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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
AMONG
HAPPY HARRY'S HEALTH CARE, INC.
THE COMPANY,
XXXXX XXXXX-XXXXXX, XXXX X. XXXXX,
XXXXXXX XXXXXXX AND XXXXX XXXXX
THE SHAREHOLDERS,
AND
AMERICAN HOMEPATIENT, INC.
THE BUYER
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TABLE OF CONTENTS
ARTICLE I. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Assets at Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Excluded Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Continuing Contracts, Leases and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Delivery of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II. RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Collection of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Additional Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Organization, Qualification and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Capitalization and Stock Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Operations Since December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Absence of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7 Employment Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 Medicare, Medicaid and Other Third-Party Payors . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Compliance with Zoning, Land Use and Other Laws; Easements . . . . . . . . . . . . . . . . . . . . . 10
4.11 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.12 Leases and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.14 Miscellaneous Representations Relating to Real Estate . . . . . . . . . . . . . . . . . . . . . . . 13
4.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.16 Company Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.19 Broker's or Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.20 Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.21 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.22 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.23 Motor Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.24 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.25 Compliance with Healthcare and Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.26 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.27 WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.28 Tax Returns; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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4.29 Asset Value; Statement of Income and Net Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.30 No Omissions or Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Organization, Qualification and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Broker's or Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI. COVENANTS OF PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Preservation of Business and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Absence of Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Medicare and Medicaid Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Current Return Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Preserve Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Maintain Books and Accounting Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Indebtedness; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Compliance with Laws and Regulatory Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Maintain Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 No Sale, Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Xxxx-Xxxxx-Xxxxxx Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII. COMPANY'S AND SHAREHOLDERS' CONDITIONS TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1 Representations and Warranties True at Closing; Compliance with Agreement . . . . . . . . . . . . . 24
8.2 No Action/Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.3 Order Prohibiting Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IX. BUYER'S CONDITIONS TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Representations and Warranties True at Closing; Compliance with Agreement . . . . . . . . . . . . . 24
9.2 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 No Action/Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Inspection of Assets; U.C.C. Searches, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.5 Order Prohibiting Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6 Confidentiality and Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.7 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.8 Operating Targets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.9 Lease Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.10 Third Party Consents; Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.11 Approval of Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.12 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE X. OBLIGATIONS OF COMPANY AND SHAREHOLDERS AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.1 Documents Relating to Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Corporate Good Standing and Corporate Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.6 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.7 Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.8 Additionally Requested Documents; Post-Closing Assistance . . . . . . . . . . . . . . . . . . . . . 27
10.9 Confidentiality, Employment and Lease Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.10 Assumption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XI. OBLIGATIONS OF BUYER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.2 Corporate Good Standing and Certified Board Resolutions . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 Opinion of Buyer's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XII. OPINION OF BUYER'S COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XIII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.2 Indemnification by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.3 Indemnification by Company and Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.4 Rules Regarding Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XIV. PRESERVATION OF BUSINESSAND NONCOMPETE RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.1 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.2 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XV. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.2 Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.4 Confidentiality; Prohibition on Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.5 Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.7 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.8 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
15.11 Interpretation; Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
15.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
15.13 Further Assurance of Shareholders After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 35
15.14 Legal Fees and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into on August ___,
1996, by and among HAPPY HARRY'S HEALTH CARE, INC., a Delaware corporation
("Company"), XXXXX XXXXX-XXXXXX, XXXX X. XXXXX, XXXXXXX XXXXXXX and XXXXX
XXXXX, (collectively, the "Shareholders"), and AMERICAN HOMEPATIENT, INC., a
Tennessee corporation ("Buyer").
R E C I T A L S:
WHEREAS, Shareholders own and operate the Company, a corporation that
operates a medical supply business at the locations described on Exhibit A
hereto, which Exhibit sets forth the type of services and products provided by
the Company at each location (collectively, the "Business"); and
WHEREAS, Shareholders own all of the issued and outstanding capital
stock of the Company (the "Stock"); and
WHEREAS, Shareholders desire to sell and transfer the Stock to Buyer,
and Buyer desires to purchase the same from Shareholders, subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
ARTICLE I. PURCHASE AND SALE
1.1 Purchase and Sale. Shareholders agree to sell, transfer,
assign, convey and deliver to Buyer, and Buyer agrees to purchase from
Shareholders, all right, title and interest in and to the Stock, which consists
of all of the issued and outstanding capital stock of the Company.
Shareholders shall deliver to Buyer at Closing all stock certificates
representing the Stock, duly endorsed for transfer or accompanied by duly
executed stock powers. The Stock shall be delivered free and clear of all
claims, liens, restrictions, suits, proceedings, calls, proxies, charges,
options, security interests and encumbrances of any kind.
1.2 Assets at Closing. At Closing the Company shall own or
lease, as specified, all assets, tangible and intangible, real and personal,
that are necessary or reasonably desirable to operate the Business
(collectively, the "Assets"), free and clear of all encumbrances, mortgages,
pledges, liens, security interests, obligations and liabilities other
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than the Continuing Liabilities (as defined in paragraph 1.4), which Assets
shall include, without limitation, the following:
(1) All right, title and interest in and to all of the
land and real estate owned or leased by the Company and used in connection with
the Business as listed in Exhibit 1.2(1) attached hereto and in and to all
structures, improvements, fixed assets and fixtures including fixed machinery
and fixed equipment situated thereon or forming a part thereof and all
appurtenances, easements and rights-of-way related thereto (collectively, the
"Real Estate");
(2) All tangible personal property, medical and other
equipment, machinery, data processing hardware and software, furniture,
furnishings, appliances, vehicles and other tangible personal property of every
description and kind and all replacement parts therefor used in connection with
the Business including, without limitation, the items listed on Exhibit 1.2(2)
attached hereto but excluding the furniture and personal property in Xx.
Xxxxx-Xxxxxx'x office (collectively, the "Equipment and Furnishings");
(3) All inventory of goods and supplies used or
maintained in connection with the Business reflected on the Financial
Statements (collectively, the "Inventory");
(4) All accounts and notes receivable (the
"Receivables");
(5) All cash, bank accounts (as listed by name and
address of banking institution, account name and account and routing numbers on
Exhibit 1.2(5) attached hereto), money market accounts, other accounts,
certificates of deposit and other investments of the Company (the "Cash and
Cash Equivalents");
(6) All patient, medical, personnel, corporate and other
records related to the Business (including both hard and microfiche copies),
and all manuals, books and records used in operating the Business, including,
without limitation, personnel policies and files and manuals, accounting
records, and computer software;
(7) To the full extent transferable, all licenses,
permits, registrations, certificates, consents, accreditations, approvals and
franchises necessary to operate and conduct the Business, together with
assignments thereof, if required, and all waivers which the Company currently
has, if any, of any requirements pertaining to such licenses, permits,
registrations, certificates, consents, accreditations, approvals and
franchises;
(8) All goodwill, and, to the extent assignable by the
Company, all warranties (express or implied) and rights and claims related to
the Assets or the operation of the Business;
(9) All prepaid expenses reflected on the Financial
Statements;
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(10) Contract and leasehold rights and interests pursuant
to contracts for purchase or lease of personal property, construction
contracts, contracts for purchase, sale or lease of equipment, goods or
services currently furnished or to be furnished in connection with the Business
and that are approved by Buyer (as such term is defined herein);
(11) All intangible or intellectual property owned,
leased, licensed or possessed by either the Company or the Shareholders and
utilized in connection with the Business, including without limitation, a
six-month non-exclusive license to use the name "Happy Harry's Health Care,
Inc.," and derivatives thereof, to the extent the Company or any Shareholder
has rights in or to each such name (during the first two (2) months following
Closing, Buyer shall endeavor to use its name in connection with each use of
Seller's name; following such two (2) month period Buyer's name shall
immediately precede any use of Seller's name); and
(12) All equity interests in Company and all corporate,
fiscal and other records pertaining to Company or the Business and all of
Company's right, title and interest in any partnerships, joint ventures or
similar arrangements.
1.3 Excluded Items. Immediately prior to conveyance of the
Stock, Company shall transfer to the Shareholders all debts, liabilities and
other obligations of any nature whatsoever, whether known or unknown,
contingent or otherwise, other than the Continuing Liabilities as specifically
set forth in paragraph 1.4(1) (the "Excluded Items"). The parties acknowledge
and agree that Shareholders and Company are not conveying to Buyer any of the
Excluded Items and that, following Closing, neither Company nor Buyer will not
have any right, title, interest or obligation with respect to the Excluded
Items.
1.4 Continuing Contracts, Leases and Liabilities.
(1) At Closing, Company will retain and agree to pay or
perform, as the case may be, only (a) those obligations constituting working
capital liabilities incurred in the ordinary course of business existing on the
Effective Date (as defined), which Company expressly elects to retain as
specifically set forth on Exhibit 1.4 attached hereto other than long-term and
interest bearing debt, (b) those obligations constituting working capital
liabilities incurred in the ordinary course of business on and after the
Effective Date as described on Exhibit 1.4, other than long-term and interest
bearing debt, and (c) those obligations arising on and after the Effective Date
under those Leases and Contracts (as defined in paragraph 4.12) which Company
expressly elects to retain (collectively, the "Continuing Liabilities") as
specifically set forth on Exhibit 1.4.
(2) Buyer is not assuming any debt, liability or
obligation of the Company or of Shareholder and, except for the Continuing
Liabilities, it is expressly agreed and understood by each of the parties to
this Agreement that after the Closing Company shall not retain or be liable
for, any debt, liability or obligation of Company prior to the Closing or of
Shareholders of any type or description whatsoever, whether related or
unrelated to the Stock, the Business or the transactions contemplated under
this Agreement and that
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Shareholders shall be jointly and severally liable and responsible for the
payment or performance, as the case may be, of all debts, liabilities,
obligations, contracts, leases, notes payable, accounts payable, commitments,
agreements, suits, claims, indemnities, mortgages, taxes, contingent
liabilities and other obligations of Company arising prior to Closing and of
Shareholders including, without limitation, any and all investment tax credit
recapture, depreciation recapture, recapture or prior period adjustments under
Medicare, Medicaid and Blue Cross, all impositions of income tax and other
taxes; all employee wages, salaries and benefits including, without limitation,
COBRA and WARN obligations, accrued vacation and sick pay not expressly
retained by Company pursuant to this paragraph, and other accrued employee
benefits including rights of Company's retirees to participate in medical
plans. Notwithstanding any statement contained in this Agreement or otherwise
seemingly to the contrary, Company shall not be obligated to retain liabilities
pursuant to clause (a) of paragraph 1.4(1) in excess of, in the aggregate Six
Hundred Eighty-Three Thousand and No/100 Dollars ($683,000.00) (the "Continuing
Liabilities Cap").
(3) For purposes of calculating the amount of the
Continuing Liabilities, the present value of payments to be made on and after
the Effective Date with respect to any Continuing Liability that is a
capitalized obligation under generally accepted accounting principles shall be
considered part of the amount of such Continuing Liabilities. In the event
that Company elects to retain Continuing Liabilities in excess of the
Continuing Liabilities Cap, then the Purchase Price (as such term is defined
herein) shall be reduced on a dollar-for-dollar basis to the full extent of
such excess.
1.5 Delivery of Stock. Shareholders shall deliver to Buyer at
Closing all stock certificates representing the Stock, duly endorsed for
transfer or accompanied by duly executed stock powers. The Stock will be
conveyed to Buyer fully paid and nonassessable with good and valid title, free
and clear of all liens, charges, claims, liabilities, encumbrances, security
interests, restrictive agreements, options, rights of others and imperfections
of title of any nature whatsoever, including all amounts due and payable for
federal, state and local transfer taxes.
ARTICLE II. RECEIVABLES
2.1 Collection of Receivables. After Closing, Company will
proceed to collect the Receivables in the ordinary course of business
consistent with past collection practices. Shareholders shall provide such
assistance in the collection process as Company or Buyer may reasonably
request. If, within 270 days following Closing, Buyer and Company have
collected less than the amount of the Receivables reflected in the Interim
Financial Statements (as such term is defined in paragraph 4.4(1)) in excess of
the reserves set forth on Exhibit 2.1 attached hereto, (a) Shareholders shall,
jointly and severally, promptly pay Buyer, or the Purchase Price shall be
reduced by, the amount of such shortfall, and (b) Shareholders agree, jointly
and severally, to prepare at their cost revised historical financial statements
reflecting the impact of the less-than-anticipated collections.
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ARTICLE III. PURCHASE PRICE
3.1 Purchase Price. The purchase price payable by Buyer to
Shareholders for the Stock and in consideration for the agreements contained
herein, including the agreements contained in Article XIV hereof, will be Nine
Million Ten Thousand and No/100 Dollars ($9,010,000.00) (the "Purchase Price").
The Purchase Price shall be subject to adjustment as set forth in this
Agreement and shall be payable at Closing in the following manner:
(1) Eight Million Two Hundred Ten Thousand and No/100
Dollars ($8,210,000.00), subject to the foregoing adjustments, in immediately
available funds at Closing by wire transfer;
(2) Eight Hundred Thousand and No/100 Dollars
($800,000.00) by a purchase price note (the "Note"), the form of which is
attached hereto as Exhibit 3.1(2); and
3.2 Additional Purchase Price. In addition to the Purchase
Price described in paragraph 3.1, Buyer shall deliver to Shareholders, in cash
at Closing, interest on that portion of the Purchase Price noted in paragraphs
3.1(1) and 3.1(2) at the rate of seven percent (7%) per annum from the
Effective Date through Closing. In addition, Buyer shall pay to Xxxxxxx
Xxxxxxx and Xxxxx Xxxxxxxxxx at Closing, in such proportions as set forth on
Exhibit 3.2A, the aggregate sum of Three Hundred Thousand and No/100 Dollars
($300,000.00) and options to acquire Twenty Thousand (20,000) shares of the
Common Stock of American HomePatient, Inc., the form of which option is
attached hereto as Exhibit 3.2B.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS
As a material inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereunder, Shareholders hereby jointly
and severally represent and warrant to Buyer, which representations and
warranties shall be true and correct on the date of Closing, as follows:
4.1 Organization, Qualification and Authority. Company is a
corporation duly organized and validly existing in the State of Delaware, and
is in good standing and duly qualified to do business as a foreign corporation
in Pennsylvania. Since the date of its organization and incorporation, Company
has consistently observed and operated within the corporate formalities of the
jurisdictions in which it is incorporated and/or conducts its business, and has
consistently observed and complied with the general corporation law of such
jurisdictions. Company has full power and authority to own, lease and operate
its facilities and assets as presently owned, leased and operated; to carry on
its business as it is now being conducted; and is duly qualified to do business
and is in good standing in
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each of the jurisdictions where the Business is conducted. Except for
Shareholders, no other person or entity owns or holds, has any interest in,
whether legal, equitable or beneficial, or has the right to purchase, any
capital stock or other security of Company. Company owns no capital stock,
security, interest or other right, or any option or warrant convertible into
the same, of any corporation, partnership, joint venture or other business
enterprise. Company and Shareholders have the full right, power and authority
to execute, deliver and carry out the terms of this Agreement and all documents
and agreements necessary to give effect to the provisions of this Agreement, to
consummate the transactions contemplated on the part of each such party hereby,
and to take all actions necessary, in their respective capacities, to permit or
approve the actions of Company and Shareholders taken in connection with this
Agreement. The execution, delivery and consummation of this Agreement, and all
other agreements and documents executed in connection herewith by Company and
Shareholders, have been duly authorized by all necessary action on the part of
such parties. This Agreement and all other agreements and documents executed
in connection herewith by Company and/or Shareholders, upon due execution and
delivery thereof, shall constitute the valid and binding obligations of Company
and/or Shareholders, as the case may be, enforceable in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally and by general principles of equity.
4.2 Capitalization and Stock Ownership. Except for
Shareholders, no other person or entity owns or holds, has any interest in,
whether legal, equitable or beneficial, or has the right to purchase, any
capital stock or other security of Company. The Stock, being 600 shares, no
par value, of common stock, constitutes all issued and outstanding securities
of Company, is duly authorized, validly issued, fully paid and nonassessable,
and is owned free and clear of any liens, charges, encumbrances, security
interests, pledges or any other restrictions whatsoever. At Closing, Company
shall have no outstanding subscriptions, options, warrants, calls, contracts,
convertible securities or other instruments, agreements or arrangements of any
nature whatsoever under which Company is or may be obligated or compelled to
issue any capital stock, security or interest of any kind, or to transfer or
modify any right with respect to any capital stock, security or other interest,
and no one has any pre-emptive rights, right of first refusal or similar rights
with respect to the Stock or any equity interest in Company. Except for a
stockholder agreement which will be terminated prior to Closing, neither
Company nor Shareholders are a party to any, and there exist no, voting trusts,
stockholder agreements, pledge agreements or other agreements relating to or
restricting the transferability of any shares of the Stock or equity interests
of Company. The Stock has been issued in accordance with all applicable
federal and state securities laws.
4.3 Absence of Default. The execution, delivery and
consummation of this Agreement, and all other agreements and documents executed
in connection herewith by Company and Shareholders will not constitute a
violation of, or be in conflict with, will not, with or without the giving of
notice or the passage of time, or both, result in a breach of, constitute a
default under, create (or cause the acceleration of the maturity of) any debt,
indenture, obligation or liability affecting Company or its Business or rights
in the Stock,
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result in the creation or imposition of any security interest, lien, charge or
other encumbrance upon any of the Stock, or otherwise adversely affect Buyer,
Company or the Business under: (a) any term or provision of the Charter or
Bylaws of Company; (b) any contract, lease, purchase order, agreement,
document, instrument, indenture, mortgage, pledge, assignment, permit, license,
approval or other commitment to which Company and/or any Shareholders is a
party or by which Company, any Shareholder, Stock or the Assets are bound; (c)
any judgment, decree, order, regulation or rule of any court or regulatory
authority; or (d) any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority or arbitration
tribunal to which Company, any Shareholder, Stock and/or the Assets are
subject.
4.4 Financial Statements.
(1) Attached hereto as Exhibit 4.4 are true and correct
copies of Company's audited balance sheets as of December 31, 1995, and its
audited income statements for the year then ending (the "Fiscal Year Financial
Statements"), and the interim unaudited balance sheet and income statement of
Company for the seven (7) month period ended July 31, 1996 (the "Interim
Financial Statements" which with the Fiscal Year Financial Statements shall be
the "Financial Statements"). The Financial Statements are based on the books
and records of Company and present fairly, in compliance with generally
accepted accounting principles, the financial position of Company as of, and
the results of its operations for, the periods specified.
(2) The books and records of Company are in such order
and completeness so that an unqualified audit may be performed for any period
prior to Closing not already audited. Shareholders shall fully and readily
cooperate with Buyer in Buyer's attempt to perform an audit of Company for any
period prior to Closing not already audited.
4.5 Operations Since December 31, 1995. Since December 31,
1995, there has been no:
(1) material change in the condition, financial or
otherwise, which has, or could reasonably be expected to have, an adverse
effect on any of the Assets, the Business or future prospects of the Business,
or in the results of the operations of the Company;
(2) loss, damage or destruction of or to any of the
Assets, whether or not covered by insurance;
(3) sale, lease, transfer or other disposition by Company
of, or mortgages or pledges of or the imposition of any lien, charge or
encumbrance on, any portion of the Assets, other than those made in the
ordinary course of business;
(4) increase in the compensation payable by Company to
any of its Shareholders, employees, directors, independent contractors or
agents, or increase in, or institution of, any bonus, insurance, pension,
profit-sharing or other employee benefit plan
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or arrangements made to, for or with the employees, directors, independent
contractors or agents of Company;
(5) cumulative net operating loss incurred in the
operation of the Business;
(6) adjustment or write-off of Receivables or reduction
in reserves for Receivables outside of the ordinary course of business;
(7) change in the accounting methods or practices
employed by Company or change in adopted depreciation or amortization policies;
(8) issuance or sale by Company, or contract or other
commitment entered into by Company or Shareholders for the issuance or sale, of
any shares of capital stock or securities convertible into or exchangeable for
capital stock of Company;
(9) payment by Company of any dividend, distribution or
extraordinary or unusual disbursement or expenditure or intercompany payable;
(10) sale, transfer, pledge, mortgage or other disposition
of any of the Stock or the Assets (except inventory and equipment held for rent
in the ordinary course of business and consistent with Company's past practice
and the sale of stock to Xxxxxxx Xxxxxxx); merger, consolidation or similar
transaction; or solicitation therefor;
(11) security interest, guarantee or other encumbrance, or
other than in the ordinary course of business, obligation or liability, in each
case whether absolute, accrued, contingent or otherwise, or whether due or to
become due, incurred or paid by Company to any person or entity; or the making
by Company of any loan or advance to, or an investment in, any person or
entity;
(12) federal, state or local statute, rule, regulation,
order or case adopted, promulgated or decided which, to the best knowledge of
Company and Shareholders, adversely affects Company, Stock, Business or Assets;
(13) strike, work stoppage or other labor dispute
adversely affecting the Business; or
(14) termination, waiver or cancellation of any rights or
claims of Company, under contract or otherwise.
Further, since the Effective Date, neither the Shareholders nor any of
their family members or affiliates has received any compensation, benefits or
distributions from Company, whether as salary, bonus, fees, dividends or any
other form of compensation, which is greater than the amount of compensation
and benefits contemplated for each pursuant to the agreements referenced in
paragraph 9.7 (except for the customary compensation paid to Xxxxxxx Xxxxxxx).
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4.6 Absence of Certain Liabilities. Except as set forth in the
Interim Financial Statements, Company has, and as of the Closing will have, no
contingent liabilities or obligations.
4.7 Employment Discrimination. Except as disclosed in Exhibit
4.7 attached hereto, no person or party (including, without limitation, any
governmental agency) has asserted, or to the best knowledge of the Company or
Shareholders, has threatened to assert, any claim for any action or proceeding,
against Company (or any officer, director, employee, agent or Shareholder of
Company) arising out of any statute, ordinance or regulation relating to wages,
collective bargaining, discrimination in employment or employment practices or
occupational safety and health standards (including, without limitation, the
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, as
amended, the Occupational Safety and Health Act, the Age Discrimination in
Employment Act of 1967, or the Americans With Disabilities Act). The claims
disclosed in Exhibit 4.7 will not result in any liability to or obligation of
Buyer, directly or through the Company, and will not cause or lead to any lien
or encumbrance being placed, created or filed against or upon any of the Stock
or Assets, and Shareholders will jointly and severally hold Buyer and Company
harmless with respect to the same.
4.8 Licenses and Permits.
(1) Company has all local, state and federal licenses,
permits, registrations, certificates, contracts, consents, accreditations and
approvals (collectively, the "Licenses and Permits") necessary for Company to
occupy, operate and conduct the Business, and there does not exist any waivers
or exemptions relating thereto. There is no default on the part of Company or
any other party under any of the Licenses and Permits. There exists no
grounds for revocation, suspension or limitation of any of the Licenses or
Permits. Copies of each of the Licenses and Permits are attached to and listed
on Exhibit 4.8(1) attached hereto. The most recent licensure surveys,
deficiency reports and plans of correction related to each of these items has
also been included in Exhibit 4.8(1). Company is, and at the time of Closing
will be, licensed by the regulatory bodies listed on Exhibit 4.8(1). No
notices have been received by Company or Shareholders with respect to any
threatened, pending, or possible revocation, termination, suspension or
limitation of the Licenses and Permits.
(2) Company is not required to have any certificates of
need or similar authorizations in order to operate the Business.
(3) Each employee of Company has all Licenses and Permits
required for each such employee to perform such employee's designated functions
and duties for Company in connection with conducting the Business, and there
exists no waivers or exemptions relating thereto. There is no default under,
nor does there exist any grounds for revocation, suspension or limitation of,
any such Licenses and Permits.
(4) Company is duly accredited by the Joint Commission on
Accreditation of Healthcare Organizations ("JCAHO") to operate and conduct the
Business. Included in
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Exhibit 4.8(4) attached hereto are the certificates of accreditation issued by
the JCAHO, and copies of the most recent JCAHO accreditation survey report,
including a list of deficiencies, if any.
4.9 Medicare, Medicaid and Other Third-Party Payors.
(1) Company participates in the Medicare and Medicaid
Programs (collectively, the "Programs"). A list of and copies of its existing
Medicare and Medicaid contracts and other documentation evidencing such
participation (collectively, the "Program Agreements") are included in Exhibit
4.12 attached hereto. Company is, and will be at the time of Closing, in full
compliance with all of the terms, conditions and provisions of the Program
Agreements.
(2) No notice of any offsets against future
reimbursements under or pursuant to the Programs has been received by either
Company or Shareholders, nor is there any basis therefor. There are no pending
appeals, adjustments, challenges, audits, litigation, notices of intent to
recoup past or present reimbursements with respect to the Programs. Company
has not been subject to or threatened with loss of waiver of liability for
utilization review denials with respect to the Programs during the past twelve
(12) months, nor has either Company or Shareholders received notice of any
pending, threatened or possible decertification or other loss of participation
in, any of the Programs.
(3) Company currently has contractual arrangements with
Blue Cross and other third party Payors. A list of and copies of its existing
Blue Cross contract(s) and other third party payor contract(s) are included in
Exhibit 4.12 attached hereto. Company is, and will be at the time of Closing,
in full compliance with all of the material terms, conditions and provisions of
such contracts.
(4) All liabilities and contractual adjustments of
Company under any third party payor or reimbursement programs have been
properly reflected and adequately reserved for in the Financial Statements. In
the event that, following Closing, Company suffers any offsets against any
reimbursement under any third-party payor or reimbursement programs due to
Buyer or Company relating to the periods on or prior to the Closing, then
Shareholders shall immediately pay to Company the amounts the amounts so
offset, with interest at a rate equal to seven percent (7%) per annum;
provided, however that Buyer shall bear the risk of offset as to operations
from the Effective Date through Closing so long as such offsets are not caused
by the wilful acts or omissions, or negligence, of Shareholders, Company and/or
their respective employees, representatives or agents. The interest shall
accrue from the date of offset by the third party until the date paid by
Shareholders to Company.
4.10 Compliance with Zoning, Land Use and Other Laws; Easements.
None of the Real Estate is in violation of any zoning, public health, building
code or other similar laws applicable thereto or to the ownership, occupancy
and/or operation thereof, nor does there exist any waivers or exemptions
relating to the Real Estate with respect to any non-conforming use or other
zoning or building codes matters. The Company has all
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easements and rights necessary to continue operation of the Business, copies of
which are set forth in Exhibit 4.10 attached hereto.
4.11 Title to Assets.
(1) Company is the sole legal and beneficial owner of the
personal property included in the Assets, free and clear of all mortgages,
security interests, liens, leases, covenants, assessments, easements, options,
rights of refusal, restrictions, reservations, defects in the title,
encroachments, and other encumbrances, except as set forth in the Leases and
Contracts. The Assets are all the assets set forth on the Interim Financial
Statements or used in the operation of the Business.
(2) The descriptions of the Real Estate contained in
Exhibit 1.2 (1) are accurate and sufficient for their intended purposes, and
such descriptions include all real property leased or owned by Company and used
in connection with the Business or set forth on the Interim Financial
Statements. Company is the sole and exclusive record, legal and equitable
owner of all right, title and interest in and has good, marketable and
insurable title in fee simple to, and is in possession of, all of the Real
Estate including the buildings, structures and improvements situated thereon
and all appurtenances thereto, in each case free and clear of all mortgages,
liens, leases, assessments, easements, covenants, options, rights of refusal,
restrictions, reservations, defects in title, encroachments and other
encumbrances, whether or not the same render the title to such Real Estate
uninsurable or unmarketable. Company is in lawful possession of all of the
Real Estate that is leased rather than owned, including, without limitation,
the buildings, structures and improvements situated thereon and appurtenances
thereto, in each case free and clear of all mortgages, liens and other
encumbrances or restrictions that are related to or impair the Assets or the
Business. Additionally, the transfer and conveyance of the Stock to Buyer as
contemplated by the terms of this Agreement once effected as contemplated
hereunder, will vest in the Buyer, either directly or indirectly through
Company, the lawful right to possess and use the leased Real Estate, superior
in right to all others.
4.12 Leases and Contracts.
(1) Exhibit 4.12 attached hereto sets forth a complete
and accurate list of all contracts, including, the Program Agreements,
agreements, purchase orders, leases, subleases, options and commitments, oral
or written, and all assignments, amendments, schedules, exhibits and appendices
thereof, affecting or relating to the Business, Stock or any Asset or any
interest therein, to which either Company and/or Shareholders are a party or by
which Company, the Assets or the Business is bound or affected, including,
without limitation, service contracts, management agreements, equipment leases
and building leases pertaining to any part of the Real Estate (collectively,
the "Leases and Contracts"). Attached to Exhibit 4.12 are accurate and
complete copies of all written Leases and Contracts and written summaries of
key terms of all oral Leases and Contracts. Except for the Continuing
Liabilities, all obligations under the Leases and Contracts shall be jointly
and severally assumed by the Shareholders.
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(2) None of the Leases and Contracts has been modified,
amended, assigned or transferred and each is in full force and effect and is
valid, binding and enforceable in accordance with its respective terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and by general principles of
equity.
(3) No event or condition has happened or presently
exists which constitutes a default or breach or, after notice or lapse of time
or both, would constitute a default or breach by any party under any of the
Leases and Contracts. There are no counterclaims or offsets under any of the
Leases and Contracts.
(4) There does not exist any security interest, lien,
encumbrance or claim of others created or suffered to exist on any interest
created under any of the Leases and Contracts (except for those that result
from or relate to leased Assets).
(5) No purchase commitment by Company is in excess of
Company's ordinary business requirements.
(6) Conveyance to Buyer of the Stock will not default,
alter or terminate any of the Leases and Contracts, and Buyer, directly or
through Company, will be entitled to all rights thereunder.
4.13 Environmental Matters.
(1) Hazardous Substances. As used in this Paragraph, the
term "Hazardous Substances" means any hazardous or toxic substances, materials
or wastes, including but not limited to those substances, materials, and wastes
defined in Paragraph 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed in the
United States Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances pursuant to 40 CFR Part
302, or which are regulated under any other Environmental Law (as such term is
defined herein), and any of the following: hydrocarbons, petroleum and
petroleum products, asbestos, polychlorinated biphenyls, formaldehyde,
radioactive substances (other than naturally occurring materials in place),
flammables and explosives.
(2) Compliance with Laws and Regulations. All operations
or activities upon, or any use of occupancy of the Real Estate, or any portion
thereof, by Company, any Affiliates of Company (wherein the term "Affiliates"
shall mean any person or entity controlling, controlled by or under common
control at any time with Company, and the term "control" shall mean the power,
directly or indirectly to direct the management or policies of such person or
entity), and any agent, contractor or employee of any agent or contractor of
Company or its Affiliates ("Agents"), or any tenant or subtenant of Company of
any part of the Real Estate is and has been in compliance with any and all
laws, regulations, orders, codes, judicial decisions, decrees, licenses,
permits and other applicable requirements of governmental authorities with
respect to Hazardous Substances, pollution or protection of
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human health and safety (collectively, "Environmental Laws"), including but not
limited to the release, emission, discharge, storage and removal of Hazardous
Substances. To the best knowledge of Company and Shareholders, all prior
owners, operators and occupants of the Real Estate complied with Environmental
Law. Except for uses and storage or presence of Hazardous Substances
reasonably necessary or incidental to the customary operation of a business
similar to the Business, as appropriate which, if required, was duly licensed
or authorized by appropriate governmental authorities or otherwise permitted by
Environmental Law, and which complies with Environmental Law:
(a) Neither Company nor its Affiliates or Agents
have allowed the use, generation, treatment, handling, manufacture, voluntary
transmission or storage of any Hazardous Substances over, in or upon the Real
Estate, nor, to the best knowledge of Company or Shareholders, has the Real
Estate ever been used for any of the foregoing.
(b) Neither Company nor its Affiliates or Agents
have installed or permitted to be installed, in or on the Real Estate friable
asbestos or any substance containing asbestos in condition or amount deemed
hazardous by Environmental Law.
(c) Company has not at any time engaged in or
permitted any dumping, discharge, disposal, spillage, or leakage (whether legal
or illegal, accidental or intentional) of such Hazardous Substances, at, on, in
or about the Real Estate, or any portion thereof that would subject the Real
Estate or Buyer to clean-up obligations imposed by governmental authorities.
(d) None of the Real Estate, nor any part
thereof, nor Company, nor any present owner or operator of the Real Estate is
subject to any existing, pending, or, to the best knowledge of Company or
Shareholder, threatened investigation or inquiry by any governmental authority
for noncompliance with, or any remedial obligations under Environmental Law.
(3) Other Environmental Matters. To the best knowledge
of Seller and Shareholders, there are no underground storage tanks on any
portion of the Real Estate, and the Real Estate is free of dangerous levels of
naturally-emitted radon. To the best knowledge of Company and Shareholders, no
portion of the Real Estate has ever been used as a landfill.
4.14 Miscellaneous Representations Relating to Real Estate.
(1) To the best knowledge of Company and Shareholders, no
part of the Real Estate is currently subject to condemnation proceedings.
There are no facts known to either Company or Shareholders that would adversely
affect the possession, use or occupancy of the Real Estate.
(2) All utilities serving the Real Estate are adequate to
operate the Real Estate in the manner it is currently operated and to the best
knowledge of Company and Shareholders all utility lines, pipes, hook-ups and
wires serving the Real Estate are located
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within recorded easements for the benefit of the Real Estate. To the best
knowledge of Company and Shareholders, there are no encroachments upon the Real
Estate and no encroachment of any improvements to the Real Estate onto adjacent
property. To the best knowledge of Company and Shareholders, none of the
improvements to the Real Estate violate set-back, building or side lines, nor
do they encroach on any easements located on the Real Estate.
(3) All potable and industrial water and all gas,
electrical, steam, compressed air, telecommunication, sanitary and storm sewage
lines and systems and other similar systems serving the Real Estate and the
facilities of the Business are installed and operating and are sufficient to
enable the Real Estate and the facilities of the Business to continue to be
used and operated in the manner currently being used and operated, and any
so-called hook-up fees or other associated charges accrued to date have been
fully paid. Company has received no written recommendation from any insurer to
repair or replace any of the Assets with which Seller has not complied.
4.15 Litigation. Neither Company nor Shareholders have received
notice of any violation of any law, rule, regulation, ordinance or order of any
court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality (including, without
limitation, legislation and regulations applicable to the Medicare and Medicaid
programs, environmental protection, civil rights, public health and safety and
occupational health). Except as set forth in Exhibit 4.15 attached hereto (for
which Shareholders shall jointly and severally indemnify and hold harmless
Buyer and Company), there are no lawsuits, proceedings, actions, arbitrations,
governmental investigations, claims, inquiries or proceedings pending or
threatened involving Company, Shareholders, Stock, any of the Assets or the
Business.
4.16 Company Employees. Exhibit 4.16 attached hereto sets forth:
(a) a complete list of all of the Company's employees, and rates of pay, (b)
true and correct copies of any and all fringe benefits and personnel policies,
(c) the employment dates and job titles of each such person, (d) categorization
of each such person as a full-time or part-time employee of Company and (e) a
list of all ex-employees of Company utilizing or eligible to utilize COBRA
(health insurance). For purposes of this paragraph, "part-time employee" means
an employee who is employed for an average of fewer than twenty hours per week
or who has been employed for fewer than six (6) of the twelve (12) months
preceding the date on which notice is required pursuant to the "Worker
Adjustment and Retraining Notification Act" ("WARN"), 29 U.S.C. Section 2102 et
seq. Except as provided in Exhibit 4.12, Company has no employment agreements
with its employees and all such employees are employed on an "at will" basis.
Shareholders agree, jointly and severally, to indemnify and hold Buyer and
Company harmless from and against any and all claims of employees, whenever
made, relating to their employment by Company through Closing. Company has
adequately accrued all salaries and wages, related payroll taxes and all sick
leave, holiday, vacation benefits, retirement and other fringe benefits that
have accrued to Company employees through the Closing Date, including related
payroll taxes.
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4.17 Labor Relations. Company is not a party to any labor
contract, collective bargaining agreement, contract, letter of understanding,
or any other arrangement, formal or informal, with any labor union or
organization which obligates Company to compensate Company's employees at
prevailing rates or union scale, nor are any of its employees represented by
any labor union or organization. There is no pending or, to the best knowledge
of Company and Shareholders, threatened labor dispute, work stoppage, unfair
labor practice complaint, strike, administrative or court proceeding or order
between Company and any present or former employee(s) of Company. There is no
pending or, to the best knowledge of Company and Shareholders, threatened suit,
action, investigation or claim between Company and any present or former
employee(s) of Company. There has not been any labor union organizing activity
at any location of Company, or elsewhere, with respect to Company's employees
within the last three years.
4.18 Insurance. Company has in effect and has continuously
maintained insurance coverage for all of its operations, personnel and assets,
and for the Assets and the Business. A complete and accurate list of all such
insurance policies is included in Exhibit 4.18. Exhibit 4.18 attached hereto
sets forth a summary of Company's current insurance coverage (listing type,
carrier and limits), and includes a list of any pending insurance claims
relating to Company. Shareholders agree, jointly and severally, to indemnify
and hold Buyer and Company harmless from and against such pending insurance
claims to the extent such claims are not satisfied by Company's insurance
policies. Company is not in default or breach with respect to any provision
contained in any such insurance policies, nor has Company failed to give any
notice or to present any claim thereunder in due and timely fashion.
4.19 Broker's or Finder's Fee. Neither Company nor Shareholders
have employed, or are liable for the payment of any fee to, any find, broker,
consultant or similar person in connection with the transactions contemplated
under this Agreement.
4.20 Conflicts of Interest. Except for the lease described in
Section 9.9, none of the following is either a supplier of goods or services to
Company, or directly or indirectly controls or is a director, officer, employee
or agent of any corporation, firm, association, partnership or other business
entity that is a supplier of goods or services to Company: (a) any Shareholder,
(b) any director or officer of Company, or (c) any entity under common control
with Company or controlled by or related to Shareholders.
4.21 Intellectual Property. All trademarks, service marks, trade
names, patents, inventions, processes, copyrights and applications therefor,
whether registered or at common law (collectively, the "Intellectual
Property"), owned by Company are listed and described in Exhibit 4.21 attached
hereto. No proceedings have been instituted or are pending or, to the best
knowledge of Company and Shareholders, threatened which challenge the validity
of the ownership by Company of any such Intellectual Property. Company has not
licensed anyone to use any such Intellectual Property, and neither Company nor
Shareholders have any knowledge of the use or the infringement of any of such
Intellectual Property by any other person. Company owns or possesses adequate
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and enforceable licenses or other rights to use all Intellectual Property now
used in the conduct of its Business.
4.22 Inventories. The Inventory is of a quality and quantity
previously used by Company in the ordinary course of business determined and
valued consistent with Company's past practice. The Inventory is properly
valued at the lower of cost or market value on a first-in/first-out basis in
accordance with generally accepted accounting principles consistently applied.
Since the date of the Interim Financial Statements, Company has not decreased
or substituted its items of Inventory other than in the ordinary course of
business. Company has fairly represented the nature and extent of the
Inventory to its outside accountants on a consistent basis and in the exercise
of good faith.
4.23 Motor Vehicles. All motor vehicles used in the Business,
whether owned or leased, are listed in Exhibit 1.2(2) attached hereto. All
such vehicles are properly licensed and registered in accordance with
applicable law.
4.24 Employee Benefit Plans.
(1) Welfare Benefit Plans. Exhibit 4.24(1) attached
hereto contains a true, accurate and complete list of each "employee welfare
benefit plan" (as defined in Paragraph 3(1) of the Employee Retirement Income
Security Act of 1974 as amended ("ERISA")) maintained by Company or to which
Company contributes or is required to contribute (such employee welfare benefit
plans being hereinafter collectively referred to as the "Welfare Benefit
Plans"). Copies of all Welfare Benefit Plans have previously been provided to
Buyer.
(2) Pension Benefit Plans. Exhibit 4.24(2) attached
hereto contains a true and complete list of each "employee pension benefit
plan" (as defined in Paragraph 3(2) of ERISA) maintained by Company, to which
Company contributes or is required to contribute, or which covered employees of
Company during the period of their employment with any predecessor of Company,
including any multi-employer pension plan as defined under Internal Revenue
Code of 1986, Paragraph 414(f) (such employee pension benefit plans being
hereinafter collectively referred to as the "Pension Benefit Plans"). Copies
of all Pension Benefit Plans have previously been provided to Buyer.
(3) Liabilities. There are no unfunded liabilities under
any Welfare Benefit Plan or Pension Benefit Plan. Neither Buyer nor Company
shall be liable or responsible for any debt, obligation, responsibility or
liability under any such plans. Shareholders hereby assume joint and several
liability under such plans for all claims due and unpaid at Closing and for all
claims incurred before Closing, whether or not paid or presented before
Closing.
4.25 Compliance with Healthcare and Other Laws. Neither Company
nor Shareholders have made any kickback, bribe or payment to any person or
entity, directly or indirectly, for referring, recommending or arranging
business or patients with, to or for Company which action could have a material
adverse effect on the Business. None of the Leases and Contracts and no
activity of Company or Shareholders violates Paragraph 1877 of the Social
Security Act or any similar provision of applicable state law in any material
respect. None of the
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Leases and Contracts and no activity of Company or Shareholders violates
provisions of applicable state law relating to the corporate practice of
medicine in any material respect. Company is in compliance (without obtaining
waivers, variances or extensions) with all federal, state and local laws, rules
and regulations which relate to the operations of the Business, except where
the failure to be in compliance would not have a material adverse effect on the
Business. No bulk sales or similar statute applies to the transactions
contemplated under this Agreement. The transactions contemplated under this
Agreement comply with applicable state antitrust or similar laws. All
healthcare, tax and other returns, reports, plans and filings of any nature
required to be filed by Company or Shareholders with any federal, state or
local governmental authorities and any third party payors have been properly
completed, except where the failure to be so completed or filed could not have
a material adverse effect on the Business, and timely filed in compliance with
all applicable requirements. Each return, report, plan and filing contains no
materially untrue or misleading statements and does not omit anything which
could cause it to be misleading or inaccurate in any material respect.
4.26 Condition of Assets. The Equipment and Furnishings are all
of the "Equipment" reflected on the Interim Financial Statements, other than
those items sold and replaced in the ordinary course of business. The Assets
comprise all of the following: all assets owned by the Company and all assets
used in connection with the Business and any related businesses. All
components of all of the Equipment and Furnishings (a) operate in accordance
with their respective specifications, (b) perform the functions they are
supposed to perform, (c) are free of structural, installation, engineering, or
mechanical defects or problems, and (d) are otherwise in good working order.
The Company has received no written recommendation from any insurer to repair
or replace any of the Assets with which the Company has not complied. Since
December 31,1995, the Business has been operated in conformity with the methods
and procedures observed and utilized during the two year period immediately
preceding December 31, 1995, and, since December 31, 1995 and except as
required in the ordinary and usual course of the Business, no assets have been
removed, distributed, assigned or paid by or from Company or Shareholders.
4.27 WARN Act. Since ninety (90) days prior to Effective Date,
Company has not temporarily or permanently closed or shut down any single site
of employment or any facility or any operating unit, department or service
within a single site of employment, as such terms are used in WARN.
4.28 Tax Returns; Taxes. Company and Shareholders have filed all
federal, state and local tax returns and tax reports required by such
authorities to be filed as of the time of Closing. Company and Shareholders
have paid all taxes, assessments, governmental charges, penalties, interest and
fines due or claimed to be due as of the time of Closing (including, without
limitation, taxes on properties, income, franchises, licenses, sales and
payrolls) by any federal, state or local authority. Additionally, the reserves
for taxes reflected in the Financial Statements are adequate to cover all tax
liabilities accrued as of the respective dates thereof. There is no pending
tax examination or audit of, nor any
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action, suit, investigation or claim asserted or, to the best knowledge of
Company and Shareholders, threatened against Company or Shareholders by any
federal, state or local authority; and Company and/or Shareholders have not
been granted any extension of the limitation period applicable to any tax
claims.
4.29 Asset Value; Statement of Income and Net Revenues. The
aggregate net book value of the Assets (being the book value of the Assets less
the Continuing Liabilities) owned by Company at Closing shall be no less than
Three Million Five Hundred Fifty Thousand and No/100 Dollars ($3,500,000.00).
For the seven (7) month period ended July 31, 1996, Company achieved annualized
earnings before interest and taxes (adjusted for owner related and
non-recurring expenses) of no less than One Million Three Hundred Thousand and
No/100 Dollars ($1,300,000.00)(including an appropriate credit for earnings
related to unrecorded nutrition revenues, estimated to be $200,000 on an annual
basis) and annualized net revenues of no less than Ten Million five Hundred
Thousand and No/100 Dollars ($10,500,000.00)
4.30 No Omissions or Misstatements. There is no fact material to
the Stock, Assets, liabilities, Business or prospects of Company which has not
been set forth or described in this Agreement or in the Exhibits hereto and
which is material to the conduct, prospects, operations or financial condition
of Company, Business or the Assets. None of the information included in this
Agreement and Exhibits hereto, or other documents furnished or to be furnished
by Shareholders or Company, or any of its representatives, contains any untrue
statement of a material fact or is misleading in any material respect or omits
to state any material fact necessary in order to make any of the statements
herein or therein not misleading in light of the circumstances in which they
were made. Copies of all documents referred to in any Exhibit hereto have been
delivered or made available to Buyer and constitute true, correct and complete
copies thereof and include all amendments, exhibits, schedules, appendices,
supplements or modifications thereto or waivers thereunder.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Shareholders and Company to enter into this
Agreement and to consummate the transactions contemplated herein, Buyer hereby
represents and warrants to Shareholders and Company, which representations and
warranties shall be true and correct on the date of Closing, as follows:
5.1 Organization, Qualification and Authority. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee. Buyer has the full corporate power and
authority to own, lease and operate its properties and assets as presently
owned, leased and operated and to carry on its business as it is now being
conducted. Buyer has the full right, power and authority to execute, deliver
and carry out the terms of this Agreement and all documents and agreements
necessary to give effect to the provisions of this Agreement and to consummate
the transactions contemplated on the part of Buyer hereby. The execution,
delivery and consummation of
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this Agreement and all other agreements and documents executed in connection
herewith by Buyer has been duly authorized by all necessary corporate action on
the part of Buyer. No other action on the part of Buyer or any other person or
entity is necessary to authorize the execution, delivery and consummation of
this Agreement and all other agreements and documents executed in connection
herewith. This Agreement, and all other agreements and documents executed in
connection herewith by Buyer, upon due execution and delivery thereof, shall
constitute the valid binding obligations of Buyer, enforceable in accordance
with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and by general principles of equity.
5.2 Absence of Default. The execution, delivery and
consummation of this Agreement and all other agreements and documents executed
in connection herewith by Buyer will not constitute a violation of, be in
conflict with, or, with or without the giving of notice or the passage of time,
or both, result in a breach of, constitute a default under, or create (or cause
the acceleration of the maturity of) any debt, indenture, obligation or
liability or result in the creation or imposition of any security interest,
lien, charge or other encumbrance upon any of the Assets (except in the
ordinary course pursuant to Buyer's existing credit agreement) under: (a) any
term or provision of the Certificate of Incorporation or Bylaws of Buyer; (b)
any contract, lease, agreement, indenture, mortgage, pledge, assignment,
permit, license, approval or other commitment to which Buyer is a party or by
which Buyer is bound; (c) any judgment, decree, order, regulation or rule of
any court or regulatory authority, or (d) any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority or arbitration tribunal to which Buyer is subject.
5.3 Broker's or Finder's Fee. Buyer has not employed and is not
liable for the payment of any fee to any finder, broker, government official,
consultant or similar person in connection with the transactions contemplated
by this Agreement.
ARTICLE VI. COVENANTS OF PARTIES
6.1 Preservation of Business and Assets. From the Effective
Date until the Closing, Company and Shareholders shall use their best efforts
and shall do or cause to be done all such acts and things as may be necessary
to preserve, protect and maintain intact the operation of the Business and
Assets as a going concern consistent with prior practice and not other than in
the ordinary course of business, to preserve, protect and maintain for Buyer
the goodwill of the suppliers, employees, clientele, patients and others having
business relations with Company or the Business. Company shall use its best
efforts to retain its employees in their Current positions up to Closing.
Buyer, Company and Shareholders shall use their best efforts to facilitate the
consummation of the transactions contemplated under this Agreement. Until
termination of this Agreement, Company and Shareholders will not sell or
transfer, or negotiate the sale or transfer of, either the Assets or Stock of
Company. From the Effective Date until the Closing,
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Company shall pay no dividend, and shall make no distribution or extraordinary
payment to Shareholders or any third party or pay any intercompany payable and,
other than in the ordinary course of business, Company will not sell, discard
or dispose of any of the Assets. None of the Leases and Contracts shall be
amended in any material respect between the date hereof and Closing without the
prior written consent of Buyer. From the Effective Date until Closing, Company
and any party in possession of all or any part of the Real Estate will not
perform any material grading or excavation, construction or removal of any
improvement, or make any material other change or improvement upon or about the
Real Estate. From the Effective Date until Closing, Company and any party in
possession of all or any part of the Assets will maintain and keep the Assets
in a sanitary, well-maintained condition and in good order and repair.
6.2 Absence of Material Change. From the Effective Date until
the Closing, neither Company nor Shareholders shall make any change in the
Business or and in the utilization of the Assets and shall not enter jointly or
separately into any other material contract or commitment or any other
transaction with respect to the Business or the Assets without the prior
written consent of Buyer.
6.3 Access to Books and Records.
(1) From the date hereof until the Closing, Company and
Shareholders shall give to Buyer and to Buyer's counsel, accountants and other
representatives, full access to all of Company's offices, properties, books,
contracts, commitments, records and affairs relating to the Stock, Assets or
the Business so that Buyer may inspect and audit them and shall furnish to
Buyer a copy of all documents and information concerning the properties and
affairs of Company, the Business, Stock or the Assets as Buyer may request. If
any such books, records and materials are in the custody of third parties,
Company and Shareholders shall direct such third parties to promptly provide
them to Buyer. Copies of documents furnished to Buyer by Company and
Shareholders will be returned by Buyer upon request if the transaction is not
consummated. Company and Shareholders shall provide Buyer promptly with
interim financial statements of Company and any other management reports, as
and when they are available.
(2) Following the Closing, Buyer shall permit
Shareholders' representatives (including, without limitation, its counsel and
auditors), during normal business hours, to have reasonable access to, and
examine and make copies of, all books and records of the Business which relate
to transactions or events occurring prior to the Closing. All out-of-pocket
costs associated with the delivery of the requested documents shall be paid by
Shareholders.
(3) Following the Closing, Shareholders shall permit
Buyer and its representatives (including, without limitation, its counsel and
auditors), to have access to, and examine and make copies of, any books and
records relating to the Business, Stock or Assets which Shareholders are
required by law to retain, if any, and which relate to transactions or events
occurring prior to the Closing. For a period of five years after the Closing,
Shareholders agree that, prior to the destruction or disposition of any such
books
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or records, Shareholders shall provide not less than forty-five (45) days', nor
more than ninety (90) days', prior written notice to Buyer of such proposed
destruction or disposal. If Buyer desires to obtain any such documents or
records, it may do so by notifying Shareholders in writing at any time prior
to the date scheduled for such destruction or disposal. In such event,
Shareholders shall not destroy such documents or records and the parties shall
then promptly arrange for the delivery of such documents or records to Buyer,
its successors or assigns. All out-of-pocket costs associated with the
delivery of the requested documents or records shall be paid by Buyer.
(4) Shareholders shall cause Company's accounting firm to
consent to the inclusion of the Financial Statements in any registration
statements, private placement memoranda, and periodic reports, if any,
necessary or appropriate in order to enable Buyer or its affiliates to comply
with any applicable registration or reporting requirements of federal or state
securities laws.
(5) After Closing, Shareholders shall make the books and
records of Company available to Buyer (and, without limitation, to Buyer's
auditors and other agents) and shall otherwise cooperate with Buyer in order to
permit Buyer to conduct an audit of Company's financial statements for any
period prior to Closing not already audited. Shareholders agree to cooperate
with Buyer in Buyer's preparation of financial statements relating to such
periods and Buyer's filing in a timely manner of registration statements,
private placement memoranda and periodic reports, if any, pursuant to any
applicable federal or state securities law.
6.4 Medicare and Medicaid Reporting. Shareholders shall jointly
and severally assume and be responsible for any liability incurred as a result
of the improper filing of all reports and claims of every kind, nature or
description required by law or by written or oral contract to be filed with
respect to the purchase of services by third party payors, including, without
limitation, Medicare, Medicaid and Blue Cross. Company has adequately accrued
or reserved for all liabilities for contracted adjustments, discounts, refunds
and other offsets in connection with the filing of such reports and claims up
to the Effective Date; provided, however, that if any adverse adjustments or
offsets regarding operations on or after the Effective Date are the result of
the wilful acts or omissions, or negligence, of Company, Shareholders and/or
either's employees, representatives and agents, Shareholders shall also be
jointly and severally responsible for such adjustments and offsets.
Shareholders shall be entitled to receive any refund or other benefit which may
result for the filing of said reports and claims for operations up to the
Effective Date, and Buyer shall likewise be so entitled beginning on the
Effective Date.
6.5 Current Return Filing. Shareholders shall be responsible
for the preparation and filing of the federal, state and local income tax and
gross receipts and use tax returns which were due on or before the Closing.
Buyer shall, with Shareholders' assistance with respect to Business operations
occurring prior to Closing, be responsible for the preparation and filing of
all such returns which were due subsequent to Closing. Company shall pay all
taxes, including any penalties or assessments thereon, for any period prior to
Closing when due. Buyer shall reimburse Shareholders for all income taxes (but
no
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penalties or assessments) properly paid by Shareholders (and not the Company)
which relate to operations of the Business from the Effective Date through the
Closing.
6.6 Preserve Accuracy of Representations and Warranties.
Shareholders and Company shall refrain from taking any action which would
render any representation and warranty contained in Article IV hereof untrue,
inaccurate or misleading as of Closing. Each Shareholder and Company will
promptly notify Buyer of any lawsuit, claim, audit, investigation,
administrative action or other proceeding asserted or commenced against Company
or its directors, officers, or Shareholders, that may involve or relate in any
way to Company, the Assets, Stock, Shareholders or the operation of the
Business. Each Shareholder and Company shall promptly notify Buyer of any facts
or circumstances that come to its attention and that cause, or through the
passage of time may cause, any of Shareholders' or Company's representations,
warranties or covenants to be untrue or misleading at any time from the date
hereof to Closing.
6.7 Maintain Books and Accounting Practices. From the date
hereof until the Closing, Company shall maintain its books of account in the
usual, regular and ordinary manner on a basis consistent with prior years and
shall make no change in its accounting methods or practices.
6.8 Indebtedness; Liens. Other than in the ordinary course of
business as reflected in the Financial Statements, from the Effective Date
until the Closing, with respect to the Stock and Assets, including the Business
and operations conducted with the Assets, Company shall not create, incur,
assume, guarantee or otherwise become liable or obligated with respect to any
indebtedness for borrowed money, nor make any loan or advance to, or any
investment in, any person or entity, nor create any lien, security interest,
mortgage, right or other encumbrance in any of the Assets, without Buyer's
prior written approval. At Closing, the Assets will be free and clear of all
mortgages, security interests, liens, leases, covenants, assessments,
easements, options, rights of first refusal, restrictions, reservations,
defects in title, encroachments or other encumbrances, except as set forth in
those Leases and Contracts which are to be retained by Company, and Company
shall deliver to Buyer such releases, U.C.C. termination statements and other
documents as Buyer may reasonably request to evidence the same.
6.9 Compliance with Laws and Regulatory Consents. From the date
hereof until the Closing, (a) Company shall comply with all applicable
statutes, laws, ordinances and regulations, (b) Company shall keep, hold and
maintain all certificates, certificates of need, certificates of exemption,
accreditations, participation, licenses, and other permits necessary for the
business and operation of the Assets, (c) Shareholders and Company shall use
their reasonable efforts and shall cooperate fully with Buyer to obtain all
consents, approvals, exemptions and authorizations of third parties, whether
governmental or private, necessary to consummate the transactions contemplated
by this Agreement, and (d) Shareholders and Company shall make and cause to be
made all filings and give and cause to be given all notices which may be
necessary or desirable on their part under all applicable laws and under their
respective contracts, agreements and commitments in order to consummate the
transactions contemplated by this Agreement.
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6.10 Maintain Insurance Coverage. From the date hereof until the
Closing, Company shall maintain and cause to be maintained in full force and
effect the existing insurance on the Assets and the operations of the Business
and shall provide at Closing written evidence satisfactory to Buyer that such
insurance continues to be in effect, that all premiums due have been paid, and
that Buyer has been named additional insured since the Effective Date.
6.11 No Sale, Merger or Consolidation. From the date hereof until
the Closing, Shareholders shall not sell, pledge or transfer any of the Stock,
and Company shall not sell all or substantially all of the Assets, or merge or
consolidate with any other entity; neither shall solicit any inquiries,
proposals or offers relating to any such transactions; and each such party
shall promptly notify the Buyer orally, and confirm in writing, of all relevant
details relating to inquiries, proposals or offers which either may receive
relating to any of the matters referred to in this paragraph.
6.12 Xxxx-Xxxxx-Xxxxxx Filing. If required, Shareholders and
Company will (with the assistance of the Buyer if and when required) timely and
promptly make, and Buyer will or if Buyer is not the "ultimate parent" it will
cause its "ultimate parent" (with the assistance of Shareholders and Company if
and when required) to timely and promptly make, all filings which are required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1987 (the "Antitrust
Improvements Act"). The parties will use their best efforts to obtain the
approval of the United States Federal Trade Commission or the Antitrust
Division of the United States Department of Justice, as the case may be, to the
purchase of the Stock by Buyer or the lapse prior to the Closing Date of the
waiting period under the Antitrust Improvements Act without the commencement of
litigation, or threat thereof, by the appropriate governmental enforcement
agency to restrain the transactions contemplated by this Agreement.
ARTICLE VII. CLOSING
7.1 Closing. If all of the conditions to Closing set forth in
Articles VIII and IX hereof are satisfied, then the Closing shall occur on or
by September 13,1996 at the offices of Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner,
P.C., Nashville, Tennessee, or at such other time or place as the parties may
mutually agree (the "Closing"). Upon consummation, the Closing shall be deemed
to be effective and the transfer of the Assets shall be deemed to have
occurred, as of 12:01 a.m. local time on August 1, 1996 (the "Effective Date").
In the event that Closing has not occurred by October 31, 1996, then any party
not in default hereunder may terminate this Agreement without further
obligation.
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ARTICLE VIII. COMPANY'S AND SHAREHOLDERS' CONDITIONS TO CLOSE
The obligations of Company and Shareholders under this Agreement are
subject to the satisfaction on or prior to Closing, of the following conditions
(which may be waived in writing by Company or Shareholders, in whole or in
part):
8.1 Representations and Warranties True at Closing; Compliance
with Agreement. The representations and warranties of Buyer contained in this
Agreement and in any certificate or document delivered pursuant hereto shall be
deemed to have been made again at the Closing and shall then be true in all
respects. Buyer shall have performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at Closing.
8.2 No Action/Proceeding. No action or proceeding before a court
or any other governmental agency or body shall have been instituted or
threatened to restrain or prohibit the transaction herein contemplated, and no
governmental agency or body or other entity shall have taken any other action
or made any request of Company, Shareholders or Buyer as a result of which
Company or Shareholders reasonably and in good xxxxx xxxx that to proceed with
the transactions hereunder may constitute a violation of law. The waiting
periods specified under the Antitrust Improvements Act with respect to the
transactions contemplated by this Agreement will have lapsed or been
terminated.
8.3 Order Prohibiting Transaction. No order shall have been
entered in any action or proceeding before any court or governmental agency,
and no preliminary or permanent injunction by any court shall have been issued
which would have the effect of (a) making the transactions contemplated by this
Agreement illegal, or (b) otherwise preventing consummation of such
transactions. There shall have been no United States federal or state statute,
rule or regulations enacted or promulgated after the date of this Agreement
that would reasonably, directly or indirectly, result in any of the
consequences referred to in this paragraph.
8.4 Exhibits. The exhibits hereto will be completed to the
satisfaction of the parties.
ARTICLE IX. BUYER'S CONDITIONS TO CLOSE
The obligations of Buyer under this Agreement are subject to the
satisfaction, on or prior to Closing, of the following conditions (which may be
waived in writing by Buyer, in whole or in part):
9.1 Representations and Warranties True at Closing; Compliance
with Agreement. The representations and warranties of Shareholders and Company
contained in this Agreement (including the Exhibits hereto) and in any
certificate or document delivered pursuant hereto shall be deemed to have been
made again at the Closing and
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shall then be true in all respects. Company and Shareholders shall have
performed and complied with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by them prior to or at
Closing.
9.2 Regulatory Approvals. Buyer shall have obtained (a)
certification for participation in the Medicaid Programs of the states where
the Business is conducted, (b) certification from the appropriate agency of the
federal government for participation in the federal Medicare Program, and (c)
all other consents, licenses, permits, approvals, provider contracts,
determinations or certificates of need necessary in the judgment of Buyer to
acquire the Stock and operate the Assets and Business as contemplated
hereunder.
9.3 No Action/Proceeding. No action or proceeding before a court
or any other governmental agency or body shall have been instituted or
threatened to restrain or prohibit the transaction herein contemplated, and no
governmental agency or body or other entity shall have taken any other action
or made any request of Company, Shareholders or Buyer as a result of which
Buyer reasonably and in good xxxxx xxxxx that to proceed with the transactions
hereunder may constitute a violation of law. The waiting periods specified
under the Antitrust Improvements Act with respect to the transactions
contemplated by this Agreement shall have lapsed or been terminated.
9.4 Inspection of Assets; U.C.C. Searches, etc. Buyer and its
representatives shall have had and continue to have reasonable rights of
inspection of the Business in connection with Buyer's due diligence review, and
the results of Buyer's inspection and due diligence review shall be acceptable
to it. Company and Shareholders shall have delivered to Buyer, at
Shareholders' expense, all U.C.C. financing statement and title searches, local
and central, including fixtures, and federal and state pending litigation, tax
lien and judgment searches, with respect to Company, including all "DBA's,"
tradenames and fictitious names of Company, dated no more than ten (10) days
prior to Closing.
9.5 Order Prohibiting Transaction. No order shall have been
entered in any action or proceeding before any court or governmental agency,
and no preliminary or permanent injunction by any court shall have been issued
which would have the effect of (a) making the transactions contemplated by this
Agreement illegal, (b) otherwise preventing consummation of such transactions,
or (c) imposing material limitations on the ability of Buyer effectively to
acquire and hold the Stock or Assets, to operate the Business, or, in any case,
to exercise rights of ownership pursuant thereto. There shall have been no
federal or state statute, rule or regulations enacted or promulgated after the
date of this Agreement that would reasonably result, directly or indirectly, in
any of the consequences referred to in this paragraph.
9.6 Confidentiality and Non-Compete Agreements. Shareholders and
key employees of Company, as reasonably determined by Buyer, shall execute and
deliver to Buyer a Confidentiality and Non-Compete Agreement in the forms
attached hereto as Exhibit 9.6.
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9.7 Employment Agreements. Buyer and Xxxxxxx Xxxxxxx shall have
entered into an employment agreement in the form attached hereto as Exhibit
9.7(a). Buyer and Xxxxx Xxxxxxxxxx shall have entered into an employment
agreement in the form attached hereto as Exhibit 9.7(b).
9.8 Operating Targets. As of the date of Closing, Company and
the Business shall meet the following minimum operating thresholds: (i) for the
seven (7) month period ended July 31, 1996, Company shall have achieved
annualized earnings before interest and taxes (adjusted for owner related and
non-recurring expenses) of no less than One Million Three Hundred Thousand and
No/100 Dollars ($1,300,000.00) (including an appropriate credit for earnings
related to unrecorded nutrition revenues, estimated to be $200,000 on an annual
basis); (ii) for the seven (7) month period ended July 31, 1996, Company shall
have achieved annualized net revenues of no less than Ten Million Five Hundred
Thousand and No/100 Dollars ($10,500,000.00); and (iii) that since December 31,
1995 and except as required in the ordinary and usual course of the Business,
no assets have been removed, distributed, assigned or paid by or from Company
or Shareholders. As of the date of Closing, the Assets shall have an aggregate
net book value of no less than Three Million Five Hundred Thousand and No/100
Dollars ($3,500,000.00). The Asset shall be free and clear of all liabilities
and encumbrances whatsoever other than the Assumed Liabilities.
9.9 Lease Agreement. Buyer and Shareholders shall have entered
into a lease in the form attached hereto as Exhibit 9.9.
9.10 Third Party Consents; Releases. Shareholders and Company
shall provide to the Buyer all third party consents, releases and
authorizations believed by Buyer to be necessary or advisable for the legal and
proper consummation of all agreements and transactions contemplated within this
Agreement, each in form and substance acceptable to Buyer.
9.11 Approval of Board of Directors. This Agreement and
consummation of the transactions contemplated hereunder shall have been
approved by the Board of Directors of Buyer.
9.12 Exhibits. The exhibits hereto will be completed to the
satisfaction of the parties.
ARTICLE X. OBLIGATIONS OF COMPANY AND SHAREHOLDERS AT CLOSING
At Closing, Company and Shareholders shall deliver or cause to be
delivered to Buyer the following in form and substance reasonably satisfactory
to Buyer:
10.1 Documents Relating to Title. Shareholders shall execute,
acknowledge, deliver and cause to be executed, acknowledged and delivered to
Buyer:
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(1) Stock certificates, registered in the name of the
Shareholders, duly endorsed by Shareholders or with stock powers attached,
representing all of the Stock.
(2) The resignation of each member of the Board of
Directors and each officer of Company effective as of the Closing.
10.2 Possession. Company shall deliver to Buyer full possession
and control of the Stock, Business and Assets.
10.3 Opinion of Counsel. Shareholders shall deliver to Buyer the
favorable opinion of counsel for Shareholders and Company which may be subject
to the Legal Opinion Accord of the ABA Section of Business Law (1991), dated as
of Closing, in the form attached hereto as Exhibit 10.3.
10.4 Corporate Good Standing and Corporate Resolution.
Shareholders shall deliver to Buyer certificates of good standing from the
Secretary of State of Company's state of organization, and from each
jurisdiction in which Company is qualified to do business, certified copies of
the Bylaws and charter of Company, and a certified copy of the resolutions of
the Board of Directors and Shareholders of Company authorizing the execution,
delivery and consummation of this Agreement and the execution, delivery and
consummation of all other agreements and documents executed in connection
herewith by them, including all assumption agreements and other instruments
required hereunder, sufficient in form and content to meet the requirements of
the law of the State of Company's incorporation relevant to such transactions
and certified by officers of Company to be validly adopted and in full force
and effect and unamended as of Closing.
10.5 Closing Certificate. Company shall deliver to Buyer a
certificate of an officer of Company and of Shareholders, dated as of Closing,
certifying that (a) each covenant and obligation of Company and Shareholders
have been complied with, and (b) each representation, warranty and covenant of
Company and Shareholders is true and correct at the Closing as if made on and
as of the Closing.
10.6 Third Party Consents. Shareholders shall deliver to Buyer
all consents, estoppels, approvals, releases, filings and authorizations of
third parties that Buyer believes are necessary or advisable for the legal and
proper execution, delivery and consummation of this Agreement, and the
transactions contemplated hereunder.
10.7 Releases. Shareholders shall deliver to Buyer executed
releases of all mortgages, security interests, liens, pledges, restrictions or
other encumbrances on or applicable to the Stock or Assets.
10.8 Additionally Requested Documents; Post-Closing Assistance.
At the reasonable request of Buyer at Closing and at any time or from time to
time thereafter, Shareholders shall cooperate with Buyer to put Buyer in actual
possession and operating control of the Stock, Company, Business and Assets,
execute and deliver such further instruments of sale, conveyance, transfer and
assignment, as Buyer may reasonably
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request in order to effectively sell, convey, transfer and assign the same to
Buyer, to execute and deliver such further instruments and to take such other
actions as Buyer may reasonably request to release Buyer and Company from all
obligation and liability with regard to any obligation or liability retained or
assumed by Shareholders, and to execute and deliver such further instruments
and to cooperate with Buyer as Buyer may reasonably request or to enable Buyer
and Company to obtain all necessary health care or regulatory certifications,
approvals, consents and licenses, accreditation or permits.
10.9 Confidentiality, Employment and Lease Agreements.
Shareholders shall deliver to Buyer each of the agreements described in
paragraphs 9.6, 9.7 and 9.9.
10.10 Assumption Agreement. Shareholders shall deliver to Buyer
and the Company an Assumption Agreement evidencing that Shareholders shall be
jointly and severally responsible for all obligations pertaining to past
operations of the Business other than the Continuing Liabilities.
ARTICLE XI. OBLIGATIONS OF BUYER AT CLOSING
At Closing, Buyer shall deliver or cause to be delivered to
Shareholders the following in a form and substance reasonably satisfactory to
Shareholders:
11.1 Purchase Price. Buyer shall pay to Shareholders the Purchase
Price upon the terms specified in this Agreement.
11.2 Corporate Good Standing and Certified Board Resolutions.
Buyer shall deliver to Shareholders a certificate of good standing from the
Secretary of State of Delaware, dated the most recent practical date prior to
Closing, together with a certified copy of the resolutions of the Board of
Directors of Buyer authorizing the execution, delivery and consummation of this
Agreement and all other documents executed in connection herewith.
11.3 Closing Certificate. Buyer shall deliver to Shareholder a
certificate of an officer of Buyer, dated as of Closing, certifying that (a)
each covenant and obligation of Buyer has been complied with, and (b) each
representation, warranty and covenant of Buyer is true and correct at the
Closing as if made on and as of the Closing.
11.4 Opinion of Buyer's Counsel. Buyer shall deliver to
Shareholders a favorable opinion of counsel for Buyer, dated as of Closing, in
the form specified in Article XII hereof.
ARTICLE XII. OPINION OF BUYER'S COUNSEL
At the Closing, Buyer shall deliver to Shareholders an opinion of
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C. dated the date of the Closing and
pursuant to the Legal Opinion Accord of the ABA Paragraph of Business Law
(1991), in form and substance reasonably satisfactory to Shareholders and their
counsel to the effect that:
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(1) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee and has
all requisite corporate power and corporate authority to own, operate and lease
its properties and assets and to carry on its business as now conducted.
(2) Buyer has the corporate power and corporate authority
to execute, deliver and carry out the terms of this Agreement and all documents
and agreements delivered by Buyer at Closing and to consummate the transactions
contemplated on the part of Buyer hereby and thereby; Buyer has taken all
action required by law, and its Certificate of Incorporation and Bylaws, to
authorize such execution, delivery and consummation of this Agreement, and this
Agreement, and all other agreements delivered by Buyer at Closing constitute
the valid and binding obligations of Buyer enforceable in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally and by general principles of equity.
ARTICLE XIII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION
13.1 Survival. The covenants, obligations, representations and
warranties of Buyer, Company and Shareholders contained in this Agreement, or
in any certificate or document delivered pursuant to this Agreement, shall be
deemed to be material and to have been relied upon by the parties hereto
notwithstanding any investigation prior to the Closing, shall survive the date
of Closing, and shall not be merged into any documents delivered in connection
with the Closing.
13.2 Indemnification by Shareholders. Subject to the provisions
of paragraph 13.4, Shareholders shall, jointly and severally, promptly
indemnify, defend, and hold harmless Buyer, Company and the directors,
officers, stockholders, employees and agents of each against any and all
losses, costs, and expenses (including reasonable cost of investigation, court
costs and legal fees actually incurred) and other damages resulting from (i)
any breach by either Company or Shareholders of any of the covenants,
obligations, representations or warranties or breach or untruth of any
representation, warranty, fact or conclusion contained in this Agreement or any
certificate or document of Company and/or Shareholders delivered pursuant to
this Agreement, (ii) any liability of Company not expressly retained by Company
or pursuant to Paragraph 1.4 hereof, and (iii) any claim (whether or not
disclosed herein) that is brought or asserted by any third party(s) against
Buyer or Company arising out of the ownership, licensing, operation or conduct
of the Business or Assets or the conduct of any of Company's employees, agents
or independent contractors, relating to all periods of time prior to the
Effective Date. Any indemnification payment made pursuant to this Article shall
include interest at a floating rate equal to two points over the prime rate of
Bankers Trust Company established from time to time (the "Rate") payable for
the period measured from the date that the loss, cost, expense or damage was
incurred until the date of payment.
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13.3 Indemnification by Company and Buyer. Subject to the
provisions of paragraph 13.4, Company and Buyer shall promptly indemnify,
defend, and hold Shareholders harmless against any and all losses, costs, and
expenses (including reasonable cost of investigation, court costs and legal
fees) and other damages resulting from (i) any breach by Buyer of any of its
covenants, obligations, representations or warranties or breach or untruth of
any representation, warranty, fact or conclusion contained in this Agreement or
any certificate or document of Buyer delivered pursuant to this Agreement, (ii)
any claim which is brought or asserted by any third party(s) against
Shareholders for failure to pay or perform any of the Continuing Liabilities,
and (iii) subject to the other provisions of this Agreement, any claim that is
brought or asserted by any third party(s) against Shareholders arising out of
the ownership, licensing, operation or conduct of the Business or the conduct
of any of Company's employees, agents or independent contractors, relating to
periods of time subsequent to the Closing Date. Any indemnification payment
pursuant to the foregoing shall include interest at the Rate from the date that
the loss, cost, expense or damage was incurred until the date of payment.
13.4 Rules Regarding Indemnification. The obligations and
liabilities of each party which may be subject to indemnification liability
hereunder (the "indemnifying party") to the other party (the "indemnified
party") shall be subject to the following terms and conditions:
(1) Claims by Non-parties. The indemnified party shall
give written notice within a reasonably prompt period of time to the
indemnifying party of any written claim by a third party which is likely to
give rise to a claim by the indemnified party against the indemnifying party
based on the indemnity agreements contained in this Article, stating the nature
of said claim and the amount thereof, to the extent known. The indemnified
party shall give notice to the indemnifying party that pursuant to the
indemnity, the indemnified party is asserting against the indemnifying party a
claim with respect to a potential loss from the third party claim, and such
notice shall constitute the assertion of a claim for indemnity by the
indemnified party. If, within thirty (30) days after receiving such notice, the
indemnifying party advises the indemnified party that it will provide
indemnification and assume the defense at its expense, then so long as such
defense is being conducted, the indemnified party shall not settle or admit
liability with respect to the claim and shall afford to the indemnifying party
and defending counsel reasonable assistance in defending against the claim. If
the indemnifying party assumes the defense, counsel shall be selected by such
party and if the indemnified party then retains its own counsel, it shall do so
at its own expense. If the indemnified party does not receive a written
objection to the notice from the indemnifying party within thirty (30) days
after the indemnifying party's receipt of such notice, the claim for indemnity
shall be conclusively presumed to have been assented to and approved, and in
such case the indemnified party may control the defense of the matter or case
and, at its sole discretion, settle or admit liability. If within the aforesaid
thirty (30) day period the indemnified party shall have received written
objection to a claim (which written objection shall briefly describe the basis
of the objection to the claim or the amount thereof, all in good faith), then
for a period of ten (10) days after receipt of such objection the parties shall
attempt to settle the dispute as between the indemnified and indemnifying
parties. If they are unable to settle the dispute, the unresolved issue or
issues shall be
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settled by arbitration in Nashville, Tennessee in accordance with the rules and
procedures of the American Arbitration Association.
(2) Claims by a Party. The determination of a claim
asserted by a party hereunder (other than as set forth in subparagraph (1)
above) pursuant to this Article shall be made as follows: The indemnified party
shall give written notice within a reasonably prompt period of time to the
indemnifying party of any claim by the indemnified party which has not been
made pursuant to subparagraph (1) above, stating the nature and basis of such
claim and the amount thereof, to the extent known. The claim shall be deemed to
have resulted in a determination in favor of the indemnified party and to have
resulted in a liability of the indemnifying party in an amount equal to the
amount of such claim estimated pursuant to this paragraph if within forty-five
(45) days after the indemnifying party's receipt of the claim the indemnified
party shall not have received written objection to the claim. In such event,
the claim shall be conclusively presumed to have been assented to and approved.
If within the aforesaid forty-five (45) day period the indemnified party shall
have received written objection to a claim (which written objection shall
briefly describe the basis of the objection to the claim or the amount thereof,
all in good faith), then for a period of sixty (60) days after receipt of such
objection the parties shall attempt to settle the disputed claim as between the
indemnified and indemnifying parties. If they are unable to settle the disputed
claim, the unresolved issue or issues shall be settled by arbitration in
Nashville, Tennessee in accordance with the rules and procedures of the
American Arbitration Association.
(3) Claims by a Straddle Patient. Any claim by a patient
relating to professional negligence or similar matters involving a patient
served both prior to the Effective Date and subsequent to the Effective Date
will be the responsibility of either Company or Shareholders in accordance with
the following guidelines: (i) if it is a claim in which the incident giving
rise to liability clearly arose on or prior to the Effective Date, Shareholders
shall jointly and severally respond to the loss and defense expenses; (ii)
subject to the other provisions of this Agreement, if it is a claim in which
the incident giving rise to liability clearly arose after the Effective Date,
Company shall respond to the loss and defense expenses; and (iii) in the event
that the incident giving rise to liability as to time is not clear,
Shareholders and Company will jointly defend the case and each will fully
cooperate with the other in such defense. Once the case is closed, if Company
and Shareholders cannot agree to the allocation of both indemnity and expenses,
then the matter shall be submitted to binding arbitration in Nashville,
Tennessee in accordance with the rules and procedures of the American
Arbitration Association.
ARTICLE XIV. PRESERVATION OF BUSINESS
AND NONCOMPETE RESTRICTIONS
14.1 Covenant Not to Compete. Shareholders hereby, jointly and
severally, covenant and agree with Buyer that, during the NON-COMPETE PERIOD
(as such term is defined herein) and within the NON-COMPETE AREA (as such term
is defined herein), no
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Shareholder shall directly or indirectly, (a) acquire, lease, manage, consult
for, serve as agent or subcontractor for, finance, invest in, own any part of
or exercise management control over any health care operation or business which
provides any goods or services competitive with the goods and services provided
by the Business as of the Closing, or (b) solicit for employment or employ any
person who at Closing or thereafter became an employee of Buyer, Company or an
affiliate unless such person is not so employed for at least six (6) months, or
(c) with respect to any customer, patient, physician, physician group, or
healthcare provider with whom Buyer, Company and/or an Affiliate contracts with
in connection with the Business, either solicit the same in a manner which
could adversely affect Buyer, Company or an Affiliate, or make statements to
the same which disparage Buyer, Company, an Affiliate or their respective
operations in any way. The "Non-Compete Period" shall commence at the Closing
and terminate on the fifth anniversary thereof. The "Non-Compete Area" shall
mean the area within a fifty (50) mile radius of each location from which the
Business is operated or conducted as of the Closing. Ownership of less than
five percent (5%) of the stock of a publicly held company shall not be deemed a
breach of this covenant nor shall the continued operations by an affiliate of
Shareholders of the existing infusion business of Happy Harry's, Inc. or the
sale or rental by Happy Harry's Inc. drug stores of their existing product line
as currently conducted. Buyer shall be granted an option to purchase such
infusion business by an option agreement in the form attached hereto as Exhibit
14.1.
14.2 Enforceability. In the event of a breach of paragraph 14.1,
Shareholders recognize that monetary damages shall be inadequate to compensate
Buyer and Company, and Buyer and Company shall be entitled, without the posting
of a bond or similar security, to an injunction restraining such breach, with
the costs (including attorney's fees) of securing such injunction to be borne
by Shareholders. Nothing contained herein shall be construed as prohibiting
Buyer or Company from pursuing any other remedy available to either for such
breach or threatened breach. All parties hereby acknowledge the necessity of
protection against the competition of Shareholders and that the nature and
scope of such protection has been carefully considered by the parties. The
period provided and the area covered are expressly represented and agreed to be
fair, reasonable and necessary. The consideration provided for herein is deemed
to be sufficient and adequate to compensate Shareholders for agreeing to the
restrictions contained in paragraph 14.1. If, however, any court determines
that the forgoing restrictions are not reasonable, such restrictions shall be
modified, rewritten or interpreted to include as much of their nature and scope
as will render them enforceable.
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ARTICLE XV. MISCELLANEOUS
15.1 Assignment. Following Closing, Buyer and Company may freely
assign any or all of their respective rights or delegate any or all of their
respective obligations under this Agreement without the express written consent
of Shareholders. No Shareholder may assign any rights or delegate any
obligations under this Agreement without the prior written consent of Buyer,
and any prohibited assignment or delegation will be null and void.
15.2 Other Expenses. Except as otherwise provided in this
Agreement, Shareholders shall jointly and severally pay all of their and
Company's expenses in connection with the negotiation, execution, and
implementation of the transactions contemplated under this Agreement and Buyer
shall pay all of its expenses in connection with the negotiation, execution,
and implementation of the transactions contemplated under this Agreement. All
sales and use taxes, recording fees and transfer taxes incurred in connection
under the transactions contemplated within this Agreement shall be jointly and
severally borne by Shareholders and paid at Closing. All ad valorem taxes
incurred and related to the Real Estate shall be shared by Shareholders
(jointly and severally) and Company and shall be prorated at Closing as of the
Effective Date, unless retained by Company as part of the Continuing
Liabilities.
15.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given: (a) if delivered
personally or sent by facsimile, on the date received, (b) if delivered by
overnight courier, on the day after mailing, and (c) if mailed, five days after
mailing with postage prepaid. Any such notice shall be sent as follows:
To Shareholders and, prior to Closing, Company:
Happy Harry's Health Care, Inc.
000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
ATTN: Xxxx Xxxxx
with a copy to:
Xxxxxx Xxxxx
Xxxxxx Xxxxxxxxx & Xxxxxxx, P.A.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
P.O. Box 25130
Wilmington, Delaware 19899
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To the Buyer and, after Closing to the Company:
American HomePatient, Inc.
0000 Xxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
15.4 Confidentiality; Prohibition on Trading. Except for press
releases issued by Buyer in the ordinary course, all parties agree to maintain
the confidentiality of the existence of this Agreement and the transactions
contemplated hereunder, unless disclosure is required by law. Shareholders,
Company and their affiliates agree not to trade in the securities of Buyer or
its affiliates based upon any nonpublic information.
15.5 Controlling Law. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of Tennessee.
15.6 Headings. Any table of contents and paragraph headings in
this Agreement are for convenience of reference only and shall not be
considered or referred to in resolving questions of interpretation.
15.7 Benefit. Subject to paragraph 15.1, this Agreement shall be
binding upon and shall inure to the exclusive benefit of the parties hereto and
their respective heirs, legal representatives, successors and assigns. This
Agreement is not intended to, nor shall it, create any rights in any other
party.
15.8 Partial Invalidity. The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions were omitted. Further, there shall be
automatically substituted for such invalid or unenforceable provision a
provision as similar as possible which is valid and enforceable.
15.9 Waiver. Neither the failure nor any delay on the part of any
party hereto in exercising any rights, power or remedy hereunder shall operate
as a waiver thereof, or of any other right, power or remedy; nor shall any
single or partial exercise of any right, power or remedy preclude any further
or other exercise thereof, or the exercise of any other right, power or remedy.
No waiver of any of the provisions of this Agreement shall be void unless it is
in writing and signed by the party against which it is sought to be enforced.
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15.10 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
15.11 Interpretation; Knowledge. All pronouns and any variation
thereof shall be deemed to refer to the masculine, feminine, neuter, singular
or plural as the identity of the person or entity, or the context, may require.
Further, it is acknowledged by the parties that this Agreement has undergone
several drafts with the negotiated suggestions of both; and, therefore, no
presumptions shall arise favoring either party by virtue of the authorship of
any of its provisions or the changes made through revisions. Whenever in this
Agreement the term "to the best knowledge of Company or Shareholders" or the
like is used, Company and Shareholders shall each be deemed to have the
knowledge of Company's officers, directors, Shareholders and employees, and of
its Affiliates; and Company and Shareholders shall each be under a duty of due
inquiry.
15.12 Entire Agreement. This Agreement, including the Exhibits and
Attachments hereto, constitutes the entire agreement between the parties hereto
with regard to the matters contained herein and it is understood and agreed
that all previous undertakings, negotiations, letter of intent and agreements
between the parties are merged herein. This Agreement may not be modified
orally, but only by an agreement in writing signed by Buyer, Company and
Shareholders.
15.13 Further Assurance of Shareholders After Closing. Subsequent
to the Closing, Shareholders shall from time to time, at Buyer's request,
execute and deliver such other instruments of conveyance and transfer, and take
such other action as Buyer may request, in order to more effectively sell,
transfer, assign and deliver and vest in Buyer and Company, as the case may be,
the benefits of, title to and possession of the Stock and Assets.
15.14 Legal Fees and Costs. In the event any party hereto incurs
legal expenses to enforce or interpret any provision of this Agreement, the
prevailing party will be entitled to recover such legal expenses, including,
without limitation, attorney's fees, costs and disbursements, in addition to
any other relief to which such party shall be entitled.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"COMPANY":
HAPPY HARRY'S HEALTH CARE, INC.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------------
Title: President
----------------------------------------------
"SHAREHOLDERS":
/s/ Xxxxx Xxxxx-Xxxxxx, by Xxxx Xxxxx authorized signer
-------------------------------------------------------
XXXXX XXXXX-XXXXXX
/s/ Xxxx Xxxxx
-------------------------------------------------------
XXXX XXXXX
/s/ Xxxxxxx Xxxxxxx
-------------------------------------------------------
XXXXXXX XXXXXXX
/s/ Xxxxx Xxxxx, by Xxxx Xxxxx authorized signer
-------------------------------------------------------
XXXXX XXXXX
"BUYER":
AMERICAN HOMEPATIENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Title: President
----------------------------------------------
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PROXY
I, the undersigned, as Trustee and individually, hereby constitute and
appoint XXXX X. XXXXX as proxy and in substitution for the undersigned to vote
for me as a stockholder all of my stock of Happy Harry's Health Care, Inc. on
all matters which may be necessary or appropriate during the period from this
date through September 6, 1996, with respect to the approval of the
stockholders of an agreement to sell the stock or assets of the corporation to
American HomePatient Inc. This Proxy is irrevocable and is coupled with an
interest.
In witness whereof, the undersigned has hereunto set her hand and seal
this 25th day of August, 1996.
/s/ Xxxxx Xxxxx Xxxxxx
-------------------------------
XXXXX XXXXX XXXXXX as the sole
Trustee of the Revocable Trust
of Xxxxx X. Xxxxx U/A dated
5/29/87, as amended, and in
her individual capacity
42
PROXY
I, the undersigned, hereby constitute and appoint XXXX X. XXXXX as
proxy and in substitution for the undersigned to vote for me as a stockholder
all of my stock of Happy Harry's Health Care, Inc. on all matters which may be
necessary or appropriate during the period from this date through September 6,
1996, with respect to the approval of the stockholders of an agreement to sell
the stock or assets of the corporation to American HomePatient Inc. This
Proxy is irrevocable and is coupled with an interest.
In witness whereof, the undersigned has hereunto set her hand and seal
this 22th day of August, 1996.
/s/ Xxxxx Xxxxx
-------------------------------
XXXXX XXXXX
(formerly Xxxxx Xxxxx Xxx)
