-----------------------------
STOCK PURCHASE AGREEMENT
Dated as of August 23, 1996
among
INTEGRATED HEALTH SERVICES, INC.
and
SELLING SHAREHOLDERS
and
SIGNATURE HOME CARE, INC.
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TABLE OF CONTENTS
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Page
ARTICLE I: SALE AND PURCHASE OF COMPANY SECURITIES............................1
1.1 Sale and Purchase of Company Securities......................1
ARTICLE II: PURCHASE PRICE....................................................1
2.1 Determination and Payment of Purchase Price..................1
2.2 Adjustments to the Aggregate Gross Purchase Price............3
2.3 Escrow.......................................................5
2.4 Appointment of Sellers' Committee............................6
2.5 Committee Duties; Power of Attorney..........................6
2.6 Actions of the Committee.....................................7
2.7 Assets and Liabilities.......................................7
ARTICLE III: IHS STOCK........................................................8
3.1 IHS Stock....................................................8
ARTICLE IV: THE CLOSING......................................................12
4.1 Time and Place of Closing...................................12
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND
COMPANY..............................................................12
5.1 Organization and Standing of the Company....................13
5.2 Absence of Conflicting Agreements...........................13
5.3 Consents....................................................13
5.4 Capital Stock...............................................13
5.5 Assets and Liabilities......................................14
5.6 Trademarks..................................................14
5.7 Contracts...................................................14
5.8 Financial Statements........................................15
5.9 Material Changes............................................16
5.10 Licenses; Permits; Certificates of Need.....................16
5.11 Title, Condition of Personal Property.......................17
5.12 Legal Proceedings...........................................18
5.13 Employees...................................................18
5.14 Collective Bargaining, Labor Contracts, Employment
Practices, Etc............................................19
5.15 ERISA.......................................................19
5.16 Insurance and Surety Agreements.............................20
5.17 Relationships...............................................20
5.18 Absence of Certain Events...................................20
5.19 Compliance with Laws........................................21
5.20 Finders.....................................................22
(i)
5.21 Tax Returns.................................................22
5.22 Encumbrances Created by this Agreement......................22
5.23 Subsidiaries and Joint Ventures.............................22
5.24 No Untrue Statement.........................................22
5.25 Medicare and Medicaid Programs..............................22
5.26 Leasehold Interests.........................................23
5.27 Power and Authority.........................................23
5.28 Binding Effect..............................................23
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF SELLERS .......................23
6.1 Organization and Standing...................................23
6.2 Authority...................................................23
6.3 Binding Effect..............................................23
6.4 Absence of Conflicting Agreements...........................24
6.5 Consents....................................................24
6.6 Ownership of Company Securities.............................24
ARTICLE VII: REPRESENTATIONS AND WARRANTIES OF BUYER.........................24
7.1 Organization and Standing...................................24
7.2 Power and Authority.........................................24
7.3 Binding Agreement...........................................25
7.5 Capital Stock...............................................25
7.6 Absence of Conflicting Agreements...........................25
7.7 Consents....................................................26
7.8 Litigation..................................................26
7.9 Investment Representation...................................26
ARTICLE VIII: INFORMATION AND RECORDS CONCERNING THE COMPANY AND
ITS SUBSIDIARIES.....................................................26
8.1 Access to Information and Records before Closing............26
ARTICLE IX: OBLIGATIONS OF THE PARTIES UNTIL CLOSING.........................27
9.1 Conduct of Business Pending Closing.........................27
9.2 Negative Covenants of the Company and its Subsidiaries......27
9.3 Affirmative Covenants.......................................27
9.4 Pursuit of Consents and Approvals...........................29
9.5 Exclusivity.................................................29
9.6 Solicitation of Stockholders................................29
9.7 Line of Credit..............................................29
ARTICLE X: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.......................29
10.1 Representations and Warranties..............................30
10.2 Performance of Covenants....................................30
10.3 Delivery of Closing Certificate.............................30
10.4 Opinion of Counsel..........................................30
10.5 Legal Matters...............................................30
(ii)
10.6 Authorization Documents.....................................30
10.7 Material Change.............................................30
10.8 Approvals...................................................30
10.9 Consents....................................................31
10.10 Closing Date Balance Sheet..................................31
10.11 Resignation of Company and its Subsidiaries'
Boards of Directors......................................31
10.12 Additional Sellers..........................................31
10.13 Xxxx-Xxxxx-Xxxxxx Act.......................................31
10.14 Samaritan Joint Venture Agreements..........................31
10.15 Real Property Consents......................................31
10.17 Other Documents.............................................32
ARTICLE XI: CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.....................32
11.1 Representations and Warranties..............................32
11.2 Performance of Covenants....................................32
11.3 Delivery of Closing Certificate.............................32
11.4 Opinion of Counsel..........................................32
11.5 Legal Matters...............................................32
11.6 Authorization Documents.....................................32
11.7 Other Documents.............................................32
ARTICLE XII: OBLIGATIONS OF THE PARTIES AFTER CLOSING.........................33
12.1 Survival of Representations and Warranties..................33
12.2 Indemnification by Sellers..................................33
12.3 Indemnification by Buyer....................................33
12.4 Assertion of Claims.........................................34
12.5 Liability Cap...............................................34
12.6 Control of Defense of Indemnifiable Claims..................34
12.7 Restrictions................................................35
12.8 Records.....................................................36
12.9 Audit.......................................................36
12.10 Appraisal Rights............................................36
ARTICLE XIII: TERMINATION....................................................37
13.1 Termination.................................................37
13.2 Effect of Termination.......................................37
ARTICLE XIV: MISCELLANEOUS...................................................37
14.1 Costs and Expenses..........................................37
14.2 Performance.................................................37
14.3 Benefit and Assignment......................................37
14.4 Effect and Construction of this Agreement...................38
14.5 Cooperation - Further Assistance............................38
14.6 Notices.....................................................38
14.7 Waiver, Discharge, Etc......................................39
14.8 Rights of Persons Not Parties...............................39
(iii)
14.9 Governing Law...............................................39
14.10 Amendments, Supplements, Etc................................39
14.11 Severability................................................39
14.12 Counterparts................................................40
(iv)
SCHEDULES & EXHIBITS
--------------------
Schedule 2.1(a) - Calculation of Fully Diluted Shares Outstanding
Schedule 5.3 - Consent List of Sellers
Schedule 5.4 - Capital Stock
Schedule 5.5(a) - Accounts Payable Aging
Schedule 5.5(b) - Liens
Schedule 5.6 - Trademarks
Schedule 5.7 - Contracts
Schedule 5.8(a) - Audited Financial Statements
Schedule 5.8(b) - Unaudited Interim Financial Statements
Schedule 5.8(c) - Material Liabilities
Schedule 5.8(d) - Financial Statement Adjustments
Schedule 5.9 - Material Changes
Schedule 5.10 - Licenses, Permits, Certificates of Need
Schedule 5.11(a) - Liens on Personal Property
Schedule 5.11(b) - Leases of Personal Property
Schedule 5.12 - Legal Proceedings
Schedule 5.13 - Employees
Schedule 5.15(b) - Employee Benefit Plans
Schedule 5.15(c) - Employees on Leave of Absence
Schedule 5.16 - Insurance and Surety Agreements
Schedule 5.17 - Relationships
Schedule 5.18 - Absence of Certain Events
Schedule 5.19 - Compliance with Laws
Schedule 5.21 - Tax Returns
Schedule 5.23 - Subsidiaries, Joint Ventures, etc.
Schedule 5.25 - Medicare and Medicaid Programs
Schedule 5.26 - Leasehold Interests
Schedule 6.6 - Ownership of Company Securities
Exhibit A - Class A Redemption Price
Exhibit 2.3 - Escrow Agreement
Exhibit 10.4 - Opinion of Sellers' Counsel
Exhibit 11.4 - Opinion of Buyer's Counsel
(v)
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STOCK PURCHASE AGREEMENT
--------------------------
This Stock Purchase Agreement (the "Agreement") is made as of
the 23rd day of August, 1996, among INTEGRATED HEALTH SERVICES, INC., a Delaware
corporation ("Buyer"), and SIGNATURE HOME CARE, INC., a Delaware corporation
(the "Company"), and each of the holders of capital stock, warrants and stock
options of the Company whose signatures appear at the end of this Agreement
(collectively, the "Sellers" and individually, the "Seller").
WHEREAS, the Sellers are the owners or holders of issued and
outstanding shares of the common, Class A, and Class B stock of the Company and
of the outstanding warrants and stock options of the Company (collectively, the
"Company Securities"); and
WHEREAS, Buyer wishes to acquire the Company Securities from
Sellers, and Sellers wish to sell the Company Securities to Buyer, in accordance
with the terms and conditions hereinafter set forth.
WHEREAS, this Agreement is initially being executed by Sellers
owning an aggregate of approximately fifty-one (51%) percent of the Company
Securities and it is contemplated that prior to the Closing hereunder, Sellers
owning an aggregate of at least ninety (90%) percent of the Company Securities
shall have executed and delivered this Agreement to Buyer.
NOW, THEREFORE, Sellers, Buyer, and Company intending to be
legally bound, agree as follows:
ARTICLE I: SALE AND PURCHASE OF COMPANY SECURITIES
--------------------------------------------------
1.1 Sale and Purchase of Company Securities. Subject to the
terms and conditions of this Agreement, at the Closing (as hereinafter defined),
Buyer shall acquire from Sellers, and Sellers shall sell, assign, transfer and
convey to Buyer, the Company Securities. The number of shares of Company
Securities (and the class or series of such shares) being sold by each Seller is
set forth on Schedule 5.4 hereto. The Company Securities to be sold by the
Sellers hereunder shall include each of the Signature Options (as defined below)
and Signature Warrants (as defined below) owned by such Sellers, notwithstanding
that the purchase price payable in respect of such options and warrants pursuant
to the provisions of Section 2.1 may be zero.
ARTICLE II: PURCHASE PRICE
--------------------------
2.1 Determination and Payment of Purchase Price.
(a) For the purposes hereof, the following terms shall
be defined as indicated below:
1
(i) "Aggregate Net Purchase Price" means the
Aggregate Gross Purchase Price, plus the aggregate exercise prices of all
Signature Warrants and Signature Options, minus (A) the amount of any adjustment
under Section 2.2, (B) the Class A Redemption Price, (C) any Class B Stock
dividends payable through the Closing to the extent not paid by the Company as
of the Closing Date, and (D) any amounts owed to New Jersey Partners in
connection with that certain Purchase Agreement dated January 1, 1994 by and
among the Company and the four New Jersey Partners named therein to the extent
not paid by the Company as of the Closing Date.
(ii) "Aggregate Gross Purchase Price" means Sixteen
Million Five Hundred Thousand ($16,500,000.00) Dollars.
(iii) "Class A Redemption Price" means an amount
determined pursuant to Exhibit A hereto.
(iv) "Class A Stock" means the Class A Stock, par
value $1.00 per share, of the Company.
(v) "Class B Stock" means the Class B Stock, par
value $1.00 per share, of the Company.
(vi) "Fully Diluted Shares" means the aggregate
number of shares of Signature Common Stock that would be outstanding as of the
Closing assuming the exercise of all of the Signature Warrants and Signature
Options (if the Per Share Purchase Price exceeds the Net Exercise Value) and the
conversion of all of the Class B Stock.
(vii) "Net Exercise Value" means, as to any Signature
Warrant or Signature Option, an amount equal to the Per Share Purchase Price
multiplied by the number of shares for which such Signature Warrant or Signature
Option is exercisable as of the Closing Date, and reduced by the aggregate
exercise price of the unexercised portion of such Signature Warrant or Signature
Option.
(viii) "Per Share Purchase Price" means the Aggregate
Net Purchase Price divided by the Fully Diluted Shares.
(ix) "Signature Common Stock" means the common stock,
par value $.01 per share, of the Company.
(x) "Signature Option" means any option outstanding
under the Company's Amended and Restated 1992 Option and Restricted Stock Plan
as of the Closing for the purchase of Signature Common Stock.
(xi) "Signature Warrant" means any warrant
outstanding as of the Closing for the purchase of Signature Common Stock.
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(b) At the Closing, Buyer shall pay to the Sellers and
the Sellers shall accept, the following amounts in full payment for the Company
Securities:
(i) Purchase of Signature Common Stock. Each share of
Signature Common Stock owned by a Seller, and all rights existing with respect
thereto, shall be exchanged for that number of shares of IHS Stock as shall be
equal in value to 51% of the Per Share Purchase Price, and an amount of cash
equal to 49% of the Per Share Purchase Price (as defined below).
(ii) Purchase of Class A Stock. Each share of Class A
Stock, par value $1.00 per share ("Class A Stock"), owned by a Seller and all
rights existing with respect thereto, shall be exchanged for that number of
shares of IHS Stock as shall be equal in value to 51% of the Class A Redemption
Price, and an amount of cash equal to 49% of the Class A Redemption Price.
(iii) Purchase of Class B Stock. Each share of Class
B Stock owned by a Seller, and all rights existing with respect thereto, shall
be exchanged for the that number of shares of IHS Stock as shall be equal to
35.7% and an amount of cash equal to 34.3% of the Per Share Purchase Price.
(iv) Purchase of Signature Warrants. Each Signature
Warrant and all rights existing with respect thereto, shall be exchanged for
that number of shares of IHS Stock as shall be equal in value to 51% of the Net
Exercise Value of such Signature Warrant and an amount of cash equal to 49% of
the Net Exercise Value of such Signature Warrant.
(v) Purchase of Signature Options. Each Signature
Option to purchase Signature Common, and all rights existing with respect
thereto, shall be exchanged for that number of shares of IHS Stock as shall be
equal in value to 51% of the Net Exercise Value of such Signature Option and an
amount of cash equal to 49% percent of the Net Exercise Value of such Signature
Option.
(c) The value of IHS Stock for the purposes of
subsection (b), above, shall be determined in accordance with Section 3.1(a).
2.2 Adjustments to the Aggregate Gross Purchase Price.
(a) At the Closing, the Company shall deliver to Buyer
the balance sheet of the Company dated as of the Closing Date on a consolidated
basis, certified by the Company's Chief Financial Officer (the "Closing Date
Balance Sheet"). The Aggregate Gross Purchase Price payable to the Sellers shall
be reduced if the Closing Date Balance Sheet discloses that the amount by which
current liabilities, minus current assets, plus long-term liabilities (excluding
minority interests), minus property and equipment before depreciation, plus
$7,700,000 exceeds $3,200,000
3
(the "Purchase Price Adjustment Amount"). In such event, the Aggregate Gross
Purchase Price payable to the Sellers at the Closing shall be reduced on a
dollar-for-dollar basis by the amount of the Purchase Price Adjustment Amount.
For purposes hereof, current assets, current liabilities, long-term liabilities
and property and equipment shall be determined on a consolidated basis in
accordance with generally accepted accounting principles, consistently applied.
(b) As soon as is reasonably practicable, but in any
event within ninety (90) days following the Closing Date, Buyer shall complete
and deliver to the Sellers an audit of the Company's Closing Date Balance Sheet.
If such audit reveals that the Purchase Price Adjustment Amount based on such
audit was greater than the Purchase Price Adjustment Amount as indicated on the
Closing Date Balance Sheet, the Aggregate Gross Purchase Price shall be deemed
to have been reduced by the amount of such excess, and the Sellers shall refund
from the Escrow Fund to Buyer the amount of such excess, in cash and/or IHS
Stock as selected by Sellers. If such audit reveals that the Purchase Price
Adjustment Amount based on such audit was less than the Purchase Price
Adjustment Amount per the Closing Date Balance Sheet, the Aggregate Gross
Purchase Price shall be deemed to have been increased by the amount of such
deficiency, and the Buyer shall pay to Sellers the amount of such deficiency, in
the respective combinations of cash and IHS Stock as set forth in Section
2.1(b). In the event that the Sellers choose to effect any reduction of the
Aggregate Gross Purchase Price under Section 2.2(b) by means of a return of IHS
Stock, the number of shares to be so returned shall be calculated based upon the
valuation of the IHS Stock at Closing as set forth in Section 3.1(b) below. If
Sellers dispute the calculation of the Purchase Price Adjustment Amount as of
the Closing Date, such dispute shall be resolved in accordance with the
following:
(i) Within sixty (60) days after delivery to Sellers
of the audit, the Sellers may deliver to Buyer a written report (the "Sellers'
Report") prepared by an independent accounting firm selected by the Sellers (the
"Sellers' Accountants") advising Buyer either that Sellers' Accountants (A)
agree with the audit, or (B) deem that one or more adjustments are required. The
costs and expenses of the services of the Sellers' Accountants shall be borne by
the Sellers. If Buyer shall concur with the adjustments proposed by the Sellers'
Accountants, or if Buyer shall not object thereto in writing delivered to the
Sellers within (30) days after Buyer's receipt of the Sellers' Report, the audit
as submitted by Buyer (as so adjusted as provided in such Sellers' Report) shall
become final and shall not be subject to further review, challenge or adjustment
absent fraud. If the Sellers do not submit a Sellers' Report within the 60- day
period provided herein, then the audit as submitted by Buyer shall become final
and shall not be subject to further review, challenge or adjustment absent
fraud.
(ii) In the event that the Sellers submit a Sellers'
Report and Buyer disagrees with the Sellers' Report, and Buyer and the Sellers'
Accountants are unable to resolve the disagreements set forth in such report
within thirty (30) days after the date of the Sellers' Report, then such
disagreements shall be referred to a recognized firm of independent certified
public accountants experienced in auditing home health care companies and
selected by mutual agreement of the Sellers and Buyer (or if the parties cannot
agree on such selection, then a "big six" accounting firm selected by lot) (the
"Settlement Accountants"), and the determination of the Settlement Accountants
shall
4
be final and shall not be subject to further review, challenge or adjustment
absent fraud. The Settlement Accountants shall use their best efforts to reach a
determination not more than forty-five (45) days after such referral. The costs
and expenses of the services of the Settlement Accountants shall be paid by
Buyer if it is determined that there will be any adjustment to the audit;
otherwise, if there is no adjustment, such costs and expenses of the Settlement
Accountants shall be paid by Sellers.
(c) In the event that the Arizona Physicians IPA
capitated contract (the "APIPA Contract") with the Company is not renewed prior
to December 31, 1996 upon terms favorable to the Company, the Aggregate Gross
Purchase Price shall be reduced by One Million ($1,000,000.00) Dollars (the
"APIPA Penalty"). The Sellers shall refund the APIPA Penalty from the Escrow
Fund to Buyer in cash and/or IHS Stock as selected by Sellers. For purposes
hereof, the renewal of the APIPA Contract shall be deemed favorable to the
Company if the renewal contract is on substantially similar terms as the
existing contract except that it shall include the following terms:
(i) the APIPA Contract shall include provisions for
revenue adjustments for material changes in utilization;
(ii) the capitation rates stated in the renewal of
the APIPA Contract are, at a minimum, equal to the HIDA rates for the periods
applicable to the APIPA Contract; and
(iii) the APIPA Contract is renewed for a two-year
period.
2.3 Escrow. At the Closing, pursuant to an Escrow Agreement to
be entered into by the parties substantially in the form of Exhibit 2.3, a
portion of the IHS Stock included in the Aggregate Net Purchase Price as shall
be equal to one-half of the Aggregate Net Purchase Price, based upon the
valuation described in Section 3.1(a), below, but in the event that the
Aggregate Net Purchase Price is below Nine Million Five Hundred Thousand
($9,500,000.00) Dollars, such portion of the IHS Stock to be held in escrow
shall be equal to Four Million ($4,000,000.00) Dollars (the "Escrow Fund"),
shall be delivered over to AMERICAN STOCK TRANSFER & TRUST COMPANY, as escrow
agent (the "Escrowee"), and shall be held and disbursed by the Escrowee in
accordance with the following:
(i) In the event that the Sellers become obligated to
remit shares back to Buyer pursuant to the post-Closing adjustments set forth in
Sections 2.2(b) and 2.2(c), the Escrowee shall release to Buyer that portion of
the Escrow Fund as shall have a value equal to the amount by which the Aggregate
Gross Purchase Price is so reduced, calculated based upon the valuation of the
IHS Stock at Closing as set forth in Section 3.1(a), below. The number of shares
of IHS Stock to be delivered to each Seller at Closing shall be reduced by such
Seller's proportional ownership interest in the Company Securities;
5
(ii) In the event that the Buyer becomes entitled to
indemnification pursuant to Section 12.2 or to payment for breach of
representations and warranties or breach of covenants hereunder, the Buyer shall
first utilize the Escrow Fund as a source of indemnification or of payment for
breach of representations and warranties or breach of covenants hereunder and
the Escrowee shall release to Buyer as selected by Sellers cash or that number
of shares of the Escrow Fund as shall be equal in value to such indemnification
or payment based upon a price per share of such stock as calculated at Closing.
Such Escrow Fund shall serve as an exclusive source of indemnification or
payment for all Loss (as defined in Section 12.2) other than Loss resulting from
Excess Reimbursement Liabilities (as defined in Section 2.7), any breach of the
representations and warranties contained in Section 5.25 (Medicare and Medicaid
Programs), and the audit or assessment of taxes by the Federal, state or local
tax authority;
(iii) If no claim for indemnification on the part of
Buyer remains outstanding upon the expiration of one (1) year following the
Closing Date (the "Escrow Period"), any remaining Escrow then held by the
Escrowee shall be released to the Sellers on a pro rata basis in accordance with
each Seller's relative ownership of the Company Securities as of the Closing
Date.
2.4 Appointment of Sellers' Committee. Sellers, by execution
of this Agreement, hereby appoint a committee (the "Committee") for the purpose
of taking certain actions on behalf of the Sellers under this Agreement as
described below. Such committee shall consist of three (3) persons. The
Committee shall initially consist of Xxxxx Xxxxx, Xxxxxxx Xxxxxx and Xxxxxx
Xxxxxxx, but shall include any successor as chosen by Sellers holding at least a
majority of the Fully Diluted Shares.
2.5 Committee Duties; Power of Attorney.
(a) The Committee (acting pursuant to the affirmative
agreement of a majority of the members thereof) is hereby appointed and
constituted agent and attorney-in-fact by each Seller, for and on behalf of such
Seller: to execute the Escrow Agreement; to give and receive notices and
communications hereunder and under the Escrow Agreement; to authorize delivery
to Buyer of IHS Stock or cash from the Escrow Fund in satisfaction of claims by
Buyer; to object to such deliveries; to agree to, negotiate, enter into
settlements and compromises of, and comply with orders of courts and awards of
arbitrators with respect to such claims; and to take all actions necessary or
appropriate in the judgment of the Committee for the accomplishment of the
foregoing and in furtherance of this Agreement. Any member of the Committee may
resign upon thirty (30) days notice to the parties to this Agreement. Such
Committee member may be replaced by the Sellers from time to time upon not less
than (5) days' prior written notice to Buyer; provided that the member may not
be replaced unless holders of at least a majority of the Fully Diluted Shares
agree to such replacement. No bond shall be required of the Committee, and the
Committee members shall receive no compensation for their services except as
provided in Section 2.4(b). Notice or communications to or from the Committee
shall constitute notice to or from each of the Sellers.
6
(b) No member of the Committee or their affiliates shall
be personally liable for his or her service in such capacity to Buyer and the
Sellers for any act done or omitted hereunder as a Committee member while acting
in good faith. The Sellers shall jointly and severally indemnify each Committee
member and hold each Committee member harmless against, any loss, liability or
expense incurred without bad faith on the part of the Committee member and
arising out of or in connection with the acceptance or administration of the
Committee member's duties hereunder. The Committee shall be entitled to direct,
immediately prior to the termination of the Escrow Period, the Escrowee to
deliver cash and/or IHS Stock held in the Escrow Fund for any Seller to such
Committee members to satisfy such Seller's obligations pursuant to the preceding
sentence; provided, however, that the Committee shall have such right only to
the extent that the Escrow Fund exceeds any amount of such funds reasonably
sufficient to satisfy any unsatisfied claims for Loss hereunder.
2.6 Actions of the Committee. The Sellers hereby authorize the
Committee to sign the Escrow Agreement on behalf of the Sellers. A decision,
act, consent or instruction of the Committee (acting by the affirmative
agreement of a majority of the members thereof) shall constitute a decision of
all the Sellers, and shall be final, binding and conclusive upon each of the
Sellers, and the Escrowee and Buyer may rely upon any decision, act, consent or
instruction of the Committee as being the decision, act, consent or instruction
of each and all of the Sellers. The Escrowee and Buyer are hereby relieved from
any liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Committee. Although the Committee
shall not be obligated to obtain instructions from the Sellers prior to any
decision, act, consent or instruction, if, and to the extent that, the Committee
receives any written instructions from the holders of a majority of the Fully
Diluted Shares, the Committee shall comply with such instructions and such
instruction shall be binding as if unanimously given by all Sellers even if some
Sellers dissent thereto.
2.7 Assets and Liabilities. As of the Closing Date, the
consolidated assets of the Company (the "Assets") will include all of the
tangible and intangible assets of the Company and its subsidiaries as presently
constituted, including, without limitation, all contract rights, leasehold
interests, fixed and moveable equipment, vehicles, furnishings, tangible
personal property, inventory and supplies (other than inventory, supplies, and
other assets disposed of in the ordinary course of business, consistent with
prior practice), goodwill, tradenames, trademarks, all patient records and
files, Certificates of Need, Medicare and Medicaid provider agreements and
numbers, telephone numbers, and to the extent permitted by law, all permits,
licenses and other governmental approvals. The Assets of the Company as of the
Closing Date shall also include cash, accounts receivable, and prepaid expenses.
As of the Closing, the Company will not have any liabilities other than such
long-term liabilities and current liabilities as are reflected on the Closing
Date Balance Sheet. It is expressly agreed that Sellers shall remain responsible
for all other liabilities and obligations of the Company, including, without
limitation, all liabilities or obligations ("Excess Reimbursement Liabilities")
owed to or amounts due or that may become due to Medicare or Medicaid or any
other health care reimbursement or payment intermediary on account of Medicare
cap cost report adjustments or other payment adjustments attributable to any
period on or prior to the Closing Date, or any other form of Medicare or other
health care reimbursement recapture, adjustment or overpayment whatsoever with
respect to any period on or prior to the Closing Date, except for the
7
current liabilities and long-term liabilities disclosed on the Closing Date
Balance Sheet referred to in Section 2.2(a). However, any favorable settlements
in excess of estimated Medicare cost report receivables or less than estimated
Medicare cost report liabilities as disclosed on the audit of the Closing Date
Balance Sheet shall be offset against the Excess Reimbursement Liabilities. If
such offset should exceed the Excess Reimbursement Liabilities, eighty (80%)
percent of the excess will be returned to Sellers upon final audit and
settlement of all Medicare and Medicaid cost reports for all periods through the
Closing Date.
ARTICLE III: IHS STOCK
----------------------
3.1 IHS Stock. Fifty-one (51%) percent of the Aggregate Net
Purchase Price and the Class A Redemption Price shall be payable by means of the
delivery to the Sellers of IHS Stock in accordance with the following:
(a) Share Value. The number of shares of IHS Stock
issuable at Closing pursuant to Section 2.1(a)(ii) shall be calculated based
upon a price per share of such stock equal to the average closing NYSE price of
such stock for the thirty (30) business day period immediately preceding the
date which is three (3) business days before the Closing Date.
(b) Registration Rights. Buyer will use its best efforts
to cause to be prepared and filed within ninety (90) days following the Closing
Date, and will use its best efforts to have declared effective by the Securities
and Exchange Commission (the "Commission"), a registration statement for the
registration of the IHS Stock under the Securities Act of 1933, as amended (the
"Securities Act"), and Buyer shall maintain the effectiveness of such
registration statement for a period of two (2) years following the date it
became effective, except to the extent that an exemption from registration may
be available.
(c) Registration Expenses. Buyer shall bear all
reasonable expenses related to such registration. Such costs and expenses shall
include, without limitation, the fees and expenses of counsel for Buyer and of
its accountants, all other costs, fees and expenses of Buyer incident to the
preparation, printing, registration and filing under the Securities Act of the
registration statement and all amendments and supplements thereto, the fees and
expenses of one counsel to the Sellers or their designees who receive IHS Stock
at Closing (the "Holders") relating to such registration, the cost of furnishing
copies of each preliminary prospectus, each final prospectus and each amendment
or supplement thereto to underwriters, dealers and other purchasers of IHS Stock
and the costs and expenses (including fees and disbursements of counsel)
incurred in connection with the qualification of IHS Stock under the Blue Sky
laws of various jurisdictions.
(d) Resale Limitations. The Holders hereby covenant with
Buyer that sales by them of IHS Stock after the Closing Date shall not, in the
aggregate, exceed 75,000 shares during any 30-day period. All sales by Holders
shall be effected solely through Xxxxx Xxxxxx, Inc., Xxxxx & Co., or Xxxxx
Xxxxxx.
8
(e) Registration Procedures, etc. In connection with the
registration rights granted to the Holders with respect to the IHS Stock as
provided in this Section 3.1, Buyer covenants and agrees as follows:
(i) At Buyer's expense, Buyer will keep the
registration and qualification under this Section 3.1 effective (and in
compliance with the Securities Act) by such action as may be necessary or
appropriate for a period of two (2) years, except to the extent that an
exemption from registration may be available. Buyer will immediately notify the
Holders, at any time when a prospectus relating to a registration statement
under this Section 3.1 is required to be delivered under the Securities Act, of
the happening of any event known to Buyer as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
(ii) Buyer shall furnish the Holders with such number
of prospectuses as shall reasonably be requested.
(iii) Buyer shall take all necessary action which may
be required in qualifying or registering IHS Stock included in a registration
statement for offering and sale under the securities or Blue Sky laws of such
states as reasonably are requested by the Holders, provided that Buyer shall not
be obligated to qualify as a foreign corporation or dealer to do business under
the laws of any such jurisdiction.
(iv) The information included or incorporated by
reference in the registration statement filed pursuant to this Section 3.1 will
not, at the time any such registration statement becomes effective, contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein as necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or
necessary to correct any statement in any earlier filing of such registration
statement or any amendments thereto. The registration statement will comply in
all material respects with the provisions of the Securities Act and the rules
and regulations thereunder. Buyer shall indemnify the Holders of IHS Stock to be
sold pursuant to the registration statement, their successors and assigns, and
each person, if any, who controls such Holders within the meaning of ss.15 of
the Securities Act or ss.20(a) of the Securities Exchange Act of 1934 ("Exchange
Act"), against all loss, claim, damage expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the
Securities Act, the Exchange Act or any other statute, common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in such registration statement executed by Buyer or
based upon written information furnished by Buyer filed in any jurisdiction in
order to qualify IHS Stock under the securities laws thereof or filed with the
Commission, any state securities commission or agency, NYSE or any securities
exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to Buyer by any of the
Holders expressly for use in such registration statement, any amendment or
supplement thereto or any application, as the case 9
may be. If any action is brought against the Holders or any controlling person
of the Holders in respect of which indemnity may be sought against Buyer
pursuant to this subsection 3.1(e)(iv), the Holders or such controlling person
shall within thirty (30) days after the receipt thereby of a summons or
complaint, notify Buyer in writing of the institution of such action and Buyer
shall assume the defense of such actions, including the employment and payment
of reasonable fees and expenses of counsel (reasonably satisfactory to the
Holders or such controlling person). The Holders or such controlling person
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of the Holders or
such controlling person unless (A) the employment of such counsel shall have
been authorized in writing by Buyer in connection with the defense of such
action, or (B) Buyer shall not have employed counsel to have charge of the
defense of such action, or (C) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to Buyer (in which case,
Buyer shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events the fees and expenses
of not more than one additional firm of attorneys for the Holders and/or such
controlling person shall be borne by Buyer. Except as expressly provided in the
previous two sentences, in the event that Buyer shall not previously have
assumed the defenses of any such action or claim, Buyer shall not thereafter be
liable to the Holders or such controlling person in investigating, preparing or
defending any such action or claim. Buyer agrees promptly to notify the Holders
of the commencement of any litigation or proceedings against Buyer or any of its
officers, directors or controlling persons in connection with the resale of IHS
Stock or in connection with such registration statement.
(v) The Holders of IHS Stock to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify Buyer, its officers and directors and each person, if
any, who controls Buyer within the meaning of ss.15 of the Securities Act or
ss.20(a) of the Exchange Act against all loss, claim, damage, or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Securities Act, the Exchange Act or any other statute, common
law or otherwise, arising from information furnished in writing by or on behalf
of such Holders, or their successors or assigns for specific inclusion in such
registration statement.
(f) Notice of Sale. If the Holders desire to transfer
all or any portion of IHS Stock, the Holders will deliver written notice to
Buyer, describing in reasonable detail their intention to effect the transfer
and the manner of the proposed transfer. If the transfer is to be pursuant to an
effective registration statement as provided herein, the Holders will sell the
IHS Stock in compliance with the disclosure therein and discontinue any offers
and sales thereunder upon notice from Buyer that the registration statement
relating to the IHS Stock being transferred is not "current" until Buyer gives
further notice that offers and sales may be recommenced. In the event of any
such notice from Buyer, Buyer agrees to file expeditiously such amendments to
the registration statement as may be necessary to bring it current during the
period specified in Section 3.1(e) and to give prompt notice to the Holders when
the registration statement has again become current. If the Holders deliver to
Buyer an opinion of counsel reasonably acceptable to Buyer and
10
its counsel and to the effect that the proposed transfer of IHS Stock may be
made without registration under the Securities Act, the Holders will be entitled
to transfer IHS Stock in accordance with the terms of the notice and opinion of
their counsel.
(g) Furnish Information. It shall be a condition
precedent to the obligations of the Buyer to take any action pursuant to this
Article III that the Holders shall furnish in writing to the Buyer such
information regarding themselves, the IHS Stock held by them, and the intended
method of disposition of such securities as shall be required to effect the
registration of their IHS Stock. In that connection, each Holder shall be
required to represent to the Buyer that all such information which is given is
both complete and accurate in all material respects. Such Holders shall deliver
to the Buyer a statement in writing from the beneficial owners of such
securities that they bona fide intend to sell, transfer or otherwise dispose of
such securities. Each Holder will, severally, promptly notify Buyer at any time
when a prospectus relating to a registration statement covering such Holder's
shares under this Section 3.1 is required to be delivered under the Securities
Act, of the happening of any event known to such Holder as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the statements as then existing.
(h) Investment Representations. All shares of IHS Stock
to be issued hereunder will be newly issued shares of Buyer. The Sellers
represent and warrant to Buyer that the IHS Stock being issued hereunder is
being acquired, and will be acquired, by the Sellers for investment for their
own accounts and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act or the applicable
state securities law; the Sellers acknowledge that the IHS Stock constitutes
restricted securities under Rule 144 promulgated by the Commission pursuant to
the Securities Act, and may have to be held indefinitely, and the Sellers agree
that no shares of IHS Stock may be sold, transferred, assigned, pledged or
otherwise disposed of except pursuant to an effective registration statement or
an exemption from registration under the Securities Act, the rules and
regulations thereunder, and under all applicable state securities laws. The
Sellers have the knowledge and experience in financial and business matters, are
capable of evaluating the merits and risks of the investment, and are able to
bear the economic risk of such investment. The Sellers have had the opportunity
to make inquiries of and obtain from representatives and employees of Buyer such
other information about Buyer as they deem necessary in connection with such
investment.
(i) Legend. It is understood that the certificates
evidencing the IHS Stock shall bear a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THESE
11
SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION
OF THE COMPANY'S COUNSEL THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT.
(j) Certain Transferees. Except in the case of any
transfer to a person in an open market transaction subsequent to the effective
date of registration of the IHS Stock, no Holder shall transfer any shares of
IHS Stock to any person or entity unless such transferee shall have agreed in
writing to be bound by the provisions applicable to the Holders under this
Article III.
ARTICLE IV: THE CLOSING
-----------------------
4.1 Time and Place of Closing. The Closing under this
Agreement (the "Closing") shall be held as promptly as practicable, but not more
than five (5) business days following the later of (a) the signing of this
Agreement by the holders of in excess of 90% of each of the outstanding
Signature Common (assuming exercise of the Signature Options and Signature
Warrants), Class A Stock, and Class B Stock (both in voting power and economic
interest) and (b) satisfaction of all other conditions precedent specified in
this Agreement, unless duly waived by the party entitled to satisfaction
thereof. The Closing shall take place at the offices of the Buyer, or at such
other time and place upon which the parties may agree. The date on which the
Closing is held is hereinafter called the "Closing Date."
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND
------------------------------------------------------------
COMPANY
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Company and each of the Sellers, each as to himself, herself
or itself, hereby severally represent and warrant to Buyer as follows (it being
understood that, for the purposes of this Article V, "Company" shall be deemed
to refer collectively to the Company and its subsidiaries listed on Schedule
5.23):
5.1 Organization and Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Copies of the Company's Articles of Incorporation and
By-Laws, and all amendments thereof to date, have been delivered to Buyer and
are complete and correct. The Company has the power and authority to own the
property and assets now owned by it and to conduct the business presently being
conducted by it.
5.2 Absence of Conflicting Agreements. Neither the execution
or delivery of this Agreement including all Schedules and Exhibits hereto, or
any of the other instruments and documents required or contemplated hereby and
thereby ("Transaction Documents") by Sellers and the Company nor the performance
by Sellers and the Company of the transactions contemplated hereby and thereby,
conflicts with, or constitutes a breach of or a default under (i) the Articles
of Incorporation or By-Laws of the Company; or (ii) any applicable law, rule,
judgment, order, writ, injunction, or decree of any court, currently in effect,
provided that the consents set forth in Schedule 5.3 are obtained prior to the
Closing; or (iii) any applicable rule or regulation of any administrative agency
or other governmental authority currently in effect; or (iv) any material
agreement, indenture, contract or instrument to which the Company is now a party
or by which any of the assets of the Company is bound.
12
5.3 Consents. Except as set forth in Schedule 5.3, no
authorization, consent, approval, license, exemption by, filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary in connection with
the execution, delivery and performance of this Agreement or any of the
Transaction Documents by any of the Sellers or the Company.
5.4 Capital Stock. Schedule 5.4 sets forth a complete list and
description of the authorized capital stock of the Company, the number of shares
issued and outstanding of each class or series of such capital stock, and the
identity of each Seller of the Company, in each case indicating the class and
number of shares held. No shares of the Company Securities are held in the
treasury of the Company. Except as otherwise set forth on Schedule 5.4, the
Sellers are the record owners of all of the Company Securities and all of such
stock is duly authorized, validly issued, and fully paid and non-assessable. On
the Closing Date, there will be no preemptive or first refusal rights to
purchase or otherwise acquire shares of capital stock of the Company pursuant to
any provision of law or the Articles of Incorporation or By-Laws of the Company
or by agreement or otherwise. Except as set forth on Schedule 5.4, on the
Closing Date there shall not be outstanding any warrants, options, or other
rights to subscribe for or purchase from the Company any shares of capital stock
of the Company, nor shall there be outstanding any securities convertible into
or exchangeable for such shares. All Signature Options and Signature Warrants of
the Company by their terms may be terminated by the Company without payment or
other compensation upon the occurrence of a merger where the Company is not the
surviving entity unless such option or warrant is exercised prior to the
effective time of such merger.
5.5 Assets and Liabilities. As of the Closing, the
consolidated Assets of the Company will include all of the tangible and
intangible assets of the Company as presently constituted, including, without
limitation, cash and accounts receivable; provided, however, that Assets shall
not include inventory, supplies and other assets disposed of in the ordinary
course of business, consistent with the prior practice of the Company's
business. The quantities of inventory items included in the Assets are
reasonable in light of the present and anticipated volume of the Company and the
inventory is good, usable, merchantable, and salable in the ordinary course of
the Company, in each case, as determined by the Company in good faith and
consistent with past practice. The accounts receivable of Company are reflected
properly on its books and records in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP"), and have been
billed or invoiced in the ordinary course of business consistent with past
practice. Schedule 5.5(a) sets forth a complete and accurate accounts payable
aging schedule of the Company as of June 30, 1996. The Assets are not subject to
any liens or encumbrances, except as identified on Schedule 5.5(b) and expressly
accepted by Buyer hereto.
5.6 Trademarks. Schedule 5.6 sets forth a complete and
accurate list of all trademarks, service marks, or applications for any of the
same, copyrights, and other items of intellectual property that are owned,
possessed or used by the Company. There are no claims or proceedings pending or,
to the knowledge of the Company, overtly threatened against the Company
13
asserting that the use of any of the aforementioned properties or rights
infringes the rights of any other person, and, to the knowledge of the Company,
the Company is not infringing on the intellectual property rights of any other
person.
5.7 Contracts. Schedule 5.7 sets forth a complete and correct
list of all agreements, contracts and commitments of the following type to which
the Company is a party or by which the Company or any of the Company's other
assets are bound and as to which the Company has any outstanding material
obligations as of the date hereof (the "Contracts"):
(a) each contract or agreement for the employment or
retention of, or collective bargaining, severance or termination agreement with,
any director, officer, employee, consultant, agent or group of employees of the
Company;
(b) each profit sharing, thrift, bonus, incentive,
deferred compensation, stock option, stock purchase, severance pay, pension,
retirement, hospitalization, insurance or other similar plan, agreement or
arrangement;
(c) each agreement or arrangement for the sale of any of
the Company's assets, properties or rights outside the ordinary course of
business (by sale of assets, sale of stock, merger or otherwise) which is
currently in effect;
(d) each contract currently in effect which contains any
provisions requiring the Company to indemnify or act for, or guarantee the
obligation of, any other person or entity;
(e) each agreement restricting the Company from
conducting business anywhere in the world;
(f) each partnership or joint venture contract or
similar arrangement or agreement which is likely to involve a sharing of profits
or future payments with respect to the Company's business or any portion
thereof;
(g) each licensing, distributor, dealer, franchise,
sales or manufacturer's representative, agency or other similar contract,
arrangement or commitment which involves consideration of more than $15,000; or
(h) each contract under which the Company performs home
health services;
(i) each lease of real property;
(j) each agreement pursuant to which any professional of
the type described under 42 C.F.R. ss.410.20(b) renders services on behalf of
the Company;
14
(k) each agreement with referral sources, whether or not
related to the referrals, including "sub-contracting agreements" with respect to
Medicare and Medicaid patients; or
(l) any other agreement not made in the ordinary and
normal course of business which involves consideration of more than $15,000.
Except as indicated on Schedule 5.7, each of the Contracts was
entered into and requires performance in the ordinary course of business and is
in full force and effect. Except as indicated on Schedule 5.7, the Company is
not in material default under any Contract and there has not been asserted,
either by or against the Company under any Contract, any written notice of
default, set-off or claim of default. To the knowledge of the Company, the
parties to the Contracts other than the Company are not in material default of
any of their respective obligations under the Contracts, and there has not
occurred any event which with the passage of time or the giving of notice (or
both) would constitute a material default or material breach under any Contract.
Except as indicated on Schedule 5.7, all amounts payable under the Contracts
are, or will at the Closing Date, be on a current basis.
5.8 Financial Statements.
(a) Schedule 5.8(a) sets forth the audited consolidated
balance sheets of the Company as of December 31, 1994, and December 31, 1995,
and the related consolidated statements of operations, consolidated statements
of changes in redeemable stock and stockholders' equity, and consolidated
statements of cash flows, for the years then ended (the "Audited Financial
Statements"), previously delivered to Buyer by Sellers, present fairly in all
material respects the financial condition and results of operations of the
Company at and for the periods therein specified and were prepared in accordance
with GAAP. Such statements of operation do not contain any items of special or
nonrecurring income or expense or any other income not earned or expense not
incurred in the ordinary course of business except as expressly specified
therein or as listed as audit adjustments on Schedule 5.8(d).
(b) Schedule 5.8(b) sets forth the unaudited
consolidated balance sheets of the Company as of April 30, 1996 and the related
consolidated statements of operations and consolidated statement of cash flows
for the period then ended (the "Unaudited Interim Financial Statements"),
previously delivered to Buyer by Sellers, present fairly in all material
respects the financial condition and results of operations of the Company at and
for the periods therein specified and were prepared in accordance with GAAP.
Such statements of operation do not contain any items of special or nonrecurring
income or expense or any other income not earned or expense not incurred in the
ordinary course of business except as expressly specified therein or as listed
as adjustments on Schedule 5.8(d).
(c) Except as set forth on Schedule 5.8(c) or as
expressly set forth on the Unaudited Interim Financial Statements, the Company
has no material liabilities or obligations
15
(whether absolute, accrued, contingent or otherwise and whether due or to become
due, including, without limitation, any guarantees of any obligations of any
other person or entity) of any kind or nature which are required by GAAP to be
reflected in a corporate balance sheet and/or the notes thereto.
5.9 Material Changes. Except as noted on Schedule 5.9, between
the date of the Unaudited Interim Financial Statements and the date of this
Agreement, there has not been any material adverse change in the condition
(financial or otherwise) of the assets, properties or operations of the Company
or any damage or destruction of any of the Company's Assets or its place of
business by fire or other casualty, whether or not covered by insurance, and
during such period of time the Company has conducted its business only in the
ordinary and normal course. Sellers have identified and communicated to Buyer
all material information with respect to any fact or condition that is
reasonably likely to adversely affect the future prospects (financial or
otherwise) of the Company.
5.10 Licenses; Permits; Certificates of Need. Schedule
5.10 sets forth a description of (a) all licenses and other governmental or
other regulatory permits, authorizations or approvals required for the operation
of the Company's business that are now in effect, including all certificates of
occupancy issued with respect to the Company's business; (b) all Certificates of
Need issued with respect to the home health agencies of the Company and its
subsidiaries that are now in effect; and (c) each other license, permit, or
other authorization that is necessary for the operation of the Company's
business (a "License" and collectively, the "Licenses"). The Licenses constitute
all of the governmental, quasi-governmental and regulatory licenses, permits and
authorizations necessary to the operation of the business of the Company and its
subsidiaries as they are operated on the date hereof. The Company has delivered
to Buyer copies of all of the Licenses. Except as set forth on Schedule 5.10,
the Company and its subsidiaries own, possess or otherwise have the exclusive
legal right to use the Licenses, free and clear of all liens, pledges, claims or
other encumbrances of any nature whatsoever. The Company is not in material
default under any such License, and the Company and its subsidiaries have not
received any notice of any material default or any other material claim or
proceeding relating to any such License, except as set forth on Schedule 5.10.
Except as set forth on Schedule 5.10, each License is in full force and effect,
and neither the Company nor any of its subsidiaries has received written notice
of any proceeding to terminate or suspend any License or of any condition or
event (other than survey deficiencies which singly or in the aggregate would not
be material to any home health agency that the Company or any of its
subsidiaries operates) which, if uncured, would result in the termination or
suspension of any License. None of the Licenses are: (a) provisional,
probationary, or restricted in any way except to the extent qualified by any
outstanding deficiencies or citations, particulars of which have been set forth
on Schedule 5.10; or (b) subject to any investigation, cancellation, impairment,
limitation, order, complaint, proceeding, or suspension nor is such threatened
or pending. Except as set forth on Schedule 5.10, all Licenses are in full force
and effect. No conditions not generally applicable to home health agencies
requiring changes in the operation of the Company or any of its subsidiaries
have been imposed, formally or informally, by any License issuer during the past
twenty-four (24) months. No Seller, director or officer, employee or former
employee of the Company, or any person,
16
firm or corporation other than the Company owns or has any proprietary,
financial or other interest, direct or indirect, in whole or in part in any of
the Licenses.
5.11 Title, Condition of Personal Property.
(a) Except for the security interests listed and
described on Schedule 5.11(a), the Company has good and marketable title to, or
valid and subsisting leasehold interests in, all of the personal property
located at its place of business or used in connection with the operation of its
business, subject to no mortgage, security interest, pledge, lien, claim,
encumbrance or charge, or restraint on transfer whatsoever other than Permitted
Liens (as defined below). No other person has any right to the use or possession
of any of such property which is owned and, except as set forth on Schedule
5.11(a), no currently effective financing statement with respect to such
personal property has been filed under the Uniform Commercial Code in any
jurisdiction, and the Company has not signed any such financing statement or any
security agreement authorizing any secured party thereunder to file any such
financing statement. All of such personal property comprising equipment,
improvements, furniture and other tangible personal property in use by the
Company, whether owned or leased, is in good operating condition and repair,
subject to normal wear and tear, and is sufficient to enable the Company to
operate its business in a manner consistent with its operation during the
immediately preceding twelve (12) months.
(b) Except as set forth on Schedule 5.11(b), no tangible
personal property used by the Company in connection with the operation of its
business is subject to a lease, conditional sale, security interest or similar
arrangement. The Company has delivered to Buyer a complete and correct copy of
each of the leases and other agreements listed on Schedule 5.11(b). All of said
personal property leases are valid, binding and enforceable in accordance with
their respective terms and are in full force and effect. The Company is not in
material default under any of such leases and there has not been asserted,
either by or against the Company under any of such leases, any written notice of
default, set-off, or claim of default. To the best knowledge of Sellers and the
Company, the parties to such leases other than the Company are not in default of
their respective obligations under any of such leases, and there has not
occurred any event which with the passage of time or giving of notice (or both)
would constitute such a default or breach under any of such leases.
(c) "Permitted Liens" shall mean:
(i) carriers', warehouseman's, mechanics,
materialmen's, repairmen's or other like liens arising in the ordinary course of
business which are (i) not overdue for a period of more than 30 days or (ii)
which are being contested in good faith and by appropriate proceedings, provided
that if such contest shall continue for more than 30 days, the amount thereof
shall be bonded or properly reserved against at the end of such 30-day period;
(ii) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of like nature
incurred in the ordinary course of business;
(iii) rights of lessors under leases set forth on
Schedule 5.11 (b);
17
(iv) pledges or deposits in connection with worker's
compensation, unemployment insurance, and other social security legislation; and
(v) the liens set forth on Schedule 5.5.
5.12 Legal Proceedings. Other than as set forth on Schedule
5.12, there are no claims, actions, suits or proceedings or arbitrations, either
administrative or judicial, pending, or, to the knowledge of the Company,
overtly threatened against or affecting the Company, or the Company's ability to
consummate the transactions contemplated herein, at law or in equity or
otherwise, before or by any court or governmental agency or body, domestic or
foreign, or before an arbitrator of any kind.
5.13 Employees. Attached hereto as Schedule 5.13 is the most
recent payroll of the Company, indicating the names, positions, and compensation
of its employees. All of such information is materially correct as of such date.
To the knowledge of Sellers and Company, none of the employees, while in the
employ of the Company, has ever had his or her professional license or
certification denied, suspended, revoked, terminated, or voluntarily
relinquished under threat of disciplinary action, or has ever been restricted in
any way from performing the duties he or she is to provide for the Company, and
there is no proceeding pending, or threatened, pursuant to which any of the
foregoing may occur.
5.14 Collective Bargaining, Labor Contracts, Employment
Practices, Etc. During the two years prior to the Closing Date, there has been
no material adverse change in the relationship between the Company and its
employees nor any strike or material labor disturbance by such employees
affecting the Company's business and, to the knowledge of the Company, there is
no indication that such a change, strike or labor disturbance is likely. The
Company's employees are not represented by any labor union or similar
organization and the Company has no reason to believe that there are pending or
threatened any activities, the purpose of which is to achieve such
representation, of all or some of the Company's employees. Except as set forth
on Schedule 5.7 or Schedule 5.13, the Company has no collective bargaining or
other labor contracts, employment contracts, pension, profit-sharing,
retirement, insurance, bonus, deferred compensation or other employee benefit
plans, agreements or arrangements with respect to its employees. The Company is
in material compliance with the requirements prescribed by all Federal, state
and local statutes, orders and governmental rules and regulations ("Government
Requirements") applicable to any of the employee benefit plans, agreements and
arrangements identified on Schedule 5.7 and Schedule 5.13, including, without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Immigration Reform and Control Act, the Worker Adjustment and
Retraining Notification Act of 1988, any such Government Requirements respecting
employment determination, equal opportunity, affirmative action, employee
privacy, wrongful or unlawful termination, workers' compensation, occupational
safety and health requirements, labor management relations and unemployment
insurance, or related matters and there are no threatened or pending claims
relating thereto, in each case. In the event of termination of employment of an
employee of Company, Buyer will not, pursuant to any agreement with any Seller
or Company or by reason of
18
any representation made or plan adopted by any Seller prior to the Closing, be
liable to any employee of the Company for so-called "severance pay", parachute
payments or any other similar payments or benefits, including, without
limitation, post-employment healthcare (other than pursuant to the continuation
health care provisions of Section 4980B of the Internal Revenue Code of 1986, as
amended or Section 601 through 608 of ERISA ("COBRA") or insurance benefits.
5.15 ERISA.
(a) The Company does not maintain or make contributions
to and has not at any time in the past maintained or made contributions to, any
employee benefit plan which is subject to the minimum funding standards of
ERISA. The Company does not now maintain or make contributions to, and has not
at any time in the past maintained or made contributions to, any multi-employer
plan subject to the terms of the Multi-employer Pension Plan Amendment Act of
1980 (the "Multi-employer Act").
(b) Schedule 5.15(b) sets forth each severance
agreement, and each plan, agreement, arrangement or plan, bonus plan, deferred
compensation agreement, employee pension, profit sharing, savings or retirement
plan, group life, health, or accident insurance or other employee benefit plan,
agreement, arrangement or commitment, including, without limitation, any
commitment arising under severance, holiday, vacation, Christmas or other bonus
plans (including, but not limited to, "employee benefit plans", as defined in
Section 3(3) of ERISA maintained by Company).
(c) Schedule 5.15(c) identifies all employees of the
Company on leave of absence eligible to receive health benefits, as required by
COBRA. Notice of the availability of COBRA coverage has been provided to all
employees of the Company on leave of absence entitled thereto, and all persons
electing such coverage are being (or have been, if applicable) provided such
coverage.
5.16 Insurance and Surety Agreements. Schedule 5.16 contains a
true and correct list of: (a) all policies of fire, liability and other forms of
insurance held or owned by the Company (including but not limited to medical
malpractice insurance, and any state sponsored plan or program for worker's
compensation); and (b) all bonds, indemnity agreements and other agreements of
suretyship made for or held by the Company, including a brief description of the
character of the bond or agreement and the name of the surety or indemnifying
party. Schedule 5.16 sets forth for each such insurance policy the name of the
insurer, the amount of coverage, the type of insurance, the policy number, the
annual premium and a brief description of the nature of insurance included under
each such policy and of any claims made thereunder during the past two years.
Such policies are owned by and payable solely to the Company, and said policies
or renewals or replacements thereof will be outstanding and duly in force at the
Closing Date. All insurance policies listed on Schedule 5.16 are in full force
and effect, all premiums due on or before the Closing Date have been or will be
paid, financed or accrued on or before the Closing Date, the Company has not
been advised by any of its insurance carriers of an intention to terminate or
modify any such policies other than under circumstances where the Company has
received a commitment for a replacement policy, nor has the Company failed to
comply with any of the material conditions contained in any such policies.
19
5.17 Relationships. Except as disclosed on Schedule 5.17
hereto, no Seller and no controlling Seller, partner or any affiliate of any
Seller has, or at any time within the last two (2) years has had, a material
ownership interest in any business, corporate or otherwise, that is a party to,
or in any property that is the subject of, business relationships or
arrangements of any kind relating to the operation of the Company or its
business by which the Company will be bound after the Closing.
5.18 Absence of Certain Events. Except as set forth on
Schedule 5.18, since the date of the Unaudited Interim Financial Statements, the
Company has not, and from the date of this Agreement through the Closing Date
the Company will not have:
(a) sold, assigned or transferred any of its assets or
properties, except in the ordinary course of business;
(b) mortgaged, pledged or subjected to any lien, pledge,
mortgage, security interest, conditional sales contract or other encumbrance of
any nature whatsoever, other than a Permitted Lien, any of the Company's assets;
(c) made or suffered any termination of any home health
services contract;
(d) made or suffered any amendment or termination of any
other contract, commitment, instrument or agreement involving consideration or
liability in excess of $15,000, other than in the ordinary course of business;
(e) except in the ordinary course of business, or
otherwise as necessary to comply with any applicable minimum wage law, increased
the salaries or other compensation of any of its employees, or made any increase
in, or any additions to, other benefits to which any of such employees may be
entitled;
(f) failed to pay or discharge when due any liabilities,
the failure to pay or discharge which has caused or will cause any actual damage
or give rise to the risk of a loss to the Company in excess of $15,000, except
as may be consistent with the current practice of the Company;
(g) changed any of the accounting principles followed by
it or the methods of applying such principles;
(h) failed to collect, withhold and/or pay to any proper
governmental agency any federal, state or local income, franchise, sales, use,
withholding or similar tax that applicable law requires be collected, withheld
and/or paid;
(i) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental agency
relating to it or its property which will likely have or has
20
had a materially adverse effect on the condition (financial or otherwise),
properties, assets, liabilities, operations, business or prospects of the
Company or any of its subsidiaries; and
(j) entered into any transaction other than in the
ordinary course of business involving consideration in excess of $15,000.
5.19 Compliance with Laws. The Company is in compliance
with all Governmental Requirements (as defined herein). Except for notices of
non-compliance as to which the Company has taken corrective action acceptable to
the applicable governmental agency, and as set forth in Schedule 5.19, the
Company has not, within the period of twelve months preceding the date of this
Agreement, received any written notice that the Company or any of the Assets
fail to comply in any material respect with any applicable Federal, state, local
or other governmental laws or ordinances, or any applicable order, rule or
regulation of any Federal, state, local or other governmental agency having
jurisdiction over its business ("Governmental Requirements"). The Company shall
report to Buyer, within five (5) business days after receipt thereof, any
written notices that the Company is not in compliance in any material respect
with any of the foregoing. Neither the Company, nor any officer, director,
employee, agent, or other representative of Company has made, directly, or
indirectly, any illegal bribes, kickbacks, or political contributions with
corporate funds, illegal payments from corporate funds to governmental officials
in their individual capacities or illegal payments from corporate funds to
obtain or retain business either within the United States or abroad.
5.20 Finders. No broker or finder has acted for the Sellers or
the Company in connection with the transactions contemplated by this Agreement,
and no other broker or finder is entitled to any broker's or finder's fee or
other commission in respect thereof based in any way on agreements,
understandings or arrangements with the Sellers or the Company.
5.21 Tax Returns.
(a) Except as set forth in Schedule 5.21, (i) all Tax
(as defined below) returns, statements, reports and forms or extensions with
respect thereto required to be filed with any Federal, state, local or other
governmental department or court or other authority having jurisdiction over it
("Governmental Authority") on or before the Closing Date by or on behalf of the
Company (collectively, the "Tax Returns"), have been or will be timely filed on
or before the Closing Date in accordance in all material respects with all
applicable Governmental Requirements; and (ii) the Company has timely paid all
Taxes payable by it.
(b) For purposes of this Agreement, "Tax" means any net
income, gross income, sales, use, franchise, personal, or real property tax.
5.22 Encumbrances Created by this Agreement. The execution and
delivery of this Agreement, or any of the Company's Transaction Documents, does
not, and the consummation
21
of the transactions contemplated hereby or thereby will not, create any liens or
other encumbrances on any of the Company's assets in favor of third parties.
5.23 Subsidiaries and Joint Ventures. Schedule 5.23 sets forth
a complete list of all subsidiaries, joint ventures and partnerships in which
the Company is the record or beneficial owner of more than ten (10%) percent of
the equity interest. All of the issued and outstanding capital stock of the
subsidiaries listed on Schedule 5.23 hereto is owned of record or beneficially
by the Company or by one of the listed subsidiaries on Schedule 5.23.
5.24 No Untrue Statement. None of the representations and
warranties in this Article V contains any untrue statement of material fact or
omits to state a material fact necessary, in light of the circumstance under
which it was made, in order to make any such representation not misleading in
any material respect.
5.25 Medicare and Medicaid Programs. The Company, to the
extent necessary to conduct the Company in a manner consistent with past
practice, is qualified for participation in the Medicare and Medicaid programs.
Except as reflected on Schedule 5.25, (a) no Seller or the Company has received
any notice of recoupment with respect to the Company's operations from the
Medicare or Medicaid programs, or any other third party reimbursement source,
(b) there is no basis for the assertion after the Closing Date of any such
recoupment claim against Buyer which arose out of any transactions on the part
of Company prior to the Closing or against any Seller for which Buyer will be
liable, and (c) to the knowledge of Sellers and the Company, no Medicare and
Medicaid investigation, survey or audit is pending, threatened or imminent with
respect to the operation of the Company prior to the Closing.
5.26 Leasehold Interests. Schedule 5.26 hereto sets forth a
complete and correct list of all leases pursuant to which the Company or any of
its subsidiaries leases real property. Each of the Company and its subsidiaries
has valid leasehold interests in all such real property free and clear of all
liens, claims, charges and encumbrances of any kind whatsoever, except for
Permitted Liens. The Company has provided access to the Buyer to complete and
correct copies of the leases identified in Schedule 5.26.
5.27 Power and Authority. Company and Sellers have all
requisite power and authority to execute, deliver and perform this Agreement,
and as of the Closing, Company and Sellers will have all requisite power and
authority to execute and deliver the Transaction Documents required to be
delivered by each party to the Buyer at the Closing.
5.28 Binding Effect. This Agreement and all Transaction
Documents executed by the Company and Sellers constitute the valid and binding
obligations of such party, enforceable against such party in accordance with
their respective terms.
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF SELLERS
----------------------------'-------------------------
Each of the Sellers, each as to himself, herself, or itself,
hereby severally represents and warrants to Buyer as follows:
22
6.1 Organization and Standing. Such Seller, if a corporation,
is a corporation duly organized, validly existing and in good standing under the
laws of the state in which it was incorporated, and if a partnership, is a
partnership duly organized and validly existing under the laws of the state of
its formation.
6.2 Authority. Such Seller has the full legal power and
authority to make, execute, deliver and perform this Agreement and the
Transaction Documents. Such execution, delivery, performance and consummation
have been duly authorized by all necessary action, corporate or otherwise, on
the part of such Seller, and any necessary consents of holders of indebtedness
of such Seller have been obtained.
6.3 Binding Effect. This Agreement and all Transaction
Documents executed by such Seller constitute the valid and binding obligations
of such party, enforceable against such Seller in accordance with their
respective terms.
6.4 Absence of Conflicting Agreements. Neither the execution
or delivery of this Agreement or any of the Transaction Documents by such Seller
nor the performance by such Seller of the transactions contemplated hereby and
thereby conflicts with, or constitutes a breach of or a default under (i) the
formation documents of such Seller, or (ii) any law, rule, judgment, order,
writ, injunction, or decree of any court currently in effect applicable to such
Seller, or (iii) any rule or regulation of any administrative agency or other
governmental authority currently in effect applicable to such Seller, or (iv)
any agreement, indenture, contract or instrument to which such party is now a
party or by which any of the assets of such Seller is bound.
6.5 Consents. No authorization, consent, approval, license,
exemption by, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary in connection with the execution, delivery and performance of
this Agreement or any of the Transaction Documents by such Seller.
6.6 Ownership of Company Securities. Except as disclosed on
Schedule 6.6 hereto, such Sellers are the lawful record and beneficial owners of
all of the Company Securities shown as owned by such Sellers in Schedule 5.4,
with good and marketable title thereto, free and clear of all liens and
encumbrances, claims and other charges thereon of any kind. Such Sellers have
the full legal power to transfer and deliver such Company Securities in
accordance with this Agreement, and delivery of such Company Securities to Buyer
pursuant hereto will convey good and marketable title thereto, free and clear of
all liens and encumbrances, claims and other charges thereon of any kind. The
shares of Company Securities indicated on Schedule 5.4 as being owned by the
Sellers constitute all of the issued and outstanding shares of the capital stock
of the Company. Except as disclosed on Schedule 5.4, on the Closing Date there
shall not be outstanding any warrants, options, or other rights to subscribe for
or purchase from the Company any shares of capital stock of the Company, nor
shall there be outstanding any securities convertible into or exchangeable for
such shares.
23
ARTICLE VII: REPRESENTATIONS AND WARRANTIES OF BUYER
----------------------------------------------------
Buyer represents and warrants to the Company and the Sellers
as follows:
7.1 Organization and Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
7.2 Power and Authority. Buyer has the corporate power and
authority to execute, deliver and perform this Agreement, and as of the Closing,
Buyer will have the corporate power and authority to execute and deliver the
Transaction Documents required to be delivered by it to the Sellers at the
Closing.
7.3 Binding Agreement. This Agreement has been duly executed
and delivered by Buyer. This Agreement is, and when executed and delivered by
Buyer at the Closing each of the Transaction Documents executed by Buyer will
be, the legal, valid and binding obligation of Buyer, enforceable against Buyer
in accordance with their respective terms.
7.4 Securities and Exchange Commission Filings. Buyer has
furnished the Company with a correct and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by Buyer with the
Commission on or after January 1, 1996 (the "SEC Documents"), which are all the
documents (other than preliminary material) that Buyer was required to file with
the SEC on or after January 1, 1996. As of their respective dates, none of the
SEC Documents (including all exhibits and schedules thereto and documents
incorporated by reference therein) contained any untrue statements therein, in
light of the circumstances under which they were made, and the SEC Documents
complied when filed in all material respects with the then applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated by the SEC thereunder. The financial
statements of the Buyer included in the SEC Documents complied as to form in all
material respects with the then applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto, were
prepared in accordance with GAAP during the periods involved (except as may have
been indicated in the notes thereto or, in the case of the unaudited statements,
as permitted by Form 10-Q promulgated by the SEC) and fairly present (subject,
in the case of the unaudited statements, to normal, recurring audit adjustments)
the consolidated financial position of the Buyer and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
7.5 Capital Stock. Buyer's Form 10-Q filed with the Commission
with respect to the fiscal quarter ended March 31, 1996 (the "Form 10-Q"), sets
forth a true and complete description of the authorized and outstanding shares
of capital stock of Buyer as of such date. All outstanding shares of IHS Stock
are validly issued, fully paid and non-assessable and not subject to preemptive
rights. Buyer has duly authorized and reserved for issuance the IHS Stock, and,
when
24
issued in accordance with the terms of Article III, the IHS Stock will be valid
ly issued, fully paid and nonassessable and free of preemptive rights.
7.6 Absence of Conflicting Agreements. Neither the execution
or delivery of this Agreement or any of the Transaction Documents by Buyer nor
the performance by the Buyer of the transactions contemplated hereby and thereby
conflicts with, or constitutes a breach of or a default under (i) the formation
documents of the Buyer, or (ii) any law, rule, judgment, order, writ,
injunction, or decree of any court currently in effect applicable to Buyer, or
(iii) any rule or regulation of any administrative agency or other governmental
authority currently in effect applicable to Buyer, or (iv) any agreement,
indenture, contract or instrument to which the Buyer is now a party or by which
any of the assets of the Buyer is bound.
7.7 Consents. No authorization, consent, approval, license,
exemption by, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary in connection with the execution, delivery and performance of
this Agreement or any of the Transaction Documents by Buyer.
7.8 Litigation. There are no legal, administrative,
arbitration or other proceedings or governmental investigations pending or, to
Buyer's knowledge, threatened against Buyer or any of its affiliates that would
give any third party the right to enjoin, rescind or condition the transactions
contemplated hereunder.
7.9 Investment Representation. Buyer is acquiring the Company
Securities for its own account with no present intention of reselling or
otherwise distributing the same or participating in a distribution of same
except pursuant to an offering of shares duly registered under the Securities
Act and applicable state securities laws, or under other circumstances that, in
the opinion of counsel for Company at the time, would not require registration
of the Company Securities under the Securities Act. Buyer is an accredited
investor as defined under the Securities Act. Buyer acknowledges that it has
been advised and is aware that (i) the Sellers are relying upon an exemption
under the Securities Act predicated upon Buyer's representations and warranties
contained in this Section 7.9 in connection with the offer and sale of the
Company Securities pursuant to this Agreement and (ii) the Company Securities in
the hands of Buyer will be restricted stock within the meaning of Rule 144
promulgated pursuant to the Securities Act and unless, and until, registered
under the Securities Act, may be subject to limitations upon its resale.
ARTICLE VIII: INFORMATION AND RECORDS CONCERNING THE COMPANY
------------------------------------------------------------
AND ITS SUBSIDIARIES
--------------------
8.1 Access to Information and Records before Closing.
25
(a) Prior to the Closing Date, Buyer may make, or cause
to be made, such investigation of the Company's (it being understood that, for
the purpose of this Article VIII, "Company" shall be deemed to refer
collectively to the Company and its subsidiaries listed on Schedule 5.23)
financial and legal condition as Buyer deems necessary or advisable to
familiarize itself with the Company and/or matters relating to their history or
operation. The Company shall permit Buyer and its authorized representatives
(including legal counsel and accountants), to have full access to the Company's
books and records upon reasonable notice and during normal business hours, and
the Company will furnish, or cause to be furnished, to Buyer such financial and
operating data and other information and copies of documents with respect to the
Company's products, services, operations and assets as Buyer shall from time to
time reasonably request. The documents to which Buyer shall have access shall
include, but not be limited to, the Company's tax returns and related work
papers since its inception; and the Company shall make, or cause to be made,
extracts thereof as Buyer or its representatives may request from time to time
to enable Buyer and its representatives to investigate the affairs of the
Company and the accuracy of the representations and warranties made in this
Agreement. The Company shall cause its accountants to cooperate with Buyer and
to disclose the results of audits relating to the Company and to produce the
working papers relating thereto.
(b) The Buyer shall use reasonable efforts to permit the
Company and its authorized representatives (including legal counsel and
accountants), to have full access to the Buyer's management and publicly
available information upon reasonable notice and during normal business hours.
The information to which the Company shall have access shall include only such
information reasonably necessary to enable the Company and its representatives
to investigate the accuracy of the representations and warranties of the Buyer
made in this Agreement and to complete a review of the Company's publicly
available information.
ARTICLE IX: OBLIGATIONS OF THE PARTIES UNTIL CLOSING
----------------------------------------------------
9.1 Conduct of Business Pending Closing. Between the date of
this Agreement and the Closing, the Company and its subsidiaries shall maintain
their existence and shall conduct their business in the customary and ordinary
course of business consistent with past practice.
9.2 Negative Covenants of the Company and its Subsidiaries.
Without the prior written approval of Buyer, neither the Company nor any of its
subsidiaries shall, between the date hereof and the Closing:
(a) use their best efforts to cause or permit to occur
any of the events or occurrences described in Sections 5.18(c) and (d) and cause
or permit to occur any of the events or occurrences described in the remainder
of Section 5.18 (Absence of Certain Events) of this Agreement;
26
(b) dissolve, merge or enter into a share exchange with
or into any other entity;
(c) enter into any contract or agreement with any union
or other collective bargaining representative representing any employees without
the prior written consent of Buyer, which consent shall not be unreasonably
withheld;
(d) sell off any Assets other than in the ordinary
course of business; or
(e) make any change to their by-laws or articles of
incorporation.
9.3 Affirmative Covenants. Between the date hereof and the
Closing, the Company and each of its subsidiaries shall:
(a) maintain their business in substantially the state
of repair, order and condition as on the date hereof, reasonable wear and tear
or loss by casualty excepted;
(b) maintain in full force and effect all Licenses
currently in effect with respect to their business unless such License is no
longer necessary for the operation of the Company and its subsidiaries;
(c) maintain in full force and effect the insurance
policies and binders currently in effect, or the replacements thereof, including
without limitation those listed on Schedule 5.16;
(d) utilize its reasonable efforts to preserve intact
the present business organization of the Company and its subsidiaries; keep
available the services of the Company's and its subsidiaries' present employees
and agents; and maintain the Company's and its subsidiaries' relations and
goodwill with suppliers, employees, affiliated medical personnel and any others
having business relating to the Company and its subsidiaries;
(e) maintain all of the books and records in accordance
with its past practices;
(f) comply in all material respects with all provisions
of the Contracts listed in Schedule 5.7 and with any other material agreements
that the Company and its subsidiaries have entered into in the ordinary course
of business since the date of this Agreement (except that, as to the Company's
Contracts with vendors, it shall use its reasonable efforts to comply in all
material respects with such Contracts), and comply in all material respects with
the provisions of all material laws, rules and regulations applicable to the
Company's and its subsidiaries' business;
(g) cause to be paid when due, all material taxes,
assessments and charges or levies imposed upon it or on any of its properties or
which it is required to withhold and pay over;
27
(h) promptly advise Buyer in writing of the threat or
commencement against the Company and its subsidiaries of any claim, action, suit
or proceeding, arbitration or investigation or any other event that would
materially adversely affect the operations, properties, assets or prospects of
the Company and its subsidiaries;
(i) shall notify the Buyer in writing of any event
involving the Company and its subsidiaries which has had or may be reasonably
expected to have a material adverse effect on the business or financial
condition of the Company and its subsidiaries or may involve the loss of
contracts with the Company's customers; and
(j) deliver to Buyer monthly financial statements within
thirty (30) days of the last day of the immediately preceding month.
Notwithstanding anything contained herein, the decertification of the San
Antonio agency will not result in a breach of this Section 9.3, a reduction of
the Aggregate Gross Purchase Price or a claim for indemnification. The foregoing
shall not be deemed to be a waiver by Buyer for any breach of representations
and warranties concerning any loss, liability or other adverse consequences
other than the actual occurrence of the decertification of the San Antonio
agency or the fact that the agency has been closed.
9.4 Pursuit of Consents and Approvals. Prior to the Closing,
Buyer shall use its reasonable efforts to obtain all consents and approvals of
governmental agencies and all other parties necessary for the lawful
consummation of the transactions contemplated hereby and the lawful use,
occupancy and enjoyment of the Company's and its subsidiaries' business by Buyer
in accordance herewith ("Required Approvals"). The Company and its subsidiaries
shall cooperate with and use its reasonable efforts to assist Buyer in obtaining
all such approvals.
9.5 Exclusivity. Until the earlier of the Closing Date or the
termination of this Agreement pursuant to Section 13.1, neither the Sellers nor
the Company, nor any of their respective affiliates, shall engage in any
discussions or negotiations directly or indirectly with any other party in
respect of the sale of the Company Securities or of substantially all of the
assets of the Company, or in respect of any merger, consolidation or other sale
of the Company (any of said transactions being referred to herein as a
"Prohibited Transaction").
9.6 Solicitation of Stockholders. The Company shall through
its board of directors unanimously recommend to its stockholders approval of
this Agreement and the sale of the Company Securities and as promptly as
practicable after the date of this Agreement use its best efforts to obtain
stockholder approval.
9.7 Line of Credit. Upon Buyer's execution of this Agreement,
the Buyer will advance to the Company the sum of $1,000,000 pursuant to the
terms of that certain Promissory Note, dated June 18, 1996 by Signature Home
Care Group, Inc.
28
ARTICLE X: CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
------------------------------------------------------
Buyer's obligations to consummate the purchase of the Company
Securities is subject to the fulfillment, prior to or at the Closing, of each of
the following conditions, any one or more of which may be waived by Buyer in
writing. Upon failure of any of the following conditions, Buyer may terminate
this Agreement pursuant to and in accordance with Article XIII herein.
10.1 Representations and Warranties. The representations and
warranties of Company and Sellers in Articles V and VI shall be true and correct
in all material respects at and as of the Closing Date, as though such
representations and warranties were made at and as of such time except to the
extent affected by the transactions herein contemplated.
10.2 Performance of Covenants. Each of the Sellers and the
Company shall have performed or complied in all material respects with their
respective agreements and covenants required by this Agreement to be performed
or complied with by it prior to or at the Closing.
10.3 Delivery of Closing Certificate. Each of the Sellers and
the Company shall have executed and delivered to Buyer a certificate of its
president or general partner, as the case may be, dated the Closing Date, upon
which Buyer may rely, certifying that the conditions contemplated by Sections
10.1 and 10.2 applicable to it have been satisfied.
10.4 Opinion of Counsel. Each Seller and Company shall have
delivered to Buyer an opinion, dated the Closing Date, of its counsel, in
substantially the form attached hereto as Exhibit 10.4.
10.5 Legal Matters. No preliminary or permanent injunction or
other order (including a temporary restraining order) of any governmental
authority which prevents the consummation of the transactions contemplated by
this Agreement shall have been issued and remain in effect.
10.6 Authorization Documents. Buyer shall have received a
certificate of the Secretary or other officer of the Company and each of the
corporate Sellers certifying as of the Closing Date a copy of Resolutions of
their respective Boards of Directors authorizing their execution and full
performance of the Transaction Documents and the incumbency of their respective
officers.
10.7 Material Change. Since the date of the Unaudited Interim
Financial Statements there shall not have been any material adverse changes in
the condition (financial or otherwise) of the assets, properties or operations
of the Company and its subsidiaries.
10.8 Approvals.
29
(a) The consent or approval of all persons necessary for
the consummation of the transactions contemplated hereby shall have been
granted, including without limitation, the Required Approvals;
(b) None of the foregoing consents or approvals (i)
shall have been conditioned upon the modification, cancellation or termination
of any material lease, contract, commitment, agreement, license, easement, right
or other authorization with respect to the Company's and its subsidiaries'
business, other than as disclosed or approved hereunder, or (ii) shall impose on
the Buyer any material condition or provision or requirement with respect to the
Company's and its subsidiaries' business or its operation that is more
restrictive than or different from the conditions imposed upon such operation
prior to Closing.
10.9 Consents. Buyer shall have received the written consent
to assignment from each of those entities with whom the Company and its
subsidiaries have home health service contracts as listed on Schedule 5.7(h),
where such consent is required by reason of the change of control of the Company
and its subsidiaries contemplated under this Agreement.
10.10 Closing Date Balance Sheet. Sellers and Company shall
have furnished the Closing Date Balance Sheet to Buyer.
10.11 Resignation of Company and its Subsidiaries' Boards of
Directors. Each director of Company and its subsidiaries shall have submitted
his or her resignation to be effective no later than the Closing Date.
10.12 Additional Sellers. The holders of at least ninety (90%)
percent of the outstanding shares of each class of the stock of the Company
shall have executed and delivered to Buyer a counterpart of this Agreement,
signifying such holder's agreement to be bound as a Seller hereunder.
10.13 Xxxx-Xxxxx-Xxxxxx Act. All applicable waiting periods
under the Xxxx- Xxxxx-Xxxxxx Antitrust Improvement Act of 1976 shall have
expired or been terminated.
10.14 Samaritan Joint Venture Agreements. The existing
arrangements with Samaritan Health System ("Samaritan") concerning the Arizona
home health agencies owned and operated by the Company's subsidiaries (the
"Subsidiary"), including without limitation, the organizational documents for
the two limited liability companies in which a Subsidiary and Samaritan are the
only two members and the applicable non-compete agreements, shall be reaffirmed.
10.15 Real Property Consents. The Company shall have used
reasonable efforts to obtain the consent of each landlord with whom the Company
or any of its subsidiaries has a lease of real property which, by its terms,
requires consent in the event of a change of control of the Company, and the
written consent of such landlords shall have been received by the Company.
30
Buyer shall have received notice from the Sellers by the Closing Date,
identifying any landlord that has not given any necessary consent as of such
date.
10.16 Dallas Joint Venture. Buyer shall have received an
amendment or confirmation to the existing Agreement of General Partnership of
Arlington Memorial Home Healthcare (the "Partnership"), dated November 3, 1986,
as amended, between AMH Health Ventures, Inc. and VHA Enterprises Home
Healthcare, Inc. that would permit Buyer to continue its existing business
operations within a fifty (50) mile radius of all Partnership locations.
10.17 Other Documents. Sellers and Company shall have
furnished Buyer with all other documents, certificates and other instruments
required to be furnished to Buyer by Sellers and Company pursuant to the terms
hereof.
ARTICLE XI: CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
--------------------------------------------------------
Sellers' obligation to consummate the sale of the Company
Securities is subject to the fulfillment, prior to or at the Closing, of each of
the following conditions:
11.1 Representations and Warranties. The representations and
warranties of Buyer in this Agreement shall be true at and as of the Closing
Date as though such representations and warranties were made at and as of such
time, except to the extent affected by the transactions herein contemplated.
11.2 Performance of Covenants. Buyer shall have performed or
complied with each of its agreements and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
11.3 Delivery of Closing Certificate. Buyer shall have
delivered to Sellers a certificate of a senior vice president of Buyer dated the
Closing Date upon which Sellers can rely, certifying that the statements made in
Sections 11.1 and 11.2 are true, correct and complete as of the Closing Date.
11.4 Opinion of Counsel. Buyer shall have delivered to Sellers
an opinion, dated the Closing Date, of Blass & Xxxxxx, Esqs., counsel for Buyer,
in the form attached as Exhibit 11.4.
11.5 Legal Matters. No preliminary or permanent injunction or
other order (including a temporary restraining order) of any governmental
authority which prevents the consummation of the transactions contemplated by
this Agreement shall have been issued and remain in effect.
11.6 Authorization Documents. Sellers shall have received a
certificate of the Secretary or other officer of Buyer certifying a copy of
Resolutions of the Board of Directors of Buyer authorizing Buyer's execution and
full performance of the Transaction Documents and the incumbency of the officers
of Buyer.
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11.7 Other Documents. Buyer shall have furnished Sellers with
all documents, certificates and other instruments required to be furnished to
Sellers by Buyer pursuant to the terms hereof.
ARTICLE XII: OBLIGATIONS OF THE PARTIES AFTER CLOSING
-----------------------------------------------------
12.1 Survival of Representations and Warranties. All
representations and warranties made by each party in this Agreement and in each
Schedule and Transaction Document shall survive the Closing Date and for a
period of one (1) year after the Closing notwithstanding any investigation at
any time made by or on behalf of the other party, provided that the
representations and warranties contained in Section 5.25 (Medicare and Medicaid)
and Section 5.21 (Tax), shall survive until the applicable period of limitations
for audits by the applicable Governmental Authority shall have expired. All
representations and warranties related to any claim asserted in writing prior to
the expiration of the applicable survival period shall survive (but only with
respect to such claim) until such claim shall be resolved and payment in respect
thereof, if any is owing, shall be made.
12.2 Indemnification by Sellers. Each Seller, severally and
not jointly, shall indemnify and defend Buyer and hold it harmless against and
with respect to any and all damage, loss, liability, deficiency, cost and
expense (including, without limitation, reasonable attorney's fees and expenses)
(all of the foregoing hereinafter collectively referred to as "Loss") resulting
from:
(a) any inaccuracy in any representation, or breach of
any warranty, made by such Seller or Company in Article V or VI, provided that a
claim is made or an action with respect thereto is initiated by Buyer against
such Seller within 90 days after the discovery by Buyer of such inaccuracy or
breach of warranty; or
(b) the breach of any covenant or undertaking by such
Seller contained in this Agreement which survives the Closing and is not waived
by Buyer at or prior to the Closing, provided that a claim is made or an action
with respect thereto is initiated by Buyer against such Seller within 90 days
after the discovery by Buyer of the occurrence of such breach; or
(c) ownership or operation of the Company or its
subsidiaries or their businesses or assets prior to the Closing Date, including,
without limitation, any Excess Reimbursement Liabilities (as defined in Section
2.7), the audit or assessment of taxes by the Federal, state or local tax
authority, and any Loss in excess of the amounts recorded on the Closing Date
Balance Sheet arising out of the legal proceedings referenced on Schedule 5.12
but excluding any Loss arising out of any current liabilities or long-term
liabilities as reflected on the Closing Date Balance Sheet or the audit of such
Closing Date Balance Sheet.
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12.3 Indemnification by Buyer. Buyer shall indemnify and
defend Sellers and hold them harmless against and with respect to any and all
Loss resulting from:
(a) any inaccuracy in any representation, or breach of
any warranty, set forth in Article VII, provided that a claim is made or an
action with respect thereto is initiated by Sellers against Buyer within 90 days
after the discovery by the Sellers, or any one or more of them, of such
inaccuracy or breach; or
(b) the breach of any covenant or undertaking by Buyer
which survives the Closing and is not waived by Sellers at or prior to the
Closing, provided that a claim is made or an action with respect thereto is
initiated by Sellers against Buyer within 90 days after the discovery by Sellers
of the occurrence of such breach.
12.4 Assertion of Claims. Any claims for indemnification under
this Article XII and any claims for breach of representations and warranties or
breach of covenants contained herein must be asserted by written notice by a
date which is one (1) year following the Closing Date, except that any claim
based upon Excess Reimbursement Liabilities (as defined in Section 2.7) or a
breach of the representations and warranties contained in Section 5.25 (Medicare
and Medicaid) or Section 5.21 (Tax) may be asserted until the applicable period
of limitations for audits by the applicable Governmental Authority shall have
expired. After one (1) year following the Closing Date, Sellers will be
severally, but not jointly, responsible for any claims based upon a breach of
the representations and warranties contained in Section 5.23 (Medicare and
Medicaid) and Section 5.21 (Tax) for such time period as described herein.
12.5 Liability Cap. Notwithstanding any other provision of
this Article XII, the maximum aggregate liability of the Sellers for
indemnification hereunder and any claims for breach of representations and
warranties or breach of covenants contained herein shall not exceed an amount
equal to the Aggregate Net Purchase Price.
12.6 Control of Defense of Indemnifiable Claims.
(a) Buyer shall give Sellers prompt written notice of
the claim for which it seeks indemnification. Failure of the Buyer to give such
prompt notice shall not relieve the Sellers of their indemnification obligation,
provided that such indemnification obligation shall be reduced by any damages
suffered by Sellers resulting from a failure to give prompt notice hereunder.
The Sellers shall be entitled to participate in the defense of such claim. If at
any time the Sellers acknowledge in writing that the claim is fully
indemnifiable under this Agreement, they shall have the right to assume total
control of the defense of such claim at their own expense. If the Sellers do not
assume total control of the defense of any such claim, the Buyer agrees not to
settle such claim without the written consent of the Sellers, which consent
shall not be unreasonably withheld. Nothing contained in this Section 12.6 shall
prevent either party from assuming total control of the defense and/or settling
any claim against it for which indemnification is not sought under this
Agreement. Notwithstanding any other provision hereof, neither party shall be
entitled to
33
indemnification in respect of a representation or warranty which it actually
knew to be incorrect, whether as a result of its investigation prior to the
Closing or otherwise.
(b) The Sellers shall give Buyer prompt written notice
of the claim for which they seek indemnification. Failure of the Sellers to give
such prompt notice shall not relieve the Buyer of its indemnification
obligation, provided that such indemnification obligation shall be reduced by
any damages suffered by Buyer resulting from a failure to give prompt notice
hereunder. The Buyer shall be entitled to participate in the defense of such
claim. If at any time the Buyer acknowledges in writing that the claim is fully
indemnifiable under this Agreement, it shall have the right to assume total
control of the defense of such claim at its own expense. If the Buyer does not
assume total control of the defense of any such claim, the Sellers agree not to
settle such claim without the written consent of the Buyer, which consent shall
not be unreasonably withheld. Nothing contained in this Section 12.6 shall
prevent either party from assuming total control of the defense and/or settling
any claim against it for which indemnification is not sought under this
Agreement. Notwithstanding any other provision hereof, neither party shall be
entitled to indemnification in respect of a representation or warranty which it
actually knew to be incorrect, whether as a result of its investigation prior to
the Closing or otherwise.
12.7 Restrictions.
(a) From and after the Closing Date, none of the Sellers
shall disclose, directly or indirectly, to any person outside of Buyer's employ
without the express authorization of the Buyer, any patient lists, customer
lists, pricing strategies, customer files, or patient files and records of the
Company and its subsidiaries, any proprietary data or trade secrets owned by the
Company and its subsidiaries or any financial or other information about the
Company and its subsidiaries not then in the public domain; provided, however,
that Sellers shall be permitted to make such disclosures as may be required by
law or by a court or governmental authority.
(b) For a period of three (3) years after the Closing
Date, none of the Sellers shall engage or participate in any effort or act to
induce any of the customers, physicians, suppliers, associates, employees or
independent contractors of the Company and its subsidiaries to cease doing
business, or their association or employment, with the Company and its
subsidiaries.
(c) For a period of three (3) years after the Closing
Date, none of the Sellers shall, directly, or indirectly, be a director of, be a
partner in, or have a proprietary interest in, any person, enterprise,
partnership, association, corporation, joint venture or other entity which is
directly or indirectly in the business of owning, operating or managing any
entity of any type, licensed or unlicensed, which is engaged in or provides home
health services anywhere within a 50 mile radius of any agency of the Company
operating on the Closing Date. Nothing herein shall prohibit any Seller from
being a passive owner of not more than five (5%) percent of the equity of a
business engaged in rendering home health services. In the event that Samaritan
is merged into, consolidated with or forms a joint venture or other similar
business arrangement or combination with another entity (the "Other Entity"),
the surviving or resulting entity from such merger or
34
consolidation or the joint venture or other similar business arrangement or
combination will be bound by the restrictions contained in this Section 12.7(c),
except that the continued ownership and/or operation by the surviving or
resulting entity or the joint venture or other similar business arrangement or
combination of any home health agencies that as of the effective date of such
merger or consolidation were already owned or operated by the Other Entity shall
not be deemed to be in violation of this provision.
(d) The Sellers acknowledge that the restrictions
contained in this Section 12.7 are reasonable and necessary to protect the
legitimate business interests of Buyer and that any violation thereof by any of
them would result in irreparable harm to Buyer. Accordingly, Sellers agree that
upon the violation by any of them of any of the restrictions contained in this
Section 12.7, Buyer shall be entitled to obtain from any court of competent
jurisdiction a preliminary and permanent injunction as well as any other relief
provided at law or equity, under this Agreement or otherwise. In the event any
of the foregoing restrictions are adjudged unreasonable in any proceeding, then
the parties agree that the period of time or the scope of such restrictions (or
both) shall be adjusted in such a manner or for such a time (or both) as is
adjudged to be reasonable.
Notwithstanding the foregoing, for purposes of this Section
12.7, any advertisement prepared for and disseminated to the public in general,
which advertises the services of Sellers not otherwise in violation of this
Section 12.7 or advertises the need for services to be supplied to Sellers shall
not be deemed to be an inducement or solicitation with respect to any such
patients, physicians, suppliers, employees or independent contractors.
12.8 Records. On the Closing Date, Sellers and Company shall
deliver, or cause to be delivered, to Buyer all records and files not then in
Buyer's possession relating to the operations of the Company and its
subsidiaries.
12.9 Audit. Following Closing, the Sellers will cooperate and
provide such information as may be necessary in connection with an audit of the
Company's financial statement for the periods beginning January 1, 1996, and
ending after the Closing Date. Buyer shall bear the cost of such audit.
12.10 Appraisal Rights. In the event that less than one
hundred (100%) percent of the Signature Common Stock, Class A Stock, and Class B
Stock is sold to Buyer at the Closing, and if, in connection with any merger of
the Company within six (6) months after the Closing, any of the holders of the
Company Securities that were not sold to Buyer at Closing shall have exercised
their appraisal rights under Section 262 of the Delaware General Corporation
Law, any amount by which the resulting appraised value of such Company
Securities exceeds the Per Share Purchase Price shall be paid to Buyer from the
Escrow Fund. If such appraised value of such Company Securities is less than the
Per Share Purchase Price, Buyer shall promptly pay the amount of such difference
to the Sellers in the respective combinations of cash and IHS Stock as set forth
in Section 2.1(b).
35
ARTICLE XIII: TERMINATION
-------------------------
13.1 Termination. This Agreement may be terminated at any time
at or prior to the Closing by:
(a) Buyer, if any condition precedent to Buyer's
obligations hereunder set forth in Article X hereof has not been satisfied by
September 30, 1996;
(b) Sellers, if any condition precedent to each Seller's
obligations hereunder set forth in Article XI hereof has not been satisfied by
September 30, 1996; or
(c) the mutual consent of Buyer and Sellers.
13.2 Effect of Termination. If a party terminates this
Agreement because one of its conditions precedent has not been fulfilled
otherwise than by reason of default of such party, or if this Agreement is
terminated by mutual consent, this Agreement shall become null and void without
any liability of any party to the other, except for the obligations of the
Company, Signature Home Care Group, Inc., and Sellers under that certain
Promissory Note, dated June 18, 1996 by Signature Home Care Group, Inc. and that
certain Stock Pledge Agreement, dated June 18, 1996, between Signature Home Care
Group, Inc. and Integrated Health Services Financial Holdings, Inc.
ARTICLE XIV: MISCELLANEOUS
--------------------------
14.1 Costs and Expenses. Except as expressly otherwise
provided in this Agreement, Buyer and Sellers shall bear their own costs and
expenses in connection with this Agreement and the transactions contemplated
hereby; provided, however, that no such costs and expenses shall be charged to
the Company and its subsidiaries.
14.2 Performance. In the event of a breach by any party of its
obligations hereunder, the other party shall have the right, in addition to any
other remedies which may be available, to obtain specific performance of the
terms of this Agreement, and the breaching party hereby waives the defense that
there may be an adequate remedy at law. Should any party default in its
performance, or other remedy, the prevailing party shall be entitled to its
reasonable attorneys' fees.
14.3 Benefit and Assignment. This Agreement binds and inures
to the benefit of each party hereto and its successors and proper assigns. Buyer
may not assign its interest under this Agreement to any other person or entity
without the prior written consent of Sellers; provided, however, that Buyer may
assign its rights, duties and obligations hereunder to one or more subsidiaries
or affiliates of Buyer, or, in connection with the financing of Buyer's purchase
of the Company Securities, to a third party with the prior written consent of
Sellers, which consent will not
36
be unreasonably withheld; and further provided that in the instance of such
assignment Buyer shall guaranty the performance of its assignee hereunder.
14.4 Effect and Construction of this Agreement. This Agreement
and the Exhibits and Schedules hereto embody the entire agreement and
understanding of the parties and supersede any and all prior agreements,
arrangements and understandings relating to matters provided for herein;
provided, however, the confidentiality provisions of that certain letter of
intent, dated June 17, 1996, among Buyer, Company, Xxxxxxx Xxxxxx, Xxxxxx
Xxxxxxx, and Xxxxx Xxxxxx shall remain in effect; provided, further, that
Buyer's obligations under such confidentiality provisions shall automatically
terminate upon the Closing. The captions used herein are for convenience only
and shall not control or affect the meaning or construction of the provisions of
this Agreement. This Agreement may be executed in one or more counterparts, and
all such counterparts shall constitute one and the same instrument.
14.5 Cooperation - Further Assistance. From time to time, as
and when reasonably requested by any party hereto after the Closing, the other
parties will (at the expense of the requesting party) execute and deliver, or
cause to be executed and delivered, all such documents, instruments and consents
and will use reasonable efforts to take all such action as may be reasonably
necessary to carry out the intent and purposes of this Agreement.
14.6 Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed to be properly given when personally
delivered to the party or parties entitled to receive the notice or within five
(5) days when sent by certified or registered mail, postage prepaid, properly
addressed to the party or parties entitled to receive such notice at the address
stated below:
If to the Company: Signature Home Care, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
with a copy to: Xxxxxxx Xxxx, Esq.
Jenkens & Xxxxxxxxx
Fountain Place
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
If to the Sellers: Xxxxxxx Xxxxxx
Liberty Partners
1177 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
with a copy to: Xxxxxxx Xxxx, Esq.
Jenkens & Xxxxxxxxx
Fountain Place
0000 Xxxx Xxxxxx, Xxxxx 0000
00
Xxxxxx, XX 00000
If to the Buyer: Integrated Health Services, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
cc: Xxxxxxxx X. Xxxxxx, General Counsel
with a copy to: Xxxxxxx X. Xxxxx, Esq.
Blass & Xxxxxx, Esqs.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
14.7 Waiver, Discharge, Etc. This Agreement shall not be
released, discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by or on behalf of each of the parties hereto by
their duly authorized officer or representative. The failure of any party to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
14.8 Rights of Persons Not Parties. Nothing contained in this
Agreement shall be deemed to create rights in persons not parties hereto, other
than the successors and proper assigns of the parties hereto.
14.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, disregarding any
rules relating to the choice or conflict of laws.
14.10 Amendments, Supplements, Etc. At any time before or
after the execution and delivery of this Agreement by the parties hereto, this
Agreement may be amended or supplemented by additional agreements, articles or
certificates, as may be mutually determined by the parties to be necessary,
appropriate or desirable to further the purposes of this Agreement, to clarify
the intention of the parties, or to add to or to modify the covenants, terms or
conditions hereof or thereof. The parties hereto shall make such technical
changes to this Agreement, not inconsistent with the purposes hereof, as may be
required to effect or facilitate any governmental approval or acceptance of this
Agreement or to effect or facilitate any filing or recording required for the
consummation of any portion of the transactions contemplated hereby. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties.
14.11 Severability. Any provision, or distinguishable portion
of any provision, of this Agreement which is determined in any judicial or
administrative proceeding to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It
is the intention of the parties that if any provision of Section
38
12.7 shall be determined to be overly broad in any respect, then it should be
enforceable to the maximum extent permissible under the law. To the extent
permitted by applicable law, the parties waive any provision of law which
renders a provision hereof prohibited or unenforceable in any respect.
14.12 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
[SIGNATURES ON THE FOLLOWING PAGE]
39
IN WITNESS WHEREOF, each of the parties hereto and in the
capacity indicated below has executed this Agreement as of the day and year
first above written.
COMPANY:
SIGNATURE HOME CARE, INC.
By:____________________________________
Its:___________________________________
SELLERS:
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
40
BUYER:
INTEGRATED HEALTH SERVICES, INC.
By:____________________________________
Xxxxx X. Xxxxxxxx,
Executive Vice President - Development
41
The undersigned holders of capital stock of the Company hereby agree to
be bound as Sellers under the Agreement.
SELLERS:
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
WITNESS:
By:
---------------------------- ----------------------------
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