HomeMy WebLinkAbout2013-114 Affiliation Agrmt - Asante-ACH
CONFIDENTIAL
AFFILIATION AGREEMENT
THIS AFFILIATION. AGREEMENT, including all xhibits, schedules and appendices
hereto (the "Agreement"), is made and entered into this day of June, 2013 (the "Execution
Date"), by and among the following entities and municipa ity.
1. Asante, an Oregon nonprofit public benefit corporation ("Asante"), located at 2650
Siskiyou Blvd., Medford, OR 97504.
2. Ashland Community Healthcare Services dba Ashland Community Hospital, an Oregon
nonprofit public benefit corporation ("ACH"), with an address at 280 Maple Street, Ashland, OR
97520.
3. Ashland Community Hospital Foundation, an Oregon nonprofit public benefit
corporation ("ACH Foundation"), with an address at 280 Maple Street, Ashland, OR 97520.
4. City of Ashland, an Oregon municipal corporation ("City"), with an address at 20 East
Main Street, Ashland, OR 97520.
RECITALS:
ACH
A. ACH is tax exempt under Section 501(c)(3) of the Code and is a nonprivate foundation
under Sections 509(a)(1) and 170(b)(1)(A)(iii) of the Code which together describe a charitable
hospital. The City is the sole member of ACH. ACH owns and operates Ashland Community
Hospital, which is located in Ashland, Oregon. Ashland Community Hospital is licensed by the
Oregon Health Authority ("OHA") Public Health Division as a general hospital for 49 beds and
three satellite locations: (1) ACH Center for Family Medicine, 628 North Main Street, Ashland,
OR 97520; (2) ACH Center for Internal Medicine, 560 Catalina Drive, Ashland, OR 97520; and
(3) ACH Center for Family Medicine, 49 Talent Avenue, Talent, OR 97540.
B. In addition, ACH owns and operates Ashland Home Health Agency, 1970 Ashland St,
Suite 1, Ashland, OR 97520, which is licensed by the OHA Public Health Division as a home
health agency.
C. In addition, ACH owns and operates Ashland Community Hospital Hospice, 1970
Ashland St., Ashland, OR 97520, which is licensed by the OHA Public Health Division as a
hospice.
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D. In addition, ACH owns and/or operates health or other services in a number of locations
as further described in Section 32.10.5 and Schedule 32.10.5.
ACH FOUNDATION
E. ACH Foundation is tax exempt under Section 501(c)(3) of the Code and is a nonprivate
foundation under Sections 509(a)(1) and 170(b)(1)(A)(vi) of the Code, which together describe a
public charity. ACH Foundation has members who are individuals, but ACH Foundation is an
independent foundation in that neither ACH, the City, nor Asante are members of ACH
Foundation. ACH Foundation's mission is to support ACH.
F. Among the assets owned by ACH Foundation are five parcels of real property which are
critical to the successful operation of ACH. Pursuant to and subject to the terms and conditions
of this Agreement, at the Closing ACH Foundation will convey to ACH fee simple title to the
five parcels as provided in Section 9.2 and its subsections.
CITY
G. The City is the sole member of ACH.
H. Among the assets owned by the City are two.parcels of real property which the City
leases to ACH pursuant to a Facilities Lease dated June 18, 1996, as amended. Pursuant to and
subject to the terms and conditions of this Agreement, at the Closing the City will convey to
ACH fee simple title to the two parcels as provided in Section 9.1.
ASANTE
1. Asante is tax exempt under Section 501(c)(3) of the Code and is a nonprivate foundation
under Sections 509(a)(1) and 170(b)(1)(A)(iii) of the Code which together describe a charitable
hospital. Asante owns and operates Rogue Regional Medical Center in Medford, Oregon and
Three Rivers Medical Center in Grants Pass, Oregon. In addition, Asante is the sole member of
certain affiliated health care organizations and fundraising foundations. Asante's mission is to
provide quality healthcare services in a compassionate manner valued by the communities it
serves. Asante's service area includes without limitation nine southern Oregon and northern
California counties.
J. Pursuant to a Letter of Intent dated February 13, 2013 and executed by the Parties on
February 19, 2013 (the "Letter of Intent" or "LOI"), the Parties agreed to pursue a transaction in
which ACH will affiliate with Asante and integrate with Asante, and in which Asante will
become the sole member of ACH as of the Closing Date (as defined in Section 27.2 and its
subsections) (the "Affiliation"). As a result of the Affiliation, ACH. will continue to serve the
health needs of the communities served by ACH.
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K. Effective March 11, 2013, Asante and ACH entered into a Management Agreement
pursuant to which Asante fully manages ACH. Upon the Closing of this Agreement, the
Management Agreement will terminate, if not earlier terminated according to its terms.
L. The Parties have entered into this Agreement for the affiliation and integration of ACH
and Asante to achieve the following purposes, principles, vision and values:
1. Community Benefit. The Affiliation of ACH and Asante is being undertaken to
serve the community interest and is being done in the best interests of all relevant constituent
groups in the region. Specifically, the Parties desire to combine their efforts to further improve
health care in the Ashland area as well as the delivery of patient and person-centered health care
to the region and the enhancement of services availability and access. The Asante and ACH
Board members believe this Agreement for the Affiliation of ACH and Asante will provide
significant benefits to:
i. The community by enhancing a community health resource (ACH)
dedicated to having the ability to improve the health status of the population while managing the
per capita costs to provide affordability;
ii. The patients by providing access to a patient focused continuum of high
quality, integrated healthcare services through convenient local primary care access points and
specialty services; and
iii. The physicians by creating growth opportunities for existing physician
practices, increasing access to specialists, and assuring the continued availability of local primary
care physicians and expanding practice support services.
2. Vision and Values. The Parties share the common values of the need for the
strong involvement of community leaders in the delivery of health care. The Parties desire a
healthcare system providing the Ashland area community with quality healthcare providers
conveniently accessible and capable of meeting the full range of needs of the community. The
Parties desire to combine their efforts to further improve health care in the Ashland area and
surrounding communities as well as the delivery of patient and person-centered health care to the
region and the enhancement of service availability and access.
M. The transactions contemplated by this Agreement are exempt from the notice, public
hearing and approval requirements of ORS 65.803 pursuant to ORS 65.803(4) because the City,
which is a political subdivision of the state of Oregon, controls the operations of ACH.
N. This Agreement is the Definitive Agreement between the Parties with respect to the
Affiliation.
AGREEMENT:
NOW THEREFORE, in consideration of the mutual promises and covenants contained in
this Agreement, the Parties agree as follows:
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1. Change of Membership. Effective as of the Closing Date, the City and ACH shall amend
or restate the articles of incorporation and corporate bylaws of ACH (respectively, the "ACH
Amended Articles" and "ACH Amended Bylaws") to provide that Asante shall be the sole
member of ACH. This shall be deemed to be a transfer by the City of its sole membership
interest in ACH to Asante.
2. Corporate Structure and Governance of ACH. The sole member of ACH shall become
Asante, an Oregon nonprofit corporation that is exempt from federal income tax under Section
501(c)(3) of the Code. Effective as of the Closing Date, the City and ACH shall amend or restate
ACH's articles of incorporation and corporate bylaws to conform to the forms attached hereto as
Exhibits 27.3.2.1 and 27.3.2.2, respectively, which shall include provisions to the following
effect:
2.1 Sole Corporate Member; Reserve Powers. Subject to the terms and conditions of
this Agreement and effective as of Closing, Asante shall have all the powers, rights and
authorities of the sole corporate member of ACH, including without limitation the reserve and
related powers of Asante described in the ACH Amended Bylaws.
2.2 Board of Directors. The ACH board of directors shall be comprised of the same
individuals as the Asante board of directors ("Asante Board"). The individuals who are from
time to time members of the Asante Board shall serve simultaneously as the members of the
board of directors of ACH (the "ACH Board") for so long as they serve on the Asante Board.
The individuals who are ex-officio members of the Asante Board shall be ex-officio members of
the ACH Board. The individuals who serve from time to time as the officers of Asante shall
serve simultaneously as the corresponding officers of ACH. Additional governance provisions
which will be contained in the ACH Amended Bylaws and in the corporate bylaws of Asante, as
appropriate, are in Section 12 of this Agreement and its subsections.
2.3 Mission Statement. ACH shall adopt Asante's mission statement, as set forth in
Exhibit 2.3 attached hereto, to reflect its affiliation with Asante.
2.4 Annual Meeting. The annual meeting of the ACH Board shall be held each year,
during the same week as the Asante Board's annual meeting.
2.5 Fiscal Year. ACH's fiscal year end shall be changed to September 30 effective on
the first September 30 following the Closing Date.
2.6 Asante Policies. ACH shall abide by, follow, and be subject to each of the
policies, systems, and procedures of Asante, as the same may be changed from time to time, and
operate as a part of the health care system comprised of hospitals and health care organizations
owned and operated by Asante.
3. ACH Foundation. ACH Foundation shall retain its legal structure as an independent
public benefit corporation until such time as ACH Foundation and Asante mutually agree to
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affiliate more closely. During the period of time Asante operates ACH as a general hospital in
accordance with OAR 333-500-0032(2)(a) (hereinafter "General Hospital"), but in no event
longer then fifteen years after the Closing Date, Asante will maintain a staffed ACH Foundation
office on the ACH campus, subject to the requirement that ACH Foundation exists to provide
and does provide financial support exclusively to ACH. Asante, ACH, and ACH Foundation will
each comply with the terms of any restricted grant or fund. For as long as Asante operates ACH
as a General Hospital, but subject to the requirement that ACH Foundation exists to provide and
does provide financial support exclusively to ACH continuously during the period of time
Asante operates ACH as a General Hospital, if Asante fails to maintain a staffed office for ACH
Foundation at ACH during the time that Asante operates ACH as a General Hospital, then at the
time that Asante ceases to maintain a staffed office for ACH Foundation (the "Cessation"),
Asante will pay to ACH Foundation the following sum: (1) if the Cessation occurs during the
first three years after the Closing of this Agreement, Asante will pay to ACH Foundation a sum
equal to the cost of operating ACH Foundation for the remaining balance of the first three years
following the Closing of this Agreement, provided that such sum shall not be less than the cost of
operating ACH Foundation for one year; or (2) if the Cessation occurs after the first three years
following the Closing of this Agreement but prior to the expiration of 15 years following the the
Closing of this Agreement, then Asante will pay to ACH Foundation a sum equal to the cost of
operating ACH Foundation for one year. For the purposes of this Agreement, the cost of
operating ACH Foundation will include the costs that ACH Foundation will incur to pay for
staff, facilities, goods and services comparable to those provided for ACH Foundation at ACH
on average, during the twelve months prior to the Cessation.
4. No Other Consideration. No other consideration not specified in this Agreement shall be
provided by Asante to ACH, ACH Foundation, or the City.
5. Commitments by Asante in First Three Years. During the first three years after the
Closing Date, Asante agrees to the following two commitments in Sections 5.1 and 5.2:
5.1 Operate ACH as a General Hospital; and
5.2 ACH Financial Operations.
5.2.1 Make minimum investments in ACH for capital improvements owned by
ACH, of at least $10 million consisting of no less than $2.5 million invested within the first year
after the Closing Date, no less than a cumulative total of $5.5 million invested within the first
two years after the Closing Date, and no less than a cumulative total of $10 million invested
within the first three years after the Closing Date. The term "capital improvements" for purposes
of this Agreement shall mean any expenditure that would be appropriately capitalized based on
generally accepted accounting principles ("GAAP"), and shall include without limitation capital
costs associated with information technology and associated with the rental or development of
medical office buildings rented or owned by ACH in Ashland and/or the equipping thereof.
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5.2.2 Fund the Ashland Community Hospital Retirement Plan (the "Plan") in
the amounts equal to at least an average of $900,000 annually.
5.2.3 Not cause any distributions of real property from ACH to Asante, or any
other entity.
5.2.4 In the event of a reversion in Section 6 and its subsections or Section 8
and its subsections, ACH's cash balance on the date of reversion will be equal to or greater than
ACH's cash balance on the Closing Date.
5.3 Verification: Audit. The investments by Asante shall be subject to written
verification and/or audit of the amounts actually paid by Asante for investments in ACH in the
form of capital improvements. Asante will provide the City and ACH Foundation with a written
statement within 120 days after the end of the first 12 month period after the Closing Date
showing the amount actually paid or spent by Asante for investments in ACH in the form of
capital improvements during the first 12 months after the Closing Date, and the capital
improvements on which the amount was paid or spent. Similar written statements shall be
provided by Asante to the City and ACH Foundation within 120 days after the end of the second
and third 12 month periods after the Closing Date. The City, ACH Foundation, or both of them
may request an audit in writing to Asante within 30 days after receipt by the City and the
Foundation of Asante's written statement for the applicable year in the first three years after the
Closing Date. Whichever Party may request an audit, whether it is the City or the Foundation,
shall be responsible for paying the costs and expenses of the audit unless the audit discloses an
overstatement by Asante in excess of $10,000, in which case Asante will pay for the audit.
Asante agrees to make available to the auditor Asante's books and records relating to the
amounts paid by Asante for the investments in ACH in the form of capital improvements.
6. Event of Default Regarding Section 5.1: City's Reversionary Clause. In the event Asante
does not operate ACH as a General Hospital, as evidenced by revocation by Oregon Health Care
Licensure of ACH's license as a General Hospital, during the first three years after the Closing
Date as provided in Section 5. 1, and in the event Asante has not activated the reversionary clause
as described in Section 8 (either or any of Sections 8.1, 8.2, or 8.3), the City shall have the right
to activate the reversionary clause in this Section 6 ("City's Reversionary Clause"), in the City's
sole discretion, by providing written notice to Asante and ACH Foundation within 30 days after
the date, if any, that Asante does not operate ACH as a General Hospital at any time during the
first three years after the Closing Date.
6.1 Effect of City's Reversionary Clause. In the event the City timely activates the
City's Reversionary Clause as provided in Section 6, Asante agrees to do the following in
Sections 6.1.1 and 6.1.2:
6.1.1 Asante will orderly transfer its sole membership and operations in ACH to
the City, and the City will thereafter have the right to deal with ACH in accordance with the
City's rights as the sole member of ACH. Asante will orderly transfer its sole membership and
operations in ACH by amending or restating the articles of incorporation and corporate bylaws of
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AC H, within 60 days of receipt of the City's written notice in Section 6 of activation of the
City's Reversionary Clause, to provide that the City will be the sole member upon the date the
amended or restated articles of incorporation are filed with the Oregon Corporation Division.
The City shall have the right to review the amended or restated articles of incorporation of ACH
in advance of Asante 'filing them, and the City shall have the right to comment to Asante on the
amended or restated articles of incorporation for the purpose of assuring that the amended or
restated articles will achieve their intended purpose of making the City the sole member of ACH.
In addition, Asante will give the City access to and the right to copy or obtain electronic access
to the books and records of Asante with respect to ACH and its operations, with the intent being
that the City will be able to own and operate ACH in the event the City activates the City's
Reversionary Clause.
6.1.2 Asante will pay to ACH $8 million, reduced by the amount of
contributions in excess of an average of $900,000 annually paid by Asante to the Plan, such
reduction not to exceed $2 million total, on or within 60 days after the date that the amended or
restated articles of incorporation of ACH are filed with the Oregon Corporation Division, as
described in Section 6.1.1; provided however that if Asante in its sole discretion pays the
Umpqua Bank loan in full, Asante shall have no obligation to pay ACH the aforedescribed $8
million, as adjusted.
6.1.3 Upon payment of the $8 million, as adjusted, by Asante to ACH, the
funding of at least an average of $900,000 annually to the Plan, and the filing of the amended or
restated articles of incorporation of ACH with the Oregon Corporation Division as provided in
Section 6.1.2, Asante shall have no further liability with respect to the Plan, to ACH, the City,
ACH Foundation and/or to any persons or entities who are sponsors of, participants in, or
beneficiaries of or with respect to or arising from the Plan, and all such liability shall thereafter
be with and for the account of ACH and the City. This exoneration of Asante from liability shall
be in addition to the satisfaction of liability provisions of Section 6.2.
6.2 Effect of $8 Million Payment, as Adjusted, by Asante. In the event the City
activates the City's Reversionary Clause in Section 6, the $8 million payment, as adjusted, by
Asante to ACH as provided in Section 6.1.2 shall be deemed to be in full satisfaction of any
liability or claim for damages, injunctive relief or otherwise owing to ACH, the City of Ashland
and/or ACH Foundation arising out of this Agreement except for (1) the City's interest as an
additional insured under Asante's or ACH's general liability policy from the signing of this
Agreement until the earlier of three years after the Closing Date or any reversion of Asante's sole
membership interest in ACH to the City under this Section 6 and its subsections, (2) the
agreement to pay the amounts described in subsection 5.2.1 or Section 7 and its subsections,
whichever may be applicable, up to the date of any default, prorated for the month or partial
month of the year in which Asante defaults, if at all, and (3) the.agreement in subsection 5.2.4
that ACH's cash balance on the date of reversion will be equal to or greater than ACH's cash
balance on the Closing Date. In the event of a reversion pursuant to Section 6 and its subsections,
the Plan liability of ACH shall be with ACH and the City after the reversion of Asante's sole
membership interest in ACH, and Asante shall have no further liability with respect to those
liabilities. Without limitation of the foregoing provisions of this Section 6.2, any and all costs,
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including without limitation personnel costs incurred by Asante associated with maintaining
ACH medical, information, or telecommunication system licenses, licensure and operating
agreements shall be the responsibility of Asante prior to the payment of the $8 million in
subsection 6.1.3, and shall by the responsibility of the City and ACH commencing with the date
of the payment by Asante of the $8 million, as adjusted, as provided in subsection 6.1.3.
6.3 Real Property. The real and personal property conveyed by the City and ACH
Foundation to ACH at the Closing shall remain with ACH during the first three years after the
Closing. The property conveyed by the City to ACH shall remain with ACH upon the reversion
in this Section 6 and its subsections.
7. Event of Default Regarding Subsection 5.2.1. Subject to Section 7.1, in the event Asante
defaults in payment of at least $2.5 million in ACH capital investments within the first year after
the Closing Date as provided in subsection 5.2.1, Asante will pay ACH Foundation the
difference between $2.5 million and the lesser amount Asante actually paid during the first year
after the Closing Date. Subject to Section 7. 1, in the event Asante defaults in payment of at least
a cumulative total of $5.5 million in ACH capital investments within the first two years after the
Closing Date as provided in subsection 5.2.1, Asante will pay ACH Foundation the difference
between $5.5 million and the lesser amount Asante actually paid during the first two years after
the Closing Date. Subject to Section 7.1, in the event Asante defaults in payment of at least a
cumulative total of $10 million in ACH capital investments within the first three years after the
Closing Date as provided in subsection 5.2.1, Asante will pay ACH Foundation the difference
between $10 million and the lesser amount Asante actually paid during the first three years after
the Closing Date, which amount will be verified as per Section 5.3.
7.1 Default under Section 7; Verification; Audit. In the event the written statement
provided by Asante to the City and ACH Foundation pursuant to Section 5.3 shows that Asante
did not make the minimum investments in ACH capital improvements during any of the first
three years as provided in Section 7, or in the event any audit requested pursuant to Section 5.3
shows that Asante did not make the minimum investments in ACH capital improvements during
any of the first three years as provided in Section 7, Asante will be in default in payment of the
applicable amount for the applicable year in Section 7, in which case Asante will pay ACH
Foundation the difference between the amount Asante was obligated to pay under Section 7 and
the lesser amount Asante actually paid during the applicable year. In the event of a default in
payment by Asante as defined in the immediately preceding sentence in this Section 7.1, Asante
will pay any amount due to ACH Foundation under Section 7, as further provided in Section 7. 1,
within 90 days after the written verification and/or audit is completed.
7.2 Effect of the Payments by Asante to ACH Foundation. The payments by Asante
pursuant to this Section 7 and its subsections with respect to default in payment of the $10
million or the portion thereof as provided in Section 7 shall be in full satisfaction of any liability
or claim for damages, injunctive relieve or otherwise owing to the City, ACH, or ACH
Foundation arising out of this Agreement, except for (1) Asante's agreement to operate ACH as a
General Hospital during the first three years after the Closing Date as provided in Section 5. 1, or,
in the event Section 9.8 is applicable, Asante's agreement to operate ACH as a General Hospital
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in Section 9.8 in years four through fifteen after the Closing Date, (2) the City's interest as an
additional insured under Asante's or ACH's general liability policy from the signing of this
Agreement until the earlier of three years after the Closing Date or any reversion of Asante's sole
membership interest in ACH to the City under Section 6 and its subsections, (3) the agreement to"
pay the amounts described in subsection 5.2.1 or to pay to ACH Foundation the amount required
to be paid in Section 7 and its subsections in the event of a default in payment by Asante under
Section 7.1 up to the date of any default, whichever may be applicable, prorated for the month or
partial month of the year in which Asante defaults, if at all, in the payment of the applicable
amounts required, and (4) any obligation of Asante with respect to a staffed ACH Foundation
office as provided in Section 3.
8. Asante's Reversionary Clause. Subject to the terms and conditions of this Section 8 and
elsewhere in this Agreement, Asante shall have the right, at its sole discretion, to cause a
reversion of its sole membership interest in ACH to the City pursuant to this Section 8 and its
subsections if any one or more of the following events in Section 8.1, 8.2, or 8.3 occur at any
time within the first three years after the Closing Date ("Asante's Reversionary Clause"):
8.1 Unfunded Defined Benefit Pension Liability of ACH. The unfunded Plan
liability, based on GAAP standards plus any cash payments made into the Plan at any time
during the first three years exceeds $16 million at any time during the first three years ending
after the Closing Date. Prior to the Closing Date of this Agreement, the Plan is a governmental
plan under Section 414(d) of the Code. The Plan received a favorable determination letter from
the Internal Revenue Service in 1997. The Plan was frozen effective December 31, 2006, which
eliminated future benefit accruals and closed the Plan to new entrants. After the Closing Date,
the Plan will become a nongovernmental plan. Milliman, Inc., actuaries shall make a written
determination within 180 days after the end of each of the first three full Plan years after the
Closing Date as to whether the Plan has an unfunded defined benefit pension plan liability which
exceeds $16 million. Asante or ACH shall be responsible for paying for the cost of each such
determination by Milliman, Inc. The determination of Milliman, Inc. shall be final and binding
on the Parties. Asante shall provide the City and ACH Foundation with a copy of the
determination of Milliman, Inc. within 30 days of receipt by Asante of the determination from
Milliman, Inc.; or
8.2 It is determined at any time during the first three years that there are liabilities that
have a negative impact of $4 million or more on the ACH Income Statement or Balance Sheet, as
defined in and prepared in accordance with GAAP, as a result of any unknown liabilities or
known liabilities arising from acts or omissions that occurred prior to the Closing Date and
which are not quantifiable at the time of the Closing Date of this Agreement, excluding: (1) the
unfunded Plan liability described in Section 8.1, (2) the existing Umpqua Bank loan to ACH, and
(3) all liabilities in the amount stated on the ACH Balance Sheet immediately prior to the
Closing; provided, however, that any liabilities arising from Asante's negligent acts or omissions
after the Closing shall not be counted in determining a negative impact of $4 million or more; or
8.3 Acts or omissions that occurred prior to the Closing Date cause (1) the federal tax
exempt status of ACH under Code Section 501(c)(3) or nonprivate foundation status under Code
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Sections 509(a)(1) and 170(b)(1)(A)(iii) to be terminated or revoked, or (2) the Medicare and/or
Medicaid provider status of ACH to be terminated or revoked.
8.4 Activation of Asante's Reversionary Clause. If any one or more of the events
described in Sections 8.1, 8.2, and/or 8.3 occurs within the first three years after the Closing
Date, Asante shall have the right to activate Asante's Reversionary Clause by giving written
notice to the City and ACH Foundation at any time following the determination in Section 8.1 or
8.2, or within 60 days of the termination or revocation in Section 8.3.
8.5 Effect of Activation of Asante's Reversionary Clause. In the event Asante
activates Asante's Reversionary Clause, Asante agrees to do the following:
8.5.1 Asante will orderly transfer its sole membership and operations in ACH to
the City, and the City will thereafter have the right to deal with ACH in accordance.with the
City's rights as the sole member of ACH. Asante will orderly transfer its sole membership and
operations in ACH by amending or restating the articles of incorporation and corporate bylaws of
ACH, within 45 days of activation of Asante's Reversionary Clause, to provide that the City will
be the sole member upon the date the amended or restated articles of incorporation are filed with
the Oregon Corporation Division. The City shall have the right to review the amended or restated
articles of incorporation of ACH in advance of Asante filing them, and the City shall have the
right to comment to Asante on the amended or restated articles of incorporation for the purpose
of assuring that the amended or restated articles will achieve their intended purpose of making
the City the sole member of ACH. In addition, Asante will give the City access to and the right
to copy or obtain electronic access to the books and records of Asante with respect to ACH and
its operations, with the intent being that the City will be able to own and operate ACH in the
event Asante activates Asante's Reversionary Clause.
8.5.2 In the event Asante activates Asante's Reversionary Clause and effective
upon the filing of the amended or restated articles of incorporation of ACH with the Oregon
Corporation Division as provided in Section 8.5.1, Asante shall have no further liability to ACH,
the City, ACH Foundation and/or to any persons or entities who are sponsors of, participants in,
or beneficiaries of the Plan with respect to the Plan which was frozen effective December 31,
2006, or defined contribution plan funded quarterly, and all such liability shall be with and for
the account of ACH and the City. This exoneration of Asante from liability after the filing of the
amended or restated articles of incorporation of ACH shall be in addition to the satisfaction of
liability provisions of Section 8.6. In the event the City's Reversionary Clause is activated or
Asante's Reversionary Clause is activated, the City shall indemnify and hold harmless Asante
and its officers, directors, employees and agents from and against any claims, liabilities, losses,
damages and expenses arising from or with respect to the Plan.
8.6 Effect of Transfer of Sole Membership by Asante to the City. In the event Asante
activates Asante's Reversionary Clause in Section 8 and its subsections, any such transfer of sole
membership in ACH by Asante to the City described in Section 8.5 is in full satisfaction of any
liability or claim for damages, injunctive relief or otherwise owing to ACH or the City arising
out of the Agreement, except for (1) the agreement to pay the amounts described in subsection
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5.2.1 or Section 7, whichever may be applicable, up to the date Asante triggers or activates
Asante's Reversionary Clause, prorated for the month or partial month of the year in which
Asante triggers or activates Asante's Reversionary Clause, if at all, and (2) the agreement in
subsection 5.2.4 that ACH's cash balance on the date of reversion will be equal to or greater than
ACH's cash balance on the Closing Date. In the event of a reversion pursuant to Section 8 and its
subsections, the defined benefit pension liability of ACH and the Umpqua Bank liability of ACH
will remain with ACH and the City after the reversion of Asante's sole membership interest in
ACH to the City, and Asante shall have no liability with respect to those liabilities. Without
limitation of the foregoing provisions of this Section 8.6, any and all costs, including without
limitation personnel costs incurred by Asante associated with maintaining ACH medical,
information, or telecommunication systems licenses, licensure, and operating agreements prior to
a reversion pursuant to Section 8 and its subsections shall be the responsibility of Asante, and
such costs incurred thereafter shall be the responsibility of the City and ACH commencing with
the effective date of the filing of the amended or restated articles of incorporation of ACH as
referred to in Section 8.5.2.
9. Real Estate Arrangements Among the Parties. The Parties agree to each of the following:
9.1 Conveyances By the City to ACH. Prior to the Closing, the City and ACH are
parties to an unrecorded Facilities Lease entered into June 18, 1996 pursuant to which the City
leases to ACH the two parcels of real property described in Exhibit 9.1, together with all
facilities and other improvements located thereon including but not limited to land
improvements, buildings and fixed equipment. Effective upon the Closing Date, the City shall
convey to ACH all of the City's assets leased by the City to ACH including without limitation
the two parcels of real property described in Exhibit 9.1 and the improvements, buildings and
fixed equipment located thereon. The two parcels of real property described in Exhibit 9.1 are (1)
Parcel I on which the main hospital buildings of ACH are located, with a situs address of 278
and 280 Maple St., Ashland, OR 97520, and (2) Parcel V on which ACH Internal Medicine and
Information Technology operations are located, with a situs address of 560 Catalina Dr.,
Ashland, OR 97520. The City shall convey to ACH at the Closing fee simple title to the two
parcels of real property described in Exhibit 9.1 and all improvements, buildings and fixed
equipment located thereon by statutory warranty deeds and bills of sale, free and clear of all liens
and encumbrances except for the line of credit deed of trust of Umpqua Bank dated January 5,
2004, recorded January 9, 2004 in the Jackson County Official Records as No. 2004-001245.
The City and ACH agree to obtain the written consent of Umpqua Bank to the conveyance of
Parcel I to ACH. The form of the statutory warranty deeds are attached as Exhibit 9.I A and
9.1 B.
9.2 Conveyances by ACH Foundation to ACH. Effective upon the Closing Date,
ACH Foundation shall convey to ACH fee simple title to the following five specific parcels. of
real property owned by ACH Foundation, including without limitation the land, buildings,
improvements, and fixed equipment:
9.2.1 317 Maple Street, Ashland, Oregon (house used for storage), as legally
described in Exhibit 9.2.1 as Parcel 111.
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9.2.2 530 Catalina Street, Ashland, Oregon (parking lot), as legally described in
Exhibit 9.2.2 as Parcel VI.
9.2.3 628 North Main Street, Ashland, Oregon (medical office building), as
legally described in Exhibit 9.2.3 as Parcel VIII.
9.2.4 49 Talent Avenue, Talent, Oregon (medical office building), as legally
described in Exhibit 9.2.4 as Parcel XI, Tract A.
9.2.5 209 North Pacific Highway, Talent, Oregon (commercial building to be
used for storage and possibly offices), as legally described in Exhibit 9.2.5 as Parcel X.
9.3 Terms of Conveyances by ACH Foundation. The conveyances by ACH
Foundation to ACH of each of the five aforedescribed parcels of real property and all buildings,
improvements and fixed equipment located thereon at the Closing shall be by statutory warranty
deeds (except for Parcel XI, Tract A described in Section 9.2.4 which may be by bargain and sale
deed) and bills of sale, free and clear of all liens and encumbrances except for the existing lien in
the amount of approximately $82,000 encumbering the property at 209 North Pacific Highway in
Talent, Oregon (the "Talent Property" described in Section 9.2.5 above) which Asante agrees to
assume or pay off as of the Closing Date, and to pay the promissory note in connection with such
existing lien according to its terms. ACH will grant to ACH Foundation (or ACH Foundation
may reserve) an easement across the Talent Property for access to other property owned by ACH
Foundation, and ACH Foundation will grant to ACH an easement across other property owned
by ACH Foundation for access to the Talent Property.
9.4 License For and Guarantee of Parking Spaces at 588 North Main Street in
Ashland. ACH Foundation also owns a parcel of real property located at 588 North Main Street,
Ashland, Oregon, which is legally described on Exhibit 9.4 as Parcel IX, Tract F. This parcel of
real property will not be conveyed by ACH Foundation to ACH, but commencing on the Closing
Date, ACH Foundation hereby licenses and guarantees to ACH and Asante the unrestricted use
of 10 parking spaces on this parcel for visitors (i.e., patients and invitees) to ACH Family
Medicine, which is located at 628 North Main Street, Ashland, Oregon, which is described in
Section 9.2.3 above. This license and guarantee by ACH Foundation shall be perpetual, subject
to revocation by ACH Foundation only in the event of a reversion of Asante's sole membership
interest in ACH under Sections 6 or 8.
9.5 ACH Foundation Reversionary Clause. Commencing on the Closing Date, ACH
Foundation shall have a reversionary clause ("ACH Foundation Reversionary Clause"), as
provided in this Section 9.5, and which will be contained in each of the five deeds from ACH
Foundation to ACH as described in Section 9.3, which will provide that in the event Asante does
not operate ACH as a General Hospital during the first three years after the Closing Date as
described in Section 5.1, or in the event Asante activates Asante's Reversionary Clause with
respect to Asante's sole membership interest in ACH as provided in Section 8 and its
subsections, ACH Foundation will have the right, in its sole discretion, to activate the
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reversionary clause(s) in any one or more or all of the five deeds by providing written notice to
Asante and the City within 90 days after the occurrence of either such event.
9.6 Obligation of Asante and ACH if ACH Foundation Reversionary Clause is
Activated. In the event ACH Foundation activates the ACH Foundation Reversionary Clause
with respect to any one or more of the deeds described in Section 9.5, Asante shall cause ACH to
reconvey to ACH Foundation the real property and all buildings, improvements and fixed
equipment located on the parcels of property described in the written notice of activation of the
ACH Foundation Reversionary Clause. Such reconveyance(s) by ACH to ACH Foundation shall
be by statutory warranty deed for properties conveyed by ACH Foundation to ACH by statutory
warranty deed and by a special warranty deed for any property conveyed by ACH Foundation to
ACH by a bargain and sale deed, as applicable to the parcel being reconveyed, as provided in
Section 9.3, and each such deed will be subject to any liens and encumbrances which existed
against such real property as of the Closing Date (provided the indebtedness secured by any such
lien or encumbrance shall not exceed the amount of such indebtedness at the time of conveyance
of the property by ACH Foundation to ACHY, but will not be subject to any liens and
encumbrances created or suffered by ACH or Asante after the Closing. Any such
reconveyance(s) by ACH to ACH Foundation described in this Section 9.6 shall be delivered by
ACH to ACH Foundation within 60 days of receipt by ACH and Asante of the written notice
from ACH Foundation of activation of the ACH Foundation Reversionary Clause.
9.7 Effect of Reconveyance from ACH to ACH Foundation. In the event the
reversionary clause in Section 9.5 is activated, the reconveyance of the assets by ACH to ACH
Foundation shall be in full satisfaction of any liability or claim for damages, injunctive relief or
otherwise owing to ACH Foundation arising from any obligation of Asante to meet or perform
the agreement to operate ACH as a General Hospital in Section 5.1, except for (1) the agreement
of Asante to fund capital improvements as provided in subsection 5.2.1, or (2) the agreement of
Asante to pay to ACH Foundation amounts required to be paid in Section 7 (as further provided
in Section 7.1), whichever may be applicable, up to the date Asante triggers the reversionary
clause, prorated for the month or partial month of the year in'which Asante triggers the
reversionary clause, if at all.
9.8 Years Four through Fifteen after Closing. For the first three years after the
Closing Date, and in the event (1) Asante has not activated Asante's Reversionary Clause in
Section 8 and (2) Asante does not cease operating ACH as a General Hospital during the first
three years after the Closing Date as provided in Section 5.1, Asante further agrees that it will
operate ACH as a General Hospital for an additional twelve (12) years. In the event the twelve
(12) year period of ACH operating as a General Hospital is not satisfied, Asante will pay to the
City $4 million in full satisfaction of any liability or claim for damages, injunctive relief or
otherwise arising out of this Agreement, including without limitation any liability or claim that
Asante is obligated to operate ACH as a General Hospital for an additional twelve (12) years,
except for any required payments from Asante to ACH Foundation in Section 7 (as further
provided in Section 7.1). In the event the condition with respect to the $4 million payment by
Asante is applicable, Asante will make the payment within 60 days of the date Asante ceases
operating ACH as a General Hospital.
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9.9 Additional Agreements of the Parties Relating to the Conveyance of Real
Property. Attached as Exhibit 9.9 are additional agreements of the Parties relating to (1) the
conveyance by the City to ACH of the two parcels of real property described in Section 9.1, and
(2) the conveyance by ACH Foundation to ACH of the five parcels of real property described in
Section 9.2 and its subsections. The agreements of the Parties in Exhibit 9.9 are incorporated into
this Agreement by this reference and shall have the same force and effect as if such agreements
were set forth as a section or part of this Agreement.
10. Finances; PERS. The City agrees to assume any liability of ACH related to the Public
.Employees Retirement System ("PERS") retirement plan of the City, including without
limitation any such liability and/or unfunded liability or surplus with respect to the participation
of the employees of ACH who were employees of ACH prior to and/or after July 1, 1996,
irrespective of whether any one or more of such employees remain as employees of ACH as of
the Closing Date or thereafter. In the event ORS 236.610(7) is applicable, which the Parties
deny, this Section 10 constitutes the written agreement described in ORS 236.610(7).
11. Hospital Name. The name/branding of ACH will be Asante Ashland Community
Hospital (or similar), in a' manner substantially consistent with Asante's existing hospital
facilities, Asante Rogue Regional Medical Center and Asante Three Rivers Medical Center.
12. Governance.
12.1 On Closing, Asante will elect a new Board of Directors for ACH, which will
consist of the Asante Board. Each of the persons on the board of directors of ACH prior to the
Closing Date shall resign as a board member of ACH effective concurrent with Closing.
Immediately after the Closing, ACH will form an "Advisory. Board" of community members
which will consist of the persons on the ACH Board of Directors immediately prior to Closing,
and shall include the current chief of the ACH Medical Staff up to two additional medical staff
members and the Asante Chief Quality and Medical Officer.
12.2 The Chair of the ACH Advisory Board shall become an ex-officio, voting member
of the Asante Board.
12.3 The current Chief of the ACH Medical Staff shall become an ex-officio, non-
voting member of the Asante Board.
12.4 The ACH Advisory Board will have specific responsibility for monitoring patient
safety and quality of care at ACH, and for confirming credentialing and other decisions of the
ACH Medical Staff. The ACH Advisory Board actions and minutes will be submitted to the
Asante Board, which will have the final approval authority.
12.5 It is the intent of all Parties that the ACH Advisory Board will become the Asante
Ashland Community Hospital Quality Committee. The agreements in Section 12.1 through 12.4
will be in effect until the date the ACH Advisory Board becomes the Asante Ashland
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Community Hospital Quality Committee. Thereafter, the level of representation of the Ashland
community on the Asante Board will be in accordance with the Asante corporate bylaws.
12.6 It is Asante's desire to merge ACH into Asante. The timing of this desire will be
at Asante's sole discretion but in any event not before three years after Closing.
13. Covenant Not to Compete. The City and ACH Foundation each agree that they shall not
either together or individually or with any other person or entity directly or indirectly own or
operate or be affiliated with a hospital or other healthcare facility or service in competition with
Asante Ashland Community Hospital in Jackson County, Oregon for the lesser of 15 years from
the Closing Date or the date of a reversion in Sections 6, 8, or 9.5 and any applicable subsections
of those Sections unless Asante withdraws all healthcare services from Ashland, Oregon. ACH
Foundation's land lease arrangement for a retirement facility at 548 N. Main Street in Ashland,
Oregon shall not be considered to violate the foregoing agreement so long as the suite of services.
provided as of the Closing do not substantively change after Closing The Parties acknowledge
that the geographic and practice restrictions in this Section and the time period(s) of such
restrictions are reasonable and necessary for the adequate protection of Asante's interests and
agreements in this Agreement. A violation of any of the terns of this Section will cause
irreparable harm and injury to Asante and ACH, the extent of which is extremely difficult or
impossible to ascertain, and any remedy at law for breach of those terms and conditions will be
inadequate. Accordingly, Asante and ACH shall be entitled as a matter of course, in addition to
any other rights and remedies, to an injunction issued out of any court of competent jurisdiction
or, at Asante's option, from the arbitral tribunal in Section 31.3 enjoining or restraining the City
and/or ACH Foundation, as applicable, from continuing to do any act or commit any violation or
threatened violation of this Section, and the City and/or ACH Foundation, as applicable, hereby
consent to the issuance of such injunction or restraining order and agree that there shall be no
bond or other security required in connection therewith. This covenant not to compete shall be
construed as an agreement or covenant independent of any other provision of this Agreement. No
claim or cause of action asserted by the City and/or ACH Foundation against Asante or ACH or
any of their agents, officers, employees, or directors, whether or not predicated on or arising
from this Agreement shall constitute a defense to the enforcement of this covenant not to
compete.
14. ACH Employees.
14.1 Effective upon the Closing Date, Asante or ACH will extend every effort to offer
at-will employment for as many ACH employees as possible at ACH or Asante, but Asante does
not guarantee that all or substantially all ACH employees will be employed after the Closing
Date.
14.2 Employees of ACH prior to the Closing Date who are at risk for not being
employed by ACH or Asante after the Closing Date in the same or substantially similar positions
which such employees had with ACH prior to the Closing Date, will be eligible to apply for
other positions within Asante as though they were internal applicants of Asante, with the
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exception of Asante employees who are members of the Oregon Nurses Association (ONA), who
will have priority for such positions over such ACH employees.
14.3 Employees losing their jobs as a result of the Affiliation will be offered a
severance payment consistent with ACH's severance guidelines immediately prior to the Closing
Date.
14.4 Any employee of ACH prior to the Closing who is terminated, discharged, or laid
off from employment by ACH prior to the Closing, and who is not rehired or employed by ACH,
Asante or Asante Physician Partners after the Closing, shall be paid all wages and/or salary and
unused Earned Time Off ("ETO") and other leave benefits payable at the time of such
termination of employment not later than the end of the first business day after the termination of
employment or discharge by ACH, as provided in ORS 652.140(1).
14.5 Employees of ACH prior to the Closing Date (the "Employees") shall continue to
be employed following the Closing Date in the same or substantially similar positions. The
Employees will maintain their seniority ("years of service") for the purposes of compensation
and benefits programs. Employees will maintain their ACH health and welfare benefits from
Closing through December 31, 2013. Employees will maintain accrued ETO and Extended Sick
Time (EST) balances. Except as otherwise specifically noted, Employees will become subject to .
all Asante Human Resources and Administrative policies as of the Closing Date.
14.5.1 From the Closing Date, Employees will be paid their current base
compensation rate and applicable differential rates but Employees will move from the ACH step
pay system to Asante's merit pay system.
14.5.2 It is the intention of the Parties that as of January 1, 2014, Employees will
move from ACH Health and Welfare Benefits and Retirement plans to the Asante plans.
14.5.3 From the Closing Date, Employees will move to the Asante ETO and EST
plans including the Asante accrual rates.
14.6 Employees hired to ACH subsequent to the Closing Date will follow all Asante
policies and be provided the same compensation and benefits plans as Asante employees.
14.7 Notwithstanding anything to the contrary in this Section 14 and its subsections or
elsewhere in this Agreement, no provision of this Agreement is intended to or shall (i) be treated
as an amendment to any particular employee benefit plan of Asante, ACH or any of their
respective affiliates, (ii) obligate Asante or any of its respective affiliates to (A) maintain any
particular benefit plan or arrangement or (B) retain the employment of any particular employee,
(iii) prevent Asante or any of its respective affiliates from amending or terminating any benefit
plan or arrangement, or (iv) give any third party the right to enforce any of the provisions of this
Agreement, or create a continued right of employment for any Employee or employees. Except
as limited in this Section, Asante retains the right to change, modify or terminate any wages,
benefits, policies and procedures in its sole discretion as it deems appropriate.
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15. Medical Staff.
15.1 Upon the Closing Date, the Asante ACH Medical Staff will continue with
separate medical staff bylaws (the "Asante ACH Medical Staff Bylaws"), subject to the approval
of the ACH Advisory Board and the ACH board of directors, which will be the Asante Board.
15.2 The Asante ACH Medical Staff will be responsible for credentialing and scope of
services at ACH, subject to the overall quality requirements of. Asante and the requirements of
Asante's or ACH's liability coverage. The credential and peer review recommendations of the
Asante ACH Medical Staff will be subject to the approval of the ACH Advisory Board and the
Asante Board.
15.3 The Closing in and of itself will not impact or change (a) the medical staff
privileges for members of the medical staff of ACH on the Closing Date, or (b) any agreements
with members of the medical staff, whether the physicians are employed or contracted provided,
however, that the foregoing statement shall not be deemed to preclude Asante and ACH from
amending any contracts with physicians in accordance with the terms of such contracts or from
establishing new procedures consistent with customary practices of other Asante hospitals and
industry standards for medical staff approval and maintenance of medical staff privileges after
the Closing Date. Further, the Closing will not impact or change the medical staff officers of
ACH; such impact or change, if any, would only occur with action taken in accordance with the
Asante ACH Medical Staff Bylaws. The consummation of the transactions contemplated in this
Agreement shall not result in a need for any reapplication of current members of ACH Medical
Staff, except as otherwise required by the Asante ACH Medical Staff Bylaws with respect to
expiration of medical staff appointments or credentials. Prior to and after the Closing, Asante and
ACH shall work with the medical staff to evaluate and, where feasible, pursue opportunities for
medical staff/clinical integration where doing so offers opportunities for advancement in quality
of care.
15.4 Upon the Closing, the Asante ACH Medical Staff shall amend its Bylaws as
required in this Agreement.
16. Confidentiality. The Parties agree that the exhibits, schedules and appendices to this
Agreement are exempt from the Public Records Law (see ORS 192.410) under ORS 192.502(4)
("Confidential Information"), some or all of which may also be exempt under ORS 192.501(2)
(as "Trade Secrets"). The Parties mutually agree to treat all such information as confidential, in
accordance with the Public Records Law and Sections 36.9, 36.10, 37.5, 38.8, and 38.9, and their
respective subsections. In the event of conflict between this Section 16 and any other provision
of this Agreement, this Section 16 shall prevail.
17. Public Statements. Subject to Section 2.5 of the Confidentiality and Non-Disclosure
Agreement made on or about December 19, 2012 (the "CNDA"):
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17.1 All Parties will work together to expeditiously develop mutually agreed upon
talking points to be shared with the media and general public.
17.2 No Party shall disclose the terms of or negotiations with respect to the Definitive
Agreements until such time as public notice is published for public consideration of the
Definitive Agreement by the Ashland City Council.
17.3 No public statements about the proposed affiliation between Asante and ACH will
be provided by any spokesperson for any of the Parties without prior approval of the other
Parties, provided however, such approval will no longer be required with respect to the
Definitive Agreement after notice of Ashland City Council's public consideration of the
Definitive Agreement has been published.
17.4 Notwithstanding Sections 17.2 and 17.3, individual Ashland City Councilors may
respond to questions from the news media or their constituents as to their views with respect to
the proposed Affiliation between Asante and ACH.
18. Due Diligence. The Parties have been conducting due diligence since prior to the
execution of the CNDA. The Parties will continue to conduct reasonable due diligence
permitting the other Party or Parties and its or their employees, lenders, financial advisors,
attorneys, accountants and other authorized representatives reasonable access to the Party's
premises, employees, accountants, and books and records, including without limitation corporate
compliance, to complete such due diligence investigations customary for transactions of this
nature. Each Party shall cause all requested due diligence documents and information to be
delivered to the other promptly. During the due diligence process, the interim ACH CEO will be
notified of all identified issues that need immediate attention/resolution and will address these
issues in a timely fashion. Any additional information discovered by any of the Parties during the
due diligence process that has the potential to extend the timeline for successful completion of
this Agreement or cause the integration of ACH into Asante to not occur must disclose this
information to the other Parties immediately. All Parties agree to work in good faith to resolve
any issue caused by this additional information, if possible, in an expeditious manner. Any and
all terms in this Agreement are subject to confirmatory due diligence. Access to data, executives
and other resources to complete such diligence is required and delays in such efforts could
influence the timing of when the Affiliation is completed. All inspections will only occur at
times and in a manner as will not unreasonably disrupt the delivery of care to patients or the
other transaction of business by a Party.
19. Definitive Agreement. This Agreement constitutes the Definitive Agreement between
the Parties with respect to the Affiliation. Asante will seek and file for regulatory approvals
required prior to Closing, and such approvals will. be required in order to complete the
Affiliation; provided however, that Asante may waive this requirement with respect to obtaining
any one or more approvals prior to the Closing Date.
20. Properly Insurance. Asante agrees to maintain or cause ACH to maintain insurance
coverage on the ACH property, structures and equipment at replacement value (including
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properties conveyed to ACH by the City and ACH Foundation), to pay any insurance deductibles
in the event of a covered loss, and to name the City of Ashland and ACH Foundation as
additional insured parties with regard to their respective contributed properties under such
insurance for the lesser of three years from the Closing, or the date of any reconveyance of the
properties pursuant to a reversion.
21. No Brokers. Each Party represents and warrants to each other Party that the Party has not
worked with, contracted with, or consulted any broker or other person or entity that may be
entitled to compensation with respect to this Affiliation or Agreement.
22. Expenses. The Parties shall each pay their respective expenses (including fees and
expenses of counsel, investment bankers, brokers, and/or other representatives and consultants)
in connection with the CNDA, LOI, Management Agreement, and this Agreement.
23. Post Closing Audit. Subsequent to the Closing, ACH shall cause an audit in accordance
with auditing standards generally accepted in the United States of America to be performed by,
and secure an audit opinion from, Clifton Larson Allen as of the Closing. Immediately following
the Closing, Asante will hire an auditing firm to conduct an audit on the financial position,
results of operations, changes in net assets and cash flows of ACH as of the Closing Date
("Closing Date Audit"). The cost of obtaining such Closing Date Audit shall be home by Asante,
and the auditors shall be instructed to apply Asante's policies and procedures insofar as they
relate to matters of accounting and financial controls.
24. Certain Liabilities. ACH shall be and remain fully liable for the defense and settlement
of any medical malpractice, professional liability, or other liability claims, suits, or proceedings,
of any kind or nature, whether known or unknown, contingent or fixed, relating to or arising out
of any actual or alleged act or omission occurring prior to and through the Closing Date. With
respect to any such liabilities, ACH shall use commercially reasonable efforts to resolve,
terminate and/or extinguish such liabilities in a manner reasonably acceptable to Asante.
25. Liability Insurance Coverage. At the Closing, ACH shall remain under its current
insurance policy and shall deliver to Asante written proof that ACH has obtained from ACH's
current insurance company comprehensive general liability and professional liability insurance
coverage with respect to all claims covered thereby attributable to or arising out of the operation
of ACH on or before the Closing, regardless of when any such claims shall be made. At the
Closing, ACH shall (i) cause said insurers to issue and deliver to Asante a certificate of insurance
evidencing each tail insurance policy maintained by ACH hereunder, naming Asante as an
additional insured thereunder, and ACH shall cause each such insurance policy to contain a
clause requiring the insurer to give not less than 30 days prior written notice to Asante prior to
the cancellation or modification of, any such policy for any reason whatsoever; (ii) pay all
premiums and take all other steps as may be reasonably necessary to maintain such tail insurance
policies in full force and effect; and (iii) use its reasonable commercial efforts to avoid
invalidating such insurance coverage.
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26. ACH Existing Debt. Effective as to the Closing Date, ACH shall retain its obligations
with respect to the Umpqua Bank debt described in Section 9.1 in place at the time of Closing.
Following three years after Closing, Asante may, in its sole discretion, add ACH as a member of
the Asante obligated group or as a designated affiliate with respect to Asante's tax exempt bonds.
27. Execution Date and Closing Date Requirements.
27.1 Execution Date Deliveries.
27.1.1 The execution of this Agreement by the Parties shall be subject to receipt
of the items specified in subsections 27.1.2 through 27.1.5 below. No Party shall be deemed to
have executed this Agreement until it has received or waived all required deliveries.
27.1.2 On the Execution Date, Asante shall deliver to ACH, the City, and ACH
Foundation a copy of resolutions of the Asante Board, certified by the Secretary of Asante as
having been duly adopted and still in effect as of the Execution Date, authorizing and approving
the execution of this Agreement, the performance of all actions to be taken on behalf of Asante
pursuant to this Agreement, and the completion of all transactions contemplated herein.
27.1.3 On the Execution Datei ACH shall deliver to Asante, the City, and ACH
Foundation a copy of resolutions of the ACH Board, certified by the Secretary of ACH as having
been duly adopted and still in effect as of the Execution Date, authorizing and approving the
execution of this Agreement, the performance of all actions to be taken on behalf of ACH
pursuant to this Agreement, and the completion of all transactions contemplated herein.
27.1.4 On the Execution Date, ACH Foundation shall deliver to Asante, the City,
and ACH a copy of resolutions of the ACH Foundation Board, certified by the Secretary of ACH
Foundation as having been duly adopted and still in effect as of the Execution Date, authorizing
and approving the execution of this Agreement, the performance of all actions to be taken on
behalf of ACH Foundation pursuant to this Agreement, and the completion of all transactions
contemplated herein.
27.1.5 On the Execution Date, the City shall deliver to Asante, ACH, and ACH
Foundation a copy of resolutions of the City, certified by the City Recorder as having been duly
adopted and still in effect as of the Execution Date, authorizing and approving the execution of
this Agreement, the performance of all actions to be taken on behalf of the City pursuant to this
Agreement, and the completion of all transactions contemplated herein.
27.2 Closing Date: Closing.
27.2.1 Unless the Parties otherwise agree in writing, the arrangement and other
transactions contemplated herein to become effective as of the Closing Date, shall become so
effective, provided that as of the Closing Date all of the conditions precedent set forth in
Sections 40, 41, 42, and 43 and their respective subsections have occurred, including the delivery
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by each Party of all documents required to be delivered by such Party as set forth in this Section
27 and its subsections (the "Closing Date Documents"), except for any documents for which
delivery has been waived in writing by a Party or Parties as of the Closing Date.
27.2.2 The delivery of the Closing Date Documents shall occur on July 31, 2013,
or if all of the conditions precedent set forth in Sections 40, 41, 42, and 43 and their respective
subsections have not occurred prior to such date, or such conditions precedent have been waived
as provided in Section 27.2.1, such other date as is agreed to by the Parties (the "Closing Date"
or the "Closing"), at the offices of Asante, 2650 Siskiyou Blvd., Medford, OR 97504 or. any
other location agreed to by the Parties. Upon 7 days prior written notice, ACH or Asante may
with mutual written agreement extend the Closing Date for up to 30 days if such Party is actively
working towards completing all of the conditions precedent to Closing; all Parties must agree to
any further extension. The Closing Date will also be automatically extended if any of the Parties
are involved in the process described in Section 27.5 and its subsections but the process has not
yet been completed thereunder, until completion of the process thereunder.
27.2.3 At the Closing, all documents to be executed and actions to be taken,
pursuant to this Agreement, as of the Closing Date, shall be deemed to have been executed and
to have been taken substantially concurrently, and no action shall be deemed to be complete until
all are completed and all documents called for in this Agreement have been executed by all
Parties.
27.3 Pre-Closing Actions. Prior to the Closing, the Parties shall take and cause to be
taken all actions necessary or appropriate on their respective parts to implement the transactions
contemplated herein on the Closing Date, including, without limitation, the following:
27.3.1 Actions by Asante. Prior to the Closing Date, the Asante Board shall
approve the execution on behalf of Asante of this Agreement and of any and all other agreements
and other documents and the taking of any and all other actions contemplated or required by this
Agreement to be executed or taken by Asante on or before the Closing Date.
27.3.2 Actions by ACH and the City. Prior to the Closing Date, the ACH Board,
and the City acting through the City Council, as appropriate, shall approve the execution by or on
behalf of ACH and the City of this Agreement and of any and all other agreements and other
documents, and the taking of any and all other actions contemplated or required by this
Agreement to be executed or taken by ACH and the City on or before the Closing Date,
including, without limitation, the following:
27.3.2.1 approve the ACH Amended Articles in substantially the
form attached hereto as Exhibit 27.3.2.1; and
27.3.2.2 approve the ACH Amended Bylaws in substantially the
form attached hereto as Exhibit 27.3.2.2.
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27.3.3 Actions by ACH Foundation. Prior to the Closing Date, the ACH
Foundation Board shall approve the execution on behalf of ACH Foundation of this Agreement
and of any and all other agreements and other documents, and the taking of any and all other
actions contemplated or required by this Agreement to be executed or taken by ACH Foundation
on or before the Closing Date, including all such other actions as are necessary or appropriate to
consummate the transactions contemplated or required by this Agreement.
27.4 Closing Document Deliveries. At the Closing, the Parties shall deliver the
documents listed below.
27.4.1 Asante. At the Closing, Asante shall deliver the following documents (the
"Asante Closing Documents"):
27.4.1.1 A certificate of the Asante President/Chief Executive
Officer, dated as of the Closing Date, certifying, to the knowledge of such officer, as to the
continued accuracy and completeness of Asante's representations and warranties, and its
performance of the covenants and conditions precedent, set forth in this Agreement;
27.4.1.2 A certificate of the Chief Financial Officer of Asante, dated
as of the Closing Date, certifying as of the date thereof, as to the accuracy of the financial
representations and warranties relating to Asante and set forth at Section 33.4 and its subsections,
and the performance of the covenants and conditions precedent relating to Asante set forth at
Sections 37 and 41 hereof and their respective subsections; .
27.4.1.3 A certificate of the Secretary of Asante, dated as of the
Closing Date, certifying as to the due adoption and continued effectiveness of and attaching a
copy of the resolutions of the Asante Board approving, with respect to Asante, the actions and
transactions and actions required or contemplated by this Agreement;
27.4.1.4 Evidence of the insurance called for in Section 20 and ACH
insurance policies;
27.4.1.5 Such other instruments and documents as may be
reasonably necessary to carry out the transactions contemplated by this Agreement and to
comply with the terms hereof.
27.4.2 ACH. At the Closing, ACH shall deliver the following documents (the
"ACH Closing Documents"):
27.4.2.1 A certificate of the Board Chair_ of ACH, dated as of the
Closing Date, certifying, to the knowledge of such officer, as to the continued accuracy and
completeness of representations and warranties of ACH and its respective performance of the
covenants and conditions precedent, set forth in this Agreement;
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27.4.2.2 A certificate of the Board Treasurer of ACH, dated as of
the Closing Date, certifying as of the date thereof, as to the accuracy of the financial
representations and warranties relating to ACH and set forth at Section 32.4 and its subsections,
and the performance of the covenants and conditions precedent relating to ACH set forth at
Sections 36 and 40 hereof and their respective subsections;
27.4.2.3 A certificate of the Secretary of ACH, dated as of the
Closing Date, certifying as to the due adoption and continued effectiveness of, and attaching a
copy of: (1) the resolutions of the ACH Board approving, with respect to ACH, the actions and
transactions required or contemplated by this Agreement, including the Amended ACH Bylaws;
27.4.2.4 A copy of the ACH Amended Articles, in a form suitable
and ready to be filed with the Secretary of State of the State of Oregon;
27.4.2.5 Evidence of the insurance called for in Section 25;
27.4.2.6 Legal Opinion of Oregon counsel to ACH, opining as to:
(1) the due organization and good standing of ACH; (2) ACH's corporate power and authority to
enter into this Agreement and such other agreements as are specified hereunder to be entered into
by ACH, and to take such other actions as are contemplated to be taken by ACH hereunder; and
(3) the due authorization, on behalf of ACH, of the execution and delivery of this Agreement and
such other agreements as are specified hereunder to be entered into by ACH as of the Closing
Date, and the performance of all other actions contemplated to be taken by ACH hereunder; and
27.4.2.7 Such other instruments and documents as may be
reasonably necessary to carry out the transactions contemplated or required by this Agreement
and to comply with the terms hereof.
27.4.3 ACH Foundation. At the Closing, ACH Foundation shall deliver the
following documents (the "ACH Foundation Closing Documents"):
27.4.3.1 A certificate of the Executive Director of ACH Foundation,
dated as of the Closing Date, certifying, to the knowledge of such officer, as to the continued
accuracy and completeness of the Foundation's representations and warranties, and its
performance of the covenants and conditions precedent, set forth in this Agreement;
27.4.3.2 A certificate of the Secretary of ACH Foundation, dated as
of the Closing Date, certifying as to and including a copy of the resolutions of the ACH
Foundation Board approving, with respect to ACH Foundation, the actions and transactions
contemplated or required by this Agreement including without limitation the conveyance of the
five parcels of real property to ACH at the Closing and. the granting of the license in Section 9.4;
27.4.3.3 A copy of the statutory warranty deeds and bargain and sale
deed in a form suitable and ready to be recorded by Jackson County, Oregon by the Title
Company at the Closing;
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27.4.3.4 Legal Opinion of Oregon Counsel, opining as to: (1) the
due organization and good standing of ACH Foundation; (2) ACH Foundation's corporate power
and authority to enter into this Agreement and such other agreements as are specified hereunder
to be entered into by ACH Foundation, and to take such other actions as are contemplated to be
taken by ACH Foundation hereunder; and (3) the due authorization, on behalf of ACH
Foundation, of the execution and delivery of this Agreement and such other agreements as are
specified hereunder to be entered into by ACH Foundation as of the Closing Date, and the
performance of all other actions contemplated to be taken by ACH Foundation hereunder; and
27.4.3.5 Such other instruments and documents as may be
reasonably necessary to carry out the transactions contemplated or required by this Agreement
and to comply with the terms hereof.
27.4.4 The City. At the Closing, the City shall deliver the following documents
(the "City Closing Documents"):
27.4.4.1 A certificate of the City Administrator, dated as of the
Closing Date, certifying, to the knowledge of such officer, as to the continued accuracy and
completeness of the City's representations and warranties, and its performance of the covenants
and conditions precedent, set forth in this Agreement;
27.4.4.2 A certificate of the City Recorder, dated as of the Closing
Date, certifying as to and including a copy of the resolutions of the City Council approving, with
respect to the City, the actions and transactions contemplated or required by this Agreement
including without limitation the conveyance of the two parcels of real property to ACH at the
Closing and the granting of the license in Section 9.4;
27.4.4.3 A copy of the two statutory deeds in a form suitable and
ready to be recorded in Jackson County, Oregon by the Title Company at the Closing;
27.4.4.4 Legal Opinion of the Ashland City Attorney opining as to:
(1) the due organization and good standing of the City; (2) the City's corporate power and
authority to enter into this Agreement and such other,agreements as are specified hereunder to be
entered into by the City, and to take such other actions as are contemplated to be taken by the
City hereunder; and (3) the due authorization, on behalf of the City, of the execution and delivery
of this Agreement and such other agreements as are specified hereunder to be entered into by the
City as of the Closing Date, and the performance of all other actions contemplated to be taken by
the City hereunder; and
27.4.4.5 Such other instruments and documents as may be
reasonably necessary to carry out the transactions contemplated or required by this Agreement
and to comply with the terms hereof.
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27.5 Schedules: Modification of Schedules. All the Parties (each an "Amending
Party"), shall provide any amendments to their respective schedules attached hereto (each, a
"Schedule") to each other, by delivering one or more amended schedules (each, an "Amended
Schedule," and collectively, the "Amended Schedules") to the other Parties (a "Receiving
Party"), not later than July 16, 2013, at which time all schedules shall be finalized, except for
changes in circumstances arising after that date and before Closing. Schedules delivered by a
Party prior to the Execution Date shall be deemed received by the other Parties as of the
Execution Date.
27.5.1 Upon receipt of a Schedule or an Amended Schedule, the
Receiving Party shall have fifteen (15) business days either to approve information contained in
the Schedule or Amended Schedule or to notify the Amending Party that it disapproves of
information in such Schedule or Amended Schedule (a "Disapproved Item").
27.5.2 The Amending Party shall have the right, but not the obligation,
within fifteen (15) business days following its receipt of notice of a Disapproved Item, to elect to
cure such Disapproved Item by the delivery of an appropriate written notice to the Receiving
Party. The Amending Party's notice shall set forth its proposed manner of cure of the
Disapproved Item and the anticipated period of time necessary to complete the cure.
27.5.3 The Receiving Party shall have ten (10) business days after receipt
of the Amending Party's notice of cure to approve or disapprove such cure. If the Receiving
Party fails to disapprove the Amending Party's cure notice within this ten-day period, the
Receiving Party shall be deemed to have approved the manner of cure specified in the cure
notice. Upon approval of a cure notice, the Amending Parry shall use Reasonable Commercial
Efforts to effectuate the cure specified in the cure notice. If the Amending Party completes the
agreed upon cure by Closing, the Disapproved Item shall not be placed on the Amending Party's
schedules to the Agreement, and the Receiving Party shall have no right to terminate this
Agreement as a result of the Disapproved Item. If the Amending Party refuses to cure the
Disapproved Item, the Parties are unable to agree upon an appropriate cure, or if the agreed-upon
cure has not been completed by Closing, the Receiving Party may: (i) elect to close despite the
Disapproved Items; or (ii) may elect to terminate this Agreement by providing written notice to
the Amending Party. If the Receiving Party elects to Close over the Disapproved Item, the
Disapproved Items shall be deemed a modification to the schedules delivered by the Amending
Party prior to the Closing Date. If any Party is notified in writing by its respective legal counsel
that a representation or warranty of the other Party given hereunder is not materially accurate or
correct, then the Party so notified shall inform the other Party that its representation and/or
warranty is not accurate.
28. Term. The term of this Agreement shall commence on the Execution Date and shall
continue for fifteen (15) years after the Closing Date unless sooner terminated by the Parties at
any time by their mutual written consent, prior to the Closing Date, except that:
28.1 This Agreement shall terminate in its entirety prior to the Closing Date in the
event that there is a failure of any condition precedent as set forth in Sections 40, 41, 42 or 43
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and their respective subsections, unless such failure is waived in writing by ACH (in the case of
conditions precedent set forth in Section 40 and its subsections); or Asame (in the case of
conditions precedent set forth in Section 41 and its subsections); or ACH Foundation (in the case
of conditions precedent set forth in Section 42 and its subsections); or the City (in the case of
conditions precedent set forth in Section 43 and its subsections).
28.2 Should Closing be delayed beyond the later of (a) periods provided for in other
Sections of this Agreement, or (b) September 30, 2013, any Party may thereafter terminate this
Agreement by written notice to all other Parties if the Closing has not occurred by December 31,
2013;
28.3 If this Agreement is terminated, any agreement entered into pursuant to this
Agreement shall terminate in accordance with the terms thereof,
28.4 Any Party may terminate this Agreement before the Closing if, pursuant to
Sections 27.5 and its subsections and 30 of this Agreement, there is a material breach or
misrepresentation of any material representation or warranty made by any Party which breach or
misrepresentation cannot be cured without detriment to the non-defaulting Parties in accordance
with Section 27.5 and its subsections or within 30 days of receipt of written notice of the material
breach or misrepresentation from the non-defaulting Party or non-defaulting Parties, if later; and
28.5 No Party or Parties may terminate this Agreement after the Closing Date, unless
all four Parties agree in writing to terminate this Agreement after the Closing Date.
29. Termination Consequences. If this Agreement is terminated pursuant to Section 28, (a)
all further obligations of the Parties under this Agreement shall terminate, except that the
obligations in Sections 36.9, 36.10, 37.5, 38.8, 38.9 39.8 and 39.9 (Confidentiality), 44.5
(Applicable Law; Forum), and 44.3 (Expenses), and their respective subsections, shall survive,
(b) each Party shall pay the costs and expenses incurred by it in connection with this Agreement,
and (c) nothing shall prevent any Party hereto from pursuing any of its legal rights or remedies
that may be granted to any such Party by law against any other Party to this Agreement, except
that no Party shall be entitled to obtain consequential damages.
30. Survival of Representations, Warranties, Covenants and Agreements. Except as
otherwise expressly provided in this Agreement, the representations and warranties contained in
this Agreement or in any document delivered at the Closing pursuant hereto shall be deemed to
have been relied upon by the Parties, and shall survive the Closing and thereafter shall be in
force and effect in accordance with their terms for a period of three years. Unless otherwise
stated herein, all covenants and agreements contained in this Agreement or in any document
delivered at Closing pursuant hereto shall be fully effective and enforceable pursuant to this.
Agreement for the term of this Agreement and shall survive the termination of this Agreement
and thereafter shall be in force and effect in accordance with their terms. If discovered prior to
the Closing, except to the extent not inconsistent with the process described in Section 27.5, the
sole and exclusive remedy for any breach or misrepresentation, or alleged breach or
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misrepresentation, of any representation or warranty made by a Party shall be termination of the
Agreement as set forth in Section 28.4.
31. Dispute Resolution.
31.1 Resolution of Potential Disputes. The Parties acknowledge that notwithstanding
their reasonable commercial efforts, disagreements or disputes may arise among or between
them regarding their respective rights, responsibilities, covenants, obligations and liabilities
under this Agreement and in any document delivered in anticipation of the Closing. Prior to the
Closing, and thereafter, the Parties shall attempt to resolve the dispute in good faith in a manner
consistent with the procedures set forth in this Section 31 and its subsections.
31.2 Dispute Resolution Procedures.
31.2.1 Prior to the Closing, and thereafter, in the event of a dispute between or
among the Parties, any Party may give written notice to the other Party or Parties to the dispute
setting forth the nature of such dispute and requesting that the Parties to the dispute meet and
confer to discuss the dispute (the "Meet and Confer Request"). Not later than thirty (30) days
after a Meet and Confer Request, the principal executive officers of each of the Parties to the
dispute or their designees, shall meet and confer to discuss the dispute in good faith in an attempt
to resolve the dispute. Such representatives shall meet at such dates and times as are mutually
convenient to the representatives of each applicable Party within such thirty (30) day period.
31.2.2 In the event any dispute is not or cannot be resolved by the Parties to the
dispute during the meet and confer process described in Section 31.2.1, any Party to the dispute
may give written notice of such Party's intention to submit the issue in dispute to non-binding
mediation pursuant to this Section 31.2.2 (the "Dispute Notice"). Not later than ten (10) days
after a Party's receipt of a Dispute Notice, the Parties to the dispute shall jointly appoint a
mediator.
31.2.2.1 If the Parties to the dispute cannot agree upon a mediator
within the ten (10) day period, or within such other period as they may mutually agree upon, then
the Parties to the dispute shall each appoint a mediator acceptable to the Party within the
following ten (10) days, and the two (2) or more, if applicable mediators shall jointly appoint,
within ten (10) days after the date on which the last mediator is appointed, a third mediator who
shall serve as the sole mediator of the issues in dispute;
31.2.2.2 The Parties to the dispute shall engage in a good faith effort
to resolve the issue in dispute following the appointment of one or more mediators. The Parties
to the dispute each shall share equally the fees and expenses of the mediator(s) and such other
costs and expenses as they shall mutually agree upon; and
31.2.2.3 If the Parties to the dispute are unable to resolve the dispute
within sixty (60) days following the appointment of one or more mediators as provided in this
Section 31.2.2, any Party to the dispute may submit the matter to binding arbitration by giving to
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the other Party or Parties to the dispute a written demand for arbitration (the "Arbitration
Demand").
31.3 Binding Arbitration
31.3.1 Not later than thirty (30) days after a Party gives to any other Party or
Parties an Arbitration Demand, the Parties to the dispute shall jointly select an arbitrator. If the
Parties to the dispute cannot agree upon an arbitrator within such thirty (30) day period, they
shall jointly submit, or any one of them may submit, to Arbitration Service of Portland, Inc. or its
successor organization (the "ASP") a request to select a panel of seven (7) potential arbitrators,
each of whom shall be licensed to practice law in the State of Oregon, from which panel the
Parties to the dispute will select a single arbitrator to hear their dispute. In the event any Party to
the dispute is dissatisfied with the panel of potential arbitrators, such Party may request one
alternate panel of potential arbitrators. The request shall state that it is the intention of the Parties
to the dispute to submit to the jurisdiction and procedures of the ASP for a hearing in the
Medford, Oregon area, and to be bound by the ASP's rules, to resolve their dispute.
31.3.2 Not later than sixty (60) days after the date on which the arbitrator is
selected, the arbitrator shall conduct a formal hearing into the issue in dispute in accordance with
the applicable rules for arbitration of the ASP then in effect and/or such rules as the Parties to the
dispute may mutually agree upon.
31.3.3 The arbitrator's decision shall be final and binding upon the Parties to the
dispute, and shall be enforceable in accordance with its terms under Oregon law.
31.3.4 The Parties to the dispute shall share equally the cost of arbitration,
including the arbitrator's fees, but the Parties to the dispute each shall bear its own legal and
other expenses incurred by it in connection with the arbitration.
31.3.5 Nothing in this Agreement shall be interpreted to limit any Party's right to
pursue preliminary or provisional equitable relief pending the arbitration award, including,
without limitation, specific performance or a temporary restraining order or preliminary
injunctive relief, from a court of competent jurisdiction at any time. By way of example, the
foregoing provisions of this Section 31.3 shall not be interpreted to require either Party to submit
to meet-and-confer, mediation or arbitration prior to exercising such Party's right to pursue
preliminary equitable relief to protect trade secrets or prevent irreparable harm. Recognizing the
substantial resources and costs incurred in integrating the governance and operations of the
Parties following the Closing, and the difficulty of segregating integrated operations, no Party
shall bring suit against any other Party seeking the equitable remedy of contract rescission or
attempting to challenge the validity or enforceability of this Agreement following the Closing
Date.
32. Representations and Warranties of ACH. ACH hereby gives, as of the Representation
Date, the following representations and warranties to Asante:
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.32.1 Due Organization; Good Standing; Power.
31.1.1 ACH is an Oregon nonprofit corporation, exempt from federal income
taxation under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of
the Code.
31.1.2 ACH is duly formed,.validly existing and in good standing under the laws
of the State of Oregon, and has the corporate power and authority to own, operate or hold under
lease its properties and assets and to carry on its business and operations as presently conducted.
32.2 Corporate Authorization.
32.2.1 ACH has the full corporate power and authority to enter into and to
perform its obligations under this Agreement.
32.2.2 The execution, delivery and performance of this Agreement by ACH have
been duly and properly authorized by all necessary corporate action in accordance with its
articles of incorporation, as amended to the Representation Date, and its corporate Bylaws, as
amended to the Representation Date; provided, however, that for purposes of this Section 32.2.2,
"Representation Date" shall refer only to the Closing Date.
32.2.3 This Agreement constitutes the valid and legally binding obligation of
ACH, enforceable against ACH in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general
application now or hereafter in effect relating to or affecting the enforcement of creditors' rights
generally and, except as provided under Section 31.3 of this Agreement, that the remedies of
specific performance, contract rescission and injunctive and other forms of equitable relief may
not be available.
32.3 No Violation; Approvals.
32.3.1 Except to the extent specified in Schedule 32.3 hereto, the execution,
delivery and performance of this Agreement shall not result in the creation of any lien, charge, or
encumbrance of any kind or the termination or acceleration of any indebtedness or other
obligation of ACH,.and is not prohibited by, does not violate or conflict with any provision of,
and does not constitute a default under or breach of any Material Contract (as defined in Section
32.18), indenture, mortgage, permit, license, approval or other commitment to which ACH is a
party or is subject or by which any such corporation is bound, any judgment, decree, order, writ
or injunction of any court or regulatory authority, or any law, statute, rule or regulation,
applicable to ACH._
32.3.2 Except to the extent specified in Schedule 32.3.2 hereto, no approval,
authorization, registration, consent, order or other action of or filing that has not occurred or been
obtained with or from any person, including any court, administrative agency or other
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governmental authority, is required for the execution and delivery by ACE of this Agreement or
the consummation by ACE of the transactions contemplated or required hereby.
32.4 Financial Statements.
32.4.1 Attached hereto as Exhibit 32.4.1 are true and correct copies of (i) audited
financial statements of ACE for the two (2) years ended June 30, 2012 and June 30, 2011, and
unaudited financial statements of ACE for the interim period from July 1, 2012, through the
most recent month-end date for which financial statements were available prior to the Execution
Date (the "ACH Financial Statements"). For each month following the Execution Date until the
Closing Date, by the twentieth (20th) day of such month, ACE shall provide Asante with
monthly unaudited financial statements for the immediately preceding month.
32.4.2 The ACE Financial Statements are complete and present fairly in all
material respects the financial position of ACE, and the results of its operations at the dates and
for the periods indicated, in conformity with generally accepted accounting principles (except as
otherwise disclosed on Schedule 32.4.2), applied consistently for the periods specified, including
the consistent use of assumptions, practices, procedures and terminology, except that the interim
financial statements need not contain any of the footnotes and other items required to comply
with generally accepted accounting principles.
32.4.3 From and after July 1, 2012 (except as set forth in Schedule 32.43), ACE
has not made any material change to its accounting methods or practices, including methods or
practices used to:
(i) establish reserves on any patient and notes receivables;
(ii) establish estimates of any third-party settlements;
(iii) establish valuation estimates related to the investment plan and any
defined benefit plan; and/or
(iv) determine the value of any other accounts which require subjective
determinations.
32.4.4 To the knowledge of ACE, and except as disclosed on Schedule 32.4.4,
ACE does not have any liabilities or obligations, whether contingent or absolute, direct or
indirect, or matured or unmatured, which are not shown or provided for in the ACE Financial
Statements and the ACE Financial Statements provided to Asante prior to the Representation
Date, other-than any individual liability or obligation of less than One Hundred Thousand
Dollars ($100,000) and claims covered by insurance.
32.4.5 Except as disclosed on Schedule 32.4.5, none of the assets of ACE are
subject to restrictions imposed by the donors of specific funds.
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32.4.6 Set forth on Schedule 32.4.6 is an accurate and complete list of all of the
accounts in which funds of or attributable to the Plan are invested or otherwise held. ACH has
not taken, or caused or permitted to be taken any action which would change the legal or
beneficial ownership status of such funds prior to the Closing Date.
32.5 Interim Changes. Except for matters expressly permitted or authorized by this
Agreement and except as set forth on Schedule 32.5, to the knowledge of ACH, there has not
been, after the date of the most recent interim financial statements provided for ACH attached
under Exhibit 32.4.1:
32.5.1 any change in the financial condition, assets, liabilities, properties or
results of operation of ACH or any other business of ACH which has had or could have, in the
aggregate, a materially adverse effect on ACH, provided that this representation is limited to
events, transactions or facts which specifically affect the operation of ACH's businesses and
does not apply to general changes in the laws or economy of the United States or matters
affecting the health care industry in general;
32.5.2 any damage, destruction or loss, whether or not covered by insurance,
which has had or could have, in the aggregate, a materially adverse effect on ACH or any other
business of ACH;
32.5.3 any disposition by ACH of any property, rights or other assets owned by
or employed in ACH or any other business of ACH, except for dispositions in the usual and
ordinary course of the business;
32.5.4 any change to the make-up or composition of the Management Personnel
(defined for these purposes to mean the chief executive, directors or other officers or any vice
president) of ACH (see Management Agreement); and
32.5.5 any amendment or termination of any Material Contract which has had or
could have, in the aggregate, a materially adverse effect on ACH or any other business of ACH.
32.6 Legal Proceedings. Except as disclosed on Schedule 32.6, ACH is not a
defendant in or, to the knowledge of ACH, threatened with any action, suit, proceeding, state or
federal investigation, complaint, claim, charge, hearing or arbitration which may materially and
adversely affect its businesses or financial conditions or the ability of ACH to perform
hereunder. Except as disclosed on Schedule 32.6, to the knowledge of ACH, ACH has not
received written notice of any investigation or threatened investigation by any federal, state or
local governmental or regulatory agency, including those involving its business practices and
policies, which could have, in the aggregate, a materially adverse effect on ACH, or its
respective business.
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32.7 Licenses and Permits.
32.7.1 ACH holds all governmental licenses, permits, certificates, consents and
approvals which are material to its respective business and operations (the "Licenses and
Permits"). The Licenses and Permits, each.of which is listed at Schedule 32.7.1, are current and
valid.
32.7.2 Except as set forth on Schedule 32.7.2, no notice from any governmental
authority in respect to the revocation, termination, suspension or limitation of any License or
Permit has been issued or given, nor does ACH have any knowledge of any basis for any such
action.
32.8 No Material Omissions.
32.8.1 To its knowledge (as provided in Section 32.23), ACH has responded in
all material respects to all written requests for information and documentation made by Asante in
connection with Asante's due diligence review of the business, operations, assets and liabilities
of ACH. ACH has not knowingly omitted any material information relating to the businesses,
operations, assets or liabilities of ACH in its responses to Asante's requests. Since the delivery
of such responses to Asante, ACH has not received and not disclosed any material information
which would render untrue or misleading any information previously disclosed to Asante in
response to its requests for information.
32.8.2 To its knowledge, the representations and warranties of ACH contained in
this Agreement, and each Exhibit, Schedule, certificate or other written statement delivered at
Closing by ACH pursuant to this Agreement, are accurate, correct and complete, do not contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements and information contained therein not misleading.
32.9 Compliance with Law. Except as set forth on Schedule 32.9, to the knowledge of
ACH, ACH is in material compliance with all laws, regulations, ordinances, decrees and orders
applicable to it, which are material to its business and operations. Without limiting the generality
of the foregoing, ACH is in material compliance with all Environmental Laws and all
employment laws, including, without limitation, provisions thereof relating to wages, hours and
the payment of Social Security and similar taxes. "Environmental Laws," as used herein, shall
mean any and all federal, state and local statutes and ordinances, and all rules and regulations
promulgated thereunder, pertaining or relating to the identification, reporting, generation,
manufacture, processing, distribution, use, treatment, storage, disposal, emission, discharge,
release, transport or other handling of any pollutants, contaminants, chemicals, wastes, including
medical wastes, radioactive material, or other noxious or harmful substances or materials.
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32.10 Title to Real Property and Other Assets.
32.10.1 Schedule 32. 10.1 sets forth an accurate and complete list of all real
property owned by ACH (the "Real Property").
32.10.2 Except as disclosed on Schedule 32.10.2, ACH has good and
defensible title to all of its assets (other than the Real Property) of every kind, character and
description, whether real, personal, tangible or intangible, used in connection with the operation
of ACH or of any other business or activity owned, operated or maintained by ACH as of the
Representation Date (the "Other Property"), free and clear of all liens, mortgages, security
interests, options, pledges, charges, covenants, conditions, restrictions and other encumbrances
and claims of any kind or character whatsoever, other than covenants, restrictions and easements
ofrecord.
32.10.3 Schedule 32.10.3 sets forth an accurate and complete list of real
property leases in which ACH is a tenant, lessee, subtenant, or otherwise in possession.
32.10.4 Schedule 32.10.4 sets forth an accurate and complete list of real
property leases in which ACH is the landlord.
32.10.5 Schedule 32.10.5 sets forth an accurate and complete list of all
locations in which or at which ACH owns and/or operates health or other services.
32.11 Affiliates and Subsidiaries. Exhibit 32.11 sets forth an accurate and complete list
of all corporations, partnerships, limited liability companies and any other entities of which ACH
is a shareholder, partner, or member, and has the right to appoint or approve one or more of the
directors, officers or managers, or persons holding equivalent positions.
32.12 Tax Exempt Status. ACH is an exempt organization under Section 501(c)(3) of
the Code and not a "private foundation" within the meaning of Section 509(a) of the Code. The
Internal Revenue Service (the "Service") has not taken, or, to the knowledge of ACH, proposed
to take, any action to revoke the tax exempt status of ACH, and has not determined in writing or,
to the knowledge of ACH, proposed to announce, that ACH is a "private foundation" within the
meaning of Section 509(c) of the Code. ACH has no knowledge of any change in the
organization or operation of ACH, which, to the knowledge of ACH, would result in a loss of
ACH's status as an organization described in Section 501(c)(3) of the Code or which could cause
ACH to be treated as a "private foundation" within the meaning of Section 509(a) of the Code.
32.13 Insurance..
32.13.1, Schedule 32.13.1 sets forth an accurate, correct and complete list
(including the name of the insurer, coverage, premium and expiration date) of all binders and
policies of insurance (collectively, the "Insurance Policies") maintained by ACH in which ACH
is a named insured; or which otherwise insure assets used primarily in connection with the
operation of ACH.
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32.13.2 Except as set forth on Schedule 32.13.2, the Insurance Policies are
in full force and effect and shall remain in full force and effect through the Closing Date.
32.14 Taxes. ACH has filed, or shall file, all returns, declarations, and reports and all
information returns and statements required to be filed or sent with respect to all federal, state,
county, local and other taxes of every kind and however measured (collectively, the "Taxes") for
all periods ending on or within the five (5) year period preceding the Representation Date
(collectively, the "Returns"). Except as set forth on Schedule 32.14, as of the time of filing, the .
Returns correctly reflected, and Returns prepared or being prepared, but not yet filed as of the
Representation Date shall correctly reflect, the income, business, assets, operations, activities and
status of ACH and any other information required to be shown therein. ACH has timely paid or
made provision for all Taxes shown as due and payable on its Returns required to be filed or sent
prior to the Representation Date and has made provision for timely payment of all Taxes that
shall be shown as due and payable on its Returns required to be filed or sent by it after the
Representation Date and relating to any period prior to the Closing Date.
32.15 Employee Benefit Plans.
32.15.1 Schedule 32.15 sets forth an accurate, correct and complete list of
all "employee welfare benefit plans" (as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), "employee pension benefit plans" (as
defined in Section 3(2) of ERISA), governmental pension plans including defined benefit
pension plans, and all other employee benefit plan agreements and arrangements and employee
benefit policies, whether funded or unfunded, qualified or nonqualified, whether or not subject to
ERISA, maintained or contributed to (or required to be contributed to) by ACH for the benefit of
any of its officers, employees or other persons (all the foregoing being herein called "Benefit
Plans"). ACH has delivered to Asante accurate, correct and complete copies of:
32.15.1.1 each Benefit Plan and any amendment thereto;
32.15.1.2 the most recent annual report on Form 5500, if required,
filed with the Service or the Department of Labor with respect to any Benefit Plan, including all
schedules and attachments;
32.15.1.3 each trust agreement, group annuity contract or other
funding vehicle relating to any Benefit Plan and any amendments thereto;
32.15.1.4 certified financial statements relating to any Benefit Plan;
32.15.1.5 the summary plan description and any summaries of
material modifications for each Benefit Plan;
32.15.1.6 collective bargaining agreements or other such contracts,
including any riders or amendments thereto;
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32.15.1.7 each determination letter, letter ruling or any outstanding
ruling request on the tax exempt status of any qualified Benefit Plan or any voluntary employees'
beneficiary association ("VEBA") implementing a Benefit Plan; and
32.15.1.8 each sample correspondence to employees giving notice of
their rights under Section 4980B of the Code and any other documents indicating compliance
with said Section 4980B.
32.15.2 Except as disclosed on Schedule 32.15.2:
32.15.2.1 all contributions to, and payments from, the Benefit Plans
required to be made in accordance with the Benefit Plans have been timely made; and
32.15.2.2 no Benefit Plan is subject to the funding rules of Section
302 of ERISA or Section 412 of the Code.
32.15.3 All Benefit Plans (and all related trust agreements or annuity
contracts or any funding instruments) currently are and at all times in the past have been, both as
to form and operation, in material compliance with and administered in accordance with their
terms and the provisions of tax laws and the Code, where required for the Benefit Plan to be a
governmental plan or tax-qualified under Sections 401(a) and 501(a) of the Code, and all other
applicable laws, rules and regulations. Except as disclosed on Schedule 32.15.3, the Benefit
Plans that are pension benefit plans have received determination letters or private letter rulings
from the Service to the effect that such Benefit Plans are governmental plans or qualified and
exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code,
or are governmental plans as defined in Code Section 414(d), and no such determination letter or
private letter ruling has been revoked or, to the knowledge of ACH, has revocation been
threatened, nor has any such Benefit Plan been amended or experienced any change in facts or
circumstances since the date of its most recent determination letter or private letter ruling or
application therefore in any respect which would adversely affect its qualification or materially
increase its cost.
32.15.4 All reports, returns and similar documents with respect to the
Benefit Plans required to be filed with any government agency or distributed to any Benefit Plan
participant have been duly and timely filed or distributed. To the knowledge of ACH, there are
no investigations by any governmental agency, termination proceedings or other claims (except
claims for benefits payable in the normal operation of the Benefit Plans), suits or proceedings
against or involving any Benefit Plan or asserting any rights or claims to benefits under any
Benefit Plan that could give rise to any material liability, nor, to the knowledge of ACH, are
there any facts that could give rise to any material liability in the event of any such investigation,
claim, suit or proceeding. '
32.15.5 No "prohibited transaction" (as defined in Section 4975 of the
Code or Section 406 of ERISA) has occurred which involves the assets of any Benefit Plan and
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which could subject ACH, or any of its respective employees, or a trustee, administrator or other
fiduciary of any trust created under any Benefit Plan to the tax or penalty on prohibited
transactions imposed by Section 4975 of the Code or the sanctions imposed under Title I of
ERISA. No Benefit Plan which has been terminated has or may cause liability to ACH.
32.15.6 Except as disclosed in Schedule 32.15.6, ACH does not (i)
maintain or contribute to any Benefit Plan which provides, or has any liability to provide, life
insurance, medical, severance or other employee welfare benefits to any employee upon his/her
retirement or termination of employment, except as may be required by Section 4980B of the
Code or other applicable Law; or (ii) has ever represented, promised or contracted (whether in
oral or written form) to any employee (either individually or to employees as a group) that such
employee(s) would be provided with life insurance, medical, severance or other employee
welfare benefits upon their retirement or termination of employment, except to the extent
required by Section 4980B of the Code or other applicable law.
32.15.7 Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (whether alone or in connection with any
other event) will, with respect to any employee under any of Benefit Plan or otherwise:
32.15.7.1 result in any material payment from ACH (including
severance, unemployment compensation, bonus or otherwise) becoming due;
32.15.7.2 increase any benefits otherwise payable; or,
32.15.7.3 result in (i) any acceleration of the time of payment or
vesting of any such benefits, (ii) any forgiveness of any indebtedness, (iii) any obligation to fund
benefits, or (iv) the imposition of any restrictions with respect to the amendment or termination
of any of the Benefit Plans (or any adverse consequence for so doing).
32.15.8 With respect to each Benefit Plan that is an "employee welfare
benefit plan" within the meaning of Section 3(2) of ERISA, all claims incurred (including claims
incurred but not reported) by employees, former employees and their dependents thereunder for
which ACH is, or will become, liable are reflected as a liability or accrued for on ACH's
consolidated financial statements for the most recently completed fiscal year end.
32.15.9 ACH does not have any liability under any Benefit Plan that is a
"multiemployer plan" within the meaning of Sections 3(37) or 4001(a)(3) of ERISA and the
transactions contemplated by this Agreement will not give rise to any such liability.
32.15.10 No individual classified as a non-employee for purposes of
receiving employee benefits (such as an independent contractor, leased employee, consultant or
special consultant), regardless of actual legal status, is eligible to participate in or receive
benefits under any Benefit Plan that does not specifically provide for their participation.
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32.16 Medicare and Medicaid.
32.16.1 Except as set forth on Schedule 32.16.1, ACH is not engaged in
termination proceedings as to its respective participation in Medicare or Medicaid, nor has ACH
received written notice that its current participation in Medicare or Medicaid is subject to any
contest, termination or suspension as a result of alleged violations or any noncompliance with
participation requirements. ACH and the Hospital meet the conditions for participation in the
Medicare and Medicaid programs, and there is not now pending or, to the knowledge of ACH,
any threatened proceeding or investigation under such programs involving any of the foregoing.
32.16.2 Except as set forth on Schedule 32.16.2, for the past ten (10) years,
each of the contracts, financial relationships or arrangements entered into between ACH and a
physician or physician group is, or was during its duration, in compliance with the laws, rules
and regulations regulating the delivery of health care services by providers, including, those
relating to the prohibition of fraudulent and abusive practices by health care providers, including
(i) the anti-kickback statute set forth at 42 U.S.C. 1320a-7(a) and 7(b) and its related
regulations ("Anti-Kickback Statute") and (ii) the anti-referral statutes set forth at 42 U.S.C.
§ 1395nn and its related regulations ("Stark IF').
32.17 Accreditation. ACH is accredited by DNV Healthcare, Inc. ("DNVHC"), and by
such other organizations as are listed on Schedule 32.17. Except as set forth on Schedule 32.17,
no written notice has been received by ACH from DNVHC or any other accreditation
organization material to its operation regarding the suspension, revocation or termination of
ACH's (or any ACH programs or divisions) with respect to accreditation, and ACH has no
knowledge of the proposed issuance of any such written notice.
a
32.18 No Defaults.
32.18.1 Except as set forth on Schedule 32.18.1, ACH is not in breach or
default in any material respect under any term or provision of any Material Contract (as defined
in the next sentence). For purposes of this Agreement, "Material Contracts" shall mean the
following: all contracts, leases (capital and operating), and other agreements entered into by or
on behalf of ACH which are in effect as of the Representation Date, have a term of more than
one year, and involve a significant aspect of the operations of ACH, including but not limited to
the following:
32.18.1.1 all management or consulting agreements and involving
payment of more than $100,000 in the aggregate;
32.18.1.2 all service contracts, shared service agreements, joint
purchasing agreements, provider agreements or similar agreements and involving payment of
more than $100,000 in the aggregate;
32.18.1.3 all leases of space and/or equipment and involving payment
of more than $50,000 in the aggregate;
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32.18.1.4 all agreements for the sale or acquisition of capital assets
and involving payment of more than $100,000 in the aggregate;
32.18.1.5 all service agreements and warranties with respect to assets
of the Hospital and involving payment of more than $100,000 in the aggregate;
32.18.1.6 all installment payment agreements involving payment of
more than $100,000 in the aggregate;
32.18.1.7 all membership or other agreements with groups or entities
which engage in quality review or rate review procedures, involving payment of more than
$100,000 in the aggregate;
32.18.1.8 all agreements with third-party administrators, involving
payment of more than $100,000 in the aggregate;
32.18.1.9 all membership or other agreements with groups formed to
coordinate facilities or services planning, involving payment of more than $100,000 in the
aggregate;
32.18.1.10 all affiliation and transfer agreements or contracts with
educational institutions, other health care facilities, and government agencies, involving payment
of more than $100,000 in the aggregate;
32.18.1.11 all supply agreements involving payment of more than
$100,000 in the aggregate;
32.18.1.12 all brokers' or finders' agreements involving payment of
more than $100,000 in the aggregate;
32.18.1.13 all agreements pursuant to which any department of ACH
is operated under a lease arrangement and involving payment of more than $100,000 in the
aggregate;
32.18.1.14 all joint venture agreements or shareholder agreements to
which ACH is a party or involving any ACH program or operations and involving payment of
more than $100,000 in the aggregate;
32.18.1.15 all agreements or commitments related to physician
hospital organizations (PHOs), medical services organizations (MSOs), physician networks,
community care networks, integrated delivery networks, or other health care delivery systems or
networks and all agreements or arrangements with physicians or physician groups;
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32.18.1.16 all indemnity arrangements for officers, directors,
members, shareholders, or advisory board members of ACH;
32.18.1.17 license and sublicense agreements with respect to any
computer software and involving payment of more than $50,000 in the aggregate; and
32.18.1.18 easement and real property operating agreements, loan
agreements, promissory notes, trust deeds, mortgages, leases and all other agreements related to
a real property interest of ACH.
32.18.2 Attached hereto at Schedule 32.18 is a true and correct list of all
Material Contracts.
32.19 Exclusion from Health Care Programs. Except as listed on Schedule 32.19, (a) no
current employee or independent contractor (whether an individual or entity) of ACH has been
excluded from participating in any state or federal health care program, and (b) none of the
officers, directors, agents or managing employees (as such term is defined in 42 U.S.C. §1320a-
5(b)) of ACH has been excluded from any state or federal health care program.
32.20 Environmental Matters. Without limiting the generality of Sections 32.6, 32.7
and 32.9:
32.20.1 except as disclosed in Schedule 32.20.1, ACH is in material
compliance with all Environmental Laws and any Permits and Licenses required under
applicable Environmental Laws.
32.20.2 except as disclosed in Schedule 32.20.2, ACH has not received any
written notification from a Governmental Authority with respect to pending or ongoing
investigations or enforcement actions related to alleged or potential violations of any applicable
Environmental Law with respect to any of the Real Property (defined in Section 32.10.1) and/or
with respect to any real property owned, leased or occupied by ACH, nor is ACH aware of any
facts or conditions which could reasonably give rise to any such investigation or enforcement
actions.
32.20.3 except as disclosed in Schedule 32.20.3, none of the following
exists at any real property currently owned, leased, or occupied by ACH: (i) underground storage
tanks, (ii) asbestos-containing material in any friable or damaged form or condition, (iii)
materials or equipment containing polychlorinated biphenyls (PCBs), or (iv) landfills or surface
impoundments.
32.20.4 ACH has provided to Asante all Environmental Reports and
assessments relating to potential or actual environmental conditions on the Real Property and any
real property currently owned, leased, or occupied by ACH that ACH has in its possession,
control or knowledge. A complete list of those Environmental Reports is included in Schedule
32.20.4.
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32.20.5 "Environmental Report," as used herein, shall mean any and all
environmental site assessments, analyses, investigations or audits prepared by an independent
environmental consultant licensed ("IECL") in Oregon to perform Phase I and Phase II
investigations of current, past and potential environmental conditions on or under real property.
ACH shall allow Asante to cause to be performed a Phase I Environmental Investigation and
corresponding Environmental Report which meets ASTM 1527-05 standards for Phase I
Environmental Assessments with an IECL suggested by, and reasonably acceptable to, Asante.
32.21 Fair Market Value. ACH has not (1) paid more than fair market value for any
property or services received by it, including any property or services received from any member
of its Board of Directors, officer, physician or physician group, or any legal entity in which such
person has an ownership interest or (2) received consideration from any third party that is less
than fair market value for goods or services rendered by ACH. ACH has only acquired goods or
services necessary to advance or further its legitimate business and charitable purposes. The
total compensation, including bonuses and benefits, paid to each contractor or employee of ACH
as of the date of this Certificate, and for the five (5) years prior thereto, was negotiated at arms'
length and is fair, reasonable, and consistent with industry standards.
32.22 Employment Matters. Except as set forth on Schedule 32.22:
32.22.1 Labor Matters.
32.22.1.1 ACH is not a party or otherwise subject to any collective
bargaining or other agreement governing the wages, hours, or terms of employment of its
employees.
32.22.1.2 There is no (i) unfair labor practice complaint against ACH
pending before the National Labor Relations Board or any other governmental authority, (ii)
labor strike, slowdown, or work stoppage actually occurring or, to the best knowledge of ACH
threatened against ACH, (iii) representation petition regarding ACH's employees pending before
the National Labor Relations Board, or (iv) grievance or any arbitration proceeding pending
arising out of or under collective bargaining agreements applicable to ACH.
32.22.1.3 ACH has not experienced any primary work stoppage or
other organized work stoppage involving its employees in the past two years.
32.22.1.4 Employment Claims. There are no pending claims and, to
ACH's knowledge, no threatened claims by or on behalf of any of its employees under any
federal, state, or local labor or employment laws or regulations.
32.22.1.5 Employment Agreements. Each of ACH's employees is an
"at-will" employee and there are no written employment, commission, or compensation
agreements of any kind between ACH and any of its employees. Schedule 32.22 lists all ACH
employment or supervisory manuals, employment or supervisory policies, and written
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information generally provided to employees (such as applications or notices), and true and
complete copies of those manuals, policies, and written information have been provided to
Asante. ACH does not have any agreements or undertakings with its employees except as
reflected in the items listed on Schedule 32.22.
32.22.1.6 Compensation. Schedule 32.22 contains a complete and
accurate list of all officers, employees, and consultants of ACH, specifying their names and job
designations, the total amount paid or payable as compensation to each of them, and the basis of
such compensation, whether fixed or commission or a combination thereof, and accrued benefits
for them as of the date of this Agreement.
32.22.1.7 Severance. Except as set forth on Schedule 32.22, ACH has no severance
pay plan, policy, practice, or agreement with any of its employees.
32.23 Knowledge, after Reasonable Inquiry and Diligence Standard. As used in this
Section 32 and its subsections, the words "to the knowledge" of ACH means the actual
knowledge of the ACH Board, after the performance, by or under the direction of the designated
ACH Board, of a reasonable investigation of the underlying, and reasonably available, facts
relating to the referenced subject matter.
33. Representations and Warranties of Asante. Asante gives, as of the Representation Date,
the following representations and warranties to ACH, the City, and ACH Foundation:
33.1 Due Organization; Good Standing; Power. Asante is an Oregon nonprofit
corporation, exempt from federal income taxation under Section 501(c)(3) of the Code. Asante
is duly formed, validly existing and in good standing under the laws of the State of Oregon, and
has the corporate power and authority to own, operate or hold under lease its properties and
assets and to carry on its business and operations as presently conducted.
33.2 Corporate Authorization.
33.2.1 Asante has the full corporate power and authority to enter into and to
perform its obligations under this Agreement.
33.2.2 The execution, delivery and performance of this Agreement by Asante
have been duly and properly authorized by all necessary corporate action in accordance with its
articles of incorporation and corporate Bylaws.
33.2.3 This Agreement constitutes the valid and legally binding obligation of
Asante, enforceable against Asante in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general
application now or hereafter in effect relating to or affecting the enforcement of creditors' rights
generally and, except as provided under Section 31.3 of this Agreement and its subsections, that
the remedies of specific performance, contract rescission and injunctive and other forms of
equitable relief may not be available.
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33.3 No Violation; Approvals.
33.3.1 Except to the extent specified in Schedule 33.3.1 hereto, the execution,
delivery and performance of this Agreement shall not result in the creation of any lien, charge, or
encumbrance of any kind or the termination or acceleration of any indebtedness or other
obligation of Asante, and is not prohibited by, does not violate or conflict with any provision of,
and does not constitute a default under or breach of any Asante material contract, indenture,
mortgage, permit, license, approval or other commitment to which Asante is a party or is subject
or by which Asante is bound, any judgment, decree, order, writ or injunction of any court or
regulatory authority, or any law, statute, rule or regulation, applicable to Asante.
33.3.2 Except to the extent specified in Schedule 33.3.2 hereto, no approval,
authorization, registration, consent, order or other action of or filing that has not occurred or been
obtained with or from any person, including any court, administrative agency or other
governmental authority, is required for the execution and delivery by Asante of this Agreement
or the consummation by Asante of the transactions contemplated or required hereby.
33.4 Financial Statements.
33.4.1 Attached hereto as Exhibit 33.4.1 are true and correct copies of audited
financial statements of Asante for the two (2) years ended September 30, 2012 and September
30, 2011 and unaudited financial statements of Asante for the interim period from October 1,
2012 through the most recent month-end date for which financial statements were available prior
to the Execution Date (the "Asante Financial Statements"). For each month following the
Execution Date until the Closing Date, by the twentieth (20th) day of such month, Asante shall
provide ACH with monthly unaudited financial statements for the immediately preceding month.
33.4.2 The Asante Financial Statements are complete and present fairly in all
material respects the financial position of Asante, and the results of the respective operations of
Asante at the dates and for the periods indicated, in conformity with generally accepted
accounting principles (except as otherwise disclosed on Schedule 33.4.2), applied consistently
for the periods specified, including the consistent use of assumptions, practices, procedures and
tenninology, except that the interim financial statements need not contain any of the footnotes
and other items required to comply with generally accepted accounting principles.
33.4.3 From and after October 1, 2012 (except as set forth in Schedule 33.4.3),
Asante has not made any material changes to its accounting methods or practices, including
methods or practices used to:
33.4.3.1 establish reserves on any patient and notes receivables;
33.4.3.2 establish estimates of any third-party settlements; and
33.4.3.3 determine the value of any other accounts which require
subjective determinations.
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33.5 Legal Proceedings. Except as disclosed on Schedule 33.5, Asante is not a
defendant in, nor to Asante's knowledge been threatened with, any action, suit, proceeding,
complaint, charge, hearing or arbitration which may materially and adversely affect its business
or financial conditions or Asante's ability to perform hereunder. Except as disclosed on
Schedule 33.5, to the knowledge of Asante, Asante has not received written notice of any
investigation or threatened investigation by any federal, state or local governmental or regulatory
agency, including those involving its business practices and policies, which could have, in the
aggregate, a materially adverse effect on its business.
33.6 No Material Omissions.
33.6.1 To Asante's knowledge, Asante has responded in all material respects to
all written requests for information and documentation made by ACH in connection with ACH's
due diligence review of the business, operations, assets and liabilities of Asante. Asante has not
knowingly omitted any material information relating to the businesses, operations, assets or
liabilities of Asante in its responses to ACH's written requests. Since the delivery of such
responses to ACH, Asante has not received and not disclosed any material information which
would render untrue or misleading any information previously disclosed to ACH in response to
its written requests for information.
33.6.2 To Asante's knowledge, the representations and warranties of Asante
contained in this Agreement, and each Exhibit, Schedule, certificate or other written statement
delivered at Closing by Asante pursuant to this Agreement, are accurate, correct and complete,
do not contain any untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements and information contained therein not misleading.
33.7 Compliance with Law. Except as set forth on Schedule 33.7, to Asante's
knowledge, Asante is in material compliance with all laws, regulations, ordinances, decrees and
orders applicable to it, which are material to its business and operations. Without limiting the
generality of the foregoing, Asante is in material compliance with all Environmental Laws and
all employment laws, including, without limitation, provisions thereof relating to wages, hours
and the payment of Social Security and similar taxes.
33.8 Tax Exempt Status. Asante is an exempt organization under Section 501(c)(3) of
the Code and not a "private foundation" within the meaning of Section 509(a) of the Code. The
Service has not taken, or, to the knowledge of Asante, proposed to take, any action to revoke the
tax-exempt status of Asante, and has not determined in writing or, to the knowledge of Asante,
proposed to announce, that Asante is a "private foundation" within the meaning of Section
509(c) of the Code. Asante has no knowledge of any change in its organization or operation
which, to the knowledge of Asante, would result in a loss of Asante's status as an organization
described in Section 501(c)(3) of the Code or which could cause Asante to be treated as a
"private foundation" within the meaning of Section 509(a) of the Code.
33.9 Taxes. Asante has filed, or shall file, all returns, declarations, and reports and all
information returns and statements required to be filed or sent with respect to all Taxes for all
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periods ending on or within the five (5) year period preceding the Representation Date
(collectively, the "Asante Returns"). Except as set forth on Schedule 33.9, as of the time of
filing, the Asante Returns correctly reflected, and Asante Returns prepared or being prepared, but
not yet filed as of the Representation Date shall correctly reflect, the income, business, assets,
operations, activities and status of Asante, and any other information required to be shown
therein. Asante has timely paid or made provision for all Taxes shown as due and payable on
Asante Returns required to be filed or sent prior to the Representation Date and has made
provision for timely payment of all Taxes that shall be shown as due and payable on Asante
Returns required to be filed or sent by it after the Representation Date and relating to any period
prior to the Closing Date.
33.10 Medicare and Medicaid. Except as set forth on Schedule 33.10, Asante is not
engaged in termination proceedings as to its participation in Medicare or Medicaid, nor has
Asante received notice that its current participation in Medicare or Medicaid is subject to any
contest, termination or suspension as a result of alleged violations or any noncompliance with
participation requirements. To the knowledge of Asante, Asante meets the conditions for
participation in the Medicare and Medicaid programs, and there is not now pending or, to the
knowledge of Asante any threatened proceeding or investigation under such programs involving
any of the foregoing.
33.11 Exclusion from Health Care Programs. Except as listed on Schedule 33.11, to the
knowledge of Asante, (1) no current employee or independent contractor (whether an individual
or entity) of Asante has been excluded from participating in any state or federal health care
program, and (2) none of the officers, directors, agents or managing employees (as such term is
defined in 42 U.S.C. § 1320a-5(b)) of Asante have been excluded from any state or federal health
care program.
33.12 Knowledge, after Reasonable Inquiry and Diligence Standard. As used in this
Section 33 and its subsections, the words "to the knowledge" of Asante mean the actual
knowledge of such corporation, after the performance, by or under the direction of a designated
executive officer thereof, of a reasonable investigation of the underlying, and reasonably
available, facts relating to the referenced subject matter.
34. Representations and Warranties of the City. The City hereby gives, as of the
Representation Date, the following representations and warranties to Asante: .
34.1 Due Organization; Good Standing; Power.
34.1.1 City is an Oregon municipal corporation, exempt from federal income
taxation under Section 115 of the Code.
34.1.2 City is duly formed and validly existing under the laws of the State of
Oregon, and has the power and authority to own, operate or hold under lease its properties and
assets and to carry on its business and operations as presently conducted.
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34.2 Authorization.
34.2.1 City has the full power and authority to enter into and to perform its
obligations under this Agreement.
34.2.2 The execution, delivery and performance of this Agreement by City have
been duly and properly authorized by all necessary action in accordance with Oregon law, the
City's charter, ordinances, and all other applicable laws, as amended to the Representation Date,
provided, however, that for purposes of this Section 34.2.2, "Representation Date" shall refer
only to the Closing Date.
34.2.3 This Agreement constitutes the valid and legally binding obligation of
City, enforceable against City in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws of general
application now or hereafter in effect relating to or affecting the enforcement of creditors' rights
generally and, except as provided under Section 31.3 of this Agreement, that the remedies of
specific performance, contract rescission and injunctive and other forms of equitable relief may
not be available.
34.3 No Violation; Approvals.
34.3.1 Except to the extent specified in Schedule 34.3 hereto and its subsections,
the execution, delivery and performance of this Agreement shall not result in the creation of any
lien, charge, or encumbrance of any kind or the termination or acceleration of any indebtedness
or other obligation of City, and is not prohibited by, does not violate or conflict with any
provision of, and does not constitute a default under or breach of any Material Contract (defined
as all contracts, leases (capital and operating), and other agreements entered into by or on behalf
of City which are in effect as of the Representation Date, have a term of more than one year, and
involve a significant aspect of the operations of City), indenture, mortgage, permit, license,
approval or other commitment to which City is a party or is subject or by which City is bound,
any judgment, decree, order, writ or injunction of any court or regulatory authority, or any law,
statute, rule or regulation, applicable to City.
34.3.2 Except to the extent specified in Schedule 34.3.2 hereto, no approval,
authorization, registration, consent, order or other action of or filing that has not occurred or been
obtained with or from any person, including any court, administrative agency or other
governmental authority, is required for the execution and delivery by City of this Agreement or
the consummation by City of the transactions contemplated or required hereby.
34.4 Financial Statements.
34.4.1 The City website contains true and correct copies of audited financial
statements of City for the two (2) years ended June 30, 2012 and June 30, 2011, and unaudited
financial statements of City for the interim period from July 1, 2012, through the most recent
month-end date for which financial statements were available prior to the Execution Date (the
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"City Financial Statements). For each month following the Execution Date until the Closing
Date, by the twentieth (20th) day of such month, City shall provide Asante with monthly
unaudited financial statements for the immediately preceding month.
34.4.2 The City Financial Statements are complete and present fairly in all
material respects the financial position of City, and the results of its operations at the dates and
for the periods indicated, in conformity with generally accepted accounting principles (except as
otherwise disclosed on Schedule 34.4.2), applied consistently for the periods specified, including
the consistent use of assumptions, practices, procedures and terminology, except that the interim
financial statements need not contain any of the footnotes and other items required to comply
with generally accepted accounting principles.
34.5 Legal Proceedings. Except as disclosed on Schedule 34.5, City is not a defendant
in or, to the knowledge of City, threatened with any action, suit, proceeding, complaint, claim,
charge, hearing or arbitration which may materially and adversely affect the ability of City to
perform hereunder. Except as disclosed on Schedule 34.5, to the knowledge of City, City has not
received written notice of any investigation or threatened investigation by any federal, state or
local governmental or regulatory agency, including those involving its business practices and
policies, which could have, in the aggregate, a materially adverse effect on the ability of City to
perform hereunder.
34.6 Compliance with Law. Except as set forth on Schedule 34.6, to the knowledge of
City, City is in material compliance with all laws, regulations, ordinances, decrees and orders
applicable to it, which are material to the ability of City to perform hereunder.
34.7 Title to Real Property and Other Assets.
34.7.1 Schedule 34.7.1 sets forth an accurate and complete list of the two parcels
of real property owned by City (the "City Real Property") which are currently leased by City to
ACH, and which will be conveyed to ACH at the Closing. The lease or leases (collectively for
purposes of this subsection 34.7.1, "leases") of the City Real Property are in full force and effect,
ACH is not in default of the leases, and the City has no existing claims against ACH under the
leases.
34.7.2 Except as disclosed on Schedule 34.7.2, City has good and defensible title
to the City Real Property together with all facilities and other improvements located thereon
including without limitation land improvements, buildings, fixed equipment and personal
property of every kind, character and description, whether real, personal, tangible or intangible,
used in connection with the operation of ACH or of any other business or activity owned,
operated or, maintained by ACH as of the Representation Date (the "Other Property"), free and
clear of all liens, mortgages, security interests, options, pledges, charges, covenants, conditions,
restrictions and other encumbrances and claims of any kind or character whatsoever, other than
covenants, restrictions and easements of record, and other than the lien of Umpqua Bank
described in Section 9.1.
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34.7.3 Schedule 34.7.3 sets forth an accurate and complete list of real property
leases by the City in which ACH is a tenant, lessee, subtenant, or otherwise, other than the City
Real Property. The leases of the real property listed in Schedule 34.7.3 are in full force and
effect, ACH is not in default of the leases, and the City has no existing claims against ACH
under the leases.
34.8 Insurance.
34.8.1 Schedule 34.8.1 sets forth an accurate, correct and complete list (including
the name of the insurer, coverage, premium and expiration date) of all binders and policies of
insurance (collectively, the "Insurance Policies") maintained by City in which ACH is a named
insured; or which otherwise insure assets used primarily in connection with the operation of
ACH.
34.8.2 Except as set forth on Schedule 34.8.2, the Insurance Policies are in full
force and effect and shall remain in full force and effect through the Closing Date.
34.9 No Defaults.
34.9.1 City is not in breach or default in any material respect under any term or
provision of any Material Contract (as defined in the next sentence). For purposes of this Section
34.9.1, "Material Contracts" shall mean the following: all contracts, leases (capital and
operating), and other agreements entered into by or on behalf of City which are in effect as of the
Representation Date, have a term of more than one year, and involve a significant aspect of the
operations of ACH.
34.10 Environmental Matters. Without limiting the generality of Sections 34.5 and
34.6:
34.10.1 Except as .disclosed in Schedule 34.10.1, City is in material
compliance with all Environmental Laws and any Permits and Licenses required under
applicable Environmental Laws with respect to the City Real Property (defined in Section
34.7.1).
34.10.2 Except as disclosed in Schedule 34.10.2, City has not received any
written notification from a Governmental Authority with respect to pending or ongoing
investigations or enforcement actions related to alleged or potential violations of any applicable
Environmental Law with respect to any of the City Real Property and/or with respect to any real
property owned by the City and leased to or occupied by ACH, nor is City aware of any facts or
conditions which could reasonably give rise to any such investigation or enforcement actions.
34.10.3 Except as disclosed in Schedule 34.10.3, none of the following
exists at any real property owned by the City and leased to or occupied by ACH: (i) underground
storage tanks, (ii) asbestos-containing material in any friable or damaged form or condition, (iii)
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materials or equipment containing polychlorinated biphenyls (PCBs), or (iv) landfills or surface
impoundments.
34.10.4 City has provided to Asante all Environmental Reports and
assessments relating to potential or actual environmental conditions on the City Real Property
and any real property owned by the City and leased to or occupied by ACH that City has in its
possession, control or knowledge. A complete list of those Environmental Reports is included in
Schedule 34.10.4.
34.10.5 "Environmental Report," as used herein, shall mean any and all
environmental site assessments, analyses, investigations or audits prepared by an independent
environmental consultant licensed ("IECL") in Oregon to perform Phase I and Phase II
investigations of current, past and potential environmental conditions on or under real property.
City shall allow Asante to cause to be performed a Phase I Environmental Investigation and
corresponding Environmental Report which meets ASTM 1527-05 standards for Phase I
Environmental Assessments with an IECL suggested by, and reasonably acceptable to, Asante,
with respect to the City Real Property and any real property owned by the City and leased to or
occupied by ACH.
34.11 No Material Omissions.
34.11.1 To City's knowledge, City has responded in all material respects to
all written requests for information and documentation made by Asante in connection with
Asante's due diligence review of the business, operations, assets and liabilities of City. City has
not knowingly omitted any material information relating to the businesses, operations, assets or
liabilities of Asante in its responses to Asante's written requests. Since the delivery of such
responses to Asante, City has not received and not disclosed any material information which
would render untrue or misleading any information previously disclosed to Asante in response to
its written requests for information.
34.11.2 . To its knowledge, the representations and warranties of City
contained in this Agreement, and each Exhibit, Schedule, certificate or other written statement
delivered at Closing by City pursuant to this Agreement, are accurate, correct and complete, do
not contain any untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements and information contained therein not misleading.
34.12 Knowledge after Reasonable Inquiry and Diligence Standard. As used in this
Section 34 and its subsections, the words "to the knowledge" of City mean the actual knowledge
of the City after the performance, by or under the direction of the designated executive officer
thereof, of a reasonable investigation of the underlying, and reasonably available, facts relating
to the referenced subject matter.
35. Representations and Warranties of the ACH Foundation. ACH Foundation hereby gives,
as of the Representation Date, the following representations and warranties to Asante:
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35.1 Due Organization; Good Standing; Power.
35.1.1 ACH Foundation is an Oregon nonprofit corporation, exempt from federal
income taxation under Section 501(a) of the Code, as an organization described in Section
501(c)(3) of the Code.
35.1.2 ACH Foundation is duly formed and validly existing under the laws of the
State of Oregon, and has the corporate power and authority to own, operate or hold under lease
its properties and assets and to carry on its business and operations as presently conducted.
35.2 Corporate Authorization. .
35.2.1 ACH Foundation has the full corporate power and authority to enter into
and to perform its obligations under this Agreement.
35.2.2 The execution, delivery and performance of this Agreement by ACH
Foundation have been duly and properly authorized by all necessary action in accordance with its
articles of incorporation, as amended to the Representation Date, and its corporate bylaws, as
amended to the Representation Date; provided, however, that for purposes of this Section 35.2.2,
"Representation Date" shall refer only to the Closing Date.
35.2.3 This Agreement constitutes the valid and legally binding obligation of
ACH Foundation, enforceable against ACH Foundation in accordance with its terms; except as
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws of general application now or hereafter in effect relating to or affecting the enforcement of
creditors' rights generally and, except as provided under Section 31.3 of this Agreement, that the
remedies of specific performance, contract rescission and injunctive and other forms of equitable
relief may not be available.
35.3 No Violation; Approvals.
35.3.1 Except to the extent specified in Schedule 35.3 hereto, the execution,
delivery and performance of this Agreement shall not result in the creation of any lien, charge, or
encumbrance of any kind or the termination or acceleration of any indebtedness or other
obligation of ACH Foundation, and is not prohibited by, does not violate or conflict with any
provision of, and does not constitute a default under or breach of any Material Contract (defined
as all contracts, leases (capital and operating), and other agreements entered into by or on behalf
of ACH Foundation which are in effect as of the Representation Date and have a term of more
than one year), indenture, mortgage, permit, license, approval or other commitment to which
ACH Foundation is a party or is subject or by which ACH Foundation is bound, any judgment,
decree, order, writ or injunction of any court or regulatory authority, or any law, statute, rule or
regulation, applicable to ACH Foundation.
35.3.2 Except to the extent specified in Schedule 35.3.1 hereto, no approval,
authorization, registration, consent, order or other action of or filing that has not occurred or been
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obtained with or from any person, including any court, administrative agency or other
governmental authority, is required for the execution and delivery by ACH Foundation of this
Agreement or the consummation by ACH Foundation of the transactions contemplated or
required hereby.
35.4 Financial Statements.
35.4.1 Attached hereto as Exhibit 35.4.1 are true and correct copies of (i) audited
financial statements of ACH Foundation for the two (2) years ended December 31, 2012 and
December 31, 2011, and unaudited financial statements of ACH Foundation for the interim
period from January 1, 2013, through the most recent month-end date for which financial
statements were available prior to the Execution Date (the "ACH Foundation Financial
Statements). For each month following the Execution Date until the Closing Date, by the
twentieth (20th) day of such month, ACH Foundation shall provide Asante with monthly
unaudited financial statements for the immediately preceding month.
35.4.2 The ACH Foundation Financial Statements are complete and present fairly
in all material respects the financial position of ACH Foundation, and the results of its operations
at the dates and for the periods indicated, in conformity with generally accepted accounting
principles (except as otherwise disclosed on Schedule 35.4.2), applied consistently for the
periods specified, including the consistent use of assumptions, practices, procedures and
terminology, except that the interim financial statements need not contain any of the footnotes
and other items required to comply with generally accepted accounting principles.
35.5 Legal Proceedings. Except as disclosed on Schedule 35.5, ACH Foundation is
not a defendant in or, to the knowledge of ACH Foundation, threatened with any action, suit,
proceeding, complaint, claim, charge, hearing or arbitration which may materially and adversely
affect its businesses or financial conditions or the ability of ACH Foundation to perform
hereunder. Except as disclosed on Schedule 35.5, to the knowledge of ACH Foundation, ACH
Foundation has not received written notice of any investigation or threatened investigation by
any federal, state or local governmental or regulatory agency, including those involving its
business practices and policies, which could have, in the aggregate, a materially adverse effect
on ACH Foundation, or its respective business.
35.6 No Material Omissions.
35.6.1 To its knowledge, ACH Foundation has responded in all material respects
to all written requests for information and documentation made by Asante in connection with
Asante's due diligence review of the business, operations, assets and liabilities of ACH
Foundation. ACH Foundation has not knowingly omitted any material information relating to the
businesses, operations, assets or liabilities of ACH Foundation in its responses to Asante's .
requests. Since the delivery of such responses to Asante, ACH Foundation has not received and
not disclosed any material information which would render untrue or misleading any information
previously disclosed to Asante in response to its requests for information.
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35.6.2 To its knowledge, the representations and warranties of ACH Foundation
contained in this Agreement, and each Exhibit, Schedule, certificate or other written statement
delivered at Closing by ACH Foundation pursuant to this Agreement, are accurate, correct and
complete, do not contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements and information contained therein not misleading.
35.7 Compliance with Law. Except as set forth on Schedule 35.7, to the knowledge of
ACH Foundation, ACH Foundation is in material compliance with all laws, regulations,
ordinances, decrees and orders applicable to it, which are material to its business and operations.
Without limiting the generality of the foregoing, to the knowledge of ACH Foundation, ACH
Foundation is in material compliance with all Environmental Laws. "Environmental Laws," as
used herein, shall mean any and all federal, state and local statutes and ordinances, and all rules
and regulations promulgated thereunder, pertaining or relating to the identification, reporting,
generation, manufacture, processing, distribution, use, treatment, storage, disposal, emission,
discharge, release, transport or other handling of any pollutants, contaminants, chemicals,
wastes, including medical wastes, radioactive material, or other noxious or harmful substances or
materials.
35.8 Title to Real Property and Other Assets.
35.8.1 Schedule 35.8.1 sets forth an accurate and complete list of all real property
owned by ACH Foundation (the "ACH Foundation Real Property") which will be conveyed to
ACH at the Closing.
35.8.2 Except as disclosed on Schedule 35.8.2, ACH Foundation has good and
defensible title to the ACH Foundation Real Property together with all facilities and other
improvements located thereon including without limitation land improvements, buildings, fixed
equipment and personal property of every kind, character and description, whether real, personal,
tangible or intangible, (other than personal property or equipment owned by ACH) used in
connection with the operation of ACH or of any other business or activity owned, operated or
maintained by ACH as of the Representation Date (the "Other Property"), free and clear of all
liens, mortgages, security interests, options, pledges, charges, covenants, conditions, restrictions
and other encumbrances and claims of any kind or character whatsoever,. other than covenants,
restrictions and easements of record, except for the $82,000 lien described in Section 9.3.
35.8.3 Schedule 35.8.3 sets forth an accurate and complete list of real property in
which ACH is a tenant, lessee, subtenant, or otherwise in possession of ACH Foundation Real
Property or any other real property owned by ACH Foundation. The leases of the real property in
Schedule 35.8.3 are in full force and effect, ACH is not in default of the leases, and ACH
Foundation has no existing claims against ACH under the leases.
35.9 Insurance.
35.9.1 Schedule 35.9.1 sets forth an accurate, correct and complete list (including
the name of the insurer, coverage, premium and expiration date) of all binders and policies of
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insurance (collectively, the "Insurance Policies") maintained by ACH Foundation in which ACH
is a named insured; or which otherwise insure assets used in connection with the operation of
ACH.
35.9.2 Except as set forth on Schedule 35.9.2, the Insurance Policies are in full
force and effect and shall remain in full force and effect through the Closing Date.
35.10 No Defaults.
35.10.1 To the knowledge of ACH Foundation, ACH Foundation is not in
breach or default in any material respect under any term or provision of any Material Contract
(as defined in the next sentence). For purposes of this Section 34.9.1, "Material Contracts" shall
mean the following: all contracts, leases (capital and operating), and other agreements. entered
into by or on behalf of ACH Foundation which are in effect as of the Representation Date, have a
term of more than one year, and involve a significant aspect of the operations of ACH.
35.11 Environmental Matters. Without limiting the generality of Section 35.5 and 35.7:
35.11.1 except as disclosed in Schedule 35.11.1, to the knowledge of ACH
Foundation, ACH Foundation is in material compliance with all Environmental Laws and any
Permits and Licenses required under applicable Environmental Laws with respect to the ACH
Foundation Real Property (defined in Section 35.8.1).
35.11.2 except as disclosed in Schedule 35.11.2, ACH Foundation has not
received any written notification from a Governmental Authority with respect to pending or
ongoing investigations or enforcement actions related to alleged or potential violations of any
applicable Environmental Law with respect to any of the ACH Foundation Real Property and/or
with respect to any real property owned by ACH Foundation and leased to or occupied by ACH,
nor is ACH Foundation aware of any facts or conditions which could reasonably give rise to any
such investigation or enforcement actions.
35.11.3 except as disclosed in Schedule 35.11.3, to the knowledge of ACH
Foundation none of the following exists at any real property owned by ACH Foundation and
leased to or occupied by ACH Foundation: (i) underground storage tanks, (ii) asbestos-
containing material in any friable or damaged form or condition, (iii) materials or equipment
containing polychlorinated biphenyls (PCBs), or (iv) landfills or surface impoundments.
35.11.4 ACH Foundation has provided to Asante all Environmental
Reports and assessments relating to potential or actual environmental conditions on the ACH
Foundation Real Property and any real property owned by ACH Foundation and leased to or
occupied by ACH that ACH Foundation has in its possession, control or knowledge. A complete
list of those Environmental Reports is included in Schedule 35.11.4.
35.11.5 "Environmental Report," as used herein, shall mean any and all
environmental site assessments, analyses, investigations or audits prepared by an independent
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environmental consultant licensed ("IECL") in Oregon to perform Phase I and Phase II
investigations of current, past and potential environmental conditions on or under real property.
City shall allow Asante to cause to be performed a Phase I Environmental Investigation and
corresponding Environmental Report which meets ASTM 1527-05 standards for Phase I
Environmental Assessments with an IECL suggested by, and reasonably acceptable to, Asante,
with respect to the ACH Foundation Real Property and any real property owned by ACH
Foundation and leased to or occupied by ACH.
35.12 Knowledge, after Reasonable Inquiry and Diligence Standard. As used in this
Section 35 and its subsections, the words "to the knowledge" of ACH Foundation mean the
actual knowledge of the governing body of the ACH Foundation after the performance, by or
under the direction of the designated executive officer thereof, of a reasonable investigation of
the underlying, and reasonably available, facts relating to the referenced subject matter.
36. Covenants of ACH. ACH hereby agrees to keep, perform and fully discharge the
following covenants and agreements, as applicable:
36.1 Interim Conduct of Business. From the Execution Date to the Closing Date, ACH
shall:
36.1.1 preserve, protect and maintain the business, properties and assets of ACH;
36.1.2 operate the businesses of ACH as a going concern, consistent with prior
practices and not other than in the ordinary course of business;
36.1.3 preserve the good will of all individuals and entities having business or
other relations with ACH including physicians, employees, patients, customers and suppliers;
36.1.4 obtain all documents called for by this Agreement and required to
facilitate the consummation of the transactions contemplated by this Agreement;
36.1.5 provide Asante promptly with interim financial statements, as referenced
in Section 32.4.1, as soon as such are available;
36.1.6 Without providing to Asante prior written notification, not (1) make any
changes, or permit any changes to be made, in the Articles of Incorporation, corporate bylaws, or
Asante ACH Medical Staff Bylaws and other organizational documents of ACH, except for
changes expressly authorized by this Agreement; or (2) enter into any transaction which could
have a Material Adverse Effect (as defined in Section 45) on the businesses of ACH, except for
transactions expressly authorized by this Agreement.
36.2 Preserve Accuracy of Representations and Warranties. From the Execution Date
to the Closing Date:
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0
36.2.1 ACH shall not take any action which would render any representation or
warranty contained in Section 32 or any of its subsections inaccurate or untrue as of the Closing
Date.
36.2.2 ACH shall promptly notify Asante of any lawsuits, claims, administrative
actions or other proceedings asserted or commenced against ACH or its respective officers,
directors or members involving in any material way the businesses, properties or assets of ACH
or of the Real Property.
36.2.3 ACH shall promptly notify Asante in writing of any facts or circumstances
which come to its attention and which cause, or through the passage of time may cause, any of
the representations and warranties made by such corporation and contained in Section 32 or any
of its subsections to be untrue or misleading at any time from the Execution Date to the Closing
Date.
36.3 Access to Information and Real Pronertv.
36.3.1 From the Execution Date to the Closing Date, ACH shall give to Asante
and to its representatives full and free access, during normal business hours, to all properties
(including without limitation the Real Property (defined in Section 32.10.1) and the City Real
Property and the ACH Foundation Real Property, collectively for purposes of this Section 36.3.1
"ACH Real Property"), books, records and contracts pertaining to the businesses, properties and
assets of ACH, as may be reasonably requested, subject to reasonable advance notice and
provided that Asante shall not exercise such rights of access in such manner as would unduly
interfere with the operations of ACH's personnel or the activities of ACH's patients or guests.
Asante's due diligence rights hereunder with respect to the ACH Real Property shall include, but
not be limited to, the right to inspect the ACH Real Property and all improvements and structures
on the ACH Real Property, and to conduct environmental, geotechnical, engineering, and other
inspections and studies thereof, as Asante desires in its sole discretion, as long as any such
inspections and studies comply with the prior sentence of this Section 36.3.1.
36.3.2 ACH shall cooperate in keeping Asante fully informed and shall promptly
notify Asante of any change having a Material Adverse Effect or other adverse change in the
normal course of business or prospects of ACH or any other business of ACH.
36.4 Maintain Books and Accounting Practices. From the Execution Date to the
Closing Date, ACH shall maintain the books of accouni of ACH in the usual, regular and
ordinary manner in accordance with generally accepted accounting principles consistently
applied and on a basis consistent with prior years, including the consistent use of assumptions,
practices, procedures and terminology, and ACH shall not make or cause to be made any
material changes in the accounting methods or practices of ACH or relating to the ACH Real
Property or the Other Property (defined in Section 32.10.2), including, as applicable, methods or
practices:
36.4.1 establishing reserves on any patient and note receivables;
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36.4.2 establishing reserves for all third-party settlements; and
36.4.3 determining the value of any other accounts which are subjectively
determined.
36.5 Compliance with Laws; Consents. From the Execution Date to the Closing Date,
ACH shall:
36.5.1 comply in all material respects with all applicable statutes, laws,
ordinances and regulations pertaining to ACH or the operation of ACH;
36.5.2 subject to Section 36.8 hereof, keep, hold and maintain all certificates,
certificates of need, certificates of exemption, accreditation, licenses and other permits necessary
for the conduct and operation of ACH and any other business of ACH; and
36.5.3 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate
fully with Asante in Asante's efforts to obtain, all consents, approvals, exemptions and
authorizations of third parties, whether governmental or private, make all filings, and give all
notices which may be necessary or appropriate under all applicable laws and under all contracts,
agreements and commitments in order to consummate the transactions contemplated or required
by this Agreement.
36.6 Resolution of Outstanding Medicare Issues.
36.6.1 From the Execution Date to the Closing Date, ACH shall make all
reasonable efforts to resolve all outstanding Medicare billing disputes, as identified on Schedule
32.16.1, prior to the Closing Date.
36.6.2 As of the Closing Date, ACH shall have filed all applicable appeals for
Medicare and Medicaid cost reporting periods prior to December 31, 2012, for which ACH has
received final notice.
36.7 No Merger or Consolidation. ACH shall not solicit or negotiate alternative bids,
proposals, or opportunities from any other party with regard to a merger, affiliation, change or
sale of membership interests, or sale of a material amount of assets relating to ACH, or merge or
consolidate with, or acquire (except in the ordinary course). any of the assets of any other
corporation, business or person.
36.8 Third-Party Authorizations, Estoppel Certificates. From the Execution Date to
the Closing Date ACH shall obtain expeditiously all consents, approvals and authorizations of
third parties, necessary for the valid execution, delivery and performance of this Agreement by
ACH. From the Execution Date to the Closing Date, A"'H shall solicit and obtain estoppel
certificates (using a form provided by Asante) from each and every third party to a lease of Real
Property in which ACH is a party other than the City or ACH Foundation.
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36.9 Confidentiality of Asante Information.
36.9.1 Except as otherwise set forth in Section 36.9.2, ACH shall hold in
confidence all information regarding Asante obtained in connection with the negotiation and
performance of this Agreement or any due diligence investigation with respect to Asante.
36.9.2 The confidentiality obligation set forth in this Section 36.9 shall not apply
to information that:
36.9.2.1 was known by ACH prior to receipt;
36.9.2.2 is or hereafter becomes lawfully obtainable by ACH from
other sources;
36.9.2.3 ACH is required by law to disclose, including in any filings
required to be made with any governmental agency and pleadings required to be filed with any
court or tribunal;. and
36.9.2.4 ACH is required to disclose to confirm the representations
and warranties contained in Section 32 and its subsections.
36.9.3 If the transactions contemplated by this Agreement are not consummated,
ACH shall continue to hold all confidential Asante information in confidence and shall
immediately return to Asante all documents (and all copies thereof) containing such information.
36.9.4 ACH acknowledges that there is not an adequate remedy at law for the
breach of this Section 36.9 and that, in addition to any other remedies available, injunctive relief
may be granted for any such breach. The provisions of this Section 36.9 shall survive any
termination of this Agreement.
36.10 Confidentiality of ACH Information.
36.10.1 If the change of the membership of ACH occurs pursuant to this
Agreement, then, from the Closing Date and at all times thereafter into perpetuity, except as
otherwise set forth in Section 36.10.2, ACH shall hold in confidence all information regarding
ACH prior to the Closing Date, and shall not divulge such information to third parties or use in a
manner detrimental to Asante, ACH, the ACH Foundation, or the City.
35.10.2 The confidentiality obligation set forth in Section 36.10.1 shall not
apply to information that:
36.10.2.1 was known by ACH prior to receipt;
36.10.2.2 is or hereafter becomes lawfully obtainable by ACH from
other sources;
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36.10.2.3 ACH is required by law to disclose; or
36.10.2.4 ACH is required to disclose to confirm the representations
and warranties contained in Section 32 and its subsections.
36.11 Performance of Undertakings. ACH shall use Reasonable Commercial Efforts to
perform faithfully at all times any and all covenants, undertakings, stipulations and provisions
applicable to it contained in this Agreement and in any and every document executed,
authenticated and delivered hereunder.
36.12 Consummation of Transactions. ACH shall use Reasonable Commercial Efforts
to consummate the transactions contemplated by this Agreement and shall not take any other
action inconsistent with its obligations hereunder or which could hinder or materially delay the
consummation of the transactions contemplated or required hereby.
36.13 Exclusivity. Between the Execution Date and the Closing Date, ACH will abide
by the exclusive negotiations provision in Section 6 of the CNDA.
37. Covenants of Asante. Asante hereby agrees to keep, perform and fully discharge the
following covenants and agreements:
37.1 Preserve Accuracy of Representations and Warranties. From the Execution Date
until the Closing Date:
37.1.1 Asante shall not take any action which would render any representation or
warranty contained in Section 33 or any of its subsections inaccurate or untrue as of the Closing
Date.
37.1.2 Asante shall promptly notify ACH, the City, and ACH Foundation of any
lawsuits, claims, administrative actions or other proceedings asserted or commenced against
Asante, or its officers or directors involving in any material way the ability of Asante to.
consummate the transactions contemplated or required by this Agreement, or materially affecting
Asante's business properties or its assets.
37.1.3 Asante shall promptly notify ACH, the City, and ACH Foundation in
writing of any facts or circumstances which come to Asante's attention and which cause, or
through the passage of time may cause, any of the representations and warranties contained in
Section 33 or any of its subsections to be untrue or misleading.
37.2 Access to Information.
37.2.1 From the Execution Date to the Closing Date, Asante shall give to ACH
and the City and to their representatives full and free access, during normal business hours, to all
properties, books, records and contracts pertaining to the businesses, properties and assets of
Asante as may be reasonably requested, subject to reasonable advance notice and provided that
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ACH shall not exercise such rights of access in such manner as would unduly interfere with the
operations of Asante or the activities of Asante's patients or invitees.
37.2.2 Asante shall cooperate in keeping ACH and the City fully informed and
1 shall promptly notify ACH of any change having a Material Adverse Effect or other adverse
change in the normal course, of business or prospects of Asante.
37.3 Compliance with Laws; Consents. From the Execution Date to the Closing Date,
Asante shall:
37.3.1 comply in all material respects with all applicable statutes, laws,
ordinances and regulations pertaining to Asante;
37.3.2 subject to Section 37.4 hereof and its subsections, keep, hold and maintain
all certificates, certificates of need, certificates of exemption, accreditation, licenses and other
permits necessary for the conduct and operation of Asante and any other business of Asante; and
37.3.3 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate
fully with ACH in ACH's efforts to obtain, all consents, approvals, exemptions and
authorizations of third parties, whether governmental or private, make all filings, and give all
notices which may be necessary or appropriate under all applicable laws and under all contracts,
agreements and commitments in order to consummate the transactions contemplated or required
by this Agreement.
37.4 Third Party Authorizations. From the Execution Date to the Closing Date:
37.4.1 Asante shall use Reasonable Commercial Efforts to obtain expeditiously
all consents, approvals and authorizations of third parties and to give all notices under all
applicable laws and under all contracts, agreements and commitments to which Asante is a party
or is bound, to the extent necessary for the valid execution, delivery and performance of this
Agreement by Asante.
37.4.2 Asante shall cooperate fully with ACH in its efforts to obtain all, consents,
approvals, exemptions and authorizations of third parties, whether governmental or private, and
to make all filings, necessary in order to consummate the transactions contemplated by this
Agreement.
37.5 Confidentiality.
37.5.1 Except as otherwise set forth in Section 37.5.2, from the Execution Date
and at all times thereafter, Asante shall hold in confidence all information regarding ACH
obtained in connection with the negotiation and performance of this Agreement, or its due
diligence investigation with respect to ACH and shall not divulge to third parties or use such
information in a manner detrimental to ACH.
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37.5.2 The confidentiality obligation set forth in Section 37.5.1 shall not apply to
information that:
37.5.2.1 was known by Asante when received;
37.5.2.2 is or hereafter becomes lawfully obtainable by Asante from
other sources;
37.5.2.3 Asante is required by law to disclose; or
37.4.2.4 Asante is required to disclose to confirm the representations
and warranties contained in Section 33 and its subsections.
37.5.3 If the transactions contemplated by this Agreement are not consummated,
Asante shall continue to hold all such information in confidence and shall immediately return to
ACH all documents (and all copies thereof) containing such information.
37.5.4 Asante acknowledges that there is not an adequate remedy at law for the
breach of this Section 37.5 and its subsections and that, in addition to any other remedies
available, injunctive relief may be granted for any such breach. The provisions of this Section
37.5 shall survive any termination of this Agreement.
37.6 Damage to Propert y. In the event that, at any time from the Execution Date to the
Closing Date, Asante engages an environmental or similar consultant to take samples of or
otherwise physically disturb any portion of the ACH Real Property, City Real Property, or ACH
Foundation Real Property, Asante shall pay the costs of repairing any damage done to the
damaged real property as a result of such consultant activity and Asante will provide the owner
of such property with the results of any such study or sample. All such samplings shall be
conducted in accordance with Section 36.3 above.
37.7 Performance of Undertakings. Asante shall use Reasonable Commercial Efforts
to perform faithfully at all times any and all covenants, undertakings, stipulations and provisions
applicable to it contained in this Agreement and in any and every document executed, .
authenticated and delivered hereunder.
37.8 Consummation of Transactions. Asante shall use Reasonable Commercial Efforts
to consummate the transactions contemplated in this Agreement and shall not take any other
action inconsistent with its obligations hereunder or which could hinder or materially delay the
consummation of the transactions contemplated hereby.
38. Covenants of City. City hereby agrees to keep, perform and fully discharge the following
covenants and agreements, as applicable:
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38.1 Interim Conduct of Business. From the Execution Date to the Closing Date, City
shall:
38.1.1 preserve, protect and maintain the City Real Property, as defined in
Section 38.3.1;
38.1.2 obtain all documents called for by this Agreement and required to
facilitate the consummation of the transactions contemplated by this Agreement;
38.1.3 without providing to Asante prior written notification, not (1) make any
changes, or permit any changes to be made, in the Articles of Incorporation, corporate bylaws, or
ACH Medical Staff Bylaws and other organizational documents of ACH, except for changes
expressly authorized by this Agreement; or (2) enter into any transaction which could have a
Material Adverse Effect (as defined in Section 45) on the businesses of ACH, except for
transactions expressly authorized by this Agreement.
38.2 Preserve Accuracy of Representations and Warranties. From the Execution Date
to the Closing Date:
38.2.1 City shall not take any action which would render any representation or
warranty contained in Section 34 or any of its subsections inaccurate or untrue as of the Closing
Date.
38.2.2 City shall promptly notify Asante of any lawsuits, claims, administrative
actions or other proceedings asserted or commenced against City or ACH or their respective
officers, directors or members or City Councilors involving in any material way the businesses,
properties or assets of ACH or of the City Real Property.
38.2.3 City shall promptly notify Asante in writing of any facts or circumstances
which come to its attention and which cause, or through the passage of time may cause, any of
the representations and warranties made by the City and contained in Section 34 or any of its
subsections to be untrue or misleading at any time from the Execution Date to the Closing Date.
38.3 Access to Information and Real Property.
38.3.1 From the Execution Date to the Closing Date, City shall give to Asante
and to its representatives full and free access, during normal business hours, to all properties
(including without limitation the Real Property (defined in Section 32.10.1) and the City Real
Property, collectively for purposes of this Section 38.3.1 ("City Real Property"), books, records
and contracts pertaining to the businesses, properties and assets of ACH, as may be reasonably
requested, subject to reasonable advance notice and provided that Asante shall not exercise such
rights of access in such manner as would unduly interfere with the operations of ACH's
personnel or the activities of ACH's patients or guests. Asante's due diligence rights hereunder
with respect to the City Real Property shall include, but not be limited to, the right to inspect the
City Real Property and all improvements and structures on the City Real Property, and to
conduct environmental, geotechnical, engineering, and other inspections and studies thereof, as
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Asante desires in its sole discretion, as long as any such inspections and studies comply with the
prior sentence of this Section 38.3.1.
38.3.2 City shall cooperate in keeping Asante fully informed and shall promptly
notify Asante of any change having a Material Adverse Effect or other adverse change in the
City Real Property.
38.4 Maintain Books and Accounting Practices. From the Execution Date to the
Closing Date, City shall not make or cause to be made any material changes in the accounting
methods or practices of ACH or relating to the ACH Real Property defined in Section 36.3.1 or
the Other Property (defined in Section 32.10.2), including, as applicable, methods or practices:
38.4.1 establishing reserves on any patient and note receivables;
38.4.2 establishing reserves for all third-party settlements; and
38.4.3 determining the value of any other accounts which are subjectively
determined.
38.5 Compliance with Laws; Consents. From the Execution Date to the Closing Date,
City shall:
38.5.1 comply in all material respects with all applicable statutes, laws,
ordinances and regulations pertaining to ACH or the operation of ACH;
38.5.2 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate
fully with Asante in its efforts to obtain, all consents, approvals, exemptions and authorizations
of third parties, whether governmental or private, make all filings, and give all notices which
may be necessary or appropriate under all applicable laws and under all contracts, agreements
and commitments to which City is a party or is bound in order to consummate the transactions
contemplated or required by this Agreement.
38.6 No Merger or Consolidation. City shall not solicit or negotiate alternative bids,
proposals, or opportunities from any other party with regard to a merger, affiliation, change or
sale of membership interests, or sale of a material amount of assets relating to ACH.
38.7 Third-Party Authorizations; Estoppel Certificates. From the Execution Date to
the Closing Date City shall obtain expeditiously all consents, approvals and authorizations of
third parties, necessary for the valid execution, delivery and performance of this Agreement by
City.
38.8 Confidentiality of Asante Information.
38.0 Except as otherwise set forth in Section 38.8.2, City shall hold in
confidence all information regarding Asante obtained in connection with the negotiation and
performance of this Agreement or any due diligence investigation with respect to Asante.
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38.8.2 The confidentiality obligation set forth in this Section 38.8 shall not apply
to information that:
38.8.2.1 was known by City prior to receipt;
38.8.2.2 is or hereafter becomes lawfully obtainable by City from
other sources;
38.8.2.3 City is required by law to disclose, including in any filings
required to be made with any governmental agency and pleadings required to be filed with any
court or tribunal; and
38.8.2.4 City is required to disclose to confirm the representations
and warranties contained in Section 34 and its subsections.
38.8.3 If the transactions contemplated by this Agreement are not consummated,
City shall continue to hold in confidence all Asante trade secrets or information submitted by
Asante in confidence (that is, information submitted pursuant to a confidentiality agreement in
advance) and shall immediately return to Asante all documents (and all copies thereof)
containing such information.
38.8.4 City acknowledges that there is not an adequate remedy at law for the
breach of this Section 38.8 and that, in addition to any other remedies available, injunctive relief
may be granted 'for any such breach. The provisions of this Section 38.8 shall survive any
termination of this Agreement.
38.9 Confidentiality of City Information.
38.9.1 If the change of the membership of ACH occurs pursuant to this
Agreement, then, from the Closing Date and at all times thereafter into perpetuity, except as
otherwise set forth in Section 38.9.2, City shall hold in confidence all information regarding
ACH prior to and after the Closing Date to the extent such information is or has been submitted
in confidence (that is, submitted pursuant to a confidentiality agreement in advance), and shall
not divulge such information to third parties or use in a manner detrimental to Asante, ACH, the
ACH Foundation, or the City.
38.9.2 The confidentiality obligation set forth in Section 38.9.1 shall not apply to
information that:
38.9.2.1 was known by City prior to receipt;
38.9.2.2 is or hereafter becomes lawfully obtainable by City from
other sources;
38.9.2.3 City is required by law to disclose; or
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38.9.2.4 City is required to disclose to confirm the representations
and warranties contained in Section 34 and its subsections.
38.10 Performance of Undertakings. City shall use Reasonable Commercial Efforts to
perform faithfully at all times any and all covenants, undertakings, stipulations and provisions
applicable to it contained in this Agreement and in any and every document executed,
authenticated and delivered hereunder.
38.11 Consummation of Transactions. City shall use Reasonable Commercial Efforts to
consummate the transactions contemplated by this Agreement and shall not take any other action
inconsistent with its obligations hereunder or which could hinder or materially delay the
consummation of the transactions contemplated or required hereby.
38.12 Exclusivity. Between the Execution Date and the Closing Date, City will abide
by the exclusive negotiations provision in Section 6 of the CNDA.
39. Covenants of ACH Foundation. ACH Foundation hereby agrees to keep, perform and
fully discharge the following covenants and agreements, as applicable:
39.1 Interim Conduct of Business. From the Execution Date to the Closing Date, ACH
Foundation shall:
39.1.1 preserve, protect and maintain the ACH Foundation Real Property;
36.1.2 obtain all documents called for by this Agreement and required to
facilitate the consummation of the transactions contemplated by this Agreement;
39.2 Preserve Accuracy of Representations and Warranties. From the Execution Date
to the Closing Date:
39.2.1 ACH Foundation shall not take any action which would render any
representation or warranty contained in Section 35 or any of its subsections inaccurate or untrue
as of the Closing Date.
39.2.2 ACH Foundation shall promptly notify Asante of any lawsuits, claims,
administrative actions or other proceedings asserted or commenced against ACH Foundation or
its respective officers, directors or members involving in any material way the ACH Foundation
Real Property.
39.2.3 ACH Foundation shall promptly notify Asante in writing of any facts or
circumstances which come to its attention and which cause, or through the passage of time may
cause, any of the representations and warranties made by ACH Foundation and contained in
Section 35 or any of its subsections to be untrue or misleading at any time from the Execution
Date to the Closing Date.
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39.3 Access to Information and ACH Foundation Real Property.
39.3.1 From the Execution Date to the Closing Date, ACH Foundation shall give
to Asante and to its representatives full and free access, during normal business hours, to the
ACH Foundation Real Property, and books, records and contracts pertaining to the ACH
Foundation Real Property, as may be reasonably requested, subject to reasonable advance notice
and provided that Asante shall not exercise such rights of access in such manner as would unduly
interfere with the operations of ACH Foundation. Asante's due diligence rights hereunder with
respect to the ACH Foundation Real Property shall include, but not be limited to, the right to
inspect the ACH Foundation Real Property and all improvements and structures on the ACH
Foundation Real Property, and to conduct environmental, geotechnical, engineering, and other
inspections and studies thereof, as Asante desires in its sole discretion, as long as any such
inspections and studies comply with the prior sentence of this Section 39.3.1.
39.3.2 ACH Foundation shall cooperate in keeping Asante fully informed and
shall promptly notify Asante of any change having a Material Adverse Effect or other adverse
change in the ACH Foundation Real Property.
39.4 Maintain Books and Accounting Practices. From the Execution Date to the
Closing Date, ACH Foundation shall maintain the books of account of ACH Foundation in the
usual, regular and ordinary manner in accordance with generally accepted accounting principles
consistently applied and on a basis consistent with prior years, including the consistent use of
assumptions, practices, procedures and terminology, and ACH Foundation shall not make or
cause to be made any material changes in the accounting methods or practices of ACH
Foundation or relating to the ACH Foundation Real Property.
39.5 Compliance with Laws; Consents. From the Execution Date to the Closing Date,
ACH Foundation shall:
39.5.1 comply in all material respects with all applicable statutes, laws,
ordinances and regulations pertaining to ACH Foundation or the operation of ACH Foundation;
39.5.2 use Reasonable Commercial Efforts to obtain and, as applicable, cooperate
fully with Asante in its efforts to obtain, all consents, approvals, exemptions and authorizations
of third parties, whether governmental or private, make all filings, and give all notices which
may be necessary or appropriate under all applicable laws and under all contracts, agreements
and commitments to which ACH Foundation is a party or is bound in order to consummate the
transactions contemplated or required by this Agreement.
39.6 No Merger or Consolidation. ACH Foundation shall not solicit or negotiate
alternative bids, proposals, or opportunities from any other party with regard to a merger,
affiliation, change or sale of membership interests; or sale of a material amount of assets relating
to ACH Foundation, or merge or consolidate with, or acquire (except in the ordinary course) any
of the assets of any other corporation, business or person.
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39.7 Third-Party Authorizations; Estoppel Certificates. From the Execution Date to
the Closing Date ACH Foundation shall obtain expeditiously all consents, approvals and
authorizations of third parties, necessary for the valid execution, delivery and performance of
this Agreement by ACH Foundation.
39.8 Confidentiality of Asante Information.
39.8.1 Except as otherwise set forth in Section 39.8.2, ACH Foundation shall
hold in confidence all information regarding Asante obtained in connection with the negotiation
and performance of this Agreement or any due diligence investigation with respect to Asante.
39.8.2 The confidentiality obligation set forth in this Section 39.8 shall not apply
to information that:
39.8.2.1 was known by ACH Foundation prior to receipt;
39.8.2.2 is or hereafter becomes lawfully obtainable by ACH
Foundation from other sources;
39.8.2.3 ACH Foundation is required by law to disclose, including
in any filings required to be made with any governmental agency and pleadings required to be
filed with any court or tribunal; and
39.8.2.4 ACH Foundation is required to disclose to confirm the
representations and warranties contained in Section 35 and its subsections.
39.8.3 If the transactions contemplated by this Agreement are not consummated,
ACH Foundation shall continue to hold all confidential Asante information in confidence and
shall immediately return to Asante all documents (and all copies thereof) containing such
information.
39.8.4 ACH Foundation acknowledges that there is not an adequate remedy at
law for the breach of this Section 39.8 and that, in addition to any other remedies available,
injunctive relief may be granted for any such breach. The provisions of this Section 39.8 shall
survive any termination of this Agreement.
39.9 Confidentiality of ACH Foundation Information.
39.9.1 If the change of the membership of ACH occurs pursuant to this
Agreement, then, from the Closing Date and at all times thereafter into perpetuity, except as
otherwise set forth in Section 39.9.2, ACH Foundation shall hold in confidence all information
regarding ACH Foundation prior to the Closing Date, and shall not divulge such information to
third parties or use in a manner detrimental to Asante, ACH, ACH Foundation, or the City.
39.9.2 The confidentiality obligation set forth in Section 39.9.1 shall not apply to
information that:
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39.9.2.1 was known by ACH Foundation prior to receipt;
39.9.2.2 is or hereafter becomes lawfully obtainable by ACH
Foundation from other sources;
39.9.2.3 ACH Foundation is required by law to disclose; or
39.9.2.4 ACH Foundation is required to disclose to confirm the
representations and warranties contained in Section 35 and its subsections.
39.10 Performance of Undertakings. ACH Foundation shall use Reasonable
Commercial Efforts to perform faithfully at all times any and all covenants, undertakings,
stipulations and provisions applicable to it contained in this Agreement and in any and every
document executed, authenticated and delivered hereunder.
39.11 Consummation of Transactions. ACH Foundation shall use Reasonable
Commercial Efforts to consummate the transactions contemplated by this Agreement and shall
not take any other action inconsistent with its obligations hereunder or which could hinder or
materially delay the consummation of the transactions contemplated or required hereby.
39.12 Exclusivitv. Between the Execution Date and the Closing Date, ACH Foundation
will abide by the exclusive negotiations provision in Section 6 of the CNDA.
40. Conditions Precedent to Obligations of ACH. The obligations of ACH to consummate
the transactions contemplated by this Agreement are, at the option of ACH subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
40.1 Accuracy of Warranties; Performance of Covenants. The representations and
warranties of Asante contained in Section 33 and its subsections shall be accurate in all material
respects as if made on and as of the Closing Date. Asante shall have performed all of the
obligations and complied with each and all of the covenants, agreements and conditions required
to be performed or complied with by it on or prior to the Closing Date.
40.2 No Pending Action. No action or proceeding before any court or governmental
body shall be pending or threatened wherein an unfavorable judgment, decree or order would
prevent the carrying out of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause such transactions to
be rescinded.
40.3 Regulatory Approvals. All regulatory consents and approvals required for the
consummation of the transactions contemplated or required by this Agreement shall have been
obtained on or before the Closing Date.
40.4 Consents. All consents, approvals and authorizations of third parties required for
the consummation of the transactions contemplated or required by this Agreement shall have
been obtained on or before the Closing Date.
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40.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be
binding upon the Parties that all required Exhibits and Schedules be attached in a final form on
the Execution Date. Notwithstanding the foregoing; all Exhibits and Schedules to this Agreement
shall be complete and otherwise in final form acceptable to the Parties and shall be attached to
the Agreement at Closing. Asante shall have cured any Disapproved Items set forth in its
Schedules and Amended Schedules, in accordance with the process described in Section 27.5
and its subsections.
40.6 Delivery of Asante Closin¢ Documents. Asante shall have executed and
delivered the Asante Closing Documents.
40.7 Delivery of Other Agreements. Asante, the City, and ACH Foundation shall have
executed and delivered all other agreements determined by the Parties to be necessary or
appropriate to be entered into as of the Closing Date, relating to the transactions contemplated by
this Agreement.
40.8 Material Adverse Change. There has not been a change having a Material
Adverse Effect on the business, financial condition, results of operation or assets of the Asante as
of, and for the annualized results of operation for the period commencing with the date of this
Agreement and ending with the most recent month ending prior to the Closing Date, when
compared to the same as of, and for the 12-month period ending, with the month ending
immediately preceding the date of this Agreement.
40.9 EIB; Seniority. Asante and ACH shall have agreed to an approach to credit,
transition and/or redeem certain seniority, paid time off (PTO) and extended illness benefits
(EIB) of those ACH employees who will transition to Asante benefit programs following the
Closing Date. Such agreement will be documented and attached to this Agreement at Closing as
Schedule 40.9.
40.10 Satisfaction of Condition. If ACH is not satisfied, in its sole discretion, that each
of the conditions set out in this Section 40 and its subsections has been satisfied, then, at any
time prior to the Closing Date, ACH shall have the right to terminate this Agreement upon
written notice to Asante, in which event, each Parties' obligation to complete the Closing shall
automatically terminate.
41. Conditions Precedent to Obligations of Asante. The obligations of Asante to
consummate the transactions contemplated by this Agreement are at the option of Asante, subject
to the satisfaction, on or prior to the Closing Date, of the following conditions:
41.1 Accuracy of Warranties: Performance of Covenants. Except for changes or
developments expressly permitted or contemplated by the express terms of this Agreement or
anticipated changes or developments disclosed on a Schedule hereto, or negative performance
trends encountered as a direct or indirect impact of transaction(s) like those that are part of this
Agreement, the representations and warranties of the following entities and municipality shall be
accurate in all material respects as if made on and as of the Closing Date: ACH as provided in
Section 32 and. its subsections, the City as provided in Section 34 and its subsections, and ACH
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Foundation as provided in Section 35 and its subsections. ACH, the City, and ACH Foundation
shall have performed all of their respective obligations and complied with each and all of the
covenants, agreements and conditions applicable to them required to be performed or complied
with by them on or prior to the Closing Date.
41.2 No Pending Action. No action or proceeding before any court, or governmental
body shall be pending wherein an unfavorable judgment, decree or order would prevent the
carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful
the transactions contemplated by this Agreement or cause such transactions to be rescinded.
41.3 Regulatory Approvals. All regulatory consents and approvals required for the
consummation of the transactions contemplated or required by this Agreement shall have been
obtained on or before the Closing Date, without imposition of terms or conditions unacceptable
to Asante in its sole discretion.
41.4 Consents. All consents, approvals and authorizations of third parties, required for
the consummation of the transactions contemplated by this Agreement shall have been obtained
on or before the Closing Date.
41.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be
binding upon the Parties that all required Exhibits and Schedules be attached in a final form on
the Execution Date. Notwithstanding the foregoing, all Exhibits and Schedules to this Agreement
shall be complete and otherwise in final form acceptable to the Parties and shall be attached to
the Agreement at Closing. ACH, the City, and the ACH Foundation shall have cured any
Disapproved Items set forth in their respective Schedules and Amended Schedules, in
accordance with the process described in Section 27.5 and its subsections.
41.6 Closing Documents. ACH, the City, and ACH Foundation shall have delivered,
respectively, on or before the Closing Date, the ACH Closing Documents, the City Closing
Documents, and the ACH Foundation Closing Documents.
41.7 Delivery of Other Agreements. ACH, the City, and ACH Foundation shall have
executed. and delivered all other agreements determined by the Parties to be necessary or
appropriate to be entered into as of the Closing Date, relating to the transactions contemplated by
this Agreement.
41.8 Change of Auditor. Subject to Section 23, ACH shall have approved KPMG as
its auditor as of the Closing Date.
41.9 No Catastrophic Losses or Liabilities. Following the Execution Date, ACH shall
have suffered or incurred no liabilities outside of the ordinary course of its businesses or casualty
losses exceeding Three Million Dollars ($3,000,000) in the aggregate.
41.10 Due Diligence. Asante shall have completed its due diligence investigation of
ACH and the resulting information from such investigation shall have been acceptable to Asante
in its sole discretion.
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41.11 Material Adverse Change. There has not been a change having a Material
Adverse Effect on the business, financial condition, results of operation or assets of ACH or
Asante as of, and for the annualized results of operation for the period commencing with the date
of this Agreement and ending with the most recent month ending prior to the Closing Date, when
compared to the same as of, and for the 12=month period ending, with the month ending
immediately preceding the date of this Agreement.
41.12 Execution of the Agreement by ACH Foundation, ACH, and the City. The City,
ACH, and ACH Foundation shall have executed this Agreement and agreed to its terms.
41.13 Environmental, Engineering and Asbestos Surveys. Asante has satisfied itself in
its sole discretion with the condition of all ACH Real Property as defined in Section 36.3.1 and
all buildings, structures, and improvements located thereon, and the condition thereof, and with
the environmental condition of the ACH Real Property as defined in Section 36.3.1 and its
compliance with all Environmental Laws.
41.14 Title Report. Asante shall have satisfied itself in its sole discretion and at its sole
expense with the condition of title to the ACH Real Property as defined in Section 36.3.1, and
the City, ACH, and ACH Foundation shall have performed each and every obligation required of
them under this Agreement regarding the conveyance of the City. Real Property and the ACH
Foundation Real Property to ACH.
41.15 Medical Staff Bylaws, Policies and Procedures. ACH shall have amended the
Asante ACH Medical Staff Bylaws, Policies and Procedures as provided in Section 15.4 hereof.
41.16 EIB; Seniority. Subject to Section 14, Asante and ACH shall have agreed to an
approach to credit, transition and/or redeem certain seniority and extended illness benefits (EIB)
of those ACH employees who will transition to Asante benefit programs following the Closing
Date. Such agreement will be documented and attached to this Agreement at Closing as
Schedule 40.9.
41.17 Evidence of Tail Insurance. ACH shall have delivered to Asante the evidence of
the insurance coverage called for under Section 25 hereof.
41.18 Satisfaction of Condition. If Asante is not satisfied, in its sole discretion, that
each of the conditions set out in this Section 41 has been satisfied, then, at any time prior to the
Closing Date, Asante shall have the right to terminate this Agreement upon written notice to
ACH, the City, and ACH Foundation, in which event, each Parties' obligation to complete the
Closing shall automatically terminate.
42. Conditions Precedent to Obligations of City. The obligations.of City to consummate the
transactions contemplated by this Agreement are, at the option of City subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
42.1 Accuracy of Warranties; Performance of Covenants. The representations and
warranties of Asante contained in Section 33 and its subsections shall be accurate in all material
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respects as if made on and as of the Closing Date. Asante shall have performed all of the
obligations and complied with each and all of the covenants, agreements and conditions required
to be performed or complied with by it on or prior to the Closing Date.
42.2 No Pending Action. No action or proceeding before any court or governmental
body shall be pending or threatened wherein. an unfavorable judgment, decree or order would
prevent the carrying out of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause such transactions to
be rescinded.
42.3 Regulatory Approvals. All regulatory consents and approvals required for the
consummation of the transactions contemplated or required by this Agreement shall have been
obtained on or before the Closing Date.
42.4 Consents. All consents, approvals and authorizations of third parties required for
the consummation of the transactions contemplated or required by this Agreement shall have
been obtained on or before the Closing Date.
42.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be
binding upon the Parties that all required Exhibits and Schedules be attached in a final form on
the Execution Date. Notwithstanding the foregoing, all Exhibits and Schedules to this Agreement
shall be complete and otherwise in final form acceptable to the Parties and shall be attached to
the Agreement at Closing: Asante shall have cured any Disapproved Items set forth in its
Schedules and Amended Schedules, in accordance with the process described in Section 27.5
and its subsections.
42.6 Delivery of Asante Closing Documents. Asante shall have executed and
delivered the Asante Closing Documents.
42.7 Delivery of Other Agreements. Asante, ACH, and ACH Foundation shall have
executed and delivered all other agreements determined by the Parties to be necessary or
appropriate to be entered into as of the Closing Date, relating to the transactions contemplated by
this Agreement.
42.8 Material Adverse Change. There has not been a change having a Material
Adverse Effect on the business, financial condition, results of operation or assets of the Asante as
of, and for the annualized results of operation for the period commencing with the date of this
Agreement and ending with the most recent month ending prior to the Closing Date, when
compared to the same as of, and for the 12-month period ending, with the month ending
immediately preceding the date of this Agreement.
42.9 EIB; Seniority. Subject to Section 14, Asante and ACH shall have agreed to an
approach to credit, transition and/or redeem certain seniority, paid time off (PTO) and extended
illness benefits (EIB) of those ACH employees who will transition to Asante benefit programs
following the Closing Date. Such agreement will be documented and attached to this Agreement
at Closing as Schedule 40.9.
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42.10 Satisfaction of Condition. If City is not satisfied, in its sole discretion, that each
of the conditions set out in this Section 42 has been satisfied, then, at any time prior to the
Closing Date, City shall have the right to terminate this Agreement upon written notice to
Asante, in which event, each Parties' obligation to complete the Closing shall automatically
terminate.
43. Conditions Precedent to Obligations of ACH Foundation. The obligations of ACH
Foundation to consummate the transactions contemplated by this Agreement are, at the option of
ACH Foundation subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
43.1 Accuracy of Warranties; Performance of Covenants. The representations and
warranties of Asante contained in Section 33 and its subsections shall be accurate in all material
respects as if made on and as of the Closing Date. Asante shall have performed all of the
obligations and complied with each and all of the covenants, agreements and conditions required
to be performed or complied with by it on or prior to the Closing Date.
43.2 No Pending Action. No action or proceeding before any court or governmental
body shall be pending or threatened wherein an unfavorable judgment, decree or order would
prevent the carrying out of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement or cause such transactions to
be rescinded.
43.3 Regulatory Approvals. All regulatory consents and approvals required for the
consummation of the transactions contemplated or required by this Agreement shall have been
obtained on or before the Closing Date.
43.4 Consents. All consents, approvals and authorizations of third parties required for
the consummation of the transactions contemplated or required by this Agreement shall have
been obtained on or before the Closing Date.
43.5 Exhibits and Schedules. It is not a condition precedent for this Agreement to be
binding upon the Parties that all required Exhibits and Schedules be attached in a final form on
the Execution Date. Notwithstanding the foregoing, all Exhibits and Schedules to this
Agreement shall be complete and otherwise in final form acceptable to the Parties and shall be
attached to the Agreement at Closing. Asante shall have cured any Disapproved Items set forth
in its Schedules and Amended Schedules, in accordance with the process described in Section
27.5 and its subsections.
43.6 Delivery of Asante Closing Documents. Asante shall have executed and
delivered the Asante Closing Documents.
I
43.7 Delivery of Other Agreements. Asante, the City, and ACH shall have executed
and delivered all other agreements determined by the Parties to be necessary or appropriate to be
entered into as of the Closing Date, relating to the transactions contemplated by this Agreement.
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43.8 Material Adverse Change. There has not been a change having a Material
Adverse Effect on the business, financial condition, results of operation or assets of the Asante as
of, and for the annualized results of operation for the period commencing with the date of this
Agreement and ending with the most recent month ending prior to the Closing Date, when
compared to the same as of, and for the 12-month period ending, with the month ending
immediately preceding the date of this Agreement.
43.9 Satisfaction of Condition. If ACH Foundation is not satisfied, in its sole
discretion, that each of the conditions set out in this Section 43 and its subsections has been
satisfied, then, at any time prior to the Closing Date, ACH Foundation shall have the right to
terminate this Agreement upon written notice to Asante, in which event, each Parties' obligation
to complete the Closing shall automatically terminate.
44. General Provisions.
44.1 Amendment. Except as otherwise provided in this Agreement, no amendment of
any provision of this Agreement shall be effective, unless the same shall be in writing and signed
by the Parties, and then such amendment shall be effective only in the specific instance and for
the specific purpose for which given.
44.2 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, as follows:
If to Asante:
Asante
2650 Siskiyou Blvd.
Medford, OR 97504
Attention: Chief Executive Officer
Peter F. Stoloff, P.C.
5285 Meadows Road, Suite 235
Lake Oswego, Oregon 97035, Attorney for Asame
If to ACH (prior to the Closing Date):
Ashland Community Hospital
280 Maple Street
Ashland, OR 97520
Attention: Chief Executive Officer
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With a copy to:
William S. Manne
Miller Nash LLP
I I I S.W. Fifth Avenue, Suite 3400
Portland, Oregon 97204, Attorney for ACH
If to ACH Foundation:
Ashland Community Hospital Foundation
280 Maple Street
Ashland, OR 97520
Attention: Board Chair
Allen Drescher, Attorney for ACH Foundation
If to the Citv:
City of Ashland.
20 East Main Street
Ashland, OR 97520
Attention: Administrator
David Lohman, Ashland City Attorney
20 East Main Street
Ashland, OR 97520
A Party may change its address for receiving notice by written notice given to the others
named above. All notices shall be effective when received, if by personal delivery or overnight
courier, or two (2) business days after being deposited in the mail addressed as set forth above, if
mailed.
44.3 Expenses. Except as otherwise provided in this Agreement, each Party shall each
pay its own fees and expenses and those of its respective agents, advisors, consultants, attorneys
and accountants with respect to the transactions described in this Agreement, its respective due
diligence investigations, and the negotiation of the Agreement and the Closing.
44.4 Entire Transaction. This Agreement contains the entire understanding of the
Parties with respect to the transactions contemplated hereby and supersedes all other agreements
and understandings of the Parties on the subject matter hereof, except that, to the extent that any
agreement (including any agreement the form of which is attached hereto as an Exhibit or a
Schedule) is referred to herein in such manner as to clearly indicate that such agreement is
designed to detail the agreement of the Parties with respect to the specified subject matter, the
terms of such agreements shall govern with respect to such subject matter, except that the dispute
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resolution procedures set forth in Section 31 and its subsections shall apply to disputes under any
agreement delivered on or prior to the Closing.
44.5 Applicable Law, Forum. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Oregon. Subject to Section 31 hereof, any
proceeding which arises out of or relates in any way to the subject matter of this Agreement shall
be brought in Medford, Oregon in the Jackson County Circuit Court. The Parties hereby consent
to the jurisdiction of such courts and waive their right to challenge any proceeding involving or
relating to this Agreement on the basis of lack of jurisdiction over the Party or forum non
conveniens.
44.6 Headings. Headings of Sections in this Agreement and the table of contents
hereof are solely for convenience or reference, do not constitute a part hereof and shall not affect
the meaning, construction or effect hereof.
44.7 Gender. Unless the context otherwise indicates, words importing the singular
shall be deemed to include the plural, and vice versa, and the use of the neuter, masculine or
feminine gender is for convenience only and shall be deemed to mean and include any other
gender, as appropriate.
44.8 Further Assurances. After the Closing, each Party shall take such further actions
and execute and deliver such additional documents and instruments as may be reasonably
requested by another Party in order to perfect and complete the transactions specifically
contemplated herein.
44.9 Waiver of Terms. Any of the terms or conditions of this Agreement may be
waived at any time by the Party which is entitled to the benefit thereof but only by a written
notice signed by the Party waiving such terms or conditions. The waiver of any term or
condition shall not be construed as a waiver of any other term or condition of this Agreement.
44.10 Partial Invalidity. In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision of this Agreement,
but this Agreement shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
44.11 Exhibits and Schedules. The attached Exhibits and Schedules shall be construed
with and as an integral part of this Agreement to the same extent as if the same had been set forth
verbatim herein.
44.12 Non-Assumption of Liabilities.
44.12.1 Asante, by entering into and performing this Agreement, shall not
become liable for any of the existing or future obligations, liabilities or debts of ACH, the City,
or ACH Foundation unless Asante expressly assumes such obligations, liabilities, or debts.
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44.12.2 No member, director, officer, agent or employee of any of the
Parties shall be individually or personally liable for the obligations of any such Party hereunder
or subject to personal liability or accountability by reason or approval, execution or delivery of
this Agreement.
44.13 Binding Effect; Non-Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, assigns and legal
representatives, but no Party may assign its rights in this Agreement or delegate its duties under
this Agreement to a third party by any means without first obtaining the prior written consent of
all other Parties.
44.14 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. The Parties agree that facsimile or 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.
44.15 Access to Records and Information. If and to the extent applicable to this
Agreement and to any agreement contemplated hereunder or entered into pursuant hereto
between or among the Parties, the Parties agree to comply with the requirements of Public Law
96-499, Section 952 (Section 1861(v)(1)(I) of the Social Security Act) and regulations
promulgated thereunder.
44.16 No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person or other third party other than the Parties and their respective
successors and permitted assigns.
44.17 Time is of the Essence. Time is of the essence in the performance of this
Agreement.
44.18 Fair Meaning. This Agreement shall be construed according to its fair meaning
and as if prepared by all Parties hereto.
44.19 Recitals. The recitals set forth above constitute a substantive part of this
Agreement.,
45. Glossary. For convenience, set forth below are summary descriptions of the defined
terms used in this Agreement. Parentheses at the end of each definition show the place in the
Agreement where the term is initially defined. To the extent of any inconsistency between the
meaning of a term as initially defined earlier in this Agreement, and any summary definition
below, the initial definition shall govern.
ACH Board has the definition set forth in Section 2.2.
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ACH Closing Documents means the documents to be delivered by ACH at the Closing,
as set forth in Section 27.4.2.
ACH Financial Statements shall have the meaning set forth in Section 32.4.1.
Agreement means this Affiliation Agreement among Asante, ACH, the City, and ACH
Foundation. (Introductory Paragraph).
Amended Schedule shall have the meaning set forth in Section 27.5.
Amending Party shall have the meaning set forth in Section 27.5.
Anti-Kickback Statute shall have the meaning set forth in Section 32.16.2.
Arbitration Demand shall have the meaning set forth in Section 31.2.2.3.
Asante Board means the Board of Directors of Asante set forth in Section 2.2.
Asante Closing Documents means the documents to be delivered by Asante at the
Closing, as set forth in Section 27.4.1.
Asante Financial Statements shall have the meaning set forth in Section 33.4.1.
ASP shall mean Arbitration Service of .Portland, Inc., or its successor organization.
(Section 31.3.1).
Benefit Plans shall have the meaning set forth in Section 32.15.1.
Closing shall have the meaning set forth in Section 27.2.
Closing Date shall have the meaning set forth in Section 27.2.
Closing Date Documents shall have the meaning set forth in Section 27.2.1.
Code means the Internal Revenue Code of 1986, and all Treasury Regulations relating
thereto, as may be amended from time to time.
Dispute Notice shall have the meaning set forth in Section 31.2.2.
DNV Healthcare, Inc. shall have the meaning set forth in Section 32.17.
Employee shall have the meaning set forth in Section 14.5.
Environmental Law shall have the meaning set forth in Section 32.9.
Environmental Report shall have the meaning set forth in Section 32.20.5.
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ERISA means the Employee Retirement Income Security Act of 1974, as amended.
(Section 32.15.1).
Execution Date means the day of May, 2013. (Introductory Paragraph).
Insurance Policies shall have the meaning set forth in Section 32.13.1.
Licenses and Permits shall have the meaning set forth in Section 32.7.1.
Material Adverse Effect as to ACH shall mean (A) any event, occurrence or matter
having or potentially having a financial impact of $500,000 or more or (B) three consecutive
months with operating losses in excess of $200,000 per each month or an aggregate loss for such
three month period of $600,000 a loss in value of invested funds of more than $1,000,000 and, as
to Asante, shall mean any event, occurrence or matter having or potentially having a financial
impact of $10,000,000 or more. (Section 41.11 and 43.8).
Material Contracts shall have the meaning set forth in Section 32.18.1.
Meet and Confer Request shall have the meaning set forth in Section 31.2.1.
Other Property shall have the meaning set forth in Sections 32.10.2, 34.7.2, and 35.8.2,
as applicable.
Parties means Asante, ACH, the City, and ACH Foundation collectively, except in
Section 31, where "Parties to the dispute" excludes Parties not participating in the dispute
resolution procedures therein.
Party means any of Asante, ACH, the City, and ACH Foundation after each executes the
Agreement and becomes a Party hereto.
Plan shall have the meaning set forth in Section 5.2.2. The Plan is a single-employer
defined benefit pension plan called the Ashland Community Hospital Retirement Plan. The Plan
was frozen on December 31, 2006.
Representation Date means the Execution Date and the Closing Date.
Schedule shall have the meaning set forth in Section 27.5.
Stark II shall have the meaning set forth in Section 32.16.2.
Taxes mean all federal, state, county, local and other taxes of every kind. (Section
32.14).
Title Company means the Company issuing the Title Policy. (Exhibit 9.9, Section 3.1).
Title Policy shall have the meaning set forth in Exhibit 9.9, Section 3.1.
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Title Report shall have the meaning set forth in Exhibit 9.9, Section 3.1.
VEBA shall have the meaning set forth in Section 32.15.1.7.
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IN WITNESS WHEREOF, the Parties, acting through their duly authorized
representatives, have executed this Affiliation Agreement as of the day and year first above
written.
Asante
By:By: SdMGk,3d13
William D. Thomdike to Roy Vinyard Date
Board Chair President and Chief Executive Officer
Ashland Community Hospital
By: alwl ~e ~oi3 By (b .
Anne Golden ate Douglas D ehl D Date
Board Chair Board Chair Elect
Ashland ommunity Hospital Foundation
r
B
dra Slattery ate Tom GrinIand Date
an
Board President Past Board President
City of Ashland
By: By. 6114113
Joh S om erg Date Dave Kanner Date
May Administrator
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LIST OF ATTACHMENTS
(Exhibits and Schedules)
EXHIBITS TO AFFILIATION AGREEMENT
EXHIBIT DESCRIPTION
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ALL SCHEDULES TO AFFILIATION AGREEMENTJO BE
PROVIDED BY
SCHEDULE " DESCRIPTION
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ALL SCHEDULES TO AFFILIATION AGREEMENT TO BE.
PROVIDED BY
SCHEDULE " DESCRIPTION
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