in accordance with normal industry practice for similar assets of like age and construction and
are in normal operating condition for their intended purpose, normal wear and tear excepted, and are
sufficient for the continued operation of the Healthcare Businesses as currently conducted. There are no
structural deficiencies or latent defects affecting any of the Improvements and, to the knowledge of
Sellers, there are no facts or conditions affecting any of the Improvements that would, individually, or in
the aggregate, interfere in any material respect with the use or occupancy of the Improvements or any
portion thereof in the operation of the Healthcare Businesses as currently conducted. The Real Property
and the Improvements are in compliance in all material respects with applicable Laws and are being used,
occupied and maintained in all material respects in accordance with all applicable zoning and entitlement
codes, building codes, easements, rights of way, contracts, permits, insurance requirements, restrictions,
building setback lines, restrictive covenants, reservations and entitlements, subdivision planning and
building codes and other land use Laws and permits, consents and rules under such Laws and any
administrative, occupational safety and Healthcare Laws. Certificates of occupancy and other
Governmental Permits required by any Governmental Entity having jurisdiction over the Real Property
are in full force and effect. Each Real Property is served by utilities in sufficient capacities in each case
as necessary for the normal operation of the Healthcare Businesses.
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(h) All easements, rights of way, permits, servitudes, licenses and similar rights
related to the Real Property benefitting any Seller or any of Sellers' Subsidiaries or Affiliates
(collectively, the "Easements") are, to the knowledge of Sellers, valid and enforceable and such
Easements grant the rights purported to be granted thereby and all rights necessary thereunder for the
ordinary operation of the Healthcare Businesses as currently conducted. Each Real Property has direct
access, or indirect access through valid Easements, to and from public rights of way.
(i) Except with respect to the Lessor Leases, neither Sellers nor any of Sellers'
Subsidiaries or Affiliates have leased or otherwise granted to any Person the right to use or occupy any
Owned Real Property or any portion thereof. Except with respect to the Lessor Leases, neither Sellers nor
any of the Sellers' Subsidiaries or Affiliates have subleased, licensed or otherwise granted any Person the
right to use or occupy any Leased Real Property.
0) No Person has a right to acquire any interest in the Owned Real Property or the
interests of Sellers or any of the Sellers' Subsidiaries or Affiliates, as applicable, in any Tenant Lease or
Lessor Lease, including any options to purchase, rights of first refusal to purchase, or rights of first refusal
to lease.
2.9 Healthcare Matters.
(a) Except as set forth on Schedule 2.9(a), with respect to the Healthcare Businesses
and the Joint Venture Businesses, Sellers, Facilities and the Material Affiliations are, and at all times
during the past six years, have been, in compliance in all material respects with all Healthcare Laws.
Except as set forth on Schedule 29(a), no Seller or Material Affiliation has during the last six years (i)
received notice, correspondence or communication of any violation, alleged violation or potential
violation of, or Liability under, any such Laws, or to the effect that any Seller, Material Affiliation or any
Affiliate or Representative of, or any Person acting on behalf of, any Seller or Material Affiliation, is or
could potentially be under investigation or inquiry with respect to any violation or alleged violation of any
Healthcare Law, applicable to any Seller or Material Affiliation, or (ii) been subject to any actual or
alleged obligation to undertake, or to bear all or any portion of the cost of, any remedial action under any
Healthcare Law. No event has occurred during the last six years, and no condition exists, that would
reasonably be expected to (with or without notice or lapse of time) constitute or result directly or
indirectly in (x) a violation by Sellers or the Material Affiliations of, or a failure on the part of Sellers or
the Material Affiliations to comply with, any Healthcare Law relating to the operation and conduct of the
Healthcare Businesses, the Joint Venture Businesses or any of their respective properties or facilities or
(y) any obligation on the part of a Seller or Material Affiliation to undertake, or to bear all or any portion
of the cost of, any remedial action.
(b) During the past six years, no Seller, Material Affiliation, or any of their
respective Affiliates, employees, independent contractors, officers or directors, has, on behalf of any
Seller or Material Affiliation or with respect to the Healthcare Businesses or Joint Venture Businesses, (i)
violated any of the Healthcare Laws in any material respect; (ii) presented or caused to be presented a
claim for a medical or other item or service that was not provided as claimed (other than claims submitted
in error that have been corrected in the ordinary course of business and that individually or in the
aggregate would not be considered material in any fiscal year), or is for a medical or other item or service
where such Person knew or should have known the claim was false or fraudulent, or (iii) presented or
caused to be presented a claim to any Government Program for a designated health service furnished
pursuant to a prohibited referral by a Physician pursuant to the Stark Law.
(c) Neither Sellers, the Material Affiliations, the Practitioners, the Facilities, nor any
of their respective employees, officers, directors or independent contractors have during the last six years
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been convicted of, charged with, investigated for, or has engaged in conduct that would constitute, an
offense related to Medicare or any other Government Program or, convicted of, charged with,
investigated for or engaged in conduct that would constitute a violation of any Law related to fraud, theft,
embezzlement, breach of fiduciary duty, kickbacks, bribes, other financial misconduct, obstruction of an
investigation or controlled substances. No employee of or any independent contractor to any Seller or
Material Affiliation (with respect to the Healthcare Businesses or Joint Venture Businesses) is excluded
from participating in any Government Program, nor, to the knowledge of Sellers, is any such exclusion
threatened or pending. None of the current officers, directors, agents, or managing employees (as such
term is defined in 42 U.S.C. § 1320a -5(b)) of any Seller or Material Affiliation (with respect to the
Healthcare Businesses or Joint Venture Businesses), or any such person in the last six years while
employed or engaged by any Seller or Material Affiliation, have been excluded from a Government
Program, been subject to sanction pursuant to 42 U.S.C. § 1320a -7a or 1320a-8 or been convicted of a
crime described at 42 U.S.C. § 1320a -7b, nor are any such exclusions, sanctions or charges pending or, to
Sellers' knowledge, threatened.
(d) Except as set forth on Schedule 2.9(d), Sellers are, and during the past six years
have been, in compliance in all material respects with HIPAA and all other applicable Information
Privacy and Security Laws. Sellers and the Material Affiliations have undertaken surveys, audits,
inventories, reviews, analyses and/or assessments of all areas of the Healthcare Businesses and the Joint
Venture Businesses required by the HITECH Act and the administrative simplification provisions of
HIPAA. Sellers have provided to Buyer accurate and complete copies of the compliance policies and/or
procedures and privacy notices of the Facilities relating to Information Privacy and Security Laws. All of
Sellers', the Material Affiliations' and the Facilities' respective workforces (as such term is defined in 45
C.F.R. § 160.103) with access to Personal Information have received or are scheduled to receive, in
accordance with the timeframes required by HIPAA and such Sellers', Material Affiliation's, providers or
Facilities' respective privacy policies, training with respect to compliance with Information Privacy and
Security Laws. Except as set forth on Schedule 2.9(d), with respect to the Healthcare Businesses and
Joint Venture Businesses, during the past six years (i) neither Sellers nor the Material Affiliations have
received notice of, and there are no pending or, to the knowledge of Sellers, threatened Proceedings with
respect to any alleged "breach" as defined in 45 C.F.R. § 164.402 (a "Breach") or any other material
violation of HIPAA or any other Information Privacy and Security Laws by Sellers, the Material
Affiliations or any of their respective "workforce" (as such term is defined under HIPAA); (ii) no Breach,
or other material violation of any Information Privacy and Security Laws, by Sellers, the Material
Affiliations or their respective "workforce" has occurred; and (iii) no successful "security incident" as
defined in 45 C.F.R. § 164.304 has occurred with respect to "protected health information" as defined in
45 C.F.R. § 164.103 in the possession or under the control of Sellers or the Material Affiliations. Sellers
and each Material Affiliation have entered into business associate agreements with all third parties acting
as a business associate (as defined in 45 C.F.R. § 160,103) of any Seller, Material Affiliation or any
component of the Healthcare Businesses or Joint Venture Businesses to the extent required by HIPAA.
No Seiler, Material Affiliation or component of the Healthcare Businesses or Joint Venture Businesses (x)
to the knowledge of Sellers, is under investigation by any Governmental Entity for a violation of HIPAA;
or (y) has received any notices from the United States Department of Health and Human Services Office
for Civil Rights, the U.S. Justice Department, the FTC or the Attorney General of any state or territory of
the United States relating to any such violations. During the past six years, there has not been any incident
that would trigger a notification or reporting requirement under any HIPAA business associate agreement
or HIPAA, including a Breach with respect to any unsecured protected health information (as such terms
are defined in 45 C.F.R. § 164.402) maintained by or on behalf of the Healthcare Businesses or Joint
Venture Businesses. Sellers have provided to Buyer accurate and complete copies of any written
complaint(s) delivered to any Seller, Material Affiliation or the Facilities during the past six years
alleging a violation of any Information Privacy and Security Laws.
22
(e) Each respective Seller, Facility and Material Affiliation is, and for the past six
years has been, duly licensed in accordance with applicable Law and has held all Governmental Permits
that are necessary or advisable to own the Assets and operate the Healthcare Businesses and Joint Venture
Businesses as currently or during such period owned and operated. All such Governmental Permits are
listed on Schedule 2.9(e), which sets forth the type of licensed facility, the license number and, for each
Hospital, the number of licensed beds at such Hospital. Sellers have provided accurate and complete
copies to Buyer of each Governmental Permit set forth in Schedule 2.9(e), Each Hospital, pharmacy,
laboratory or other ancillary departments, facilities, services, departments and other operations
comprising the Healthcare Businesses or Joint Venture Businesses, or operated for the benefit of the
Healthcare Businesses or Joint Venture Businesses, that are required by Law to be specifically licensed
are, and have been for the past six years, duly licensed by the appropriate Governmental Entities. All of
the Governmental Permits required to be listed on Schedule 2.9(e) are valid, in good standing and in full
force and effect and not subject to meritorious challenge. There are no provisions in, or agreements
relating to, any Governmental Permits that preclude or limit in any material respect any Seller, Facility or
Material Affiliation from operating the Facilities or carrying on the Healthcare Businesses or Joint
Venture Businesses as currently conducted. Each of the Physicians and other licensed professional
providers employed by any Seller or who provide services to or at the Healthcare Businesses or Joint
Venture Businesses on an independent contractor basis (each, a "Practitioner" and, collectively, the
"Practitioners") is, and at all times during which such Practitioner performed services at or on behalf of
the Healthcare Businesses or Joint Venture Businesses has been, in possession of all Governmental
Permits necessary for such Practitioner's performance of such services. Each of the Physicians and other
licensed professional providers on the medical staff (each, a "Medical Staff Member") of any Facility is,
and at all times during which such Medical Staff Member performed services at or on behalf of the
Healthcare Businesses or Joint Venture Businesses has been, in possession of all Governmental Permits
necessary for such Medical Staff Member's performance of such services_ There is no pending or, to the
knowledge of Sellers, threatened Proceeding by or before any Governmental Entity to revoke, cancel,
rescind, suspend, restrict, modify or refuse to renew any material Governmental Permit owned or held by
any Seller, Practitioner, Facility or any component of the Healthcare Businesses or Joint Venture
Businesses. No event has occurred and no facts exist with respect to any such Governmental Permits that
allow or, after notice or the lapse of time or both, would allow the suspension, revocation or termination
of any Governmental Permits, or would result in any other impairment in the rights of any holder thereof.
No Seller, Practitioner, Facility, or Material Affiliation has received any notice (whether written or oral
from any Governmental Entity regarding any violation of any such Governmental Permits (other than any
surveys or deficiency reports for which a plan of correction has been accepted or approved by the
applicable Governmental Entity)). Sellers have delivered to Buyer accurate and complete copies of all
material survey reports, deficiency notices, plans of correction and related correspondence received by
any Seller, Material Affiliation or any Facility, since January 1, 2014, in connection with the
Governmental Permits relating to the Healthcare Businesses or the Joint Venture Businesses. Except as
set forth on Schedule 2.9(e), no Governmental Permit relating to the Healthcare Businesses or Joint
Venture Businesses will expire, be terminated or be restricted as a result of the Transactions.
(f) Schedule 2.9(fl sets forth an accurate and complete list of all aeereditations and
certifications held by Sellers, the Hospitals, the Facilities, the Material Affiliations, the Healthcare
Businesses and the Joint Venture Businesses (collectively, the "Accreditations"). All such Accreditations
are, and have been for the past six years, valid, unrestricted, in good standing and in full force and effect.
Each Hospital is duly accredited, without conditions, by DNV GL — Healthcare through the period set
forth on Schedule 2.90). No event has occurred or other fact exists with respect to such Accreditations
that allows or, after notice or the lapse of time or both, would allow revocation or termination of any such
Accreditations, or would result in any other material impairment in the rights of any holder thereof.
There is no pending or, to the knowledge of Sellers, threatened Proceeding by any accrediting body to
revoke, cancel, rescind, suspend, restrict, modify or not renew any such Accreditation, and no such
23
Proceedings, surveys or actions are pending or, to the knowledge of Sellers, threatened or imminent.
Since the date of each most recent Accreditation survey, none of Sellers, the Hospitals or the Facilities
has made any changes in policy or operations that would reasonably be likely to cause any Facility to lose
such Accreditations. Sellers have delivered to Buyer a copy of each Facility's most recent Accreditation
reports and any material reports, documents or correspondence relating thereto.
(g) Each of the Hospitals, Joint Venture Businesses and the other Healthcare
Businesses, to the extent they are receiving payments from Medicare, Medicaid, TRICARE, NC Health
Choice or any other applicable state or federal healthcare program (collectively, the "Government
Programs") (i) are certified, and have been certified for the past six years, for participation in such
Government Programs, (ii) have, and have had for the past six years, current and valid provider Contracts
with each of such Government Programs, (iii) to the extent such entity bills Government Programs on
behalf of Practitioners, has, and for the past six years has had, valid reassignments from such Practitioners
that permits such entity to bill Government Programs and (iv) are and have been in compliance in all
material respects during the past six years, with the conditions of participation of such Government
Programs. Except as set forth in Schedule 2.9(g), in the past six years, Sellers have not received any
notice of any pending or threatened investigations, surveys or audits by any Governmental Entity with
respect to the operation of the Healthcare Businesses, other than audits or surveys in the ordinary course
of business. Sellers and the Material Affiliations are parties to, or are otherwise entitled to bill under,
current Payor Agreements with certain private nongovernmental payors or programs, including any
private insurance payor or program, self-insured employer or Third -Party Payor (each, a "Private
Program"), under which Sellers and the Material Affiliations directly or indirectly receive payments.
Sellers have delivered accurate and complete copies of all Payor Agreements to Buyer.
(h) Except as set forth in Schedule 2.9(h), Sellers and the Material Affiliations are,
and for the past six years have been, in compliance in all material respects with the conditions of
participation in the Government Programs and Private Programs and with the terms of the Payor
Agreements. The Payor Agreements are each in full force and effect, and no events or facts exist that
would cause any Payor Agreement to be suspended, terminated, restricted or withdrawn. Except as set
forth on Schedule 2.9(h), during the last six years, none of Sellers or the Material Affiliations have
received any notice (whether written or oral) from any Government Program or Private Program to the
effect that it intends to cease or materially alter its business relationship with any Seller or Material
Affiliation (whether as a result of the Transactions or otherwise). No Government Program or Private
Program (i) has indicated in writing to Sellers or any Material Affiliation its intent to cancel or otherwise
substantially and adversely modify its relationship with any Seller or Material Affiliation or (ii) has
advised any Seller or Material Affiliation (whether orally or in writing) of any material problem or
dispute that remains unresolved. During the last six years, all billing practices of Sellers and the Material
Affiliations with respect to all Government Programs and Private Programs have been conducted in
compliance with all applicable Laws and the billing guidelines of such Government Programs or Private
Programs in all material respects. Except as set forth in Schedule 2.9(h) and except with respect to routine
overpayments consistent with historical practice refunded in the ordinary course of business, during the
last six years, none of Sellers, the Material Affiliations or the Facilities have billed or received any
payment or reimbursement in excess of amounts allowed by Law or the billing guidelines of any Private
Programs or Government Programs. During the last six years, no Seller or Material Affiliation has
submitted any claims that are cause for civil penalties under, or mandatory or permissive exclusion from,
any Government Program, Private Program or under the terms of a Payor Agreement. During the last six
years, Sellers and the Material Affiliation have ;maintained such records as required by applicable Laws or
Third -Party Payor policy supporting the provision of services billed under all Government Programs and
Private Programs. Except as set forth on Schedule 2.9(h) and other than ordinary and routine Third -Party
Payor claims auditing processes, there is no Proceeding, survey or other action pending or, to the
knowledge of Sellers, threatened involving any Government Program or any Private Program, including
24
the Facilities' participation in and the reimbursement received by Sellers, the Material Affiliations and the
Facilities from the Government Programs or any Private Program, and no such Proceedings surveys or
actions are pending or, to Sellers' knowledge, threatened or imminent. During the last six years, none of
Sellers, the Material Affiliations or any of their respective employees, officers, directors or agents (or any
former employee, officer, director or agent) has committed a violation of any Law relating to payments
and reimbursements under any Government Program or any Private Program. Schedule 2.9(h) contains a
list of all NPIs and all provider numbers under the Government Programs issued to and held by Sellers,
the Material Affiliations and the Facilities, all of which are in full force and effect.
(i) Sellers have made available to Buyer true, correct and complete copies of the
bylaws of the medical staffs of the Facilities, to the extent required by Law or Accreditation standards, as
well as a list of all members of each Facility's medical staff as of the Effective Date. Except as set forth in
a writing delivered by Sellers to Buyer that specifically makes reference to this Section 29(i), there are no
(i) pending or, to the knowledge of Sellers, threatened adverse actions with respect to any medical staff
member of any of the Facilities or any applicant thereto, including any adverse actions for which a
medical staff member or applicant has requested a judicial review hearing that has not been scheduled or
that has been scheduled but has not been completed or (ii) pending or, to the knowledge of Sellers,
threatened disputes with applicants, medical staff members or health professional affiliates, and all appeal
periods in respect of any medical staff member or applicant against whom an adverse action has been
taken have expired. Except as set forth on Schedule 2.96), no medical staff members of the Hospitals
have resigned while under investigation by the applicable medical staff or had their privileges revoked or
suspended in the past six years. Notwithstanding the foregoing provisions of this Section 296), Sellers
shall not be required to disclose any information pursuant to this Section 2.96 where such disclosure is
prohibited by applicable Law.
0) Each Seller and Material Affiliation is in compliance with all applicable Laws
regarding the selection, deselection and credentialing of its employed and independent contractor
Physicians and other Practitioners, including verification of licensing status and eligibility for
reimbursement under Government Programs.
(k) Sellers have provided to Buyer an accurate and complete copy of each Facility's
current compliance program materials, including 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. During the last six years,
Sellers, the Material Affiliations and the Facilities have conducted their operations in accordance with
their respective compliance programs in all material respects. Except as set forth on Schedule 2.9(k), no
Seller or Material Affiliation (i) is a party to a Corporate Integrity Agreement with the Office of Inspector
General of the United States Department of Health and Human Services ("OIG"); (ii) has any reporting
obligations pursuant to any settlement agreement entered into with any Governmental Entity; (iii) to the
knowledge of Sellers, has been the subject of any Government Program investigation conducted by any
federal or state enforcement agency during the last six years; (iv) has been a defendant in any qui
tam/False Claims Act litigation during the last six years; (v) has been served with or received any search
warrant, subpoena, civil investigative demand, contact letter, telephone or personal contact by or from any
federal or state enforcement agency during the last six years; or (vi) has received any complaints through
any Seller's or Material Affiliation's compliance "hotline" from employees, independent contractors,
vendors, Physicians, patients or any other Persons during the past six years that could reasonably be
considered to indicate that such Seller or Material Affiliation has violated, or is currently in violation of,
any applicable Law. For purposes of this Agreement, the term "compliance program" refers to provider
programs of the type described in compliance guidance published by the OIG.
25
(1) No Seller, Facility or Material Affiliation nor any of their respective predecessors
has received any loans, grants, loan guarantees, donations, monies or other financial assistance pursuant
to the Hill -Burton Act program, the Health Professions Educational Assistance Act, the Nurse Training
Act, the National Health Planning and Resource Development Act, or the Community Mental Health
Centers Act or similar Laws relating to healthcare facilities that remain unpaid or that impose any
restrictions on the Facilities, Healthcare Businesses, Joint Venture Businesses or the Assets.
(m) During the last six years, Sellers and the Material Affiliations have timely filed
all required Cost Reports relating to the Healthcare Businesses or the Joint Venture Businesses for all
fiscal years through and including the fiscal year ended September 30, 2019 and has provided copies of
all Cost Reports relating to the Healthcare Businesses and Joint Venture Businesses since the fiscal year
ended September 30, 2017 to Buyer. All Cost Reports relating to the Healthcare Businesses or the Joint
Venture Businesses filed by or on behalf of Sellers or the Material Affiliations during the last six years
accurately reflect the information required to be included therein in all material respects, and such Cost
Reports do not claim, and neither Sellers, the Facilities nor the Material Affiliations have received,
reimbursement in any amount materially in excess of the amounts allowed by Law or any applicable
agreement to which such entity is a party. Except as set forth on Schedule 2.9(m), no facts or
circumstances exist that would reasonably be expected to give rise to any material disallowance under any
such Cost Reports. Schedule 2_.9(m) indicates which of such Cost Reports have not been audited and
finally settled and includes a brief description of any and all notices of program reimbursement, proposed
or pending audit adjustments, disallowances, appeals of disallowances and any and all other unresolved
claims or disputes in respect of such Cost Reports. Sellers and the Material Affiliations have established
adequate reserves to cover any potential reimbursement obligations that Sellers or any Material
Affiliation may have in respect of such Cost Reports, and such reserves are accurately set forth in the
Financial Statements of such entity.
(n) For the three fiscal years of the U.S. federal government ("Federal Fiscal Year")
or calendars years, as applicable, immediately preceding the current Federal Fiscal Year or current
calendar year, as applicable, each Seller and each Material Affiliation has timely filed all quality and
performance reports, data, and other information to be filed with the Centers for Medicare & Medicaid
Services ("CMS"), with respect to both Physicians and hospitals, inpatients and outpatients, as required
by CMS Reporting, and all reports, data and other information submitted by a Seller or Material
Affiliation in support of its quality and performance for the avoidance of negative payment adjustments or
in support of positive payment adjustments are in all material respects accurate, correct and supportive of
its claims of quality and performance and receipt of positive payment adjustment and avoidance of
negative payment adjustments, as applicable. During the last six years, none of Sellers, the Material
Affiliations or any of their respective officers, directors or managing employees have knowingly and
willfully made or caused to be made a false statement or representation of a material fact in any report,
data and other information supporting its CMS Reporting.
(o) During the last six years, none of Sellers, the Material Affiliations or the
Facilities has received any written notification of any pending or threatened Proceeding or other action
from any Governmental Entity, Private Program or patient of any potential or actual material
noncompliance by, or material Liability of, any Seller, Material Affiliation, the Facilities, the Practitioners
or the Assets under any Law. Sellers and the Material Affiliations have timely filed all reports, data, and
other information required to be filed with such Governmental Entities regarding Sellers, the Facilities,
the Material Affiliation and the Assets during the last six years.
(p) All of Sellers', the Material Affiliations' and the Facilities' Contracts with a
Physician or any Immediate Family Members of any Physicians, or any entity in which Physicians or
Immediate Family Members of any Physicians are equity owners, involving services, supplies, payments,
26
or any other type of remuneration, and all of Sellers', the Material Affiliations' and the Facilities' leases
of personal or real property with such Physicians, Immediate Family Members of any Physician or
entities are in compliance with applicable Laws in all material respects.
(q) Except in material compliance with all applicable Laws, none of Sellers or the
Material Affiliations are party to any Contract (including any joint venture or consulting agreement) to
provide services, lease space, lease equipment or engage in any other venture or activity related to any
Seller, Material Affiliation, Facility, the Healthcare Businesses, the Joint Venture Businesses or the
Assets with any Physician, Immediate Family Member of a Physician, or other Person that is in a position
to make or influence referrals to or otherwise generate business for any Seller, Material Affiliation or
Facility.
(r) None of Sellers, the Material Affiliations or any Representative of any Seller or
Material Affiliation has engaged in any activities that are prohibited under 42 U.S.C. §§ 1320a-7, et
or the regulations promulgated thereunder, or under any other federal or state Laws.
(s) All off -campus locations of each Hospital that are treated by such Hospital as
being a provider -based location or department of such Hospital (i) were in operation and billing the
Medicare program under the outpatient prospective payment system for covered outpatient department
services prior to November 2, 2015, (ii) are in compliance with the site -neutral programs of Section 603
of the Bipartisan Budget Act of 2015 and CMS Regulations 42 C.F.R. § 413.65 and (iii) have been
reported as practice locations on such Hospital's Medicare application. All on -campus locations of each
Hospital that are required to be included on the CMS Medicare Enrollment Application have been
reported.
(t) None of the HHAs, nor any Seller or Material Affiliation, in connection with the
operation of the HHAs, has during the last six years made a claim to any Government Program or any
Private Program for: (i) a patient who has not been certified or re -certified as needing home health
services in the timeframes and manner set forth in 42 C.F.R. § 484.55 (other than certification errors that
are corrected in the ordinary course of business that would not result in an overpayment); (ii) a service
that is not an approved home health service; or (iii) a service that does not comply with the plan of care
approved for the patient. The effective dates of the initial enrollment of each of the HHAs in Medicare
occurred prior to February 1, 2012, and neither of the HRAs has undergone a change in majority
ownership as such term is defined in 42 C.F.R. § 424.502 since February 1, 2012.
(u) None of the Hospices or any Seller or Material Affiliation, in connection with the
operation of the Hospices, has made a claim to any Government Program or any Private Program in the
last six years for: (i) a patient who has not been certified or re -certified as terminally ill in the timeframes
and manner set forth in 42 C.F.R. §§ 418.22 and 418.25 (other than certifications in error that are
corrected in the ordinary course of business and that would not result in an overpayment); (ii) a service
that is not an approved hospice service; or (iii) a service that does not comply with the plan of care
approved for the patient. All claims, returns, invoices, reports, including cap reports, and other forms
made by the Hospices, Sellers or the Material Affiliations, in connection with the operation of the
Hospices, to any Government Program or any Private Program in the last six years are true, complete and
accurate in all material respects. As of the Closing Date, (i) the Hospices have no Medicare Cap Liability
for Cost Reports for any fiscal year through and including the fiscal year ended September 30, 2019 and
(ii) to the knowledge of Sellers, no circumstances currently exist that would cause the Hospices to exceed
their Medicare Cap Liability at the end of the current Medicare cap year. For purposes of this Section
2.,9Lu), "Medicare Cap Liability" means any Liability for amounts paid to Sellers or the Material
Affiliations in excess of the maximum "caps" allowed pursuant to the limitation on payments for hospice
services described in 42 U.S.C. § 1395f and the applicable Medicare regulations.
27
(v) Sellers and the Material Affiliations, in connection with the operation of the
CAHs, have been during the last six years and are currently in compliance in all material respects with the
requirements set forth in 42 U.S.C. § 1395i-4, and 42 C.F.R. Part 485, Subpart F, including the status and
location requirements set forth in 42 C.F.R. § 485.610, and, to the extent applicable, the requirements for
swing -beds set forth in 42 C.F.R. § 485.645. None of the CAHs, or Sellers or the Material Affiliations in
connection with the operation of the CAHs, has received notice from CMS or any other Governmental
Entity of its intent to terminate the critical access hospital designation of any of the CAHs, and no events
or facts exist that would reasonably be expected to jeopardize the critical access hospital designation of
any of the CAHs.
(w) The entities set forth in Schedule 2.9(w) (i) participate in the Medicare program
as an accountable care organization in the Medicare Shared Savings Program ("MSSP"), (ii) have been
during the last six years and are currently in compliance in all material respects with the requirements set
forth in 42 C.F.R. Part 425, and any guidance promulgated by CMS pursuant to the MSSP and (iii) have
been during the last six years and are currently in compliance in all material respects with each MSSP
Participation Agreement that each such entity has entered into with CMS, as well as each provider
agreement with providers participating in the MSSP. Sellers and the Material Affiliations have repaid all
amounts owed to any Private Program and Government Program, including MSSP, pursuant to any
shared savings or bundled payments program, or any amounts owed by Sellers or any Material
Affiliation, as applicable, to any participant participating in any bundled payments or shared savings
program, including the MSSP.
(x) Except as set forth on Schedule 2.9(x), no insurance application, to the North
Carolina Department of Insurance or any other Governmental Entity (each, an "Insurer Application")
has been made by any Seller or Material Affiliation that is currently pending or open before such
Governmental Entity. No Insurer Application filed by any Seller or Material Affiliation within the past six
years has been ultimately denied by any Governmental Entity or withdrawn by such Seller or Material
Affiliation. Sellers and each Material Affiliation have properly filed all required Insurer Applications
necessary to the Healthcare Businesses and Joint Venture Businesses, and such Insurer Applications are
complete and correct in all material respects.
(y) For the six fiscal years or calendar years, as applicable, immediately preceding
the current calendar year, Sellers and the Material Affiliations, as applicable, have timely filed all reports,
data and other information to be filed with CMS regarding Sellers' and the Material Affiliations' use of
certified electronic health record technology ("CEHRT") as required by the HITECH Act, and its
implementing regulations, and have successfully attested to meaningful use of CEHRT as required by the
HITECH Act, and, all reports, data and other information submitted by Sellers or the Material Affiliations
in support of their attestation of CEHRT meaningful use and claim for HITECH Payments and avoidance
of payment adjustment are accurate and correct in all material respects and support their claims of
required CEHRT use and receipt of HITECH Payments and avoidance of payment. adjustments. During
the last six years, neither Sellers nor the Material Affiliations have, and no employee, officer or director
of any Seller or Material Affiliation, has knowingly and willfully made or caused to be made a false
statement or representation of a material fact in any report, data and other information supporting Sellers'
or the Material Affiliations' attestation of CEHRT use.
(z) During the past six years, none of Sellers, the Material Affiliations or the
Facilities have performed or permitted the performance of any experimental or research procedure or
study involving patients in the Facilities that were not authorized and/or conducted in accordance with the
policies and procedures of the Facilities that comply with applicable Laws, including applicable U.S.
Food and Drug Administration regulations.
28
(aa) Except as set forth on Schedule 2.9 as , other than with respect to the
Transactions, no application for any Certificate of Need, exemption certificate or declaratory ruling
(collectively, the "Applications") has been made by any Seller or Material Affiliation with any
Governmental Entity that is currently pending or open before such Governmental Entity or has been
approved but relates to projects not yet completed. Except as set forth on Schedule 2.9 as , no
Application filed by any Seller or Material Affiliation within the past six years has been ultimately denied
by any Governmental Entity or withdrawn by such Seller or Material Affiliation. Each Seller and
Material Affiliation has properly filed all required Applications necessary to the Healthcare Businesses
and the Joint Venture Businesses, which Applications are complete and correct in all material respects
with respect to any and all improvements, projects, changes in services, construction and equipment
purchases, and other changes for which approval is required under any applicable federal or state Law.
(bb) Other than as set forth in Schedule 2.9(bb), no Affiliate of any Seller or Material
Affiliation, or Referral Source of Seller or Material Affiliation, directly or indirectly: (i) other than with
respect to employment agreements delivered by Sellers to Buyer, provides any services to the Healthcare
Businesses or Joint Venture Businesses or is a lessor, lessee or supplier to the Healthcare Businesses or
Joint Venture Businesses; (ii) has any cause of action or other claim whatsoever against or owes any
amount to, or is owed any amount by, any Seller or Material Affiliation; (iii) has any financial interest in
or owns property or rights used in the Healthcare Businesses or Joint Venture Businesses; (iv) is a party
to any Contract relating to the Assets or the Healthcare Businesses or Joint Venture Businesses (other
than employment compensation or employee benefits payable in the ordinary course of business); (v)
received from or furnished to any Seller or Material Affiliation any goods or services; or (vi) has any
financial interest in, or serves as an officer, manager, director of any customer, competitor or vendor or
supplier of any Seller or Material Affiliation.
(cc) All financial relationships (as such term is defined by the Stark Law) between
Sellers, their Affiliates and any Material Affiliation, on the one hand, and a Referral Source to any such
entity, on the other hand, are commercially reasonable and the consideration paid under such
arrangements is consistent with fair market value, including employment, lease, medical director, co -
management, and other similar arrangements.
(dd) NHRMC entered into an agreement dated July 9, 2015 with Elderhaus, Inc.
("Elderhaus"), which owns and operates an approved PACE Organization (within the meaning of 42
C.F.R. § 460.6) (the "PACE Organization") and a capitated program of all-inclusive care for the elderly
(the "PACE Program") pursuant to a PACE program agreement with CMS and the North Carolina
Department of Health, Division of Medical Assistance (the "PACE Program Agreement"). NHRMC
and, to the knowledge of Sellers, Elderhaus, have been during the past six years and currently are in
compliance in all material respects with the requirements set forth in 42 U.S.C. §§ 1395eee and 1396u-4,
and 42 C.F.R. Part 460, and the terms and conditions set forth in the PACE Program Agreement. None of
NHRMC or, to the knowledge of Sellers, Elderhaus or the PACE Organization, is subject to any
enrollment or payment suspension, restriction or corrective action plan in connection with the PACE
Program. None of NHRMC or, to the knowledge of Sellers, Elderhaus or the PACE Organization has
received any written notice from any Governmental Entity during the past six years of any compliance
deficiencies or intent to issue civil money penalties or terminate the PACE Provider Agreement in
connection with the PACE Program, and no events or facts exist that would reasonably be expected to
jeopardize or impair the ability of NHRMC to continue to contract with Elderhaus regarding the PACE
Program.
(ee) The AAP Program Amount is zero.
29
2.10 Title to Assets: Sufficiency_ and Condition of Assets.
(a) Sellers own and hold good and marketable title to, or have valid and subsisting
leasehold interests in, all assets, real, personal or mixed, whether tangible or intangible (including all
Intellectual Property), used or held for use in, or otherwise relating to, the Healthcare Businesses or
located at the Facilities, free and clear of all Encumbrances other than the Permitted Encumbrances, all of
which shall be a part of the Assets, except for the Excluded Assets. No third party owns or holds in its
name any assets, real, personal or mixed, whether tangible or intangible (including all Intellectual
Property), used or held for use in, or otherwise relating to, the Healthcare Businesses or located at the
Facilities, except for (i) the Leased Real Property set forth on Schedule 1.4(b), (ii) furniture and
equipment owned or leased by the applicable counterparties to the Lessor Leases set forth on Schedule
1_4 e , (iii) the Capital Leases and Personal Property Leases set forth on Schedule 1.4(f)(i) and Schedule
1.4 ii , respectively, or (iv) Excluded Assets. At the Closing, Sellers will convey to Buyer, and Buyer
will acquire, good and marketable title to, or valid and subsisting leaschold interests in, the Assets, free
and clear of all Encumbrances, other than Permitted Encumbrances. There are no outstanding rights
(including any right of first refusal or right of first offer), options or Contracts giving any third party any
current or future right to require any Seller to sell or transfer to a third party any interest in any of the
Assets.
(b) The Assets (together with the Excluded Assets) constitute all the assets used in or
necessary to operate, and are adequate for the purposes of operating, the Healthcare Businesses in the
manner in which they have been operated before the Effective Time. There are no facts or conditions
affecting the Assets that could, individually or in the aggregate, interfere in any material respect with the
use, occupancy or operation of the Assets as currently used, occupied or operated, or their adequacy for
such use. Following the consummation of the Transactions, no Seller or any of its Affiliates will retain
any asset necessary to operate the Healthcare Businesses in the manner in which it has been operated
before the Effective Time. The Assets will enable Buyer to operate the Healthcare Businesses after the
Effective Time in substantially the same manner as operated by Sellers before the Effective Time. All
tangible Assets are in reasonably good operating condition and repair and are reasonably adequate for the
uses to which they are being put, and none of the tangible Assets is in need of maintenance or repairs,
except for ordinary, routine maintenance and repairs that are not material in nature or cost.
(c) All funds currently held by NHRMC Foundation can remain with NHRMC
Foundation immediately after the Closing based on the terms of the restricted gift or endowment
agreements applicable to those funds.
2.11 Financial Statements.. Indebtedness,
(a) Attached as Schedule 2.11(a) are (a) the audited balance sheets, and statements of
income, changes in net assets and cash flows of NHRMC with respect to the operation of the Healthcare
Businesses as of September 30, 2018 and September 30, 2019, and for the years ended September 30,
2018 and September 30, 2019, and (b) the unaudited balance sheet (the "Interim Balance Sheet") and
statements of income, changes in net assets and cash flows of NHRMC with respect to the operation of
the Healthcare Businesses as of June 30, 2020 (the "Interim Balance Sheet Date") and for the nine
months then ended (collectively, the "Financial Statements"). The Financial Statements are true, correct
and complete, are derived from the books and records of Sellers and fairly and accurately present the
financial condition and results of operations, changes in net assets and cash flows, as applicable, of
Sellers with respect to the operation of the Healthcare Businesses as of and for the periods then ended, in
each case in conformity with GAAP consistently applied during such periods, except, in the case of the
unaudited Financial Statements, that the Financial Statements (i) do not contain footnotes and (ii) are
subject to normal year-end adjustments and reclassifications, the effect of which is not material,
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individually or in the aggregate. There are no Liabilities, whether accrued or fixed, absolute or
contingent, matured or unmatured, determined or determinable, of Sellers of a nature required to be
reflected on a balance sheet prepared in accordance with GAAP, other than any such Liabilities (x)
reflected or reserved against on the Financial Statements or the notes thereto, (y) incurred since the date
of the Interim Balance Sheet in the ordinary course of business of Sellers, none of which, individually or
in the aggregate, is material in amount, or (z) those that would not be Assumed Obligations.
(b) Schedule 2.1l(b) sets forth all Indebtedness of Sellers. For each item of
Indebtedness of Sellers, Schedule 2.1 l(b) correctly sets forth, as of the date hereof, the debtor or
borrower, creditor or lender, outstanding principal amount and accrued but unpaid interest, maturity date,
the collateral, if any, securing the Indebtedness (in reasonable detail), and any prepayment, make -whole,
breakage or other premiums, payments, fees, costs or penalties required to be paid (in reasonable detail)
to fully discharge such Indebtedness in connection with the consummation of the Transactions.
2.12 Legal Proceedings, Except as set forth on Schedule 2.12, there is no Proceeding before
any Governmental Entity or arbitrator pending, and, to Sellers' knowledge, there is no such Proceeding
threatened, against any Seller or any of their Affiliates with respect to the operation of the Healthcare
Businesses or any of the Assets. Except as set forth on Schedule 2.12, none of Sellers or any of their
Affiliates, with respect to the operation of the Healthcare Businesses or the Assets, are subject to any
Order or other governmental restriction specifically (as distinct from generally) applicable to them or their
assets, including the Assets. Sellers have complied in all material respects, and are in material compliance
with, all applicable Orders, settlements and other governmental restrictions. There is no Proceeding
before any Governmental Entity pending or, to Sellers' knowledge, threatened against any Seller or any
of their Affiliates or the Healthcare Businesses which: (a) adversely affects or seeks to prohibit, restrain
or enjoin the execution and delivery of this Agreement; (b) adversely affects or challenges the validity or
enforceability of this Agreement; or (c) challenges the power or authority of any Seller to carry out the
Transactions or to perform its obligations under this Agreement.
2.13 Employee Benefits.
(a) Schedule 2.13(a) contains a list of (i) each pension, profit sharing, bonus,
deferred compensation or other retirement plan or arrangement of Sellers with respect to the operation of
the Healthcare Businesses and each Material Affiliation, whether oral or written, which constitutes an
"employee pension benefit plan" as defined in Section 3(2) of ERISA, (ii) each medical, health, disability,
insurance or other plan or arrangement of Sellers and each Material Affiliation with respect to the
operation of the Healthcare Businesses and the Joint Venture Businesses, whether oral or written, that
constitutes an "employee welfare benefit plan" as defined in Section 3(1) of ERISA, (iii) each employee
benefit plan within the meaning of Section 3(3) of ERISA and (iv) each other employment, severance,
termination or similar contract and any other employee benefit plan, program, policy or arrangement
providing for compensation, bonuses, commission, profit-sharing, stock option or other stock- or equity -
linked benefits or rights, incentive, deferred compensation, vacation or paid -time -off benefits, insurance
(including any self-insured arrangements), death, life, dental, vision, health or medical benefits, employee
assistance, disability or sick leave benefits, workers' compensation, supplemental unemployment benefits,
retention, transaction, change -of -control payments, savings, pension, retirement, post -employment or
retirement benefits or other employee compensation plan, program, policy, agreement, program,
arrangement or commitment, in each case, whether written or unwritten and whether formal or informal
provided by Sellers and each Material Affiliation with respect to the operation of the Healthcare
Businesses and the Joint Venture Businesses, in which any employee of Sellers or the Joint Venture
Businesses participates in his capacity as such (each, a "Seller Plan" and, collectively, the "Seller
Plans").
ME
(b) Current copies of each of the Seller Plans, including all amendments thereto, and
related contracts and trusts, to the extent applicable, have been provided or otherwise made available to
Buyer. There has also been provided or otherwise made available to Buyer, with respect to each Seller
Plan, the following (to the extent applicable): (i) copies of the most recent Internal Revenue Service
("IRS") determination letter or advisory or opinion letter with respect to each such Seller Plan intended to
qualify under Section 401(a) of the Code; (ii) copies of the most recent summary plan descriptions and
any summaries of material modifications thereto; (iii) copies of the three most recent Form 5500 annual
reports and accompanying schedules, the actuarial report (to the extent applicable), and the
nondiscrimination testing results; and (iv) any material correspondence with any Governmental Entity
with respect to any Seller Plan during the last six years.
(c) Except as set forth on Schedule 2.13(c), neither Sellers, any Joint Venture
Business nor any of their ERISA Affiliates sponsors, maintains, has an obligation to contribute to or any
current or contingent Liability under or with respect to (i) any "multiemployer plan" (as defined in
Section 3(37) of ERISA), (ii) any "pension plan" (as defined in Section 3(2) of ERISA) that is or was
subject to Sections 412 or 430 of the Code or 'Title IV of ERISA, (iii) any "multiple employer plan"
within the meaning of Section 210 of ERISA or Section 413(c) of the Code, (iv) any "multiple employer
welfare arrangement" as defined in Section 3(40) of ERISA, (v) any "voluntary employees' beneficiary
association" within the meaning of Section 501(c)(9) of the Code or (vi) a "defined benefit plan" as
defined in Section 3(35) of ERISA.
(d) With respect to each Seller Plan, Sellers do not have any direct or indirect, actual
or contingent Liability, other than to make payments for contributions, premiums or benefits when due in
the ordinary course of business, all of which payments have been made to the extent due.
(e) Each of the Seller Plans has been administered, and is currently administered, in
compliance with the applicable provisions of the Code, except to the extent any noncompliance would not
result in a material Liability. There are no "accumulated funding deficiencies" within the meaning of the
Code or any federal excise Tax or other Liability on account of any deficient funding in respect of the
Seiler Plans.
(f) Seller, the Healthcare Businesses, and the Joint Venture Businesses have no
obligation to offer or provide health benefits to any employee following retirement or other termination,
except continuation coverage as required under Section 4980B of the Code (or equivalent state Law).
(g) Each of the Seller Plans is in compliance in all material respects with the
applicable requirements of the Patient Protection and Affordable Care Act_
(h) All material reports and disclosures relating to the Seller Plans required to be
filed with or furnished to Governmental Entities, Seller Plan participants or Seller Plan beneficiaries have
been filed or furnished in accordance with applicable Law.
(i) Each of the Seller Plans intended to be qualified under Section 401 of the Code
satisfies in all material respects the requirements of such Section. Each Seller Plan that is intended to be
qualified within the meaning of Section 401(a) of the Code has received a determination letter or, with
respect to a prototype or volume submitter plan, can rely on an opinion letter from the Internal Revenue
Service to the prototype or volume submitter plan sponsor, to the effect that such plan is so qualified and
that the plan and the trust related thereto are exempt from federal Income Taxes under Section 401(a) and
501(x), respectively, of the Code; and nothing has occurred since the date of such determination or
opinion letter that could adversely affect the qualified status of any Seller Plan.
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0) None of the Seller Plans nor any trust created thereunder or with respect thereto
has engaged in any "prohibited transaction" or "party -in -interest transaction" as such terms are defined in
Section 4975 of the Code and Section 406 of ERISA that could reasonably be expected to subject any of
the Seller Plans, Sellers or the Joint Venture Businesses to a Tax or penalty on prohibited transactions or
party -in -interest transactions pursuant to Section 4975 of the Code or Section 502(1) of ERISA.
(k) There are no Proceedings of any nature pending or, to the knowledge of Sellers,
threatened against any Seller or the Healthcare Businesses with respect to the Seller Plans.
(1) Each Seller Plan that is subject to Section 409A of the Code has been
administered in all material respects in compliance with its terms and the operational and documentary
requirements of Section 409A of the Code and all applicable regulatory guidance (including notices,
rulings, and proposed and final regulations) thereunder; and none of Sellers, the Healthcare Businesses or
the Joint Venture Businesses have any obligation to "gross up" any Person for any Taxes under Section
409A of the Code.
(m) Neither the execution and delivery of this Agreement by Sellers nor the
consummation of the Transactions will: (A) entitle any current or former employee of any Seller, the
Healthcare Business or the Joint Venture Businesses to severance pay, unemployment compensation,
benefits, incentive compensation or any similar payment; (B) accelerate the time of payment or vesting or
increase the amount of any compensation due to any such employee or former employee; (C) require any
contribution or payment to fund any obligations under any Seller Plan; or (D) directly or indirectly result
in any payment made to or on behalf of any Person to constitute a "parachute payment" within the
meaning of Section 280G of the Code; and Sellers, the Healthcare Business and the Joint Venture
Businesses do not have any obligation to "gross up" any Person for any Taxes under Section 4999 of the
Code.
(n) None of Sellers, the Healthcare Business nor the Joint Venture Businesses has
incurred any Liability or taken any action, and no action or event has occurred that could reasonably be
expected to cause Sellers, the Healthcare Business or the Joint Venture Businesses to incur any Liability
(A) under Section 412 of the Code or Title IV of ERISA with respect to any "single -employer plan"
within the meaning of Section 4001(a)(15) of ERISA that is not a Seller Plan; or (B) to any
multiemployer plan, including on account of a partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA.
2.14 Personnel.
(a) Schedule 2,14(a) sets forth a complete list of names and positions of the Business
Employees as of the date set forth therein (which shall be no earlier than 10 Business Days before the date
hereof and updated as of no earlier than ten and later than five Business Days before the Closing), and
each Business Employee's salary or wage rates; Accrued Paid Time Off as of such date; recognized date
of hire, department; job title; status as part-time, full-time, PRN or temporary; name of employer; work
location; exempt or nonexempt classification under federal and state overtime Laws; whether such
Business Employee has a permanent or temporary authorization to work in the United States; and whether
each such Business Employee is active or on a leave of absence (and, if so, the type of leave). To the
knowledge of Sellers, not more than five of the employees set forth on Schedule 2.14(a) were at any time
since July 1, 2019 employed by or a contractor to the County in any business other than the Healthcare
Businesses.
(b) There are no labor union or collective bargaining agreements in effect with
respect to the Business Employees. There is no unfair labor practice complaint against any Seller or any
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of their Affiliates pending or, to the knowledge of Sellers, threatened before the National Labor Relations
Board that relates to the Healthcare Businesses or the Business Employees, and no such complaint has
been filed within the past six years. There is no labor strike, slowdown, work stoppage or labor dispute or
labor arbitration pending or, to the knowledge of any Seller, threatened with respect to the Business
Employees or the Healthcare Businesses, and none of the foregoing has occurred during the past six
years. To the knowledge of any Seller, there are no pending or threatened union organizing activities
involving Business Employees and no such activities have occurred during the past six years.
(c) Except as set forth on Schedule 2.14(c): (i) each Seller and each of its Affiliates
is, and has been at all times in the past six years, in compliance in all material respects with all applicable
Laws and Contracts respecting employment and employment practices, labor relations, terms and
conditions of employment, nondiscrimination, nonharassment, whistleblower protections, retaliation,
worker classification, workplace safety and health, immigration, employee Tax withholding and
reporting, workers' compensation, unemployment insurance, employment termination, overtime pay, and
wages and hours with respect to the Business Employees; (ii) no Seller is engaged, and no Seller has been
engaged in the past six years, in any material unfair labor practices with respect to the Business
Employees; and (iii) there are no pending or, to the knowledge of Sellers, threatened complaints, charges,
lawsuits, actions or investigations related to the Healthcare Businesses before any Governmental Entity or
arbitrator regarding any labor or employment Laws, employment discrimination, harassment, retaliation,
whistleblower claims, wrongful discharge, safety or other employment-related charges or complaints,
affirmative action, or federal or state wage -and -hour claims.
(d) To the knowledge of Sellers, in the last six years, no allegations of sexual
harassment have been made to any Seller or any of its Affiliates against any individual in his or her
capacity as an employee of any Seller or any of its Affiliates at a level of Vice President or above or in
any managerial position.
(e) None of Sellers or any of their Affiliates is party to a settlement agreement with a
current or former officer, employee or independent contractor of any of Sellers or their Affiliates
resolving allegations of sexual harassment by either (i) an officer of any such Person or (ii) an employee
of any such Person. Except as set forth on Schedule 2.14(e), there are no, and in the last six years there
have not been any Proceedings pending or, to Sellers' knowledge, threatened against Sellers or any of
their Affiliates, in each case, involving allegations of sexual harassment by any employee of Sellers or
any of their Affiliates at a level of Vice President or above or in any managerial position.
(f) During the past six years, no Seller has effectuated (i) a "plant closing" as
defined in WARN or any similar state or local Law affecting any site of employment or one or more
components of the Healthcare Businesses or operating units within any site of employment or facility of
any Seller or (ii) a "mass layoff' as defined in WARN, or any similar state, local or foreign Law,
affecting any site of employment or facility of any Seller.
(g) With respect to the Healthcare Businesses, Sellers are in compliance in all
material respects with the terms and provisions of the Immigration Reform and Control Act of 1986
("Immigration Act"). Sellers have not been cited, fined, served with a Notice of Intent to Fine or with a
Cease and Desist Order (as such terms are defined in the Immigration Act) at any of the Healthcare
Businesses during the past six years, nor has any Proceeding, audit or review of any type been initiated or,
to the knowledge of Sellers, threatened against any Seller or any of their Affiliates, in each case in
connection with the Healthcare Businesses by reason of any actual or alleged failure to comply with the
Immigration Act during the past six years.
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(h) No Seller is delinquent in payments to any Business Employee or other
individual who has performed services for the Healthcare Businesses for wages, salaries, commissions,
bonuses, fees, or other compensation for any services performed.
2.15 Insurance. Schedule 2.15 sets forth a true and complete list of all self-insurance, or
policies or binders of insurance, in force and maintained by Sellers with respect to the operation of the
Healthcare Businesses or ownership of the Assets as of the Effective Date ("Insurance Policies"), Sellers
maintain, and have maintained, without interruption, at all times during Sellers' operation of the
Healthcare Businesses and ownership of the Assets, self-insurance or policies or binders of insurance
covering such risks and events, including personal injury, property damage, malpractice and general
liability, to provide adequate and sufficient insurance coverage for all the operations of the Healthcare
Businesses. All of the Insurance Policies are in full force and effect. All premiums due and payable on
the Insurance Policies have been paid. All Insurance Policies (a) are valid and binding in accordance with
their terms; and (b) have not been subject to any lapse in coverage. There are no material claims pending
under any of the Insurance Policies as to which coverage has been questioned, denied or disputed or in
respect of which there is an outstanding reservation of rights. Sellers have timely provided all notices
required to be given under the Insurance Policies to the respective insurer with respect to all material
claims and actions covered by insurance, and no insurer has denied coverage of any such claims or
actions or reserved its rights in respect of or rejected any such claims. Sellers have not (i) received any
written notice or other communication from any insurer canceling or materially amending any of the
Insurance Policies, and, to the knowledge of Sellers, no such cancellation or amendment is threatened, or
(ii) failed to present any material claim which is still outstanding under any of the Insurance Policies.
2.16 Solvency. No Seller or Seller Subsidiary is insolvent nor will any Seller or Seller
Subsidiary be rendered insolvent as a result of any of the Transactions. For purposes of this Section 2.16,
the term "solvency" means that: (a) the fair salable value of such Seller's or Seller Subsidiary's tangible
assets is in excess of the total amount of its liabilities (including for purposes of this definition all
liabilities, whether or not reflected on a balance sheet prepared in accordance with generally accepted
accounting principles, and whether direct or indirect, fixed or contingent, secured or unsecured, and
disputed or undisputed); (b) such Seller or Seller Subsidiary is able to pay its debts or obligations in the
ordinary course as they mature; and (c) such Seller or Seller Subsidiary has capital sufficient to carry on
its businesses as currently conducted.
2.17 Taxes.
(a) Sellers, the Seller Subsidiaries and the Joint Ventures have each: (i) filed on a
timely basis (including valid extensions) all Tax Returns required to be filed and; (ii) timely paid all
Taxes and assessments due and payable (whether or not shown on any Tax Return). Sellers have
delivered to Buyer true, correct and complete copies of all Income and other material Tax Returns of
Sellers, the Seller Subsidiaries and the Joint Ventures for all Tax periods commencing on or after January
1, 2015.
(b) Sellers, the Seller Subsidiaries and the Joint Ventures have each withheld and
timely paid all Taxes required to have been withheld and paid in connection with amounts paid or owing
to any Business Employee, independent contractor, creditor or other third party. All IRS Forms W-2 and
1099 required with respect thereto have been properly completed and timely filed, and Sellers, the Seller
Subsidiaries and the Joint Ventures have maintained all documentation, as required by Law, relating to
the withholding and remittance of such Taxes.
(c) None of Sellers, the Seller Subsidiaries or the Joint Ventures are currently the
subject of any Tax audit or examination, dispute or investigation. Neither Sellers, the Seller Subsidiaries
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nor the Joint Ventures, nor any Affiliate of Sellers, the Seller Subsidiaries or the Joint Ventures have
received any notice of any proposed or threatened Tax matter, dispute, inquiry, investigation or
assessment relating to Taxes or of any proposed adjustments to any Tax Returns previously filed. No
claim has been made by any Governmental Entity in writing or, to the knowledge of Sellers, otherwise in
any jurisdiction where any Sellers, Seller Subsidiary or Joint Venture does not file Tax Returns that any
of them are, or may be, subject to Tax by such jurisdiction. There are no Encumbrances for Taxes on the
Assets (including the equity interests or membership interests of any of the Seller Subsidiaries or Joint
Ventures) other than Permitted Encumbrances.
(d) None of Sellers, the Seller Subsidiaries or the Joint Ventures have waived any
statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency that has not yet expired. None of Sellers, the Seller Subsidiaries or the Joint
Ventures are a party to or bound by any Tax -allocation or Tax -sharing agreement, None of Sellers or the
Subsidiaries have any Liability for the Taxes of any other Person (i) as a transferee or successor or (ii) by
contract, applicable Law or otherwise. None of Sellers, the Seller Subsidiaries or the Joint Ventures has
been a member of an "affiliated group" within the meaning of Section 1504(a) of the Code filing a
consolidated federal Income Tax Return.
(e) No closing agreements, private letter rulings, technical advice memoranda or
similar agreements or rulings relating to Taxes have been entered into or issued by any Governmental
Entity with or with respect to Sellers, the Seller Subsidiaries or the Joint Ventures. None of Sellers, the
Seller Subsidiaries and the Joint Ventures have executed any power of attorney with respect to any Taxes,
other than powers of attorney that are no longer in force.
(i) None of Sellers, the Seller Subsidiaries and the Joint Ventures are, or have ever
been during the last six years, a party to any transaction, Contract, understanding or arrangement
described as a "reportable transaction" for purposes of Section 6707A of the Code and Treasury
Regulation Section 1.6011-4. Each of Sellers, the Seller Subsidiaries and the Joint Ventures have
disclosed on its Tax Returns all positions taken therein that could give rise to a substantial understatement
of Tax within the meaning of Code Section 6662 (or any similar Law).
(g) None of the Assets are subject to a lease, safe harbor lease or other arrangement
as a result of which such assets are required for federal Income Tax purposes to be treated as owned by a
Person other than Sellers, the Seller Subsidiaries or the Joint Ventures.
(h) None of Sellers, the Seller Subsidiaries and the Joint Ventures have distributed
the stock of any corporation or had their stock or equity interests distributed by another Person in a
transaction satisfying or intending to satisfy the requirements of Section 355 or Section 361 of the Code.
(i) No Seller Subsidiary or Joint Venture will be required to include any item in
taxable income or exclude any item of deduction or loss from taxable income for any Post -Closing Tax
Period as a result of (i) any "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax Law) executed on or before the Closing
Date; (ii) the long-term contract method of accounting; (iii) any installment sale or open transaction
method; (iv) under Section 108(i) of the Code; (v) as a result of any intercompany transactions or any
excess loss account described in Treasury Regulations Section 1.1502-19 (or any similar provision of
state, local or foreign Law); (vi) any prepaid amount received on or before the Closing Date; (vii) use of
an improper method of accounting; (viii) any change in method of accounting (including adjustments
pursuant to Section 481 of the Code) for a Pre -Closing Tax Period; (ix) any deferred revenue or prepaid
amount received on or before the Closing Date; or (x) as a result of any debt instrument held before the
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Closing that was acquired with "original issue discount" as defined in Section 1273(a) of the Code or
subject to the rules set forth in Section 1276 of the Code.
0) None of Sellers, the Seller Subsidiaries or the Joint Ventures engage in activity
that creates a permanent establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States and such foreign country.
(k) None of Sellers, the Seller Subsidiaries or the Joint Ventures have (i) deferred the
payment of any "applicable employment taxes" under Section 2302 of the CARES Act or (ii) claimed the
"employment retention credit" within the meaning of Section 2301 of the CARES Act or any other Tax
credit applicable to employment Taxes under the Families First Coronavirus Response Act of 2020.
(1) NHRMC, for all periods during the last six years, has been an organization
described in Section 501(c)(3) of the Code and recognized as exempt from Taxes under Section 501(a) of
the Code for all U.S, federal (and, where applicable, state and local) Income Tax purposes. With respect
to the Seller Subsidiaries and Joint Ventures, for all periods since their respective organizations, (i) each
Joint Venture has been properly treated as a partnership within the meaning of Treasury Regulations
Section 301.7701-3(b)(1)(i) for all U.S. federal (and, where applicable, state and local) Income Tax
purposes, (ii) each Disregarded Entity has been properly treated as a disregarded entity within the
meaning of Treasury Regulations Section 301.7701-3(b)(1)(ii) for all U.S. federal (and, where applicable,
state and local) Income Tax purposes and (iii) the remaining Subsidiaries are each an organization
described in Section 501(c)(3) of the Code and recognized as exempt from Taxes under Section 501(a) of
the Code for all U.S. federal (and, where applicable, state and local) Income Tax purposes. The County is
properly classified as a Governmental Entity.
(m) No Joint Venture has elected, pursuant to Section I101(g)(4) of the Bipartisan
Budget Act of 2015 (the "Tax Act") to "opt in" to the partnership audit regime created under the Tax Act
for any taxable year beginning before January 1, 2018.
2.18 Absence of Changes. Since the Interim Balance Sheet Date, Sellers have conducted the
Healthcare Businesses in the ordinary course of business and there has not occurred any change in the
operation of the Healthcare Businesses or any event or development that, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect. Except as set forth on
Schedule 2.18, since the Interim Balance Sheet Date, no Seller has taken any action that, if taken after the
Effective Date, would constitute a breach of any of the covenants set forth in Section 4.2 or Section 4.3.
2.19 Intel Iectual_Property, IT. Systems.
(a) Schedule 2.19(a} sets forth an accurate and complete list of the following in
respect of the Healthcare Business: (i) all Copyrights, Patents and Marks, in each case to the extent
applied for or registered with any Governmental Entity and owned by any Seller or any of Sellers'
Affiliates, (ii) all material unregistered Intellectual Property owned by any Seller or any of Sellers'
Affiliates; and (iii) all Intellectual Property, including Software proprietary to third parties and licensed to
Sellers or Sellers' Affiliates for use in the Healthcare Businesses as currently conducted, and, for the
items described in clauses i -iii , identifies all Intellectual Property Agreements associated with them.
(b) Except as disclosed on Schedule 2.19(b), all the Intellectual Property disclosed
on Schedule 2.19(a) is owned by Sellers or Sellers' Affiliates free and clear of all Encumbrances, except
Permitted Encumbrances. For all Intellectual Property disclosed on Schedule 2.19(x} that is not owned by
Sellers or Sellers' Affiliates, Sellers or Sellers' Affiliates have a valid contractual right or license to use
the same in the conduct of the Healthcare Businesses as currently conducted, which right or license shall
37
continue after the Closing. Neither Sellers nor any of Sellers' Affiliates are obligated to pay royalties to
any Person for the use of any Intellectual Property (other than license fees for the Software identified in
Schedule 2.19a)).
(c) (i) None of the registrations for Copyrights, Patents and Marks identified in
Schedule 2.19(a) are subject to a Proceeding to challenge or invalidate such Intellectual Property, and all
applications to register any unregistered Copyrights, Patents and Marks so identified are pending and in
good standing, all without challenge of any kind; (ii) there are no Proceedings pending or, to the
knowledge of Sellers or Sellers' Affiliates, threatened against Sellers or Sellers' Affiliates that challenge
the validity or ownership of or right to use any Intellectual Property identified in Schedule 2.19(a); (iii)
Sellers do not have any knowledge of any facts that would be grounds for any Person to challenge Sellers'
or Sellers' Affiliates' ownership of, or otherwise demand an in -license of third -party Intellectual Property
in order to exploit, Sellers' or Sellers' Affiliates' Intellectual Property; and (iv) Sellers' or Sellers'
Affiliates have the right to bring actions for infringement or unauthorized use of the Intellectual Property
owned by Sellers or Sellers' Affiliates.
(d) Sellers, Sellers' Affiliates and the Healthcare Businesses do not infringe upon or
misappropriate the Intellectual Property of any third party, and none of Sellers or Sellers' Affiliates have
received in the last six years any notice asserting that any such infringement or misappropriation has
occurred.
(e) 'There are no agreements, consents or stipulations to which any Sellers or any of
Sellers' Affiliates are subject that would prevent Buyer after the Closing Date from using any of the
Intellectual Property currently used in the Healthcare Businesses in connection with the Healthcare
Businesses as currently conducted.
(f) Each Seller and each of their Affiliates has taken commercially reasonable steps
to protect its Trade Secrets and all other Intellectual Property (all in accordance with such Person's
reasonable business judgment), and as a matter of course enters into customary nondisclosure and
confidentiality agreements generally as and when necessary or appropriate under the circumstances, and
neither Sellers nor Sellers' Affiliates have disclosed any Trade Secrets to any other Person except
pursuant to a written confidentiality or nondisclosure agreement (other than to employees who are
generally required to enter into standard form nondisclosure agreements, or unless a similar duty or
obligation then existed), nor, to the knowledge of Sellers or Sellers' Affiliates, has any employee or
officer or any other Person breached any such agreement.
(g) All Public Software used by Sellers or Sellers' Affiliates in connection with such
party's proprietary Software is set forth on Schedule 2.19(8), Except as set forth on Schedule 2.19(8),
Sellers and Sellers' Affiliates have not made any improvements or changes to any such Public Software
that would constitute improvements that Sellers or Sellers' Affiliates would be obligated to share with
other Persons. Except as disclosed in Schedule 2.19(g), the Public Software does not limit, restrict,
govern or affect in any material respect Sellers' or Sellers' Affiliates' intellectual property rights in and to
Sellers' and Sellers' Affiliates' Intellectual Property, and Sellers and Sellers' Affiliates are not required
under the terms governing such Public Software to make any of Sellers' or Sellers' Affiliates' proprietary
Software generally available for the purpose of making derivative works.
(h) None of Sellers' or Sellers' Affiliates current proprietary products (excluding any
open -source or Public Software contained therein as set forth on Schedule_ 2.190)) that are used in the
Healthcare Businesses contain Intellectual Property that is (i) owned by any Governmental Entity or
educational institution or (ii) derived from Intellectual Property owned by any Governmental Entity or
educational institution. Neither Sellers nor Sellers' Affiliates have made any written submission or
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suggestion to, and is not subject to any agreement with, any standards bodies or other entities that would
obligate them to grant licenses to or otherwise impair Sellers' or Sellers' Affiliates' control of their
Intellectual Property that is used in the Healthcare Businesses. No current or former employee, consultant
or independent contractor of Sellers or Sellers' Affiliates, who was involved in, or who contributed to, the
creation of development of any of Sellers' or Sellers' Affiliates' Intellectual Property that is used in the
Healthcare Businesses, has performed services for any Governmental Entity, university, college or other
educational institution, research center, security force (other than reserve duty) or other public service
during a period of time during which such employee, consultant or independent contractor was also
performing services for Sellers or Sellers' Affiliates in a manner that could reasonably be expected to
adversely affect Sellers' or Sellers' Affiliates' Intellectual Property.
(i) Any Software developed by or on behalf of any Seller or any Seller's Affiliate
and used in connection with the Healthcare Businesses has been developed by such Seller or such Seller's
Affiliate through its own efforts or for its own account and is owned exclusively by such Seller or Seller's
Affiliate, except as disclosed in Schedule 2.19(1). With the exception of open source code, the source
code for the Software has been maintained in strict confidence and has not been disclosed to any Person
other than pursuant to suitable confidentiality agreements. Except as disclosed on Schedule 2.19(i), the
Software developed by or on behalf of Sellers or Sellers' Affiliates related to the Healthcare Businesses
does not use or rely upon open source code standards or materials or any source code or standards
developed or owned by any other Person. There are no programming defects, errors or bugs in such
Software that are outside the scope of programming defects, errors and bugs typically corrected in the
ordinary course of Software maintenance procedures and programs or that, if such defects, errors or bugs
were not corrected, would materially and adversely affect the Healthcare Businesses.
0) Except as set forth in Schedule 2. 190), all Software developed by or on behalf of
Sellers or Sellers' Affiliates related to the Healthcare Businesses was (i) developed by Sellers' or Sellers'
Affiliates' employees working within the scope of their employment at the time of such development, all
of whom are and were obligated to assign and did assign all rights to Sellers or Sellers' Affiliates, as
applicable, or (ii) developed by independent contractors or other Persons who have executed appropriate
instruments of assignment in favor of Sellers or Sellers' Affiliates, as applicable, as assignee or assignees
that have conveyed to Sellers or Sellers' Affiliates ownership of all of their Intellectual Property rights in
the Software.
(k) Each Seller and each of its Affiliates exercises commercially reasonable
measures, consistent with applicable industry best practices, to protect the confidentiality, security and
operation of its information technology, computer systems, Software, websites, and networks that are
used in the operation of the Healthcare Businesses (and the data and transactions transmitted therein)
(collectively, the "IT Systems"), including from any unauthorized use, manipulation and access. The IT
Systems are sufficient for the Sellers' and their Affiliates' current and reasonably anticipated future
needs. Each Seller and each of its Affiliates has taken reasonable measures to provide for the back-up and
recovery of the systems, data and information, including Personal Information, necessary to conduct the
Healthcare Businesses without disruption to, or interruption in, the conduct of the Healthcare Businesses.
(1) During the immediately preceding six-year period, there have been no failures,
crashes, substandard performance or other adverse events affecting the IT Systems that have caused, or
could reasonably be expected to cause, any disruption in the ability of Sellers and their Affiliates or, after
the Closing, Buyer and its Affiliates to operate the Healthcare Businesses, or, in any material respect, to
use any of the IT Systems. During the immediately preceding six-year period, there has not been any
unauthorized use or intrusion or other security breach of any of the IT Systems, including with respect to
the data or databases contained therein or transmitted thereby.
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(m) Each Seller and each of its Affiliates has collected, stored, retained, maintained,
destroyed and otherwise used all Personal Information owned or maintained by it, and each Seller and
each of its Affiliates has protected the IT Systems, in accordance with all Information Privacy and
Security Laws and its own policies. Each Seller and each of its Affiliates (i) has implemented and
maintains commercially reasonable administrative, technical and physical safeguards, including the
adoption, implementation and maintenance of a written information security program, incident response
plan, vendor management policy, and disaster recovery and business continuity plans, designed to ensure
the protection of systems, networks, Personal Information and Confidential Information against loss,
destruction, damage and unauthorized access, use, acquisition and disclosure; (ii) performs vulnerability
scans and penetration testing on its IT Systems and networks no less frequently than annually; (iii) timely
install Software security patches and other fixes to identified material technical information security
vulnerabilities; and (iv) maintains commercially reasonable cybersecurity insurance in coverage types and
amounts reasonably sufficient to withstand a breach of security.
2.20 Unlawful Pam. During the last six years, Sellers, the Material Affiliations and each
of their respective Affiliates and Representatives have complied in all material respects with the U,S.
Foreign Corrupt Practices Act of 1977, the Corruption of Foreign Public Officials Act, the OECD Anti -
Bribery Convention and other applicable Laws regarding the use of funds for political activity or
commercial bribery. No Seller, Material Affiliation nor any of their respective Affiliates or
Representatives has, for or on behalf of any Seller or Material Affiliation, at any time during the last six
years, (i) made or caused to be made or provided, directly or indirectly, any type of payment, gift,
contribution or similar item to a governmental official, political party or candidate for office for the
purpose of influencing a decision, inducing an official to violate their lawful duty, securing an improper
advantage, or inducing an official to use their influence to affect a governmental decision or (ii) accepted
or received any unlawful payment, gift, contribution or similar item_ No Seller, Material Affiliation nor
any of their respective Affiliates or Representatives has, during the last six years, directly or indirectly,
taken any action in violation of any export restrictions, anti -boycott regulations, embargo regulations or
other similar applicable U.S. or foreign Laws. No Seller, Material Affiliation nor any of their respective
Affiliates or Representatives is a "specially designated national" or blocked Person under U.S. sanctions
administered by OFAC. Neither Sellers nor the Material Affiliations have engaged in any business with
any Person or in any country that it is prohibited for a U.S. Person to engage in any business with or
under applicable Law or under applicable U.S. sanctions administered by U.S. Department of the
Treasury.
2.21 COVID-19 Matters. Schedule 2.21 sets forth the Provider Relief Funds received by any
Seller or Material Affiliation relating to the Healthcare Businesses or Joint Venture Businesses. Each
Seller and Material Affiliation is in compliance in all material respects with all terms and conditions,
audit requirements, reporting obligations and other conditions associated with receipt of any Provider
Relief Funds. Sellers have made available to Buyer all attestations, terms and conditions, agreements,
applications and other related documentation any Seller or Material Affiliation has executed in
conjunction with receipt of any Provider Relief Funds.
2.22 Brokers and Finders. Except for Guidehouse and Ponder & Co., the fees and expenses of
which are the joint and several responsibility of Sellers, neither Sellers nor any Affiliate thereof, nor any
officer or director thereof, has engaged, hired, employed or otherwise dealt with any finder or broker in
connection with the Transactions.
2.23 Disclaimer of Warranties. Except as expressly set forth in this Article 2 (with the
exceptions expressly provided in the Disclosure Schedules), no Seller makes, and has not made and shall
not be deemed to have made, any representation or warranty in connection with the Transactions. Each
Seller expressly disclaims any other representations or warranties of any kind or nature, express or
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implied, notwithstanding the delivery or disclosure to Buyer or its Representatives of any documentation
or other information (including any financial projections or other supplemental data), including as to the
condition, value or quality of the Healthcare Businesses or the Assets. Each Seller specifically disclaims
any representation or warranty of merchantability, usage, suitability or fitness for any particular purpose
with respect to the Assets, any part thereof, the workmanship thereof, and the absence of any defects
therein, whether latent or patent, it being understood that, except as provided in Article 2, the Assets are
being acquired "as is, where is" on the Closing Date, and in their present condition, and, except for any
intentional misrepresentations or fraud on the part of Sellers, Buyer shall rely solely on its own
examination and investigation thereof as well as the representations and warranties of Sellers set forth in
this Article 2 and the certificate delivered pursuant to Section 6.$(g).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers to enter into this Agreement and to consummate the Transactions,
Buyer hereby represents and warrants to Sellers as to the following matters:
3.1 Authorization. Buyer and Novant Health each have full corporate or limited liability
company power and authority to enter into this Agreement and has full corporate or other power and
authority to carry out the Transactions.
3.2 Binding Agreement. All corporate or other actions required to be taken by Buyer and
Novant Health to authorize the execution, delivery and performance of this Agreement, the other
Transaction Documents and the Transactions have been duly and properly authorized, taken or obtained
by Buyer and Novant Health. No other action on the part of Buyer or Novant Health is necessary to
authorize the execution, delivery and performance of this Agreement, the other Transaction Documents
and the Transactions. This Agreement and the other Transaction Documents have been (or will be when
executed and delivered) duly and validly executed and delivered by Buyer and Novant Health, and,
assuming due and valid execution by Sellers, this Agreement and the other Transaction Documents
constitutes (or will constitute) a valid and binding obligation of Buyer and Novant Health enforceable in
accordance with their terms subject to (a) applicable bankruptcy, reorganization, insolvency, moratorium
and other Laws affecting creditors' rights generally from time to time in effect and (b) limitations on the
enforcement of equitable remedies.
3.3 Organization and Goad Standing. Buyer is a limited liability company duly organized,
validly existing and in good standing under the Laws of the State of North Carolina, and has full limited
liability company power and authority to own, operate and lease its properties and to carry on its business
as now conducted. Novant Health is a nonprofit corporation duly organized, validly existing and in good
standing under the Laws of the State of North Carolina, and has full corporate power and authority to
own, operate and lease its properties and to carry on its business as now conducted.
3.4 No Conflict. Neither the execution and delivery by Buyer of this Agreement or any other
Transaction Document to which it is a party nor the consummation of the Transactions by Buyer will (i)
violate, conflict with or result in a breach of any provision of Buyer's articles of incorporation or bylaws
(or similar governing document) or (ii) violate any Order or material Law applicable to Buyer.
3.5 Brokers and Finders. Except for Wells Fargo Securities, the fees and expenses of which
Buyer is solely responsible, neither Buyer nor any Affiliate thereof nor any officer or director thereof has
engaged, hired, employed or otherwise dealt with any finder or broker in connection with the
Transactions.
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3.6 Legal Proceedings. Except as described on Schedule 3.6, there is no Proceeding before
any Governmental Entity pending, and, to Buyer's knowledge, there is no Proceeding threatened, against
Buyer or any Affiliate of Buyer before any Governmental Entity in which an adverse determination
would materially adversely affect Buyer's ability to consummate the Transactions. Neither Buyer nor any
Affiliate of Buyer is subject to any Order or other governmental restriction specifically, as distinct from
generally, applicable to Buyer or any Affiliate of Buyer that materially adversely affects Buyer's ability to
consummate the Transactions. There is no action or suit before any Governmental Entity pending, and, to
Buyer's knowledge, there is no Proceeding threatened, against Buyer or any Affiliate of Buyer that: (a)
adversely affects or seeks to prohibit, restrain or enjoin the execution and delivery of this Agreement; (b)
adversely affects or challenges the validity or enforceability of this Agreement; or (c) challenges the
power or authority of Buyer at Closing to carry out the Transactions or to perform its obligations under
this Agreement.
3.7 Ability to Perform. Buyer has and will have on the Closing Date immediately available
funds in cash, which are sufficient to pay the Purchase Price to be paid at Closing and to pay any other
amounts payable pursuant to this Agreement and the other Transaction Documents at Closing and to
consummate the Transactions.
3.8 Solvency. Buyer is solvent and Buyer will not be rendered insolvent as a result of any of
the Transactions. For purposes of this Section 3.8, the term "solvency" means that: (a) the fair salable
value of Buyer's tangible assets is in excess of the total amount of its liabilities (including for purposes of
this definition all liabilities, whether or not reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, and whether direct or indirect, fixed or contingent, secured or
unsecured, and disputed or undisputed); (b) Buyer is able to pay its debts or obligations in the ordinary
course as they mature; and (c) Buyer has capital sufficient to carry on its businesses as currently
conducted.
3.9 Representations of Sellers. Buyer is not relying on any representation or warranty
(expressed or implied, oral or otherwise) made on behalf of Sellers other than those representations and
warranties expressly set forth in Article 2 and in the other Transaction Documents.
3.10 No Other. Representations or Warranties. Except for the representations and warranties
contained in this Article 3 (as modified by the Schedules, as supplemented and amended), Buyer has not
made, and does not make, any other express or implied representation or warranty, either written or oral.
ARTICLE 4
COVENANTS OF SELLER
4.1 Access and Information; Inspections. From the Effective Date through the Closing or
termination of this Agreement, Sellers shall afford to the representatives of Buyer, which include Buyer's
and Buyer's Affiliates' respective officers, directors, trustees, managers, employees, contractors,
accountants, attorneys, bankers and other consultants and agents ("Buyer's Representatives"),
reasonable access during normal business hours to and the right to inspect the plants, properties, books,
accounts, records and other relevant documents and information with respect to the Assets and Assumed
Obligations. From the Effective Date through the Effective Time, Sellers shall furnish Buyer and Buyer's
Representatives with such additional financial and operating data and other information in Sellers'
possession as to businesses and properties of the Healthcare Businesses as Buyer or Buyer's
Representatives may from time to time reasonably request, without regard to where such information may
be located. Buyer will exercise Buyer's right of access and inspection in such a manner as not to interfere
unreasonably with the operations of the Healthcare Businesses. Sellers shall permit Buyer and its
environmental consultants, at Buyer's sole cost and expense, to conduct such investigations (including
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investigations known as "Phase I" and "Phase 11" environmental assessments) of the environmental
conditions of the Real Property or the operations thereat (subject to any limitations contained in valid,
previously executed leases) as Buyer, in its reasonable discretion, shall deem necessary or prudent
("Buyer's Environmental Assessment"), so long as (x) Buyer provides Sellers with no less than five
Business Days' advance written notice of any such Buyer's Environmental Assessment and (y) Buyer's
Environmental Assessment is conducted by a qualified environmental consulting firm, possessing
reasonable levels of insurance, in compliance with applicable Laws and in a manner that minimizes the
disruption of the operations of the Healthcare Businesses, undertake noninvasive inspections and surveys
of the Healthcare Businesses and the Real Property. Notwithstanding the foregoing, all access and
inspection activities contemplated by this Section 4.1 shall be subject to the prior reasonable approval of
Sellers, which approval shall not be unreasonably withheld, conditioned or delayed, and with respect to
access to and inspections of (a) the Owned Real Property, shall be subject to the terms of any applicable
Lessor Lease, and (b) the Leased Real Property, shall be subject to the terms of any applicable Tenant
Lease; provided, however, that Sellers shall use commercially reasonable efforts to coordinate the access
and inspection activities contemplated by this Section 4.1 with Buyer, Buyer's Representatives and the
parties to any Tenant Leases or Lessor Leases, as applicable, such that Buyer and/or Buyer's
Representatives may carry out such inspection activities pursuant to the terms of this Section 4.1.
Notwithstanding the foregoing, all disclosures of information shall be consistent with the confidentiality,
wall agreements and any other nondisclosure agreements entered into (or to be entered into) among
Buyer, its representatives and Sellers (including Affiliates of Sellers). Buyer shall not, except in the
ordinary course of business or through the clean room process for purposes of due diligence and
integration planning, contact, directly or through one or more intermediaries, any employees of the
Healthcare Businesses or any Physicians employed or otherwise affiliated with the Healthcare Businesses
without prior written approval from Sellers.
4.2 Conduct of Business. From the Effective Date through the Closing or termination of this
Agreement, and except as otherwise consented to or approved by Buyer in writing, which such approval
shall not be unreasonably withheld, conditioned or delayed, or as specifically required by this Agreement,
Sellers shall, with respect to the operation of the Healthcare Businesses, use their commercially
reasonable efforts to:
(a) continue to operate the Healthcare Businesses in the ordinary course of business;
(b) preserve intact their corporate existence and business organizations;
(c) (i) maintain the Assets in a manner consistent with past practices, ordinary wear
and tear excepted, and inclusive of substitutions and retirements in the ordinary course of business and
(ii) make repairs and acquire replacements in the ordinary course of business;
(d) Pay all Liabilities of the Healthcare Businesses in the ordinary course of business
as they become due and payable, other than those disputed in good faith;
(e) comply in all material respects with all Laws, all Material Contracts, all Leases
and other obligations to which Sellers are bound;
(f) maintain, and timely renew, all Governmental Permits and Accreditations used in
the Healthcare Businesses; and
insurance.
(g) keep in full force and effect all Insurance Policies or other comparable self-
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4.3 Negative Covenants. From the Effective Date through the Closing or termination of this
Agreement, with respect to the operation of the Healthcare Businesses, Sellers shall not, without the prior
written consent of Buyer or except as may be required by Law (and, to the extent required by Law, Sellers
shall provide written notice to Buyer thereof):
(a) amend or voluntarily terminate any Assumed Contract or Lease, or enter into any
new contract or commitment that would constitute an Assumed Contract, or enter into any lease, license
or occupancy agreement related to real property, except, in each case, in the ordinary course of business
(which shall include renewals of any Assumed Contract or any contract that can be terminated without
cause upon notice of 60 calendar days or less);
(b) sell, assign, lease, or otherwise transfer or dispose of any of the Assets, except for
the disposition of immaterial Assets in the ordinary course of business and sales or dispositions of
Inventory in the ordinary course of business with comparable replacement thereof,
(c) make any material change in personnel, operations, real or personal property,
finance or accounting policies, unless Sellers are required to adopt such changes under GAAP or
applicable Laws;
(d) except with respect to budgeted expenditures or expenditures incurred in the
ordinary course of business make any capital expenditure commitment for additions to property, plant,
equipment, intangible or capital assets of the Healthcare Businesses or for any other purpose, the payment
for which is to be made after the Closing Date;
(e) mortgage, pledge or subject to any Encumbrance (other than Permitted
Encumbrances) any portion of the Assets except for such mortgages, pledges or Encumbrances as shall be
extinguished as of the Effective Time;
(0 incur or guarantee any Indebtedness with respect to the Assets outside the
ordinary course of business;
(g) fail to keep in force insurance coverage with respect to the Assets or the
Healthcare Businesses substantially similar to that which is then in effect for Affiliates of Sellers on a
company -wide basis;
(h) (i) other than in the ordinary course of business, increase the compensation or
benefits payable or to become payable to any Physician or other Referral Source of any Seller or the
Healthcare Businesses, Business Employees or any director, manager, officer or consultant of the
Healthcare Businesses; (ii) grant or increase any rights to change -in -control, severance or termination
payments or benefits to, or enter into any change -in -control, employment, consulting or severance
agreement with, any Business Employee or any other Person, including any director, manager, officer or
consultant of the Healthcare Businesses; (iii) grant any equity -based or long-term incentive award; (iv)
establish, adopt, enter into, amend, modify or terminate any Seller Plan, except to the extent required by
applicable Laws or as required in order to effectuate Buyer's assumption of the Transferred Plans; or (v)
take any affirmative action to amend or waive any performance or vesting criteria or accelerate vesting,
exercisability or funding under any Seller Plan;
(i) take or omit to take any action that, individually or in the aggregate, could
reasonably be expected to result in any representation or warranty of Sellers to be untrue, result in a
breach of any covenant made by any Seller in this Agreement, would require disclosure pursuant to
44
Section 4.15 or could reasonably be expected to result in any condition set forth in Article 6 not being
satisfied;
0) (i) accelerate or delay collection of notes receivable or Accounts Receivable in
advance of or beyond their regular due dates or the dates when the same would have been collected in the
ordinary course of business or (ii) delay or accelerate payment of any account payable related to the
Healthcare Businesses in advance of or beyond its due date or the date such Liability would have been
paid in the ordinary course of business;
(k) acquire (including by merger, consolidation, license or sublicense) any interest in
any Person or material portion of the assets or business of any Person, or otherwise acquire any material
asset other than in the ordinary course of business;
(1) (i) make loans or advances to, guarantees for the benefit of, or any investments in
any Person or (ii) cancel any Indebtedness owed to any Seller or waive any claims or rights of value in
respect of the Healthcare Businesses;
(m) enter into any new line of business or make any material change in the
Healthcare Businesses or the operation of the Assets;
(n) apply for or accept any Provider Relief Funds, Disaster Relief Funds or AAP
Program Amount, other than as required by Law;
(o) hire for or assign to the Healthcare Businesses any employee of or contractor to
County who was at any time since July 1, 2419 employed by or a contractor to the County in any business
other than the Healthcare Businesses;
(p) waive, release, assign, settle or compromise any material right or claim, or any
material Proceeding with respect to the Healthcare Businesses or the Assets; or
(q) alter or subject to any Encumbrance (other than a Permitted Encumbrance) title
to any Owned Real Property.
Notwithstanding any provision to the contrary contained in this Agreement, neither Section 4.2
nor this Section 4.3 shall be construed to prohibit Sellers from engaging in any act that Sellers reasonably
believe in good faith is necessary (i) for patient safety needs or (ii) to comply with the requirements of
any Law or Governmental Entity. Sellers shall give Buyer prompt written notice (but no later than three
days) subsequent to taking any act described in the immediately preceding sentence.
4.4 Re uired Governmental Approvals,
(a) From the Effective Date through the CIosing or termination of this Agreement,
Sellers shall (i) use their commercially reasonable efforts to obtain, as promptly as practicable, all
Required Governmental Authorizations required of Sellers to consummate the Transactions, and (ii)
reasonably assist and cooperate with Buyer in Buyer's obtaining, as soon as practicable, the Required
Governmental Authorizations required of Buyer to consummate the Transactions.
(b) Notwithstanding the generality of Section 4.4 a , Sellers shall (i) comply at the
earliest practicable date with any request for additional information received by ,Sellers or Sellers'
Affiliates from any Governmental Entity pursuant to applicable Law, (ii) subject to applicable Law,
consult and cooperate with Buyer, and consider in good faith the views of Buyer, in connection with any
45
analyses, appearances, substantive discussions, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of Sellers in connection with Proceedings under or
relating to antitrust Law and in connection with resolving any investigation or other inquiry concerning
the Transactions commenced by any Governmental Entity, (iii) promptly notify Buyer of any written
communication made to or received by Sellers from any Governmental Entity regarding any of the
Transactions, and, subject to applicable Law, permit Buyer (or its counsel on an outside -counsel basis) to
review and comment in advance on any proposed written communication to the Governmental Entity,
incorporate Buyer's reasonable comments into such proposed written communications to the
Governmental Entity, and permit Buyer to participate in any oral communications and meetings with a
Governmental Entity, and (iv) not enter into any agreement or understanding with the Governmental
Entity without consulting and obtaining written consent from Buyer. Notwithstanding the foregoing or
any other term herein, "commercially reasonable efforts", as used in this Section 4.4, shall not be
interpreted to obligate Sellers or their Affiliates to (x) agree to divest or hold separate any Hospital,
affiliates, business units, or services or (y) defend or prosecute through any litigation any claim asserted
in court by any Person, including any Governmental Entity, in order to avoid entry of, or to have vacated
or terminated, any Order (whether temporary, preliminary or permanent) that would prevent the Closing.
4.5 Insurance Policies and Suret Bands.
(a) Sellers shall obtain supplemental insurance policies (the "Tail Policies")
providing for extended reporting periods for claims made after the Effective Time in respect of events
occurring before the Effective Time, in form and substance reasonably acceptable to Buyer, for any
claims -made Insurance Policies held for the benefit of the Healthcare Businesses, the Assets or the
Practitioners (which are listed on Schedule 4.5 a ), including professional and general liability coverage,
relating to all periods before the Effective Time. Such Tail Policies shall extend for the maximum time
period permissible by each respective Insurance Policy (but in no event extend less than five years from
the Effective Time) and shall provide minimum coverage in an amount no less than the coverage
currently maintained under the applicable Insurance Policy. Sellers shall deliver to Buyer evidence of
Sellers' purchase of the Tail Policies at least five Business Days prior to the Closing Date. Sellers and
Sellers' Representatives shall cooperate with Buyer in the assignment of the Tail Policies and the transfer
of Broker of Record from Willis of North Carolina Inc. to a broker of Buyer's choice. The cost of the Tail
Policies shall be borne by Sellers.
(b) Sellers shall assign to Buyer the Surety Bonds and the Insurance Policies set
forth on Schedule 4.5(b) (the "Transferred Insurance Policies and Surety Bonds"). Sellers agree to
provide Buyer with all reasonably requested information and assistance as necessary for Buyer to
effectuate the assumption of the Transferred Plans. Sellers and Sellers' Representatives shall cooperate
with Buyer in the transfer of Broker of Record with respect to the Transferred Insurance Policies and
Surety Bonds from Willis of North Carolina Inc. to a broker of Buyer's choice, and in the designation of
Buyer as the First Named Insured to be effective on the Effective Time.
4.6 Sellers' Efforts to Close. From the Effective Date through the Closing or termination of
this Agreement, Sellers shall use their reasonable best efforts to satisfy all of the conditions precedent set
forth in Articles 6 and 7 to their obligations under this Agreement to the extent that Sellers' action or
inaction can control or influence the satisfaction of such conditions.
4.7 Consents.
(a) As promptly as practicable after the Effective Date, Sellers shall (i) request from
the applicable counterparty all consents set forth on Schedule 4.7(a) and (ii) provide all notices set forth
on Schedule 4.7 a , in each case required in connection with the Transactions pursuant to any Contract or
46
Lease, in each case in a form of consent or notice, as applicable, mutually agreed by Buyer and Sellers;
provided, however, in connection with any such consent or notice, no Seller shall be obligated to pay any
consideration, agree to any undertaking or modification to a Contract or Lease or offer or grant any
financial accommodation not expressly required by the terms of such Contract or Lease. Sellers shall use
commercially reasonable efforts to obtain all such consents; provided, however, that, with respect to any
consent that is not a Required Contract Consent or a Contract and Lease Consent, Sellers' obligations to
use commercially reasonable efforts shall be limited to one follow-up communication with respect to such
consent and compliance with the following sentence_ At Buyer's request, Sellers shall promptly make
available to Buyer all information, contact information and documents in either of their possession,
custody or control related to the counterparty or counterparties to the Contracts and Leases for which
consents or notices are to be provided under in this Section 4.7 a promptly following Sellers' first
solicitation of the relevant consent or notice and that is reasonably necessary to obtain an applicable
consent, and Buyer shall be permitted to independently contact any such counterparty to a Contract or
Lease for which Sellers have sent a letter or other correspondence pursuant to the provisions in this
Section 4.7(a}. Buyer and Sellers hereby acknowledge and agree that, unless agreed otherwise by Buyer
in Buyer's reasonable discretion, the form of assignment and assumption agreement set forth in Exhibit i-
1 shall be the agreed-upon form of counterparty consent with respect to any Tenant Lease (x) set forth in
Schedule 4.7(a) and (y) to be assigned to Buyer pursuant to Section 6.8(c)(i), subject to any commercially
reasonable modifications approved by Buyer and Sellers pursuant to Section 6.8(c) in the event the
applicable Tenant Lease is a sublease (as opposed to a direct lease).
(b) Notwithstanding anything contained herein to the contrary, this Agreement shall
not constitute an agreement to assign any Assumed Contract if an attempted assignment thereof without
the consent of a counterparty thereto would constitute a breach thereof or in any material way adversely
affect the rights of a Seller thereunder (or the rights of Buyer thereunder following the Effective Time),
unless such consent is obtained. If such consent is not obtained, or if an attempted assignment would be
ineffective or would materially and adversely affect the rights of a Seller thereunder (or the rights of
Buyer thereunder following the Effective Time), then Sellers shall, upon the request of Buyer, cooperate
in any reasonable arrangement designed to provide for Buyer the benefits under any such Assumed
Contract, including enforcement of any and all rights of any Seller against the counterparty or
counterparties thereto. To the extent Buyer cannot receive the benefit of an Assumed Contract due to the
failure or inability to obtain the necessary consent from the counterparty to such Assumed Contract, then,
at Buyer's option, such Contract or Lease, as applicable, shall be deemed an Excluded Contract, and all
Liabilities with respect to such Contract or Lease, as applicable, shall be Excluded Liabilities.
(c) If, before the Closing, Buyer discovers information regarding an Assumed
Contract that causes Buyer to determine in its reasonable discretion that such Assumed Contract may
violate applicable Laws or Buyer's written policies, Buyer shall have the right to designate such Assumed
Contract as an Excluded Contract by giving Sellers written notice of such election before the Closing and
as a result, such Contract or Lease, as applicable, shall be deemed an Excluded Contract.
4.8 Closing Date Business Employees.
(a) Effective immediately prior to the Effective Time, the Closing Date Business
Employees shall cease to be employees of Sellers, and shall be removed from Sellers' payroll. Sellers
shall terminate the active participation of all of the Closing Date Business Employees in all of the Seller
Plans in accordance with the terms and conditions thereof, subject to the terms of Section 5.13. Effective
immediately prior to the Effective Time, Sellers shall waive any and all restrictive covenants or
noncompetition covenants applicable to the Closing Date Business Employees solely to the extent
necessary to permit such Closing Date Business Employees to become employees of Buyer, or an
Affiliate of Buyer, post -Closing.
FS]
(b) After the Effective Time, Sellers shall timely make or cause to be made
appropriate distributions to, or for the benefit of, all of the Closing Date Business Employees in respect of
the Seller Plans which are in force and effect with respect to the Closing Date Business Employees
immediately prior to the Effective Time in accordance with the terms and conditions of the Seller Plans;
provided, however, no such distribution shall be required to the extent it is among the Assumed
Obligations (unless and to the extent funded by Buyer).
4.9 Termination Cost Reports. Sellers shall file all Medicare, Medicaid, TRICARE,
commercial payor and any other termination cost reports for periods ending on or prior to the Effective
Time required to be filed as a result of the consummation of the Transactions. All such termination cost
reports shall be filed by Sellers in accordance with Law. Sellers will be solely responsible, financially
and otherwise, for the contents of all such termination cost reports. Without limiting the generality of the
foregoing, Sellers will be solely obligated for all cost report deficiencies related to periods prior to the
Effective Time.
4.10 Confidentiality. From and after the Closing Date, Sellers and their Affiliates, except as
required for the post -Closing performance of Sellers' obligations under this Agreement, if applicable,
shall not, directly or indirectly, disclose, reveal, divulge or communicate to any third party (other than
authorized officers, managers, directors and employees of Buyer) or use or otherwise exploit for its own
benefit or for the benefit of any other third party, any Confidential Information. Sellers and their
Affiliates shall have no obligation to keep confidential any Confidential Information if and to the extent
disclosure thereof is required by Law or in a Proceeding;rop ovided, however that, if disclosure is required
by applicable Law or in a Proceeding, then Sellers and their Affiliates, as applicable, shall, to the extent
reasonably possible, provide Buyer with prompt written notice of such requirement before making any
disclosure so that Buyer may seek an appropriate protective Order. For purposes of this Section 4.10,
"Confidential Information" means all confidential and proprietary information of the Healthcare
Businesses and/or Buyer and includes all information that gives the Healthcare Businesses and/or Buyer a
competitive business advantage or the opportunity of obtaining such advantage, or the disclosure of which
could be detrimental to the interests of the Healthcare Businesses and/or Buyer, all methods of operation,
trade secrets, Software, marketing methods, client lists, client information, pricing, strategy, plans,
personnel, suppliers, competitors, markets, financial information or other specialized information or
proprietary matters. Confidential Information does not include, and there shall be no obligation hereunder
with respect to, information that (a) becomes a matter of public knowledge or is contained in materials
available to the public through no breach of this Agreement by any Seller or any of their Affiliates or
Representatives; or (b) is already known to the recipient on a nonconfrdential basis at the time of
disclosure by Sellers or their Affiliates, as applicable.
4.11 Bond Defeasance. One or more Sellers carry those certain bonds set forth in Schedule
2.11(b) ("Bond Indebtedness"), which are not callable until the respective call dates set forth on
Schedule 2.1 l(b). Contemporaneously with the Closing, the applicable Seller(s) shall extinguish all such
Bond Indebtedness, including by placing into escrow (the "Bond Defeasance Escrow") an amount equal
to the Bond Indebtedness principal and interest to accrue prior to the first allowable call date (the "Bond
Defeasance Escrow Amount"). Seller(s) shall establish the Bond Defeasance Escrow and complete other
tasks necessary to complete the defeasance of the Bond Indebtedness. Seller(s) shall provide Buyer with
(i) an escrow agreement among Seller(s) and the escrow agent for the Bond Defeasance Escrow (the
"Bond Defeasance Escrow Agent"), (ii) a copy of a verification report required pursuant to Section 1101
of the Bond Order adopted by the Board of Commissioners for the County of New Hanover, North
Carolina, as amended (the "Bond Order"), and such report shall include Buyer as an addressee thereto,
and (iii) an opinion of bond counsel to the effect that (a) the Bond Indebtedness has been defeased
pursuant to the terms of the Bond Order, the governing documents of the Bond Indebtedness and North
Carolina Law and that the bond trustee is required to cancel and discharge the lien of the Bond Order, (b)
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the deposit of the securities in the escrow funds relating to the defeasance of the Bond Indebtedness, the
transfer of the assets to Sellers and the termination of the operating agreement will have no adverse effect
on the exemption of interest on the Bond Indebtedness, and (c) the escrow agreement(s) is enforceable
against County (the documents described in clauses (i)- iii , collectively, the "Bond Defeasance
Documents").
4.12 Use of Net Proceeds. Sellers agree that the Purchase Price, the Cash Amount, any
interest accruing on Sellers' portion of the Adjustment Escrow Amount or General Escrow Amount, any
portion of the Adjustment Escrow Amount paid to Sellers, and any remaining portion of the Escrow
Amount paid to Sellers following the expiration of the Escrow Period (collectively, the "Net Proceeds"),
shall only and exclusively be used, distributed, directed, invested or allocated in accordance with those
terms set forth in Exhibit C.
4.13 No Shoo.
(a) From the Effective Date until the earlier of (i) the Closing Date or (ii) the
termination of this Agreement, Sellers shall not, without the approval of Buyer, directly or indirectly: take
any action to (A) offer for sale the Healthcare Businesses (or any material portion thereof) or any
ownership interest in any Person owning or owned by NHRMC or its Affiliates, (B) solicit offers to buy
all or any material portion of the Healthcare Businesses or any ownership interest in any Person owning
or owned by NHRMC or its Affiliates, (C) hold discussions with any third party looking toward such an
offer or solicitation or looking toward a merger or consolidation of any Person owning or owned by
NHRMC or its Affiliates or (D) enter into any agreement with any third party with respect to the sale,
lease or other disposition of the Healthcare Businesses (or any material portion thereof) or any ownership
interest in any Person owning or owned by NHRMC or its Affiliates or with respect to any merger,
consolidation or similar transaction involving any Person owning or owned by NHRMC or its Affiliates
(each, an "Acquisition Proposal"), other than in connection with the Transactions.
(b) From the Effective Date until the earlier of (i) the Closing Date or (ii) the
termination of this Agreement, Sellers and their Affiliates shall, and shall cause their respective
Representatives not to, directly or indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any third party relating to an
Acquisition Proposal, or otherwise knowingly encourage or facilitate any effort or attempt to make or
implement an Acquisition Proposal.
(c) Sellers and their Affiliates and Representatives must immediately cease and
cause to be terminated any existing activities, discussions or negotiations with any third party conducted
heretofore with respect to any Acquisition Proposal or the Transactions. Sellers and their Affiliates shall
take the necessary steps to promptly inform their respective Representatives of the obligations undertaken
in this Section 4.13. Sellers shall notify Buyer promptly, but in any event within 48 hours, if any
inquiries, proposals or offers are received by, any information is requested from or any discussions or
negotiations are sought to be initiated or continued with, any Seller, any of their Affiliates or any of their
Representatives relating to an Acquisition Proposal, indicating, in connection with such notice, the name
of such individual seeking such information, and upon request, shall inform Buyer whether any such
proposal has been withdrawn or rejected.
4.14 Cooperation. On and before the Closing, Sellers will provide reasonable assistance and
cooperation in connection with Buyer's financing arrangements related to the Transaction, as may be
reasonably requested by Buyer.
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4.15 Notification of Certain Matters. From the Effective Date until the Closing Date, Sellers
shall give prompt written notice to Buyer of (a) the occurrence, or failure to occur, of any event,
circumstance or fact that is reasonably likely to cause any representation or warranty of Sellers contained
in this Agreement to be untrue in any material respect; (b) any failure of a Seller to comply with or
satisfy, in any material respect, any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement and/or (c) any other material development affecting the Assets or the Assumed
Obligations. Such notice shall provide a reasonably detailed description of the relevant circumstances
and shall include the amount that Sellers believe, based on facts known to Sellers, would be payable by
Sellers pursuant to the indemnification provisions set forth in Article 10. The content of any notice or
update delivered by Sellers to Buyer before the Closing Date pursuant to this Section 4.15 shall not be
deemed to amend or supplement the Disclosure Schedules or to modify the applicable representations,
warranties and covenants contained in this Agreement or the other Transaction Documents for purposes
of determining whether applicable conditions precedent in Article 7 are satisfied, for purposes of
determining or calculating Sellers' indemnification obligations set forth in Article 10 or for purposes of
Buyer's termination rights under Article 8.
ARTICLE 5
COVENANTS OF BUYER
5.1 Buyer's Efforts to Close. From the Effective Date through the Closing or termination of
this Agreement, Buyer shall use its reasonable best efforts to satisfy all of the conditions precedent set
forth in Articles 6 and 7 to its or Sellers' obligations under this Agreement to the extent that Buyer's
action or inaction can control or influence the satisfaction of such conditions.
5.2 Required Governmental Authorizations.
(a) From the Effective Date through the Closing or termination of this Agreement,
Buyer will: (i) use its commercially reasonable efforts to obtain, as promptly as practicable, all Required
Governmental Authorizations required of Buyer to consummate the Transactions and (ii) reasonably
assist and cooperate with Sellers in Sellers' obtaining, as soon as practicable, the Required Governmental
Authorizations required of Sellers to consummate the Transactions.
(b) Notwithstanding the generality of Section' 5.2 a , Buyer shall (i) comply at the
earliest practicable date with any request for additional information received by Buyer or Buyer's
Affiliates from any Governmental Entity pursuant to applicable Law, (ii) subject to applicable Law,
consult and cooperate with Sellers, and consider in good faith the views of Sellers, in connection with any
analyses, appearances, substantive discussions, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party in connection with Proceedings under or
relating to antitrust Law and in connection with resolving any investigation or other inquiry concerning
the Transactions commenced by any Governmental Entity, (iii) promptly notify Sellers of any written
communication made to or received by Buyer from any Governmental Entity regarding any of the
Transactions and, subject to applicable Law, permit Sellers (or their counsel on an outside -counsel basis)
to review and comment in advance on any proposed written communication to the Governmental Entity,
incorporate Sellers' reasonable comments into such proposed written communications to the
Governmental Entity and permit Seller to participate in any oral communications and meetings with a
Governmental Entity, and (iv) not enter into any agreement or understanding with the Governmental
Entity without consulting with and incorporating the views of Sellers. Notwithstanding the foregoing or
any other term herein, "commercially reasonable efforts", as used in this Section 5.2, shall not be
interpreted to obligate Buyer or its Affiliates to defend or prosecute through any litigation any claim
asserted in court by any Person, including any Governmental Entity, in order to avoid entry of, or to have
vacated or terminated, any Order (whether temporary, preliminary, or permanent) that would prevent the
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Closing. Buyer shall not, and shall cause its Affiliates not to, acquire or agree to acquire, by merging with
or into or consolidating with, or by purchasing a portion of the assets of or equity in, or by any other
manner, any business or any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets or equity interests, if the entering into
of a definitive agreement relating to, or the consummation of such acquisition, merger or consolidation,
would reasonably be expected to: (w) impose any delay in the obtaining of, or materially increase the risk
of not obtaining, any Required Governmental Authorization; (x) increase the risk of any Governmental
Entity seeking or entering an Order prohibiting the consummation of the Transactions; (y) increase the
risk of not being able to remove any such Order on appeal or otherwise; or (z) delay or prevent the
consummation of the Transactions.
5.3 Excluded Assets. As soon as practicable after the Closing Date, Buyer shall deliver at
Sellers' cost to Sellers or Sellers' designee any Excluded Assets found at the Healthcare Businesses on
and after the Effective Time, without imposing any charge on Sellers for Buyer's storage or holding of
same on and after the Effective Time.
5.4 Confidentiality. The terms of the Confidentiality Agreement shall survive the execution
of this Agreement and the Closing for a period of three years and Buyer shall, and shall cause its
Affiliates to, continue to comply with the terms of such Confidentiality Agreement; provided, however,
that following the Closing, Buyer shall not be restricted under the Confidentiality Agreement with respect
to its use in connection with the operation of the Healthcare Businesses of information that is included in
the Assets.
5.5 Title Matters.
(a) Buyers will order or have ordered one or more current title commitments for a
policy or policies of title insurance with respect to the Owned Real Property (collectively, the "Title
Commitment"), from Chicago Title Insurance Company (the "Title Company"), together with legible
copies of all exceptions to title referenced therein, sufficient for the issuance of a policy or policies of
commercially reasonable title insurance for the Owned Real Property (collectively, the "Title Policy"),
Buyer shall promptly upon receipt provide a copy of the Title Commitment and exception documents to
Sellers.
(b) Within 180 days after the Effective Date, Buyer may, at its expense, obtain
current as -built surveys of the Owned Real Property (each, a "Survey" and, collectively, the "Surveys")
or such portions thereof as Buyer elects. Buyer shall promptly upon receipt furnish a copy of each Survey
to Sellers.
(c) The Title Commitment and the Surveys (to the extent obtained by Buyer pursuant
to Section 5.5(b)) are collectively referred to as "Title Evidence." Buyer shall notify Sellers, in writing,
within 20 Business Days after Buyer's receipt of the last of the Title Evidence (the "Title Objection
Period") of any liens, claims, encroachments, exceptions or defects disclosed in the Title Evidence
(collectively, "Defects"); provided, however, that the term "Defects" shall not include any liens, claims,
encroachments, exceptions or defects that are Permitted Exceptions; provided further, however, that any
lien, claim, encroachment, exception or defect that qualifies as a Permitted Exception solely by virtue of
being disclosed by the Title Commitment or the Surveys shall not be excluded from the term "Defects".
Any Defect or Encumbrance to which Buyer does not timely object shall be deemed to be a Permitted
Exception. Notwithstanding anything herein to the contrary, Sellers agree (i) to satisfy and discharge
(including the filing of appropriate satisfaction instruments in connection therewith), at or prior to
Closing, all mortgages, deeds of trust, financing statements, mechanics' liens, judgment liens and similar
liens encumbering any Owned Real Property and/or the interest of any Seller in any Owned Real Property
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(each, a "Monetary Encumbrance" and, collectively, the "Monetary Encumbrances"), to the extent
any such particular Monetary Encumbrance can be satisfied and discharged by the payment of a definite
and ascertainable sum of money, and (ii) to cure any other Defects (i.e., any Defects other than Monetary
Encumbrances) encumbering or otherwise affecting any Owned Real Property andlor the interest of any
Sellers in any Owned Real Property that were communicated in writing within the Title Objection Period
and that, individually or in the aggregate, materially and adversely affect the operation of the Healthcare
Businesses (collectively, "Non -Monetary Encumbrances"); provided, however, that Sellers shall not be
required to expend, in the aggregate, more than One Million Dollars ($1,000,000.00) (the "Non -
Monetary Cure Threshold") to cure the Non -Monetary Encumbrances; provided, further, that in the
event Sellers are unable to cure any Non -Monetary Encumbrances, either as a result of the total expenses
incurred by Sellers with respect to the curing of Non -Monetary Encumbrances exceeding the Non -
Monetary Cure Threshold or because such cure is beyond Sellers' reasonable control despite Sellers'
good faith, commercially reasonable efforts, then Sellers shall provide written notice to Buyer thereof,
such inability of Sellers to cure shall not constitute a default of Sellers, and Buyer shall have, as its sole
remedy, the right to terminate this Agreement upon written notice to Sellers. Subject to the terms and
limitations of this Section 5.5(c), Sellers shall use commercially reasonable efforts to cure any liens,
claims, encroachments, exceptions or defects disclosed in the Title Evidence and encumbering or
otherwise affecting any Owned Real Property and/or the interest of any Sellers in any Owned Real
Property that were communicated to Sellers in writing within the Title Objection Period. As used herein,
the term "Monetary Encumbrance" shall not include any encumbrance the removal of which is an
obligation of any tenant pursuant to a Lessor Lease, to the extent such particular Lessor Lease expressly
permits the lessor thereunder to remove or cure such encumbrance on behalf of the lessee thereunder in
the event such lessee fails to do so within a reasonable period of time. For purposes of this section, a
Defect shall be deemed cured if the Title Company agrees to (i) delete the Defect from the applicable title
policy or (ii) issue an endorsement or other provision to the applicable title policy reasonably acceptable
to Buyer obligating the Title Company, within the limits of the applicable title policy, to protect Buyer
against any loss or damage incurred on account of such Defect.
(d) Section 12.12 shall govern which party or parties shall bear the costs and
expenses of the Title Commitment, the Title Policy and the Surveys.
(e) Buyer and Sellers hereby acknowledge and agree that, to the extent required by
Title Company, at the Closing, Buyer shall pay, by wire transfer of immediately available funds pursuant
to Section 1.1(d)(vi), the portion of the Purchase Price allocated to the transfer of the Owned Real
Property to Buyer in the manner set forth in Section 1.4(a) (i.e., the Owned Real Property Purchase Price)
to Title Company, in lieu of any other obligation of Buyer contained herein to wire, pay or otherwise
provide such portion of the Purchase Price to any other Person or in any other manner, and such portion
of the Purchase Price shall be (i) held by Title Company pursuant to a commercially reasonable escrow
agreement reasonably approved by Buyer and Sellers and (ii) distributed by Title Company at Closing
pursuant to the Funds Flow Memorandum; it being the intent of Buyer and Sellers that the portion of the
Purchase Price allocated to the transfer of the Owned Real Property in the manner set forth in Section
1.4(a) shall, to the extent required by Title Company, flow through Title Company in a manner consistent
with customary closing procedures of commercial real property acquisitions and dispositions involving
title insurance companies in the State of North Carolina.
5.6 Inspection; Repair and Restoration; Insurance. From the Effective Date through the
Closing or termination of this Agreement, Buyer shall conduct any inspections, investigations and
reviews permitted pursuant to Section 4.1 in a manner that does not materially damage the Real Property
or interfere unreasonably with the operations of the Healthcare Businesses. Buyer shall promptly repair
any damage that occurs as a result of any inspections, investigations and reviews and shall promptly
52
restore the Real Property to its prior condition following completion of such inspection, investigation or
review. Such repairs and restoration shall be performed at Buyer's sole expense.
5.7 Consents. Subject to the terms of Section 4.7(b), Buyer will use its commercially
reasonable efforts to assist Sellers in obtaining, prior to the Closing Date, the Contract and Lease
Consents; provided, however, in connection with any such Consent, Buyer shall not be obligated to pay
any consideration, agree to any undertaking or modification to a Contract or Lease or offer or grant any
financial accommodation not expressly required by the terms of such Contract or Lease.
5.8 R&W Insurance Policy, Contemporaneous with the Effective Date, Buyer has obtained a
buyer -side representations and warranties insurance policy effective as of the Closing (the "R&W
Policy") with an insurance broker selected by Buyer providing for (a) coverage against, inter alfa, the
inaccuracy or breach of Sellers' representations and warranties contained in this Agreement (including the
Fundamental Representations), (b) an initial retention amount of $12,750,000 (the "Retention") and (c)
waiver of any and all subrogation rights to the insurer in favor of Sellers or any of their respective
Affiliates except in the case of fraud or intentional misconduct. The cost of the R&W Policy (including
all premiums and excess lines Taxes payable in connection therewith and any fees or expenses incurred
by any insurance broker or underwriting insurance company in connection therewith) shall be borne by
Buyer;rod videcl, however, the first 50% of the Retention shall be borne by Buyer ("Buyer Retention")
and the second 50% of the Retention, if any is due, shall be the responsibility of Sellers ("Seller
Retention") and paid out of the General Escrow Amount.
5.9 Capital Commitments.
(a) At the Closing, Buyer shall contribute a one-time, lump -sum payment in the total
amount of Fifty Million Dollars ($50,000,000) ("Foundation Contribution") to NHRMC Foundation as
further set forth in Section 7.5fb).
(b) As soon as practicable following the Closing, but in any event within the later of
(i) one year following Closing and (ii) upon the receipt of any required approvals by any applicable
Governmental Entity, Buyer shall cause Novant Health Brunswick Medical Center ("NHBMC") to
become a component hospital of the Healthcare Businesses subject to governance by the Local Board
following the Closing. Buyer shall cause the foregoing to occur in a method chosen in its reasonable
discretion. The Local Board may establish a subordinate local board for the Hospitals.
(c) in addition to payment of the Purchase Price and the other commitments set forth
in this Agreement, Buyer shall make the following Capital Expenditures to the Healthcare Businesses
from and after the Closing:
(i) Buyer shall spend no less than Six Hundred Million Dollars
($600,000,000) during the 10 -year period immediately following the Closing to fund
commercially reasonable routine Capital Expenditures of the Healthcare Businesses (the
"Routine Capital Commitment"). In the event the full amount of such Routine Capital
'Commitment cannot reasonably be expended within such 10 -year period due to the lack of
commercially reasonable routine Capital Expenditure requirements, as reasonably determined by
Buyer, such Routine Capital Commitment period shall be automatically extended for one
additional five-year period.
(ii) In addition to the Routine Capital Commitment, Buyer shall make no less
than Two Billion Five Hundred Million Dollars ($2,500,000,000) in Capital Expenditures
following the Closing to materially implement (A) all of the strategic projects set forth in the
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Strategic Plan (to the extent disclosed in reasonable detail), with such strategic projects scheduled
to be completed in the five-year period following the Closing to be implemented in a manner
materially consistent with target dates and timelines set forth in the Strategic Plan, and (B) such
other capital -intensive projects similar to those in the Strategic Plan as may be approved by the
Local Board from time to time. In conjunction with implementing the foregoing, the parties agree
to periodically consider opportunities to optimize the overall strategic capital plan for the
Healthcare Businesses taking into consideration the contribution of NHBMC; provided, however,
that any modification to the commitments set forth in Section 5.9 shall require the prior written
consent of the Local Board and Buyer. The parties acknowledge and agree that the items and
amounts listed in the Strategic Plan are based on projections and estimates and are subject to
Buyer's and the Local Board's review throughout the implementation of the Strategic Plan;
provided, however, for the avoidance of doubt, the foregoing clause shall not be interpreted as
limiting, modifying or permitting any modification of Buyer's aggregate capital commitments set
forth in this Section 5.9(c).
5.10 Improving Access to Care and Wellness.
(a) Unless otherwise consented to in writing by the Local Board, Buyer shall not, at
any time following the Closing, perform or take any actions to discontinue or otherwise eliminate any of
the Core Clinical Service Lines of the Healthcare Businesses. Buyer shall use commercially reasonable
efforts to further develop, upgrade, and expand the Healthcare Businesses' clinical service lines, including
the Core Clinical Service Lines, which such expansion and development shall be tailored to fill needs
identified in the Strategic Plan and the Provider Needs Assessment and shall include upgrades to the
Hospital campuses as well as expansion of the Hospitals' tertiary and quaternary capabilities.
(b) For a period of not less than 10 years following the Closing, Buyer shall use
commercially reasonable efforts to ensure that the Healthcare Businesses continue to expand and enhance
the scope, level, and areas of services, including any inpatient and outpatient Hospital services, as are
offered by the Hospitals and Healthcare Businesses as of the Closing.
(c) As of the Closing, Buyer shall operate the Healthcare Businesses as the "hub" for
the provision of all clinical services offered or provided by Buyer within the Service Area and eastern
North Carolina. As part of such organizational model, and without limiting the foregoing, the Healthcare
Businesses shall retain primary responsibility for all patient care delivered within the Service Area, and
Buyer shall make commercially reasonable efforts to make available specialty medical services and
patient care support by consultation or otherwise in furtherance and support of such model.
(d) Unless Pender is sooner more fully integrated into the Healthcare Businesses, or
NHRMC and Pender County otherwise agree to another structure with respect to Pender prior to Closing
(subject to Buyer's approval), Buyer shall, for a period of not less than three years following the Closing,
use commercially reasonable efforts to ensure the continued maintenance and further development of the
existing arrangement with Pender Memorial Hospital, Inc. ("Bender"), including, at a minimum, Buyer's
assumption as of Closing of that certain Second Amended and Restated Operating Agreement among
NHRMC, Pender County and Pender ("Pender MSA") and the other contracts between a Seller and
Pender set forth on Schedule 1.4(g). For at least three years following the Closing, Pender shall continue
to be operated as part of the Healthcare Businesses consistent with the commitments set forth in the
Pender MSA, unless Pender County and Buyer agree to a fuller integration of Pender or another
appropriate structure.
(e) Within not more than 18 months following the Closing, Buyer shall deploy or
otherwise provide the Hospitals and other components of the Healthcare Businesses access to Buyer's or
54
Buyer's Affiliates' full suite of electronic consumer -facing tools, as such tools exist and are available for
deployment at any other Buyer owned, managed or operated facility, and shall cause and facilitate the
Healthcare Businesses' implementation of such tools.
(f) Within not more than LS months following the Closing, Buyer shall use
commercially reasonable efforts to fully implement Buyer's or Buyer's Affiliates' existing telemedicine
platform at the Hospitals and the Healthcare Businesses. Buyer shall provide ongoing support and
expertise to the Healthcare Businesses relating to such telemedicine program, which shall include the
following: (i) technology infrastructure and support; (ii) coding, billing, reimbursement expertise and
support; (iii) clinical workflows and protocols; and (iv) access to clinicians, providers and legislative
leadership. With respect to telehealth services, Buyer shall use commercially reasonable efforts to
integrate into the Healthcare Businesses' existing contracted payer relationships coverage for on -demand
and scheduled virtual visits and office visit parity for synchronous video visits. Buyer shall support the
Healthcare Businesses' development and implementation of an out-of-pocket payment solution for such
services. Buyer shall continue to work with legislators at the state and national levels in support of
telehealth coverage, including expanded broadband access in rural communities within the Service Area.
Buyer shall, through its Physicians and leadership team, provide education on the benefits of telehealth to
payer partners and work with the Healthcare Businesses' internal standing committees to ensure revenue
cycle and compliance best practices with respect to telemedicine.
(g) Within not more than 18 months following the Closing, Buyer shall, subject to
input from the Local Board, develop and implement a plan to establish the Hospitals' administration and
services as the regional headquarters for Buyer's health system in the Service Area. Buyer further agrees
to share, develop and implement at the Healthcare Businesses industry -recognized best practices, existing
capabilities, and innovative tools and dashboards during the development and implementation of the
headquarters.
(h) In addition to the commitments in Sections 5.10(a) -W, Buyer agrees to use
commercially reasonable efforts to:
(i) integrate the Hospitals into Buyer's existing network of health facilities
and hospitals within the region to improve patient access to care. Buyer shall further enhance and
expand the Hospitals' existing ambulatory network in accordance with the objectives and
timelines identified in the Strategic Plan;
(ii) provide to the Healthcare Businesses and cause and facilitate the
Healthcare Businesses' implementation of, Buyer's and Buyer's Affiliates' existing price
transparency tools, including patient cost and point of care price estimation platforms and shall
further collaborate with the Hospitals to develop and implement enhanced price transparency
tools based on the needs within the Service Area;
(iii) implement an omni -channel digital consumer platform at the Healthcare
Businesses, which is scalable and customizable based on consumer needs and shall include, at a
minimum, online provider and location directories, virtual triage services, online patient
scheduling, online bill payment and secure portals for sharing of information with patients;
(iv) develop and implement corporate health and wellness programs
customized to meet the various needs of local employers, including the development and
implementation of effective systematic approaches to bring employer services to market; and
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(v) create and enhance Buyer's existing partnerships in the region for post-
acute care optimize the current post -acute care capabilities and practices of Pender and New
Hanover Regional Medical Center Rehabilitation Hospital.
5.11 Advancing the Value of Care.
(a) Buyer shall provide access to and shall use reasonable best efforts to integrate
into the Healthcare Businesses, shared infrastructure, value -based capabilities and corporate services,
including patient access solutions, care management, behavioral health and primary care integration,
telepsychiatry, documentation excellence, clinical solutions and analytics.
(b) Buyer shall use commercially reasonable efforts to apply Buyer's health plan and
value -based contracting experience to advance NHRMC's strategy regarding value -based care options. To
the extent applicable, Buyer shall use commercially reasonable efforts to provide the Healthcare
Businesses with access to health plans that are owned by Buyer or health plans in which Buyer has a
material ownership interest and facilitate the Healthcare Businesses' use of such plans.
(c) Buyer shall use commercially reasonable efforts to expand Buyer's and Buyer's
Affiliates' partnership network offering within the Service Area.
(d) Buyer shall assume, and use commercially reasonable efforts to further develop,
NHRMC's existing Medicare Advantage plan and continue to operate the Healthcare Businesses in
accordance with NHRMC's existing Medicare Advantage strategy.
(e) To the extent applicable, Buyer shall include and use commercially reasonable
efforts to fully integrate appropriate segments of the Healthcare Businesses, including the Healthcare
Businesses' existing ACO, Physician Quality Partners, within Buyer's accountable care organization and
clinically integrated network structures or through a new legal entity.
(f) Within not more than 18 months following the Closing, Buyer shall use
commercially reasonable efforts to perform the following commitments:
(i) provide the Healthcare Businesses with full access to all of Buyer's and
Buyer's Affiliates' patient satisfaction programs and resources; and
(ii) upon the request of Sellers or the Local Board, fully integrate the
Hospitals and Healthcare Businesses, or applicable parts thereof, into Buyer's and Buyer's
Affiliates' existing patient satisfaction initiatives.
(g) Buyer shall use reasonable best efforts to position and maintain the Healthcare
Businesses in the top 10% nationally in patient satisfaction.
5.12 Promoting Health Equity.
(a) Subject to changes in applicable Law, Buyer shall use reasonable best efforts to
expand, and in any event shall maintain, the Healthcare Businesses' policies on charity and indigent care,
as such policies are in existence as of the Closing, and shall continue to increase and expand the scope
and level of care provided to indigent and low-income patients beyond the scope and level historically
provided by the Healthcare Businesses, consistent with Buyer's policies on charity care.
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(b) Buyer shall not, with respect to any patients of the Healthcare Businesses, engage
in any extraordinary debt collection practices, including placing a lien on an individual's primary
residence or real property, seizing of bank accounts or other personal property, bringing civil action
against an individual or garnishing of wages.
(c) Buyer shall use reasonable best efforts to fully develop and expand the
Healthcare Businesses' existing partnerships and to establish new partnerships focused on expanding
health equity in the Service Area. Buyer shall use commercially reasonable efforts to collaborate with
identified key stakeholders to determine optimal community benefit for local residents and to place social
workers, case managers, or other care management professionals within clinics of the Healthcare
Businesses in accordance with demonstrated need for increased patient support. Buyer shall use
commercially reasonable efforts to collaborate with identified key stakeholders to expand existing
community outreach programs and social services partnerships in the region.
(d) Buyer shall expand and enhance the Healthcare Businesses' community outreach
efforts and engagement beyond historical levels and scope. Buyer shall continue to expand and enhance
the Healthcare Businesses' existing community benefit programs and partnerships, including, but not
limited to those related to financial assistance and health education. The adoption, termination, or
amendment of policies and procedures regarding community outreach programs, social services
partnerships and other similar programs shall be subject to the approval of the Local Board for no less
than five years following the Closing.
(e) Buyer shall continue and fully fund and support, the Healthcare Businesses'
inclusion, anti -discrimination, and diversity programs, or, to the extent Buyer's programs are reasonably
determined to be comparable or better than the Healthcare Businesses' then -existing programs in all
material respects, Buyer shall replace the Healthcare Businesses' programs with Buyer's programs.
(f) Buyer shall expand and enhance the Healthcare Businesses' efforts to identify
social determinants of health, and the impacts thereof, in the Service Area. Buyer shall further develop
and implement comprehensive strategies to address and mitigate the impacts of such social determinates
of health, which shall include development and implementation for the Healthcare Businesses of a data
analytics platform and related solutions designed to facilitate the implementation, monitoring and
improvement of such strategies.
(g) Without limiting the generality of the foregoing, within not more than one year
following the Closing, Buyer shall (i) integrate the Healthcare Businesses' staff into Buyer's existing
diversity and inclusion programming and (ii) in collaboration with the Local Board, develop a
Southeastern North Carolina metric -based scorecard consistent with Buyer's current analytics to be used
to measure the Healthcare Businesses' progress toward health equity and to identify health disparities, as
such scorecard and measuring process may be amended or modified from time to time.
(h) In addition, and without limiting the generality of the foregoing, within not more
than one year following Closing, Buyer shall assist the Healthcare Businesses to formalize the creation of
the Healthcare Businesses' Health Equity Department, including the establishment of a Health Equity
Budget and a Southeastern North Carolina Community Engagement Team, and establishing the support
services to be provided centrally by Buyer. As a component of the Healthcare Businesses' formal Health
Equity Program, Buyer shall, within one year following Closing, assist the Healthcare Businesses in
developing a social worker strategy for highest clinical needs.
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5.13 Certain Employee Matters.
(a) Buyer or its designated Affiliate shall offer employment to all of the Closing
Date Business Employees, subject to Buyer's standard preemployment screening criteria, as of the
Effective Time. Subject to the reasonable application of Buyer's and Buyer's Affiliates' respective
employment practices and compensation and benefits policies and procedures, Buyer or its designated
Affiliate will offer employment to such Closing Date Business Employees at each such Closing Date
Business Employee's current wage, salary, job title, responsibilities, reporting structure and other
conditions of employment. For purposes of this Agreement, "Closing Date Business Employees" means
each of the Business Employees as of the Closing Date, whether or not on a leave of absence. No later
than 10 days prior to the Closing, Sellers shall deliver to Buyer a schedule specifically referencing this
Section 5.13(a) and identifying each of the Closing Date Business Employees, including each such
Closing Date Business Employee's title, job position, location of employment and salary. Any of the
Closing Date Business Employees who accept an offer of employment with Buyer as of or promptly after
the Effective Time shall be referred to in this Agreement as the "Hired Employees." Any of the Closing
Date Business Employees who do not accept an offer of employment with Buyer as of or promptly after
the Effective Time shall be referred to in this Agreement as the "Rejecting Employees." Any of the
Closing Date Business Employees to whom Buyer either (i) does not offer employment as of the Effective
Time or (ii) does not offer employment as of the Effective Time on terms and conditions consistent with
this Section 5.13(a) shall be referred to in this Agreement as the "Non -Offered Employees." Buyer
covenants and agrees that Buyer shall continue to employ the Hired Employees in accordance with the
terms of Section 5.13 for a period of no less than 24 months following the Closing Date, unless (x) Buyer
sooner terminates the employment of any Hired Employee for cause, including felony indictment,
exclusion from participating in a federal health care program, loss of medical staff privileges or material
failure to comply with Buyer's regular employment policies and procedures applicable to Buyer's
workforce, as a whole, or (y) in the event any Hired Employee voluntarily resigns or retires.
(b) Buyer shall assume certain Seller Plans, which are identified on Schedule 5.13(b)
(the "Transferred Plans"). Sellers agree to provide Buyer with all reasonably requested information and
assistance as necessary for Buyer to effectuate the assumption of the Transferred Plans. Buyer
acknowledges and agrees that from and after the Effective Time, and for a period of not less than three
years, (i) Hired Employees shall be eligible for participation in (x) the Transferred Plans in accordance
with the eligibility criteria of such plans and/or (y) Buyer's and Buyer's Affiliates' respective
comprehensive and market -competitive benefits packages in the same manner as similarly situated
employees of Buyer and Buyer's Affiliates; and (ii) Hired Employees shall be given credit for length of
service with Sellers and any Affiliate thereof for purposes of determining eligibility for participation in,
vesting, and benefit accrual under the various benefit plans offered by Buyer or its designated Affiliate,
including the Transferred Plans, as necessary, following the Effective Time and for purposes of satisfying
pre-existing condition limitations and applicable waiting periods with respect to health insurance
coverage provided to Hired Employees by Buyer, subject to compliance with applicable Law. In addition,
if prior to the Effective Time a Hired Employee or such Hired Employee's covered dependents paid any
amounts towards a deductible or out-of-pocket maximum in Sellers' medical and health plan's current
plan year, such amounts shall be applied toward satisfaction of the deductible or out-of-pocket maximum
in the current plan year of Buyer's medical and health plan that covers Hired Employees on and after the
Effective Time.
(c) Buyer shall carry over and give all Hired Employees full credit for all Accrued
Paid Time Off as of the Effective Time by crediting such employees the amount of such Accrued Paid
Time Off as determined pursuant to Section 1.1; provided, however, that from and after the Effective
Time, each Hired Employee's paid time off benefits shall be administered pursuant to Buyer's and
Buyer's Affiliates' applicable policies and procedures.
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(d) Buyer shall be responsible for providing continuation coverage pursuant to the
requirements of section 4980B of the Code, and Part b of Title I of ERISA ("COBRA coverage") with
respect to each of the Hired Employees (and their dependents) whose qualifying event occurs on or after
the date on which such Closing Date Business Employees become Hired Employees. For qualifying
events occurring before the date on which such Closing Date Business Employees become Hired
Employees, for Rejecting Employees and Non -Offered Employees, and qualifying events occurring by
virtue of the closing of the Transactions, Sellers shall provide COBRA coverage in accordance with
COBRA and shall continue to be fully responsible for such COBRA coverage; provided, however, that
Sellers' responsibility for COBRA coverage in such circumstances is contingent upon Buyer's
compliance with Section 5.13(a).
(c) After the Closing Date, Buyer's human resources department will give
reasonable assistance to Sellers' and their Affiliates' human resources department with respect to Sellers'
and their Affiliates' post -Closing administration of Sellers' and their Affiliates' pre -Closing employee
retirement benefit plans and employee health or welfare benefit plans for the Closing Date Business
Employees. Within ten 10 Business Days after the Closing Date, Buyer shall provide to Sellers a list of
all the Rejecting Employees. After the Closing Date, in addition to, and without limiting any other terms
herein, including the terms set forth in Section 5.13(a), Buyer shall retain that number of employees as
shall be necessary to avoid triggering applicable provisions and liabilities under WARN or any similar
state, local or foreign Law.
5.14 Medical Staff. To ensure continuity of care in the community, Buyer agrees that the
Hospital's medical staff members in good standing as of the Effective Time shall maintain medical staff
privileges at the Hospital as of the Effective Time. The foregoing will not limit the ability of Buyer to
grant, withhold, or suspend medical staff appointment or clinical privileges in accordance with the terms
of the Hospital's medical staff Bylaws after the Effective Time and subject to the approval of the Local
Board, as applicable. On and after the Effective Time, the medical staff will be subject to the Hospital's
Medical Staff Bylaws then in effect. To ensure continuity of care in the Service Area, Buyer shall ensure
that the Hospitals' medical staffs will be substantially unchanged as a result of the Transactions, subject
to Buyer's reasonable policies and procedures. The medical staff of the Hospitals shall remain an open
medical staff at all times following the Closing, unless otherwise approved by the Local Board. Without
the approval of the Local Board, Buyer shall not take, or cause or permit to be taken, any action that
would affect or materially change the medical staff privileges held by members of the medical staffs of
the Hospitals as of the Closing; the medical staff bylaws, rules and regulations, or credentialing
procedures of the Hospitals as of the Closing; or any agreements with members of the medical staffs, so
long as all such relationships are in compliance with applicable state and federal Laws.
5.15 Partt� _tering with Providers.
(a) Following Closing, Buyer shall provide comprehensive administrative and
management services for the medical groups and practices associated with the Healthcare Businesses.
Buyer shall use commercially reasonable efforts to provide such services with minimal disruption, to the
extent solely within Buyer's control, to such medical groups and practices.
(b) Buyer shall use commercially reasonable efforts to cause and facilitate the
Healthcare Businesses' adoption and implementation of Buyer's advanced practice provider ("APP")
recruitment and retention resources, including APP recruitment and retention programs and the
deployment of team -based care practices emphasizing practice at the top of license for all APPs.
(c) Upon Closing, Buyer shall cause and facilitate the Healthcare Businesses'
adoption and implementation of Buyer's recruitment infrastructure in order to recruit Physicians to fill
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positions identified in the Provider Needs Assessment. Within not more than three years following the
Closing, Buyer shall use commercially reasonable efforts to ensure the recruitment of Physicians to fill at
least 75% percent of the positions identified in the Provider Needs Assessment.
(d) At the Closing, Buyer shall enter into an academic and clinical affiliation
agreement ("New Hanover Academic and Clinical Affiliation Agreement") by and among Buyer, the
University of North Carolina Health Care System ("UNCHCS") and The University of North Carolina at
Chapel Hill on behalf of its School of Medicine ("UNCSOM") that, as of the Closing, provides for (i)
Buyer's continued operation of a Graduate Medical Education program ("GME Program") at the
Hospitals from and after the Effective Time, which GME Program shall be, at a minimum, commensurate
in quality, size and scope with the Hospitals' GME Program as of the Closing Date; (ii) expansion of the
GME Program as reasonably requested by the Local Board and funded by the Healthcare Businesses from
time to time; (iii) Buyer's development, implementation and expansion of a comprehensive medical
resident and fellow recruitment program; and (iv) Buyer's adoption and implementation of educational
partnerships, children's clinical partnerships, research and clinical trial infrastructure, and access to
quaternary care. The New Hanover Academic and Clinical Affiliation Agreement shall be based on the
Term Sheet for Proposed Academic and Clinical Affiliation for New Hanover Region dated June 23, 2020
attached as Exhibit D. The New Hanover Academic and Clinical Affiliation Agreement shall be prepared
in consultation with Sellers.
(e) Buyer shall develop, implement and expand upon the Hospitals' existing APP
graduate medical education program in accordance with the needs identified by the Healthcare Businesses
and the Local Board regarding the same.
(f) Within not more than 12 months following the Closing, Buyer shall provide, and
facilitate the Healthcare Businesses' access to, Buyer's specialty Physicians for electronic consultation on
an as -needed basis and in accordance with applicable Business policies and procedures.
(g) Buyer shall cause and facilitate the Healthcare Businesses' adoption and
implementation of Buyer's process improvement policies, procedures and initiatives, including by
implementation of electronic health record system enhancements, clinical workflow management,
clinician availability and room utilization and other clinical and administrative tools that operationalize
new growth and drive quality.
(h) Buyer shall use commercially reasonable efforts to provide all eligible employees
and medical staff members of the Hospitals with access to its provider and leadership development
programs and shall facilitate such providers' utilization of such programs.
(i) Buyer shall, subject to compliance with applicable state and federal Law, Buyer's
compliance standards and the terms of the Assumed Contracts: (i) as of the Closing, offer to, subject to
such individual's consent, if needed, maintain all employment agreements for Sellers' directly employed
Physicians and mid-level providers and cause each such agreement to remain in place with CHA, without
material modification in terms; (ii) as of, or subsequent to, the Closing, as applicable and in any event no
later than October 1, 2022, to the extent not prohibited by their existing terms of employment, enter into
new agreements, each with an initial term of not less than three years from the Closing Date, with those
providers set forth on Schedule 5.15(i) who are engaged by the Healthcare Businesses through
agreements with third parties, which such new agreements shall be on terms materially similar to those
terms that had been included in such providers' agreements with such third parties; and (iii) assume,
maintain and enhance those contracts and arrangements between the Healthcare Businesses and
independent community providers set forth on Schedule 5.15(1) (the agreements covered by clauses (i) -
(iii) collectively, the "Provider Agreements"). Within the three-year period immediately following
Closing, Buyer agrees not to terminate any Provider Agreement without cause, to provide notice of
nonrenewal of any Provider Agreement if such notice would result in the expiration of such Provider
Agreement within such three-year period, or to take any action or refrain from taking any action that
would be grounds for any provider or practitioner terminating any such Provider Agreement for cause.
To the extent applicable, Buyer shall also agree and consent to any renewal of any Provider Agreement
described in clauses i and(iii above within such three-year period following Closing. Further, Buyer
shall not propose or attempt to implement, within the three-year period following Closing, any material
amendment to any Provider Agreement, except for such amendments as are necessary to comply with
applicable law or as are otherwise voluntarily agreed to in writing by the applicable provider.
Notwithstanding the foregoing, Buyer shall not be in breach of the obligations set forth in this Section
5.156) in the event any provider or practitioner terminates any Provider Agreement without cause or in
the event Buyer terminates any Provider Agreement for cause. Further, subject to compliance with
applicable state and federal Law, Buyer's compliance standards and the Assumed Contracts, Buyer shall,
to the extent agreed to by the applicable third party, assume, maintain and enhance those existing joint
venture arrangements to which any Seller is a party with independent community providers for so long as
such joint venture arrangements reasonably remain a net benefit to the Healthcare Businesses.
0) Within not more than 12 months following the Closing, Buyer shall use
commercially reasonable efforts to extend and facilitate, as applicable, the opportunity for the Healthcare
Businesses to participate in Buyer's accountable care organization or clinically integrated network to all
independent providers who maintain an active arrangement with the Hospitals.
(k) Subject to compliance with applicable state and federal Law and Buyer's
compliance standards, Buyer shall use commercially reasonable efforts to cause and facilitate the
Healthcare Businesses' adoption and implementation of Buyer's existing Physician alignment models,
including by making available to community providers in the Service Area opportunities for shared
investments and co -management arrangements.
(1) Buyer shall use commercially reasonable efforts to cause and facilitate the
Healthcare Businesses' adoption and implementation of Buyer's electronic health record support services
and connectivity capabilities, including those certain electronic health records connectivity, referral
management connectivity, technical consulting and analytics solutions and services set forth in Schedule
515(1. Buyer shall further use commercially reasonable efforts to make such solutions and services
available to independent community providers in the Service Area.
5.16 Driving Quality of Care Throughout the Continuum.
(a) Buyer shall cause the Hospitals to continue to be accredited by DNV GL
Healthcare following the Closing.
(b) From and after the Closing, Buyer shall use commercially reasonable efforts to
deploy, cause, and facilitate the Healthcare Businesses' implementation of Buyer's care management
coordination programs, capabilities and resources. In connection with the foregoing, Buyer, in
consultation with the Local Board, shall develop and implement a task force to assess the Healthcare
Businesses' Care Management Platform and develop a plan for implementation of Buyer's best practice
programs and other enhancements, and integrate care management and utilization management functional
areas, including platform optimization, all within not more than three years following Closing.
(c) Buyer shall, in coordination and consultation with the Local Board, use
commercially reasonable efforts to assume and further develop and expand those certain quality
improvement initiatives and best practices focused on Buyer's best practices programs relating to First,
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Do No Harm, Continuous Readiness, Analytics and Informatics, Infection Prevention, Opioid
Stewardship, and Clinical Documentation Excellence. Buyer shall, in addition to the foregoing, cause and
facilitate the Healthcare Businesses' adoption and implementation of. (i) Buyer's clinical transformation
guidelines, including preventive guidelines, evidence -based protocols and safety initiatives; (ii) Buyer's
quality improvement infrastructure and resources, including care redesign teams and quality analytics and
scorecard; and (iii) those other quality initiatives described on Schedule 5.16(c).
(d) Buyer shall cause and facilitate the Healthcare Businesses' adoption and
implementation of available emerging technologies regarding the quality and safety of care as such
technologies become available, in a manner consistent with applicable industry standards.
(e) Buyer shall use reasonable best efforts to cause the Hospitals and other
appropriate components of the Healthcare Businesses to satisfy the quality metrics consistent with
Buyer's system -wide quality and safety metrics, which shall include measures relating to patient safety,
clinical effectiveness, patient-centeredness, timeliness, efficiency and equity as may be implemented from
time to time at the Healthcare Businesses in consultation with the Local Board (collectively, the "Quality
Metrics"). In connection with such efforts, Buyer will give consideration to adoption and implementation
of all, or parts of, the Hospitals' Quality Assurance and Performance Improvement Plan. Buyer further
shall adopt and implement appropriate protocols for measuring and monitoring the Healthcare
Businesses' performance against such Quality Metrics and shall further implement appropriate
technology infrastructure to facilitate such measurement and monitoring, which shall include providing a
quality connection to its electronic medical records system to the Healthcare Businesses and independent
community Physicians in the Service Area. Buyer shall provide a report to the Local Board concerning
the Healthcare Businesses' performance toward such Quality Metrics on a not less than annual basis, with
the format and substance of such report to be determined by Buyer and the Local Board from time to
time. Buyer shall use reasonable best efforts to position and maintain the Healthcare Businesses in the top
10% nationally with respect to each such Quality Metric adopted for the Healthcare Businesses.
5.17 Growin the Level and Scope of Care_
(a) Buyer shall use commercially reasonable efforts to facilitate the Healthcare
Businesses' access to and adoption and implementation of, appropriate resources and infrastructure,
including a fully staffed call center, to facilitate the transfer of patients among providers and to coordinate
expedited transfers. Buyer shall ensure such resources and infrastructure are available to the Healthcare
Businesses consistent with Buyer's current operating hours.
(b) Buyer shall use commercially reasonable efforts to cause and facilitate the
Healthcare Businesses' ongoing adoption and implementation of any existing and emerging innovative
care solutions and technologies. Buyer shall further facilitate the Healthcare Businesses' adoption and
implementation of Buyer's current innovation infrastructure.
(c) Except as otherwise set forth herein, Buyer shall use commercially reasonable
efforts to further develop and expand the Healthcare Businesses' clinical research capabilities existing as
of the Effective Time and shall continue and further develop any existing clinical research efforts of the
Healthcare Businesses. In addition to the foregoing, Buyer shall facilitate the Healthcare Businesses'
access to and utilization of, Buyer's expertise, resources and infrastructure related to clinical trials and
research. Buyer shall use commercially reasonable efforts to educate and inform providers within the
Service Area of clinical trials in which Buyer is participating and, to the extent permitted by Law, shall
make available such clinical trials to patients of the Healthcare Businesses. As appropriate, Buyer shall
use commercially reasonable efforts to provide the Healthcare Businesses the opportunity to participate as
a clinical trial site in ongoing clinical trials to facilitate local access to treatments.
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(d) Buyer shall use commercially reasonable efforts to cause and facilitate the
Healthcare Businesses' adoption and implementation of Buyer's clinical research and grant -funding
capabilities, including pre -award and post -award support for local investigators.
5.18 Investing to Ensure Long -Term Financial Security.
(a) Buyer shall cause and facilitate the Healthcare Businesses' adoption and
implementation of certain corporate services and economies of scale, to include, at a minimum, supply
chain, access to group purchasing organizations.
(b) Buyer shall not allocate to the Healthcare Businesses any overhead expenses
related to the maintenance and operation of Buyer's graduate or undergraduate medical education
programs that provide benefits to Buyer solely outside the Service Area, including any programs
maintained through Buyer's partnership with an accredited medical school. If any such overhead
expenses are allocated to the Healthcare Businesses that relate to graduate or undergraduate medical
education programs that benefit both the Buyer and the Service Area, such allocation shall be determined
according to a methodology used consistently throughout the Novant Health system.
5.19 Strategic Positioning.
(a) From and after the Effective Time, Buyer shall use commercially reasonable
efforts to fully integrate the Healthcare Businesses into Buyer's existing integrated healthcare system.
(b) In furtherance of supporting the availability of quality care in the region and to
position the Hospitals as a regional referral center, Buyer shall use commercially reasonable efforts to
cause the Hospitals to develop and enter into appropriate and desirable clinical affiliations, clinically
integrated provider networks, partnerships and arrangements with unaffiliated hospitals, health systems
and other facilities and providers in the region.
(c) Buyer shall not alter, modify or otherwise change the branding associated with
the Hospitals or the Healthcare Businesses without the prior consent and approval of the Local Board,
except that Sellers acknowledge and anticipate that over time the parties will brand the Healthcare
Businesses consistent with Buyer's current brand. Buyer shall work in collaboration with the Local Board
to align branding strategies and marketing initiatives.
Notwithstanding anything to the contrary set forth in Sections 5.9 through 5.19, to the extent a Force
Majeure Event renders Buyer's performance of its obligations set forth in such Sections impossible or
commercially unreasonable, Buyer shall (i) within not more than ten Business Days after Buyer's
becoming aware of such Force Majeure Event, provide Sellers with written notice that reasonably
describes (A) the nature of such Force Majeure Event and (B) which obligations set forth in Sections 5.9
through 5.19 have been rendered impossible or commercially unreasonable due to such Force Majeure
Event, (ii) be temporarily excused from full performance of such obligations to the extent required by
such Force Majeure Event, but only for so long as the period of the Force Majeure Event and the
applicable Remediation Period, and (iii) continue to use commercially reasonable efforts, taking into
account such Force Majeure Event, to perform its obligations under such Sections. For the avoidance of
doubt, subject to Buyer's compliance with the terms of this Section 5.19, Buyer shall not be in breach of
its obligations under Sections 5.9 through 5.19 and Sellers shall not be entitled to initiate a Repatriation
Transaction (if applicable), during a Force Majeure Event or the remediation Period and the cure period
set forth in Section 10.6 shall be tolled until the end of the Remediation Period.
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5.20 Local Board Governance.
(a) From and after Closing, the Healthcare Businesses shall be governed by a local,
community-based board of trustees (the "Local Board"), which may sit at a regional, or then -equivalent,
level within Buyer's organizational structure, and which shall consist of 17 trustees ("Trustees"), Not
less than 12 Trustees shall be Community Trustees, and not less than three such Community Trustees
shall be Physician Trustees. The balance of the Trustees may be At Large Trustees.
(b) The individuals to be appointed to serve as the initial Trustees are set forth in
Schedule 5.20(b). The Local Board shall retain the sole power and authority to select, nominate, terminate
and appoint all subsequent Trustees to the Local Board and, in so doing, shall ensure that the composition
of the Local Board, taken as a whole, is materially representative, measured by demographic factors such
as race, ethnicity, and sex or sexual orientation, of the Service Area's resident population served by the
Healthcare Businesses; provided, that such appointments shall be subject to ratification by the Novant
Health Board of Trustees ("Novant Board"), which such ratification shall not be unreasonably withheld,
conditioned or delayed. In the event the Novant Board fails to ratify any appointment made by the Local
Board, then the Local Board shall select, nominate and appoint a new proposed Trustee to be submitted
for ratification by the Novant Board. All Trustees shall be selected subject to a prospective candidate's
satisfaction of governance best practices and core competencies, which shall include advocacy and public
interest; social services and community outreach; financing and investing; accounting, executive
leadership; marketing and communications; strategy, planning and consulting; information systems and
technology; human resources; quality and safety, and law and regulation, as such standards are described
on Schedule 5.20(b) and may be modified from time to time by the Local Board subject to Novant Board
ratification.
(c) Following the Effective Time, the Local Board shall be invested with, and shall
retain, the following rights and powers with respect to the Healthcare Businesses ("Reserved Powers"):
(i) Approval of the elimination of any Core Clinical Service Line;
(ii) Development and recommendation of (A) elimination of any service line
that is not a Core Clinical Service Line, (B) establishment of new clinical service lines or (C)
expansion of existing clinical service lines;
(iii) Development and recommendation of major operational plans;
(iv) Approval of the Healthcare Businesses' initial CEO immediately
following the Effective Time, as well as (A) ongoing participation in the evaluation, as well as
recommending employment and termination, of the Healthcare Businesses' CEO and (B)
participation in the evaluation of candidates and making recommendations for any CEO
appointment subsequent to the initial CEO;
(v) Oversight and recommendation of management accountability,
evaluation, and succession;
(vi) Approval of any material workforce reduction that would qualify as a
"plant closing" as defined in 29 U.S.C. § 2101;
(vii) Development and approval of annual operating and capital budgets,
which budgets shall also be subject to the ratification and approval of the Novant Board;
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(viii) Oversight and approval of medical staff matters, including credentialing,
adverse actions, and adoption and amendment of medical staff bylaws and policies,
(ix) Development and recommendation of policies for Physician
compensation;
(x) Development and recommendation of Physician organization strategies,
development, and recruitment;
(xi) Oversight of political and community interaction;
(xii) Selection and engagement of hospital-based Physicians;
(xiii) Approval and development of the Strategic Plan or any other strategic or
development plans of the Healthcare Businesses, including approval of any modifications thereto;
(xiv) Approving modifications to the Healthcare Businesses' charity care and
indigent care programs in consultation with the Novant Board or its designee(s);
(xv) Approving the termination or amendment (other than with respect to
extension of the term) of the Pender MSA or any successor agreement thereto;
(xvi) Approving the adoption, termination, or amendment of policies or
procedures regarding community outreach programs, social services partnerships, and other
similar programs in consultation with the Novant Board or its designee(s);
(xvii) Oversight and approval of quality and accreditation matters in
consultation with the Novant Board or its designee(s);
(xviii) Approving any direct or indirect sale, transfer, or conveyance of all, or
substantially all, of the assets then associated with, or the control of, the Healthcare Businesses to
a for-profit third party or, for a 10 -year period after the Effective Time, to a non-profit third party;
provided, however, that approval of the Local Board shall not be required for any Novant Health
Change of Control;
(xix) Approving any modifications to any post -Closing commitments or
covenants set forth in this Agreement or the other Transaction Documents;
(xx) Approving any alterations or modifications to the branding associated
with the Healthcare Businesses or any component thereof in consultation with the Novant Board
or its designee(s); and
(xxi) Oversight of the Healthcare Businesses' compliance program.
(d) Effective as of the Effective Time, Buyer shall adopt governing documents, or
amendments to Buyer's existing governing documents, which may include articles of incorporation,
bylaws or similar documents, reflecting the terms set forth in this Section 5.20 ("Buyer Governing
Documents"), which such Buyer Governing Documents shall be in the form set forth in Exhibit E. Buyer
shall not, and shall cause its Affiliates not to, amend or consent to the amendment of the Buyer Governing
Documents in any manner that materially contravenes any of the terms reflected in this Section 5.20,
without the written consent of Sellers.
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5.21 Local Representation on Buyer's Governing Boards and Councils.
(a) Within not more than 90 days after the Effective Time, the Local Board shall
nominate and Buyer shall appoint, subject to ratification by the Novant Board (such ratification not to be
unreasonably withheld or delayed), two of the Local Board's then -current Community Trustees to serve
as voting trustees on the Novant Board (each, a "Local Representative"). The Local Board shall have
the authority to remove a Local Representative from the Novant Board at any time and for any reason
and, further, the Local Board shall have the authority to appoint a then -current Community Trustee as a
replacement or to fill any vacancy created with respect to a Novant Board position held by any Local
Representative, which such appointment shall be subject to the ratification of the Novant Board (such
ratification not to be unreasonably withheld or delayed). In the event a Local Representative at any time
is no longer a Trustee on the Local Board, for any reason, then such Local Representative shall
automatically be removed from the Novant Board as if by voluntary resignation, and the Local Board
shall appoint a replacement for such Local Representative, which such appointment shall be subject to the
ratification of the Novant Board (such ratification not to be unreasonably withheld or delayed). Within
not more than 90 days following the Effective Time, Buyer shall cause Novant Health to adopt
amendments to Novant Health's existing bylaws reflecting and implementing the terms set forth in this
Section 5.21(a) ("Novant Governing Documents"), which such Novant Governing Documents shall be
in the form set forth in Exhibit F.
(b) Within not more than 90 days after the Closing, the Local Board shall nominate
and Buyer shall appoint, one of the Local Board's then -current Physician Trustees to serve on the Novant
Health system Physician leadership council or other similar system -level Physician leadership body. The
Local Board shall have the authority to nominate any subsequent replacement for such appointment to the
Physician leadership council, which such nomination shall be subject to Buyer's ratification (such
ratification not to be unreasonably withheld or delayed). In consultation with, and subject to the approval
of the Local Board, Buyer agrees to amend or modify the governing documents and charter of such
council as necessary to effectuate the covenants contained in this Section 5.21(b).
5.22 Right_of First Refusal. Following Closing, in the event Buyer at any time receives a bona
fide offer ("Third -Party Offer Notice") to sell, transfer or assign all or substantially all of the assets or
operations associated with the Healthcare Businesses, or a direct or indirect controlling interest in the
Healthcare Businesses, including the Assets and any after-acquired assets associated with the Healthcare
Businesses, excluding the assets and operations of NHBMC (collectively, the "Affected Assets"), to a
third party unaffiliated with Buyer ("Third -Party Offeree"), and Buyer desires to accept such offer, then
Buyer shall first offer to sell, transfer, or assign such Affected Assets to Sellers, on the same terms and
conditions as set forth in the Third -Party Offer Notice, by providing Sellers with written notice ("ROFR
Notice"), which shall include a copy of the purchase agreement, or other definitive document, and all
ancillary documents. Upon receipt of the ROFR Notice, Sellers shall have the right and option, for a
period of 60 days following receipt of such ROFR Notice ("ROFR Option Period") to notify Buyer in
writing of Sellers' intent to acquire the Affected Assets upon the same, or better, terms and conditions as
set forth in the ROFR Notice. In the event Sellers provide such notice to Buyer within the ROFR Option
Period, then Buyer agrees to accept such offer from Sellers, and the parties shall work in good faith to
enter into definitive documents relating to such transaction, on terms consistent with the ROFR Notice as
well as such other terms and conditions as are typical of such a transaction, within the period of 90 days
following the delivery of such notice by Sellers (the "Purchase Period"). In the event that (a) Sellers fail
to provide written notice to Buyer of their intent to purchase the Affected Assets within the ROFR Option
Period or (b) the parties fail to agree to definitive documents within the Purchase Period, then Buyer shall
have the right to accept the Third -Party Offer Notice and transfer the Affected Assets to the Third -Party
Offeree at a price no less than the price set forth in, and otherwise on terms and conditions at least as
favorable to Buyer as those contained in, the Third -Party Offer Notice;roQ_._vided, however, that if Buyer
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does not accept the Third -Party Offer Notice or fails to consummate the transaction contemplated thereby
within 180 days of the later of the end of the ROM Option Period or the Purchase Period, as the case
may be, then the provisions of this Section 5.22 shall be complied with respect to any subsequent
transfers of the Affected Assets. Buyer shall cause any third party acquiring the Affected Assets to
assume Buyer's obligations and covenants set forth in this Article 5 to the extent such obligations and
covenants remain in effect. For the avoidance of doubt, this Section 5.22 shall not apply to any Novant
Health Change of Control. This Section 5.22 shall survive the Closing for a period of 25 years.
5.23 Statutory Requirements. At all times following the Effective Time, Buyer shall comply in
all material respects with all Laws applicable to Buyer in connection with the Transactions, including the
terms of N.C. Gen. Stat_ § 131E -13(a), as amended, restated or revised from time to time, the language of
which as of the Effective Date is set forth in Schedule 5.23. For purposes of this Agreement, all
references to "corporation" in N.C. Gen. Stat. § 131E -13(a) shall be read and interpreted to include
Buyer, notwithstanding any other statutory definitions. Notwithstanding that the parties have agreed to the
foregoing sentence as a contractual matter between them, Buyer acknowledges that the North Carolina
Attorney General is empowered to require Buyer to comply with N.C. Gen. Stat. § 131E -13(a) in all
respects regardless of the parties' agreement among themselves to allocate no contractual Liability to
Buyer for immaterial noncompliance with such Law.
5.24 Timing and Duration _of_Post-Closing Commitments, This Article 5 shall survive the
Closing indefinitely except as expressly set forth in any Section in Article 5 and except that
(notwithstanding anything to the contrary in any such Sections), and other than with respect to Section
5.23, Buyer shall have the ability after 25 years post Closing to reassess and adjust any then -applicable
covenants. Buyer shall satisfy its covenants and agreements set forth in Section 5.10 through Section 5.19
within five years of Closing unless a more specific date or timeline is explicitly set forth with respect to
any such covenant.
5.25 Insurance Ratings. Sellers shall take all action reasonably requested by Buyer to enable
Buyer to succeed to the Workmen's Compensation and Unemployment Insurance ratings of the
Healthcare Businesses, as applicable, and other ratings for insurance or other purposes established by
Sellers for the Healthcare Businesses. Buyer shall not be obligated to succeed to any such rating, except
as it may elect to do so.
5.26 Casualty. If any material part of the Assets (including any Facility) is damaged, lost or
destroyed (whether by fire, theft, vandalism or other cause or casualty), in whole or in part, before the
Effective Time (such damaged, lost or destroyed Assets or Facilities, the "Damaged Assets"), Buyer
may, at its option, (a) reduce the Purchase Price by the greater of (i) the fair market value of the Damaged
Assets (such value to be determined as of the date immediately before such damage, loss or destruction),
or (ii) the estimated cost to replace or restore the Damaged Assets, (b) require Sellers to transfer the
proceeds (or the right to the proceeds) of the applicable Insurance Policies covering the Damaged Assets
(including the business interruption Insurance Policy covering the Healthcare Businesses) to Buyer at the
Closing, plus an amount equal to any deductibles paid or incurred by Sellers or (c) if the fair market value
of the Damaged Assets is greater than $50,000,000 or if a Facility has suffered damage of greater than
$50,000,000, terminate this Agreement. If disputed by the parties, the amount of any reduction in the
Purchase Price pursuant to this Section 5.26 shall be determined by a valuation expert experienced in the
healthcare business mutually determined by the parties, which the parties shall use all commercially
reasonable efforts to have completed as promptly as possible. The fees and expenses of any such expert
shall be paid one-half by Sellers, jointly and severally, and one-half by Buyer. Until the Effective Time,
Sellers shall bear all risk of loss with respect to the Damaged Assets.
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5.27 Transferred Seller Bank Accounts. Between the date of this Agreement and the Closing
Date, Sellers shall take such actions, and execute and deliver such documents, as are reasonably necessary
or appropriate to transfer at Closing the ownership of the Transferred Seller Bank Accounts (inclusive of
all cash in such Transferred Seller Bank Accounts), including facilitating contact between Buyer's
Representatives and any financial institution at which any of such Transferred Seller Bank Accounts is
maintained, obtaining any signature guarantees required by any financial institution at which any of such
Transferred Seller Bank Accounts is maintained and ensuring that no debits or cash sweeps of whatever
kind will be made by or on behalf of Sellers or any Seller Affiliate out of such Transferred Seller Bank
Accounts following the Closing.
5.28 Novant Health Guarantee. Novant Health hereby unconditionally and absolutely
guarantees the performance by Buyer of each and every obligation, covenant and agreement of Buyer in
this Agreement and in each other Transaction Document, and in any amendment and/or modification
hereof or thereof and notwithstanding the extension of the time for performance of payment of money
pursuant to this Agreement, or of the time for performance of any other obligations, covenants or
agreements in this Agreement or any Transaction Document, as amended or modified; provided, however,
that this Section 5.28 and Novant Health's guarantee shall apply, after the Closing, only to the express
covenants of Buyer under this Agreement and the other Transaction Documents and not to any other
action or obligation of Buyer directed, caused or created by the Local Board (whether pursuant to its
Reserved Powers or otherwise) after the Closing.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Buyer's obligation to purchase the Assets and to close the Transactions shall be subject to the
satisfaction of each of the following conditions on or prior to the Closing Date unless specifically waived
in writing by Buyer in whole or in part at or prior to the Closing.
6.1 No Orders; Illegality. No Orders of any Governmental Entity of competent jurisdiction
shall be in effect, and no Proceedings by or before any Governmental Entity of competent jurisdiction
shall be pending, which restrain, enjoin, impede or otherwise challenge the consummation of the
Transactions.
6.2 Representations and Warranties. The representations and warranties of Sellers set forth
in Article 2, other than the Fundamental Representations, shall be true and correct on and as of the
Closing Date as if made on and as of the Closing Date (except for such representations and warranties that
expressly speak only as of a particular date, which shall have been true and correct as of such particular
date), except where the failure of such representations and warranties (without giving effect to any
qualifications as to materiality or Material Adverse Effect) has not had or would not reasonably be
expected to have a Material Adverse Effect in respect of Sellers or the Healthcare Businesses, taken as a
whole. The Fundamental Representations of Sellers set forth in Article 2 shall be true and correct in all
respects on and as of the Closing Date as if made on and as of the Closing Date, except for Fundamental
Representations that expressly speak only as of a particular date, which shall have been true and correct in
all respects as of such particular date.
6.3 Performance of Covenants. Each Seller, respectively, shall have in all material respects
performed or complied with each of the obligations, covenants, agreements and conditions required to be
performed or complied with by each such Seller on or prior to the Closing (including the obligation to
cure any Monetary Encumbrance and Non -Monetary Encumbrance that Sellers are required to cure, or
otherwise commit to cure, pursuant to the terms of Section 5.5(c)).
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6.4 Required Governmental Authorizations_ Buyer, Sellers and their respective Affiliates
shall have obtained the Governmental Permits, waivers and expirations set forth on Schedule 6.4 (the
"Required Governmental Authorizations").
6.5 Material Adverse Effect. There shall have been no event resulting in a Material Adverse
Effect with respect to the Healthcare Businesses or Assets since the Effective Date.
6.6 Amendments to Governing Documents of Seller Subsidiaries.
(a) Except as set forth in Section 6.6(b), at or before the Closing, NHRMC shall (i)
cause each Seller Subsidiary for which NHRMC holds a membership interest to either adopt and file with
the North Carolina Secretary of State's Office amended and restated articles of incorporation or
organization to substitute Buyer as the sole entity holding a membership interest in such Seller
Subsidiary, which will take effect at Closing, and/or (b) execute such assignment or other documentation
necessary to accomplish the substitution of Buyer as the sole member of each Seller Subsidiary and adopt
amended and restated bylaws or other applicable governing documents, which will take effect at Closing,
in a form satisfactory to Buyer.
(b) At or before Closing, Sellers shall have completed the corporate actions
described on Schedule 6.6 b .
6.7 Changes to Governing Boards and Amendments to Governing Documents of Certain
Seller Subsidiaries.
(a) At or before the Closing, the board of directors of NHRMC Foundation shall be
reconstituted and NHRMC Foundation shall adopt amended and restated bylaws, in each case effective at
Closing in a manner satisfactory to Buyer.
(b) At or before the Closing, the board of directors of CHA shall be reconstituted and
CHA shall adopt amended and restated bylaws, in each case effective at Closing in a manner satisfactory
to Buyer.
6.8 Items to be Delivered by Sellers at Closing. At or before the Closing, Sellers shall have
delivered to Buyer, or cause to be delivered to Buyer, the following, duly executed by Sellers (and any
applicable Subsidiaries or Affiliates of Sellers) where appropriate:
(a) Bills of Sale in the form of Exhibit G (the "Bills of Sale");
(b) Assignment and Assumption Agreements between Sellers and Buyer in the form
of Exhibit H (the "Assignment and Assumption Agreements");
(c) (i) with respect to the assignment to Buyer of any Tenant Leases under which a
Seller is a lessee (or sublessee) and that require the consent of the applicable landlord thereunder in order
to properly effectuate such assignment to Buyer, an assignment and assumption agreement between the
applicable Seller (and any applicable Subsidiaries of Sellers), Buyer and such landlord, in the form of
Exhibit I-1, (ii) with respect to the assignment to Buyer of any Tenant Leases that do not require the
consent of the applicable landlord thereunder in order to property effectuate such assignment to Buyer, an
assignment and assumption agreement between Sellers (and any applicable Subsidiaries of Sellers) and
Buyer, in the form of Exhibit 1-2 and (iii) with respect to the assignment to Buyer of any Lessor Leases
under which a Seller is a lessor (or sublessor), an assignment and assumption agreement between the
applicable Seller (and any applicable Subsidiaries of Sellers) and Buyer, in the form of Exhibit 1-3 (each
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assignment and assumption agreement required by clauses (i), ii) and(iii of this subsection. (c) are
referred to herein as a "Lease Assignment Agreement" and all such agreements shall be collectively
referred to herein as the "Lease Assignment Agreements"); provided, however, that in the event the
applicable Tenant Lease or Lessor Lease is a sublease (as opposed to a direct lease), the applicable form
of Lease Assignment Agreement shall be subject to commercially reasonable modifications reasonably
approved by Buyer and Sellers with respect to the status of such Lease as a sublease (as opposed to a
direct lease);
(d) special warranty deed(s) in the form of Exhibit 3 and other appropriate
instruments of conveyance (including, to the extent requested by Buyer, quitclaim deed(s) containing the
applicable legal description(s) corresponding to the applicable Survey(s) obtained by Buyer), covering
each parcel of Owned Real Property, each acknowledged and in recordable form;
(e) a resolution of the governing body of each Seller authorizing Sellers to enter into
this Agreement and consummate the Transactions, each of which shall be dated, and delivered to Buyer,
as of the Effective Date;
(f) as applicable, a certificate of good standing, or comparable status, of each Seller,
issued by the North Carolina Secretary of State, as of a recent date prior to the Closing Date;
(g) a certificate of an officer of each Seller certifying to Buyer that the conditions set
forth in Section 6.2 and Section 6.3 have been satisfied with respect to such Seller;
(h) limited powers of attorney for use of DEA and Other Registration Numbers, and
DEA Order Forms, in the form of Exhibit K (the "Powers of Attorney");
(i) the Escrow Agreement;
6) a duly completed and executed certification of nonforeign status from each Seller
pursuant to Sections 1445 and 1446(f)(2)(A) of the Code and Section 1.1445-2(b)(2) of the Treasury
Regulations promulgated under the Code;
(k) a custodial agreement in the form of Exhibit L (the "Custodial Agreement");
(I) the Funds Flow Memorandum;
(m) (i) evidence of termination of the County Lease (including evidence of any
consent or approval required in connection with such termination) and any recorded memoranda of lease
or similar instruments evidencing the existence thereof, each in a form and of a substance reasonably
acceptable to Buyer, and (ii) to the extent requested by Buyer, lease agreements, each in a form and of a
substance reasonably acceptable to Buyer, to replace any Leases terminated as a result of the termination
of the County Lease (including the Leases set forth on Schedule 6.8(m)), each executed by the applicable
counterparty thereto;
(n) written consents to the assignment of the Contracts listed on Schedule 6.8(n) (the
"Required Contract Consents");
(o) Intellectual Property Assignment between Sellers and Buyer in the form of
Exhibit M (the "Intellectual Property Assignment");
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(p) evidence reasonably satisfactory to Buyer that Sellers have terminated those
Contracts listed on Schedule 6.8(p), in each case without any Liability to Buyer;
(q) the Bond Defeasance Documents, each in form and substance reasonably
satisfactory to Buyer;
(r) applications or amendments for filing in appropriate form to abandon or change
each of the Acquired Names;
(s) exclusive access rights and permissions to the social media accounts owned or
operated by Sellers with respect to the Healthcare Businesses as set forth on Schedule 6.8(s);
(t) payoff letters from all lenders to Sellers for all Indebtedness listed on Schedule
2.11(b), each of which shall contain a covenant from the applicable lender to release all liens on the
Assets upon receipt of the payoff amount, in each case, in form and substance reasonably satisfactory to
Buyer (collectively, the "Payoff Letters");
(u) A certified copy of the articles of incorporation filed with the Secretary of State
of North Carolina and a copy of the accompanying bylaws for the "public -benefit community foundation"
expected to be named the New Hanover Community Endowment, Inc. (the "Endowment"), which has a
governance structure consistent with the terms outlined in Exhibit N;
(v) A copy of the IRS determination letter recognizing the Endowment as a tax-
exempt organization described in Section 501(c)(3) of the Internal Revenue Code or a copy of the Form
1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,
as filed with the IRS;
Agent; (w) A copy of the escrow agreement between Sellers and the Transition Escrow
(x) an affidavit, indemnity or other evidence sufficient for the Title Company to
delete the standard exception to Buyer's title insurance policy insuring the Owned Real Estate against
unrecorded mechanics' liens;
(y) documentation of the establishment of the Mental and Behavioral Health Fund;
(z) the New Hanover Academic and Clinical Affiliation Agreement, in form
satisfactory to Buyer;
(aa) a Transition Services Agreement between Buyer and Sellers in the form of
Exhibit O (the "Transition Services Agreement");
(bb) (i) executed copies of employment or independent contractor agreements with
each Physician with whom a verbal or unwritten agreement was disclosed on Schedule 6.8 bb i , each in
form and substance reasonably acceptable to Buyer; and (ii) lease agreements (or, if applicable and
reasonably approved by Buyer, license agreements or similar occupancy agreements), each in a form and
of a substance reasonably acceptable to Buyer, to memorialize the terms of the oral leases and other
agreements and arrangements set forth of Schedule 6.8(bb)(ii), each executed by the applicable
counterparty thereto; and
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Transactions.
(cc) all such other documents and items reasonably appropriate to effectuate the
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
Sellers' obligation to sell the Assets and to close the Transactions shall be subject to the
satisfaction of each of the following conditions on or prior to the Closing Date unless specifically waived
in writing by Sellers in whole or in part at or prior to the Closing:
7.1 No Orders, Illegality. iity. No Orders of any Governmental Entity of competent jurisdiction
shall be in effect, and no Proceedings by or before any Governmental Entity of competent jurisdiction
shall be pending or threatened that restrain, enjoin, impede or otherwise challenge or seek to restrain,
enjoin, impede or otherwise challenge the consummation of the Transactions.
7.2 Representation sand Warranties. The representations and warranties of Buyer set forth in
Article 3 shall be true and correct on and as of the Closing Date as if made on and as of the Closing Date,
except for representations and warranties that expressly speak only as of a particular date, which shall
have been true and correct as of such particular date, except where the failure of such representations and
warranties (without giving effect to any qualifications as to materiality or Material Adverse Effect) has
not had or would not reasonably be expected to have a Material Adverse Effect in respect of Buyer. The
Fundamental Representations of Buyer set forth in Article 3 shall be true and correct in all respects on and
as of the Closing Date as if made on and as of the Closing Date, except for Fundamental Representations
that expressly speak only as of a particular date, which shall have been true and correct in all respects as
of such particular date.
7.3 Performance of Covenants. Buyer shall have in all material respects performed or
complied with each of the obligations, covenants, agreements and conditions required to be performed or
complied with by Buyer on or prior to the Closing.
7.4 Required Governmental Authorizations. Buyer, Sellers and their respective Affiliates
shall have obtained the Required Governmental Authorizations.
7.5 Items to be Delivered by Buyer at Closing. At or before the Closing, Buyer shall have
executed and delivered, or cause to be delivered, to Sellers the following:
(a) payment of an amount equal to the Estimated Closing Payment, minus (A) the
NHRMC Transition Stabilization Escrow Amount, minus (B) the County Revenue Stabilization Fund
Amount, minus (C) the Mental and Behavioral Health Fund Amount, and minus (D) the Bond Defeasance
Escrow Amount by wire transfer of immediately available funds to the Endowment to the account(s)
specified by Sellers to Buyer in writing;
(b) payment of the Foundation Contribution by wire transfer of immediately
available funds to NHRMC Foundation to the account(s) specified by Sellers to Buyer in writing;
(c) payment of the Adjustment Escrow Amount and the General Escrow Amount by
wire transfer of immediately available funds to the Escrow Agent to the account(s) specified by the
Escrow Agent to Buyer in writing;
(d) payment to (A) the Transition Escrow Agent, or other deposit account designated
by Sellers, the NHRMC Transition Stabilization Escrow Amount, (B) the County Revenue Stabilization
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Fund, the County Revenue Stabilization Fund Amount, (C) to the Mental and Behavioral Health Fund,
the Mental and Behavioral Health Fund Amount, and (D) to the Bond Defeasance Escrow Agent, the
Bond Defeasance Escrow Amount the by wire transfer of immediately available funds to the account(s)
specified by Sellers to Buyer in writing;
(e) payment to each of the holders of outstanding Indebtedness that are listed on
Schedule 2.1 l(b), cash in the amount set forth in the holder's respective Payoff Letter;
(f) payment to each of the applicable obligors of the Seller Transaction Expenses
Amount to the applicable recipients identified in the Estimated Closing Statement;
(g) a certificate of the President or other officer of Buyer certifying to Sellers that the
conditions set forth in Section 7.2 and Section 7.3 have been satisfied;
(h) certificate of good standing, or comparable status, of Buyer, issued by the North
Carolina Secretary of State as of a recent date prior to the Closing Date;
(i) a resolution of the governing body of Buyer authorizing Buyer to enter into this
Agreement and consummate the Transactions, which shall be dated, and delivered to Sellers, as of the
Effective Date;
0) the Escrow Agreement;
(k) the Assignment and Assumption Agreements;
(1) the Lease Assignment Agreements;
(m) the Intellectual Property Assignment;
(n) the Powers of Attorney;
(o) the Custodial Agreement;
(p) the Funds Flow Memorandum;
(q) the New Hanover Academic and Clinical Affiliation Agreement;
(r) the Transition Services Agreement;
(s) the Buyer Governing Documents; and
(t) the Novant Governing Documents.
Buyer acknowledges that Buyer shall not satisfy the condition precedent set forth in Section 7.5 (as it
relates to the delivery of the amount set forth in Section 7.5(a)) unless Buyer initiates the wire transfer of
the amount set forth in Section 7.5(a) to Sellers, and provides to Sellers a Federal Reserve wire reference
number with respect thereto, on or before 4.00 p.m. (Eastern time) on the Closing Date; provided, that
acceptance by Sellers of such wire transfer after such time shall be deemed a waiver by Sellers of such
condition.
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follows:
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to Closing only as
(a) by the mutual written consent of the parties;
(b) by Sellers by written notice to Buyer if (i) a material breach of this Agreement
has been committed by Buyer, (ii) such breach would give rise to the failure of a condition in Article 7
and (iii) such breach has not been (A) waived in writing by Sellers or (B) cured by Buyer to the
reasonable satisfaction of Sellers by the earlier of 30 calendar days after service by Sellers upon Buyer of
a written notice that describes the nature of such breach or the date that is three calendar days prior to the
End Date;
(c) by Buyer by written notice to Sellers if (i) a material breach of this Agreement
has been committed by either Seller, (ii) such breach would give rise to the failure of a condition in
Article 61 and (iii) such breach has not been (A) waived in writing by Buyer or (B) cured by the
applicable Seller to the reasonable satisfaction of Buyer by the earlier of 30 calendar days after service by
Buyer upon Sellers of a written notice that describes the nature of such breach or the date that is three
calendar days prior to the End Date;
(d) by either Buyer or Sellers if the Closing has not occurred on or prior to
December 31, 2021 (the "End Date"); provided, however that the right to terminate this Agreement
pursuant to this Section 8.1(d) shall not be available to any party whose breach of a representation,
warranty, covenant or obligation under this Agreement has been the principal cause of the failure of the
Closing to have been consummated on or before the End Date.
8.2 Termination Consequences; Break Amount.
(a) In the event Closing does not occur as a direct result of Buyer's material and
uncured breach of this Agreement and Sellers terminate this Agreement under Section 8.1(b), then Buyer
shall pay the Break Amount to Sellers, by wire of immediately available funds to an account(s)
designated by Sellers to Buyer in writing, in full within no more than 30 calendar days following the
effective date of termination of this Agreement. Payment of the Break Amount to Sellers shall be in
addition to, and not in limitation of, any other remedy to which Sellers may be entitled, and shall not
prevent Sellers from pursuing any of their respective other legal rights or remedies that may be granted or
available to any such Seller by Law against any other party.
(b) In the event Closing does not occur as a direct result of the County's material and
uncured breach of this Agreement and Buyer terminates this Agreement under Section 8.1(b) then the
County shall pay the Break Amount to Buyer, by wire of immediately available funds to an account(s)
designated by Buyer to the County in writing, in full within no more than 30 calendar days following the
effective date of termination of this Agreement. Payment of the Break Amount to Buyer shall be in
addition to, and not in limitation of, any other remedy to which Buyer may be entitled, and shall not
prevent Buyer from pursuing any of its legal rights or remedies that may be granted or available to Buyer
by Law against any other party. Any Break Amount payable under this Section 8.2(b) shall be paid solely
by the County, and NHRMC shall not provide, directly or indirectly, any funding to cover the County's
Break Amount obligations under this Section 8.2(b).
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(c) In the event Closing does not occur as a direct result of NHRMC's material and
uncured breach of this Agreement and Buyer terminates this Agreement under Section 8.1 d , then the
NHRMC shall pay the Break Amount to Buyer, by wire of immediately available funds to an account(s)
designated by Buyer to NHRMC in writing, in full within no more than 30 calendar days following the
effective date of termination of this Agreement. Payment of the Break Amount to Buyer shall be in
addition to, and not in limitation of, any other remedy to which Buyer may be entitled, and shall not
prevent Buyer from pursuing any of its legal rights or remedies that may be granted or available to Buyer
by Law against any other party. Any Break Amount payable under this Section 8.2(c) shall be paid solely
by NHRMC, and the County shall not provide, directly or indirectly, any funding to cover NHRMC's
Break Amount obligations under this Section 8.2(c).
(d) For the avoidance of doubt, a Seller's Break Amount obligation under Section
8.2(b) and Section 8.2(c) shall be a several, and not joint, obligation.
(e) If this Agreement is terminated pursuant to Section 8. 1, (a) all further obligations
of the parties under this Agreement shall terminate, except that the obligations in Sections 4.10 and 5.4
(Confidentiality), 8_2 (Termination Consequences),12.3 (Governing Law; Jurisdiction), 12.8
(Confidentiality and Publicity), 12.11 (Third -Party Beneficiary), 12.12 (Expenses and Attorneys' Fees)
and 12.14 (Entire Agreement) shall survive, and (b) nothing shall prevent any party from pursuing any of
its legal rights or remedies that may be granted to any such party by Law against any other party.
ARTICLE 9
POST -CLOSING MATTERS
The parties agree as follows with respect to the period following the Closing:
9.1 Post-Closin Recei t of Assets or Excluded Assets.
(a) Buyer (or its respective successors -in -interest, assigns or Affiliates) shall
transfer, assign or convey to Sellers at Sellers' cost any Excluded Asset or Excluded Liability (and related
mail and other communications) that, post -Closing, is in its possession, custody or control promptly after
Buyer becomes aware of such Excluded Asset or Excluded Liability and, in any event, within not more
than 90 days following the date following Closing upon which a Buyer knowledge party becomes aware
of such Excluded Asset or Excluded Liability. Until such transfer, assignment and conveyance, Buyer
(and its respective successors -in -interest, assigns and Affiliates) shall not have any right, title or interest
in or obligation or responsibility with respect to such Excluded Asset or Excluded Liability except that
Buyer shall hold any such Excluded Asset in trust for the benefit of Sellers. Buyer (and its respective
successors -in -interest, assigns and Affiliates) shall have neither the right to offset amounts payable to
Sellers under this Section 9.1(a) against, nor the right to contest its obligation to transfer, assign and
convey to Sellers because of, outstanding Liabilities asserted by Buyer against Sellers including pursuant
to the post -Closing Purchase Price adjustment of Section 1.2 and the provisions of Section 10.2.
(b) Each Seller (or its respective successors -in -interest, assigns or Affiliates) shall
transfer, assign or convey to Buyer at Buyer's cost any Asset or Assumed Obligation that, post -Closing, is
in its possession, custody or control promptly after such Seller becomes aware of such Asset or Assumed
Obligation and, in any event, within not more than 90 days following the date following Closing upon
which a Seller knowledge party becomes aware of such Asset or Assumed Obligation. Until such
transfer, assignment and conveyance, Sellers (and their respective successors -in -interest, assigns and
Affiliates) shall not have any right, title or interest in or obligation or responsibility with respect to such
Asset or Assumed Obligation except that Sellers shall hold such Asset in trust for the benefit of Buyer.
Sellers (and their respective successors -in -interest, assigns and Affiliates) shall have neither the right to
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offset amounts payable to Buyer under this Section_ 9.1(b) against, nor the right to contest their obligation
to transfer, assign and convey to Buyer because of, outstanding Liabilities asserted by Sellers against
Buyer including pursuant to the post -Closing Purchase Price adjustment of Section 1.2 and the provisions
of Section 10.3.
(c) Section 9.1 shall survive the Closing for a five-year period.
9.2 Preservation and Access to Records After the Closing.
(a) From the Closing Date until five years after the Closing Date or such longer
period as required by Law (the "Document Retention Period"), Buyer shall keep and preserve in the
ordinary course of business all medical records, patient records, medical staff records and other books and
records that are among the Assets as of the Effective Time, but excluding any records that are among the
Excluded Assets. Subject to compliance with applicable Law, Buyer, at Sellers' sole cost and expense,
will afford to the representatives of Sellers, including their counsel and accountants, reasonable access to,
and copies of, such records with respect to time periods prior to the Effective Time (including access to
records of patients treated at the Healthcare Businesses prior to the Effective Time) during normal
business hours after the Effective Time, for legitimate business purposes or in connection with any
Excluded Liabilities. The parties acknowledge that, as a result of entering into this Agreement and
operating the Healthcare Businesses, Buyer (i) will gain access to patient records and other information
which are subject to certain Laws concerning confidentiality and (ii) has obligations with respect to
certain Laws relating to the confidential information it acquires.
(b) Each party shall cooperate with the others, their Affiliates and their insurance
carriers in respect of the defense of claims by third parties against any other party or any of its Affiliates
in respect of events occurring before the Effective Time with respect to the operation of the Healthcare
Businesses. Such cooperation shall be at each party's own cost and expense and may include (i) making
the Hired Employees or a party's other employees reasonably available for interviews, depositions,
hearings and trials and (ii) making its employees available to assist in the securing and giving of evidence,
in obtaining the presence and cooperation of witnesses, and in the production of related documents and
records (all of which shall be done without payment of any fees or expenses to a party or to such
employees). In addition, Sellers and Sellers' Affiliates shall be entitled to, at Seller's expense, make
copies of any such records (to the extent consistent with preserving attorney-client privilege and attorney
work product protections) for purposes of pending litigation involving the persons to whom such records
refer. Any records so copied shall be promptly returned to Buyer following Sellers' or their applicable
Affiliate's use of such records.
(c) In connection with (i) the transition of the Healthcare Businesses pursuant to the
Transactions, (ii) Sellers' rights to the Excluded Assets and (iii) Sellers' obligations under the Excluded
Liabilities, Buyer shall after the Effective Time give Sellers, Sellers' Affiliates and their respective
representatives reasonable access during normal business hours and at Sellers' expense to Buyer's books,
accounts and records and all other relevant documents and information with respect to the assets,
liabilities and business of the Healthcare Businesses relating solely to the operation of the Healthcare
Businesses prior to the Effective Time as representatives of Sellers and Sellers' Affiliates may from time
to time reasonably request in connection with bona fide business and operational requirements of Sellers
related to the Excluded Assets and Excluded Liabilities, all in such manner as not to unreasonably
interfere with the operations of the Healthcare Businesses or Buyer's other businesses, subject to Buyer's
good faith concerns regarding preserving attorney-client privilege and complying with antitrust Law.
Sellers acknowledge that they shall conduct their activities contemplated by this Section 9.2(c) only with
the prior written consent of the chief executive officer of Buyer or his or her designees.
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(d) Buyer and its representatives shall be given access by Sellers during normal
business hours to the extent reasonably needed by Buyer for business purposes to all documents, records,
correspondence, work papers and other documents retained by Sellers pertaining to any of the Assets or
Assumed Obligations or with respect to the operation of the Healthcare Businesses prior to the Effective
Time, all in such manner as to not interfere unreasonably with Sellers' business, subject to Buyer's good
faith concerns regarding preserving attorney-client privilege and complying with antitrust Law. Such
documents and other materials shall be, at Sellers' option, either (i) copied by Sellers for Buyer at Buyer's
expense or (ii) removed by Buyer from the premises, copied by Buyer and promptly returned to Sellers.
(e) Buyer shall reasonably cooperate with Sellers, on a timely basis and as
reasonably requested by Sellers, in connection with the provision of all data of the Healthcare Businesses
and other information required to be reported by Sellers under the Medicare and Medicaid programs to
CMS and to the DNV GL Healthcare USA, Inc. for periods prior to the Effective Time.
(i) To the maximum extent permitted by Law, if any Person requests or demands, by
subpoena or otherwise, any documents relating to the Excluded Liabilities for which a Buyer Indemnified
Party has sought indemnification hereunder, including documents relating to the operations of the
Healthcare Businesses or any of the Healthcare Businesses' committees prior to the Effective Time, prior
to any disclosure of such documents, Buyer shall, to the extent allowable by Law, notify Sellers and shall
provide Sellers with a reasonable opportunity to object to, and otherwise coordinate with respect to, such
request or demand.
9.3 Chane and Use of Restricted Names. No later than 30 days after the Closing Date,
Sellers shall file with the applicable Governmental Entity all applications or amendments to abandon or
change each of the Acquired Names. Additionally, Sellers shall take such actions and execute such
documents as may be necessary for Buyer to make appropriate assumed name filings in order to evidence
and protect Buyer's right to use the Acquired Names in connection with the operation of the Healthcare
Businesses after the Effective Time, and Sellers shall take all necessary action to eliminate the Acquired
Names from, or paint over or otherwise permanently obscure the Acquired Names on, any signage or
other materials (including any publicly distributable documents and other materials bearing such
Acquired Names) owned or controlled by Sellers following the Effective Time.
9.4 Post -Closing Discove1y of Contracts. Buyer acknowledges that it is assuming the
Assumed Contracts as defined in Section 1.4 regardless of whether such Assumed Contracts are set forth
on Schedule 1.4{b}, 1.4(e), 1.4 i , 1.4 ii or 1.4{g}. If (i) following the Effective Date or the Closing
Date, Buyer or Sellers discover (through whatever means) one or more Contracts and/or Leases that have
not been scheduled on Schedule 1.4{b}, 1.4e, 1.4 i , 1.4 ii or 1AW or (ii) if between the Effective
Date and the Closing Date, any Seller enters into a Contract or Lease required to be listed on Schedule
1.4fb), 1.4(e), 1.4ifl(i}, 1.4 ii or 1.4(g), then, with respect to discoveries by Sellers pursuant to clause
and any Contracts and Leases entered into pursuant to clause (iij, Sellers shall promptly notify Buyer
of such fact and provide Buyer with an accurate and complete copy of such Contract or Lease, as
applicable. Buyer may, in its sole discretion, designate such Contract or Lease either as an Assumed
Contract or Excluded Contract, and if Buyer elects to treat such Contract or Lease as an Assumed
Contract, the parties shall update Schedule 1.4fb}, 1.4fe), l�i�, 1.4 ii or 1.4(g} accordingly.
9.5 Medicare Bad Debts. Sellers shall be entitled to receive Medicare bad debt
reimbursement associated with services furnished prior to the Effective Time ("Sellers' Bad Debts"),
Sellers shall have the right, in their reasonable discretion, to require that Buyer, at Sellers' sole cost,
submit a claim for reimbursement to CMS for a Sellers' Bad Debt on Buyer's cost report(s) for the period
in which Sellers' Bad Debt becomes uncollectible by Sellers. If Sellers request that Buyer submit one or
more Sellers' Bad Debt claims to CMS, as contemplated by this Section 9.5, Sellers shall provide to
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Buyer a list of Sellers' Bad Debts to be claimed with a certification reasonably acceptable to Buyer and
Sellers. Buyer shall remit to Sellers the full amount of reimbursement received by Buyer for Sellers' Bad
Debts within 30 days of the tentative settlement of any cost report in which Sellers' Bad Debts have been
claimed pursuant to this Section 9.5. The parties shall reconcile the prior payment made based on the
tentative settlement pursuant to the immediately preceding sentence, with the final amount set forth in the
final settlement of the cost report(s), by the making of a cash payment so as to cause the net aggregate
amount paid by Buyer to Sellers with respect to any given Sellers' Bad Debt to be equal to the amount set
forth on the final settlement. Any additional payment due to Sellers by Buyer as a result of the cost report
audit of Sellers' Bad Debts claims submitted by Buyer and/or any final settlement shall be remitted to
Sellers within 30 days of Buyer's receipt of the Notice of Program Reimbursement (NPR) for the cost
report in question. Any payment due to Buyer from Sellers with respect to Sellers' Bad Debts as a result
of a report audit and/or final settlement shall be remitted to Buyer after 30 days of written notice
regarding the final settlement from Buyer.
9.6 AAP Program Funds. The balance of the amount advanced, if any, to Sellers by CMS
under the CMS Accelerated and Advance Payment Program (the "AAP Program") that is outstanding
immediately prior to the Effective Time (the "AAP Program Amount") shall be treated as follows:
(a) To the extent that Buyer or an Affiliate sustains any Liabilities related to the
AAP Program Amount through recoupment by CMS against amounts otherwise due to Buyer or an
Affiliate or direct payment following the end of the recoupment period (each such recoupment or
payment is referred to herein as a "AAP Program Repayment"), Sellers shall be jointly and severally
obligated to pay Buyer the full amount of each AAP Program Repayment as provided herein. Following
the end of each month, Buyer shall provide Sellers with a notice that lists the AAP Program Repayments
and includes reasonable supporting documentation requested by Sellers. Sellers shall remit the full
amount of the AAP Program Repayments owed hereunder within 20 Business Days of receipt of the
applicable notice. To the extent that CMS repays Buyer or its Affiliates all or a portion of an AAP
Program Repayment for which Sellers have reimbursed Buyer for under this Section 9.6, Buyer shall
repay such amount to Sellers within 20 Business Days of receipt.
(b) In the event that the AAP Program is amended or modified to provide for the
extension, deferral or forgiveness of all or a portion of the AAP Program Amount, upon request of
Sellers, Buyer shall take such action and file such documents to obtain such extension, deferral or
forgiveness.
9.7 License to Use Billing Information. Effective as of the Effective Time and to the extent
allowed by applicable Laws, Sellers grant Buyer and its Affiliates a license ("Billing Information
License") to use each Seller's, each Material Affiliation's and each Facility's billing identification
information (which information shall include each entity's or Facility's name, Government Program
provider numbers, federal employer identification numbers, and such other information as may be
reasonably necessary) for purposes of submitting claims to Government Programs for services provided at
the Facilities by Buyer, any Material Affiliation or any of its Affiliates after the Effective Time. Each
such Billing Information License shall be effective (a) for purposes of Medicare, until CMS and the
applicable CMS Medicare Administrative Contractor approve Buyer's or its Affiliate's Medicare change
of ownership application and issue a tie-in notice and approval letter acknowledging that Buyer (or its
Affiliate) may be reimbursed for claims submitted using Buyer's (or such Affiliate's) billing
identification information; and (b) for purposes of Medicaid and any other Government Programs, until
the applicable Medicaid program(s) or program agent(s) approves Buyer's (or its Affiliate's) provider
enrollment application and/or approves assignment of the applicable provider contract and issues the
appropriate notice acknowledging that Buyer (or its Affiliate) may be reimbursed by the applicable
Medicaid or other Government Program for claims submitted using Buyer's (or its Affiliate's)
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identification information. So long as such Billing Information License remains in effect, Sellers shall not
act to: (i) terminate any of their billing identification information except as required by applicable Law;
(ii) close any accounts used by Sellers before the Effective Time for purposes of receiving
reimbursement; or (iii) cancel any electronic funds transfer agreements with respect to any Government
Program. All accounts receivable and monies collected in the name of Buyer and/or its Affiliates or the
Facilities for services provided by Buyer (and/or its Affiliates), the Facilities or any Material Affiliation
after the Effective Time shall belong to Buyer (and/or its Affiliates).
9.8 Remittances. As of the Effective Time, each Seller hereby (i) authorizes Buyer to open
any and all mail addressed to any Seller and delivered to the Healthcare Businesses or otherwise to Buyer
if received on or after the Effective Time, and (ii) appoints Buyer as its attorney in fact to endorse, cash
and deposit any monies, checks or negotiable instruments received by Buyer after the Effective Time with
respect to any Accounts Receivable, any other Asset or any accounts receivable relating to services
provided by Buyer or the Healthcare Businesses after the Effective Time, as the case may be, made
payable or endorsed to any Seller or Seller's order, for Buyer's own account.
9.9 Agreement Not to Compete. Each Seller covenants and agrees that in order to maintain
the goodwill acquired in the Transactions by Buyer and in consideration of the investments in the Service
Area that Buyer is committing to and will make, for a ten-year period following the Closing Date, it shall
not, directly or indirectly:
(a) engage in any Competitive Activity (as defined below) within or with respect to
the Service Area; and/or
(b) as an employee, agent, partner, equityholder, member, manager, investor,
director, consultant or otherwise assist any third party to engage in Competitive Activity within or with
respect to the Service Area.
(c) "Competitive Activity" means engaging in a business similar to the Healthcare
Businesses. Notwithstanding the preceding, beneficially owning the stock or options to acquire stock
totaling less than 1% of the outstanding shares in a public company shall not constitute by itself
"Competitive Activity".
(d) Notwithstanding any other term of this Section 9.9, nothing in this Section 9.9
shall, or shall be construed to, prohibit or limit in any way the County's operations of a county health
department and emergency services and the provision of services ancillary thereto so long as such
services are not provided as a licensed hospital. The term "Competitive Activity" shall specifically
exclude the operation by the County of a county health department and emergency services and the
provision of services ancillary thereto so long as such services are not provided as a licensed hospital.
9.10 Agreement Not to Interfere with the Healthcare Businesses. Each Seller covenants and
agrees that in order to maintain the goodwill acquired in the Transactions by Buyer, ensure that the
acquired Healthcare Businesses continue to have key personnel necessary to provide high quality services
to patients in the Service Area after the Transactions, and in consideration of the investments in the
Service Area that Buyer is committing to and will make, for a seven-year period following the Closing
Date, it shall not, directly or indirectly:
(a) solicit, encourage or cause any resident of the Service Area to purchase any
services from any third party that are competitive with or a substitute for the services offered by the
Healthcare Businesses in the Service Area at any time during the 24 -month period immediately preceding
the Closing Date;
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(b) solicit, encourage or cause any supplier of goods or services who has provided
goods or services to the Healthcare Businesses during the 24 -month period before the Closing Date not to
do business with or to reduce any part of its business with the Healthcare Businesses in the Service Area
or Buyer; and/or
(c) (i) hire or engage or attempt to hire or engage for employment or as an
independent contractor in the Service Area any person employed by the Healthcare Businesses or Buyer
who was employed by or worked in the Healthcare Businesses immediately before the Closing as an
executive, manager, Physician, nurse, clinician, department leader or other supervisory employee (each, a
"Restricted Employee"); and/or (ii) solicit or encourage any Restricted Employee to terminate his or her
employment or independent contractor relationship with the Healthcare Businesses or Buyer. The
foregoing restrictions do not apply to any Restricted Employee that responds to a general advertisement
or recruitment campaign not specifically directed at such Restricted Employee.
9.11 Closing of Financials. Buyer shall cause the individual(s) acting as the chief financial
officer of Buyer after the Effective Time or such other person(s) as may be responsible for financial
closings and reconciliations (the "Finance Team") to complete (or take such action as shall be necessary
for Buyer or Sellers to complete) the standardized closing of Sellers' financial records for the Healthcare
Businesses through the Closing Date including the closing of general ledger account reconciliations
(collectively, the "Closing of Financials"). Buyer shall cause the Finance Team to use their good faith
efforts to complete the Closing of Financials by no later than the date which is 60 days after the Closing
Date. The Finance Team and other appropriate personnel shall be reasonably available to Sellers after the
Closing Date as reasonably requested by Sellers, including to assist Sellers in the completion of any post -
Closing audit by Sellers of Seller's financial records for the Healthcare Businesses before the Closing
Date.
9.12 Archive Copy of VDR. Sellers shall, at Buyer's sole cost and expense, within five
Business Days after the Closing Date, deliver to Buyer a complete archive copy of the VDR hosted by
lntralinks as of the Closing Date.
9.13 Survival. Each Section of Article 9 shall survive the Closing for a period of three years
unless otherwise expressly stated in such Section.
ARTICLE 10
INDEMNIFICATION; COMPLIANCE MATTERS
10.1 Survival. The representations and warranties of Sellers and Buyer set forth in Sections 2
and 3, respectively, shall not survive the Closing, except that the representations and warranties set forth
in Sections 2.1, 232, 233, 2.8(c), 2.10(x), 2.22, 331, 332, 33, 3.44 and 335 (the "Fundamental
Representations") shall continue in full force and effect for 10 years following the Closing. All
covenants of Buyer and Sellers herein (including all covenants of Buyer and Sellers required to be
performed before the Closing) shall survive Closing indefinitely unless such covenant expires earlier by
its express terms. Except as otherwise set forth herein, no hold harmless or indemnification claim arising
with respect to a breach of any representation or warranty, to the extent permitted, or any covenant shall
be initiated following the applicable expiration date set forth in this Section 10.1; provided, however, that
any such hold harmless or indemnification claim made in accordance with this Agreement on or prior to
the applicable expiration date, and any obligation under this Article 10 with respect thereto, shall survive
and remain in effect notwithstanding the occurrence of the applicable expiration date.
10.2 Sellers' Indemnification of Buyer.
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(a) Indemnification. If the Closing occurs, Sellers shall, jointly and severally, and
with respect to the County, solely to the extent permitted under applicable Law, and subject to the
limitations set forth in Section 10.2(b), indemnify, defend and hold harmless Buyer and each of Buyer's
Affiliates (including the Joint Ventures and Facilities) and its and their respective equityholders,
members, Representatives, successors and assigns (collectively, the "Buyer Indemnified Parties") from
and against all Damages to the extent arising or resulting from:
(i) any breach of any representation or warranty of any Seller under this
Agreement (other than the Fundamental Representations);
Agreement;
Agreement;
(ii) any breach of any Fundamental Representation of any Seller under this
(iii) any breach or default by Sellers of any covenant of any Seller under this
(iv) any of the Excluded Assets and/or Excluded Liabilities; and/or
(v) any fraud or intentional misconduct on the part of any Seller.
Sellers' obligations under this Section 10.2 shall remain subject to, and shall be limited by, the provisions
contained in this Article 10.
(b) Limitations. Sellers' indemnification, defense and hold harmless obligations
under Section 10.2(a) shall be subject to the following limitations:
(i) Buyer's sole and exclusive remedy for any Damages arising out of
Sellers' breach of representations and warranties under Section 10.2 a i shall be the R&W
Policy and Sellers' payment of the Seller Retention from the General Escrow Account. For the
avoidance of doubt, except solely with respect to Sellers' responsibility for the Seller Retention,
Buyer shall have no recourse or remedy against Sellers, and Sellers shall have no obligation to
indemnify or hold harmless Buyer, for Damages arising out of or relating to Sellers' breach of
representations or warranties under Section 10.2(a)(i), under common law, or otherwise,
including in the event Buyer does not obtain or maintain the R&W Policy for any reason. For the
avoidance of doubt, this Section 10.2(b)(i) does not apply to claims for Damages arising under
Sections 102(060 t.
(ii) Subject to Section 10.4(4), for any and all other Damages arising or
accruing under Section 102(a) (other than with respect to any Seller's breach of a post -Closing
covenant and other than with respect to fraud or intentional misconduct of any Seller), Buyer's
sole and exclusive remedy for such Damages shall be a disbursement of funds from the General
Escrow Amount, and only for so long as sufficient General Escrow Amount funds remain
available in the General Escrow Account. For the avoidance of doubt, upon the exhaustion of the
General Escrow Amount, Buyer shall have no further recourse from or against Sellers for
Damages arising or accruing under Section 10.2(a) (other than with respect to any Seller's breach
of a post -Closing covenant and other than with respect to fraud or intentional misconduct). For
the avoidance of doubt, nothing in this Agreement shall preclude any Buyer Indemnified Party
from bringing a claim and pursuing Damages as a remedy against the applicable Seller (on a
several basis) for such Seller's breach of a post -Closing covenant or fraud or intentional
misconduct after exhaustion of the General Escrow Amount or after the second anniversary of the
Closing.
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(iii) Buyer shall bring any and all indemnity claims against Sellers prior to
the expiration of the Escrow Period;rop vided, however, that any indemnity claim made in
accordance with this Agreement on or prior to expiration of the Escrow Period, and any
obligation of Sellers under this Article 10 with respect thereto, shall survive and remain in effect
notwithstanding such expiration date.
(iv) Sellers shall be under no obligation to indemnify any Buyer Indemnified
Party under Section 10.2(a) and no claim under Section 10.2(a) shall be made unless notice
thereof shall have been given by or on behalf of Buyer Indemnified Party to Sellers in the manner
provided in Section 10.4, unless failure to provide such notice in a timely manner does not
materially impair Sellers' ability to defend their rights or otherwise protect their interests.
10.3 Indemnification of Sellers by Buyer. If the Closing occurs, Buyer shall indemnify,
defend and hold harmless each Seller and each of its Affiliates and their respective equityholders,
Representatives, successors and assigns from and against all Damages to the extent arising or resulting
from (a) any breach of any representation or warranty of Buyer under this Agreement, (b) any breach of
any Fundamental Representation of Buyer under this Agreement, (c) any breach or default by Buyer
under any covenant or agreement of Buyer under this Agreement, (d) the Assumed Obligations or (c) any
fraud or intentional misconduct on the part of Buyer. Buyer's obligations under this Section 10.3 shall
remain subject to, and shall be limited by, the provisions contained in this Article 10.
10.4 Payment of Claims.
(a) From and after the Closing, any Damages with respect to any claim as to which
any Buyer Indemnified Party may be entitled to indemnification from Sellers under Section 10.2(x)(i)
shall be satisfied (i) first, toward satisfaction of Buyer's responsibility for the Buyer Retention, to the
extent all, or any portion of, the Buyer Retention remains unsatisfied, (ii) second, toward satisfaction of
Sellers' responsibility for the Seller Retention, to the extent all, or any portion of, the Seller Retention
remains unsatisfied, which such amount shall be paid from the General Escrow Account to the extent
sufficient General Escrow Amount funds remain, and (iii) third, to the extent such Damages exceed the
Buyer Retention and Seller Retention, by recovery under the R&W Policy to the extent such recovery is
available.
(b) From and after the Closing, any Damages with respect to any claim as to which
any Buyer Indemnified Party may be entitled to indemnification from Sellers under Section 10.2(a)(ii) or
Section 10.2(a)(iv), as applicable, shall be satisfied: (i) first, toward satisfaction of Buyer's responsibility
for the Buyer Retention, to the extent all, or any portion of, the Buyer Retention remains unsatisfied, (ii)
second, toward satisfaction of Sellers' responsibility for the Seller Retention, to the extent all, or any
portion of, the Seller Retention remains unsatisfied, which such amount shall be paid from the General
Escrow Account to the extent sufficient General Escrow Amount funds remain; (iii) third, to the extent
such Damages exceed the Buyer Retention and Seller Retention, by recovery under the R&W Policy to
the extent such recovery is available; and (iv) fourth, to the extent the R&W Policy limits have been
exhausted, by recovery from Sellers via the General Escrow Account, and only for so long as sufficient
General Escrow Amount funds remain.
(c) From and after the Closing (other than with respect to any breach by a Seller of a
post -Closing covenant and other than with respect to fraud or intentional misconduct), any Damages with
respect to any claim as to which any Buyer Indemnified Party may be entitled to indemnification from
Sellers under Section 10.2(a) for which recovery under the R&W Policy is not available shall be satisfied
solely by claim against the General Escrow Account, and only for so long as sufficient funds remain in
the General Escrow Account.
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(d) In the case the state of facts giving rise to a claim for indemnification allows any
Buyer Indemnified Party to seek recovery for Damages under any of Section 10.2 a ii ori 0.2 a iv and
Buyer believes in its reasonable judgment that the R&W Policy may reasonably be expected to provide
such Buyer Indemnified Party with recovery for such Damages, such Buyer Indemnified Party shall first
bring such claim against the R&W Policy and use commercially reasonable efforts to recover its
indemnifiable Damages to the greatest extent provided under the R&W Policy; provided, however, in no
event shall any Buyer Indemnified Party be obligated to commence a Proceeding against the insurer under
the R&W Policy.
(e) Within five Business Days after a Final Determination, Buyer and Sellers shall
execute and deliver to the Escrow Agent a joint written direction pursuant to the Escrow Agreement
instructing the Escrow Agent to disburse all or a portion of the General Escrow Amount (to the extent
there are funds remaining in the General Escrow Account and only up to the amount of such remaining
General Escrow Amount funds) in accordance with such Final Determination_ For purposes of this
Article 10, a "Final Determination" shall exist when (i) the Indemnifying Party and the Indemnified
Party have entered into a written settlement agreement with respect to the subject matter of a claim or (ii)
a final nonappealable Order has been entered by a court of competent jurisdiction with respect to the
subject matter of a claim.
M Upon the second anniversary of the Closing, by joint written direction of the
parties, an amount equal to (i) $75,000,000, minus (ii) all amounts released from the General Escrow
Account before such time pursuant to Final Determinations, minus(iii) an amount equal to the amount in
controversy with respect to any then -pending claims under this Article 10 shall be disbursed to a bank
account designated in writing by Sellers together with all interest accrued on such amount; rovided,
however, that, after such date, the amounts retained in the General Escrow Account under clause iii
shall be released when such claims are finally judicially determined or settled in accordance with this
Article 10 and the parties issue a joint written direction to the Escrow Agent designating how such funds
fourth anniversary of the Closing, by joint written direction of the parties, all amounts
are to be disbursed together with interest thereon (consistent with such Final Determination(s)). Upon the
remain
General Escrow Account shall be disbursed to a bank account designated in writing by Selleing in the
rs together
rovided, however, that, the General Escrow Account shall
with all interest accrued on such amount;
continue to retain an amount equal to the amount in controversy with respect to any then -pending claims
under this Article 10 until such claims are finally judicially determined or settled in accordance with this
Article 10 and the parties issue a joint written direction to the Escrow Agent designating how such funds
are to be disbursed together with interest thereon (consistent with such Final Determination(s)).
10.5 Method of Asserting_Claims for Indemnification_ All indemnification claims by any
Person entitled to be indemnified under Section 10.2 or Section 10.3 (the "Indemnified Party") shall be
asserted and resolved as follows:
(a) In the event any claim or demand for which a party (an "Indemnifying Party")
would be liable for Damages to an Indemnified Party is asserted against or sought to be collected from
such Indemnified Party by a Person other than Sellers, Buyer or their Affiliates (a "Third -Party Claim")
the Indemnified Party shall deliver a notice of its claim (a "Claire Notice") to the Indemnifying Party
within 30 calendar days after the Indemnified Party receives written notice of such Third -Party Claim
which Claim Notice specifies in commercially reasonable detail the nature of and basis for such Third -
Party Claim, the amount or the estimated amount of such Third -Party Claim (if known) and includes
copies of all material written evidence thereof. If the Indemnified Party fails to provide the Claim Notice
within such applicable time period after the Indemnified Party receives written notice of such Third -Party
Claim and thereby materially impairs the Indemnifying Party's ability to protect its interests, the
indemnity with respect to the subject matter of the Claim Notice shall be limited to the Damages that
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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. The Indemnifying Party
shall notify the Indemnified Party within 30 calendar days after receipt of the Claim Notice (the "Notice
Period") whether the Indemnifying Party desires, at the sole cost and expense of the Indemnifying Party,
to defend the Indemnified Party against such Third -Party Claim. Notwithstanding anything to the
contrary in thisSection 10.5, with respect to (x) any claim under Section 10.2 a i or (y) any claim under
Section 102 a ii or 1Q.2(aJ iv with respect to which a Buyer Indemnified Party has determined under
Section 10.4 d to make a claim against the R&W Policy, if the underwriter under the R&W Policy so
requires, the underwriter or the Buyer Indemnified Party, as applicable, shall control the defense of such
Third -Party Claim and settle such claim in its sole discretion so long as such settlement is satisfied from
the R&W Policy (subject to the application of any of the Buyer Retention and/or Seller Retention).
(i) If the Indemnifying Party notifies the Indemnified Party within the
Notice Period that the Indemnifying Party desires to defend the Indemnified Party with respect to
the "Third -Party Claim pursuant to this Section 10.5a , then the Indemnifying Party will have the
right to defend, at its sole cost and expense, with counsel selected by the Indemnifying Party
( rog vided, that such counsel is reasonably acceptable to the Indemnified Party), such Third -Party
Claim by all appropriate Proceedings, which Proceedings will be prosecuted by the Indemnifying
Party to a final conclusion or will be settled at the discretion of the Indemnifying Party; provided,
however, that the Indemnifying Party may not settle any such Third -Party Claim without the prior
written consent of the Indemnified Party if the settlement involves any admission of Liability,
guilt, or culpability by the Indemnified Party, or otherwise would require the Indemnified Party to
pay money or incur any other obligation. Except as set forth in this Section 10.5 (including the
last sentence of the foregoing paragraph), the Indemnifying Party will have full control of such
defense and Proceedings, including any compromise or settlement thereof, and the Indemnified
Party shall agree to any settlement, compromise or discharge of any Third -Party Claim that the
Indemnifying Party may recommend that (A) by its terms obligates the Indemnifying Party to pay
the full amount of the Liability in connection with such Third -Party Claim (subject to the
indemnification limitations in this Article 10), (B) releases the Indemnified Party completely in
connection with such Third -Party Claim, (C) does not provide for injunctive or other
nonmonetary relief affecting the Indemnified Party or its Affiliates and representatives and (D)
does not require any statement or admission of Liability or culpability by the Indemnified Party
or its Affiliates or Representatives. Notwithstanding the foregoing, the Indemnified Party may, at
its sole cost and expense, file during the Notice Period any motion, answer or other pleadings that
the Indemnified Party may deem necessary or appropriate to protect its interests or those of the
Indemnifying Party and which is not materially prejudicial, in the reasonable judgment of the
Indemnifying Party, to the Indemnifying Party. Except as provided in Section 10.5(a)(ii , if an
Indemnified Party takes any such action that is materially prejudicial and causes a final
adjudication that is adverse to the Indemnifying Party, the Indemnifying Party will be relieved of
its obligations hereunder solely to the extent such Third -Party Claim is materially prejudiced by
the Indemnified Party's action. If requested by the Indemnifying Party, the Indemnified Party
agrees, at the sole cost and expense of the Indemnifying Party, to reasonably cooperate with the
Indemnifying Party and its counsel in contesting any Third -Party Claim that the Indemnifying
Party elects to contest, or, if appropriate and related to the Third -Party Claim in question, in
making any counterclaim against the Person asserting the Third -Party Claim, or any cross-
complaint against any Person (other than the Indemnified Party or any of its Affiliates). The
Indemnified Party may participate in (including engaging counsel of its choice, at its expense),
but not control, any defense or settlement of any Third -Party Claim controlled by the
Indemnifying Party pursuant to this Section 10.5 a i , and except as specifically provided in this
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Section 10.5 a i , the Indemnified Party will bear its own costs and expenses with respect to such
participation.
(ii) If (A) the Indemnifying Party fails to notify the Indemnified Party within
the Notice Period that the Indemnifying Party desires to defend the Indemnified Party pursuant to
this Section 10.5(a), (B) the Indemnifying Party gives such notice but fails to prosecute diligently
or settle the Third -Party Claim, (C) the Indemnifying Party fails to give any notice whatsoever
within the Notice Period or (D) the Third -Party Claim is asserted by a Governmental Entity for a
violation of Law or involves a provider or material supplier or a Third -Party Claim that could
reasonably be expected to result in the imposition of specific performance on Buyer or the
Healthcare Businesses, then the Indemnified Party will have the right to defend, at the sole cost
and expense of the Indemnifying Party, the Third -Party Claim by all appropriate Proceedings,
which Proceedings will be promptly and reasonably prosecuted by the Indemnified Party to a
final conclusion or will be settled at the discretion of the Indemnified Party. The indemnified
Party will have full control of such defense and Proceedings, including any compromise or
settlement thereof, provided, however, that, if requested by the Indemnified Party, the
Indemnifying Party agrees, at the sole cost and expense of the Indemnifying Party, to cooperate
with the Indemnified Party and its counsel in contesting any Third -Party CIaim that the
Indemnified Party is contesting, or, if appropriate and related to the Third -Party Claim in
question, in making any counterclaim against the Person asserting the Third -Party Claim, or any
cross-complaint against any Person (other than the Indemnifying Party or any of its Affiliates).
Notwithstanding the foregoing provisions of this Section 10.5(a)(ii), if the Indemnifying Party has
notified the Indemnified Party with reasonable promptness that the Indemnifying Party disputes
its Liability to the Indemnified Party with respect to such Third -Party Claim and if such dispute is
resolved in favor of the Indemnifying Party, the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's defense pursuant to this Section 10.5(al(iil or of
the Indemnifying Party's participation therein at the Indemnified Party's request. Subject to the
above terms of this Section 10.5 a ii , the Indemnifying Party may participate in, but not control,
any defense or settlement controlled by the Indemnified Party pursuant to this Section 10.5 a ii ,
and the Indemnifying Party will bear its own costs and expenses with respect to such
participation. The Indemnified Party shall give sufficient prior notice to the indemnifying Party
of the initiation of any discussions relating to the settlement of a Third -Party Claim and allow the
Indemnifying Party to participate therein.
(b) If the Indemnifying Party does not notify the Indemnified Party within 30
calendar days following its receipt of a Claim Notice that the Indemnifying Party disputes its Liability to
the Indemnified Party hereunder, such claim specified by the Indemnified Party will be conclusively
deemed a Liability of the Indemnifying Party hereunder and the Indemnifying Party shall pay the amount
of such Liability to the Indemnified Party on demand, or on such later date (i) in the case of a Third -Party
Claim, as the Indemnified Party suffers the Damages in respect of such Third -Party Claim or (ii) in the
case of an Indemnity Notice in which the amount of the claim is estimated, when the amount of such
claim becomes finally determined.
(c) The Indemnified Party agrees to give the Indemnifying Party reasonable access
to the books and records and employees of the Indemnified Party in connection with the matters for which
indemnification is sought hereunder, to the extent the Indemnifying Party reasonably deems necessary in
connection with its rights and obligations hereunder.
(d) The Indemnified Party shall assist and cooperate with the Indemnifying Party in
the conduct of litigation, the making of settlements and the enforcement of any right of contribution to
which the Indemnified Party may be entitled from any Person in connection with the subject matter of any
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litigation subject to indemnification hereunder. In addition, the Indemnified Party shall, upon request by
the Indemnifying Party or counsel selected by the Indemnifying Party (without payment of any fees or
expenses to the Indemnified Party or an employee thereof), attend hearings and trials, assist in the
securing and giving of evidence, assist in obtaining the presence or cooperation of witnesses, and make
available its own personnel; and shall do whatever else is necessary and appropriate in connection with
such litigation. The Indemnified Party shall not make any demand upon the Indemnifying Party or
counsel for the Indemnifying Party in connection with any litigation subject to indemnification hereunder,
except a general demand for indemnification as provided hereunder. If the Indemnified Party shall fail to
perform such obligations as Indemnified Party hereunder or to cooperate fully with the Indemnifying
Party in Indemnifying Party's defense of any suit or Proceedings, such cooperation to include attendance
at all depositions and the provision of all documents relevant to the defense of any claim, then, except
where such failure does not materially affect the Indemnifying Party's defense of such claims, the
Indemnifying Party shall be released from all of its obligations under this Agreement with respect to that
suit or Proceedings and any other claims which had been raised in such suit or Proceedings.
(e) Following indemnification as provided for hereunder, the Indemnifying Party
shall be subrogated to all rights of the Indemnified Party with respect to all persons or entities relating to
the matter for which indemnification has been made; provided, however, that the Indemnifying Party shall
have no subrogation rights to seek reimbursement through or from the Indemnified Party's insurance
policies, programs, coverage, carriers or beneficiaries.
(f) The failure of the indemnified party to give reasonably prompt notice of any
claim shall not release, waive or otherwise affect the Indemnifying Party's obligations with respect
thereto, except to the extent that the Indemnifying Party can demonstrate that the Indemnifying Party's
ability to defend or resolve such claim is adversely affected in a material manner thereby.
(g) Any payment made to an Indemnified Party under this Agreement shall be
treated by the parties as an adjustment to the Purchase Price for Tax purposes, allocable to the Assets of
such Seller to which the payment relates, unless otherwise required by Law.
(h) To the extent Sellers, as an applicable Indemnifying Party, are obligated for any
costs or expenses under this Section 10.5, Buyer's sole recourse for such amounts shall be the General
Escrow Amount, and only for so long as sufficient funds remain.
(i) If the Indemnified Party is entitled to recover any sum, whether by payment,
discount, credit or otherwise, from any third party or policy of insurance, which, with respect to Buyer,
shall include the Transferred Insurance Policies and Surety Bonds, in respect of any matter for which an
indemnification claim could be made hereunder, the Indemnified Party shall use its commercially
reasonable efforts to recover such sum from such third party or policy of insurance, and any sum
recovered will reduce the amount of the indemnification claim accordingly. If the Indemnifying Party
pays to the Indemnified Party an amount in respect of a claim, and the Indemnified Party subsequently
recovers from a third party a sum that relates to that claim, the Indemnified Party shall promptly repay to
the Indemnifying Party so much of the amount paid by it as does not exceed the sum recovered from the
third party less all reasonable costs, charges and expenses incurred by the Indemnified Party in obtaining
payment in respect of that claim and in recovering that sum from the third party. Nothing in this Section
10.56) shall require any party to commence litigation against any third party, including any insurance
carrier.
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10.6 ReRe atriation.
(a) if at any time following the Effective Time, Buyer (i) is in material default with
respect to more than 50% of its obligations under Section 59(c), (ii) materially breaches any of Buyer's
covenants set forth in Sections 5.10 or 5.12 or (iii) fails to comply in all material respects with the terms
of N.C. Gen. Stat. § 131E -13(a), as amended, restated or revised from time to time ("Fundamental
Covenants") and such material default or breach has not been waived in writing by Sellers or cured by
Buyer to the reasonable satisfaction of Sellers within 90 calendar days after service by Sellers upon Buyer
of a written notice that describes the nature of such material default or breach, then Sellers may at Sellers'
election in Sellers' sole and unrestricted discretion, purchase, or take assignment of, all, and not less than
all, of the Assets transferred to Buyer hereunder, including the Hospitals and all assets associated with the
operation of the Hospitals and all other components of the Healthcare Businesses, and further including
any assets acquired post -Closing and used by Buyer primarily in connection with the operation of the
Healthcare Businesses, excluding NHBMC and all related assets (collectively, the "Repatriation
Assets") (the "Repatriation Transaction"); provided, however, that the Repatriation Assets and the
Repatriation Transaction shall not include the assets and operations of NHBMC. Sellers may exercise
such right to purchase such Repatriation Assets by delivering written notice to Buyer at any time during
the 45 -day period immediately following the expiration of the cure period set forth above ("Purchase
Notice").
(b) Upon Sellers' delivery to Buyer of a Purchase Notice, the parties shall use their
respective reasonable best efforts to enter into definitive documents relating to such Repatriation
Transaction within not more than 90 days following Buyer's receipt of the Purchase Notice. The
Repatriation Assets shall be transferred and assigned to Sellers or Sellers' designees pursuant to terms
that shall be consistent with the following in all material respects:
(i) All rights, benefits, and obligations of Buyer to the Repatriation Assets
and operations associated with the Healthcare Businesses shall revert to Sellers, and following
such reversion, Sellers shall be the owner and operator of the Repatriation Assets and Healthcare
Businesses.
(ii) Buyer shall transfer to Sellers to the extent permitted by Law, all rights
of Buyer under any Governmental Permits as are necessary to allow the continued operation of
the Healthcare Businesses.
(iii) Buyer shall assign to Sellers all of Buyer's executory contracts with third
parties that are Repatriation Assets, to the extent such contracts are assignable, and Sellers shall
assume the same.
(iv) Sellers shall offer to employ all employees of Buyer associated with the
Healthcare Businesses, including Physicians, on substantially the same terms and conditions as
they are then employed under and with the same pay and benefits, and Buyer shall waive, and
refrain from enforcing, any covenants or restrictions otherwise applicable to such employees
acceptance of such offers from Sellers. Buyer shall further waive, and refrain from enforcing, all
restrictive covenants applicable to third parties, including independent contractor Physicians,
which would prohibit any such third party from continuing to provide services to the Healthcare
Businesses following the closing of the Repatriation Transaction.
(v) Buyer shall assign to Sellers 100% of Buyer's equity, membership or
control rights with respect to any subsidiaries and joint ventures that are Repatriation Assets.
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(vi) Buyer and Sellers shall use reasonable best efforts to obtain all necessary
governmental and third -party authorizations associated with any such Repatriation Transaction
within not more than 90 days following execution of definitive documents.
(vii) The Repatriation Assets shall be transferred to Sellers by bill of sale,
deed, assignment and assumption agreement, or other appropriate document of transfer upon
payment by Sellers to Buyer of an amount equal to the Repatriation Purchase Price.
"Repatriation Purchase Price" means an amount equal to the fair market value of the
Repatriation Assets. The fair market value of the Repatriation Assets shall be determined by a
nationally recognized independent valuation firm experienced in valuing healthcare assets and
operations selected according to the mutual agreement of the parties ("Valuation Firm") and
shall take into account the Liabilities assumed and capital investments made by Buyer. If the
parties are unable to agree to such Valuation Firm within 20 days following Sellers delivery of
the Purchase Notice, then each party shall select a valuation firm, and the valuation firms selected
by the parties shall thereafter select the Valuation Firm. Sellers shall pay the Repatriation
Purchase Price by wire transfer of immediately available funds at the closing of the Repatriation
Transaction. Notwithstanding the foregoing, unless otherwise waived by Sellers, Buyer shall use
reasonable best efforts to continue to operate the Healthcare Businesses pursuant to the teens set
forth in this Agreement and to cooperate in good faith with Sellers until the Healthcare
Businesses are transitioned back Sellers.
(c) Each party to the Repatriation Transaction shall bear its own costs and expenses.
(d) The terms of this Section 10.6 shall survive the Effective Time.
10.7 Liquidated Damages. In the event that (a) County brings or initiates any Proceeding, or
makes a counterclaim in any Proceeding, challenging the legality of, or alleging the illegality of, County's
obligation to indemnify, defend or hold harmless any Buyer Indemnified Party under this Agreement on
the basis that County's obligation to indemnify, defend or hold harmless under this Agreement is
unconstitutional, infringes upon County's sovereign/governmental immunity or is otherwise not permitted
by applicable Law or (b) any third party or Governmental Entity brings or initiates any Proceeding
challenging the legality of, or alleging the illegality of, County's obligation to indemnify, defend or bold
harmless any Buyer Indemnified Party under this Agreement on the basis that County's obligation to
indemnify, defend or hold harmless is unconstitutional, infringes upon County's sovereign/governmental
immunity or is otherwise not permitted by applicable Law and, as the final, non -appealable result of such
third -party or Governmental Entity Proceeding (or written settlement related thereto), the General Escrow
Amount, or any portion thereof, is no longer available as a source of recourse for the Buyer Indemnified
Parties (each of the conditions set forth in clauses a and Lt?J, a "Liquidated Damages Trigger Event"),
then, as a condition and inducement to Buyer's willingness to enter into this Agreement, Sellers shall
immediately forfeit any and all of Sellers' rights, title, and interest in and to the then -remaining balance of
the General Escrow Amount ("Liquidated Damages Amount"), and all of Sellers' right, title, and
interest in and to such Liquidated Damages Amount shall immediately and automatically transfer to
Buyer. Within five Business Days after a Liquidated Damages Trigger Event, Buyer and Sellers shall
execute and deliver to the Escrow Agent a joint written direction pursuant to the Escrow Agreement
instructing the Escrow Agent to disburse the Liquidated Damages Amount to Buyer and if any Seller
refuses to sign such joint written direction, Buyer may either sign it on such Seller's behalf or present to
the Escrow Agent either (x) with respect to a Liquidated Damages Triggering Event described in clause
(a), written evidence of the County initiated Proceeding or counterclaim or (y) with respect to a
Liquidated Damages Triggering Event described in clause (b), a copy of the final, nonappealable
judgment or settlement, whereupon the Escrow Agent will, pursuant to the Escrow Agreement, disburse
the Liquidated Damages Amount to Buyer. Buyer shall have the right to specific performance to enforce
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Sellers' obligations under this Section 10.7. This Section 10.7 shall not apply, and no Liquidated
Damages Trigger Event shall be deemed to have occurred, with respect to any Proceeding other than
those described in clauses a and th) above, including any challenge or dispute in which any Seller
challenges a specific indemnity obligation of any Seller arising under this Agreement on the basis that (i)
a Buyer Indemnified Party has not incurred Damages for which a Seller is obligated to indemnify such
Buyer Indemnified Party hereunder, (ii) Sellers dispute the amount of Damages claimed or (iii) Sellers are
not contractually obligated to indemnify the applicable Buyer Indemnified Party for such specific
indemnity claim under the terms set forth in Article 10.
10.8 Specific Performance. The parties hereby acknowledge and agree that (a) the rights of
each party to consummate the Transactions, and the covenants of each party contemplated by this
Agreement are special, unique and of extraordinary character, (b) if any party violates or fails or refuses
to perform any covenant or agreement made by it herein, the non -breaching party or parties would suffer
irreparable harm and be without an adequate remedy at law, and (c) except as otherwise expressly
provided in this Agreement, if any party violates or fails or refuses to perform any covenant or agreement
made by such party herein, the non -breaching party or parties shall, subject to the terms hereof and in
addition to any other remedy at law for Damages or other relief, be entitled to specific performance of
such covenant or agreement, or to any other equitable relief, all without the requirement of posting bond
or proving the inadequacy of monetary Damages.
10.9 Exclusive. From and after the Closing, other than claims for equitable relief, which
equitable relief claims are nevertheless subject to Section 10. 1, or for fraud or intentional misconduct, any
claim arising under this Agreement or in connection with or as a result of the Transactions or any
Damages or injury alleged to be suffered by any party as a result of the actions or failure to act by any
other party shall be governed solely and exclusively by the provisions of this Article 10.
ARTICLE 11
TAX; COST REPORT MATTERS; HITECH PAYMENTS; COMPLIANCE MATTERS
11.1 Tax Matters.
(a) Preparation of Pre -Closing Tax Returns. Sellers shall cause Sellers' tax
preparation firm to prepare to the extent any Seller is required to file a Tax Return, at the sole cost and
expense of Sellers, all federal, state or local Tax Returns for taxable periods that close on or before the
Closing Date ("Pre -Closing Tax Returns"). All Pre -Closing Tax Returns for such period shall be
marked as "final" to the fullest extent permissible under applicable Law. Any such Pre -Closing Tax
Return shall be prepared in a manner consistent with past practice (unless otherwise required by a Law)
and without a change of any election or any accounting method and shall be submitted by Sellers to Buyer
(together with schedules, statements and, to the extent reasonably requested by Buyer, supporting
documentation) for review and comment at least 60 days prior to the due date (including extensions) in
the case of Income or franchise Pre -Closing Tax Returns or at least five days prior to the due date
(including extensions) in the case of other Pre -Closing Tax Returns. If Buyer objects to any item on any
such Pre -Closing Tax Return, Buyer shall notify Sellers in writing within 20 days after Buyer's receipt of
such Pre -Closing Tax Return that it so objects, specifying with particularity any such item and stating the
specific factual or legal basis for any such objection. If a notice of objection is duly delivered, Buyer and
Sellers shall negotiate in good faith and use their commercially reasonable efforts to resolve such items.
If Buyer and Sellers are unable to reach such agreement within ten days after receipt by Sellers of such
notice, the disputed items shall be resolved by the Independent Accountants and any determination by the
Independent Accountants shall be final. The Independent Accountants shall resolve any disputed items
within 30 days of having the item referred to it pursuant to such procedures as it may require. If the
Independent Accountants are unable to resolve any disputed items before the due date for such Pre -
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Closing Tax Return, the Pre -Closing Tax Return shall be filed as prepared by Sellers and then amended to
reflect the Independent Accountants' resolution. The costs, fees and expenses of the Independent
Accountants shall be borne equally by Buyer and Sellers, except if the Independent Accountants resolves
the matter fully in favor of the position of one party, then the other party shall bear all the costs fees and
expenses of the Independent Accountants in full.
(b) Preparation of Straddle Period Returns. Buyer shall prepare, or cause to be
prepared, all Tax Returns not described in Section 11.1(a) required to be filed with respect to the
Healthcare Businesses after the Closing Date with respect to Straddle Periods ("Straddle Period
Returns"), and Buyer and Sellers shall be responsible for their share of the Taxes and costs attributable to
such Straddle Period Returns as determined in this Section 11.1(b) and in accordance with the
methodology prescribed in Section 11.1(c). Any such Straddle Period Returns shall be prepared in a
manner consistent with past practice (unless otherwise required by Law) and without a change of any
election or any accounting method and shall be submitted by Buyer to Sellers (together with schedules,
statements and, to the extent requested by Sellers, supporting documentation) at least 45 days prior to the
due date (including extensions) of such Straddle Period Returns that are in the nature of Income or
franchise Tax Returns and at least five days prior to the due date (including extensions) in the case of
other Straddle Period Tax Returns. If Sellers object to any item on any such Straddle Period Return, it
shall, within ten days after delivery of such Straddle Period Return that is in the nature of an Income or
franchise Tax return and at least two days prior to the due date (including extensions) in the case of other
Straddle Period Tax Returns, notify Buyer in writing that it so objects, specifying with particularity any
such item and stating the specific factual or legal basis for any such objection. If Sellers do not timely
provide Buyer with a written notice of objection, Sellers shall be deemed to accept such Straddle Period
Return as prepared by Buyer. If Sellers do not timely provide Buyer with a written notice of objection,
Sellers shall be deemed to accept such Straddle Period Return as prepared by Buyer. If a written notice of
objection is duly delivered, Buyer and Sellers shall negotiate in good faith and use their commercially
reasonable efforts to resolve such items. If Buyer and Sellers are unable to reach such agreement within
ten days after receipt by Buyer of such notice, the disputed items shall be resolved by the Independent
Accountants and any determination by the Independent Accountants shall be final. The Independent
Accountants shall resolve any disputed items within 30 days of having the item referred to it pursuant to
such procedures as it may require. If the Independent Accountants are unable to resolve any disputed
items before the due date for such Straddle Period Return, the Straddle Period Return shall be filed as
prepared by Buyer and then amended to reflect the Independent Accountants' resolution. The costs, fees
and expenses of the Independent Accountants shall be borne equally by Buyer and Sellers, except if the
Independent Accountants resolves the matter fully in favor of the position of one party, then the other
party shall bear all of the costs fees and expenses of the Independent Accountants in full_ The parties shall
allocate the economic responsibility for Taxes in the case of Straddle Period Returns in accordance with
the methodology prescribed in Section 11.1(c).
(c) Tax Methodoloa. For purposes of this Agreement, in the case of Taxes that are
payable with respect to a Straddle Period, the portion of any such Tax that is allocable to the portion of
the taxable period ending on the Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or related to income
or receipts; or (B) imposed in connection with any sale or other transfer or assignment of property
(real or personal, tangible or intangible) (other than a Transfer Tax covered by Section 11.1(f)),
deemed equal to the amount that would be payable (after giving effect to amounts that may be
deducted from or offset against such Taxes) if the taxable period ended on the Closing Date;
(ii) in the case of Taxes imposed on a periodic basis or otherwise measured
by the level of any item, deemed to be the amount of such Taxes for the entire Straddle Period
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(after giving effect to amounts that may be deducted from or offset against such Taxes) (or, in the
case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately
preceding period), multiplied by a fraction the numerator of which is the number of days in the
period ending on the Closing Date and the denominator of which is the number of days in the
entire Straddle Period; and
(iii) in the case of any Tax based upon or measured by capital (including net
worth or long-term debt) or intangibles, any amount thereof required to be allocated under this
Section 11.1(c) shall be computed by reference to the level of such items on the Closing Date.
All determinations necessary to effect the foregoing allocations shall be made in a manner
consistent with prior practices of Sellers as relating to the Healthcare Businesses.
(d) Cooperation and Exchange of Information. Sellers and Buyer shall provide each
other with such cooperation and information as any of them reasonably may request of the others in filing
any Tax Return pursuant to Section 1 1.1 or in connection with any audit or other Proceedings in respect
of Taxes of the Healthcare Businesses_ Such cooperation and information shall include providing copies
of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers
and documents relating to rulings or other determinations by tax authorities. Sellers and Buyer shall retain
all Tax Returns, schedules and work papers, records and other documents in their possession relating to
Tax matters of the Healthcare Businesses for any taxable period beginning before the Closing Date until
the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other
documents relate, without regard to extensions except to the extent notified by the other parties in writing
of such extensions for the respective Tax periods. Sellers shall retain possession of the Tax Returns,
schedules and work papers, records and other documents in their possession prior to the Closing Date
relating to Tax matters of the Healthcare Businesses.
(e) Tax Proceedings.
(i) Generallv. Each of Buyer, on one hand, and Sellers, on the other hand,
shall promptly notify the other in writing upon receipt (including receipt by Affiliates of Buyer or
any Seller) of any written notice of any audit or other Proceeding by any Governmental Entity
that might be reasonably expected to affect the Tax Liabilities of any party (each, a "Tax
Proceeding") with respect to any Pre -Closing Tax Period.
(ii) Pre -Closing Tax Proceedings. Sellers shall have the right to control any
Tax Proceeding relating to a taxable period ending on or before the Closing Date. Sellers shall
provide Buyer copies of any written correspondence received from the Governmental Entity or
provided to the Governmental Entity in respect of such Tax Proceeding and shall allow Buyer
reasonable opportunity to participate (at its own cost) in the defense of such audit. Sellers shall
consider in good faith any written comments provided by Buyer in respect of such Tax
Proceeding. Sellers shall be entitled to settle any such Tax Proceeding without consent of Buyer,
except to the extent the settlement of such Tax Proceeding would adversely impact Buyer in the
Post -Closing Tax Period, in which case Sellers shall not settle such Tax Proceeding without first
obtaining the consent of Buyer, which consent shall not be unreasonably withheld. if Sellers fail
to timely take control of a Tax Proceeding relating to a tax period ending on or before the Closing
Date, Buyer shall have the right to control such Tax Proceeding, and shall be entitled to settle any
such Tax Proceeding without consent of Sellers, except to the extent the settlement of such Tax
Proceeding would adversely impact the indemnification obligation of Sellers hereunder, in which
case Buyer shall not settle such Tax Proceeding without first obtaining the consent of Sellers,
which consent shall not be unreasonably withheld.
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(iii) Straddle Period Tax Proceedin s. Buyer shall have the right to control
(at its own cost) any Tax Proceeding relating to a Straddle Period., Buyer shall provide Sellers
copies of any written correspondence received from the Governmental Entity or provided to the
Governmental Entity in respect of such Tax Proceeding and shall allow Sellers reasonable
opportunity to participate (at Sellers' own cost) in the defense of such Tax Proceeding. Buyer
shall consider in good faith any written comments provided by Sellers in respect of such Tax
Proceeding. Buyer shall be entitled to settle any such Tax Proceeding without consent of any
Seller, except to the extent the settlement of such Tax Proceeding would adversely impact the
indemnification obligation of Sellers hereunder, in which case Buyer shall not settle such Tax
Proceeding without first obtaining consent of Sellers, which consent shall not be unreasonably
withheld.
(i) Transfer Taxes. Sellers shall be responsible, at Sellers' sole cost and expense, for
the payment of all Transfer Taxes associated with the Transactions, if any, and the filing of Tax Returns
in respect of such Transfer Taxes. Notwithstanding anything to the contrary contained herein, the parties
hereby acknowledge and agree that Sellers are exempt from Transfer Taxes with respect to the
conveyance of the Owned Real Property to Buyer pursuant to the terms hereof, and therefore Buyer shall
not be required to pay any such Transfer Taxes in connection with such conveyance of the Owned Real
Property to Buyer.
(g) Tax -Sharing; Agreements. All Tax -sharing agreements or similar agreements with
respect to or involving NHRMC, the Seller Subsidiaries and Joint Ventures shall be terminated as of the
Closing Date, and, after the Closing Date, the Subsidiaries shall not be bound thereby or have any
Liability thereunder.
(h) Closing of the Books. NHRMC shall cause, or timely request in writing to the
applicable governing board to cause, each Joint Venture to adopt the interim "closing of the books"
method for the taxable year of such Joint Venture in which the Closing Date occurs for purposes of
determining allocations of profit, income, gain, deduction, and loss of such Joint Venture.
(i) Tax Elections under the Partner_s_hip_Audit Rules. At Buyer's request, NHRMC
shall cause, or timely request in writing to the applicable governing board to cause, each Joint Venture to
make an election pursuant to (i) Section 6221(a) of the Code to elect out of the application of the
Partnership Audit Rules, if possible, and (ii) Section 6226(a) of the Code if such election described in
clause W is not possible, in each case, with respect to such Joint Venture's taxable year that includes the
Closing Date and for all prior years in which such Joint Venture is subject to the Partnership Audit Rules.
0) Code Section 754 Election. At Buyer's request, NHRMC shall cause or timely
request in writing to the applicable governing board to cause, each Joint Venture to make a timely
election under Section 754 of the Code (and under any corresponding or similar provisions of state or
local Tax Law) ("Section 754 Election") effective as of the taxable period of such Joint Venture in which
the Closing Date occurs if such Closing Date does not already have a Section 754 Election in effect for
such period.
11.2 Cost Report Matters.
(a) Buyer, at Sellers' cost and expense, shall prepare and timely file all cost reports
relating to Sellers and the Facilities for periods ending prior to the Effective Time or as may be required
as a result of the consummation of the Transactions, including those relating to Government Programs
and Private Programs that settle on a cost report basis (the "Seller Cost Reports"). Buyer shall provide
copies to Sellers of all material correspondence relating to the Seller Cost Reports or rights to settlements
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and retroactive adjustments on the Seller Cost Reports ("Agency Settlements"). Buyer will forward any
demand for payments with respect to the Agency Settlements or the Seller Cost Reports within 10
Business Days of receipt by Buyer. Sellers shall retain all rights, Liabilities and obligations associated
with Agency Settlements and the Seller Cost Reports, including any amounts receivable or payable in
respect of such reports or reserves relating to such reports. Sellers shall retain the right to control the
appeal of any Medicare or Medicaid determinations relating to any of the Seller Cost Reports at Sellers'
sole cost and expense. Sellers shall retain, for the applicable statute of limitations period, the originals of
the Seller Cost Reports, correspondence, work papers and other documents relating to the Seller Cost
Reports. Sellers shall furnish copies of the Seller Cost Reports, correspondence, work papers and other
documents to Buyer upon reasonable request, at the sole cost and expense of Sellers. After the Closing
Date, Sellers shall reasonably cooperate with Buyer, at the sole cost and expense of Seller, to the extent
that Buyer has questions about, or otherwise needs pertinent information relating to, the Seller Cost
Reports.
(b) Except as required by Law, Sellers shall not open, re -file or amend any Seller
Cost Report without the prior written consent of Buyer, not to be unreasonably withheld, conditioned or
delayed. In the event that any Government Program offsets, withholds or recoups any amounts payable or
paid to Buyer as a result of any Liabilities or obligations of Seller, any Material Affiliation or their
respective predecessors in respect of periods ending at or before the Effective Time arising under the
terms of the Government Programs (including as a consequence of a Seller's failure to timely file any
terminating Cost Report), Sellers shall tender to Buyer an amount equal to the amount offset, withheld or
recouped within five Business Days after Sellers' receipt of written notice from Buyer of such offset,
withholding or recoupment. Sellers, at their own cost and expense, shall timely prepare and file any other
required reports for the Facilities with respect to any reportable period ending at or before the Effective
Time.
(c) Upon reasonable notice and during normal business office hours, Sellers, at
Sellers' expense, shall cooperate with Buyer in regard to Buyer's preparation and filing of the Seller Cost
Reports. Upon reasonable notice and during normal business office hours, Sellers shall cooperate with
Buyer, at Sellers' expense, in connection with any cost report audits, appeals, disputes and/or other claim
adjudication matters relative to Governmental Program reimbursement. Such cooperation shall include
obtaining files at the Healthcare Businesses and Sellers' provision to Buyer of data and statistics, and the
coordination with Buyer pursuant to reasonable notice of Medicare and Medicaid exit conferences or
meetings.
(d) If any party receives any amount from patients, Third -Party Payors, group
purchasing organizations or suppliers that, under the terms of this Agreement, belongs to the other party,
the party receiving such amount shall remit within 10 Business Days the full amount (net of any Taxes
incurred by such party as a result of receiving any such amount) so received to the other party,
(e) Sellers shall cooperate with Buyer in all reasonable respects in providing pre -
Closing patient data and any documents Buyer reasonably believes are necessary or appropriate to file
with respect to North Carolina Medicaid disproportionate share hospital surveys and any other required
supplement program surveys for the fiscal periods before and after the Effective Time.
11.3 HITECH Payments.
(a) After the Closing Date, Buyer will cooperate with Sellers in all reasonable
respects in providing documents or data that Sellers reasonably believe are necessary or appropriate to file
with respect to receiving payments (and rights to receive such payments) under the Medicare EHR
Incentive Program and the applicable Medicaid EHR Incentive Program, with respect to demonstrating
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"meaningful use" of certified electronic health records technology (as these terms are defined under the
Health Information Technology for Economic and Clinical Health Act ("HITECH Act"), pursuant to the
requirements of the implementing regulations under the HITECH Act) at the Healthcare Businesses or
Joint Venture Businesses ("HITECH Payments"), or to substantiate Sellers' claim for HITECH
Payments, including (i) making available to Sellers all information and records necessary for the
preparation of attestations or other filings, (ii) providing the services of Buyer's employees as reasonably
required to assist Sellers in preparing such reports, (iii) coordinating with Sellers in regards to applicable
Medicare and Medicaid conferences or meetings and (iv) providing to appropriate parties, as determined
to be reasonably necessary by Sellers, a letter acknowledging that Sellers have retained all rights to the
HITECH Payments, that Buyer agrees that Sellers have the right to pursue such HITECH Payments,
either on Sellers' behalf or, to the extent required by Law, as Buyer's representative, and that Sellers have
the right to submit all attestations with respect to such HITECH Payments for such periods, either on
Sellers' behalf or, to the extent required by Law, as Buyer's representative. In the event that Buyer
provides personnel pursuant to this Section 11.3(a), Buyer shall be entitled to reimbursement from Sellers
for all reasonably incurred out-of-pocket costs and expenses. Buyer shall forward to Sellers any and all
correspondence relating to HITECH Payments within 10 Business Days after receipt by Buyer. In the
event that there is any state or federal audit related to any attestation or other filing contemplated by this
Section 11.3(a), Buyer shall reasonably cooperate with Sellers with respect to any such audit.
(b) If Buyer or any of its Affiliates receives any HITECH Payment that is an
Excluded Asset, Buyer will pay Sellers an amount equal to such HITECH Payments received by Buyer or
its Affiliates. Buyer will make all such payments promptly, and in any event within 10 Business Days of
receipt of the applicable payments.
(c) With respect to HITECH Payments for the federal fiscal year in which the
Effective Time occurs, the parties agree that (i) such HITECH Payments (including all rights to pursue
such payments and/or appeal any decisions regarding such payments) are included in the Assets and shall
become the property of Buyer as of the Effective Time; provided, that Buyer agrees to share any HITECH
Payments for such federal fiscal year with Sellers on a pro rata basis (based upon the number of days
during such federal fiscal year that Sellers operated the Facilities); (ii) Buyer shall remit Sellers' pro rata
share of funds relating to such HITECH Payments to Sellers within 10 Business Days after receipt by
Buyer; and (iii) to the extent Buyer is required to refund or repay any portion of the HITECH Payments,
Sellers shall pay to Buyer Sellers' pro rata portion of the amount of the required refund or repayment
within 10 Business Days after Buyer refunds or remits such amount to Medicare or Medicaid, as
applicable.
(d) Subject to Buyer's satisfaction of its obligations under Section 11.3(b), to the
extent that Buyer is required to refund or repay any portion of the HITECH Payments, including any
amounts related to refunds, penalties or interest, that the Healthcare Businesses receive, or any other
amount associated with HITECH Payments that are, or would be, Excluded Assets, Sellers shall pay
Buyer 100% of any amounts that Buyer is required to refund or repay within 10 Business Days after
Buyer refunds or remits such amount to Medicare or Medicaid, as applicable.
11.4 CMS Reporting, Payment Adiustments and Share Savings/Bundled Payments
Reconciliation.
(a) Following the Effective Time, Sellers shall cooperate with Buyer in all
reasonable respects in providing pre -Closing documents or data that Buyer reasonably believes are
necessary or appropriate to file with respect to CMS Reporting for the federal fiscal year in which the
Effective Time occurs and any subsequent federal fiscal year. Sellers shall forward to Buyer any and all
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correspondence from CMS relating to CMS Reporting for such federal fiscal years within 10 Business
Days after receipt by a Seller.
(b) To the extent Buyer, a Facility or any Material Affiliation incurs a penalty or
reduction in fees paid by CMS for hospital or Physician services based on CMS Reporting (or failure to
report) for services rendered by any Seller before the Effective Time, then Sellers shall pay to Buyer the
payment differential attributable to such reduction in fees paid under CMS Reporting within 10 Business
Days after notice to Sellers of such amount due.
(c) To the extent Buyer, a Facility or any Material Affiliation is required to refund,
reimburse or repay any portion of an increased Medicare payment or Medicaid payment based on CMS
Reporting or any portion of a CMS Reporting bonus paid to any Seller before the Effective Time, then
Sellers shall pay to Buyer the amount of the required refund, reimbursement or repayment within 10
Business Days after Buyer refunds, reimburses or remits such amount to Medicare or Medicaid, as
applicable.
(d) To the extent Buyer, a Facility or any Material Affiliation is required to submit
any payment to any Government Program or any participant participating with Seller in any bundled
payment or shared savings program, Sellers shall pay Buyer the amount of the required payment within
10 Business Days after Buyer remits such amount to any Government Program or any participant, as
applicable.
(e) Notwithstanding the foregoing, nothing in this Agreement shall require Buyer to
prepare, file or otherwise participate in any Government Program or Private Program appeal relating to
the operations of Sellers, Material Affiliations or the Facilities before the Effective Time.
11.5 Waiver Program Payments. Buyer and Sellers shall prorate any payments received by the
Facilities after the Effective Time under waiver or supplemental payment programs as follows:
(a) Any such amounts that correspond to federal fiscal years before the federal fiscal
year during which the Effective Time occurs will be paid to Sellers;
(b) Any such amounts that correspond to federal fiscal years after the federal fiscal
year during which the Effective Time occurs will be paid to Buyer; and
(c) Any such amounts that correspond to the federal fiscal year during which the
Effective Time occurs will be allocated between Buyer and Sellers on a pro rata basis (based upon the
number of days during such year that Sellers operate the Facilities and the number of days during such
year that Buyer operates the Facilities).
11.6 Compliance Matters. Following the Effective Time, if any compliance matter is
identified by a party, whether through internal audit or otherwise, for which another party may bear
responsibility or exposure (a "Compliance Matter"), such party shall provide prompt written notice to
such other party (and such other party's parent organization, if applicable), Because any such
Compliance Matter may impact Buyer and Sellers, the parties acknowledge that both Buyer and Sellers
shall have a common interest in fully resolving all such Compliance Matters and cooperating in good faith
to do so_ To the extent necessary to preserve attorney-client privilege and attorney -work -product doctrine
relating to the investigation or resolution of any Compliance Matter, the parties agree that a common
interest privilege shall exist with respect to any communications relating to the investigation and
resolution of the Compliance Matter and, to the extent necessary and requested by any party or its
counsel, the parties and their respective counsel shall enter into a written agreement to memorialize this
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common interest privilege existing among them relating to the Compliance Matter. The parties will
thereafter cooperate reasonably with each other in any internal investigations or audits and shall make
available to the other, as reasonably requested, any and all relevant information and, further, shall provide
personnel as may be necessary and appropriate for purposes of analyzing and resolving such Compliance
Matter. In order to ensure the accuracy of any report of any compliance issue to a third party, the parties
agree that Sellers shall not make any such report or disclosure to, or in respect of, any federally funded or
state -funded healthcare program, including Medicare, Medicaid, TRICARE, NC Health Choice or with
any Third -Party Payor with respect to any Compliance Matter that might give rise to any Liability of
Buyer, any Facility or any Material Affiliation without at least 30 days' prior written notice to, and
participation and approval of the report by, Buyer, such approval not to be unreasonably withheld,
conditioned or delayed. Buyer may determine in its sole discretion whether or not a self-report is required,
whether or not to self-report and whether or not to repay funds related to a Compliance Matter has been
directed to report such Compliance Matter of a type contemplated by this Section 11.6. In the event that
Buyer submits a self -disclosure of any Compliance Matter in accordance with the terms and provisions of
Section 11.6 to any Governmental Entity, such self -disclosure shall be submitted, and any resulting
settlement with such Governmental Entity shall be negotiated and finalized, as determined by Buyer in its
sole discretion. All parties agree to cooperate fully and in good faith as necessary in the resolution of all
Compliance Matters, and Buyer and Sellers shall each bear their own expenses in connection therewith.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Further Assurances and Cooperation. Sellers shall execute, acknowledge and deliver to
Buyer any and all other assignments, consents, approvals, conveyances, assurances, documents and
instruments reasonably requested by Buyer at any time and shall take any and all other actions reasonably
requested by Buyer at any time for the purpose of more effectively assigning, transferring, granting,
conveying and confirming to Buyer the Assets. After the Closing, the parties agree to reasonably
cooperate with each other and take such further actions as may be necessary, appropriate or desirable to
effectuate, carry out and comply with all of the terms of this Agreement, the other Transaction Documents
and the Transactions.
12.2 Assignment; Successors and_ Assigns. No party may assign this Agreement or any of
such party's rights, duties, or obligations hereunder to any Person without the prior written consent of the
other parties; provided, however, that Buyer may assign this Agreement and the other Transaction
Documents, and any of Buyer's rights, duties, or obligations hereunder or thereunder, to (a) one or more
of Buyer's Affiliates without the requirement of consent (provided, that (i) Buyer shall remain primarily
liable to Sellers hereunder and no such assignment shall relieve Buyer of its obligations hereunder and (ii)
Buyer shall provide Sellers with written notice of such assignment), or (b) for collateral security purposes,
to provide financing to Buyer or any of its Affiliates. All of the terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of and be enforceable by the respective successors and
assigns of the parties;rop vided, however, that no party may assign any of its rights or delegate any of its
duties under this Agreement without the prior written consent of the other parties.
12.3 Governing, Law; Jurisdiction.
(a) This Agreement shall be governed by and construed and enforced in accordance
with the Laws of the State of North Carolina as applied to contracts made and performed within the State
of North Carolina without application of any conflicts -of -law principles. The parties hereby waive their
right to claim in any Proceeding involving this Agreement, any other Transaction Document or the
Transactions that the Law of any jurisdiction other than the State of North Carolina shall apply to such
M
dispute; and the parties hereby covenant that they shall assert no such claim in any dispute arising under
this Agreement, any other Transaction Document or the Transactions.
(b) Each party absolutely and unconditionally waives, to the fullest extent
permitted by Law, any and all rights to trial by jury in connection with any Proceeding arising out of or
relating to this Agreement, any other Transaction Document or the Transactions.
(c) The parties agree that jurisdiction and venue in any Proceeding brought by any
party in connection with this Agreement, any other Transaction Document or the Transactions, or the
performance of the obligations imposed hereunder or thereunder (each, an "Action") shall properly and
exclusively lie in the North Carolina General Court of Justice; provided, however, that the parties agree
and consent to designate any such Action as a complex business case to be assigned to a special superior
court judge of the North Carolina Business Court to the fullest extent permitted by N.C. Gen. Stat. § 7A-
45.4, General Rules of Practice 2.1 and 2.2, and the North Carolina Business Court Rules. Each party
also agrees not to bring any such Action in any other court and not to bring any such Action without
designating such Action as a complex business court case pursuant to this Section 12.3(c). By execution
and delivery of this Agreement, each party irrevocably submits to the jurisdiction of such courts with
respect to any such Action. The parties irrevocably agree that venue would be proper in any such court,
and hereby waive any objection that any such court is an improper or inconvenient forum for the
resolution of such Action. The parties further agree that the mailing by certified or registered mail, return
receipt requested, of any process required by any such court shall constitute valid and lawful service of
process against them, without necessity for service by any other means provided by statute or rule of
court.
12.4 Amendments. This Agreement may not be amended other than by written instrument
signed by the parties and Novant Health. No joint written direction pertaining to the Escrow Account
may be signed by Buyer without the approval of Novant Health.
12.5 Exhibits and Disclosure Schedules.
(a) The Disclosure Schedules and all Exhibits referred to in this Agreement shall be
attached hereto and are incorporated by reference herein.
(b) From the Effective Date until the Closing, Sellers may update any information in
the Disclosure Schedules as necessary to reflect matters first arising during the course of conducting the
Healthcare Businesses after the Effective Date (any such update, a "Schedule Update") and Sellers will
provide any documents related to such Schedule Updates promptly with the Schedule Updates. Unless
Buyer notifies Sellers before the earlier of the Closing Date or the date that is ten days after Sellers
deliver a Schedule Update and applicable documents related to such Schedule Update that the information
contained in such Schedule Update has had or would reasonably be expected to have a materially
detrimental effect on the Healthcare Businesses, then such Schedule Update shall be deemed to have
amended the appropriate section(s) of the Disclosure Schedules as of the Effective Date; provided,
however, that the foregoing shall not apply to Schedule Updates with respect to the Assumed Contracts
Schedules listed in Section 9.4, which shall be governed by Section Error} Reference source not found..
No information contained in any Schedule Update shall have any effect for the purpose of determining
whether the conditions set forth in Articles 6 and 7 have been satisfied. Sellers may also update any
writing provided to Buyer pursuant to Article 2 in accordance with the mechanism set forth above in this
Section 12.5 with respect to the updating of the Disclosure Schedules.
(c) From the Effective Date until the Closing, Buyer may, by written request to
Sellers, require Sellers to update any information in Schedules 1.Sif and 1.5{s1.
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12.5 Notices. Any notice, demand or communication required, pennitted or desired to be
given hereunder shall be deemed effectively given when personally delivered, when received by email,
one Business Day after being deposited with a nationally or internationally recognized overnight courier
or five calendar days after being deposited in the United States mail, with postage prepaid thereon,
certified or registered mail, return receipt requested, addressed as follows:
If to NHRMC: New Hanover Regional Medical Center
2 13 1 S. 17th Street
Wilmington, North Carolina 28401
Attention: John Gizdic, Chief Executive Officer
Lynn Gordon, Chief Legal Officer & General Counsel
Email:
John.Gizdic @nhrmc. org
Lynn. Gordon@nhrme. org
With a copy to: Hall, Render, Killian, Heath & Lyman, LLP
3015 Carrington Mill Blvd.
Suite 450
Morrisville, North Carolina 27560
Attention: Joseph M. Kahn
Robert A. Harrill
Email:
JKahn@hallrender.com
R14amill@hailrender.com
If to the County: New Hanover County
230 Government Center Drive
Suite 175
Wilmington, North Carolina 28403
Attention: Chris Coudriet, County Manager
Wanda Copley, County Attorney
Email!
ccoudriet@nhcgov.com
wcopley@nhcgov.com
If to Buyer Novant Health, Inc.
or Novant Health: 2085 Frontis Plaza Blvd.
Winston-Salem, North Carolina 27103
Attention: Chief Financial Officer
Email: fmhargett@novanthealth.org
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With a copy to: Novant Health, Inc.
1701 East 3" Street
Charlotte, NC 28201
Attention: Executive Vice President, Chief Administrative Officer and
Chief Legal Officer
Email: feemory@novanthealth.org
and to: McGuireWoods LLP
201 North Tryon Street
Suite 300
Attention: Chris Scheurer
Bart Walker
Email-
CScheurer@mcguirewoods.com
B W alker@mcguirewoods. corn
or to such other address and to the attention of such other person or officer as any party may designate by
notice hereunder to the other parties.
12.7 Headin s. The section and other headings contained in this Agreement, the Disclosure
Schedules, and the Exhibits to this Agreement are included for the purpose of convenient reference only
and shall not restrict, amplify, modify or otherwise affect in any way the meaning or interpretation of this
Agreement, the Disclosure Schedules or the Exhibits hereto.
12.8 Confidentiality and Publicity.
(a) The parties acknowledge and agree that, upon execution, this Agreement shall be
publicly available consistent with applicable Law. Notwithstanding the foregoing, however, the parties
shall keep confidential all information, communications, negotiations, draft documents and any other
documents, information or materials exchanged that concern or relate in any way to, the Transactions and
other actions of the parties contemplated hereunder, all pursuant to the terms of that certain
Confidentiality Agreement between Buyer and Sellers, dated January 15, 2020, which shall remain in
effect and shall be binding upon the parties in accordance with its terms.
(b) Prior to the Closing, the parties shall cooperate in good faith regarding any public
announcements regarding this Agreement or the Transactions, To the extent that any press releases or
public announcements are to be issued or made following the Closing to patients, customers, vendors, and
employees relating to the Transactions, the timing and content of such press releases and public
announcements shall be determined according to the mutual agreement of the parties.
12.9 Construction. This Agreement shall be construed according to its fair meaning and shall
not be construed for or against any party by virtue of draftsmanship.
12.10 Number, Construction. For purposes of this Agreement, the following rules of
interpretation shall apply:
(a) All references to the singular shall include the plural and vice versa, where
applicable.
M The word "including" or any variation thereof means "including, without
limitation" and shall not be construed to limit any general statement that it follows to the specific or
similar items or matters immediately following it.
(c) The words "herein," "hereof' and "hereunder" and words of similar import refer
to this Agreement as a whole and not to any particular provision of this Agreement.
(d) References to a "party" means each of Sellers and Buyer and includes references
to such party's successors and permitted assigns; and references to a "third party" means a Person that is
not a party to this Agreement or an Affiliate thereof.
(e) Unless the context requires otherwise, any reference to any Law will be deemed
also to refer to all amendments and successor provisions thereto and all rules and regulations promulgated
thereunder, in each case as in effect from time to time.
(f) References to "ordinary course of business" means the ordinary course of
business consistent with past practice.
12.11 Third -Party Beneficiary. None of the provisions contained in this Agreement are
intended by the parties, nor shall they be deemed, to confer any benefit on any Person not a party to this
Agreement.
12.12 Expenses and Attorneys' Fees. Except as otherwise expressly provided in this
Agreement, each party shall bear and pay its own costs and expenses relating to the preparation of this
Agreement and the other Transaction Documents and to the Transactions contemplated by, or the
performance of or compliance with any condition or covenant set forth in, this Agreement, including, the
disbursements and fees of their respective attorneys, accountants, advisors, agents and other
representatives incidental to the preparation and carrying out of this Agreement, whether or not the
Transactions are consummated. The parties expressly agree that the following shall be borne by Buyer:
(a) all costs and expenses of Sellers in obtaining title reports and surveys obtained by Buyer; (b) all costs
of any environmental surveys obtained by Buyer; (c) the fees of the Escrow Agent; (d) all fees and
expenses for economist and consultant (other than Sellers' counsel and any economist or consultant
retained by any Seller) required in connection with obtaining any Required Governmental Authorizations,
(e) all costs associated with the R&W Policy (other than the Seller Retention), (f) any escrow fees that
may be charged by any title company in its role as escrow agent relating to the transfer of Real Property;
(g) the total cost of owner's and any lender's title insurance and of all endorsements to such owner's and
lender's title insurance; (h) all costs associated with the purchase money financing Buyer obtains, if any;
(i) all fees for recording the deeds conveying the Owned Real Property to Buyer; and 0) all Taxes
(including documentary and/or Transfer Taxes) that become payable by reason of the transfer of the
Assets (including the Real Property).
12.13 Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same Agreement,
binding on all of the parties. The parties agree that facsimile or electronic .PDF copies of signatures shall
be deemed originals for all purposes hereof and that a party may produce such copies, without the need to
produce original signatures, to prove the existence of this Agreement in any Proceeding brought
hereunder.
12.11 Entire Agreement. Other than the Confidentiality Agreement, this Agreement, the
Disclosure Schedules, the Exhibits to this Agreement, and the other Transaction Documents contain the
entire understanding between the parties with respect to the Transactions and supersede all prior or
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contemporaneous agreements, understandings, representations and statements, oral or written, between
the parties on the subject matter hereof, including that certain Letter of Intent among the parties dated July
13, 2020, which shall be of no further force or effect.
12.15 No Waiver. Any term, covenant or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof but only by a written notice signed by the party
expressly waiving such term or condition. The subsequent acceptance of performance hereunder by a
party shall not be deemed to be a waiver of any preceding breach by any other party of any term,
covenant or condition of this Agreement, other than the failure of such other party to perform the
particular duties so accepted, regardless of the accepting party's knowledge of such preceding breach at
the time of acceptance of such performance. The waiver of any term, covenant or condition shall not be
construed (a) as a waiver of any other term, covenant or condition of this Agreement or (b) as a waiver of
any subsequent breach of the same term, covenant or condition. Notwithstanding the foregoing, Buyer
may not waive any term, covenant or condition of this Agreement without the prior written consent of
Novant Health, which may be withheld in its sole discretion.
12.16 Severability. If any term, provision, condition or covenant of this Agreement or the
application thereof to any party or circumstance is held to be illegal, invalid or unenforceable under any
present or future Law, and if the rights or obligations of Sellers or Buyer under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement
will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised
a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will
not be affected by the illegal, invalid or unenforceable provision or by its severance here from, and (d) in
lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
12.17 Definitions. For the purposes of this Agreement:
"Accrued Paid Time Off' means the value of vested accrued paid time off earned but not taken
with respect to the Hired Employees as of the Effective Time, in an amount not to exceed $32,000,000 in
the aggregate.
"Adjustment Escrow Amount" means Thirty -Five Million Dollars ($35,000,000).
"Affiliate" means any Person directly or indirectly controlling, controlled by or under common
control with a second Person (including, for purposes of this Agreement a Person's Subsidiaries);
provided, however, an "Affiliate" shall not include any officer or director of any Person. The term
"control" (including the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or otherwise.
"Assumed Contracts" means the Tenant Leases, the Lessor Leases, the Capital Leases, the
Personal Property Leases and the Contracts.
"At Large Trustees" means individual persons who will be chosen based on the Local Board's
need for financial, legal, public relations, planning, fund-raising, healthcare, or other expertise and who
may, but are not required to, fulfill the qualifications of Community Trustees or Physician Trustees. At
least one At Large Trustee, which shall be one of the 12 Community Trustees, shall be an individual in a
position to represent the interests of NHBMC.
1al
"Books and Records" means originals, or where not available, copies (including in electronic
format), of books and records maintained in connection with the Healthcare Businesses or the Assets,
including books and records relating to books of account, ledgers and general financial accounting
records, Physician records, medical staff records, personnel records, machinery and equipment
maintenance files, patient and customer lists, price lists, distribution lists, supplier lists, quality control
records and procedures, customer and patient complaints and inquiry files, research and development
files, records and data (including all correspondence with any Governmental Entity), sales material and
records, strategic plans, marketing plans, internal financial statements and marketing and promotional
surveys, pricing and cost information, material and research that relate to the Healthcare Businesses
and/or the Assets.
"Break Amount" means Twenty -Five Million Dollars ($25,000,000).
"Business Day" means any day other than a Saturday, Sunday or a day on which commercial
banks in New York, New York are authorized or required to be closed for regular business.
"Business Employees" means all full-time and part-time employees of Sellers that are engaged
solely in the operation of the Healthcare Businesses (including the Hospital's management team).
"Buyer's knowledge" or "the knowledge of Buyer" means the actual knowledge of, and what
would reasonably be expected to have been known after reasonable inquiry by, Frank E. Emory, Jr. and
Fred Hargett.
"CAHs" means all critical access hospitals owned, leased, managed or operated by a Seller, any
Material Affiliation or any of their respective Affiliates.
"Capital Expenditures" means expenditures made in the Healthcare Businesses or in the Service
Area that are limited to! (i) those capitalized in accordance with GAAP, (ii) reasonable incremental
operating losses associated with ambulatory growth strategies (including Physician practices), (iii)
reasonable costs arising from information technology, data analytics and digital strategy integration,
implementation and/or improvement, (iv) reasonable expenses for right -of -use assets related to the
Strategic Plan, (v) reasonable expenses related to medical education, inter -professional education,
healthcare worker pipeline programs, faculty appointments, development and oversight, graduate medical
student education, research and clinical trials, clinical affiliations and capital investments related to any of
the foregoing, which shall include the actual amount of aggregate financial commitment payments and
related payments made under the New Hanover Academic and Clinical Affiliation Agreement, in excess
of those incurred by Sellers in the last full fiscal year prior to Closing, (vi) reasonable costs arising from
deployment of value -based care arrangements and (vii) merger and acquisition and joint venture activity
entered into for the benefit of the Healthcare Businesses. Notwithstanding the foregoing, Capital
Expenditures: (a) shall not include routine day-to-day operating losses not associated with investment in
the Healthcare Businesses; (b) may include funding for operating losses solely to the extent such
operating losses arise out of commercially reasonable working capital and operating expenses incurred in
connection with implementing the capital projects described in clauses (ii - vi of this definition for the
corresponding reasonable start-up period; and (c) shall be for the specific benefit of the Healthcare
Businesses and shall not include any allocation of corporate or system -wide capital expenses or overhead
that is not incurred for the specific benefit of the Healthcare Businesses.
"Cash Amount" means the cash (other than Restricted Cash) of NHRMC and its Affiliates (other
than, for the avoidance of doubt, the Joint Ventures or the NHRMC Foundation) determined in
accordance with GAAP, as of the Effective Time and held in the Transferred Seller Bank Accounts. For
the avoidance of doubt, Cash Amount shall include all cash in physical custody or control plus amounts in
ME,
bank accounts and investment accounts. These amounts will be (a) reduced by (i) issued but uncleared
checks and drafts, (ii) the Excess Accrued Paid Time Off and (iii) a cash amount equal to the value of all
Restricted Cash that cannot be transferred to Buyer and (b) increased by checks, credit cards and drafts
deposited but not reflected on the bank or investment statements.
"CHA" means Carolina Healthcare Associates, Inc., a North Carolina nonprofit corporation.
"Certificate of Need" means a written statement issued by a Governmental Entity pursuant to
N.C. Gen. Stat. § 131E-175 et seg. evidencing community need for a new, converted, expanded, relocated
or otherwise significantly modified healthcare facility or health service.
"Closing Liabilities Amount" means the aggregate amount of all Excluded Liabilities that are
assumed or paid by Buyer at Closing.
"Closing Net Working Capital" means Net Working Capital as of immediately prior to the
Effective Time.
"CMS Reporting" means any cost, quality and performance payment program reporting
requirements implemented by CMS pursuant, but not limited, to the Social Security Act, the Patient
Protection and Affordable Care Act of 2010, the Health Care and Education Reconciliation Act of 2010,
the Pathway for Sustainable Growth Reform (SGR) Act of 2013, the Protecting Access to Medicare Act
of 2014, the Improving Medicare Post -Acute Care Transformation Act of 2014, American Taxpayer
Relief Act of 2012 (ATRA), Balanced Budget Act of 1997 (BBA), the Medicare, Medicaid and SCHIP
(State Children's Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA), and the
Medicare, Medicaid, and SCRIP Benefits Improvement and Protection Act of 2000 (BIPA) and/or the
Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), each applicable at such time as
healthcare services are rendered.
"Code" means the Internal Revenue Code of 1986.
"Community Trustees" means individual persons who reside within the Service Area and rely
upon the Hospitals and Healthcare Businesses for regular and recurrent healthcare services.
"Confidentiality Agreement" means that certain Confidentiality Agreement, dated as of January
15, 2020, by and between Buyer and Sellers.
"Core Clinical Service Lines" means medical -surgery; obstetrics; pediatrics; outpatient and
emergency services, including emergency services for the indigent; cardiovascular health; orthopedics;
oncology; and trauma care; women's health; behavioral health; primary care; neonatal intensive care; and
neurosciences, inclusive of neurology, neurosurgery, neuroinvasive care and stroke care.
"Cost Report" means any cost report required to be filed in respect of the Healthcare Businesses,
Joint Venture Businesses or the Facilities pursuant to a Government Program or any Private Program.
"County Lease" means that certain Lease Agreement by and between the County and NHRMC,
dated as of October 1, 1993, as amended by that certain First Amendment to Lease Agreement dated as of
June 15, 1996; as further amended by that certain Second Amendment to Lease Agreement dated as of
February 15, 1999; as further amended by that certain Third Amendment to Lease Agreement dated
December 1, 2005; as further amended by that certain Fourth Amendment to Lease Agreement dated as of
September 1, 2006; as further amended by that certain Fifth Amendment to Lease Agreement dated as of
October 1, 2008; as further amended by that certain Sixth Amendment to Lease Agreement dated as of
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June 1, 2009; as further amended by that certain Seventh Amendment to Lease Agreement dated as of
September 1, 2011; as further amended by that certain Eighth Amendment to Lease Agreement dated as
of July 1, 2013; and as further amended by that certain Ninth Amendment to Lease Agreement, dated as
of June 1, 2017.
"County Revenue Stabilization Fund" means the fund established at or before Closing to hold
the County Revenue Stabilization Fund Amount.
"County Revenue Stabilization Fund Amount" means $300,000,000.
"COVID-19" means severe acute respiratory syndrome coronavirus (SARS-CoV-2) also known
as the novel coronavirus, and the disease caused thereby, COVID-19.
"Damages" means all losses, damages, claims, penalties, fines, settlement payments, Liabilities,
Taxes, costs (including court costs and costs of any appeals) and expenses (including reasonable
attorneys' fees), whether or not arising out of a Third -Party Claim, excluding punitive damages (except to
the extent awarded or paid to an unaffiliated third party).
"Disclosure Schedules" means the disclosure schedules delivered by Sellers to Buyer and
attached hereto.
"Disaster Relief Funds" means any payments received before or after the Effective Time that are
intended to compensate any Seller or the Healthcare Businesses for costs incurred or revenue lost as a
result of hurricanes or other natural disasters occurring prior to the Effective Time, where such payments
are derived from programs established or funded directly or indirectly by or through FEMA, other federal
agencies, or state and local agencies.
"Disregarded Entity" or "Disregarded Entities" means those business entities set forth on
Schedule 1.4(x) that are limited liability companies for which NHRMC owns 100% of the equity
interests.
"Encumbrance" means any lien, pledge, claim, charge, mortgage, deed of trust, security interest,
covenant, easement, encroachment or other restriction or encumbrance of any kind.
"Environmental Laws" means all applicable state, federal or local Laws relating to Hazardous
Substances or to the protection of the environment, including Laws relating to the storage, treatment and
disposal of medical and biological waste.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any entity treated as a single employer with Sellers, the Healthcare
Businesses or the Joint Venture Businesses for purposes of Section 414 of the Code or Section 4001 of
ERISA.
"Escrow Agent" means Truist Bank.
"Escrow Amount" means the Adjustment Escrow Amount and the General Escrow Amount.
"Estimated Cash Amount" means Sellers' good faith written estimate of the Cash Amount as of
the Effective Time.
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"Estimated Closing Liabilities Amount" means Sellers' good faith written estimate of Closing
Liabilities Amount as of the Closing.
"Estimated Closing Net Working Capital" means Sellers' good faith written estimate of
Closing Net Working Capital.
"Estimated Closing Net Working Capital Adjustment" means Sellers' good faith written
estimate of the Closing Net Working Capital Adjustment.
"Estimated Closing Payment" means an amount equal to (i) Base Cash Consideration, minus
(ii) Estimated Closing Liabilities Amount, minus (iii) the Estimated Seller Transaction Expenses Amount,
minus (iv) the Estimated Indebtedness Amount,llus (v) the amount (if any) by which Estimated Closing
Net Working Capital exceeds the Net Working Capital Target, minus (vi) the amount (if any) by which
the Net Working Capital Target exceeds Estimated Closing Net Working Capital, plus (vii) the Estimated
Cash Amount, minus (viii) the Adjustment Escrow Amount, minus (ix) the General Escrow Amount.
"Estimated Indebtedness Amount" means Sellers' good faith written estimate of the
Indebtedness Amount as of the Closing.
"Estimated Purchase Price" means (i) Base Cash Consideration, minus (ii) the Estimated
Closing Liabilities Amount, minus (iii) the Estimated Seller Transaction Expenses Amount, minus (iv)
the Estimated Indebtedness Amount, plus (v) the Estimated Closing Net Working Capital Adjustment (if
a positive number); plus (vi) the Estimated Cash Amount.
"Estimated Seller Transaction Expenses Amount" means Sellers' good faith written estimate
of Seller Transaction Expenses Amount as of the Closing.
"Excess Accrued Paid Time Off' means the amount of Accrued Paid Time Off in excess of
$32,000,000.
"Facilities" means the Hospitals, HHAs, Hospices and all other healthcare facilities, healthcare
operations or Physician practices owned, leased, managed or operated by any Seller or Material
Affiliation related to or associated with the Healthcare Businesses or Joint Venture Businesses and all
assets and operations ancillary to or associated with any of the foregoing.
"FEMA" means the Federal Emergency Management Agency_
"Force Majeure Event" means an event or effect that either cannot be anticipated or cannot be
controlled, including acts of nature (including fire, flood, earthquake, hurricane, tornado, lightning and/or
other natural disaster), war, terrorist activities, sabotage, government prohibition, pandemic, epidemic,
labor dispute, strike, lockout, partial or entire failure of utilities or other vital supplies, acts or omissions
of any Governmental Entity or Laws, or changes in Laws, issued by any Governmental Entity.
"FTC Red Flag Rules" means the regulations set forth in 16 C.F.R. Part 681.
"GAAP" means United States generally accepted accounting principles and practices as in effect
from time to time.
"General Escrow Amount" means $100,000,000.
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"Governmental Entity" means any local, state or federal government or authority, including
each of their respective branches, departments, agencies, commissions, boards, bureaus, courts,
instrumentalities, contractors or other subdivisions, including the North Carolina Department of Health,
NC Health Choice, North Carolina Department of Justice, the Medicare and Medicaid programs
(including their respective fiscal intermediaries or administrative contractors) and TRICARE.
"Governmental Permit" means any license, registration, permit, certificate, order, grant,
certificate of need, franchise, registration, authorization, consent or approval of any Governmental Entity,
including provider agreements with the Medicare and Medicaid programs (including their respective
fiscal intermediaries or administrative contractors) and TRICARE.
"Hazardous Substances" means (i) any hazardous or toxic waste, substance, or material defined
as such in (or for the purposes of) CERCLA and/or the Resource Conservation and Recovery Act (42
U.S.C. §6901, et. M.), and/or the Hazardous Materials Transportation Act (49 U.S.C. §1801, et, sN.),
and/or the Toxic Substances Control Act (15 U.S.C. §2601, et. seq.), and/or the Clean Air Act (42 U.S.C.
§7401, et. sect.), and/or the Clean Water Act (33 U.S.C. §1251, et. seq.), and/or any corresponding state
Law, (ii) asbestos -containing material, (iii) medical and biological waste, (iv) polychlorinated biphenyls,
(v) petroleum products, including gasoline, fuel oil, crude oil and other various constituents of such
products, and (vi) any other chemicals, materials or substances, exposure to which is prohibited, limited
or regulated by any Environmental Laws.
"Healthcare Laws" means Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395hhh
(the Medicare statute), including 42 U.S.C. §1395nn or any regulations promulgated pursuant thereto
(collectively, the "Stark Law"); Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396v (the
Medicaid statute); the Federal Health Care Program Anti -Kickback Statute, 42 U.S.C. § 1320a-7b(b); the
False Claims Act, 31 U.S.C. §§ 3729-3733; the Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-
3812; the Anti -Kickback Act of 1986, 41 U.S.C. §§ 51-58; the Civil Monetary Penalties Law, 42 U.S_C.
§§ 1320a -7a and 1320a -7b; the Exclusion Laws, 42 U.S.C. § 1320a-7; the Federal False Claims Act, 31
U.S.C. §3729; the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§ 1320d -
1329d -8, as amended by the Health Information Technology for Economic and Clinical Health Act,
enacted as Title XIII of the American Recovery and Reinvestment Act of 2009, Public Law 111-5
(collectively, "HIPAA"); Information Privacy and Security Laws; any Laws applicable to the Provider
Relief Funds; Laws applicable to the use, handling, control, storage, transportation and maintenance of
controlled substances, pharmaceuticals or drugs; and all applicable implementing regulations, rules,
ordinances and Orders; and any similar or other state and local Laws; and all applicable federal, state and
local licensing, certificate of need, regulatory and reimbursement, and Orders applicable to healthcare
service providers or other Persons providing the items and services similar to those provided by Sellers,
Facilities, Material Affiliations, Joint Venture Businesses or the Healthcare Businesses.
"HHAs" means all home health agencies owned, leased, managed or operated by a Seller, any
Material Affiliation or any of their respective Affiliates.
"Hospices" means all hospice agencies owned, leased, managed or operated by a Seller, any
Material Affiliation or any of their respective Affiliates.
"Immediate Fancily Member" means husband or wife; birth or adoptive parent, child, or sibling;
stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law; grandparent or grandchild; and spouse of a grandparent or grandchild.
"Income Tax" means any federal, state, local or foreign Tax measured or imposed on net income,
including any interest, penalty or addition thereto, whether disputed or not.
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"Income Tax Return" means any Tax Return relating to Income Taxes, including any schedule
or attachment thereto.
"Indebtedness" means, as at a specified date, without duplication, (i) the amount of all
obligations for borrowed money of Sellers with respect to, arising from or related to the Healthcare
Businesses (including any unpaid principal, premium, unpaid interest, prepayment penalties, commitment
and other fees, reimbursements, indemnities and all other amounts payable in connection therewith), (ii)
Liabilities of Sellers with respect to the Healthcare Businesses evidenced by bonds, debentures, notes or
other similar instruments or debt securities, (iii) all obligations, contingent or otherwise, of Sellers with
respect to, arising from or related to the Healthcare Businesses in respect of any letters of credit or
bankers' acceptances (to the extent drawn), (iv) any interest rate swap, forward contract or other hedging
arrangement of Sellers, (v) obligations to pay the deferred purchase price of property or services or assets
in each case, together with all accrued interest thereon and any applicable prepayment, redemption,
brokerage, make -whole or other premiums, fees or penalties with respect to which any Seller is liable,
contingently or otherwise, as obligor or otherwise (except trade accounts payable to suppliers arising in
the ordinary course of business), including all deferred purchase price Liabilities related to past
acquisitions, whether contingent or otherwise (including the maximum potential amount payable with
respect to any "earn -out", purchase price adjustment or similar payments or obligations); (vi)
indebtedness or other obligations of others of the type described in this definition guaranteed by any
Seller or any of their Affiliates (to the extent there is a demand for payment of any such guarantee); and
(vii) all obligations (including accrued interest) of Sellers with respect to the Healthcare Businesses
without duplication under a lease agreement that would be capitalized pursuant to GAAP, including
payment obligations assumed by Buyer or paid at Closing by Buyer under Capital Leases, but excluding
any breakage costs, prepayment penalties or fees or other similar amounts payable in connection with any
capitalized leases related to any post -Closing event, (viii) the AAP Program Amount and (ix) any accrued
and unpaid interest, fees and other expenses owed with respect to the foregoing, including prepayment
penalties and breakage fees.
"Indebtedness Amount" means the aggregate amount of all Indebtedness of Sellers related to the
Healthcare Businesses outstanding as of the Effective Time.
"Independent Accountants" means Ernst & Young.
"Information Privacy and Security Laws" means HIPAA, all other Laws concerning the
privacy or security of Personal Information, including state data breach notification Laws, state health
privacy and information security Laws, the FTC Act, the FTC Red Flag Rules and state consumer
protection Laws and applicable industry standards, including Payment Card Industry Data Security
Standard 3.0 or higher.
"Intellectual Property" means all intellectual property rights arising under the Laws of the
United States or any other jurisdiction with respect to the following: (i) trade names, trademarks and
service marks (registered and unregistered), trade dress and similar rights and applications to register any
of the foregoing (collectively, "Marks"); (ii) inventions, whether or not patentable, and all patents, patent
applications and rights in respect of utility models or industrial designs (collectively, "Patents"); (iii)
works of authorship, whether or not copyrightable, and copyrights and registrations and applications
therefor (collectively, "Copyrights"); (iv) domain names and social media accounts; (v) all computer
programs (including any and all software implementation of algorithms, models and methodologies,
whether in source code or object code), databases and compilations (including any and all data and
collections of data) and all documentation therefor (including user manuals and training materials relating
to the foregoing) ("Software"); (vi) know-how, discoveries, methods, processes, technical data,
specifications, research and development information, technology, data bases and other proprietary or
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confidential information, including customer lists, in each case that derives economic value from not
being generally known to other Persons who can obtain economic value from its disclosure, but excluding
any Copyrights or Patents that cover or protect any of the foregoing (collectively, "Trade Secrets"); and
(vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world,
including moral rights and publicity rights.
"Intellectual Property Agreements" means all licenses, sublicenses and other agreements by or
through which other Persons grant any Seller or any of its Affiliates, or any Seller grants any other
Persons, any exclusive or nonexclusive rights or interests in or to any Intellectual Property that is
necessary for use in connection with the Healthcare Businesses.
"Iron Gate" means Iron Gate Surgery Center, LLC.
"Joint Venture(s)" means those business entities set forth on Schedule 1.4(w) that are limited
liability companies for which NHRMC owns less than 100% of the equity interests.
"Joint Venture Businesses" means the operation of the Material Affiliations and all assets and
operations ancillary to or associated with any of the foregoing as currently conducted.
"Law" means any federal, state, local or foreign law, statute, code, ordinance, order, rule,
regulation, code, directive, judgment, binding administrative guidance or interpretation, constitutional
provision, accreditation, standard ruling or decree of any Governmental Entity.
"Liability" means any liability, Indebtedness, obligation, deficiency, interest, Tax, penalty, fine,
claim, demand, judgment, cause of action or other losses (including loss of benefit or relief), cost or
expense of any kind or nature whatsoever, whether known or unknown, asserted or unasserted, absolute,
fixed, or contingent, accrued or unacerued, liquidated or unliquidated, recorded or unrecorded, due or to
become due or otherwise, and regardless of when asserted.
"Material Adverse Effect," as used in this Agreement with respect to Sellers, the Assets, and the
Healthcare Businesses, means any event, change, fact, effect, condition or occurrence that individually or
in the aggregate with all other events, changes, facts, effects, conditions or occurrences, (i) has had,
results in or would reasonably be expected to have a material adverse effect on the condition (financial or
otherwise), business, assets, liabilities, properties, operations or results of operations of the Healthcare
Businesses, taken as a whole, or (ii) has prevented or materially delayed, or would reasonably be expected
to prevent or materially delay, the consummation by Sellers of the Transactions, but excluding any effect
resulting or arising from (a) any change that is generally applicable to the healthcare industry, (b) any
actual changes in Law, (c) any change in general business, economic or market conditions, (d) any
national or international political event or natural disaster, including acts of war, terrorism, pandemics,
epidemics, hurricanes, floods, storms and other natural disasters, (e) the entry into, or compliance with the
terms of, this Agreement or the announcement of the Transactions, (f) any action taken by Buyer or
Sellers that are required to be taken by this Agreement, (g) any omission to act or action taken that is
specifically required by this Agreement, (h) any changes in GAAP or (i) any failure by Sellers to meet
any internal or published projections or predictions with respect to the Healthcare Businesses (whether
such projections or predictions were made by Sellers or independent third parties) for any period ending
on or after the Effective Date (it being understood that the facts or occurrences giving rise to or
contributing to such failure may be deemed to constitute, or be taken into account in determining whether
there has been or will be, a Material Adverse Effect); provided, however, that any event, change, fact,
effect, condition or occurrence referred to in the foregoing clauses a , c , and (h) may be taken
into account in determining whether there is or would reasonably be expected to be a Material Adverse
Effect to the extent that Sellers or the Healthcare Businesses have been or would reasonably be expected
108
to be disproportionately affected thereby relative to other participants in the industry in which Sellers
operate the Healthcare Businesses. "Material Adverse Effect" as used in this Agreement with respect to
Buyer, means any one or more events, developments, circumstances, occurrences, changes or effects that,
individually or in the aggregate, has prevented or materially delayed, or would reasonably be expected to
prevent or materially delay, the consummation by Buyer of the Transactions.
"Material Affiliation" means (a) any Person in which NHRMC, directly or indirectly, owns at
least 50% of the equity interests, is the sole member or manages or controls by contract or otherwise,
including those Persons set forth in Schedule 1.4(w) and (b) any arrangement or agreement between any
of the Healthcare Businesses and Carolinas Physicians Network, Inc.
"Mental and Behavioral Health Fund" means the fund established at or before Closing to hold
the Mental and Behavioral Health Fund Amount.
"Mental and Behavioral Health Fund Amount" means $50,000,000.
"Net Working Capital" means the excess of (a) the current assets of the Healthcare Businesses
included in the line items set forth on Exhibit P as of the determination date (excluding the Cash Amount
and Restricted Cash), over (b) the current liabilities (including (i) Accrued Paid Time Off minus (ii)
Excess Accrued Paid Time Off) of the Healthcare Businesses included in the line items set forth on
Exhibit P as of such date, in each case calculated in accordance with GAAP. An example calculation of
Net Working Capital as of June, 2020 is attached as Exhibit P.
"Net Working Capital Target" means S 102,000,000.
"NHRMC Transition Stabilization Escrow Amount" means $200,000,000.
"Novant Health Change of Control" means, with respect to Novant Health, (i) any transaction
or series of related transactions that results in an independent third party, directly or indirectly, (a)
becoming the beneficial owner of more than 50% of the then -outstanding voting securities or other voting
ownership or membership interests of Novant Health, (b) having the power or authority to elect or appoint
more than 50% of the governing board or body, or otherwise direct the affairs and policies of Novant
Health, or (c) otherwise having control (as defined in the definition of Affiliate, above) of Novant; (ii) the
sale, transfer or lease of all or substantially all of the assets of Novant Health in any single transaction or
series of related transactions, to an independent third party; and/or (iii) any joint venture, management
arrangement, or similar transaction between Novant Health and an independent third party that results in
such independent third party owning or controlling all, or substantially all, of the assets of Novant Health.
"OWP4" means OWP4, LLC.
"Order" means any order, injunction, decree, ruling, writ, opinion, assessment or arbitration
award.
"Payor Agreement" means any Contract between any entity and a Government Program or a
Private Program under which the Healthcare Businesses, Joint Venture Businesses, any Material
Affiliation or any Seller or any of its Affiliates directly or indirectly receives payments for medical
services provided to such program's beneficiaries.
"Permitted Encumbrances" means Permitted Exceptions and (i) statutory liens for current
Taxes not yet due or delinquent (or which may be paid without interest or penalties) or the validity or
amount of which is being contested in good faith by appropriate Proceedings in accordance with
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applicable Law that are properly accrued for on the books of the applicable Seller and set forth on
Schedule 12.17(a), (ii) mechanics', carriers', workers', repairers' and other similar liens arising or
incurred in the ordinary course of business relating to obligations as to which there is no default on the
part of Sellers, (iii) pledges, deposits or other liens securing the performance of bids, trade contracts,
leases or statutory obligations (including workers' compensation, unemployment insurance or other social
security Laws), in each case in the ordinary course of business, and (iv) with respect to Owned Real
Property only, any Defects identified in writing during the Title Objection Period that are subsequently
cured by Sellers in accordance with the terms and conditions of Section 5.5(c) or waived by Buyer, in
Buyer's sole and absolute discretion.
"Person" means any natural person, partnership, corporation, limited liability company,
association, trust or other legal entity.
"Personal Information" means any information with respect to which there is a reasonable basis
to believe that the information can be used to identify an individual, including "individually identifiable
health information" as defined in 45 C.F.R. § 160.103, "personally identifiable information" (as such
term, or similar term in purpose or effect, may be defined by any applicable Information Privacy and
Security Laws), demographic information and Social Security numbers.
"Physician" means a doctor of medicine or osteopathy, a doctor of dental surgery or dental
medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor, as defined in Section
1861(x) of the Social Security Act.
"Physician Trustees" means individual licensed physicians then currently maintaining active
privileges on the Hospitals' medical staff and who reside, and practice primarily, in the Service Area.
"Post -Closing Tax Period" means any taxable period beginning after the Closing Date and, with
respect to the Straddle Period, the portion of such taxable period beginning after the Closing Date.
"Pre -Closing Tax Period" means any taxable period ending on or before the Closing Date and,
with respect to the Straddle Period, the portion of such taxable period ending on and including the
Closing Date.
"Proceeding" means any action, arbitration, charge, claim, counterclaim, complaint, demand,
dispute, audit, grievance, hearing, inquiry, investigation, self -disclosure, litigation, proceeding, qui tam
action, suit (whether civil, criminal, administrative, judicial, or investigative) commenced, brought,
conducted, or heard by or before, or otherwise involving, any (a) Governmental Entity, (b) Medicare
fiscal intermediary or administrative contractor, recovery audit contractor, zone program integrity
contractor or (c) arbitrator, whether at law or in equity.
"Provider Needs Assessment" means Sellers' current provider needs assessment, which is
attached as Schedule 12.17(b).
"Provider Relief Funds" means any payments received prior to the Effective Time that are
intended to compensate any Seller or the Healthcare Businesses for costs incurred or revenue lost as a
result of their COVID-19 response, where such payments are derived from programs established or
funded, directly or indirectly, by or through the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act"), including payments received through the Public Health and Social Services Emergency
Fund and through state and local programs funded through federal appropriations under the Coronavirus
Relief Fund defined under the CARES Act Title V Section 601, and any other payments received through
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programs funded directly or indirectly by other Governmental Entities, including FEMA or the North
Carolina Medicaid program, or through subsequent Congressional appropriations.
"Public Software" means any open source Software used by Sellers or Sellers' Affiliates,
including any Software that contains, or is a derivative work of, any Software that is distributed under an
open source license as defined by the Open Source Initiative or a free Software license as defined by the
Free Software Foundation including any of the following licenses: (i) GNU'S General Public License
(GPL) or LesserlLibrary GPL (LGPL), (ii) the Artistic License (e.j4., PERL), (iii) the Mozilla Public
License, (iv) the Netscape Public License, (v) the Sun Community Source License (SCSL), (vi) the Sun
Industry Standards License (SISL), (vii) the BSD License and (viii) the Apache License.
"Referral Source" any of the following: (a) a Physician, an Immediate Family Member of a
Physician, or an entity owned in whole or in part by a Physician or by an Immediate Family Member of a
Physician; (b) any other Person who (i) makes, who is in a position to make, or who could influence the
making of referrals of patients to any healthcare facility; (ii) has a provider number issued by Medicare,
Medicaid or any other Government Program; or (iii) provides services to patients who have conditions
that might need to be referred for clinical or medical care, and participates in any way in directing,
recommending, arranging for or steering patients to any healthcare provider or facility; or (c) any Person
or entity that is an Affiliate of any Person or other entity described in clause a or (b).
"Remediation Period" means, with respect to any occurrence of Force Majeure Event, the period
following such occurrence that Buyer reasonably requires to remediate any Damage resulting from such
Force Majeure Event and/or the period that Buyer reasonably requires to resume operations or other status
or activity that have been stopped, curtailed or otherwise disrupted as a result of such Force Majeure
Event, including the period of any delay in construction resulting from such Force Majeure Event.
"Representatives" means, with respect to any Person, the officers, directors, employees, agents,
attorneys, accountants, advisors, bankers, financing sources and other authorized representatives of such
Person.
"Restricted Cash" means any cash of a type (a) recorded, in accordance with GAAP, by
NHRMC or any of its Affiliates (other than, for the avoidance of doubt, the Joint Ventures or the
NHRMC Foundation) under the ledger items named "Restricted Cash" and "Restricted investments" on
the Financial Statements or (b) otherwise subject to legal or contractual restriction on the ability to freely
transfer or use such cash (e g in a cash escrow or reserve account).
"Securities Act" means the Securities Act of 1933.
"Sellers" means County and NHRMC as well as each of its Subsidiaries and Affiliates (other
than the NHRMC Foundation and Material Affiliations);rop vided, however, that for purposes of Sections
1.4 and 1.6, Sellers shall not include Pender, it being understood and agreed by the parties that Pender is
not transferring, leasing, selling or conveying any of its assets or Liabilities to Buyer (rather, Buyer will
substitute as the member of Pender at the Closing).
"Sellers' knowledge" or "knowledge of Sellers" means the actual knowledge of, and what
would reasonably be expected to have been known after reasonably inquiry in the performance of such
individual's duties in their respective office by, John Gizdic (CEO), Heidi Berger (Deputy General
Counsel), Mary Ellen Bonczek (Chief Nurse Executive), Andre Boyd (Chief Operating Officer), Philip
Brown, M.D. (Chief Physician Executive), Schorr Davis (NHRMC Foundation Executive Director),
Laura Festa (Risk Management), Dan Goodwin (VP Physician Network), Lynn Gordon (Chief Legal
Officer), Chris Hillier (Executive Director Innovation), Kristy Hubard (Chief Strategy Officer), Vera
111
Newkirk (Corporate Compliance), Joe Norris (Chief Information Officer), Ed 011ie (Chief Financial
Officer) and Michelle Adamolekun (Chief Human Resources Officer).
"Seller Subsidiary" means a Subsidiary or Affiliate, including NHRMC Foundation, of any
Seller or any Subsidiary of any Seller.
"Seller Taxes" means any Liability for Taxes (or the nonpayment thereof) (a) imposed on or
payable by (i) Sellers, any Seller Subsidiary or Joint Venture regardless of the taxable period to which
such Taxes relate, (ii) any member of an affiliated, consolidated, combined or unitary group of which
Sellers, any Seller Subsidiary or any Joint Venture (or any Seller's, any Seller Subsidiaries' or any Joint
Venture's respective predecessors, whether by merger, conversion or otherwise) is or was a member on or
before the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or
similar Law, or (iii) any Person (other than Sellers or any Seller Subsidiary or Joint Venture) imposed on
or payable by Sellers, Seller Subsidiary or Joint Venture as a transferee or successor, by Contract or
pursuant to any Law which Taxes relate to an event or transaction occurring before the Closing Date; or
(b) imposed on the Assets that are incurred in, or attributable to, any Pre-Closing Tax Period.
"Seller Transaction Expenses" means the aggregate amount, as of the Effective Time, of: (a) all
unpaid fees, expenses, costs, commissions and disbursements of any broker, finder, financial advisor,
consultant, accountant, legal counsel or other professional incurred by or on behalf of any Seller or any of
their Affiliates in connection with this Agreement, the Transaction Documents and/or the Transactions;
(b) the unpaid fees of the Transition Escrow Agent and the Bond Defeasance Escrow Agent, (c) any and
all unpaid severance, transaction, retention, success, change-of-control or similar bonuses payable
(including the employer's share of any employment, payroll or similar Taxes related thereto) to any
Business Employee, director or consultant of any Seller or any of their Affiliates as a result of the
Transactions, if any; provided, however, that in no event shall any payments made pursuant to an offer
letter or other Contract entered into by Buyer (or by NHRMC at the written direction of Buyer) whether
before, on or following the date of this Agreement be considered a Seller Transaction Expense or
otherwise reflected as a current liability of any Seller in calculating Net Working Capital; and (d) the
aggregate amount of any loans or other obligations owed by any Business Employee to any Seller or any
of their Affiliates that are forgiven by a Seller or one of its Affiliates in connection with the Transactions.
"Seller Transaction Expenses Amount" means an amount equal to all Seller Transaction
Expenses that have been incurred or accrued on or before the Closing but have not been paid as of the
Closing, whether or not a Seller or any of its Affiliates has been billed for such expenses.
"Service Area" means the Healthcare Businesses' current primary and secondary service areas as
of the Closing, New Hanover, Pender, Brunswick, Columbus, Onslow, Duplin and Bladen Counties and
any other primary or secondary service areas into which the Healthcare Businesses expand following
Closing.
"Straddle Period" means any taxable period beginning on or before the Closing Date and ending
after the Closing Date.
"Strategic Plan" means NHRMC's Strategic Master Plan dated as of April 23, 2019 as further
reflected in the PAC's February 20, 2020 presentation, which is attached as Schedule 12.17(c).
"Subsidiary" or "Subsidiaries" of any Person means any corporation, partnership, limited
liability company or other legal entity in which such Person (either alone or through or together with any
other Subsidiary), (i) owns or holds, directly or indirectly, 50% or more of the stock, membership or other
equity or ownership interests, the holder of which is generally entitled to elect a majority of the board of
112
directors or other governing body of such legal entity, or (ii) is entitled to appoint, elect or has the ability
to control the appointment or election of a majority of the board of directors or other governing body of
such legal entity, each of which are set forth on Schedule 1.4(x).
"Tax" or "Taxes" means any federal, state, local or foreign taxes, charges, fees, duties, tariffs,
levies or other assessments, including income, gross receipts, net proceeds, ad valorem, turnover, real
property, personal property, sales, use, franchise, excise, value added, goods and services, license,
payroll, unemployment, environmental, customs duties, capital stock, disability, stamp, user, transfer,
fuel, excess profits, occupational and interest equalization, windfall profits, alternative or add-on
minimum, estimated, registration, withholding, social security (or similar), or other tax of any kind
whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other
manner, including any interest, penalty, or addition thereto, whether disputed or not, together with any
installments with respect thereto and any estimated payments or estimated taxes and whether disputed or
not, including any Liability for Taxes as a result of being a member of a consolidated, combined, unitary
or aggregate group for any taxable period and any Liability for Taxes of another Person pursuant to a
contract, as a transferee or successor, or under Treasury Regulations Section 1.1502-6 or analogous state,
local or foreign Law or otherwise, and including any Liability for abandoned or unclaimed property.
"Tax Return" means any return, declaration, report, statement, estimate, claim for refund and
other document filed or required to be filed or provided to a payee in respect of Taxes, including any
schedules or attachments thereto or amendments thereof.
"Third -Party Payor" means any third -party purchaser of healthcare services other than any
Government Programs.
"Transaction Documents" means this Agreement, the Bills of Sale, the Assignment and
Assumption Agreements, the Lease Assignment Agreements, the special warranty deed(s), the Intellectual
Property Assignment and all other written agreements, documents and certificates expressly required by
any of the foregoing documents to be delivered to another party on the date hereof or at the Closing.
"Transactions" means the transactions contemplated by the Transaction Documents.
"Transfer Taxes" means any sales, use, stock transfer, value added, real property transfer, real
property gains, transfer, stamp, registration, documentary, recording or similar duties or taxes together
with any interest, penalties, additions to tax or additional amounts with respect thereto incurred in
connection with the Transactions.
"Transition Escrow Agent" means Truist Bank, unless otherwise designated by Sellers in
writing.
"Waiver/Supplemental Payment Program Receivables" means amounts recorded as a
receivable by the Facilities under any waiver or supplemental payment programs for periods on or before
the Effective Time consistent with historical accounting practices.
Certain terms listed below are defined elsewhere in this Agreement and, for ease of reference, the
section containing the definition of each such term is set forth opposite such term.
Term................................................................................................................................. Section
AAPProgram............................................................................................................ Section 9.6
AAP Program Amount............................................................................................. Section 9.6
113
AAP Program Repayment................................................................................... Section 9.6(a)
Accounts Receivable..............................................................................................Section
1.4(i)
Accreditations........................................................................................................
Section 2.9(f)
AcquiredNames....................................................................................................
Section 1.4(p)
Acquisition Proposal...........................................................................................
Section 4.13(a)
Action...................................................................................................................Section
12.3(c)
Adjustment Escrow Account...........................................................................
Section 1.1(d)(i)
Affected Assets........................................................................................................
Section 5.22
Agency Settlements.............................................................................................
Section 11.2(a)
Agreement...............................................................................................
Introductory Paragraph
Allocable Consideration.....................................................................................
Section 1.12(b)
Allocation Review Period..................................................................................
Section 1.12(b)
Allocation Schedule Methodology.....................................................................
Section 1.12(b)
APP.......................................................................................................................
Section 5.15(b)
Applications............................................................................................
.... Section 2.9(aa)
Assets..........................................................................................................................
Section 1.4
Assignment and Assumption Agreements..........................................................
Section 6.8(b)
Assumed Obligations................................................................................................
Section 1.6
BankAccounts...........................................................................................................
Section 1.8
Base Cash Consideration......................................................................................Section
1.1(a)
Billing Information License.....................................................................................
Section 9.7
Billsof Sale............................................................................................................
Section 6.8(a)
Bond Defeasance Documents................................................................................
Section 4.11
Bond Defeasance Escrow........................................................................................
Section 4.11
Bond Defeasance Escrow Agent............................................................................
Section 4.11
Bond Defeasance Escrow Amount.........................................................................
Section 4.11
BondIndebtedness..................................................................................................
Section 4.11
BondOrder......................................................................................................
... Section 4.11
Breach....................................................................................................................
Section 2.9(d)
Buyer.......................................................................................................
Introductory Paragraph
Buyer Governing Documents.............................................................................Section
520(d)
Buyer Indemnified Parties.................................................................................
Section 10.2(a)
BuyerRetention............................................................................................
... Section 5.8
Buyer's Environmental Assessment........................................................................
Section 4.1
Buyer Severance Obligations...............................................................................
Section 1.6(e)
Buyer's Representatives.....................................................................................
.. Section 4.1
CapitalLease.........................................................................................................
Section 1.4(t)
CEHRT.........................................................................................................
..Section 2.9(y)
CERCLA....................................................................................................................
Section 2.7
ClaimNotice........................................................................................................
Section 10.5(a)
Closing......................................................................................................................
.. Section 1.3
ClosingDate...............................................................................................................
Section 1.3
Closing Date Business Employees......................................................................
Section 5.13(a)
Closing Net Working Capital Adjustment..........................................................
Section 1.1(a)
Closing of Financials...............................................................................................
Section 9.11
ClosingStatement.................................................................................................
Section 1.2(a)
CMS.......................................................................................................................Section
2.9(n)
COBRA coverage................................................................................................Section
5.13(d)
CompetitiveActivity.....................................................................................
........ Section 9.9(c)
ComplianceMatter.................................................................................................
Section 11.6
Confidential Information.......................................................................................
Section 4.10
114
Construction Contracts................................................................................
Section 2.4(b)(xxi)
Contract and Lease Consents..............................................................................
Section 2.5(a)
Contracts................................................................................................................Section
1.4(g)
Copyrights .......... ........... ............ .... - ........ .............................
Definition of Intellectual Property
County.....................................................................................................
Introductory Paragraph
County Commissioners........................................................................................
Fourth Recital
Custodial Agreement....,-, ... ........ - ... ................................................................
Section 6.8(k)
DamagedAssets.......................................................................................................
Section 5.26
Defects....................................................................................................................Section
5.5(c)
Document Retention Period.................................................................................
Section 9.2(a)
Easements..............................................................................................................Section
2.8(h)
Effective Date.........................................................................................
Introductory Paragraph
EffectiveTime...........................................................................................................
Section 1.3
Elderhaus.............................................................................................................Section
2.9(dd)
EndDate................................................................................................................Section
8.1(d)
Environmental Permits ........................
.......... Section 2.7
Escrow Agreement....................................................................................................
Section 1.9
EscrowPeriod...........................................................................................................
Section 1.9
Estimated Closing Statement...............................................................................Section
1.1(b)
Excluded Assets.........................................................................................................
Section 1.5
Excluded Contracts...............................................................................................
Section 1.5(e)
Excluded Liabilities..................................................................................................
Section 1.7
ExcludedRecords...................................................................................................Section
1.5(l)
Federal Fiscal Year...............................................................................................Section
29(n)
Final Determination............................................................................................Section
10.4(d)
Final Purchase Price.............................................................................................Section
1.2(b)
FinanceTeam..........................................................................................................
Section 9.11
Financial Statements...........................................................................................
Section 2.11(a)
Foundation.............................................................................................................
Section 6.8(u)
Foundation Contribution.....................................................................................
Section 5.9(a)
Fundamental Covenants.....................................................................................
Section 10.6(a)
Fundamental Representations...............................................................................
Section 10.1
Funds Flow Memorandum...................................................................................
Section 1.1(c)
General Escrow Account..................................................................................
Section 1.1(d)(i)
GMEProgram.....................................................................................................Section
5.15(4)
Government Programs.........................................................................................Section
2.9(g)
Healthcare Businesses..............................................................................................First
Recital
Hired Employees.................................................................................................Section
5.13(a)
HITECHAct.......................................................................................................Section
11.3(a)
HITECHPayments.............................................................................................Section
11.3(a)
Hospitals... .......... ........... ....... ....................................................................
............ First Recital
ImmigrationAct..................................................................................................
Section 2.14(8)
Improvements........................................................................................................Section
2.8(g)
Indemnified Party...................................................................................................
Section 10.5
Indemnifying Party.............................................................................................
Section 10.5(a)
Insurance Policies....................................................................................................
Section 2.15
Insurer Application..............................................................................................Section
2.9(x)
Intellectual Property Assignment........................................................................Section
6.8(o)
Intended Tax Treatment....................................................................................
Section 1.12(a)
Interim Balance Sheet.........................................................................................
Section 2.11(a)
Interim Balance Sheet Date................................................................................
Section 2.11(a)
115
Inventory................................................................................................................ Section 1.4(h)
IRS.......................................................................................................................Section
2.13(b)
ITSystems...........................................................................................................Section
2.19(k)
JVEntity................................................................................................................Section
2.3(d)
Lease Assignment Agreements............................................................................
Section 6.8(c)
Leased Real Property...........................................................................................
Section 1.4(b)
Leases........................................................................................................
............. Section 2.4(a)
LessorLease..........................................................................................................
Section 1.4(e)
Licenses__ ............................................................................................................
Section 1.4(d)
Liquidated Damages Amount................................................................................
Section 10.7
Liquidated Damages Trigger Event......................................................................
Section 10.7
LocalBoard.........................................................................................................
Section 5.20(a)
Local Representative..........................................................................................
Section 5.21(a)
LOI......................................................................................................................
Seventh Recital
Marks.....................................................................................Definition
of Intellectual Property
Material Contracts...............................................................................................Section
2.4(b)
Medical Staff Member..........................................................................................
Section 2.9(e)
Medicare Cap Liability.........................................................................................Section
2.9(u)
Monetary Encumbrance.......................................................................................
Section 5.5(c)
MSSP.......................................................................... ..................................
........ Section 2.9(w)
Net Proceeds...................................................................... ...........................
........... Section 4.12
New Hanover Academic and Clinical Affiliation Agreement .......................-Section 5.15(d)
NHBMC.................................................................................................................
Section 5.9(b)
NHRMC..................................................................................................Introductory
Paragraph
NHRMC Board............................................................................................
...... Third Recital
NHRMC Foundation............................................................................................
Section 1.4(s)
Non -Monetary Cure Threshold...........................................................................
Section 5.5(c)
Non -Monetary Encumbrance..............................................................................
Section 5.5(c)
Non -Offered Employees... .........................................................................
..... ... Section 5.13(a)
Non -Transferable Governmental Patient Receivables .......................................Section
1.40)
Notice Period.......................................................................................................
Section 10.5(a)
NovantBoard......................................................................................................Section
520(b)
Novant Governing Documents...........................................................................
Section 5.21(a)
Novant Health........................................................................................
Introductory Paragraph
NPIs..................................................... .................................................................
..Section 1.4(d)
Objection Statement.............................................................................................Section
1.2(b)
OIG.........................................................................................................................Section
2.9(k)
Other Businesses......................................................................................................
First Recital
Owned Real Property...........................................................................................
Section 1.4(a)
Owned Real Property Allocation Schedule ......................................................Section
1.12(d)
Owned Real Property Purchase Price...............................................................Section
1.12(d)
PACE Organization............................................................................................
Section 2.9(dd)
PACE Program...................................................................................................
Section 2.9(dd)
PACE Program Agreement...............................................................................Section
2.9(dd)
PAG..........................................................................................................................
Fifth Recital
Party.......................................................................................................................
Section 12.10
Patents....................................................................................
Definition of Intellectual Property
PayoffLetters.........................................................................................................Section
6.8(t)
Pender..................................................................................................................Section
5.10(d)
PenderMSA.......................................................................................................Section
5.10(d)
Permitted Exceptions............................................................................................Section
2.8(d)
116
Personal Property.................................................................................................
Section 1.4(c)
Personal Property Lease.......................................................................................
Section 1.4(f)
Powers of Attorney...............................................................................................
Section 6.8(h)
Practitioner(s)........................................................................................................
Section 2.9(e)
Pre -Closing Tax Returns....................................................................................Section
1 I.I(a)
PrepaidExpenses..................................................................................................
Section 1.4(q)
Private Program....................................................................................................
Section 2.9(g)
Provider Agreements...........................................................................................Section
5.15(i)
Purchase Notice... .......................................................................
_ ... ____ .......... Section 10.6(a)
Purchase Period.. ................................... _ ... ...................................
...................... Section 5.22
PurchasePrice.......................................................................................................Section
1.1(a)
Purchase Price Allocation.................................................................................
Section 1.12(b)
Purchase Price Allocation Schedule.................................................................
Section 1.12(b)
Quality Metrics...................................................................................................
Section 5.16(e)
R&W Policy...............................................................................................................
Section 5.8
RealProperty........................................................................................................
Section 1.4(b)
Rejecting Employees...........................................................................................
Section 5.13(x)
Repatriation Assets.............................................................................................Section
10.6(x)
Repatriation Purchase Price.......................................................................Section
10.6(b)(vii)
Repatriation Transaction...................................................................................
Section 10.6(x)
Required Contract Consents................................................................................
Section 6.8(n)
Required Governmental Authorizations................................................................
Section 6.4
ReservedPowers.................................................................................................
Section 5.20(c)
Respondents.............................................................................................................
Fifth Recital
Restricted Employee...........................................................................................Section
9.10(c)
Retention....................................................................................................................
Section 5.8
RFP........................................................................................................................
Fourth Recital
ROMNotice...........................................................................................................
Section 5.22
ROM Option Period..............................................................................................
Section 5.22
Routine Capital Commitment..........................................................................
Section 59(c)(i)
ScheduleUpdate..................................................................................................Section
12.5(b)
Section 754 Election.............................................................................................Section
11.10)
Seller Cost Reports.............................................................................................
Section 11.2(a)
SellerPlan(s)........................................................................................................
Section 2.13(a)
SellerRetention.. .........................................................................
...... ...................... Section 5.8
Sellers' Had Debts.....................................................................................................
Section 9.5
Software.................................................................................
Definition of Intellectual Property
Solvency or solvency (as to Sellers).......................................................................
Section 2.16
Solvency or solvency (as to Buyer)..........................................................................
Section 3.8
Stark Law....................................................................................Definition
of Healthcare Laws
Straddle Period Returns.....................................................................................Section
11.1(b)
Survey....................................................................................................................Section
5.5(b)
TailPolicies............................................................................................................
Section 4,5(a)
TaxAct................................................................................................................
Section 2.17(m)
Tax Proceeding....................................................................................................Section
11.1(e)
TenantLeases........................................................................................................Section
1.4(b)
Third Party... .............................................................................
.............. Section 12.10(4)
Third -Party Claim..............................................................................................
Section 10.5(a)
Third -Party Offer Notice.. . .................... ___ .................................................
........ Section 5.22
Third -Party Offeree................................................................................................
Section 522
Title Commitment.................................................................................................
Section 5.5(a)
117
Title Company ..................................... ................. Section 5.5(a)
TitleEvidence........................................................................................................ Section 5.5(c)
Title Objection Period.......................................................................................... Section 5.5(c)
TitlePolicy............................................................................................................. Section 5.5(a)
Trade Secrets......................................................................... Definition of Intellectual Property
Transferred Insurance Policies and Surety Bonds ............................................Section 4.5(b)
Transferred Plans............................................................................................... Section 5.13(b)
Transferred Seller Bank Accounts...................................................................... Section 1.4(r)
Transition Services Agreement.......................................................................... Section 6.8(aa)
Trustees................................................................................................................ Section 5.20(a)
UNCHCS..............................................................................................................Section 5.15(d)
UNCSOM............................................................................................................. Section 5.15(d)
Valuation Firm.............................................................................................Section 10.6(b)(vii)
WARN.................................................................................................................... Section 1.6(c)
12.18 Time is of the Essence. Time is of the essence for all dates and time periods set forth in
this Agreement and each performance called for in this Agreement.
[Remainder of page intentionally left blank]
118
IN WITNESS WHEREOF, this Agreement has been entered into as of the day and year first
above written by the parties' duly authorized representatives.
BUYER:
NOVANT HEALTH NEW HANOVER REGIONAL
MEDICAL CENTER, LLC
By: eacx S.
� W. 0;9�—
Name:
Title: S'CIE
Solely for purposes of Section 5.28:
NOVANT HEALTH, INC.
By: &..e .4�:.
Name:
SELLERS:
NEW HANOV R REGIONAL MEDICAL
CEN
By:
Name: a
i-�� a`7-�;'
Title.-
itle:NEW
NEWH E
N
By:
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Title:
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Signature Page to Asset Purchase Agreement
SCHEDULE 2.50)
Consents - Governmental
PART
Federal Controlled Substance Registration Certificate. Seller shall provide notice to the U.S.
Department of Justice Drug Enforcement Administration of the transaction no later than 14 days
prior to the Effective Date. Buyer must submit anew application to the U.S. Department of
Justice Drug Enforcement Administration as soon as practicable prior to the Effective Date of the
Transaction.
2. Home Care Agency License. Seller must provide written notice via email or regular mail
(Division of Health Service Regulation, 2712 Mail Service Center, Raleigh, NC 27699-2712) to
the North Carolina Division of Health Service Regulation, Acute and Home Care Licensure and
Certification Section 30 days prior to the Effective Date. Notice must include the name of the
agency and the home care agency license number.
3. Florida Medicaid Participation Agreement. Seller must submit notice to the Florida Agency
for Health Care Administration in writing at least 60 days prior to the Effective Date, including in
the notification the anticipated effective date of the change of ownership. This notice may via
email (for the hospitals) or uploaded via the online portal (for all other provider types). Buyer
must submit an enrollment application no later than 60 days prior to the Effective Date.
4, North Carolina Medicaid Participation Agreement. Seller must submit notice of the change
of ownership to the North Carolina Department of Health and Human Services in writing at least
30 days prior to the Effective Date.
5. Radioactive Materials License Notification and Consent. Seller must request and receive
approval from the North Carolina Department of Health and Human Services Division of Health
Service Regulation, Radiation Protection Section prior to the transfer of any radioactive materials
license.
6. North Carolina Notice of Registration for X -Ray Units. Seller must notify the North Carolina
Department of Health and Human Services Division of Health Service Regulation, Radiation
Protection Section prior to the transfer of any registered radiation machine.
Federal Communications Commission Notification and Consent. Seller and Buyer must
notify the Federal Communications Commission regarding the transaction and receive consent
prior to the Effective Date for the transfer of Call Signs WPG1387, KA47954, KKY651,
KNDS620, KWD477, KYU489, WNXD631, WNYL223, WPBD933, WPDQ531, WPFZ358,
WPIE673 and WPLQ938 registered to New Hanover Regional Medical Center (FRN
000195346).
8. North Carolina Certificate of Need. Seller and Buyer must notify the North Carolina
Department of Health and Human Services, Division of Health Service Regulation, Healthcare
Planning and Certificate of Need Section regarding the transfer of ownership and confirm the
transaction is exempt from Certificate of Need review.
9. The Joint Commission Accreditation. Seller and Buyer must notify The Joint Commission, of
the transaction no later than 30 days prior to the Effective Date.
10. North Carolina Ambulatory Surgical Facility License. Seller must provider notice of the
transaction to the North Carolina Department of Health and Human Services no later than 30 days
prior to the Effective Date of the Transaction.
11. DNV Healthcare, Inc. Accreditation. Seller and Buyer must notify DNV Healthcare, Inc.
regarding the transaction no later than 30 days prior to the Effective Date.
12. North Carolina Hospital Licenses. Seller must provide notice of the transaction to the North
Carolina Department of Health and Human Services no later than 30 days prior to the Effective
Date of the Transaction.
13. North Carolina Controlled Substance Registration Certificate. Buyer must submit a new
application to the North Carolina Department of Health and Human Services no later than 60
days prior to the Effective Date of the Transaction.
14. Federal Controlled Substance Registration Certificate. Buyer must submit a new application
to the U.S. Department of Justice Drug Enforcement Administration as soon as practicable prior
to the Effective Date of the Transaction.
15. Pharmacy Permit, Buyer, as applicant, must submit a Transfer of Ownership Application to the
North Carolina Board of Pharmacy no later than six weeks prior to the Effective Date of the
Transaction.
16. College of American Pathologists Accreditation. Seller must provide verbal notice of
transaction to College of American Pathologists no later than 30 days prior to the transaction and
update organization's online profile through the College of American Pathologists on the
Effective Date.
17, North Carolina Attorney General. Notice to the North Carolina Attorney General 30 days
prior to closing pursuant to N.C. Gen. Stat. 55A -12-02(g).
PART II
1. See Attachment 2.5(b).
2. See Schedule 6.4.
SCHEDULE 5.20(b)
Initial Trustees of the Local Board
10 Existing eligible NHRMC BOT members
— Rhonda Amoroso
— Barb Biehner
— Dana Cook
— Brian Eckel
— Jerome Fennel
— Mitch Lamm
-- Tony McGhee
— John Pace
— Howard Rockness
— Jason Thompson
• 3 providers on medical staffs of hospitals
— Dr. Neal Beard
Dr. Heather Davis
Dr. Michael Jaskolka
• 1 CHA representative — Dr. Bill Smith
• 1 UNC representative appointed by UNC CEO or Dean School of Medicine - TBD
• 2 Regional representatives (one each from Pender and Brunswick Counties) — David
Williams (Pender) and Thomas Bellamy (Brunswick)
Final
EXHIBIT A
ESTIMATED CLOSING STATEMENT
Pursuant to Section 1.1(b) of that certain Asset Purchase Agreement (the "Agreement') to be
entered into by and among New Hanover County, North Carolina ("County"), New Hanover
Regional Medical Center, a North Carolina nonprofit corporation, on behalf of itself and its
Subsidiaries and Affiliates ("NHRMC" and, together with County, the "Sellers"), on the one
hand, and Novant Health New Hanover Regional Medical Center, LLC, a North Carolina limited
liability company ("Buyer"), and, for the limited purposes set forth therein, Novant Health, Inc.,
a North Carolina nonprofit corporation, on the other hand, Sellers deliver to Buyer this statement
of the (i) Estimated Closing Liabilities Amount, (ii) Estimated Seller Transaction Expenses
Amount, (iii) Estimated Indebtedness Amount, (iv) Estimated Closing Net Working Capital,
resulting calculations of the Estimated Closing Net Working Capital Adjustment and the
Estimated Purchase Price and (vi) Estimated Cash Amount. Capitalized terms used, but not
defined, herein shall have the meanings given to them in the Agreement.
Estimated Closing Liabilities Amount $
Estimated Seller Transaction Expenses Amount $
Estimated Indebtedness Amount $
Estimated Closing Net Working Capital $
Estimated Closing Net Working Capital Adjustment $
Estimated Purchase Price $
Estimated Cash Amount $
SELLERS:
NEW HANOVER REGIONAL MEDICAL
CENTER
By:_
Name:
Title:
NEW HANOVER COUNTY
By:
Name:
Title:
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this ^ )isentered into and effective this day of
______._____,
by and among Quvank Health New Hanover Regional Medical Center, LLC, a NorthCano|ina limited liability company ("5.g�er^). New Hanover Regional Medical Center, m North Carolina
nonprofit corporation ("INHflIVIC"). New Hanover Coun<y, North Carolina ("Count / and, together with
NHRyWC,the "Sellers "), and Truist Bank, a North Carolina banking corporation, as escrow agent ("Escrow
Agent"). Sellers and Buyer are collectively referred to as the "Parties" and individually, as a "Party",
WHEREAS, pursuant hmthat certain Asset Purchase Agreement, dated October [-], 2020 (the "Purchase
AgDreeIe[8^), by and among Buyer, Sellers and, for the limited purposes set forth therein, Nuvan¢ Health,
Inc,, a North Carolina nonprofit corporation, vvhanaby Buyer is acquiring substantially all of the eouats
used in the Healthcare Businesses (as defined therein) operated by Sellers, Buyer is required to deposit
the Escrow Fund (as defined below) with the Escrow Agent;
WHEREAS, the Parties desire for the Escrow Agent toopen two accounts, the ^
Account" and the "General (the AdmmUnerd Escrow Account and the General Escrow
Account are collectively referred to as the "Escrow > into which Buyer will deposit funds tw be
held, disbursed and invested by the Escrow Agent in accordanoe with this Escrow Agreement.- and
WHEREAS, the Parties acknowledge that the Escrow Agent is not a party to, and has no duties or
obligations under. the Purchase Agreement, that all references in this Escrow Agreement iuthe Purchase
Agreement are for convenience only, and that the Escrow Agent shall have no implied duties beyond the
express duties set forth in this Escrow Agreement.
NOW, THEREFORE, in consideration of the premises herein, the Parties and the Escrow Agent agree as
Terms and Conditions
1 A. The Parties hereby appoint the Escrow Agent as their escrow agent for the purposes set forth
herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set
forth herein.
1�2 Atthe Ckm��gkaude�n�dinU�ePun�heneAQnmemo�.Buyer mhmUnamh(i)$3S.0OO.00W�he
"Adiustment Escrow to be deposited into the Adjustment Escrow Account, and (ii)
$100.000.000 (the "General and, together with the Adjustment Eounzw Fund, the
"Escrow Fund"), to be deposited into the General Escrow Account, to the Escrow Agent, using the
wire instructions he|ovv, to be held by the Escrow Agent and invested and disbursed as provided in
this Escrow Agreement.
Adjustment Escrow Account:
|m|sdBpnk
ABA:
Account Name: Escrow Services
Rehonanoo: NomantHealth Adjustment
Attention: Matt Ward
General Escrow Account:
Tr istBenk
Account: 1
Account Name: Escrow Services
Reference: NoventHealth General
Attention: Matt Ward
1.3. Within two Business Days after receipt of joint written instructions, substantially in the form of
Attachment 1 ("Joint Written ), signed by an authorized representative of each of the
Parties met forth on such Party's Certificate of Incumbency provided to the Escrow Agent pursuant
to Section 4.13, the Escrow Agent shall disburse funds as provided in such Joint Written
|na�u/tions, but'only to the extent that funds are collected and available. For purposes o/ this
/ Note to Draft: This hEscrow Services' wire clearing gcncm| ledger, Two separate escrow 000nuots will be
established tohold the funds.
Escrow Agreement, `Business bay" shall mean any day other than a Saturday, Sunday or any
other day on which the Escrow Agent located at the notice address set forth in Section 4.5 is
authorized or required by law or executive order to remain closed.
Upon receipt by Escrow Agent of a Final Order (as defined below) from Buyer or either Seller,
Escrow Agent shall (i) promptly deliver a copy of such Final Order to the other Parties and (ii) within
two Business Days after receipt of such Final Order, disburse funds in the amount and to the Party
as directed in such Final Order. Unless otherwise specified in the Final Order, Escrow Agent shall
disburse such funds from the General Escrow Account rather than the Adjustment Escrow Account.
For purposes of this Escrow Agreement, "Final Order" shall mean a final and nonappealable order
of a court of competent jurisdiction (an "Order'), which Order is delivered to Escrow Agent
accompanied by a written instruction from Buyer or Sellers given to effectuate such Order and
confirming that such Order is final, nonappealable and issued by a court of competent jurisdiction,
and Escrow Agent shall be entitled to conclusively rely upon any such confirmation and instruction
and shall have no responsibility to review the Order to which such confirmation and instruction
refers.
Provisions as to Escrow Agent
2.1. This Escrow Agreement expressly and exclusively sets forth the duties of the Escrow Agent
with respect to any and all matters pertinent hereto, which duties shall be deemed purely ministerial
in nature, and no implied duties or obligations shall be read into this Escrow Agreement against the
Escrow Agent. The Escrow Agent shall in no event be deemed to be a fiduciary to any Party or any
other person or entity under this Escrow Agreement. The permissive rights of the Escrow Agent to
do things enumerated in this Escrow Agreement shall not be construed as duties. In performing its
duties under this Escrow Agreement, or upon the claimed failure to perform its duties, the Escrow
Agent shall not be liable for any damages, losses or expenses other than damages, losses or
expenses which have been finally adjudicated by a court of competent jurisdiction to have directly
resulted from the Escrow Agent's willful misconduct, bad faith, fraud, material breach of this Escrow
Agreement or gross negligence. In no event shall the Escrow Agent be liable for incidental,
indirect, special, consequential or punitive damages of any kind whatsoever (including but not
limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action. The Escrow Agent shall not be responsible or liable
for the failure of any Party to take any action in accordance with this Escrow Agreement. Any wire
transfers of funds made by the Escrow Agent pursuant to this Escrow Agreement will be made
subject to and in accordance with the Escrow Agent's usual and ordinary wire transfer procedures
in effect from time to time. The Escrow Agent shall have no liability with respect to the transfer or
distribution of any funds affected by the Escrow Agent pursuant to wiring or transfer instructions
provided to the Escrow Agent in accordance with the provisions of this Escrow Agreement. The
Escrow Agent shall not be obligated to take any legal action or to commence any proceedings in
connection with this Escrow Agreement or any property held hereunder or to appear in, prosecute
or defend in any such legal action or proceedings,
2.2. The Parties acknowledge and agree that the Escrow Agent acts hereunder as a depository
only, and is not responsible or liable in any manner whatsoever for the sufficiency, correctness,
genuineness or validity of the subject matter of this Escrow Agreement or any part thereof, or of
any person executing or depositing such subject matter. No provision of this Escrow Agreement
shall require the Escrow Agent to risk or advance its own funds or otherwise incur any financial
liability or potential financial liability in the performance of its duties or the exercise of its rights
under this Escrow Agreement.
2.3. This Escrow Agreement constitutes the entire agreement between the Escrow Agent and the
Parties in connection with the subject matter of this Escrow Agreement, and no other agreement
entered into between the Parties, or any of them, including, without limitation, the Purchase
Agreement, shall be considered as adopted or binding, in whole or in part, upon the Escrow Agent
notwithstanding that any such other agreement may be deposited with the Escrow Agent or the
Escrow Agent may have knowledge thereof.
2.4. The Escrow Agent shall in no way be responsible for, nor shall it be its duty to notify any
Party or any other person or entity interested in this Escrow Agreement of, any payment required or
2
Truist Escrow Agreement Final Investment Form 3.2020
maturity occurring under this Escrow Agreement mrunder the terms of any instrument deposited
herewith unless such notice is explicitly provided for in this Escrow Agreement.
2.5. The Escrow Agent mhoK be protected in acting upon any written instruction, nctioe, requeot,
waiver, conaent, certifica$a, neoaipt, muthohzation, power of attorney or other paper or document
that the Escrow Agent in good faith believes to be genuine and what i1purports to be, inc|udimg, but
not limited to, itenmm directing investment or non -investment of funda, items vmquamdnA or
authorizing release, disbursement orretainage ofthe subject matter of this Escrow Agreement and
items amending the terms of this Escrow Agreement. The Escrow Agent shall be under no duh/ or
obligation to inquire into or investigate the va|idi1y, accuracy or content of any such nodma, request,
waimar, onneen1, oertifioahe, nycmipt, euthorizmUmn, power of attorney or other paper or document.
The Escrow Agent shall have no duty or obligation to make any formulaic calculations of any kind
hereunder.
2.6. The Escrow Agent may execute any of its powers and par -form any of its duties hereunder
directly orthrough afUDabaa or agents. The Escrow Agent shall be entitled to mooh the advice of
legal counsel with respect to any matter arising under this Escrow Agreement and the Esonmvv
Agent shall have no liability and, subject to Sections 2.1, 2.8 and 4.4, shall be fully protected with
respect 1oany action taken or omitted pursuant tothe advice of such legal counsel. The Parties
ahnU be jointly and severally liable for and nhe|| promptly pay upon demand by the Escrow Agent
the reasonable and documented fees and expenses ufany such legal counsel.
2.7. In the event of any disagreement between any of the Pmrtieo, or between any of them and
any other person or entity, resulting in adverse o|mima or demands being made in connection with
the matters covered by this Escrow Agreement, or in the event that the Escrow Agent, in good haith,
is in doubt as to what action it should take hereunder, the Escrow Agent may, at its option, refuse to
comply with any claims ordemands on it, orrefuse Uztake any other action hereunder, so long as
such disagreement continues orsuch doubt exists, and in any such event, the Escrow Agent shall
not be or become liable in any way or to any Party or other person or entity for its 0m||ump or refusal
tnact, and the Escrow Agent shall boentitled tocontinue hmrefrain from acting until (i)the rights of
the Parties and all other interested persons and entities shall have been fully and finally adjudicated
by m court oYcompetent jurisdiction or (ii) all differences uho|| have been settled and all doubt
naao|vad by agreement among all of the Parties and all other interested persons and enUbau, and
the Escrow Agent shall have been notified thereof in writing signed by the Parties and all such
persons and entities. Notwithstanding the preceding, (a) the Escrow Agent may in its discretion
obey the ordor, judgrnen1, decree or levy of any court, whether with or without jurisdiction, ornfan
agency of the United States or any political subdivision thereof, or of any agency of any State of the
United States or of any pn|iUvw| subdivision of any thereof, and the Escrow Agent is hereby
authorized in its uo|m discretion to comply with and obey any such orders, judgments, docreec or
levies and (b) the Escrow Agent nhm|| comply with any direction orJoint Written |na1muUon provided
under Section L1l}.7of the Purchase Agreement. The rights of the Escrow Agent under this sub-
paragraph are cumulative of all other rights which it may have by law or otherwise.
In the event ofany disagreement or doubt, as described above, the Escrow Agent shall have the
h0ht, in addition to the rights described above and at the election of the Escrow Agent, to tender
into the neg|aby or custody of any court having jurisdiction, all funds and property held under this
Escrow Agreement, and the Escrow Agent ohm|| have the right to take such other |oge| action as
may be appropriate or neoensmry, in the oo|o discretion of the Escrow Agent. Upon such tender,
the Parties agree that the Escrow Agent shall be discharged from all further duties under this
Escrow Agreement; provided, however, that any such action of the Escrow Agent shall not deprive
the Escrow Agent of its compensation and right to reimbursement of expenses hereunder arising
prior to such action and discharge of the Escrow Agent of its duties hereunder.
2.8. The Parties jointly and sewero||y, and with respect to the County' solely to the extent
permitted under applicable |aw, agree to |ndemnify, defend and hold harmless the Escrow Agent
and each of the Escrow Agent's of8oem, dirau1ora, agents and employees (the "Indemnified
Parties ')from and against any and all |ousmu. |iobi|ides, claims mode by any Party orany other
person or enhty, domagao, reasonable and documented out-of-pocket oxpan000 and costs
(including, without Umita1ion, reasonable and documented attorneys' fees and expenses) of every
nature whatsoever (uo||wc±ive|y. ''Losses^)that any such Indemnified Party may incur and that arise
3
Tmist Escrow Agreement Final Investment Form 3.2020
directly or indirectly from this Escrow Agreement or that arise directly or indirectly by virtue of the
Escrow Agent's undertaking to serve as Escrow Agent hereunder; provided, however, that no
Indemnified Party shall be entitled to indemnity with respect to Losses that have been finally
adjudicated by a court of competent jurisdiction to have been directly caused by such Indemnified
Party's gross negligence, bad faith, fraud, material breach of this Escrow Agreement or willful
misconduct. The provisions of this section shall survive the termination of this Escrow Agreement
and any resignation or removal of the Escrow Agent.
2.9. Any entity into which the Escrow Agent may be merged or converted or with which it may be
consolidated, or any entity to which all or substantially all the escrow business of the Escrow Agent
may be transferred, shall be the Escrow Agent under this Escrow Agreement without further act.
2.10. The Escrow Agent may resign at any time from its obligations under this Escrow Agreement
by providing written notice to the Parties. Such resignation shall be effective on the date set forth in
such written notice, which shall be no earlier than thirty (30) days after such written notice has been
furnished. In such event, the Parties shall promptly appoint a successor escrow agent. In the event
no successor escrow agent has been appointed on or prior to the date such resignation is to
become effective, the Escrow Agent shall be entitled to tender into the custody of any court of
competent jurisdiction all funds and other property then held by the Escrow Agent hereunder and
the Escrow Agent shall thereupon be relieved of all further duties and obligations under this Escrow
Agreement; provided, however, that any such action of the Escrow Agent shall not deprive the
Escrow Agent of its compensation and right to reimbursement of expenses hereunder arising prior
to such action and discharge of the Escrow Agent of its duties hereunder. The Escrow Agent shall
have no responsibility for the appointment of a successor escrow agent hereunder.
2.11 The Escrow Agent and any director, officer or employee of the Escrow Agent may become
financially interested in any transaction in which any of the Parties may be interested and may
contract with and lend money to any Party and otherwise act as fully and freely as though it were
not escrow agent under this Escrow Agreement. Nothing herein shall preclude the Escrow Agent
from acting in any other capacity for any Party.
III. Compensation of Escrow Agent
3.1. The Parties jointly and severally agree to pay to the Escrow Agent compensation, and to
reimburse the Escrow Agent for costs and expenses, all in accordance with the provisions of Exhibit
B hereto, which is incorporated herein by reference and made a part hereof. The fees agreed upon
for the services rendered hereunder are intended as full compensation for the Escrow Agent's
services as contemplated by this Escrow Agreement; provided, however, that in the event that the
conditions for the disbursement of funds are not fulfilled, or the Escrow Agent renders any service
not contemplated in this Escrow Agreement, or there is any assignment of interest in the subject
matter of this Escrow Agreement or any material modification hereof, or if any dispute or
controversy arises hereunder, or the Escrow Agent is made a party to any litigation pertaining to
this Escrow Agreement or the subject matter hereof, then the Parties jointly and severally agree to
compensate the Escrow Agent for such extraordinary services and reimburse the Escrow Agent for
all costs and expenses, including reasonable attorneys' fees and expenses, occasioned by any
such event. In the event the Escrow Agent is authorized to make a distribution of funds to any Party
(or at the direction of any Party) pursuant to the terms of this Escrow Agreement, and fees or
expenses are then due and payable to the Escrow Agent pursuant to the terms of this Escrow
Agreement (including, without limitation, amounts owed under this Section 3.1 and Section 2.8) by
the Party receiving or directing such distribution, the Escrow Agent is authorized to offset and
deduct such amounts due and payable to it from such distribution. The Escrow Agent shall have,
and is hereby granted, a prior lien upon and first priority security interest in the Escrow Fund (and
the earnings and interest accrued thereon) with respect to its unpaid fees, non -reimbursed
expenses and unsatisfied indemnification rights, superior to the interests of any other persons or
entities and without judicial action to foreclose such lien and security interest, and the Escrow Agent
shall have and is hereby granted the right to set off and deduct any unpaid fees, non -reimbursed
expenses and unsatisfied indemnification rights from the Escrow Fund (and the earnings and
interest accrued thereon); provided, however, that Escrow Agent shall give not less than 10 days'
notice to the other Parties prior to exercising such right of set off. The provisions of this section shall
survive the termination of this Escrow Agreement and any resignation or removal of the Escrow
4
Truist Escrow Agreement Final Investment Form 3.2020
Agent. Notwithstanding anything to the contrary in this Section 3.1, solely as between Buyer and
Sellers, responsibility for Escrow Agent's fees and expe_nsesshall be as set forth in the Purchase
PV. Miscellaneous
41. The Escrow Agent shall make no disbursement, investment or other use of funds until and
unless it has collected funds. The Escrow Agent shall not be liable for collection items until the
proceeds of the mmmm in actual cash have been received or the Federal Roaome has given the
Escrow Agent credit for the funds.
4.2. The Escrow Agent shall invest all funds held pursuant to this Escrow Agreement in the
SunTrust Institutional Preferred Deposit Option. The investments in the SunTrust Institutional
Preferred Deposit Option are insumd, subject to the applicable rules and regulations of the Federal
Deposit Insurance Corporation (the "FDIC"), in the standard FDIC insurance amount mY$258.O8B.
including principal and accrued in0oreut, and are not secured. The SunTrust Institutional Preferred
Deposit Option is more fully described in materials which have been furnished to the Parties by the
Escrow Agent, and the Parties acknowledge receipt of such matahe|w from the Escrow Agent.
Instructions to make any other investment must be in writing and signed by each of the Parties.
The Parties recognize and agree that the Escrow Agent will not provide oupewioimn,
recommendations or advice nu|uUng to the investment of moneys held hereunder orthe purohuam,
aa|e, retention or other disposition of any invom1ment, and the Escrow Agent shall not be liable to
any Party or any other person or entity for any |ona incurred in connection with any such
investment. The Escrow Agent is hereby authorized to axaouUm purchases and sales of
investments through the facilities of its own trading or capital markets operations or those of any
affiliated entity, The Escrow Agent or any of its affiliates may receive compensation with respect to
any investment directed hereunder including without limitation charging any applicable agency fee
inconnection with each transaction. The Escrow Agent shall use its best efforts toinvest funds ona
timely basis upon receipt ofsuch funds; provided, however, that the Escrow Agent shall innoevent
be liable for compensation to any Party orother person or entity related to funds which are held un-
invested orfunds which are not invested timely. The Escrow Agent is authorized and directed tosell
or redeem any investments as it deems necessary to make any payments or distributions required
under this Escrow Agreement. Any investment earnings and income on the Escrow Fund shall
become part of the Escrow Fund and shall be disbursed in accordance with this Escrow
Agreement.
4.3 The Escrow Agent shall provide rnmn1h|y reports of transactions and holdings to the Parties
as of the end of each month, at the addresses provided by the Parties in Section 4.5
44 The Parties agree that all interest and income from the investment of the funds shall be
reported as having been earned by Sellers as of the end of each calendar year whether or not such
income was disbursed during such calendar year and to the extent required by the Internal
Revenue Service. On or before the execution and delivery of this Escrow Agreement, each of the
Parties nhm|| provide to the Escrow Agent a correot, duly oomp|eted, dated and executed current
United States Internal Revenue 8emina Form VV -9 or Form VV'8, whichever is appropriate or any
successor forms tharatw, in m form and substance satisfactory to the Escrow Agent including
appropriate supporting documentation and/or any other form, dmcument, and/or certificate required
or reasonably requested by the Escrow Agent to validate the form provided. Notwithstanding
anything to the contrary heroin provided, except for the delivery and filing of tax information
reporting forms required pursuant to the Internal Revenue Code of 1086, as amended, to be
delivered and filed with the Internal Revenue Service by the Escrow /\Qen1. as escrow agent
hereunder, the Escrow Agent shall have no duty to prepare or file any Federal or state tax report or
return with respect toany funds held pursuant 1othis Escrow Agreement orany income earned
thereon. With respect to the prepmnm1ion, delivery and filing of such required tax information
reporting forms and all mutters pertaining tnthe reporting oYearnings unfunds held under this
Escrow Agreement, the Escrow Agent xhm|| be onUdod to request and receive written instructions
from the Parties, and the Escrow Agent shall be entitled to rely conclusively and without further
inquiry on such written instructions. The Partias, jointly and mevona||y, and with respect to the
County, solely to the extent permitted under applicable law, agree to indemnify, defend and hold the
Escrow Agent harmless from and against any tax. |u&e payment, inhensat, penalty or other cost or
Truist Escrow Agreement Final investment Form 3.2020
expense that may be assessed against the Escrow Agent on or with respect to the Escrow Fund or
any earnings or interest thereon unless such tax, late payment, interest, penalty or other cost or
expense was finally adjudicated by a court of competent jurisdiction to have been directly caused
by the gross negligence, bad faith, fraud, material breach of this Escrow Agreement or willful
misconduct of the Escrow Agent. The indemnification provided in this section is in addition to the
indemnification provided to the Escrow Agent elsewhere in this Escrow Agreement and shall
survive the resignation or removal of the Escrow Agent and the termination of this Escrow
Agreement.
4.5. Any notice, request for consent, report, or any other communication required or permitted in
this Escrow Agreement shall be in writing and shall be deemed to have been given when delivered
(i) personally, (ii) by electronic mail to the e-mail address given below, and written confirmation of
receipt is obtained promptly after completion of the transmission, (iii) by overnight delivery with a
reputable national overnight delivery service or (iv) by United States mail, postage prepaid, or by
certified mail, return receipt requested and postage prepaid, in each case to the appropriate
address set forth below or at such other address as any party hereto may have furnished to the
other parties hereto in writing:
If to Escrow Agent: Truist Bank
Attention: Escrow Services
Mail Code: VA-HDO-1205
919 East Main Street, 51h Floor
Richmond, Virginia 23219
Client Manager: Matt Ward
Phone: 804-782-7182
Email: matthew.ward@SunTrust.com
If to Buyer: Novant Health New Hanover Regional Medical Center, LLC
c/o Novant Health, Inc.
2085 Frontis Plaza Blvd.
Winston-Salem, North Carolina 27103
Attention: Chief Financial Officer
Email: fmhargett@novanthealth.org
with a copy to: Novant Health, Inc.
1701 East 31d Street
Charlotte, NC 28204
Attention: Executive Vice President, Chief Administrative Officer
and Chief Legal Officer
Email: feemory@novanthealth.org
and to: McGuireWoods LLP
201 North Tryon Street
Suite 300
Attention: Chris Scheurer; Bart Walker
Email: cscheurer@mcguirewoods.com;
bwalker@mcguirewoods.com
If to NHRMC: New Hanover Regional Medical Center
2131 S. 17th Street
Wilmington, North Carolina 28401
Attention: John Gizdic, Chief Executive Officer; Lynn Gordon,
Chief Legal Officer and General Counsel
E-mail: john.gizdiic@nhrmc.org; lynn.gordon@nhrmc.org
Truist Escrow Agreement Final Investment Form 3.2020
with m copy to: HaU. Render, 0Diom. Heath &Lyman. LLP
3O15Carrington Mill Blvd.
Suite 450
Morrisville, North Carolina 275OO
Attention: Joseph PW,Kahn; Robert A. Hamill
htoCqu�� New Hanover County
230 Government Center Drive
Suite 175
Wilmington, North Carolina 28403
Attention: Chris Coudhet, County Manager; Wanda Copley,
County Attorney
Any party hereto may unilaterally designate m different address by giving notice of each change in
the manner specified above 1oeach other party hereto. Notwithstanding anything 0othe contrary
herein provided, the Escrow Agent shall not be deemed to have received any notice, request, report
orother communicationhemaunderprio/toUhe Escrow Agent's actual receipt thereof.
4.6. This Escrow Agreement is being made in and is intended to be construed according to the
|ewe of the 8(aba of North Carolina without application of any conflicts -of -law principles. Except as
permitted in Section 2.9, neither this Escrow Agreement nor any rights orobligations hereunder
may be assigned by any party hereto without the express written consent of each of the other
parties hereto. This Escrow Agreement shall inure to and be binding upon the Parties and the
Escrow Agent and their respective successors, heirs and permitted assigns.
4.7. The banmm of this Escrow Agreement may he m|ten*d, amended, modified or revoked only by
mninstrument inwriting signed byall the Parties and the Escrow Agent.
4.8. This Escrow Agreement is for the sole benefit of the Indemnified Parties, the Parties and the
Escrow Agent, and their respective successors and permitted assigns, and nothing herein, express
or implied, is intended to or shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Escrow Agreement.
4.9. No party to this Escrow Agreement shall be liable toany other party hereto for losses due
to, or if it is unable to perform its obligations under the terms of this Escrow Agreement because of,
acts of Qod. Mre, war, terrorism, #oods, strikes, electrical outagea, equipment or transmission
failure, orother causes reasonably beyond its control; provided, however, that such Party shall use
commercially reasonable efforts to mitigate the impact of such circumstances and shall continue to
use commercially reasonable efforts to fully perform its obligations under this Agreement.
4.10 This Escrow Agreement shall terminate on the first to occur of (i) the date on which all of the
funds and property held by the Escrow Agent under this Escrow Agreement have been disbursed or
(|i) .2U25zatwhich time the Escrow Agent iaauthorized and directed todisburse
all of the remaining funds and property held hereunder in accordance with the Join( Written
Instructions of the Parties. Upon the termination of this Escrow Agreement and the disbursement of
all of the funds and property held hereunder, this Escrow Agreement shall be of no further effect
except that the provisions oySections 2.8.3j.4A[.4.5iand 4.6shall survive such termination.
4.11 All titles and headings in this Escrow Agreement are intended solely for convenience of
/afemynoa and shall in no way limit or otherwise affect the interpretation of any of the provisions
hereof.
zNoIte tolDraft: 7mbe40tuomthstoUnwingthe Closing.
4.12. This Escrow Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the same instrument.
4.13. Contemporaneously with the execution and delivery of this Escrow Agreement and, if
necessary, from time to time thereafter, each of the Parties shall execute and deliver to the Escrow
Agent a Certificate of Incumbency substantially in the form of Exhibit A-1 and AA®2 hereto, as
applicable (a "Certificate of Incumbency"), for the purpose of establishing the identity and authority
of persons entitled to issue notices, instructions or directions to the Escrow Agent on behalf of each
such Party. Until such time as the Escrow Agent shall receive an amended Certificate of
Incumbency replacing any Certificate of Incumbency theretofore delivered to the Escrow Agent, the
Escrow Agent shall be fully protected in relying, without further inquiry, on the most recent
Certificate of Incumbency furnished to the Escrow Agent. Whenever this Escrow Agreement
provides for joint written notices, joint written instructions or other joint actions to be delivered to the
Escrow Agent, the Escrow Agent shall be fully protected in relying, without further inquiry, on any
joint written notice, instructions or action executed by persons named in such Certificate of
Incumbency.
4.14 This Agreement is the result of arms -length negotiations and shall not be construed for or
against any Party by virtue of draftsmanship.
[Signature page follows.]
Truist Escrow Agreement Final Investment Form 3.2020
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the
A ate first above written,
ESCROW AGENT:
1110=; M.,
By:
Name:
Title:
Signariep-e Page to Escimv Agreement
BUYER:
Novant Health New Hanover Regional Medical Center, LLC
By:
Name:
Title:
Signature Page to Escrosv Agreement
SELLERS:
New Hanover Regional Medical Center
New Hanover County
a
Signaturc Page, to Escrow Agreement
EXHIBIT A-1
Certificate of Incumbency
(List of Authorized Representatives)
Client Name: Novant Health New Hanover Regional Medical Center, LLC
As an Authorized Officer of the above referenced entity, I hereby certify that each person listed below is
an authorized signor for such entity, and that the title and signature appearing beside each name is true
and correct.
IN WITNESS WHEREOF, this certificate has been executed by a duly authorized officer on:
Date _
By-
Name:
Its:
-A-1-
EXHIBIT A-2
Certificate of Incumbency
(List of Authorized Representatives)
Client Name: New Hanover Regional Medical Center and New Hanover County
As an Authorized Officer of the above referenced entity, I hereby certify that each person listed below is
an authorized signor for such entity, and that the title and signature appearing beside each name is true
and correct.
IN WITNESS WHEREOF, this certificate has been executed by a duly authorized officer on:
IMM
By: —
Name:
Its:
EXHIBIT B
Truist Bank, as Escrow Agent
Schedule of Fees & Expenses
Acceptance/Legal Review Fee: $1,000.00 — one time only payable at the time of signing the
Escrow Agreement
(Fee is waived if no legal review is needed)
The Legal Review Fee includes review of all related documents and accepting the appointment of Escrow
Agent on behalf of Truist Bank. The fee also includes setting up the required account(s) and accounting
records, document filing, and coordinating the receipt of funds/assets for deposit to the Escrow Account.
This is a one-time fee payable upon execution of the Escrow Agreement. As soon as Truist Bank's
attorney begins to review the Escrow Agreement, the legal review fee is subject to payment regardless if
the Parties decide to appoint a different escrow agent or a decision is made that the Escrow Agreement is
not needed.
Administration Fee: $2,500 — payable at the time of signing the Escrow Agreement
and on the anniversary date thereafter, if applicable
The Administration Fee includes providing routine and standard services of an Escrow Agent. The fee
includes administering the escrow account, performing investment transactions, processing cash
transactions (including wires and check processing), disbursing funds in accordance with the Agreement
(note any pricing considerations below), and providing trust account statements to the Parties for a twelve
(12) month period. If the account remains open beyond the twelve (12) month term, the Parties will be
invoiced each year on the anniversary date of the execution of the Escrow Agreement. Extraordinary
expenses, including legal counsel fees, will be billed as out-of-pocket. The Administration Fee is due
upon execution of the Escrow Agreement. The fees shall be deemed earned in full upon receipt by the
Escrow Agent, and no portion shall be refundable for any reason, including without limitation, termination
of the agreement.
Out -of -Pocket Expenses: At Cost
Out-of-pocket expenses such as, but not limited to, postage, courier, overnight mail, wire transfer, travel,
legal (out-of-pocket to counsel) or accounting, will be billed at cost.
Note: This fee schedule is based on the assumption that the escrowed funds will be
invested in one of the SunTrust Deposit Options. If any other investment options are
chosen, this fee schedule will become subject to change.
SM
ATTACH80ENT1
Form of Joint Written Instruction
TmistBmrk
Attention: Escrow Services
Mail Code: VA-HD()42O5
910 East Main Street, 5m Floor
Richmond, Virginia 23219
Client Manager:
Phone: 804 -782 -
Email: __@SunTrust.com
RE: Escrow Agreement entered into and effective as wf__' 2020. by and among
Novurd Health New Hanover Regional PNadiou| Center LLC, a Worth Carolina limited liability
company ("Buyer"), New Hanover Regional Medical Center. a North Carolina nonprofit
corporation (''NfFUMC^). New Hanover County. North Carolina ("Count ^ and. together with
WHRK4C.the "Selhers'). and TruistBank, aNorth Carolina banking corporation, amescrow agent
(the "Escrow Aqgnt").
Pursuant to Section 1.3 of the Escrow Agreement, Buyer and Sellers hereby instruct Escrow
Agent Lodisburse the amount of$[ -] from the [Adjuahnent]/kGeneraUEscrow Account to [Buyer)
[Sellers], as provided below:
Bank Name:
Bank Address. -
ABA No.:
ddreoo�ABANo.:
Account Name:
Account No.:
SELLERS:
NEW HANOVERREGIONAL MEDICAL CENTER
By:
Name
/me:
NEW HANOVERCOUNTY
By:
Nome:
NO\ANTHEALTH NEW HANOVER
REGIONAL MEDICAL CENTER. LLC
Final
EXHIBIT C
Use of Net Proceeds
The Purchase Price, the Cash Amount, any interest accruing on Sellers' portion of th*
Adjustment Escrow Amount or General Escrow Amount, any portion of the Adjustment Escrow
Amount paid to Sellers, and any remaining portion of the General Escrow Amount paid to Sellers
followin the expiration of the Escrow Period (collectively, the "Net Proceeds") will be used,
distributed, directed, invested, or allocated in accordance with the terms set forth in this Exhibit C.
1. Initial Allocations. Out of the aggregate Net Proceeds, the Sellers shall make initial
allocations at Closing as follows (the "Initial Allocations"):
(a) General Escrow and -Adjustment Escrow Amounts. $ 100 Million will be
deposited into the General Escrow Account for a 48 -month period to address certain trailing
liabilities associated with pre -Closing operations of the Healthcare Businesses. On the second
anniversary of the Closing, an amount equal to (i) $75,000,000 minus (ii) all amounts released
from the General Escrow Account before such time, minus (iii) an amount equal to the amount in
controversy with respect to any then -pending claims shall be disbursed to Sellers. Upon the fourth
anniversary of the Closing, all amounts remaining in the General Escrow Account shall be
disbursed to Sellers, provided however- that- the General Escrow Account
an amount equal to the amount in controversy with respect to any then -pending claims. Any
portion of the General Escrow Amount accruing to Sellers shall be allocated to the Endowment
and NHRMC Foundation, with the Endowment and NHRMC Foundation each receiving 50% of
such amount. In addition, in conjunction with the reconciliation of the Net Working Capital
adjustments, an amount equal to $35 Million will be placed into the Adjustment Escrow Amount,
to be used to address an a-
ment owed b,,,,, the Sellers. if
reconciliation adustments, AW�A amount remaining from the
distributed to the Endowment.
(b) NHRMC Transition Stabilization Escrow. Funds in the aggregate estimated amoum
of approximately $200 Million shall be deposited into an escrow account or reserve fund
established and controlled by the successor to NHRMC to address transition stabilization
initiatives associated with post -Closing matters, including, but not limited to:
i. A Team Investment and Resiliency Fund providing funds necessary to (1)
administer NHRMC's existing pension plan following its transfer to the County, (2) provide for
certain payments to be made, over time, to affected NHRMC employees to mitigate adverse
impacts associated with such employees' transition from NHR-MCs existing pension plan to
Buyer's retirement benefits plan, (3) provide stabilization payments for NHRMC employees to
facilitate the transition of the Business from Sellers to Buyer, and (4) address the staff and provider
resiliency funding needs of the organization,
Payments for tail insurance associated with terminated Seller policies.
W
iii. Funding for certain support administrative services necessary to facilitate
the wind -down of NHRMC, as well as other miscellaneous costs and expenses associated with the
transition and wind -down (e.g., trailing cost report matters, filings, etc.).
(c) County Revenue Stabilization Fund. Funds in the aggregate amount of $300
Million shall be deposited into a reserve fund or escrow account established and controlled by the
County for revenue stabilization purposes. Such funds may be allocated toward County revenue
stabilization initiatives upon the affirmative vote of the County Commissioners. Revenue
stabilization initiatives may include:
Retirement of voter and non-voter approved debt;
ii. Establish pay-as-you-go financing for certain capital assets and projects;
iii. Reserve for unexpected emergency spending needs (e.g. natural disasters
and pandemics);
iv. Reserve funds to address budget shortfalls during economic downturns,
and
V. Minimization of tax and fee increases in future years.
(d) Distributions from the Revenue Stabilization Fund shall be made from interest
earned on such funds, and any draw -downs from the principal of the Revenue
Stabilization Fund shall only be for specifically defined purposes and shall be made
only upon the vote of at least four out of five County Commissioners.
2. Mental and Behavioral Health and Substance Use Disorder Treatment Fund. Funds in the
amount of $50 Million shall be earmarked and allocated to the following mental and behavioral
health and substance use disorder treatment initiatives:
(a) Capital funding for long-term, residential substance abuse treatment programs;
(b) Sustained grant funding commitments to support evidence -based programs (e.g.,
Tides, Inc.); and
(c) Expanding access to mental health services independent of state assistance.
3. Endowment Allocations.
(a) Fund Assets. Following the Initial Allocations, the Sellers shall grant the entirety
of the remaining Net Proceeds, which remaining amount is currently estimated to be approximately
$1.25 Billion (subject to adjustments) ("Fund Assets"), to the Endowment.
(b) Purpose. The Endowment shall manage the assets and consider as such sacred and
protected for the community in perpetuity. The Endowment will provide financial support to
C-2
benefit the residents of New Hanover County and region ("Defined Beneficiaries"). The
Endowment will establish an endowment (as defined below), and the Endowment shall be
designated to provide financial support in the following areas in furtherance of the mission and
initiatives of the County: (1) public primary, secondary, and post -secondary education, (2) health
and social equity, (3) community development, and (4) community safety. Except for those
monies resuired for the administration of the Endowment, all other Fun
to the Endowment.
(c) Endowment Board of Directors. The Endowment will be governed by an 11 -
member
I -member Board of Directors ("Endowment Board"). The County Commissioners shall appoint
five of the directors ("Endowment Directors") and the Local Board shall appoint six of the
Endowment Directors. All Endowment Directors shall be subject to satisfaction of applicable
governance best practices, core competencies, and diversity considerations. No Endowment
Director may simultaneously hold an elected office. Routine actions of the Endowment Board
shall require the vote of a majority of the Endowment Board. Amendments to Article IV of the
Endowment's bylaws shall each require supen-najority approval of the Endowment Board, which
shall be defined as not less than 67% of the Endowment Board ("Supermajority Vote"). The
Endowment shall not assign, transfer or otherwise convey any Endowment assets except as defined
herein.
(d) Administration and Fund Management. The daily operations of the Endowment
shall be overseen by the Endowment Board. The Fund Assets shall be invested under the
supervision and management of an experienced institutional investment manager ("Investment
Manager") chosen by the Endowment Board, which Investment Manager role may, but does not
have to be, contracted through a third -party firm.
(e) Endowment.
0) In conjunction with its formation, the Endowment will establish a single
endowment consisting initially of the Fund Assets. In addition to the Fund Assets contributed by
the Sellers, the Endowment may also accept donations. The Endowment will make annual Unitrust
payments not to exceed 4% of the fair market value of the Endowment, based upon a rolling five
year average of the fair market value as of December 31 for the prior five (5) years, or until 2025,
for as many prior years as the Endowment has existed, Distributions may be paid quarterly or
monthly, as the Endowment Board may decide. Fund Distributions shall only be paid pursuant to
the strictly prescribed purposes and rules to be a part of the Endowment charter and governing
documents ("Fund Distributions").
(ii) Fund Distributions shall take the form of grants and other financial supporl
for projects and initiatives of non-profit, governmental, or community organizations that ar*
specifically focused on, and shall use such funds exclusively in furtherance of, the explicil
purposes of the Endowment. For the avoidance of doubt, 100% of all Fund Distributions shall bg
used exclusively for purposes benefiting the Defined Beneficiaries. The specific purposes of the
Endowment shall be to make available Fund Distributions to support community wellbeing an'll
other public purposes that are consistent with the then -current County Strategic Plan and for the
benefit of the Defined Beneficiaries. Notwithstanding the broad purposes described in this Section
2 e , in the event a Fund Distribution is made in furtherance of a purpose typically funded by a
governmental agency (e.g., EMS), it is intended that such Fund Distribution shall be made only to
supplement such governmental agency funding and that such Fund Distribution shall not be used
to replace or substitute for governmental funding of such projects, and this limitation shall be
incorporated into the Endowment's governing documents. By way of further illustration, and
subject to adjustment based on the then -current County Strategic Plan, the initial Endowment shall
support and promote the following focus areas:
A. Public Primary, Secondary and Post -Secondary Education. The
following are illustrations of possible initiatives:
(1) High quality universal pre -kindergarten with wrap-around
services;
(2) Comprehensive, no -cost broadband connectively county-
wide;
(3) Comprehensive access to modern technology for all
learners;
(4) Local Teacher Fellows program for traditional and charter
school graduates committed to returning to local public
schools;
(5) Access to scholarships for post -secondary education
attainment; and
(6) School facilities designed for mid -21st Century education
delivery.
B. Health and Social Equity. The following are illustrations of possible
initiatives:
(1) Eradicate food deserts across the county;
(2) Expand access to high quality, fair cost physical and mental
health clinics for county residents;
(3) Funding support to eliminate disparities in health outcomes
focused initially on diabetes and obesity;
(4) On -demand, cost effective transit system for dependent and
choice riders; and
(5) Funding for new senior resource centers and other support
for senior citizens based on the county's strategic master
plan for aging adults.
C. Community Development, The following are illustrations of possible
initiatives.,
(1) Workforce housing trust fund;
(2) Small business micro -loan program-,
(3) Minority and Women Owned Business support programs;
and
(4) Open space and public water access preservation.
D. Community Safety The following are illustrations of possible
initiatives:
(1) Next generation 911 services developed and deployed;
(3) Support and resources for community -led restorative justice
programs;
(4) Modem development and training of law enforcement, to
include cultural competency and implicit bias; and
(5) Comprehensive flood, storm surge and wind mitigation
investments,
HNMEWWMM��
(a) In the event of dissolution of the Endowment, all net assets of the Endowment sh
accrue solel�L�public, non-profit chari ,, exemvt from taxes Fursuant to IRS Co
(b) The Endowment shall, twice a year, publicly provide the County with repo
summarizing the Endowment's activities and grants.
(c) With the exception of the appointment authority for the Endowment Directors a I
the limited approval requirements explicitly set forth herein, the Local Board shall not, nor sh
any other third -party, have any reserved powers or governance rights or b,.,
1
eowment. For clarity, notwithstanding the Local Board's appointment authority
Endowment Directors, the Endowment shall not be considered an affiliate, unit or division of t
Buger or Novant HeallL and neither the Buner Novant Health. nor an -*iL
pen-nitted to consolidate the Endowment.
(d) The Fund Assets held in the Endowment shall never be used as collateral nor
pledged as any form of security for any type of loan or guarantee.
M
(c) All Fund Distributions must be made pursuant to and accompanied by a plan of
accountability to ensure that Fund Distribution is used in full for the designated purposes (the
"Plan of Accountability" or "POA"). The POA shall be accepted, agreed to and signed by the
individual at the recipient organization who will be responsible for the use of the funds and for
accounting for the funds. The POA shall require that the individual provide an acceptable and
complete accounting to the Endowment, submitted and signed under penalty of perjury. Further,
the misuse of the funds by any person, or the failure of the responsible person to provide a complete
accounting within six months after the end of the year in which the Fund Distribution occurred,
may result in both civil and criminal penalties.
(f) The officers and Endowment Directors of the Endowment shall be subject to a
Conflicts of Interest Policy and each such person will be required to sign such Conflicts of Interest
Policy annually to confirm his or her understanding and acceptance of the Conflicts of Interest
Policy's requirements.
(g) The Endowment's Articles of Incorporation shall provide for the broadest
indemnification and reimbursement provisions for the actions of the Officers and Directors made
in good faith and allowed under NC law.
C-6
EXHIBIT D
New Hanover Academic and Clinical Affiliation Agreement Term Sheet
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A
New Hanover Rulon Exc—lusivity Provisions
Restrictions on Educational Activities
ITE arlITS MT I V atreel-VO M S erm ee 737-1-Tin'l—FIVO—n—over Academic FFTUMMMT;�
Affiliation Agreement intended to replace the Term Sheet, as applicable) and for a period of one year
following the termination or expiration of the Term Sheet or the New Hanover Academic and Clinical
Affiliation Agreement (whichever occurs later), to exclusively collaborate with the one another on new
medical education partnerships to train medical students, residents, sub -specialty fellowships and /or allied
health trainees C'Trainees") and/or establish branch campuses within New Hanover, Brunswick, Columbus,
Bladen, and Pender Counties (the "Service Area'O with the following exceptions:
@ in the event that the Term Sheet terminates because the contingencies in Term I are not mer, the
exclusivity commitment would terminate immediately;
(i) In the event the Term Sheet is terminated prior to the execution of the New Hanover Academic and
Clinical Affiliation Agreement, or the New Hanover Academic and Clinical Affiliation Agreement is
terminated, the Parties may make arrangements to develop alternative sites within the Service Area
to minimize the disruption to the trainees at that location or those who entered training with the
expectation of the availability of that (those) training site(s);
(iii) Sites may be excepted with the mutual consent of the Parties;
v) Each Party acknowledges that the other Party cannot contractually or otherwise obligate managed or
minority-owned joint venture affiliates to abide by the terms of these restrictions butwill use
commercially reasonable efforts to encourage these entities to engage in discussions with the other
Party hereto regarding any new medical education partnerships proposed within the Restricted Area
as partnership opportunities arise;
(y) Nothing in this Term Sheet will be construed to place limitations on the statewide operations of
AHEC; and,
(vi) Recognizing the public nature of UNC health and UNC SOM, nothing in this agreement will
contravene or otherwise thwart legislated requirements of the Parties.
Restrictions on Clinical Activities
In order to improve the quality and availability of specialized care in Southeastern North Carolina, the Parties
agree to exclusively collaborate with one another on Pediatrics within the Service Area,
UNC He-altk 2xi UkTC S= ?,Il Yowt recNift, employ or tl9ce Peii9itric specialists iFI tke $ervice Are�
without Novant's express Consent.
Nov -ant will not recruit; employ or otherwise collaborate with -any other provider to recruit or employ
care without UNC I lealth's express consent.
The Parties recognize the following exceptions:
(i) The Parties may work with existing groups within the Service Area to improve the quality and
availability of specialized care within the Service Area;
(ii) Nothing in this T= Sheet will be construed to place Lhnitations on the statewide operations of
AAEC;
C'on fide rifial., F'.xen,ilA fr-oria disiclosuirie
Final
EXHIBIT G
BILL OF SALE
This Bill of Sale (this "Bill of Sale") is made as of [e], 202[e] by and between [New
Hanover County, North Carolina] ("Assignor") and Novant Health New Hanover Regional
Medical Center, LLC, a North Carolina limited liability company ("Assignee"). Capitalized
terms used but not otherwise defined herein shall have the respective meanings ascribed to such
terms in the Purchase Agreement (as defined herein).
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of [0], 202[a],
by and among Assignor, Assignee, [New Hanover Regional Medical Center, a North Carolina
nonprofit corporation (on behalf of itself and certain of its subsidiaries and affiliates identified
therein)] and, for the limited purposes set forth therein, Novant Health, Inc., a North Carolina
nonprofit corporation (the "Purchase Agreement"), Assignor has agreed to transfer to Assignee,
and Assignee has agreed to purchase all right, title and interest of Assignor in and to certain
assets of Assignor relating to or used or held for use in connection with the Healthcare
Businesses; and
V,rHEREAS, this Bill of Sale is being delivered in connection with, and as contemplated
by, the Purchase Agreement to further effect the Transactions.
NOW, THEREFORE, in consideration of the mutual covenants set forth in the Purchase
Agreement, and such further mutual covenants contained herein, the receipt and sufficiency of
which are hereby acknowledged, Assignor and Assignee agree as follows:
I . Transfer of Assets. Subject to the terms and conditions of the Purchase
Agreement, Assignor hereby irrevocably sells, assigns, conveys and transfers to Assignee,
effective as of the Effective Time, all right, title and interest of Assignor in, to and under the
Assets, on the terms set forth in the Purchase Agreement.
2. Further Actions. From time to time, as and when requested by Assignee,
Assignee hereby covenants and agrees that it will execute and deliver, or cause to be executed
and delivered, any and all further instruments, transfers, assignments, conveyances, assurances
and filings and will take, or cause to be taken, all such further actions as Assignee may deem
reasonably necessary or desirable to accomplish the purposes and benefits of this Bill of Sale.
3. Successors and Assians. This Bill of Sale shall be binding upon, and enforceable
against, the parties and all of their permitted assignees and successors in title or interest.
4. Terms of the Purchase Agreement ', The terms of the Purchase Agreement will not
be superseded but will remain in full force and effect to the full extent provided in the Purchase
Agreement. In the event of any inconsistency between the terms of the Purchase Agreement and
the terms of this Bill of Sale, the terms of the Purchase Agreement will govern.
5. Governing Law; Venue. This Bill of Sale shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of North Carolina, without
giving effect to the conflict -of -laws rules thereof. This Bill of Sale shall be subject to the venue
and dispute resolution terms set forth in Section 12.3 of the Purchase Agreement.
f. Construction. This Bill of Sale is the result of arms -length negotiations and shall
not be construed for or against any party by virtue of draftsmanship.
7. Counterparts. This Bill of Sale may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument. Copies (including delivery by facsimile, electronic mail (PDF) or other electronic
transmission or original) of signatures to this Bill of Sale shall be deemed to be originals and
shall be binding to the same extent as original signatures.
[Signature Page Follows.]
9
ASSIGNOR:
[NEW HANOVER COUNTY]
ASSIGNEE:
NOVANT HEALTH NEW HANOVER
REGIONAL MEDICAL CENTER, LLC
Signaltere Page to Bill of Sale
Final
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Agreement") is made as of [e],
bg and between 'New Hanover Coun**-NL*ith,*
New Hanover Regional Medical Center, LLC, a North Carolina limited liability company
("Assignee"). Capitalized terms used but not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Purchase Agreement (as defined herein).
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of [e], 202[o],
by and among Assignor, Assignee, [New Hanover Regional Medical Center, a North Carolina
nonprofit corporation (on behalf of itself and certain of its subsidiaries and affiliates as identified
therein)] and, for the limited purposes set forth therein, Novant Health, Inc., a North Carolina
nonl%rofit corporation fthe "Purchase Agreement") Assignor has aV-4oa'VVW �.-
and Assignee has agreed to purchase all right, title and interest of Assignor in and to certain
assets of Assignor relating to or used or held for use in connection with the Healthcare
Businesses; and
'ITAER-EAS, this Agreement is being delivered in connection with, and as contemplated
by, the Purchase Agreement to further effect the Transactions.
NOW, THEREFORE, in consideration of the rnutual covenants set forth in the Purchase
Agreement, and such further mutual covenants contained herein, the receipt and sufficiency of
which are hereby acknowledged, Assignor and Assignee agree as follows:
1. Assignment. Subject to the terms and conditions of the Purchase Agreement,
Assignor hereby irrevocably sells, assigns, conveys and transfers to Assignee, effective as of the
Effective Time, all right, title and interest of Assignor in, to and Linder the Assets, on the terms
set forth in the Purchase Agreement.
2. Assumption. As of the Effective Time, Assignee hereby accepts such sale,
assignment, conveyance and transfer of the Assets and assumes all of the Assumed Obligations
and agrees to pay, perform and discharge, as and when due, all of the Assumed Obligations,
3. Further Actions. From time to time, as and when requested by Assignee,
Assignee hereby covenants and agrees that it will execute and deliver, or cause to be executed
and delivered, any and all further instruments, transfers, assignments, conveyances, assurances
and filings and will take, or cause to be taken, all such further actions as Assignee may deem
reasonably necessary or desirable to accomplish the purposes and benefits of this Agreement.
4. Successors and Assigns. This Agreement shall be binding upon, and enforceable
against, the parties and all of their permitted assignees and successors in title or interest.
5. Terms of the Purchpse Affeemen!. The terms of the Purchase Agreement will not
be superseded but will remain in full force and effect to the full extent provided in the Purchase
Agreement. In the event of any inconsistency between the terms of the Purchase Agreement and
the terms of this Agreement, the terms of the Purchase Agreement will govern.
6. Governing taw, Venue. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of North Carolina, without
giving effect to the conflict -of -laws rules thereof. This Agreement shall be subject to the venue
and dispute resolution terms set forth in Section 12.3 of the Purchase Agreement.
i. Construction. This Agreement is the result of arms -length negotiations and shall
not be construed for or against any party by virtue of draftsmanship.
8. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument. Copies (including delivery by facsimile, electronic mail (PDF) or other electronic
transmission or original) of signatures to this Agreement shall be deemed to be originals and
shall be binding to the same extent as original signatures.
[Signature Page Follows.]
ASSIGNOR:
[NEW HANOVER COUNTY]
ASSIGNEE:
NOVANT HEALTH NEW HANOVER
REGIONAL MEDICAL CENTER, LLC
m
Signature Page to Assignment and Assumption Agreement
Final
EXHIBIT 1-1
ASSIGNMENT AND ASSUMPTION OF LEASE
AND CONSENT OF LANDLORD
([Property Address])
THIS ASSIGNMENT AND ASSUMPTION OF LEASE AND CONSENT OF LANDLORD
(this "Assignment") is made as of —_-, 2020 (the "Execution Date") by and among
(i) [ ] (11 11), 00 L ---------- J C'A_ssjg_nQg"), and (iii)[ J
(-Landlord'% with reference to the following facts:
A. Landlord [(as successor in interest to and Assignor [(as successor in interest to
are parties to that certain [Lease Agreement] dated as of —_[, as amended
by ([collectively,]the "Lease") with respect to certain prernises located at
(such premises shall be referred to herein as the "Leased Premises"), as
more particularly described in the Lease;
B. [Assignor,] [Assignee] and certain other parties thereto are parties to that certain [Asset
Purchase Agreement], pursuant to which, among other things, [Assignor] will transfer and assign certain
assets to Assignee (the "Transaction"), including Assignor's interest in the Lease-,
C. Assignor desires to assign to Assignee all of its right, title and interest in, to and under the
Lease; and
D. Assignee desires to assume all of Assignor's obligations under the Lease co ening on
the closing of the Transaction (the date of closing of the Transaction shall be referred to herein as the
"Effective Date"), upon the terms and conditions hereinafter set forth,
...........
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set
forth, and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Conditioned upon the closing of the Transaction, effective as of the Effective Date,
Assignor hereby grants, conveys, transfers and assigns to Assignee all of Assignor's right, title and interest
in, to and under the Lease [(including all of Assignor's right, title and interest to any security deposit held
by Landlord under the Lease)], together with all of the rights, privileges and appurtenances with respect to
the leasehold estate created thereby, and all of Assignor's right, title and interest in and to any leasehold
improvements located in the Leased Premises, upon all of the terms and conditions herein set forth, to have
and to hold the same unto Assignee for the term of the Lease and any renewals and extensions thereof,
subject to all of the terms, covenants and conditions of the Lease.
2. Assignee, for itself, its successors and assigns, hereby accepts the foregoing assignment of
Assignor's right, title and interest in, to and under the Lease, and expressly assumes and agrees to fully and
punctually pay, perform and observe all of the terms, covenants, conditions and obligations of the Lease
required to be paid, per -formed and observed on the part of the ["Tenant"] under the Lease and which arise
or accrue from and after the Effective Date.
1 Assignor hereby acknowledges, agrees, certifies and represents to Assignee as follows:
(i) A true, complete and accurate copy of the Lease, as amended, is attached hereto as
Exhibit A. The Lease represents the entire understanding between the ["Landlord"
and "Tenant"] under the Lease with respect to the leasing of the Leased Premises.
The Lease is in full force and effect. The Lease has not been modified, altered or
amended except as attached hereto;
(ii) To the actual knowledge of Assignor without duty of inquiry, as of the Execution
Date, there exists no default of Landlord or Assignor under the Lease nor state of
facts that, with the passage of time or the giving of notice or both, could ripen into
a default on the part of the Assignor or Landlord under the Lease; and
(iii) Assignor has not assigned, transferred or pledged the Lease or any interest therein
or sublet all or any portion of the Leased Premises as of the date hereof, except as
otherwise reflected in the Lease documents attached hereto.
4. Assignor hereby acknowledges and agrees that Assignor will hereafter execute and deliver
to Assignee any further assignments, instruments of transfer, bills of sale, releases or conveyances which
are necessary under applicable state law to fully vest in Assignee all of the Assignor's right, title and interest
in, to and under the Lease and leasehold improvements in the Leased Premises.
5. Landlord hereby consents to the assignment of the Lease by Assignor to Assignee pursuant
to the terms of this Assignment.
6. Notwithstanding anything to the contrary contained herein or in the Lease, Landlord hereby
agrees that Assignee shall have no liability whatsoever due to or arising from any failure or alleged failure
of Assignor under the Lease prior to the Effective Date, nor otherwise have any responsibility, to undertake,
perform, pay, discharge or observe any of the covenants, terms and conditions which arise or accrue under
the Lease prior to the Effective Date.
7. Assignor shall, to the extent permitted under applicable law, indemnify, defend and hold
harmless Assignee from and against any and all claims, liabilities, damages and expenses (including,
without limitation, reasonable attorneys' fees) which may be asserted against or imposed on Assignee by
reason of Assignor's failure to pay, perform, observe or comply with any of the terms, covenants,
conditions, agreements, provisions or obligations contained in the Lease to be kept, paid, performed,
observed and complied with by the ["Tenant"] thereunder prior to the Effective Date.
8. Assignee shall indemnify, defend and hold harmless Assignor from and against any and all
claims, liabilities, damages and expenses (including, without limitation, reasonable attorneys' fees) which
may be asserted against or imposed on Assignor by reason of Assignee's failure to pay, perform, observe
or comply with any of the tenns, covenants, conditions, agreements, provisions or obligations contained in
the Lease to be kept, paid, performed, observed and complied with by the ["Tenant"] thereunder on or after
the Effective Date.
9. From and after the Effective Date, Landlord agrees that notices to the ["Tenant"] under the
Lease shall be sent to Assignee at the following address:
Assignee:
With a copy to:
IQ
M This Assignment may not be amended, modified or terminated except by an instrument, in
writing, executed by the parties hereto,
11. This Assignment may be executed in several counterparts, and all so executed shall
constitute one Assignment, binding on each of the parties hereto, notwithstanding that each of the parties
are not signatories to the original or the same counterpart. Delivery of an executed counterpart of this
Assignment by facsimile, electronic mail or other electronic imaging means shall be deemed to have been
duly and validly delivered and effective as an original for all purposes. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Lease.
12, This Assignment shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successor and assigns,
13. This Assignment shall be governed by and construed in accordance with the laws of the
state of where the Leased Premises is located,
IN WITNESS WHEREOF, the [parties hereto have duly executed this Assignment as of the day and
year first above written.
ASSIGNEE:
By: _..._
Name:
Title:
[Signature Cage to Assignment and Assumption of Lease and Consent of Landlord — [Property Address]]
[Signature Page 10 Assignment and Assumption off-eaze and Con:5cnl,)fl.,armllord [PropertyAddress.1]
LANDLORD:
By: _
Name:
Title:
[Signature Page to Assignment and Assumption of Lease and Consent of Landlord -- [Property Address]]
EXHIBIT A
COPY OF LEASE AND ALL AMENDMENTS
[Attached hereto]
Final
EXHIBIT 1-2
ASSIGNMENT AND ASSUMPTION OF LEASE
([Property Address])
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this '-Assignment") is made as of
,2020 (the "E—x,ecution Date") by and between ("Assignor") and
("Assignee"), with reference to the following facts:
A. Assignor [(as successor in interest to _)] and [(as successor in
interest to ("Landlord") are parties to that certain [Lease Agreement] dated as of
[, as amended by ([collectively,] the "Lease") with respect to certain
premises located at (such premises shall be referred to herein as the
"Leased Premises"), as more particularly described in the Lease;
B. [Assignor,] [Assignee] and certain other parties thereto are parties to that certain [Asset
Purchase Agreement], pursuant to which, among other things, [Assignor] will transfer and assign certain
assets to Assignee (the "Transaction"), including Assignor's interest in the Lease;
tD
C. Assignor desires to assign to Assignee all of its right, title and interest in, to and under the
Lease; and
D. Assignee desires to assume all of Assignor's obligations under the Lease commencing on
the closing of the Transaction (the date of closing of the Transaction shall be referred to herein as the
"Ef
,feL ct" ive Date"), upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set
forth, and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Conditioned upon the closing of the Transaction, effective as of the Effective Date,
Assignor hereby grants, conveys, transfers and assigns to Assignee all of Assignor's right, title and interest
in, to and under the Lease [(including all of Assignor's right, title and interest to any security deposit held
by Landlord under the Lease)], together with all of the rights, privileges and appurtenances with respect to
the leasehold estate created thereby, and all of Assignor's right, title and interest in and to any leasehold
improvements located in the Leased Premises, upon all of the terms and conditions herein set forth, to have
and to hold the same unto Assignee for the term of the Lease and any renewals and extensions thereof,
subject to all of the terms, covenants and conditions of the Lease.
2. Assignee, for itself, its successors and assigns, hereby accepts the foregoing assignment of
Assignor's right, title and interest in, to and under the Lease, and expressly assumes and agrees to fully and
punctually pay, perform and observe all of the terms, covenants, conditions and obligations of the Lease
required to be paid, performed and observed on the part of the ["Tenant"] under the Lease and which arise
or accrue from and after the Effective Date.
3. Assignor hereby acknowledges, agrees, certifies and represents to Assignee as follows:
(i) A true, complete and accurate copy of the Lease, as amended, is attached hereto as
Exhibit A. The Lease represents the entire understanding between the ["Landlord"
and "Tenant"] under the Lease with respect to the leasing of the Leased Premises.
The Lease is in full force and effect. The Lease has not been modified, altered or
amended except as attached hereto;
(ii) To the actual knowledge of Assignor without duty of inquiry, as of the Execution
Date, there exists no default of Landlord or Assignor under the Lease nor state of
facts that, with the passage of time or the giving of notice or both, could ripen into
a default on the part of the Assignor or Landlord under the Lease; and
(iii) Assignor has not assigned, transferred or pledged the Lease or any interest therein
or sublet all or any portion of the Leased Premises as of the date hereof, except as
otherwise reflected in the Lease documents attached hereto.
4. Assignor hereby acknowledges and agrees that Assignor will hereafter execute and deliver
to Assignee any further assignments, instruments of transfer, bills of sale, releases or conveyances which
are necessary under applicable state law to fully vest in Assignee all of the Assignor's right, title and interest
in, to and under the Lease and leasehold improvements in the Leased Premises.
5. Assignor shall, to the extent permitted under applicable law, indemnify, defend and hold
harmless Assignee from and against any and all claims, liabilities, damages and expenses (including,
without limitation, reasonable attorneys' fees) which may be asserted against or imposed on Assignee by
reason of Assignor's failure to pay, perform, observe or comply with any of the terms, covenants,
conditions, agreements, provisions or obligations contained in the Lease to be kept, paid, performed,
observed and complied with by the ["Tenant"] thereunder prior to the Effective Date.
6. Assignee shall indemnify, defend and hold harmless Assignor from and against any and all
claims, liabilities, damages and expenses (including, without limitation, reasonable attorneys' fees) which
may be asserted against or imposed on Assignor by reason of Assignee's failure to pay, perform, observe
or comply with any of the terms, covenants, conditions, agreements, provisions or obligations contained in
the Lease to be kept, paid, performed, observed and complied with by the ["Tenant"] thereunder on or after
the Effective Date.
7. This Assignment may not be amended, modified or terminated except by an instrument, in
writing, executed by the parties hereto.
8. This Assignment may be executed in several counterparts, and all so executed shall
constitute one Assignment, binding on each of the parties hereto, notwithstanding that each of the parties
are not signatories to the original or the same counterpart. Delivery of an executed counterpart of this
Assignment by facsimile, electronic mail or other electronic imaging means shall be deemed to have been
duly and validly delivered and effective as an original for all purposes. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Lease.
9. This Assignment shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successor and assigns.
10. This Assignment shall be governed by and construed in accordance with the laws of the
state of where the Leased Premises is located.
[Remainder of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the parties hereto have duly executed this Assignment as of the day and
year first above written.
ASSIGNEE:
[Signature Page To Assignment and Assumption of Lease [Property AddressIl
ASSIGNOR:
........................................................ . . . . . .. ........................... . . . . .................. . . . . ............ I
By: —
Namc�
Title:
(Signature Page to Assignment and Assumption of Lease [Property Address]l
EXHIBIT A
COPY OF LEASE AND ALL AMENDMENTS
[Attached hereto]
Final
EXHIBIT 1-3
ASSIGNMENT AND ASSUMPTION OF LANDLORD'S INTEREST IN LEASE
([Property Address])
THIS ASSIGNMENT AND ASSUMPTION OF LANDLORD'S INTEREST IN LEASE (this
"Assignment") is made as of 2020 (the "Execution Date") by and
between L—J (-&�nor") and ("Assignee"), with reference to the
following facts:
A. Assignor [(as successor in interest to and [__] [(as successor in
interest to __)] ("Tenant") are parties to that certain [Lease Agreement] dated as of
f, as amended by ([collectively,] the "Lease") with respect to certain
premises located at (such premises shall be referred to herein as the
"Leased Prem -1z"), as more particularly described in the Lease;
B. [Assignor,] [Assignee] and certain other parties thereto are parties to that certain [Asset
Purchase Agreement], pursuant to which, among other things, [Assignor] will transfer and assign certain
assets to Assignee (the "Transaction'"), including Assignor's interest in the Lease;
C. Assignor desires to assign to Assignee all of its right, title and interest in, to and under the
Lease; and
D. Assignee desires to assume all of Assignor's obligations under the Lease commencing on
the closing of the Transaction (the date of closing of the Transaction shall be referred to herein as the
"Effective Date"), upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set
forth, and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Conditioned upon the closing of the Transaction, effective as of the Effective Date,
Assignor hereby grants, conveys, transfers and assigns to Assignee all of Assignor's right, title and interest
in, to and under the Lease [(Including all of Assignor's right, title and interest to any security deposit
provided by Tenant pursuant to the terms of the Lease)], upon all of the terms and conditions herein set
forth, to have and to hold the same unto Assignee for the term of the Lease and any renewals and extensions
thereof.
2. Assignee, for itself, its successors and assigns, hereby accepts the foregoing assignment of
Assignor's right, title and interest in, to and under the Lease, and expressly assumes and agrees to fully and
punctually pay, perform and observe all of the terms, covenants, conditions and obligations of the Lease
required to be paid, performed and observed on the part of the ["Landlord"] under the Lease and which
arise or accrue from and after the Effective Date,
3. Assignor hereby acknowledges, agrees, certifies and represents to Assignee as follows:
(i) A true, complete and accurate copy of the Lease, as amended, is attached hereto as
Exhibit A. The Lease represents the entire understanding between the ["Landlord"
and "Tenant"] under the Lease with respect to the leasing of the Leased Premises.
The Lease is in full force and effect. The Lease has not been modified, altered or
amended except as attached hereto;
(ii) To the actual knowledge of Assignor without duty of inquiry, as of the Execution
Date, there exists no default of Tenant or Assignor under the Lease nor state of
facts that, with the passage of time or the giving of notice or both, could ripen into
a default on the part of the Assignor or Tenant under the Lease; and
(iii) Assignor has not assigned, transferred or pledged the Lease or any interest therein
as of the date hereof, except as otherwise reflected in the Lease documents attached
hereto.
4, Assignor hereby acknowledges and agrees that Assignor will hereafter execute and deliver
to Assignee any further assignments, instruments of transfer, bills of sale, releases or conveyances which
are necessary under applicable law to fully vest in Assignee all of the Assignor's right, title and interest in,
to and under the Lease.
5. Assignor shall, to the extent permitted under applicable law, indemnify, defend and hold
harmless Assignee from and against any and all claims, liabilities, damages and expenses (including,
without limitation, reasonable attorneys' fees) which may be asserted against or imposed on Assignee by
reason of Assignor's failure to perform, observe or comply with any of the terms, covenants, conditions,
agreements, provisions or obligations contained in the Lease to be kept, paid, performed, observed and
complied with by the ["Landlord"] thereunder prior to the Effective Date.
6. Assignee shall indemnify, defend and hold harmless Assignor from and against any and all
claims, liabilities, damages and expenses (including, without limitation, reasonable attorneys' fees) which
may be asserted against or imposed on Assignor by reason of Assignee's failure to perform, observe or
comply with any of the terms, covenants, conditions, agreements, provisions or obligations contained in the
Lease to be kept, paid, performed, observed and complied with by the ["Landlord"] thereunder on or after
the Effective Date.
7. This Assignment may not be amended, modified or terminated except by an instrument, in
writing, executed by the parties hereto.
S. This Assignment may be executed in several counterparts, and all so executed shall
constitute one Assignment, binding on each of the parties hereto, notwithstanding that each of the parties
are not signatories to the original or the same counterpart. Delivery of an executed counterpart of this
Assignment by facsimile, electronic mail or other electronic imaging means shall be deemed to have been
duly and validly delivered and effective as an original for all purposes. Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Lease_
9. This Assignment shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successor and assigns.
to. This Assignment shall be governed by and construed in accordance with the laws of the
state of where the Leased Premises is located.
[Remainder of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the par -ties hereto have duly executed this Assignment as of the day and
year first above written.
ASSIGNEE:
[Signature Page to Assignment avid Assuimpdvin off,.andlord's Interest in Lcuasc -[PropertyAddress.1.1
ASSIGNOR:
--- . . ............ ...............m......_.....______ ...................... -,
By: _
Name:
Title:
(Signature Page to Assignment and Assumption of Landlord's frileresi in Lease - LProperty Addressjj
EXHIBIT A
COPY OF LEASE AND ALL AMENDMENTS
[Attached hereto]
Final
InkViNIRM-W
Form Special Warranty Deed
NORTH CAROLINA SPECIAL WARRANTY DEED
Excise Tax: Exempt
Tax Lot No. . . . . . ................................................ . ........................ Parcel Identifier No.
Verified by . ....... . ............................................................. . ...... -- County on the _ day of
M,
Mail after recording to:
This instrument was prepared by:
Mail after recording to: _
Brief Description for the
Index
THIS DEED made this day of
GRANTOR
E.
2020, by and between
GRANTEE
R]
Enter in appropriate block for each party narne, address, and, if appropriate, character of entity, e.g. corporation or partnership
The designation Grantor and Grantee as used herein shall include said parties, their heirs, successors, and assigns, and
shall include singular, plural, masculine, feminine or neuter as required by context.
WITNESSETH, that the Grantor, for a valuable consideration paid by the Grantee, the receipt of which is hereby
acknowledged, has and by these presents does grant, bargain, sell and convey unto the Grantee in fee simple, all that
certain lot or parcel of land situated in the City of . . ......... Township,
County, North Carolina and more particularly described as follows:
SEE EXHIBIT A ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE.
The property hereinabove described was acquired by Grantor by instrument recorded in Book , Page
All or a portion of the property herein conveyed does not include the primary residence of a Grantor.
A map showing the above-described property is recorded in Map Book , Page
TO HAVE AND TO HOLD the aforesaid lot or parcel of land and all privileges and appurtenances thereto belonging to
the Grantee in fee simple.
AND the Grantor covenants with the Grantee that Grantor has done nothing to impair such title as Grantor received, and
Grantor will, to the extent permitted under applicable law, warrant and defend the title against the lawful claims of all
persons claiming by, under or through Grantor, except for the exceptions hereinafter stated.
Title to the property hereinabove described is subject to the following exceptions:
See Exhibit B attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, the Grantor has caused this instrument to be executed by its duly authorized
as of the day and year first above written,
[SIGNATURE PAGE FOLLOWS]
The foregoing Certificate(s) of
is/are certified to be correct. This instrument and this certificate are duly registered at the date and time and in the Book
and Page shown on the first page hereof.
............................................................................
REGISTER OF DEEDS FOR COUNTY
By......................................................_....... _ ___. __ Deputy/Assistant - Register of Deeds
Hum
COICI TY •
(Place of Acknowledgment)
,a
she signed the foregoing document: ______...m ......> as the of Grantor,
(Naine qfsignatory) (Title qj'signaloq)
Date:
Notary Public
Printed or Typed Name_.....
(Official Seal) My commission expires
EXHIBIT A
Legal Description
[To be populated]
EXHIBIT B
NNUMMMKNOWIMM
ITo be populated]
Final
FXHTRI(T K
LIMITED POWER OF ATTORNEY
FOR USE OF DEA REGISTRATION NUMBERS,
AND DEA ORDER FORMS'
[NHRMC ENTITY]z, a North Carolina nonprofit corporation, [an acute care hospital]'
located at [ADDRESS]', North Carolina ("Seller" or "Operator"), is licensed to operate the
pharmacy operations located at [ADDRESS], North Carolina (the "Pharmacy") and is authorized
under DEA registration number [ (the "DEA Registration") to sign the current
applications for registration and licensure as the registrant under the Controlled Substances Act of
the United States.
The Operator has made, constituted and appointed, and hereby makes, constitutes and
appoints [NOVANT BUYER] ("Agent"), as the Operator's agent and true and lawful attorney-
in-fact for the purposes of utilizing Operator's DEA Registration to continue pharmacy operations
at the Pharmacy. Agent may act in this capacity until such time as Agent or its designee obtains
new DEA registrations, but in no event shall this Limited Power of Attorney continue more than
45 calendar days after the effective date of the Agent's acquisition of Operator's business closed;
provided, however, this Limited Power of Attorney may continue in excess of 45 calendar days
after the effective date of Agent's acquisition of Operator's business closed if, despite Agent's
good faith efforts, the issuance of new DEA registrations for the Pharmacy is delayed. The
Operator further grants this Limited Power of Attorney to Agent to act as the true and lawful agent
and attomey-in-fact of the Operator, and to act in the name, place and stead of the Operator, to
execute applications for books of official order forms, to sign such order forms in requisition for
controlled substances, in accordance with Section 308 of the Controlled Substances Act (21 U.S.C.
828) and part 1305 of Title 21 of the Code of Federal Regulations, and to carry out the controlled
substance activities of the Pharmacy under Seller's DEA Registration,
The Operator recognizes that it remains legally responsible for the DEA Registration issued
to it during the period in which this Limited Power of Attorney is in effect. Therefore, the Operator
grants this Limited Power of Attorney based upon the following covenants and warranties of
Agent: (a) Agent shall follow and abide by and comply with all federal and state laws governing
the regulation of controlled substances and pharmacy practice at all times while utilizing this
Limited Power of Attomey, (b) Agent, or its designee, shall make application for and pursue its
own DEA registrations that are required for the distribution of pharmaceuticals, including but not
limited to controlled substances, at the Pharmacy, as soon as practicable, and (c) Agent shall
defend, indemnify and hold harmless the Operator, the Operator's affiliates, and its and their
respective owners, trustees, directors, managers, officers, agents, employees, and representatives
from and against all losses, claims and costs, including attorney's fees, related to Agent's
i Note to Agent: The North Carolina Board of Pharmacy prohibits a new owner from operating using an old permit
under a power of attorney.
-' Note to Draft: To be updated for each license holder.
3 Note to Draft: To be updated for each license holder.
a Note to Draft: To be updated for each license holder,
utilization of Operator's DEA Registrations pursuant to this Limited Power of Attorney; provided,
that any such indemnity shall not protect any such party against any liability that such person
would otherwise be subject by reason of such person's willful malfeasance, bad faith or gross
negligence.
This Limited Power of Attorney For Use of DEA Registration Numbers and DEA Order
Forms may be executed in any number of counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same agreement, binding on all of the parties
hereto. Operator and Agent have executed this Limited Power of Attorney For Use of DEA
Registration Numbers and DEA Order Forms as of the [DAY] day of [MONTH], [YEAR], to be
effective as of 12:01 a.m. Eastern Time on the [DAY] day of [MONTH], [YEAR.
[Signature page follows.]
M WITNESS WHEREOF, Operator and Agent have, by their duly authorizei
representatives, executed this Limited Power of Attorney For Use of DEA Registration Numbers
and DEA Order Forms as of the date and year first above written.
OPERATOR:
AGENT:
[NHRMC ENTITY] [NOVANT BUYER]
By.- _
Name.
Title:
WITNESSES:
By: _
Name:
Title:
WITNESSES:
1 2.
Final
EXHIBIT L
CUSTODIAL AGREEMENT
This Custodial Agreement (the "Agreement") is dated [`], 2020 (the "Transfer Date"), by
and between New Hanover Regional Medical Center ("Seller"), and Novant Health New Hanover
Regional Medical Center, LLC ("Novant') (each a party", and collectively, the "parties").
Capitalized terms used herein without definition shall have the definitions assigned to such terms
in the Purchase Agreement (as defined below).
RECITALS
A. Seller, New Hanover County, North Carolina ("County") and, for the limited
purposes set forth therein, Novant Health, Inc. are parties to that certain Asset Purchase
Agreement, dated [e], 2020 (the "Purchase Agreement"), pursuant to which Seller and County
agreed to sell, and Novant agreed to purchase, certain assets related to the Healthcare Businesses,
as such term is defined in the Purchase Agreement;
B. Seller desires to ensure the continuation of necessary health care services for
patients of the Healthcare Businesses and to provide for the smooth transfer of the Medical Records
(as defined below) to Novant so that the Medical Records may be accessed readily by health care
providers that will provide continuing treatment to such patients; and
C. Novant has agreed to assume the custody and storage of the Medical Records
pursuant to applicable Law.
NOW, THEREFORE, for and in consideration of the premises and the agreements
hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of all of
which are forever acknowledged, the parties agree as follows:
Transfer of Custody.
a. On the CIosing Date and effective as of the Effective Time, Seller shall transfer to
Novant all documents, records, operating manuals and files that are used or held for use in the
operation of the Healthcare Businesses as specified in Section 1.4(k) of the Purchase Agreement,
including patient records, medical records, copies of employee records relating to Hired
Employees, financial records, facility records, medical staff records, property records, equipment
records, construction plans and specifications, and medical and administrative libraries (but
excluding the Excluded Records). All patient records and medical records in existence as of the
Effective Time and transferred by Seller to Novant are referred to herein as the "Medical Records".
Seller hereby appoints Novant, and Novant agrees to serve during the term of this Agreement, as
custodian for the Medical Records, pursuant to applicable state and federal Law.
b. The parties agree that the Medical Records are being transferred for custodial
purposes to Novant hereunder for purposes of the care and treatment of patients by Novant, its
employees and staff, the billing activities of Novant related to such care, and the operations of the
Healthcare Businesses by Novant.
C. Novant shall store and maintain the Medical Records in accordance with all
applicable federal, state and local Laws as may be applicable, including, but not limited to, HIPAA
and its implementing regulations, or any successor legislation. Specifically, from and after the
Closing Date, Novant will assume and discharge all of Seller's obligations with respect to the
Medical Records that are imposed by applicable Laws, including, but not limited to, Seller's
obligations under HIPAA. The parties agree that as of the Closing Date and on a going -forward
basis only, Novant shall assume Seller's HIPAA obligations as a Covered Entity (as defined by
HIPAA) with respect to the Medical Records; provided, however, that by executing and
performing its duties under this Agreement, Novant does not assume and shall not in any way be
liable for any breach or violation of any of Seller's obligations as the Covered Entity with respect
to the Medical Records, which breach or violation occurred prior to the Closing Date. Novant shall
at all times safeguard and protect the Medical Records in compliance with applicable state and
federal Laws.
2. Access; Preservation of Medical Records. During the period required by
applicable Law (the "Transition Period'), Seller shall have the right of access to all of the Medical
Records, at reasonable times and upon reasonable notice to Novant, and a right to receive copies
of the Medical Records, for reasonable copying charges, as reasonably necessary for clinical, legal,
financial, or any other appropriate reasons of Seller as permitted by applicable laws, regulations,
and standards. Seller represents and warrants that it will not request access to the Medical Records
for any purpose that violates or is inconsistent with HIPAA or any other applicable federal, state,
or local Law. Novant will maintain and preserve the custody of the Medical Records in accordance
with all applicable medical record retention obligations. During the Transition Period, Novant may
destroy the Medical Records provided that such destruction is consistent with applicable Law.
3. Compliance with Laws. Each party is responsible for compliance with all Laws
that may be applicable to its respective activities and responsibilities under this Agreement.
4. Inspection of Records and Operations. Seller and Novant shall permit the United
States Department of Health and Human Services, and the Office of the Inspector General, the
Comptroller or their designees, to inspect, evaluate, and audit any pertinent books, documents,
papers and records of Seller involving transactions pertaining to this Agreement as required by
law whether such inspection is announced or unannounced. Seller and Novant shall cooperate
with any such inspection, including providing copies of complete Medical Records on request. The
obligations under this Section 4 shall survive any termination of this Agreement.
5. Subsequent Transfer. if, during the Transition Period, Novant desires to transfer
custody of all or any portion of the Medical Records to any other person or entity (the
"Transferee") as a result of any event including, but not limited to, the sale of Novant or any
portion of Novant's business, Novant agrees to ensure that the Transferee first enters into a
custodial agreement, in substantially the same form as this Agreement, to become effective as of
the date of the transfer. Such custodial agreement must preserve the rights, benefits and protections
of Seller as set forth in this Agreement.
6. Regulatory Framework and Other Representations. Novant and Seller agree
and acknowledge that in connection with the purchase and sale of the certain assets to Novant, the
2
transfer of Medical Records, must be accomplished in compliance with applicable federal and state
privacy Laws, including HIPAA. Accordingly, the parties covenant and agree as follows;
a. Ownership of Medical Records. The parties acknowledge that under HIPAA, the
Medical Records are the property of the provider maintaining them, but that the patients of the
provider have a right of privacy in the underlying content of their Medical Records, also referred
to under HIPAA as Protected Health Information ("PHF).
b. The transfer of the Medical Records to Novant as part of the sale of assets, and
related due diligence review of the Medical Records, is permitted without the authorization of the
patient under HIPAA pursuant to paragraph (6)(iv) of the definition of "health care operations" at
45 CFR § 164.501, which includes the "sale, transfer, merger, or consolidation of all or part the
covered entity with another covered entity, or an entity that following such activity will become a
covered entity, including due diligence related to such activity."
C, The HIPAA Omnibus Rule, 45 CFR § 164.508(a)(4), provides that an authorization
is required for the sale of PHI as defined in 45 CFR §164.501; however, paragraph (2) of the
definition of "sale of protected health information" excludes a disclosure of PHI "[f]or the sale,
transfer, merger, or consolidation of all or part the covered entity and for related due diligence as
described in paragraph 6(iv) of the definition of health care operations and pursuant to 45 CFR
§ 164.506(a)."
7. Miscellaneous.
a. Subject to express provisions herein to the contrary, this Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns, and the rights and obligations of the parties hereunder will
survive the sale or other transfer of substantially all of the capital stock, membership interest, or
assets of any party or a change in control of any party. No party may assign any of its rights or
obligations under this Agreement without the express consent of each of the other parties;
provided, however, that Novant may freely assign this Agreement, at any time without notice to
Seller, to any affiliate of Novant or any successor -in -interest whether occurring by sale or other
transfer of substantially all of the capital stock, membership interest, or assets.
b. Nothing contained in this Agreement will be construed as giving rise to any right
to enforce its provisions to any person not a party to this Agreement under any legal theory. Novant
and Seller are the sole beneficiaries of this Agreement.
C. This Agreement supersedes all prior agreements and constitutes the entire
agreement of whatsoever kind or nature existing among the parties representing the within subject
matter; provided, however, that in the event of a conflict between this Agreement and the Purchase
Agreement, the Purchase Agreement shall control. This Agreement may be amended, and the
terms hereof may be modified, only by a writing executed by each party hereto or their respective
successors, and any matter referred to herein as mutually agreed to or designated by the parties
must be evidenced by such writing.
d. Except as otherwise provided herein or in the Purchase Agreement, no right or
remedy herein conferred upon or reserved to either of the parties hereto is intended to be exclusive
of any other right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder, or now or hereafter legally existing upon
the occurrence of an event of default hereunder. The failure of any party to insist at any time upon
the strict observance or performance of any of the provisions of this Agreement or to exercise any
right or remedy as provided in this Agreement, shall not impair with respect to subsequent defaults.
Every right and remedy given by this Agreement to the parties hereto may be exercised from time
to time and as often as may be deemed expedient by the parties, as the case may be.
e. Each party may be temporarily excused from full performance of such party's
obligations under this Agreement to the extent required or caused by any cause beyond such party's
reasonable control, including but not limited to fire, accident, labor dispute or unrest, flood, riot,
war, rebellion, insurrection, sabotage, terrorism, transportation delays, shortage of raw materials,
energy or machinery, acts of God or of the civil or military authorities of a state or nation, or the
inability, due to the aforementioned causes, to obtain necessary labor or facilities; provided,
however, that the party affected by such causes shall use commercially reasonable efforts to
mitigate the impact of such causes, and shall continue to use commercially reasonable efforts,
taking into account such causes, to continue to fully perform its obligations under this Agreement.
f. This Agreement, and any document or instrument required or permitted hereunder,
may be executed in counterparts, each of which will be deemed an original and all of which
together will constitute but one and the same instrument. The parties agree that facsimile or
electronic ..PDF copies of signatures shall be deemed originals for all purposes hereof and that a
party may produce such copies, without the need to produce original signatures, to prove the
existence of this Agreement in any proceeding brought hereunder.
g. This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of North Carolina as applied to contracts made and performed within the
State of North Carolina without application of any conflicts -of -law principles. The parties hereby
waive their right to claim in any proceeding involving this Agreement that the law of any
jurisdiction other than the State of North Carolina shall apply to such dispute, and the parties
hereby covenant that they shall assert no such claim in any dispute arising under this Agreement.
Each party absolutely and unconditionally waives, to the fullest extent permitted by applicable
law, any and all rights to trial by jury in connection with this Agreement.
h. if any provision of this Agreement or the application of any provision hereof to any
person or circumstances is held to be legally invalid, inoperative or unenforceable, then the
remainder of this Agreement shall not be affected unless the invalid provision substantially impairs
the benefits of the remaining portions of this Agreement to the other party or parties.
i. Neither Seller nor Novant shall be authorized to act as agent for the other or to incur
any liability in the name of or on behalf of the other, unless specifically authorized in this
Agreement or in a writing executed by the party that would be responsible for the obligation.
4
j. The parties shall execute and deliver all documents, provide all infonnation and
take or forbear from all such action as may be reasonably necessary or appropriate to achieve the
purposes set forth in this Agreement.
k. This Agreement is the result of an -ns -length negotiation and shall not be construed
for or against any party by virtue of draftsmanship.
1. Any notice, demand or communication required, permitted or desired to be given
hereunder shall be deemed effectively given when personally delivered or mailed by prepaid
certified mail, return receipt requested, addressed to the addresses set forth below or to such other
addresses, and to the attention of such other person(s) or officer(s), as either party may designate
by written notice to the other party:
If to Seller: New Hanover Regional Medical Center
2131 S. 17" Street
Wilmington, North Carolina 28401
Attention: John Gizdic, Chief Executive Officer
Lynn Gordon, Chief Legal Officer &
General Counsel
Email: John.Gizdic@nhTmc.org
Lynn.Gordon@D,nhrmc,org
With a copy to: Hall, Render, Killian, Heath & Lyman, LLP
3015 Carrington Mill Blvd, Suite 450
Morrisville, North Carolina 27560
Attention: Joseph M. Kahn
Robert A. Hamill
Email: JKahn@hallrender.com
RHamill@ballrender.com
If to Novant: Novant Health, Inc.
2085 Frontis Plaza Blvd.
Winston-Salem, North Carolina 27103
Attention: Chief Financial Officer
Email: fmhargettCdnovanthealth.org
With a copy to: McGuireWoods, LLP
201 North Tryon Street, Suite 3000
Charlotte, North Carolina 28202
Attention: Chris Scheurer
Bart Walker
Email: CScheurer@mcguirewoods.com
BWalker@mcguirewoods.com
[SIGNATURES TO FOLLOW ON NEXT PACE]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers, all as of the date and year first above written.
NOVANT HEALTH, INC.
By: _
Name:
Title:
NEW HANOVER REGIONAL MEDICAL CENTER
Name:
Title:
[Signature Pages to Custodial Agreement]
Final
EXHIBIT M
INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT
This Intellectual Property Assignment Agreement (this "Agreement") is made as of [•]
(the "Effective Date"), by and among New Hanover Regional Medical Center, a North Carolina
nonprofit corporation (collectively, "Assignor") and Novant Health New Hanover Regional Medical
Center, LLC, a North Carolina limited liability company ("Assignee"). Capitalized terms used but
not otherwise defined herein shall have the respective meanings set forth in that certain Asset
Purchase Agreement, dated October [•], 2020 by and among Assignor and Assignee ("Purchase
Agreement").
RECITALS
WHEREAS, pursuant to the Purchase Agreement, Assignor has agreed to sell, assign,
convey, transfer and deliver to Assignee, and Assignee has agreed to purchase and acquire from
Assignor, all right, title and interest in and to the Intellectual Property (as defined in the Purchase
Agreement) owned by Assignor and listed on Schedule A hereto (the "Registered Intellectual
Property"); and
WHEREAS, pursuant to the Purchase Agreement, Assignor has agreed to execute this
Agreement in order to effectively assign, transfer and convey to Assignee such assets.
NOW THEREFORE, in consideration of the foregoing and the representations, warranties
and agreements herein set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee, intending to be legally bound,
hereby agree as follows:
1. Assignment of Registered Intellectual Propert Ri hts. Upon the terms set forth in the
Purchase Agreement, Assignor hereby sells, conveys, assigns, transfers, delivers and sets over to
Assignee and its successors and assigns all of Assignor's right, title and interest in and to the
Registered Intellectual Property, and including all goodwill associated therewith, to be held and
enjoyed by Assignee for its own use and benefit and for the use and benefit of its subsidiaries,
affiliates, successors, assigns, licensees and legal representatives, including all rights to sue for any
past infringement or unauthorized use of any of the foregoing and to recover all damages therefrom
for its own use and behalf and for the use and behalf of its successors and assigns or other legal
representatives as such rights would have been held and enjoyed by Assignor had this Agreement not
been made. In order to enable the use by Assignee of the website names, addresses and social media
accounts set forth on Schedule A ("Domain Names"), Assignor agrees to provide Assignee, on the
Effective Date, with any account information with which the Domain Names are registered, if any,
including any user names and passwords of Assignor relating thereto.
2. Further Assurances. Assignor and Assignee agree to execute and deliver such other
assignment agreements and other instruments of conveyance and assignment and will do such other
acts and things, at the requesting party's expense, in each case as that party may reasonably request,
as shall be reasonably necessary to vest in Assignee such title to such Registered Intellectual Property,
and to fulfill and discharge each party's obligations of conveyance and discharge hereunder and under
the Purchase Agreement.
3. Representations or Warranties. The Registered Intellectual Property is subject to the
representations and warranties set forth in the Agreement. No other representations or warranties are
made in or pursuant to this Agreement, but rather such are expressly disclaimed.
4. Binding Effect. This Agreement shall be binding upon and will inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
5. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of North Carolina as applied to contracts made and performed
within the State of North Carolina. The parties hereby waive their right to claim in any proceeding
involving this Agreement that the law of any jurisdiction other than the State of North Carolina shall
apply to such dispute; and the parties hereby covenant that they shall assert no such claim in any
dispute arising under this Agreement. EACH PARTY HERETO ABSOLUTELY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
6. Purchase A regiment. This Agreement is executed and delivered pursuant to Section
6.8(o) of the Purchase Agreement, and is subject to the terms of the Purchase Agreement, and nothing
contained herein is intended to alter, modify, expand or diminish the terms set forth in the Purchase
Agreement. In the event of a conflict between this Agreement and the Purchase Agreement, the
Purchase Agreement shall control.
7. Construction. This Agreement is the result of arms -length negotiations and shall not
be construed for or against any party by virtue of draftsmanship.
8. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but such counterparts shall together (when executed and
delivered) constitute but one and the same instrument. This Agreement may be executed and
delivered in counterpart signature pages executed and delivered via facsimile transmission or by email
transmission in Adobe portable document format ("PDF"), and any such counterpart executed and
delivered via facsimile or PDF shall constitute effective execution and delivery of this Agreement as
to the parties and shall be deemed an original for all purposes.
[Signature page follows. ]
2
IN WITNESS WHEREOF, the parties have, by their duly authorized representatives,
executed this Agreement effective as of the date first set forth above.
NEW HANOVER REGIONAL
MEDICAL CENTER
■
Signature Page to Intellectual Propertv Assignment Agreemew
NOVANT HEALTH NEW HANOVER
REGIONAL MEDICAL CENTER, LLC
BY: __
Name:
Title:
Signature Page to Intellectual Property Assignment Agreement
Schedule A
Trademarks:
_..____ ............................... �.............._ .__ �.. __.... _... ............_.__ ...........
Mark Jurisdiction Reg. Serial No. _ Goods f Services
AIRLIN* North Carolina 021000-� 39: Emergency medical
transport helicopter services
Unregistered Trademarks:
NEW HANOVR REGIONAL MEDICAL CENTER
NEW HANOVER HEALTH ADVANTAGE
BEHAVIORAL HEALTH HOSPITAL
All logo treatments and trademarks
included on the attached NHRMC
Logos Document
........ ___ ............................................—
Listing of DBAs
Name
Date Filed
NHRMC dba
Betty H. Cameron Women's
October -08
– _ .........
and Children's Hospital
NHRMC dba
Cape Fear Orthopedic
_.. .._........
April -12
Specialtv Hospital
NHRMC dba
Coastal Family Medicine
Oct -14
NHRMC dba
General Sur er S ecialists
Oct -14
NHRMC dba
Maxillofacial Surgery
Oct -14
NHRMC dba
New Hanover Health
Nov-06
_.................__..m...........................................
Network
NHRMC dba
New Hanover Regional
September -12
Medical Center Atlantic
SurgiCenter
NHRMC dba
New Hanover Regional EMS
April®19
NHRMC dba
New Hanover Regional
August -13
Medical Center Orthopedic
Hospital
NHRMC dbaNHRMC
_ ............................
PSA
October -13
NHRMC dba
............
OB/GYN Specialists
..............
October -14
NHRMC dba
SEAHEC
October -14
NHRMC dba
South East Area Education
October -14
Center
NHRMC dba _..................................................................._
The Care Team
October-14
Listing of DBAs – Owner CHA
_ ..........................................................
Naive
Date Filed
CHA dba
Atlantic Fetal Medicine
3/8118
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................................. mmmmm
CHA dba
Atlantic Urology NHRMC
.... _.........
February -10
............... ---_
Physician Grou p -
.....
CHA dba
Cape Fear Cancer Specialists
June -12
NHRMC Physician Group
CHA dba
Cape Fear Heart Associates
March- l 1
NHRMC Physician Grou
CHA dba
Coastal Family Medicine
October -14
NHRMC Physician Grou
CHA dba
Coastal OB/GYN Specialists
October -14
and Midwifery NHRMC
Physician Grou
CHA dba
Coastal Reproductive
February -1 S
Endocrinology & Infertility
NHRMC Physician Group —
CHA dba
Endoscopy Center NI-IRMC
7/1/20
Ph sician Grou
CHA dba
General Surgery Specialists
October -14
NHRMC Physician Group
CHA dba.
Glen Meade Center for
November -13
Robotic Surgery NHRMC
Physician Grou
CHA dba
Glen Meade Center for
November -13
Women's Health NHRMC
Physician Group
CHA dba
Glen Meade Incontinence
November 13
Center NHRMC Physician
Group
CHA dba
Hanover Cardiology
June -12
NHRMC Physician Group
CHA dba
Internal Medicine Specialists
Ocotber-14
NHRMC Physician Grou
CHA dba
Maxillofacial Surgery
October -14
NHRMC Physician Group
CHA dba
Hanover Gastroenterology
June -12
NHRMC Physician Grou
CHA dba
Morgan Internal Medicine
February -10
MHRMC Physician Group
CHA dba
New Hanover Gynecologic
December -10
Oncology NHRMC Physician
Group ---
_..............................................................
CHA dba
New Hanover Hospitalists
December -10
NHRMC Physician Group
CHA dba
New Hanover Medical Group
December -10
NHRMC Physician Group
CHA dba
I New Hanover Neurology
December -10
NHRMC Physician Grou
-- ....... ... — ..............................................................
CHA dba
_ _ _ _.........
New Hanover Nurse
____ ....... _............................
Dere ber-10
Practitioner Clinic NHRMC
___.....___................................................................................... —
Physician Group
CHA dba
New Hanover Oncology
........ ___.........
December-10
NHRMC Physician Group
Listing of DBAs — Owner CHA
Name
Date Filed
CHA dba
New Hanover Oral and
December-10
Maxillofacial Surgery
NHRMC Ph sician Group
CHA dba
New Hanover Pediatric
December 10
Surgery NHRMC Physician
Group
CHA dba
New Hanover Psychiatry
December-10
._............ __
NHRMC Physician Group
CHA dba
NHRMC Physician Grout)
July-09
CHA dba..._..........................................
NHRMC Urgent Care
February-_10
CHA dba
—
NHRMC Urgent Care-
_________................. _.......................................
February-10
Military Cutoff
CHA dba
NHRMC Urgent Care —
April-10
Wallace
CHA dba
OB/GYN Specialists
October-14
NHRMC Physician Group
CHA dba
Onslow Oncologya
12
CHA dba
Onslow Urology NHRMC
January-13
PhysicianGrou
CHA dba
Onslow Urology Clinic
January-13
NHRMC Physician Group
CHA dba ___.....
Pediatric Sure
Ma -12
CHA dba i
Pender PrimaryCare �
Se teber-10
CHA dba
Pender Primary Care-
September-10
Bur aw
CHA dba
Pender Primary Care- Rocky
September-10
Point
CHA dba
RCS
_...... — -----
December-14
CHA dba
Revenue C cle Solutions
December- 14
CHA dba
Robert T. Bennett M.D.,
February-10
FAAP NHRMC Physician
—�
Group
CHA dba
Urology Comprehensive
August-09
Services NHRMC Physician
Group
CHA dba
_ ................
Wrightsville Beach Family
_ __.......................................................-......................................
August-09
Medicine NHRMC Physician
Grou
Listing of DBAs — Owner PQP
Copyrights:
Title
On a nutrition mission.
Name
Respiratory Assessment Program &
Date Filed ............................ __ . . . . . . ................................
Physician Quality Partners
Revenue Cycle Solutions
The satinillow.
October -14
LLC DBA
PAu002134094
What should I eat?
VAu000287892
Physician Quality Partners
RCS
October -14
LLCDBA
_ ._..._
........................................................................................................
CHA dba
RCS
December -14
CHA dba
Revenue Cycle Solutions
December -14
Copyrights:
Title
On a nutrition mission.
Reg. No. J
VAu000316449
Respiratory Assessment Program &
TXu000746459
Protocols: RAPP
The satinillow.
PAu002405236
Home care.
PAu002134094
What should I eat?
VAu000287892
Custom software:
NHRMCA Alexa public skill
NHRMC Healthcoin, and
NHRMC internal Alexa skill "Margaret."
Domain Names:
Domain Status Expiration
b Date
atlantics u rgicenter.com
bennetturology.com
blueoceanuniversity.org
capefearcancerspecialists.com
capefearcancerspecialists.net
capefeareancerspecialists.or�
capefearheartassociates.com
coastalrei.com
coastalrei.org
Active 06/01/2021
Active 11/15/2020
Active 08/14/2020
Active 06/27/2021
Active 06/27/2021
Active 06/27/2021
Active 02/17/202 l
Active 06/29/2021
Active 06/29/2021
lleenmeadeincontinence.com
Active
11/19/2020
hanovereardiolo .com
Active
06/27/2021
hanovercardiologv.net
Active
06/27/2021
— ...... ...................... .................. _ . ...... .
hanovercardiology.org
Active
06/27/2021
hanoverendocrinology.com
Active
04/21/2021
hanover astroenterolo .com
Active
06/27/2021
hanovergastroenterology.net
Active
06/27/2021
hanover astroenterolo .or
Active
06/27/2021
hanovergi.com
Active
04/21/2021
...............
morganinternalmedicine.net
Active
01/28/2021
mor aninternalmedidne.or
Active
01/28/2021
newhanovered.com
Active
05/05/2021
newhanoverhealth.com
Active
07/14/2021
�......_ ....... ,.. .....
newhanoverhealth.or
Active
07/14/2021
newhanoverhealthadv.com
Active
07/14/2021
newhanoverhealthadv.or
Active
07/14/2021
newhanoverhealthadvantage.com
Active
07/14/2021
newhanoverhealthadvantage.org
Active
07/14/2021
newhanoverheart.com
Active
05/05/2021
NEWHANOVERINTERNALMEDICINERESIDENCY.COM
Active
08/01/2020
newhanovermedsur .com
Active
05/05/2021
newhanovernicu.com
Active
09/16/2020
__.. .._ . .,...... .................. ...... ,,,,,,, .......
newhanovernurseaide.eom
Active
01/0812021
... _ _ ...... ,..............
newhanovernursin .com
Active
01/27/2021
NEWHANOVEROBGYNRESIDENCY.COM
Active
08/01/2020
newhanoveror.com
Active
11/18/2020
NEWHANOVERSURGERYRESIDENCY.COM
Active
07126/2021
NEWHANOVERSURGERYRESIDENCY.ORG
Active
07/26/2021
newhanoverwomensandchildrens.com
Active
11/21/2020
nhhadvantage. com
Active
07/14/2021
nhhadvvantage.org
Active
07/14/2021
nhhn.org
Active
07/20/2021
nhmg.info
Active
10/19/2020
nhrme.foundation
Active
08/22/2020
nhrme.or
Active
05/09/2020
nhrme.us
Active
11/30/2020
nhrmeatlanticsurgicenter.com
Active
10/01/2020
nhrmebenefits.com
Active
08/26/2020
nhrmcconnect.com
Active
05/06/2021
nhrmcconnect.or
Active
05/06/2021
nhrmcexpresscare.com
Active
06/27/2022
nhrmcexpresscare.org
Active
06/27/2022
nhrmefoundation.com
Active
01/13/2023
nhrmefoundation.or
Active
01/13/2023
nhrmcfuture.or
Active
07/05/2021
nhrmehomecare.com
Active
04/20/2021
nhrmehomecare.or
Active
07/11/2021
ohrmehomecarecareers.com
Active
04/22/2021
NHRMCINTERNALMEDICINERESIDENCY.COM
Active
08/01/2020
nhrmem chart.eom
Active
05/06/2021
nhrmemychart.or2
Active
05/06/2021
NHRMCOBGYNRESIDENCY.COM
Active
08/01/2020
.. _.............. .
nhrinembenefits.com
Active
09/08/2020
nhrmc h sician rou .eom
Active
06/04/2021
nhrmephysiciangroup.org
Active
05/26/2021
NHRMCSURGERYRESIDENCY.COM
Active
07/26/2021
NHRMCSURGERYRESIDENCY.ORG
Active
07/26/202 t
nhrmcurgentcare.com
Active
07/11/2021
onslowoncology.com
Active
04/13/2021
onslowoncology.org
Active
04/t3/2021
ourcommunit link.com
Active
02/21/2021
oureommunitylink.net
Active
02/21/2021
ourcommunit link.or
Active
02/21/2021
penderprimarycare.com
Active
02/16/2021
h sician uality artners.com
_ Active
05/14/2.021
h sician ualit artners.net
Active
05/14/2021
physicianqualitypartners.org
Active
05/14/2021
gualityscoresmatter.com
Active
11113/2020
......
u alityscores matter. net
Active
11/13/2020
...........�.._
gualityscoresmatter.org
Active
11/13/2020
robertbennetturoloev.com
Active
11/15/2020
WILMINGTONINTERNALMEDICINERESIDENCY.COM
Active
08/01/2020
WILMINGTONOBGYNRESIDENCY.COM
Active
08/01/2020
WILMINGTONSURGERYRESIDENCY.COM
Active
07/26/2021
WILMINGTONSURGERYRESIDENCY.ORG
Active
07/26/2021
WILMNCINTERNALMEDICINERESIDENCY.COM
Active
08/01/2020
WILMNCOBGYNRESIDENCY.COM
Active
08/01/2020
WILMNCSURGERYRESIDENCY.COM
Active
07/26/2021
WILMNCSURGERYRESIDENCY.ORG
Active
07/26/2021
wrightsvillebeachfamilymedicine.com
Active
09/25/2020
vourlifev_ourschedule.com
Active
i
06/26/2021
New Hanover Regional Medical
Center
NHRMC Physician Group
NHRMC Foundation
.... ,
NHRMC Future
Our Community Link
NHRMC Careers
Physician Quality Partners
New Hanover Health Advantage
NHRMC MyChart
...,. . .. . ...
SEAHEC
www.nh.rmc.arg
_w.n__hnnc hysician roup.org
nhrmcfoundation. org
www.nhrmcfuture.orc
www.ourcornmunitylink.org
careers.i c.org
nhvsiciano ualitvnartners.orc
www.newhanoverhealLhadvantage.or
Lnyqhart.nhrmc.org
www.seahec.net
NHRMC Graduate Medical www.nhrmc.oM/gme
Education
NHRMC Family Medicine www.coastalfmresidency-com
Residency
NHRMC General Surgery .nhrmcsurgeryresidency com
Residency
NHRMC Internal Medicine www.nhrmcinternatmedicineresidenc,y.,,com
Residency
NHRMC OB/Gyn Residency www.nhrmcobynresidencY com
NHRMC Employee Discounts www.nhrmc.us/employee-discounts
Capslive (internal site) caslive.nhrmc.org
Social Media Accounts:
List of Social Media Accounts
Facebook
ehttp,s://www.facebook.com/AirlinkVitalink
•https://www.facebook.com/Atlantie-Fetal-Medicine-1351976866198331
•https://www.facebook.com/Betty-HCame_ ron-Womens-and-Childrens-Hospital-
116194811742129
• https://www.facebook.com/Coastal-OBG VN -Specialists -Midwifery -583941138285683_
• https://www.facebook.com/NHRMC-Atlantic-Sur2icenter-140147866044803
*httys://www.facebook.com/uhrmc.coordinator
*https://www.facebook.com/nhrmcefe/
•hUps://www.facebook.com/NHRMC-Emerp_ency-Department-_North-1776613625667121
• https://www.facebook.com/nhrmefoundation/
• https://www.facchook.com/pinkribbonproject/
• https-.Hww kv.facebook.com[NHRMC-Orthopedic-Hospital-3848844883741631
•https://www.facebook.com/NHRMC-Rehabilitation-Hospital-113365328696116/
•https://www.facebook.com/nhrmcne/
•htt s://www.facebook.com/New-Hanover-Re ional-Medical-Center-Sur ical-Pavilion-
2547589812795221
•htt s://www.facebook.com/Nhrmc-438717602833992/
• https://www.facebook.com/FamilyHouseofWilmi_ngt_on/
•https://www.Facebook.com/SouthEastAreaHealthEducationCenter/
•https://ivww.facebook.com/NHRMCRx/
• https://www.facebook.comINHRMCFamMedRes/
• https://www.facebook.com/careersatnhrmc
• https://www.facebook.com/Surgery-Residency-New-Hanover-Regional-Medical-Center-
174177939407275/
Twitter
• https://twitter.com/nhrme
•httns:/Itwitter.com/NHRMC IM
•https://twitter.com/NhrmeRx
ohttps,//twitter.com/NHRMCFoundation
•https://hvitter.com/NHRMC Careers
ehttps://t,svitter.com/nursingatnhrme
•https://twitter.com/NHRMC FamMed
•httt)s:Hovitter.com/SEAHEC CE
*https://t-,vitter.com/SEAHEC Wi1mNC_
•https:Htivitter.com/CMESEAHEC
•https://twitter.com/SEAHEC Library
Linkedln
•htt s:Hwwvv.linkedin.com/com an /new-hanover-re ional-medical-center/
ohttps://ivww.linkedin.com/company/nhrmcstroke/
shttps://ivw,vv.linkedin.com/companv/seahee/
•https://ivw-iv.instagram.com/nhrme ncl
Final
EXHIBIT N
Endowment Governance Structure
The Endowment's initial governance structure shall be generally consistent with the terms
set forth in this Exhibit N.
1. Board of Directors. The Endowment shall be governed by a Board of Directors
("Endowment Board"). A majority of the Endowment Board will be appointed by the Local Board
and a minority of the Endowment Board will be appointed by the Board of Commissioners of the
County. No elected official and no member of the Local Board shall be allowed to serve as a director
until at least two years after the person has ceased to serve as an elected official or on the Local Board,
as the case may be. The term for each director will be one to three years and each director may
serve no more than three consecutive terms. The term of a director appointed to fill a vacancy
shall expire at the time the term he or she is filling would have expired. After a director has served
three consecutive terms, the director must have at least a one year break in service before the
director can serve on the Endowment Board again.
2. Qualifications.. All Endowment Board members shall be residents of New Hanover County
and shall be subject to the satisfaction of applicable governance best practices, core competencies,
and diversity considerations. The bodies that appoint members to the Endowment Board should
consider the community demographics and characteristics at large at the time by giving serious
and deliberate consideration to the balance of gender, race, and ethnicity in each and every one of
its appointees. The appointing bodies will equally consider a range of professional and life
experiences of its appointees to include prior service to the community, effective governance for
public and private corporations, and stewardship of resources to include all forms of community
and organizational assets. Competencies of every board member and candidate should include,
but may not be limited to:
(a) Demonstrated leadership within the community with complex decision-
making experiences.
(b) Shared governance responsibilities with a demonstrated capacity to work
collaboratively with a group that is purposely constructed to represent the community in all
manners possible.
(c) Demonstrated professionalism in the individuals' chosen careers or
volunteerism that meets the high standard and conduct of what is expected and becoming for
persons serving the public and community at large.
() Commitment to the values and principles of the Endowment itself including
a commitment to advancing the complicated work of the Endowment, the ability to represent
positively and effectively the work of the Endowment, and a passion for helping solve intractable
community problems.
(e) Diversity that fairly and equitably ensure gender, racial, and ethnicity
considerations as well as lived -experiences reflecting different rates of educational attainment,
economic prosperity, and social mobility.
3. Manner of Acting. The affirmative vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Endowment Board unless a different vote is required
by applicable law, the Endowment's Articles of Incorporation or the Endowment's Bylaws. The
amendment or modification of Article IV of the Endowment's Bylaws (Board of Directors) shall
require a Supenrnajority Vote.
N-2
Final
EXHIBIT 0
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (this "Agreement"), effective as of [e] (the
"Effective Date"), is entered into by and between Novant Health New Hanover Regional
Medical Center, LLC, a North Carolina limited liability company ("Novant"), and New Hanover
Regional Medical Center, a North Carolina nonprofit corporation ("Seller").' Novant and Seller
are, each, a "Party" and, collectively, the "Parties". Any capitalized term not otherwise defined
in this Agreement shall have the meaning provided in the Purchase Agreement (as defined
below).
RECITALS
WHEREAS, the Parties, New Hanover County, North Carolina ("County") and, for the
limited purposes set forth therein, Novant Health, Inc, have entered into that certain Asset
Purchase Agreement (the "Purchase Agreement") dated as of October [•], 2020, with respect to
which Novant will acquire substantially all of the assets of Seller and County used in the
Healthcare Businesses; and
WHEREAS, in order to assist Novant to operate the Healthcare Businesses during the
Term (as defined below), Novant desires Seller to provide, and Seller desires to provide the
Services (as defined below) on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Parties, and subject to any terms and conditions of the Purchase
Agreement, the Parties hereby agree as follows:
ARTICLE I
SERVICES; LIMITED LICENSE
Ll Appointment. On the terms and conditions set forth in this Agreement, Seller
agrees to perforin, provide or cause to be provided to Novant, the services set forth in Exhibit A
attached hereto (collectively, the "Services").
1.2 General Provisions Reaardinv Services.
(a) Nature of Services. Seller will provide the Services in good faith and in a
commercially reasonable manner and will use commercially reasonable efforts to perform the
Services in substantially the same manner Seller provided, and using substantially the same
degree of care that Seller used in providing, the Services for its own purposes immediately prior
to the Effective Date, Novant acknowledges and agrees that Seller may engage those
I Note to Draft: TBD if Coun!�: needs to be added aLLLLUL
subcontractors to perform all, or any portion of, the Services that Seller engaged to perform such
Services immediately before the Effective Date.
(b) Coordination; Personnel. Novant shall provide Seller with any and all
information and support on a timely basis as is reasonably necessary and requested by Seller to
enable the performance by Seller of the Services pursuant to this Agreement. Novant further
agrees to make available, or cause to be made available, to Seller, at Novant's sole cost and
expense, and as reasonably requested by Seller from time to time, certain employees of Novant,
or an Affiliate of Novant, who were employees of Seller immediately prior to the Effect Date, to
provide support and assistance to Seller as may be reasonably necessary to enable Seller to
perform the Services hereunder.
(c) Prepayment. Notwithstanding anything to the contrary in this Agreement,
in the event Seller is required to make any payment on behalf of Novant to any third party in
connection with the Services, Novant shall provide to Seller funds in the aggregate amount of
such payment to be made at least five Business Days before the proposed date of such payment,
and Seller shall be under no obligation to make such payment unless and until sufficient funds
are received from Novant.
(d) Third -Party Products. Seller agrees to use commercially reasonable efforts
to license the Third -Party Products (as defined below) as specifically set forth in this Agreement
as licensed software subject to (i) compliance with the terms and conditions on use as imposed
by the licensors of such Third -Party Products; and (ii) compliance with the terms and conditions
of this Agreement. Seller may apply amendments, corrections and updates to the Third -Party
Products as made available to Seller from the third -party licensor, including new releases and
versions of third -party Software, from time to time in Seller's reasonable discretion. Seller will
pass through to Novant all additional fees or charges imposed by Third -Party Products' licensors
with respect to additional functionality included in such updates, versions and new releases, and
Novant shall be responsible for the prompt payment of all such amounts. Novant shall comply
with all applicable Third -Party Product terms and conditions. if Seller determines that an
agreement, amendment or consent relating to a Third -Party Product may be required in order for
Seller to have all rights necessary to provide the Services as contemplated by this Agreement,
then upon Seller's request, the Parties will meet and cooperate to identify solutions to the issue,
which may include modifying this Agreement or the Services to eliminate any need for such
agreement, amendment or consent. "Third -Party Products" means (x) those Software -as -a -
Service applications and other technology products and services utilized in providing the
Services and that are set forth on Exhibit B, and (y) those Software or other technology products
or services expressly licensed or provided to Seller that are owned, controlled or provided by a
third party and that are set forth on Exhibit B.
1.3 Additional Services. If Novant reasonably determines that a service necessary for
the operation of the Healthcare Businesses that Seller or a third party on behalf of Seller
provided to the Healthcare Businesses immediately before the Closing was omitted from Section
1.22, then the Parties shall negotiate in good faith the terms and conditions upon which such
services shall be added to this Agreement and upon the mutual agreement of the Parties such
additional agreed upon services added to this Agreement shall be treated as "Services," for all
purposes hereunder.
0
1.4 Communications. Novant, on the one hand, and Seller, on the other hand, shall
appoint certain individuals who shall serve as contact persons for purposes of communicating
with the other and carrying out this Agreement, and who shall be authorized to act on behalf of
such Party that appointed such person as to matters pertaining to this Agreement. Novant, on the
one hand, and Seller, on the other hand, shall notify the other in writing as to the name, address
and telephone number of any such person and any replacement for such designated coordinator.
ARTICLE II
COMPENSATION FOR SERVICES
2.1 Fees. Novant shall pay Seller the amount of $10 for the Services. Additionally,
to the extent not paid directly to the applicable third party vendor, Novant shall pay Seller, in
advance on a monthly basis, all fees and expenses under any third -party Contract pursuant to
which Seller is providing the Services. Seller will invoice Novant monthly for such fees. Novant
shall pay to, or on behalf of, Seller the amount set forth on each such invoice within 30 days after
receipt by electronic transfer of immediately available ffinds in United States dollars to an
account designated in writing by Seller, If Novant has any questions with respect to any invoice
or otherwise disputes the amounts due, the Parties shall discuss and resolve the question or
dispute as soon as possible.
2.2 Additional Reimbursement. In addition to the fees set forth in Section 2. 1,
Novant shall reimburse Seller for all of Seller's costs and expenses incurred in providing the
Services hereunder. Seller will invoice Novant on a monthly basis for such costs and expenses,
and Novant shall pay such costs and expenses to, or on behalf of, Seller in full within 30 days
following receipt of each such invoice by electronic transfer of immediately available funds in
United States dollars to an account designated in writing by Seller. Novant acknowledges that it
is possible that Seller's costs in providing Services hereunder may change from the amount
contemplated hereunder in the event that a third party increases its prices for Services it is
providing that are necessary for the provision of Services hereunder, or a third -party licensor of
software imposes additional license fees for software necessary for the provision of Services
hereunder. In such event, such additional costs and fees will be payable by Novant pursuant to
Section 2.1.
ARTICLE III
TERM AND TERMINATION
3.1 Term. The teen of this Agreement shall begin on the date hereof and shall remain
in full force and effect, unless sooner terminated pursuant to Section 3,2, until December 31,
2022 (the "Ten -n"); provided, however, that certain Services may sooner terminated by Novant
pursuant to Section 3.3. In the event a Service does not set forth a separate term, such Service
shall be provided for the Term and expire upon the expiration or earlier termination of this
Agreement,
12 Termination for Breach. This Agreement may be terminated in part or in whole
before expiration of the Term by either Party if the other Party breaches a material provision of
this Agreement and fails to correct such breach within 30 days after receipt of written notice of
such breach from the nonbreaching Party.
K
3.3 Earlv Termination by Novant. Novant may elect to terminate its right to receive
any Service by providing not less than 30 days' prior written notice to Seller, which notice
identifies the Services to be terminated. If Novant terminates its right to receive all of the
Services, then such termination shall constitute the termination of this Agreement in its entirety.
3.4 Expenses and Compensation After Termination. Upon termination or expiration
of any or all of the Services pursuant to this Agreement, or upon the termination or expiration of
this Agreement in its entirety, Seller shall have no further obligation to provide the applicable
terminated Services and Novant will have no obligation to pay any future compensation for such
Services (other than for or in respect of Services already provided in accordance with the terms
of this Agreement and received by Novant before such termination). Any invoice and related
payment for any period of Service less than one month shall be calculated on a pro -rata basis.
ARTICLE IV
INDEPENDENT CONTRACTOR
In providing the Services, Seller is acting as, and shall be considered, an independent
contractor, and no relationship of partnership, joint venture, employment, franchise, agency or
similar arrangement is being created pursuant to or by virtue of this Agreement.
ARTICLE V
NO WARRANTY
Except as provided in Section 1.2(b), Services will be provided by Seller "as is," with no
warranties or representations of any kind whatsoever, express or implied, including those relating
to merchantability, fitness for a particular purpose, non infringement, title, performance or results,
all of which are hereby expressly disclaimed.
ARTICLE VI
CONFIDENTIALITY
Except as required by Law or judicial or like process, each of the Parties (the "Receiving
Party") shall maintain all information disclosed to it under this Agreement by the other Party or
the other Party's Affiliates (the "Disclosing Party") as confidential and shall not disclose such
information to any third party (other than its Representatives who have a need to know and who
shall be bound to similar obligations of confidentiality). Except as required by Law or the
obligations of any Governmental Entity, if the Receiving Party is required to disclose any such
information it shall give the Disclosing Party reasonable notice, to the extent permitted under
applicable Law, so such Party may seek relief from such disclosure. The Disclosing Party shall
have the right to seek equitable relief without the posting of a bond or other surety if there is a
breach of this provision. Notwithstanding anything stated herein or otherwise to the contrary, the
Receiving Party shall not be obligated to adhere to the restrictions in this Article VI with respect
to information that (a) is made public by the Disclosing Party, (b) is already in the possession of
the Receiving Party and not subject to an existing agreement of confidence between the Parties;
(c) is received from a third party which the Receiving Party believes is not in breach of a
confidentiality obligation to the Disclosing Party or (d) is independently developed by the
Receiving Party as evidenced by its records.
4
ARTICLE VII
LIMITATION OF LIABILITY; INDEMNIFICATION
7.1 Limits on Liability. Notwithstanding anything herein to the contrary neither Party
shall be liable to the other for any indirect, incidental, consequential, special, exemplary or
punitive loss or damage.
7.2 Indemnification. Novant shall defend, indemnify and hold harmless Seller,
Seller's Affiliates, and its and their respective directors, trustees, managers, officers, employees,
agents and representatives from and against any and all losses, liabilities, claims and costs to
which such indemnified party is subjected directly arising out of or attributed to (i) Sellers'
performance or non-performance of any of the Services under this Agreement, (ii) Novant's
material breach of this Agreement or (iii) any fraud, intentional misconduct or gross negligence
on the part of Novant or any of its employees, agents or representatives.
ARTICLE VIII
MISCELLANEOUS
8.1 Binding Effect; Assignments. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties and their respective successors and
assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party, whether by operation of Law or otherwise, without the prior written
consent, which shall not unreasonably be withheld, of Seller and Novant and Novant Health, Inc.
No assignment of this Agreement shall relieve any such assignor of its obligations hereunder.
8.2 Books and Records. Each Party shall maintain a complete and accurate set of
files, books and records of all business activities and operations conducted by such Party related
to the Services provided under the terms of this Agreement, as well as any correspondence
related to compliance with any applicable federal, state and local Laws.
8.3 No Authority to Bind Other Party ' . It is understood and agreed that in no event
shall Seller have any authority to negotiate or enter into any contract or commitment for or on
behalf of, or in the name of, Novant or any of its Affiliates, or otherwise possess any authority to
bind Novant or any of its Affiliates in matters of contract, indebtedness or other -wise, without the
prior written approval in each instance of Novant and Novant Health, Inc. It is further understood
and agreed that Seller shall not represent itself as having any such authority.
8.4 Notices. Any notice, demand or communication required, permitted or desired to
be given hereunder shall be deemed effectively given when personally delivered, when received
by email, one Business Day after being deposited with a nationally or internationally recognized
overnight courier or five calendar days after being deposited in the United States mail, with
postage prepaid thereon, certified or registered mail, return receipt requested, addressed as
follows:
If to Seller: New Hanover Regional Medical Center
2131 S. 17th Street
Wilmington, North Carolina 28401
Attention: John Gizdic, Chief Executive Officer
5
Lynn Gordon, Chief Legal Officer & General Counsel
Email:
John.Gizdic@nhrmc.org
Lynn.Gordon@nhrmc.org
With a copy to: Hall, Render, Killian, Heath & Lyman, LLP
3015 Carrington Mill Blvd.
Suite 450
Morrisville, North Carolina 27560
Attention: Joseph M. Kahn
Robert A. Hamill
Email:
JKahn@hallrender.com
RHamill@hallrender.com
If to Novant Novant Health, Inc.
or Novant Health, 2085 Frontis Plaza Blvd.
Inc.: Winston-Salem, North Carolina 27103
Attention: Chief Financial Officer
Email: fmhargett@novanthealth.org
With a copy to: Novant Health, Inc.
1701 East Yd Street
Charlotte, NC 28204
Attention: Executive Vice President, Chief Administrative Officer
and Chief Legal Officer
]Email; feemory@novanthealth.org
and to: McGuireWoods LLP
201 North Tryon Street
Suite 300
Attention: Chris Scheurer
Bart Walker
Email:
CScheurer@mcguirewoods.com
BWalker@mcguirewoods.com
or to such other address and to the attention of such other person or officer as any party may
designate by notice hereunder to the other parties.
8.5 Governing Law; Disputes. This Agreement shall be governed by and construed
and enforced in accordance with the Laws of the State of North Carolina as applied to contracts
made and performed within the State of North Carolina without application of any conflicts -of -
law principles. Any dispute under this Agreement shall be governed by Section 12.3 of the
Purchase Agreement.
8.6 Force Majeure.
6
(a) In the event a Force Majeure Event causes any cessation or interruption of
the Party's performance hereunder (or any portion thereof), upon written notification to the other
Party, performance by such Party shall be temporarily excused for the period of the disability,
without liability. In the event that the affected Party is excused from performing hereunder (or
any portion thereof) in accordance with the terms of this Section 8.6, such Party shall use its
commercially reasonable efforts to promptly resume the performance of its obligations
hereunder, and, during such excused period, the provisions of this Agreement shall be suspended
and the period of suspension shall be added to the Term,
(b) If Seller is excused from providing Services in accordance with the terms
of this Section 8.6, Novant shall not be liable for further payment for such excused Services
during such period of interruption and shall be free to acquire such Services from any substitute
source, at Novant's expense, and without liability to Seller.
(c) The provisions of this Section 8.6 shall not be available to either Party if
such Party fails to use reasonable diligence to remedy the situation and to remove the cause of
the Force Majeure Event in an adequate manner with reasonable dispatch and at reasonable cost.
8.7 Construction.
(a) Drafting. The Parties have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any
provision of this Agreement.
(b) Section Headings, Gender and Number. The section headings inserted in
this Agreement are for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to any "Section" are
to the corresponding Section of this Agreement unless otherwise specified. Any reference in this
Agreement to gender shall include all genders, and words imparting the singular number only
shall include the plural and vice versa.
(c) Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and supersedes all prior written or
oral understandings or agreements, except for the Purchase Agreement. For the avoidance of
doubt, in the case of conflict between the Purchase Agreement and this Agreement, the Purchase
Agreement shall control.
(d) Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any applicable Law or public policy, all other terms or
provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereunder is not affected in any
manner materially adverse to any Party. Upon such determination that any teen or other
provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the Par -ties as closely as
0
possible in an acceptable manner in order that the transactions contemplated hereunder are
consurnmated as originally contemplated to the greatest extent possible.
(e) Including. The word "including" or any variation thereof means (unless
the context of its usage requires otherwise) "including, but not limited to," and shall not be
construed to limit any general statement that it follows to the specific or similar items or matters
immediately following it.
8.8 Amendment; Waiver. This Agreement can be amended, supplemented, changed,
waived, discharged, modified or terminated only by a writing signed by each of the Parties and
Novant Health, Inc. No action taken pursuant to this Agreement, including any investigation by
or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action
of compliance with any representation, warranty, covenant or agreement contained herein, The
waiver by any Party of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of any other preceding
or subsequent breach, No failure on the part of any Party to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such Party preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
8.9 Compliance. Each party shall comply with all applicable Laws in connection with
this Agreement.
8.10 Survivability. The parties' rights and obligations under Section 3.4 and Articles
VI, )LII and VIII of this Agreement shall survive the termination of this Agreement.
8.11 Counterparts; Facsimiles. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
8.12 Third -Party Beneficiary. Except to the extent expressly stated otherwise herein,
nothing in this Agreement is intended to confer upon any Person other than the Parties and their
respective successors and assigns any rights, benefits or obligations hereunder.
[THE REMAINDER OF THIS PAGE Is INTENTIONALLY LEFT BLANK.]
8
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers as of the date first written above.
NOVANT HEALTH NEW HANOVER
REGIONAL MEDICAL CENTER, LLC
By:__
Name:
Title:
NEW HANOVER REGIONAL
MEDICAL CENTER
By:
Name:
Title:
FX14TRIT A
SERVICES
Seller will use commercially reasonable efforts to provide Novant the benefit of those
certain Assumed Contracts set forth on Exhibit B.
[Additional Services TSD]
/:TY.��171�f��L�l'►"�(�11:7�[�IT�'"7:1�1711�:� : 1 ' :: ' : lT�3if�.
[To be Determined]
=I
EXHIBIT P
EXAMPLE CALCULATION OF NETWORKING CAPITAI
Total current liabilities 215,992
Net Working Capital, as reported 258,179
Adliseturents,
AS of
C.'r, and Cash "coi-Inri
June40,
USS In thromands2020
1 " 0
cunrerstasfents
158'71 (I
Usi and raSh,ii,qnNa1,rnRS
206.1.17
Ao;eu Vned ,,, tax use
44's m.,
Not leatki'll 'ec".19ci,
155,780
Pregram iocsn-bl-
(14,16'.71
Otto, 'er—phte.5
M736
Ph,dii and gram, n,,,,h,;,b11s,
1,196
D'i Viromati
D
hoveirt.nes
18,871
Prepaid-P—Ae^:
33,111
Tentil current ."els
_774,172
curnentifulnuffiel
3,461.1 I
ACcounti, payable
74,501
Salaries, wage It tiunl un't,
sq'm6
plefieW."al and gene"Al 11.1h
~4'027
Othoi, sr4it insured liability
:13,600
P,og,amF, Pzilshle
43
Cine to affiliates
45
nefe,led revenue
Rood -oomst payable
I'vaq
Current prodonot debt
17,679
Total current liabilities 215,992
Net Working Capital, as reported 258,179
Adliseturents,
C.'r, and Cash "coi-Inri
A
A.—u' Nri or, to use
A
Third -pa "y Payor Cost rop.rt. zr.ttPoalsrvrz
158'71 (I
Bond Therett payable:
V149 r
Cu—ue portion of dthr
17,679 r;
Ploi Relief T.ri
ii7..474 D
p'-fitcoahal and Ae"u'll liiaeh
24,027 F.
Other sett -insured Imbilay
t,3,6fltl E
int-ri, exons Pavabi.
F•
Acelued interest nece—be - boni,l r,.ap
z C,
DSH/0111L
1.4.795 G
r,d—lkal'i working capital
(817) H
Physii in.— ii --ter
wio'} I
Emma Assirried Paid Tinit Off
3,461.1 I
S.1w, fnirimctiorr Expenses
K
Total adjusirnerips
_(Is{ 04.y
Net Working Capitol 104,676
Woke: Lower C,,pe Fear qui r,i., is Badu led fmm The Traqsackiors; T.hii the related net oierkiv%
c-prel To excluded from Net Working Capital
This Exhibit P sir-rus- the Prameweik for cake axing the Estimated Closing Ni Working Capital
Adji,oiboi at Clasing and .1iiii—nily the Clo—it Net Working Crarik.1 per Sc-rxki 1.2 OfThe Agreement.
M --ewer. Seller and 0,.on,.,s have agreed that We Net Working Capital Target 4 5102,000,") as stated iirl
the AR—nii
A Per The d0ilmillinn of NO Vdollilrig Upit.1 in the Alimeniern, The Cash Aiu—m and md,ict,rf trash are
excluded Train the definkion ui Net Working appriai, and Thu" per both u, excluded
I—IT NO Working C.Pit"i
U Per Section I 51[1y and 1.7(b) of The Agreement, I hi,d foony p.", most report, setflernern, are Excluded
Asset, and "Sr.'ertri,ely, and Thu" per the adi,ust-eut' both are excluded from Net Working
Capital
C bonds—p,per
tau tugrry . .soup, arr: Created 'x76 Ircrdrskaerdnezw, and thus, pr.�r r.hc ,mrlju5n'nvenk, ix hi, -0,,ri frilrn Net
Working C.i
D Per Senior, Ir YI4 W th, Agreurne.not, Providpi, Relip? Funds are ExtilId. rid jahiiiij— the
. , and olus, pe i
adtostfnioit' it liis "o luded i Net Working C*aPftal
E Pe, S.toitiri 4.' ili' The Ali,eemcmrr.bmooi and gerieral lImbikty li,darimr iiff-rn"rived liability are
nistA.--. d ind Blau;, per thie odIustmont, hoth i tmWttr,ded fmir, Net Working C'spn.l
r finc,ornu tai s-irr and -U he,etai,,cd by Se.lcmr, i tku s, Ii.dwild from Net Workirig
Capital
G Feli L!Vs)1 sof the AgIr merij, lVawer/5UqpiPernej pm(i paityliii program fir -his mile
Usiuded Allen, an vhu5, per the rdjul,lurerv, are-r.hidves from Nor Working Capital
H Buyer and Se.1111ers agree, ti,it khe neT .06-g nprtal of tiae NHRMC F ntini.,i frdu&d Ai
but should be e.dud"i ho", I'll. t Vi Capin lid Uni � an adjustment n ii,ade %o -cluide the mheer.d
net —ldriff C.P.Vaf (torn Net wo'kTIF [apical
I F hysidim istcrorafe gbal;in,it'm ills vian ca,h eem, 0,kPS per tlie. Dopurillmitinir, ii' it emdu&d home Not
Woking Cop,lal
Ii Pb Cii-d Paid h"n'.0fir its cria —ri or Accrued Pori Iiine Off in iiuce.%sof 512,100Q,1000
K 5,11., 11,ar,,,,4ljor Lilp,
. in ols, her The Agretin,mrt, is —tudi finivu her Viorkiiii, Capiili