SHARE PURCHASE AGREEMENT
BY AND AMONG
HFI ACQUISITION CORP.
HOUSECALL MEDICAL RESOURCES, INC.
HF HOLDINGS, INC.
HTHF, INC.
AND
HOME TECHNOLOGY HEALTHCARE, INC.
May 13, 1997
1
SHARE PURCHASE AGREEMENT
TABLE OF CONTENTS*
1. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . 2
1.1 Agreement to Purchase and Sell the Shares. . . . . . . . 2
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Transactions and Documents at Closing. . . . . . . . . . 2
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER AND
PARENT . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.1 Organization and Authority. . . . . . . . . . . . . . . . 3
2.2 Ownership of Shares and Subsidiary Shares. . . . . . . . 3
2.3 Authority; Inconsistent Obligations. . . . . . . . . . . 4
2.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 No Violation; Compliance with Laws. . . . . . . . . . . . 4
2.6 Financial Statements. . . . . . . . . . . . . . . . . . . 5
2.7 Liabilities. . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Title to Properties. . . . . . . . . . . . . . . . . . . 5
2.9 Receivables. . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Personal Property. . . . . . . . . . . . . . . . . . . . 6
2.11 Real Property. . . . . . . . . . . . . . . . . . . . . . 6
2.12 Authority to Conduct Business and Intellectual Property
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
* THIS TABLE OF CONTENTS DOES NOT CONSTITUTE A PART OF THIS AGREEMENT.
i
2.13 Contracts. . . . . . . . . . . . . . . . . . . . . . . . 8
2.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 8
2.15 Customers. . . . . . . . . . . . . . . . . . . . . . . . 9
2.17 Contingencies. . . . . . . . . . . . . . . . . . . . . . 9
2.17 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.18 Medicare Participation/Accreditation. . . . . . . . . 11
2.20 Employment and Labor Matters. . . . . . . . . . . . . 11
2.20 Employee Benefit Matters. . . . . . . . . . . . . . . 12
2.21 Environmental Matters. . . . . . . . . . . . . . . . . 14
2.20 Absence of Certain Business Practices. . . . . . . . . 14
2.23 Government Reports. . . . . . . . . . . . . . . . . . 15
2.24 Agreements and Transactions with Related Parties. . . 15
2.25 Absence of Changes. . . . . . . . . . . . . . . . . . 15
2.26 No Defaults. . . . . . . . . . . . . . . . . . . . . . 17
2.27 Fraud and Abuse. . . . . . . . . . . . . . . . . . . . 17
2.28 Full Disclosure. . . . . . . . . . . . . . . . . . . . 18
2.29 Disclaimer. . . . . . . . . . . . . . . . . . . . . . 19
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . 19
3.1 Organization. . . . . . . . . . . . . . . . . . . . . . 19
3.2 Authorization; No Inconsistent Agreements. . . . . . . 19
3.3 Full Disclosure. . . . . . . . . . . . . . . . . . . . 20
3.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . 20
3.5 No Violation; Compliance with Laws. . . . . . . . . . . 20
4. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . 20
4.1 Purchaser's Access and Inspection. . . . . . . . . . . 20
4.2 Confidentiality. . . . . . . . . . . . . . . . . . . . 21
4.3 Cooperation. . . . . . . . . . . . . . . . . . . . . . 22
4.4 Covenant Against Competition. . . . . . . . . . . . . . 22
4.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . 23
4.6 Brokers. . . . . . . . . . . . . . . . . . . . . . . . 23
4.7 Other Post-Closing Cooperation. . . . . . . . . . . . . 24
4.8 Publicity. . . . . . . . . . . . . . . . . . . . . . . 24
4.9 Interim Financial Statements. . . . . . . . . . . . . . 24
4.10 Update of Information. . . . . . . . . . . . . . . . . 24
4.11 Certain Governmental Filings. . . . . . . . . . . . . 25
4.12 Tax Matters. . . . . . . . . . . . . . . . . . . . . . 25
4.13 Certain Employee Benefit Plan Covenants . . . . . . . 28
4.14 Certain Liabilities. . . . . . . . . . . . . . . . . . 29
4.15 Certain Agreements by Housecall. . . . . . . . . . . . 30
5. CONDUCT OF BUSINESSES PENDING CLOSING . . . . . . . . . . 30
5.1 Business in the Ordinary Course. . . . . . . . . . . . 30
5.2 No Material Changes. . . . . . . . . . . . . . . . . . 31
5.3 Compensation. . . . . . . . . . . . . . . . . . . . . . 32
5.4 Employee Benefit Plans. . . . . . . . . . . . . . . . . 32
6. CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . 33
6.1 Proceedings and Documents Satisfactory. . . . . . . . . 33
6.2 Representations and Warranties. . . . . . . . . . . . . 33
6.3 Compliance with Agreements and Conditions. . . . . . . 33
6.4 Certificates. . . . . . . . . . . . . . . . . . . . . . 33
6.5 Resolutions. . . . . . . . . . . . . . . . . . . . . . 34
6.6 Opinion of Counsel. . . . . . . . . . . . . . . . . . . 34
6.7 Consents. . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Employment Agreements. . . . . . . . . . . . . . . . . 34
6.9 Bank Approvals. . . . . . . . . . . . . . . . . . . . . 34
6.10 Consummation of Other Transactions. . . . . . . . . . 34
6.11 No Inconsistent Requirements. . . . . . . . . . . . . 34
6.12 Minute Books and Share Records . . . . . . . . . . . . 35
6.13 Certain Management Contracts . . . . . . . . . . . . . 35
7. CONDITIONS TO OBLIGATIONS OF SELLER, HTHF AND PARENT . . . 35
7.1 Representations and Warranties. . . . . . . . . . . . . 35
7.2 Compliance with Agreements and Conditions. . . . . . . 35
7.3 Certificate of Purchaser. . . . . . . . . . . . . . . . 35
7.4 Resolutions. . . . . . . . . . . . . . . . . . . . . . 36
7.5 Opinion of Counsel. . . . . . . . . . . . . . . . . . . 36
7.6 Consummation of Other Transactions. . . . . . . . . . . 36
7.7 No Inconsistent Requirements. . . . . . . . . . . . . . 36
7.8 Employment Agreements. . . . . . . . . . . . . . . . . 36
8. INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Indemnification of Purchaser and Companies. . . . . . . 36
8.2 Indemnification of Seller, HTHF and Parent. . . . . . . 37
8.3 Interchangeable Terminology. . . . . . . . . . . . . . 37
8.4 Payment. . . . . . . . . . . . . . . . . . . . . . . . 37
8.5 Defense of Claims. . . . . . . . . . . . . . . . . . . 38
8.6 No Contribution. . . . . . . . . . . . . . . . . . . . 39
8.7 Limitations on Liability. . . . . . . . . . . . . . . . 39
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . 39
10. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 40
10.1 Termination for Certain Causes. . . . . . . . . . . . 40
10.2 Procedure on and Effect of Termination. . . . . . . . 40
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 41
11.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . 41
11.2 Counterparts. . . . . . . . . . . . . . . . . . . . . 42
11.3 Entire Agreement. . . . . . . . . . . . . . . . . . . 42
11.4 Governing Law. . . . . . . . . . . . . . . . . . . . . 42
11.5 Successors and Assigns. . . . . . . . . . . . . . . . 43
11.6 Partial Invalidity and Severability. . . . . . . . . . 43
11.7 Waiver. . . . . . . . . . . . . . . . . . . . . . . . 43
11.8 Headings. . . . . . . . . . . . . . . . . . . . . . . 43
11.9 Number and Gender. . . . . . . . . . . . . . . . . . . 43
11.10 Consented Assignment. . . . . . . . . . . . . . . . . 44
11.11 Guaranty. . . . . . . . . . . . . . . . . . . . . . . 44
11.12 Acknowledgment and Consent. . . . . . . . . . . . . . 44
11.13 Satisfaction of Conditions. . . . . . . . . . . . . . 44
12. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS . . . . . . . . 45
12.1 Certain Definitions. . . . . . . . . . . . . . . . . . 45
12.2 Index of Definitions. . . . . . . . . . . . . . . . . 47
List of Exhibits
Exhibit A Legal Opinion Xxxxxx & XxXxxxxx or Boult,
Cummings, Xxxxxxx & Xxxxx, PLC
Exhibit B Legal Opinion of Xxxxxxxxxx Xxxxxxxx LLP
List of Schedules
Schedule 2.1 Organization and Authority
Schedule 2.3(b) Authority; Inconsistent Obligations
Schedule 2.4 Consents
Schedule 2.6 Financial Statements
Schedule 2.7 Liabilities
Schedule 2.10 Personal Property
Schedule 2.11 Real Property
Schedule 2.12 Authority to Conduct Business and
Intellectual Property Rights
Schedule 2.13 Contracts
Schedule 2.14 Insurance
Schedule 2.15 Customers
Schedule 2.16 Contingencies
Schedule 2.17 Taxes
Schedule 2.19 Employment and Labor Matters
Schedule 2.20 Employee Benefit Matters
Schedule 2.21 Environmental Matters
Schedule 2.23 Government Reports
Schedule 2.24 Agreements and Transactions with Related
Parties
Schedule 2.25 Absence of Changes
Schedule 4.4 Client/Customer List
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 13th
day of May, 1997, by and among HFI ACQUISITION CORP., a Delaware
corporation ("Purchaser"); HOUSECALL MEDICAL RESOURCES, INC., a
Delaware corporation ("Housecall"); HF HOLDINGS, INC., a
Tennessee corporation ("Seller"); HTHF, INC., a Delaware
corporation ("HTHF"); and HOME TECHNOLOGY HEALTHCARE, INC., a
Delaware corporation ("Parent").
W I T N E S S E T H:
WHEREAS, the total authorized capital stock of
Healthfirst, Inc., a Delaware corporation ("HFI"), consists of
1,650,000 shares of common stock, par value of $.01 per share, of
which 1,000,000 shares are presently issued and outstanding and
owned beneficially and of record by Seller.
WHEREAS, the total authorized capital stock of Health
Care Resources, Inc., a Kentucky corporation ("HCR"), consists of
2,100 shares of common stock, no par value, of which 140 shares
are presently issued and outstanding, and all of which are owned
beneficially and of record by HFI; and
WHEREAS, the total authorized capital stock of Computer
Masters of Kentucky, Inc., a Kentucky corporation ("CMK"),
consists of 2,000 shares of common stock, no par value, of which
70 shares are presently issued and outstanding, and all of which
are owned beneficially and of record by HFI, (HFI, HCR and CMK
shall hereinafter be referred to as the "COMPANIES"; all of the
issued and outstanding capital stock of HFI shall hereinafter be
referred to as the "SHARES"; and all of the issued and
outstanding capital stock of HCR and CMK shall hereinafter be
referred to collectively as the "SUBSIDIARY SHARES"); and
WHEREAS, in reliance on and subject to the terms and
conditions contained herein, the Purchaser desires to purchase
the Shares from Seller, and Seller desires to sell the Shares to
Purchaser; and
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1
AGREEMENT:
1. PURCHASE AND SALE
1. AGREEMENT TO PURCHASE AND SELL THE SHARES. In reliance
upon and subject to the terms and conditions hereinafter set
forth, at the Closing, Seller shall sell, assign, transfer and
convey unto the Purchaser, and the Purchaser shall purchase and
acquire from Seller, all of the Shares, free and clear of any and
all Liens for an aggregate purchase price (the "PURCHASE PRICE")
of $10,750,000.
1.2 CLOSING. Subject to the conditions contained in
ARTICLES 6 AND 7 having been satisfied or waived in accordance
with the terms of this Agreement, the consummation of the
transactions contemplated in this Agreement (the "CLOSING") shall
take place at the offices of Xxxxxxxxxx Xxxxxxxx LLP, 0000
Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, at 10:00 a.m.,
Atlanta time, on May ___, 1997 (the "CLOSING DATE"). Should the
transactions contemplated by this Agreement not close on or
before such date, the parties' rights, duties and obligations
under and pursuant to this Agreement shall be governed by ARTICLE
10.
1. TRANSACTIONS AND DOCUMENTS AT CLOSING.
(a) Seller shall deliver to the Purchaser certificates
representing the Shares, duly endorsed for transfer, with
signatures guaranteed by a bank or trust company and all required
stock transfer stamps, if any, affixed, in each case free and
clear of all Liens.
(b) Purchaser shall pay to Seller the Purchase Price
by wire transfer of immediately available federal funds to the
demand deposit account in the United States designated by Seller
to Purchaser at least three (3) Business Days prior to the
Closing Date.
(c) All deliveries, payments and other transactions
and documents relating to the Closing shall be interdependent and
none shall be effective unless and until all are effective
(except to the extent that the party entitled to the benefit
thereof has waived in writing satisfaction or performance thereof
as a condition precedent to Closing).
(d) From time to time and at any time, at any party's
reasonable request, whether on or after the Closing Date, and
without further consideration, each party shall execute and
deliver such further documents and instruments of conveyance,
assignment, and transfer and shall take such further reasonable
actions as may be reasonably necessary or desirable to carry out
the intent of this Agreement.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER AND
PARENT
To induce Purchaser to enter into and perform this
Agreement, to consummate the transactions contemplated hereby,
and to pay the consideration as provided herein, Seller, HTHF and
Parent, jointly and severally, represent and warrant to, and
covenant and agree with, Purchaser as follows:
2.1 ORGANIZATION AND AUTHORITY.
(a) The Companies are corporations duly organized,
validly existing and in good standing under the laws of their
respective states of incorporation as set forth in the various
recital clauses of this Agreement. The Companies' principal
offices and places of business are at the locations specified in
SCHEDULE 2.1(A). The Companies have all requisite corporate
power and authority to carry on their respective businesses as
they are now being conducted.
(b) The Companies are duly authorized, licensed and
qualified in the jurisdictions listed in SCHEDULE 2.1(B) hereto,
which are all jurisdictions where such authorization, licensure
or qualification is necessary to avoid a material adverse effect
upon the Companies, their current businesses or their property or
other assets. SCHEDULE 2.1(B) lists, with respect to the
Companies, (i) each office or place of business, (ii) all names
under which the Companies or their predecessors have operated
since their formation or incorporation, as appropriate, if
different from their present name, (iii) all locations where any
Company's assets where the net book value of such assets at such
location, in the aggregate, exceeds $10,000 are currently located
(together with a list of such assets) if such location is not
otherwise disclosed pursuant to any of the other sub-clauses of
this PARAGRAPH 2.1(B); and (iv) all subsidiaries or former
subsidiaries of such entities existing at any time since the date
of such entities' formation or incorporation, as appropriate.
2.2 OWNERSHIP OF SHARES AND SUBSIDIARY SHARES.
The recital clauses of this Agreement set forth the
authorized, issued and outstanding capital stock of the
Companies, and also sets forth that number of shares of the
capital stock of the Companies owned of record by Seller or HFI,
as appropriate. Seller is the sole record and beneficial owner
of all of the Shares and HFI is the sole record and beneficial
owner of all of the Subsidiary Shares, in each case free and
clear of any and all Liens. All the Shares are duly authorized,
validly issued, fully paid and nonassessable. There are no
outstanding securities convertible into the shares of, or rights
to subscribe for or to purchase, or any options for the purchase
of, or any agreements or arrangements providing for the issuance
(contingent or otherwise) of, or, to the knowledge of Seller,
HTHF and Parent, any Actions relating to, the capital stock of
the Companies. None of the Shares or the Subsidiary Shares has
been issued, offered, sold, registered or recorded in violation
of the preemptive or other rights of any past or present
shareholder of the relevant Company or any other Person. None of
the Companies has any interest, direct or indirect, or any
commitment to purchase or otherwise acquire any shares or other
equity interests, direct or indirect, in, or to make any loans to
or other investments in, any other Person. There are no
outstanding contracts, demands, commitments, or other agreements
or arrangements under which Seller is or may become obligated to
sell, transfer or assign any of the Shares or under which HFI is
or may become obligated to sell transfer or assign any of the
Subsidiary Shares.
2.3 AUTHORITY; INCONSISTENT OBLIGATIONS.
(a) Seller has the full right, corporate power and
authority to execute and deliver and to perform and comply with
this Agreement in accordance with its terms. All proceedings and
actions required to be taken by the Companies or Seller to
authorize the execution, delivery, and performance of this
Agreement have been properly taken or will be taken prior to the
Closing. This Agreement has been duly and validly executed and
delivered on behalf of Seller by its authorized officers. This
Agreement constitutes the valid and legally binding obligation,
subject to general equity principles, of Seller, HTHF and Parent
in each instance enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency,
reorganization or similar Laws affecting the rights of creditors
generally.
(b) Except as disclosed in SCHEDULE 2.3(B), neither
the execution and delivery of this Agreement nor the consummation
of the transactions contemplated herein will result in a
violation or breach by Seller, HTHF, Parent or the Companies of,
or constitute a default by Seller, HTHF, Parent or the Companies
under, (i) the Certificate or Articles of Incorporation (as
appropriate) or By-Laws of Companies, (ii) any term or provision
of any indenture, note, mortgage, bond, security agreement, loan
agreement, guaranty, pledge, or other agreement, instrument or
document, (iii) any material Law, (iv) any other commitment or
restriction, to which Seller, HTHF, Parent or Companies are a
party or by which any of them or any of their assets, properties
or businesses is subject or bound; nor will such actions result
in (v) the creation of any Lien on any of the assets of the
Companies, (vi) the acceleration or creation of any obligation of
the Companies, or (vii) the forfeiture of any material right or
privilege of the Companies.
2.4 CONSENTS.
The execution and delivery of this Agreement by Seller,
HTHF and Parent and the consummation of the transactions
contemplated herein (a) do not require the consent, approval or
action of, or any filing with or notice to, any Person or
Government, except as specified in Schedule 2.4, and (b) do not
require the consent or approval of any shareholders, except such
as have been obtained or will be obtained prior to the Closing.
2.5 NO VIOLATION; COMPLIANCE WITH LAWS.
The Companies are not in default under or in violation
of their Certificates or Articles of Incorporation (as
appropriate) or By-laws. To the knowledge of Seller, HTHF and
Parent, the Companies have complied in all material respects with
all Laws applicable to their respective businesses. The
Companies have not received any notification of any asserted
present or past failure to comply with any Laws.
2.6 FINANCIAL STATEMENTS.
Prior to the date hereof, the Companies have delivered
to Purchaser copies of their unaudited Balance Sheets as of
December 31, 1995 and 1996, and related unaudited Statements of
Operations, Retained Earnings, and Cash Flows for the fiscal
years then ended (the "UNAUDITED YEAR-END FINANCIAL STATEMENTS").
Companies have also delivered to Purchaser copies of their
unaudited Balance Sheets as of March 31, 1997 (the "UNAUDITED
BALANCE SHEETS"), and unaudited Statements of Operations,
Retained Earnings, and Cash Flows for the 3-month period then
ended, collectively, the "UNAUDITED INTERIM FINANCIAL
STATEMENTS"). The Unaudited Year-end Financial Statements and
the Unaudited Interim Financial Statements are sometimes referred
to in this Agreement collectively as "THE UNAUDITED FINANCIAL
STATEMENTS." The Unaudited Financial Statements are attached
hereto as Schedule 2.6. Except as disclosed in Schedule 2.6(a),
the Unaudited Financial Statements (including any related notes
and schedules thereto) are true and correct, have been prepared
from the books and records of the Companies in accordance with
GAAP consistently applied, and present fairly the financial
condition of the Companies as of the respective dates thereof and
the results of their operations for the periods then ended.
2.7 LIABILITIES.
The Companies do not have any accrued, absolute, known
or contingent debt, liability or obligation, except (i) those
reflected on the Unaudited Interim Financial Statements, (ii)
liabilities incurred in the regular and ordinary course of
business consistent with the Companies' past practices since the
date of the Unaudited Interim Financial Statements (the
"REFERENCE DATE"), and (iii) as specifically disclosed in
SCHEDULE 2.7 to this Agreement (collectively, the "DISCLOSED
LIABILITIES"). The Companies have no debt, liability or
obligation, accrued, absolute, known or contingent, relating to
arising from the transactions described on SCHEDULE 2.7, all of
which occurred prior to the Closing Date.
2.8 TITLE TO PROPERTIES.
The Companies have good and complete title to all
properties and assets reflected in their Unaudited Interim
Financial Statements, except assets which have been disposed of
in the regular and ordinary course of business since the
Reference Date, and all other properties and assets necessary to
conduct their businesses as currently being conducted and as
conducted during the periods covered by the Unaudited Financial
Statements (other than any leased property), free and clear of
Liens, except as may be set forth in the Unaudited Financial
Statements, including the notes thereto, or specifically on any
Schedule to this Agreement.
2.9 RECEIVABLES.
All notes and accounts receivable shown on the
Unaudited Financial Statements, and all such receivables now held
by the Companies, are valid obligations and, to the knowledge of
Seller, HTHF and Parent, were not and are not subject to any
offset or counterclaim.
2.10 PERSONAL PROPERTY.
(a) Except as set forth in Schedule 2.10(a), all of
the equipment, vehicles and other items of tangible personal
property used by the Companies in the conduct of their businesses
are owned or leased by one or more of Companies, and are in good
condition and repair and, to Seller and Parent's knowledge, have
been so maintained, subject to normal wear and tear, are suited
for the use intended and, to Seller's, HTHF's and Parent's
knowledge, have been operated in conformity with all applicable
Laws, manufacturer's operating manuals, manufacturer's
warranties, and insurance requirements of the Companies.
(b) Except as set forth in Schedule 2.10(b), to the
knowledge of Seller and Parent, (i) all lessors of any equipment
or other tangible personal property leased to the Companies have
fully and completely performed and satisfied their respective
duties and obligations under such leases, and (ii) the Companies
do not have any claims, actions or causes of action against any
such lessor for failure to fully and completely perform and
satisfy its duties and obligations thereunder.
2.11 Real Property.
(a) Except as set forth on Schedule 2.11, none of the
Companies owns, or has the right or option to acquire, or lease,
use or occupy any real property (any such real property being
referred to herein as the "REAL PROPERTY").
(b) All agreements with respect to the ownership, and
leases, easements, rights of way, licenses, usufructs and other
non-fee simple interests granted to Companies in the Real
Property (collectively, the "Real Property Documents") are listed
in Schedule 2.11(b). The interests of Companies in and under
each of the Real Property Documents are free and clear of any
defects, claims or Liens and subject to no present Action or, to
the knowledge of Parent, HTHF and Seller, threatened Action.
(c) The Companies are lawfully in possession of all
Real Property.
(d) All of the Real Property owned by any of Companies
(the "Owned Real Property") is free from any development, use or
occupancy restrictions, except those imposed by applicable Laws,
and from all special taxes or assessments, except those generally
applicable to other properties in the tax districts in which the
Real Property is located. There is lawfully available to all the
Owned Real Property, through private easements and facilities or
properly dedicated public easements and facilities, water, gas,
sewer, electricity and telephone service sufficient to allow
Companies' businesses to continue to be conducted as heretofore
conducted by them, and all of which are now being utilized.
(e) The present use and occupancy of the Real Property
by Companies, and the present use, occupancy and operation by
Companies, and all aspects of the improvements to the Owned Real
Property (the "REAL PROPERTY IMPROVEMENTS"), are in compliance in
all material respects with all, and not in violation of any, Laws
and with all private restrictive covenants of record, and none of
Seller, HTHF nor Parent has any knowledge of any proposed change
therein that would materially affect any of the Real Property or
its use, occupancy or operation, as appropriate. There exist no
conflicts or disputes with any Government or Person relating to
any Real Property or the activities thereon. All Real Property
Improvements are located within the lot lines (and within the
mandatory set-backs from such lot lines established by applicable
Law or otherwise) and not over areas subject to easements or
rights of way. All Real Property Improvements are in good
condition and repair, suited for the operation of Companies'
businesses.
(f) Neither Companies nor any other Person has caused
any work or improvements to be performed upon or made to any of
the Real Property for which there remains outstanding any payment
obligation that would or might serve as the basis for any Lien in
favor of the Person who performed the work.
(g) All requisite certificates of occupancy and other
permits and approvals required with respect to the Real Property
Improvements and the use, occupancy and operation thereof have
been obtained and paid for and are currently in effect and free
of restrictions.
(h) Except as set forth on Schedule 2.11(b), no rent
or use fee has been paid in advance, no security deposit has been
paid and no brokerage commission is payable by Companies with
respect to any Real Property Documents.
(i) [INTENTIONALLY LEFT BLANK]
(j) No portion of the Owned Real Property is located
within any Special Flood Hazard Area designated by the Federal
Emergency Management Agency, or in any area similarly designated
by any Government. No portion of the Owned Real Property has
been designated "wetlands" within the jurisdiction of the U.S.
Army Corp. of Engineers, or has been similarly designated by any
Government. No portion of the Owned Real Property constitutes
"wetlands" that have been filled, whether or not pursuant to
appropriate permits. No portion of the Real Property is subject
to any classification, designation or preliminary determination
of any Government or pursuant to any Law which would restrict the
use, development, occupancy or operation of the Real Property in
connection with the business in any material respect.
2.12 AUTHORITY TO CONDUCT BUSINESS AND INTELLECTUAL PROPERTY RIGHTS.
Except as set forth on SCHEDULE 2.12, Companies have the
right and authority required to sell, offer for sale and use the
items and perform the services as presently being offered for
sale, sold, used or performed by Companies, including, without
limitation, the rights and authority required to offer for sale,
sell and use all such items and perform all such services without
incurring any liability for license fees or royalties or any
claims of infringement of patents, trade secrets, copyrights,
trademark, service xxxx or other proprietary rights. Companies
are not parties to, either as licensor or licensee, and are not
bound by or subject to, any license agreement for any patent,
process, trademark, service xxxx, trade secrets, trade name,
service name or copyright, except as described in SCHEDULE 2.12.
All patents, copyrights, trademarks, service marks and trade
names, and applications therefor or registrations thereof, owned
or used by Companies are listed in SCHEDULE 2.12 and, to the
extent indicated thereon, have been duly registered in, filed in
or issued by the Patent and Trademark Office, the Copyright
Office or the corresponding agency or office of the Forum
identified therein. To the knowledge of Seller, HTHF and Parent,
there are no rights of third parties with respect to any patent,
patent application, invention, copyrights, trademark, service
xxxx, trade secrets, trade name or device which would have an
adverse effect on the operations of the Companies' businesses.
2.13 CONTRACTS.
SCHEDULE 2.13 identifies and, in the case of oral contracts
or commitments, describes all existing contracts and commitments
of Companies (a) which are necessary to conduct their businesses
in the same manner as currently conducted by Companies, other
than contracts or commitments which may be canceled with not more
than 30 days' notice without further obligation to the Companies,
or (b) which are otherwise material to Companies or their
businesses, in each case whether written or oral (collectively,
the "CONTRACTS"). Companies have heretofore delivered to
Purchaser a true, correct and complete copy of each such written
Contract and a complete and accurate summary of each such oral
Contract. All of the Contracts have been entered into in the
ordinary course of Companies' businesses. None of the Contracts
constitute an illegal restraint of trade under any applicable
Law.
2.14 INSURANCE.
SCHEDULE 2.14 contains a complete list and description of
all fire, theft, casualty, health, life, accident, title,
automobile, liability, product liability, worker's compensation
and other policies of insurance maintained by Companies, all of
which are, and will be maintained through the Closing Date, in
full force and effect. SCHEDULE 2.14 also lists and describes
the limits and deductibles for all such policies. Companies have
or, prior to the Closing Date, will have delivered to Purchaser a
true, correct and complete copy of each such insurance policy.
All premiums due thereon have been paid and Companies have not
received any notice of cancellation with respect thereto. All
such policies taken together provide adequate coverage to insure
the properties, business and operations of Companies against such
risks and in such amounts as are prudent and customary. Companies
will not as of the Closing Date have any liability for premiums
or for retrospective premium adjustments for any period prior to
the Closing Date, except as set forth in Schedule 2.14.
Schedule 2.14 also lists and describes all known occurrences
which may form the basis for a claim by or on behalf of Companies
under any such policy; and, to the knowledge of Seller, HTHF and
Parent, Companies have timely given notice to the appropriate
insurer of any occurrences which may form the basis for a claim
by or on behalf of Companies and have not waived (either
intentionally or inadvertently) their right to make the related
claim under any such policy.
2.15 CUSTOMERS.
Schedule 2.15 sets forth the names and addresses of each
customer of Companies that purchased $100,000 in goods or
services from Companies in any of the three prior years or that
accounted for five percent (5%) or more of Companies' revenues in
any such year ("SIGNIFICANT CUSTOMERS"). To the knowledge of
Seller, HTHF and Parent, except as disclosed in Schedule 2.15,
(a) no Significant Customer has advised the Companies of its
intention to discontinue or substantially diminish or change its
relationship with Companies or the terms thereof, or (b) no
supplier of Companies has advised the Companies of its intention
to increase prices or charges for goods or services presently
supplied.
2.16 CONTINGENCIES.
Except as set forth in SCHEDULE 2.16, there are no
Actions pending or, to the knowledge of Seller, HTHF and Parent,
threatened against, by or affecting Companies or any of their
assets, properties or businesses in any Forum, nor, to the
knowledge of Seller, HTHF or Parent, do there exist any other
"LOSS CONTINGENCIES" (as such term is defined in Statement of
Financial Standards No. 5 of the Financial Accounting Standards
Board), the eventual outcome of which would have a materially
adverse effect on Companies, their assets, properties or
businesses or the operation of their businesses as currently
conducted, or which would prevent or materially impede the
transactions contemplated by this Agreement. Except as set forth
in SCHEDULE 2.16, Companies have not been charged with, nor, to
the knowledge of Seller, HTHF or Parent, are they under
investigation with respect to any charge concerning, any
violation of any provision of any Law. There are no unsatisfied
judgments against Companies or any Orders to which Companies, or
any of the assets, properties or businesses of Companies, are
subject.
2.17 TAXES.
(a) Companies have filed all Tax Returns that they
were required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by Companies (whether
or not shown on any Tax Return) have been paid. Except as
provided on SCHEDULE 2.17(A), none of Companies currently is the
beneficiary of any extension of time within which to file any Tax
Return. To the knowledge of Seller, HTHF and Parent, no claim
has ever been made by an authority in a jurisdiction where either
of Companies does not file Tax Returns that either of Companies
is or may be subject to taxation by that jurisdiction. There are
no mortgages, pledges, liens, encumbrances, charges, or other
security interests, other than liens for Taxes not yet due and
payable, on any of the assets of Companies that arose in
connection with any failure (or alleged failure) to pay any Tax.
(b) Companies are members of the Parent Affiliated
Group. Except as provided on Schedule 2.17(b), none of the
Companies has been a member of an affiliated group filing a
consolidated federal income Tax Return other than the Parent
Affiliated Group. Parent has filed all consolidated Tax Returns
for the Parent Affiliated Group that it was required to file.
None of the Companies has any liability for the Taxes of any
Person other than Companies (i) under Regulations section 1.1502-
6 (or any similar provision of state, local, or foreign law),
(ii) as a transferee or successor, (iii) by contract or (iv)
otherwise.
(c) Companies have withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(d) There is no dispute or claim concerning any Tax
Liability for Taxes of Companies either (i) claimed or raised by
any authority in writing or (ii) as to which any director and
officer (and employees responsible for Tax matters) of Seller or
Companies has knowledge based upon personal contact with any
agent of such authority. Schedule 2.17(d) lists all federal,
state, local and foreign income Tax Returns filed with respect to
Companies for taxable periods ended on or before the Closing Date
that have been audited or currently are the subject of audit.
Seller has delivered to Purchaser correct and complete copies of
all examination reports and statements of deficiencies assessed
by the Internal Revenue Service against or agreed to by Companies
since January 1, 1990.
(e) None of the Companies has waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency which waiver
or extension is in effect as of the date of this Agreement.
(f) None of the Companies has filed a consent under
Code section 341(f) concerning collapsible corporations. None of
the Companies has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will
not be deductible under Code section 280G. None of the Companies
has been a United States real property holding corporation within
the meaning of Code section 897(c)(2) during the applicable
period specified in Code section 897(c)(1)(A)(ii). Companies
have disclosed on their federal income tax returns all positions
taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code
section 6662.
(g) The unpaid Taxes of Companies (i) did not, as of
the most recent Fiscal Year End, exceed the reserve for Tax
Liability (other than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set
forth on the face of the Unaudited Year-End Financial Statements
for such period (rather than in any notes thereto).
(h) There is no dispute or claim concerning any
Liability for income Taxes of the Affiliated Group for any
taxable period during which either of Companies was a member of
the group either (i) claimed or raised by any authority in
writing or (ii) as to which any of the directors and officers
(and employees responsible for tax matters) of any of Parent and
its Subsidiaries has knowledge based upon personal contact with
any agent of such authority. Except as disclosed on SCHEDULE
4.17(H), Parent Affiliated Group has not waived any statute of
limitations in respect of any income Taxes or agreed to any
extension of time with respect to an income Tax assessment or
deficiency for any taxable period during which either of
Companies was a member of the group, which waiver or extension
agreement is in effect as of the date of this Agreement.
2.18 MEDICARE PARTICIPATION/ACCREDITATION.
Companies have never filed, and have never been
required to file, Medicare cost reports.
2.19 EMPLOYMENT AND LABOR MATTERS.
(a) SCHEDULE 2.19 lists all employees, consultants, or
other agents who on the date hereof perform services on a regular
basis in the business operations of or for Companies and whose
annualized rate of compensation exceeds $30,000 per year. Except
as provided in SCHEDULE 2.19, no such employee, consultant, or
other agent has terminated his employment or engagement, nor, to
the knowledge of Seller or Parent, plans not to continue
employment with Companies after the Closing Date if so offered by
Companies. Schedule 2.19 also lists any employee, consultant, or
other agent of Companies who has a contract for employment with
or engagement by Companies (whether written or oral) that is not
terminable by Companies in its discretion on not more than thirty
(30) days' notice without penalty or requirement of any severance
or similar payment by Companies.
(b) Except as disclosed in SCHEDULE 2.19, Companies
are not parties to any collective bargaining agreement or
agreement of any kind with any union or labor organization, and
no union or other collective bargaining unit has been certified
or recognized by Companies as representing any employee, nor, to
the knowledge of Seller or Parent, is a union or other collective
bargaining unit seeking recognition for such purpose. There are
no controversies pending, or, to the knowledge of Seller or
Parent threatened, between Companies and any labor union or
collective bargaining unit representing, or seeking to represent,
any of their employees. Except as disclosed in SCHEDULE 2.19,
to the knowledge of Seller and Parent there has been no attempt
by any union or other labor organization to organize any of
Companies' employees at any time in the past five years. To the
knowledge of Seller and Parent, Companies have complied with all
applicable Laws relating to wages, hours, health and safety,
payment of social security, withholding and other taxes,
maintenance of worker's compensation insurance, labor and
employment relations, and employment discrimination, including
without limitation, the Americans with Disabilities Act, Fair
Labor Standards Act, Title VII of the Civil Rights Act, and Age
Discrimination in Employment Act.
2.20 EMPLOYEE BENEFIT MATTERS.
(a) SCHEDULE 2.20 lists all plans, programs, and
similar agreements, commitments or arrangements maintained by
Companies that provide benefits or compensation to, or for the
benefit of, current or former employees of Companies ("PLAN" or
"PLANS") and identifies each such Plan that is an "employee
benefit plan" as defined in Section 3(3) of ERISA ("ERISA PLAN"),
including any frozen or terminated "EMPLOYEE PENSION BENEFIT
PLAN" which covers or covered any employee. Copies of all Plans
and, to the extent applicable, all related trust agreements
and/or insurance contracts, actuarial reports, and valuations for
the most recent three years, all summary plan descriptions,
prospectuses, Annual Report Form 5500s or similar forms (and
attachments thereto) filed by the Companies for the most recent
three years, all Internal Revenue Service determination letters
and filings, and any related documents requested by Purchaser,
including all amendments, modifications and supplements thereto,
have been delivered to Purchaser. SCHEDULE 2.20 lists all plans,
programs, and similar agreements, commitments or arrangements
maintained by Parent that provide benefits or compensation to, or
for the benefit of, current or former employees of Companies
("PARENT PLAN" or "PARENT PLANS") and identifies each such Parent
Plan that is an "employee benefit plan" as defined in SECTION
3(3) of ERISA ("ERISA PARENT PLAN"), including any frozen or
terminated "employee pension benefit plan" which covers or
covered any employee.
(b) With respect to each Plan, except as set forth on
SCHEDULE 2.20: (i) no litigation or administrative or other
proceeding is pending or threatened involving such Plan; (ii)
such Plan has been administered and operated in substantial
compliance with, and has been amended to comply with, all
applicable laws, rules, and regulations, including, without
limitation, ERISA, the Internal Revenue Code, and the regulations
issued under ERISA and the Internal Revenue Code; (iii) Parent,
Seller, HTHF and Companies and their predecessors, if any, have
made, and as of the Closing Date will have made or accrued, all
payments and contributions required, or reasonably expected to be
required, to be made under the provisions of such Plan or
required to be made under applicable laws, rules and regulations,
with respect to any period prior to the Closing Date, such
amounts to be determined using the ongoing actuarial and funding
assumptions of the Plan; (iv) such Plan is fully funded, and as
of the Closing Date will be fully funded, in an amount sufficient
to pay all liabilities accrued (including liabilities and
obligations for health care, life insurance and other benefits
after termination of employment) and claims incurred to the date
hereof, or the Unaudited Financial Statements contain adequate
reserves, or paid-up insurance has been provided, therefor; and
(v) such Plan has been substantially administered and operated
only in the ordinary and usual course and in accordance with its
terms, and there has not been in the four years prior hereto any
material increase in the liabilities of such Plan.
(c) No ERISA Plan or ERISA Parent Plan is a
"Multiemployer Plan" as defined in Section 3(37) of ERISA.
Companies are not required to contribute to any Multiemployer
Planned do not have any liability to any Multiemployer Benefit
Plan.
(d) With respect to each ERISA Plan, except as set
forth on Schedule 2.20, at no time have any of Companies, or any
employee, agent or officer thereof, or, to the knowledge of
Seller, HTHF or Parent, any trustee, administrator, fiduciary,
agent or employee of any Plan, been involved in a transaction
which would constitute a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code, unless such transaction is specifically permitted
under Section 407 or 408 of ERISA, Section 4975 of the Internal
Revenue Code or a class or administrative exception issued by the
Department of Labor, nor has any such person been involved in or
caused such Plan to be involved in a breach of fiduciary duty
under Section 404 of ERISA. With respect to each ERISA Parent
Plan, except as set forth on Schedule 2.20, at no time have
Companies, or any employee, agent or officer thereof been
involved in a transaction with any ERISA Parent Plan which would
constitute a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue
Code, unless such transaction is specifically permitted under
Section 407 or 408 of ERISA, Section 4975 of the Internal Revenue
Code or a class or administrative exception issued by the
Department of Labor, nor has any such person been involved in or
caused such ERISA Parent Plan to be involved in a breach of
fiduciary duty under Section 404 of ERISA.
(e) Of the ERISA Plans, the "employee pension benefit
plans" within the meaning of Section 3(2) of ERISA (collectively,
the "Employee Pension Benefit Plans") are separately identified
on Schedule 2.20. With respect to each Employee Pension Benefit
Plan, except as set forth on Schedule 2.20: (i) such Employee
Pension Benefit Plans constitutes a qualified plan within the
meaning of Section 401(a) of the Internal Revenue Code and the
trust (if any) thereunder is exempt from federal income tax under
Section 501(a) of the Internal Revenue Code; (ii) all minimum
funding standards required by law with respect to the funding of
benefits payable or to be payable under such Employee Pension
Benefit Plan have been met; (iii) there is no "accumulated
funding deficiency" within the meaning of Internal Revenue Code
Section 412 under such Employee Pension Benefit Plan; and (iv) no
termination, partial termination or discontinuance of
contributions has occurred without a determination by the IRS
that such action does not adversely affect the tax-qualified
status of such plan. With respect to each ERISA Parent Plan
which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA, such ERISA Parent Plan constitutes a
qualified plan within the meaning of Section 401(a) of the
Internal Revenue Code and the trust (if any) thereunder is exempt
from federal income tax under Section 501(a) of the Internal
Revenue Code.
(f) None of Parent, Seller, HTHF or Companies
maintains, or within the past six years has maintained, an
"employee pension benefit plan" within the meaning of Section
3(2) of ERISA that is or was subject to Title IV of ERISA.
(g) Except as set forth on Schedule 2.20, Companies
and their Plans do not have any obligation to provide, or
liability for, health care, life insurance or other benefits
after termination of employment, except for retirement benefits
under the Employee Pension Benefit Plans or except as required by
Section 601 of ERISA and Section 4980B of the Internal Revenue
Code.
(h) Companies have substantially complied with the
COBRA continuation coverage requirements of Sections 601 through
608 of ERISA and Section 4980B of the Internal Revenue Code. As
of the Closing Date, notice of the availability of continuation
coverage will have been provided to all persons entitled thereto,
and all persons electing such coverage have been or will be
provided such coverage.
(i) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or current
or former employee of Companies under any Plan or otherwise, (ii)
increase any benefits otherwise payable under any Plan, or (iii)
result in any acceleration of the time of payment or vesting of
any such benefit, except as contemplated by the covenants under
PARAGRAPH 4.13.
2.21 ENVIRONMENTAL MATTERS.
Except as set forth on SCHEDULE 2.21, to the knowledge
of Seller and Parent, Companies have all permits, licenses,
approvals and operating authorizations, including without
limitation, permits for disposal of hazardous waste, that are
required pursuant to all Environmental Laws for (i) the conduct
of their businesses as they are now being conducted, and (ii) the
ownership of their properties and assets. Schedule 2.21 contains
a true, correct and complete list of all permits, licenses,
approvals and operating authorizations pursuant to all
Environmental Laws with respect to the Companies' businesses, and
true, correct and complete copies of such permits, licenses,
approvals and operating authorizations have been delivered
Purchaser. Companies are not in violation of any such permits,
licenses, approvals, or operating authorizations.
2.22 ABSENCE OF CERTAIN BUSINESS PRACTICES.
Neither Companies nor any officer, employee or agent of
Companies, nor any other person acting on their behalf, has,
directly or indirectly, within the past five years given or
agreed to give any gift or similar benefit to any customer,
supplier, Governmental employee or other Person who is or may be
in a position to help or hinder Companies' businesses (or assist
Companies in connection with any actual or proposed transaction)
which (a) might subject Companies to any damage or penalty in any
civil, criminal or other governmental Action or which would have
a material adverse effect on Companies' businesses or their
assets, (b) if not given in the past, might have had a material
adverse effect on Companies businesses, or (c) if not continued
in the future, might materially and adversely affect their
assets, Companies' businesses or the operations, cash flows or
prospects of their businesses after the Closing, or which might
subject Companies to suit or penalty in any private or
governmental Action, other than, in each instance, reasonable
entertainment and similar expenses for which Companies were
properly entitled to claim deductions under Code section 162.
2.23 GOVERNMENT REPORTS.
Schedule 2.23 contains a true, correct and complete
list, and Companies have furnished or, prior to the Closing Date,
will furnish Purchaser with true, correct and complete copies of,
all material reports, if any, filed during the past five years by
Companies with any Government, other than for income tax and
information returns.
2.24 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES.
Except as set forth in SCHEDULE 2.24, Companies are not
parties to any contract, agreement or lease with, or any other
commitment to, (a) any party owning, or formerly owning,
beneficially or of record, directly or indirectly, any of the
Shares, (b) any person related by blood, adoption or marriage to
any such party, (c) any director or officer of Companies, (d) any
Person in which any of the foregoing has, directly or indirectly,
at least a five percent (5%) beneficial interest in the capital
stock or other type of equity interest in such Person, or (e) any
Partnership in which any such party is a general partner (any or
all of the foregoing being herein referred to as "RELATED
PARTIES"). Without limiting the generality of the foregoing,
except as disclosed in SCHEDULE 2.24, or as would be permitted
pursuant to PARAGRAPH 4.4, (x) no Related Party, directly or
indirectly, owns or controls any assets or properties which are
or have been used in Companies' businesses, and (y) no Related
Party, directly or indirectly, engages in or has any significant
interest in or connection with any business (i) which is or which
within the last three years has been a competitor, customer or
supplier of Companies or has done business with Companies, or
(ii) which as of the date hereof sells or distributes products or
services which are similar or related to Companies' products or
services.
2.25 ABSENCE OF CHANGES.
Except as expressly provided for in this Agreement or
as may be set forth in SCHEDULE 2.25, since the Reference Date:
(a) there has been no change in the businesses,
assets, liabilities, results of operations, financial condition
or prospects of Companies or in their respective relationships
with suppliers, customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which
have been or will be, in the aggregate, materially adverse to
Companies' business as presently conducted or the condition
(financial or otherwise) of Companies, individually and not in
the aggregate;
(b) there has been no damage, destruction or loss to
the properties or businesses of Companies, whether or not covered
by insurance which will materially and adversely impact
Companies' current business;
(c) there has been no declaration, setting aside or
payment of any dividend or other distribution on or in respect of
the Shares, nor has there been any direct or indirect redemption,
retirement, purchase or other acquisition of any of the Shares;
(d) there has been no (i) increase in the compensation
or in the rate of compensation or commissions payable or to
become payable by Companies to any director, officer, manager,
employee, consultant or other agent of Companies earning $30,000
or more per annum, (ii) general increase in the compensation or
in the rate of compensation payable or to become payable to
hourly or salaried personnel earning less than $30,000 per annum
("GENERAL INCREASE" for the purpose hereof shall mean any
increase generally applicable to a class or group of personnel
and shall not include increases granted to individual personnel
for merit, length of service, change in position or
responsibility or other reasons applicable to specific employees
and not generally applicable to a class or group thereof), (iii)
employee hired at a salary in excess of $30,000 per annum, or
(iv) payment of or commitment to pay any bonus, profit share or
other extraordinary compensation to any employee, consultant or
other agent;
(e) no indebtedness, liability or obligation (whether
absolute, accrued, contingent or otherwise) has been discharged
or satisfied, other than current liabilities reflected in the
Unaudited Financial Statements, and current liabilities incurred
since the date thereof in the ordinary course of business;
(f) there have been no amendments or other corporate
actions having the effect of an amendment increasing past or
future liabilities or contributions of any kind to any Plan;
(g) Companies have not (i) paid any judgment of more
than $10,000 resulting from any Action or (ii) made any payment
to any party of more than $10,000 in settlement of any Action;
(h) Companies have not discontinued or determined to
discontinue the provision or sale of any products or services
previously provided or sold by Companies representing more than
one percent (1%) of Companies' annual revenues, respectively,
during the period covered by the Unaudited Financial Statements;
(i) There has been no sale, transfer, lease or other
disposition of any asset or assets of Companies, other than in
the ordinary course of business; and
(j) Companies have not acquired any capital stock or
other equity securities of any Person or otherwise made any loan
or advance to or investment in any Person.
2.26 NO DEFAULTS.
Each of the Contracts is valid, binding and
enforceable, subject to the provisions of any bankruptcy or
similar law and other laws affecting the rights of creditors
generally, in accordance with its terms and is in full force and
effect; to the knowledge of Seller, HTHF and Parent there are no
existing defaults by Companies thereunder; to the knowledge of
Seller, HTHF and Parent, no default by the Companies has occurred
(whether with or without notice, lapse of time or the happening
or occurrence of any event) which would constitute an event of
default thereunder.
2.27 FRAUD AND ABUSE.
To the knowledge of Seller, HTHF and Parent, persons
who provide professional services under agreements with any of
Companies or their Affiliates have not engaged in any activities
which are prohibited under federal Medicare and Medicaid
statutes, 42 U.S.C. Sections 1320a-7, 1320a-7(a) and 1320a-7b, or the
regulations promulgated pursuant to such statutes or related
state or local statutes or regulations, or which are prohibited
by rules of professional conduct, including but not limited to
the following:
(a) knowingly and willfully making or causing to be
made a false statement or representation of a material fact in
any application for any benefit or payment or for use in
determining rights to any benefit or payment;
(b) presenting or causing to be presented a claim for
reimbursement for services under Medicare, Medicaid, or any other
state health care program that is for an item or service that is
known or should be known to be (i) not provided as claimed or
(ii) otherwise false or fraudulent;
(c) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right
to any benefit or payment on its own behalf or on behalf of
another, with intent to fraudulently secure such benefit or
payment;
(d) knowingly and willfully offering, paying,
soliciting or receiving any remuneration (including any kickback,
bribe, or rebate), directly or indirectly, overtly or covertly,
in cash or in kind (i) in return for referring an individual to a
person for the furnishing (or arranging for the furnishing) of
any item or service for which payment may be made in whole or in
part by Medicare, Medicaid, or any other state health care
program or (ii) in return for purchasing, leasing, or ordering
any good, facility, service, or item for which payment may be
made in whole or in part by Medicare or Medicaid or other state
health care program;
(e) knowingly making a payment, directly or
indirectly, to a physician as an inducement to reduce or limit
services to individuals who are under the direct care of the
physician and who are entitled to benefits under Medicare,
Medicaid, or any other state health care programs;
(f) providing to any person information that is known
or should be known to be false or misleading that could
reasonably be expected to influence the decision when to
discharge a hospital in-patient from the hospital;
(g) knowingly and willfully making or causing to be
made or inducing or seeking to induce the making of any false
statement or representation (or omit to state a fact required to
be stated therein or necessary to make the statements contained
therein not misleading) of a material fact with respect to (i)
the conditions or operations of a facility in order that the
facility may qualify for Medicare, Medicaid or any other state
health care program certification, or (ii) information required
to be provided under Section 1124A of the Social Security Act (42 U.S.C.
Section 1320a-3); or
(h) knowingly and willingly (i) charging for any
Medicaid service money or other consideration at a rate in excess
of the rate established by the state, or (ii) charging,
soliciting, accepting or receiving, in addition to amounts paid
by Medicaid, any gift money, donation or other consideration
(other than a charitable, religious or other philanthropic
contribution from an organization or from a person unrelated to
the patient) as a precondition of the Companies precertifying,
providing or continuing care for any patient.
2.28 FULL DISCLOSURE.
No representation, warranty, covenant, agreement or
indemnity of Seller, HTHF or Parent contained in this Agreement
or in any other document, instrument, agreement, paper or other
written statement or certificate delivered by Companies pursuant
to this Agreement, or in connection with the transactions
contemplated herein, contains any untrue statement of a material
fact, as such facts existed as of the date of such document,
instrument, agreement, paper or other written statement or
certificate, or omits to state a material fact necessary to make
the statements contained herein or therein not misleading. To the
knowledge of Seller, HTHF and Parent, there is no event,
occurrence or action which materially and adversely affects, or,
with the passage of time, the giving of notice or both, in the
future may materially and adversely affect, the business,
operations, cash flows, affairs, prospects, properties or assets
or the condition (financial or otherwise) of Companies, all as
presently exist, which has not been disclosed in this Agreement,
the schedules attached to this Agreement, or in the documents,
instruments, agreements, papers or other written statements or
certificates furnished to Purchaser for use in connection with
this Agreement and the transactions contemplated hereby. Unless
expressly stated otherwise as to a particular Schedule, the
information contained in any of the Schedules to this Agreement
shall be deemed to be part of and qualify all representations and
warranties contained in ARTICLE 2, whether or not specifically
referenced in such Schedules.
2.29 DISCLAIMER.
EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT TO
THE CONTRARY, THERE ARE NO REPRESENTATIONS OR WARRANTIES MADE BY
SELLER, HTHF OR PARENT, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OR MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller and Parent to enter into and
perform this Agreement, Purchaser hereby represents, warrants and
covenants as follows:
3.1 ORGANIZATION.
Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Purchaser has all requisite corporate power and
authority to carry on its business as it is now being conducted.
Purchaser is duly authorized, licensed and qualified in all
jurisdictions where such authorization, licensure or
qualification is necessary in order to avoid a material adverse
effect upon Purchaser, its business or its property or other
assets.
3.2 AUTHORIZATION; NO INCONSISTENT AGREEMENTS.
Purchaser has the full right, corporate power and
authority to make, execute and perform and comply with this
Agreement and the transactions contemplated hereby. This
Agreement and all transactions required hereunder to be performed
by Purchaser have been or will be prior to the Closing duly and
validly authorized and approved by all necessary corporate action
on the part of Purchaser, as appropriate. This Agreement has
been duly and validly executed and delivered on behalf of
Purchaser by its duly authorized officers, and this Agreement
constitutes the valid and legally binding obligation of
Purchaser, enforceable, subject to general equity principles, in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally. Neither the
execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will constitute a violation
or breach of the certificate or articles of incorporation or the
bylaws of Purchaser, as appropriate, or any provision of any
contract or other instrument to which Purchaser is a party or by
which any of the assets of Purchaser may be affected or secured,
or any Law or Order to which Purchaser is subject, or will result
in the creation of any Lien on any of the assets of Purchaser or
acceleration of any debt.
3.3 FULL DISCLOSURE.
No representation, warranty or covenant of Purchaser
contained in this Agreement, or in any other written statement or
certificate delivered by Purchaser pursuant to this Agreement or
in connection with the transactions contemplated herein, contains
or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
3.4 CONSENTS.
The execution and delivery of this Agreement by
Purchaser and the consummation of the transactions contemplated
by this Agreement (a) do not require the consent, approval or
action of, or any filing with or notice to, any Person or
Government, except as specified in Schedule 3.4, and (b) do not
require the consent or approval of any shareholders, except such
as have been obtained or will be obtained prior to the Closing.
3.5 NO VIOLATION; COMPLIANCE WITH LAWS.
Purchaser is not in default under or in violation of
its Certificate of Incorporation or By-laws. Purchaser has
complied in all material respects with all Laws applicable to its
business. To its knowledge, Purchaser has not received any
notification of any asserted present or past failure to comply
with any Laws.
4. ADDITIONAL AGREEMENTS
4.1 PURCHASER'S ACCESS AND INSPECTION.
Seller shall cause Companies to provide Purchaser and its
Representatives with full access during normal business hours
from and after the date hereof until the Closing to all of the
assets, properties and businesses of Companies and the books and
records of Companies, and to furnish such information concerning
the business and affairs of Companies as may exist from time to
time as may be reasonably requested, in each case for the purpose
of making such continuing investigation of Companies and their
businesses as Purchaser may reasonably desire. Seller shall cause
Companies to cause their Representatives to assist Purchaser and
its Representatives in such continuing investigation and shall
cause the Representatives of Companies to be reasonably available
to Purchaser and its Representatives in connection with their
continuing investigation. Except in connection with the sale of
Southland Medical Supplies, Inc., a Tennessee corporation, and
Southeastern Medical Supplies Management, Inc., a Tennessee
corporation, Companies shall not provide any other Person with
similar access or information between the date hereof and any
termination or expiration of this Agreement. No investigation
made heretofore or hereafter by or on behalf of Purchaser shall
limit or affect in any way the representations, warranties,
covenants, agreements and indemnities of Seller hereunder, each
of which shall survive any such investigation.
4.2 CONFIDENTIALITY.
(a) Companies, directly or through their
representatives, have disclosed and shall disclose certain
information which is either non-public, confidential or
proprietary in nature (the "INFORMATION") relating to its
business operations. Purchaser shall accept and hold such
Information in strict confidence in accordance with the
provisions of this PARAGRAPH 4.2.
(b) The Information will be kept strictly confidential
and, without the prior consent of Companies, neither Purchaser,
its Affiliates nor any of their respective directors, officers,
employees or agents shall: (i) copy, reproduce, distribute or
disclose the Information to any third party (except as provided
in this PARAGRAPH 4.2), or (ii) use the Information for any
purpose other than the consummation of the transactions
contemplated by this Agreement. Purchaser agrees to transmit the
Information only to those individuals who are actively and
directly participating in the evaluation of any transaction
involving Companies and who are informed of this Agreement and
are instructed not to make use of the Information in a manner
inconsistent herewith.
(c) The Information shall not include information
which falls within any of the following categories: (i)
Information which has come or comes within the public domain, or
is generally known within the industry, through no fault or
action of Purchaser; (ii) Information which was known by or
rightfully available to Purchaser prior to its disclosure
hereunder; (iii) Information which becomes rightfully available
to Purchaser on a nonconfidential basis from any third party, the
disclosure of which to Purchaser does not violate any contractual
or legal obligations said third party has with respect to such
Information; (iv) Information which is provided to Purchaser
after Purchaser has notified Companies in writing that it no
longer desires to receive Information; or (v) Information which
is required to be disclosed by Law or Order of any Forum,
provided that Purchaser will provide Companies at least five (5)
days' prior written notice of such disclosure, unless only a
shorter period of notice is permitted by such Law or Order.
(d) Except as may otherwise be expressly set forth in
this Agreement, Companies shall not be deemed to have made any
representations or warranties as to the accuracy or completeness
of the Information or any item thereof. Except as specifically
provided to the contrary in this Agreement, neither Companies,
Parent, HTHF, Seller nor any of their respective Affiliates shall
have any liability to Purchaser relating to or arising in any
manner from the use of the Information.
(e) If the transactions contemplated by this Agreement
do not close for any reason, Purchaser shall immediately return
or, if requested by Companies, destroy the Information, including
all notes, copies, reproductions, summaries, analyses, or
extracts thereof, then in the possession of Purchaser or any of
its representatives, either furnished by Companies hereunder or
prepared by Purchaser or its representatives, based on
Information supplied by Companies.
(f) Without prejudice to the rights and remedies
otherwise available, Companies shall be entitled to equitable
relief by way of injunction if Purchaser (or any of its
representatives) breaches or threatens to breach any of the
provisions of this PARAGRAPH 4.2.
4.3 COOPERATION.
The parties shall cooperate fully with each other and
with their respective Representatives in connection with any
steps required to be taken as part of their respective
obligations under this Agreement, and all parties shall use their
best commercial efforts to consummate the transactions
contemplated herein and to fulfill their obligations hereunder,
including, without limitation, causing to be fulfilled at the
earliest practical date the conditions precedent to the
obligations of the parties to consummate the transactions
contemplated hereby. Without the prior written consent of the
other parties, no party hereto may take any intentional action
that would cause the conditions precedent to the obligations of
the parties hereto to effect the transactions contemplated hereby
not to be fulfilled, including, without limitation, taking or
causing to be taken any action which would cause the
representations and warranties made by such party herein not to
be true, correct and complete as of the Closing.
4.4 COVENANT AGAINST COMPETITION.
(a) Seller, HTHF and Parent each agree that, for a
period of four years beginning on the Closing Date, it shall not,
without the prior written consent of Purchaser, for its own
account or jointly or in combination with another, directly or
indirectly, for or on behalf of any Person, as principal, agent
or otherwise: (i) engage in the Restricted Business of the
Companies within the Service Areas, except as an employee or
otherwise for and on behalf of Purchaser or Companies; (ii)
solicit, call upon, or attempt to solicit the patronage of any
Person within the Service Areas and to whom Companies provided
services as of, or during the 12-month period immediately
preceding, the Closing Date, for the purpose of obtaining the
patronage of any such Person for the purchase of any products or
services included in the Restricted Business, except as an
employee and on behalf of Purchaser or Companies; or (iii)
solicit or induce, or in any manner attempt to solicit or induce,
any individual who is employed by Housecall, Purchaser, Companies
or any of their Affiliates as of the date hereof or the Closing
Date, to leave such employment, whether or not such employment is
pursuant to a written contract with Purchaser or Companies or
otherwise. For purposes of this PARAGRAPH 4.4, "RESTRICTED
BUSINESS" means the business of providing home health care
management, billing and data processing, information systems, and
consulting services relating to any of the foregoing. "HOME
HEALTH CARE" means home nursing and related services, hospice
services, infusion therapy services, respiratory therapy services
and home medical equipment. "SERVICE AREA" means the area within
a 50-mile radius of the parent office location of any customer of
the Restricted Business, or, with respect to the corporate
clients or customers listed on SCHEDULE 4.4, such area with
respect to any other parent office location of any other
operating unit of such client or customer that is engaged in
providing home health care.
(b) Notwithstanding anything herein to the contrary,
(i) it shall not be a breach of the covenants contained in this
PARAGRAPH 4.4 for Seller, in the aggregate, to own, of record or
beneficially, not more than two percent (2.0%) of the capital
stock or other equity interest of any Person whose shares or
equity interests are publicly traded, and (ii) the covenants
described in this Paragraph 4.4 shall apply only if the
transactions contemplated by this Agreement are consummated.
(c) Anything in this Agreement to the contrary
notwithstanding, it shall not be a breach of the covenants under
this PARAGRAPH 4.4 for Continental Illinois Venture Corporation,
a Delaware corporation, Parent or any successor to Parent to own
and operate home health agencies and related businesses directly
or through Affiliates, provided such businesses do not offer to
establish or manage any home health agency for any Person that is
a customer or client of Companies, as of the date hereof or the
Closing Date, during the four-year period referred to in
PARAGRAPH 4.4 (a).
4.5 EXPENSES.
All expenses incurred by Purchaser in connection with
the authorization, preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including,
without limitation, all fees and expenses of their
Representatives, shall be paid by Purchaser. All expenses
incurred by any or all of the Companies, HTHF, Seller or Parent
in connection with the authorization, preparation, execution and
performance of this Agreement and the transactions contemplated
hereby, or any transactions under taken by any of them prefatory
to the transactions contemplated hereby including, without
limitation, all fees and expenses of their respective
Representatives and any Representatives acting for Companies or
Seller, shall be paid by Seller, but shall not be paid from or
out of any of the assets of Companies.
4.6 BROKERS.
Seller, HTHF and Parent, jointly and severally, hereby
represent and warrant to Purchaser that no broker or finder,
other than X.X. Xxxxxxxx (the fees and expenses of which shall be
borne by Seller, HTHF and Parent), has acted on behalf of Seller
in connection with this Agreement or the transactions
contemplated herein, and each of them agrees, jointly and
severally, to indemnify Purchaser and its Affiliates from and
against any and all claims or demands for commissions or other
compensation by any broker, finder or similar agent claiming to
have been employed by or on behalf of Seller, HTHF or Parent.
Purchaser hereby represents and warrants to Seller, HTHF and
Parent that no broker or finder has acted on Purchaser's behalf
in connection with this Agreement or the transactions
contemplated herein, and it agrees to indemnify Seller, HTHF and
Parent and hold them harmless from and against any and all claims
or demands for commissions or other compensation by any broker,
finder or similar agent claiming to have been employed by or on
behalf of Purchaser.
4.7 OTHER COOPERATION.
Seller, HTHF and Parent, jointly and severally,
covenant and agree that they shall cooperate fully and in good
faith, and shall use their reasonable best efforts to cause any
and all accountants, legal counsel, actuaries and other
professional advisors employed or engaged at any time prior to
the Closing Date to cooperate fully and in good faith, with
Purchaser, at Purchaser's expense, in connection with the
preparation and filing of any and all documents, agreements,
instruments, certificates, consents, registration statements and
other reports or papers required or permitted to be filed,
registered or submitted in accordance with any Law, including,
without limitation, the federal securities Laws.
Purchaser agrees to indemnify Seller, HTHF and Parent, and all
such accountants, legal counsel, actuaries and other
professionals, if and to the extent customary in connection with
such matters, with respect to any claims, demands or liabilities
arising out of or related to any such filings, registrations or
submissions by Purchaser.
4.8 PUBLICITY.
All press releases and other public announcements prior
to the Closing Date (and the initial press release or
announcement by any party immediately following the Closing)
respecting the subject matter hereof shall be made only with the
mutual agreement of Purchaser, Seller, and Parent, none of which
shall unreasonably withhold its agreement.
4.9 INTERIM FINANCIAL STATEMENTS.
Seller shall cause Companies to deliver to Purchaser
within seven Business Days of the conclusion of any calendar
month from the date hereof through and including the Closing
Date, copies of the unaudited balance sheets of Companies for the
calendar month then ended (which shall include year-to-date
figures), and the related unaudited statements of operations,
retained earnings and cash flows for such calendar month (which
shall include year-to-date figures) (the "INTERIM STATEMENTS").
The Interim Statements will be true, correct and complete in all
material respects, will be prepared in accordance with GAAP on a
basis consistent with the Unaudited Financial Statements, will
fairly present the financial condition of Companies as at the
date thereof and the results of their operations and cash flows
for the period then ended.
4.10 UPDATE OF INFORMATION.
All documents, agreements, instruments, statements and
other writings furnished to Purchaser or any of its
Representatives pursuant to this Agreement are and shall be true,
correct and complete as of the date furnished, and any and all
amendments and supplements of the same have been or will be
delivered to Purchaser (or to its Representatives if and as
requested) in a timely and expeditious manner prior to the
Closing. At all times prior to and including the Closing Date,
Seller shall cause Companies to promptly provide Purchaser (and
to its Representatives if and as requested) with written
notification of any event, occurrence or other information of any
kind whatsoever which materially affects, or may materially
affect, the continued truth, correctness or completeness of any
representation, warranty, covenant or agreement made in this
Agreement or any document, agreement, instrument, certificate or
writing furnished to Purchaser pursuant to or in connection with
this Agreement, and each such written notification shall
specifically identify any and all of the representations,
warranties, covenants and agreements affected by the fact, event,
occurrence or information that necessitated the giving of such
notice. No such notification or other disclosure shall be deemed
to amend or supplement this Agreement, the Schedules hereto, or
any representation, warranty, covenant, agreement or indemnity or
any other document, agreement, instrument, certificate or writing
furnished to Purchaser pursuant to or in connection with this
Agreement.
4.11 CERTAIN GOVERNMENTAL FILINGS.
The parties will make, or cause to be made, all filings
and submissions required to be made to any Government in
connection with the transactions contemplated by this Agreement,
including as may be required by the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended. Each of the parties will
furnish to the other parties such necessary information and
reasonable assistance as such other party may reasonably request
in connection with their preparation of necessary filings or
submissions to any governmental or other regulatory agency.
4.12 TAX MATTERS.
(a) Any tax sharing agreement between Parent and any
of Companies, Seller and any of Companies, or HTHF and any of
Companies, or HTHF and any of Companies, and all similar
agreements with respect to or involving Companies, shall be
terminated as of the Closing Date and will have no further effect
for any taxable year (whether the current year, a future year, or
a past year), and, after the Closing Date, Companies shall not be
bound thereby nor have any liability thereunder.
(b) Purchaser shall prepare or cause to be prepared
and file or cause to be filed all Tax Returns for Companies for
all periods ending on or prior to the Closing Date which are
filed after the Closing Date other than Consolidated Tax Returns
of the Parent Affiliated Group including the operations of
Companies. Purchaser shall permit Seller and Parent to review
and approve each such Tax Return described in the preceding
sentence prior to filing, any such approval not to be
unreasonably withheld. Seller shall reimburse Purchaser for
Taxes of Companies with respect to such periods within fifteen
(15) days after payment by Purchaser or Companies of such Taxes
to the extent such Taxes are not reflected in Companies' reserve
for Liability for Taxes (rather than any reserve for deferred
Taxes established to reflect timing differences between book and
Tax income) as of the Closing Date, any such reimbursement
obligation not being subject to the limitations on liability set
forth in PARAGRAPH 8.7 hereof.
(c) Purchaser shall prepare or cause to be prepared
and file or cause to be filed any Tax Returns of Companies for
Tax periods which begin before the Closing Date and end after the
Closing Date. Seller shall pay to Purchaser within fifteen (15)
days after the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which
relates to the portion of such taxable period ending on the
Closing Date to the extent such Taxes are not reflected in
Companies' reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between
book and Tax income) as of the Closing Date, any such
reimbursement obligation not being subject to the limitations on
liability set forth in PARAGRAPH 8.7 hereof. For purposes of
this PARAGRAPH 4.12(c), in the case of any Taxes that are imposed
on a periodic basis and are payable for a taxable period that
includes (but does not end on) the Closing Date, the portion of
such Tax which relates to the portion of such taxable period
ending on the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be
deemed to be the amount of such Tax for the entire taxable period
multiplied by a fraction, the numerator of which is the number of
days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire taxable
period, and (ii) in the case of any Tax based upon or related to
income or receipts be deemed equal to the amount which would be
payable if the relevant taxable period ended on the Closing Date.
Any credits relating to a taxable period that begins before and
ends after the Closing Date shall be taken into account as though
the relevant taxable period ended on the Closing Date. All
determinations necessary to give effect to the foregoing
allocation shall be made in a manner consistent with prior
practice of Companies.
(d) The Purchaser, Companies, Seller, and Parent shall
cooperate on all matters relating to Taxes as follows:
(i) Purchaser, Companies, Seller, and Parent shall
cooperate fully, as and to the extent reasonably requested
by another party, in connection with the filing of Tax
Returns pursuant to this PARAGRAPH 4.12 and any audit,
litigation, or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon any other
party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation,
or other proceeding and making employees available on a
mutually convenient basis to provide additional information
and explanation of any material provided hereunder.
Purchaser, Companies, Seller and Parent agree (A) to retain
all books and records with respect to Tax matters pertinent
to Companies relating to any taxable period beginning before
the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Purchaser or
Sellers, any extension thereof) of the respective taxable
periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give all
other parties reasonable written notice prior to
transferring, destroying or discarding any such books and
records and, if another party so requests, Companies shall
allow such other party to take possession of such books and
records.
(ii) Purchaser, Companies, Seller and Parent further
agree, upon request, to use their best efforts to obtain any
certificate or other document from any governmental
authority or any other person as may be necessary to
mitigate, reduce, or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the
transactions contemplated hereby).
(iii) Purchaser, Companies, Seller and Parent
further agree, upon request, to provide any other party with
all information that such other party may be required to
report pursuant to Code section 6043 and the Regulations
promulgated thereunder.
(e) All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with this
Agreement, shall be paid by Seller when due, and Seller will, at
its own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other taxes and fees, and, if
required by applicable law, Purchaser will, and will cause its
affiliates to, join in the execution of any such Tax Returns and
other documentation.
(f) Parent will include the income of Companies
(including any deferred income triggered into income by
Regulations section 1.1502-13 and Regulations section 1.1502-14
and any excess loss accounts taken into income under Regulations
section 1.1502-19) on Parent's Consolidated Tax Returns for all
periods through the Closing Date and pay any income Taxes
attributable to such income. Companies will furnish Tax
information to Parent for inclusion in Parent's federal
consolidated income Tax Return for the period which includes the
Closing Date in accordance with each of Companies' past custom
and practice, and Parent shall bear the expense of compliance
with this provision. Parent will allow Purchaser an opportunity
to review and comment upon such Tax Returns (including any
amended returns) to the extent that they relate to Companies.
Parent will take no position on such returns that relate to
Companies that would adversely affect Companies after the Closing
Date. The income of Companies will be apportioned to the period
up to and including the Closing Date and the period after the
Closing Date by closing the books of Companies as of the end of
the Closing Date.
(g) Parent will allow Companies and their counsel to
participate in any audits of Parent's consolidated federal income
Tax Returns to the extent that such returns relate to Companies.
Parent will not settle any such audit in a manner which would
adversely affect Companies after the Closing Date.
(h) Purchaser shall be prohibited from making a
carryback of a post-acquisition Tax attribute of any of Companies
into Parent's consolidated Tax Return.
(i) Purchaser will allow Seller and Parent, and their
respective counsel, at Seller or Parent's expense, as the case
may be, to participate in any audits or of any return filed by
Purchaser pursuant to Paragraphs 4.12(b) or (c). Purchaser or
Companies will not settle any such audit in a manner which would
adversely affect Seller or Parent without their consent, which
consent will not be unreasonably withheld.
(j) Parent, as the common parent of the Parent
Affiliated Group, shall cause the Parent Affiliated Group to join
with Purchaser in making joint elections pursuant to Code section
338(h)(10) (the "Section 338(h)(10) Elections") to treat the
transactions contemplated by this Agreement as (1) an acquisition
of HFI's assets, and (2) an acquisition of each other Company's
assets, all effective as of the Closing Date.
(k) Purchaser shall cause to be prepared as soon as
practicable after the Closing Date an Internal Revenue Service
Form 8023-A, which Purchaser shall send to Parent. Parent shall
cause the Form 8023-A to be executed by the person authorized to
act on behalf of Parent and to be returned to Purchaser no later
than fifteen (15) days after receipt of the Form 8023-A from
Purchaser. Seller, HTHF and Parent shall also provide any other
assistance reasonably requested by Purchaser in making the
Section 338(h)(10) Elections.
(l) Parent shall pay any federal, state, local or
foreign income tax attributable to the Section 338(h)(10)
Elections. Parent also shall pay any state, local or foreign
income tax with respect to the acquisition of the Shares pursuant
to this Agreement in the event that such taxing jurisdiction (i)
does not provide or recognize the Section 338(h)(10) Elections or
(ii) does not apply its provisions corresponding to Code section
338(h)(10) to the acquisition of the Shares (for example, because
HFI or either of Companies files a separate corporation income
tax return in such jurisdiction).
4.13 CERTAIN EMPLOYEE BENEFIT PLAN COVENANTS.
(a) HOME TECHNOLOGY HEALTHCARE, INC. 401(K) PROFIT
SHARING PLAN. Parent maintains the Home Technology Healthcare,
Inc. 401(k) Profit Sharing Plan (the "HOME TECHNOLOGY PLAN") in
which the employees of Companies participate. Parent agrees that
as soon as practicable following the Closing Date, Parent will
(i) vest the account balances of those participants in the Home
Technology Plan who were employed by the Companies as of the
Closing Date (the "PARTICIPANTS") to the extent permitted by the
Home Technology Plan and otherwise as permitted by applicable Law
and (ii) permit the Participants to elect to receive a lump sum
distribution of their vested account balances in accordance with
the provisions of Code Section 401(k)(10)(A)(iii). With respect
to each employee of the Companies as of the Closing Date,
Purchaser will give credit for purposes of eligibility and
vesting under the Housecall Medical Resources, Inc. Retirement
Savings Plan for all service with Parent, the Companies or any
Affiliate thereof.
(b) MEDICAL PLAN AND SECTION 125 CAFETERIA PLAN. HFI
maintains a medical insurance plan (the "HEALTHFIRST HEALTH
PLAN") and a Section 125 cafeteria plan (the "HEALTHFIRST 125
PLAN") in which the employees of the Companies, HFI Management,
Inc. (the "GENERAL PARTNER") and HFI Home Care Management, L.P.
(the "PARTNERSHIP") participate.
(i) Parent and Purchaser agree that effective as of
the Closing Date, Purchaser shall assume the obligations
under and shall continue the Healthfirst Health Plan for the
benefit of those employees of the Companies, General Partner
and Partnership who become employed by an Affiliate of
Purchaser as of the Closing Date (the "TRANSFERRED
EMPLOYEES"). Nothing contained in this Agreement limits or
restricts Purchaser's right from and after the Closing Date
to amend, modify or terminate the Housecall Medical Plan in
such manner as Purchaser deems appropriate.
(ii) Parent and Purchaser agree that effective as of
the Closing Date, Purchaser shall assume the obligations
under and shall assume the Healthfirst 125 Plan for the
benefit of the Transferred Employees. Nothing contained in
this Agreement limits or restricts Purchaser's right from
and after the Closing Date to amend, modify or terminate the
Healthfirst 125 Plan in such manner as Purchaser deems
appropriate.
(iii) Parent agrees to cooperate and assist
Purchaser in the transition of the Healthfirst Health Plan
and the Healthfirst 125 Plan and to provide Purchaser
requested information needed by Purchaser to continue such
plans.
(iv) Purchaser and Parent agree that following the
Closing Date, Purchaser shall retain the obligation to
provide COBRA continuation coverage with respect to those
individuals who, as of the Closing Date, have elected or are
eligible to elect COBRA continuation coverage (pursuant to
Section 601 of ERISA and Section 4980B of the Code) under
the Healthfirst Health Plan, other than in respect of
individuals who were not employed by Companies, the
obligation for which shall be borne by Parent.
(v) Purchaser and Parent agree that following the
Closing Date, Purchaser shall retain the obligation to comply
with the certification requirements under the Health Insurance
Portability and Accountability Act of 1996 with respect to all
individuals covered under the Healthfirst Health Plan who lost
coverage at any time prior to the Closing Date, other than in
respect of individuals who were not employed by Companies, the
obligation for which shall be borne by Parent.
4.14 CERTAIN LIABILITIES.
Seller, HTHF and Parent shall indemnify and hold
harmless Purchaser Indemnitees from and against and in respect of
any and all loss, damage, liability, claim, cost and expense,
including reasonable attorneys' fees and amounts paid in
settlement relating to or arising out of (a) the ownership,
operation, properties, assets, businesses and liabilities of
Rural Health Services, Inc., a Tennessee and its subsidiaries or
other Affiliates whether or not disclosed in any Schedule to this
Agreement, (b) all legal, accounting and other professional
advisor fees, disbursements and expenses incurred by any of
Companies arising from or relating to the transactions
contemplated by this Agreement or the Acquisition Agreement (for
which Purchaser shall be promptly reimbursed upon written request
to Seller, HTHF and Parent), (c) (x) prior to the date of the
settlement agreement entered into by and between Greenville
Hospital System and Healthfirst, Inc., dated March 27, 1997, any
use by any of Companies of the tradename and service xxxx
"Healthfirst", if asserted by Greenville Hospital System or any
of its subsidiaries or affiliates, and (y) after the date of such
settlement agreement, any use by any of Companies not
inconsistent with the terms of such settlement agreement, if
asserted by Greenville Hospital System or any of its subsidiaries
or affiliates, (d) all costs, expenses and penalties, other than
for filing fees not in excess of the amount thereof assuming
timely filing and CT Corporation Service Fees and expenses
(except to the extent that CT Corporation Service has advance
such penalties), associated with qualifying any of Companies in
any jurisdiction in which they should have been qualified but
were not so qualified, (e) the transactions described on SCHEDULE
2.7, and (f) any liability of Healthfirst or Health Services
Management, Inc., as identified on SCHEDULE 2.16.
4.15 CERTAIN AGREEMENTS BY HOUSECALL.
Housecall shall use its reasonable best efforts, which
shall not include any obligation to accelerate the indebtedness
or lease obligations described below or post any form of
collateral or security, to cause Parent to be released from any
further obligations under and pursuant to (i) that certain Master
Lease Agreement, dated February 15, 1996, among SunShore Leasing
Corp., Parent and HFI and (ii) that certain Lease Agreement,
dated June 6, 1996, among Colonial Pacific Leasing, Parent and
HFI. Housecall shall indemnify and hold harmless Parent from and
against any claim, loss, damage, liability or expense related to
the foregoing lease agreements arising from the use, possession
or operation of any of the equipment and other items of tangible
personal property the subject of such leases.
5. CONDUCT OF BUSINESSES PENDING CLOSING
Seller, HTHF and Parent covenant and agree that, except
as may otherwise be provided herein, without the prior written
consent of Purchaser, between the date hereof and the Closing
Date:
5.1 Business in the Ordinary Course.
Seller shall cause Companies' businesses to be
conducted only in the ordinary and usual course and consistent
with prior practices, without the creation of any additional
indebtedness for borrowed money, provided that Companies may
continue to draw on their existing lines of credit with their
lenders in a manner consistent with its past practices. Without
limiting the generality of the foregoing:
(a) Except as provided in PARAGRAPH 5.1(b), Companies
shall not enter into any contracts, agreements or other
arrangements in connection with Companies' businesses, and except
as otherwise expressly provided herein, Companies will not enter
into any contract nor effect any transaction with any Related
Party.
(b) Companies shall not enter into any contracts,
agreements or other arrangements to provide, sell, distribute or
supply goods or services to any customer or any third party
except in the ordinary course of Companies' businesses at prices
and on terms consistent with the prior operating practices of
Companies.
(c) Except for sales of inventory and normal disposal
of used equipment in the ordinary course of Companies'
businesses, Companies shall not sell, assign, transfer, convey,
pledge, mortgage, encumber or otherwise dispose of, or cause the
sale, assignment, transfer, conveyance, pledge, mortgage,
encumbrance or other disposition of, any of their assets.
(d) All contracts or commitments of Companies for the
purchase of services and supplies shall be entered into only in
the ordinary and regular course of business to enable Companies
to conduct their normal business operations and to maintain their
normal inventory of supplies, at prices and on terms consistent
with the prior operating practices of Companies.
(e) Companies shall maintain, preserve and protect all
of their assets in good condition, except for ordinary wear and
tear and damage by fire or other casualty; and Companies shall
maintain in full force and effect all insurance policies referred
to in PARAGRAPH 2.14 or other insurance equivalent thereto.
(f) The books, records and accounts of Companies shall
be maintained in the usual, regular and ordinary course of
business on a basis consistent with prior practices and in
accordance with GAAP.
(g) Companies shall use their reasonable best efforts
to preserve their businesses, to keep available the services of
their present employees, to preserve the goodwill of their
suppliers, customers and others having business relations with
Companies, and if so requested by Purchaser, to assist Purchaser
in retaining the services of key employees and agents of
Companies after the Closing Date on terms satisfactory to
Purchaser.
5.2 NO MATERIAL CHANGES.
No action shall be taken by Seller which shall
materially alter the organization, capitalization, or financial
structure, practices or operations of Companies' businesses.
Without limiting the generality of the foregoing:
(a) No change shall be made in the Certificate or
Articles of Incorporation or By-Laws of Companies.
(b) No change shall be made in the authorized or
issued capital stock of Companies.
(c) Seller shall not issue or grant any right or
option to purchase or otherwise acquire any capital stock or
other securities of Companies.
(d) No dividend or other distribution or payment shall
be declared or made with respect to any capital stock of
Companies, and Companies shall not, directly or indirectly,
redeem, purchase or otherwise acquire any capital stock.
(e) Seller shall not liquidate or voluntarily declare
bankruptcy or seek the appointment of a receiver, trustee or
custodian.
5.3 COMPENSATION.
No increase shall be made in the compensation payable
or to become payable to any director, officer, employee or agent
of Companies and no bonus or profit-share payment or other
arrangement (whether current or deferred) shall be made to or
with any such director, officer, employee or agent. No officer,
director or employee shall be hired, and no consultant or agent
shall be retained, by Companies at a salary or fee in excess of
$30,000 per annum.
5.4 EMPLOYEE BENEFIT PLANS.
Seller, HTHF and Parent shall ensure that:
(a) Neither Seller nor Companies shall (i) cause or
permit any ERISA Plan to be involved in any transaction which
constitutes a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue
Code, unless such transaction is specifically permitted under
Sections 407 or 408 of ERISA, Section 4975 of the Internal
Revenue Code or a class or administrative exemption issued by the
Department of Labor; (ii) cause or permit any ERISA Plan or
fiduciary of such ERISA Plan to be involved in a breach of
fiduciary duty under Section 404 of ERISA; or (iii) fail to
timely make all filings, returns and reports, or fail to timely
give all notices, which are required under ERISA or the Internal
Revenue Code.
(b) With respect to the Employee Benefit Pension
Plans, Seller and Companies shall take such actions, and refrain
from such actions, as are necessary to maintain the qualification
of each such Employee Benefit Pension Plan under Section 401(a)
of ERISA, and the exemption of the trust (if any) maintained for
each such Employee Pension Benefit Plan under Internal Revenue
Code Section 501(a).
(c) Seller and Companies shall timely make all
contributions and other payments to its Plans which it is
obligated to make as of the date hereof. Other than
contributions or payments declared or obligated to be paid to the
Plans as of the date hereof, no contribution shall be declared
for or paid to any Plan including, without limitation, the
Employee Pension Benefit Plans.
(d) No amendment or change to the provisions of any
Employee Pension Benefit Plan shall be made or adopted prior to
the Closing Date.
6. CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the
transactions contemplated hereby are subject to the fulfillment
and satisfaction of each and every of the following conditions on
or prior to the Closing, any or all of which may be waived in
writing in whole or in part by Purchaser:
6.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY.
All proceedings taken in connection with the
consummation of the transactions contemplated herein and all
documents and papers reasonably required in connection therewith
shall be reasonably satisfactory to Purchaser and its counsel,
and Purchaser and its counsel shall have timely received copies
of such documents and papers, all in form and substance
reasonably satisfactory to Purchaser and its counsel, as
reasonably requested by Purchaser or its counsel in connection
therewith.
6.2 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Seller, HTHF and
Parent contained in this Agreement shall be true and correct as
of the date when made and shall be true and correct at and as of
the Closing Date, to the same extent and with the same force and
effect as if made as of such date, except as affected by the
transactions contemplated by this Agreement or the Acquisition
Agreement.
6.3 COMPLIANCE WITH AGREEMENTS AND CONDITIONS.
Seller shall have performed and complied with all
covenants, agreements and conditions required by this Agreement
to be performed or complied with by Seller prior to or on the
Closing Date.
6.4 CERTIFICATES.
Seller shall have delivered to Purchaser a certificate
executed by the Presidents or officers of Companies as
appropriate, dated the Closing Date, certifying in such detail as
Purchaser may reasonably request as to (a) the fulfillment and
satisfaction of the conditions specified in Paragraphs 6.2 and
6.3, and (b) the absence of any material adverse change in
Companies' businesses prior to the Closing.
6.5 RESOLUTIONS.
Purchaser shall have received duly adopted resolutions
of the Board of Directors of Seller, HTHF and Parent certified by
the Secretary or Assistant Secretary, as appropriate, dated the
Closing Date, authorizing and approving the execution and
delivery of this Agreement, or approving the transactions
contemplated hereby, and all other action necessary to enable
Seller to comply with the terms hereof.
6.6 OPINION OF COUNSEL.
Purchaser shall have received from Xxxxxx & XxXxxxxx or
Boult, Cummings, Xxxxxxx & Xxxxx, PLC, opinions, dated as of the
date of Closing, in substantially the form set forth as Exhibit
A.
6.7 CONSENTS.
Any and all consents, authorizations and approvals of
all Persons and Governments as are necessary for the consummation
of the transactions contemplated by this Agreement and all
notices required to be given to any Government shall have been
given and all applicable waiting periods shall have expired.
6.8 EMPLOYMENT AGREEMENTS.
Companies shall have entered into employment agreements
satisfactory to Purchaser and the Employer with R. Xxxxxx
Xxxxxxxx for their continuation of employment after the Closing
Date.
6.9 BANK APPROVALS.
Purchaser shall have received from its lenders any
required approval of the transactions contemplated by and
provided for in this Agreement.
6.10 CONSUMMATION OF OTHER TRANSACTIONS.
The transactions contemplated by the Acquisition
Agreement shall have been consummated.
6.11 NO INCONSISTENT REQUIREMENTS.
No Action shall have been commenced by any Government
or Person (excluding Purchaser or any Affiliate of Purchaser or
any Person acting at the direction or request of Purchaser)
seeking to enjoin or prohibit the transactions contemplated
hereby.
6.12 MINUTE BOOKS AND SHARE RECORDS
Seller shall have delivered the minute books, share
records and all other corporate records of Companies to
Purchaser.
6.13 CERTAIN MANAGEMENT CONTRACTS
Seller shall have delivered to Purchaser true, correct
and complete copies of addenda to or correspondence regarding (i)
that certain Management and Computer Services Agreement, dated
March 1, 1997, as amended through and including the date hereof,
between HFI Home Care Management, L.P. and Hospice Preferred
Choice, Inc., relating to San Xxxx, Santa Xxxx, Xxxxxx and
Atlanta, and (ii) that certain Consulting and Computer Services
Agreement, dated January 1, 1997, as amended through and
including the date hereof, between HFI Home Care Management, L.P.
and Option Care, Inc., relating to Cincinnati, Bellingham,
Washington, hospice care and private duty nursing in Columbia,
Missouri.
7. CONDITIONS TO OBLIGATIONS OF SELLER, HTHF AND PARENT
The obligations of Seller, HTHF and Parent under this
Agreement are subject to the fulfillment and satisfaction of each
and every of the following conditions on or prior to the Closing,
any or all of which may be waived in writing in whole or in part
by Seller and Parent:
7.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained in Article
3 shall be true and correct as of the date when made and shall be
true and correct at and as of the Closing Date, to the same
extent and with the same force and effect as if made as of such
date, except as affected by the transactions contemplated by this
Agreement or the Merger Agreement.
7.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS.
Purchaser shall have performed and complied with all
agreements and conditions required by this Agreement to be
performed or complied with by Purchaser prior to or on the
Closing Date.
7.3 CERTIFICATE OF PURCHASER.
Purchaser shall have delivered to Seller, HTHF and
Parent a certificate, dated the Closing Date, certifying in such
detail as Seller, HTHF and Parent may reasonably request to the
fulfillment and satisfaction of the conditions specified in
PARAGRAPHS 7.1 and 7.2.
7.4 RESOLUTIONS.
Purchaser shall have delivered to Seller, HTHF and
Parent duly adopted resolutions of the respective Board of
Directors (or Executive Committees thereof) of Purchaser and
Housecall, certified by the Secretary or an Assistant Secretary
of Purchaser and Housecall, as the case may be, dated the Closing
Date, authorizing and approving the execution of this Agreement
by Purchaser and all other action necessary to enable Purchaser
to comply with the terms of this Agreement.
7.5 OPINION OF COUNSEL.
Seller, HTHF and Parent should have received from
Xxxxxxxxxx Xxxxxxxx LLP, legal counsel for Purchaser, an opinion,
dated the Closing Date, in substantially the form set forth as
Exhibit B attached hereto.
7.6 CONSUMMATION OF OTHER TRANSACTIONS.
The transactions contemplated by the Acquisition
Agreement, shall have been consummated.
7.7 NO INCONSISTENT REQUIREMENTS.
No Action shall have been commenced by any Government
or Person (excluding Seller, Parent, any Affiliate of Seller or
Parent, or any Person acting on behalf of or at the direction of
Seller or Parent) seeking to enjoin or prohibit the transactions
contemplated hereby.
7.8 EMPLOYMENT AGREEMENTS.
Companies shall have entered into an employment
agreement satisfactory to Purchaser and R. Xxxxxx Xxxxxxxx for
his continuation of employment after the Closing Date.
8. INDEMNITIES
8.1 INDEMNIFICATION OF PURCHASER AND COMPANIES.
In accordance with and subject to the provisions of
this ARTICLE 8, Seller, HTHF and Parent (collectively, "PURCHASER
INDEMNITORS") shall, jointly and severally, indemnify and hold
harmless Purchaser, Companies, and their Affiliates, and their
respective officers, directors, agents and employees (other than
for any officer, director, agent or employee who is a Purchaser
Indemnitor hereunder) (collectively, "PURCHASER INDEMNITEES"),
from and against and in respect of any and all loss, damage,
liability, claim, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement pursuant to
PARAGRAPH 8.5(b) (collectively, the "PURCHASER INDEMNIFIED
LOSSES"), suffered or incurred by any one or more of the
Purchaser Indemnitees by reason of, or arising out of, any breach
of any representation or warranty, or any breach or
nonfulfillment of any covenant or agreement, of Companies, Seller
or Parent contained in this Agreement; PROVIDED, HOWEVER, that
(a) Purchaser Indemnitors shall have no obligation to indemnify
or hold harmless any Purchaser Indemnitee for any breach by any
other Purchaser Indemnitor of the covenants pursuant to PARAGRAPH
4.4 and (b) Purchaser Indemnitors shall have no obligation to
indemnify or hold harmless any Purchaser Indemnitee for any
Purchaser Indemnified Loss that arises in connection with or as a
result of any Management Contract if (a) the event, occurrence or
action which is the principal basis for such Purchaser
Indemnified Loss has been specifically disclosed in SCHEDULE 8.1
or (b) the principal basis upon which such Purchaser Indemnified
Loss is established or asserted is an event, occurrence or action
that was not known by Companies, Seller, HTHF or Parent as of the
Closing Date.
8.2 INDEMNIFICATION OF SELLER, HTHF AND PARENT.
In accordance with and subject to the provisions of
this ARTICLE 8, Purchaser (for purposes of this ARTICLE 8,
"SELLER INDEMNITOR") shall indemnify and hold harmless Seller,
HTHF Parent and their Affiliates, and their respective officers,
directors, agents and employees (collectively, "SELLER
INDEMNITEES"), from and against and in respect of any and all
loss, damage, liability, claim, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement
pursuant to PARAGRAPH 8.5(b) (collectively, the "SELLER
INDEMNIFIED LOSSES"), suffered or incurred by any one or more of
the Seller Indemnitees by reason of, or arising out of, any
breach of any representation or warranty, or breach or
nonfulfillment of any covenant or agreement, of Purchaser
contained in this Agreement.
8.3 INTERCHANGEABLE TERMINOLOGY.
For purposes of the remaining Paragraphs of this
ARTICLE 8, which are mutually applicable to Purchaser (on the one
hand) and to Seller, HTHF and Parent (on the other hand)
depending on the party with the obligation to indemnify or the
right to be indemnified as provided in PARAGRAPHS 8.1 and 8.2,
the Purchaser Indemnitors and Seller Indemnitors, and the
Purchaser Indemnitees and Seller Indemnitees, are sometimes
referred to interchangeably as "INDEMNITORS" and "INDEMNITEES,"
respectively, with the understanding and agreement that such
references are to the particular party or parties that have the
obligation to or right from the other party or parties, as the
case may be, under PARAGRAPH 8.1 or 8.2. Similarly, Purchaser
Indemnified Losses and Seller Indemnified Losses are sometimes
referred to interchangeably as "INDEMNIFIED LOSSES," with the
comparable understanding and agreement.
8.4 PAYMENT.
Indemnitors shall, subject to the provisions of
PARAGRAPH 8.5, reimburse Indemnitees within 10 days of written
demand on the Indemnitors for any Indemnified Loss.
8.5 DEFENSE OF CLAIMS.
(a) If any claim or Action by a third party arises
after the Closing Date for which an Indemnitor may be liable to
an Indemnitee under the terms of this Agreement, then such
Indemnitee shall notify such Indemnitor within a reasonable time
after such claim or Action arises and is known to such
Indemnitee, and shall give the Indemnitor a reasonable
opportunity: (i) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend such
Indemnitee; (ii) to take all other required steps or proceedings
to settle or defend any such claim or Action; and (iii) to
employ counsel to contest any such claim or Action in the name of
Indemnitee or otherwise. The expenses of all proceedings,
contests or lawsuits with respect to such Actions shall be borne
by the Indemnitor. If the Indemnitor desires to assume the
defense of such claim or Action, then such Indemnitor shall give
written notice to the Indemnitee within 30 days after notice from
the Indemnitee of such claim or Action (unless the claim or
action reasonably requires a response in less than 30 days after
the notice is given to such Indemnitor, in which event such
Indemnitor shall notify Indemnitee at least 10 days prior to such
reasonably required response date), and the Indemnitor shall
thereafter assume the defense of any such claim or Action through
counsel reasonably satisfactory to the Indemnitee; provided that
an Indemnitee may participate in such defense at its own expense;
further provided that, Purchaser shall have the sole right,
exercisable in good faith, to direct and control the defense
(whether or not assumed by the Purchaser Indemnitors) of any and
all claims or Actions that involve a Government or other Person
acting as a third party payor for health care services; and
further provided that, any Indemnitee may refuse to permit its
Indemnitor to assume the defense of any claim or Action with
respect to which defense there exists a material conflict of
interests between such Indemnitee and Indemnitor as to the
subject matter of the claim or Action. A difference of opinion
concerning how much to pay a third party claimant, without more,
shall not constitute a material conflict of interests between an
Indemnitee and an Indemnitor for purposes of the preceding
sentence.
(b) If the Indemnitors do not assume the defense of,
or if after so assuming the Indemnitors fail to defend, any such
Action (or if the Indemnitors are not permitted to assume such
defense as a result of the assertion of a material conflict of
interests by an Indemnitee), then Indemnitees may defend against
such claim or Action in such manner as they may deem appropriate
(provided that the Indemnitors may participate in such defense at
their own expense); Indemnitees may settle such claim or Action
on such terms as they may deem appropriate; and the Indemnitors
shall promptly reimburse Indemnitees for the amount of all
expenses, legal and otherwise, reasonably and necessarily
incurred by Indemnitees in connection with the defense against
and settlement of such claim or Action. If no settlement of such
claim or Action is made, the Indemnitors shall satisfy any
judgment rendered with respect to such claim or in such Action,
before Indemnitees are required to do so, and shall pay all
expenses, legal or otherwise, reasonably and necessarily incurred
by Indemnitees in the defense of such claim or Action.
(c) If a judgment is rendered against any of the
Indemnitees in any Action covered by the indemnification
hereunder, or any Lien in respect of such judgment attaches to
any of the assets of any of the Indemnitees, the Indemnitors
shall immediately upon receipt from Indemnitees of copies of such
attachment or entry, pay such judgment in full or discharge such
Lien unless, at the expense and direction of the Indemnitors, an
appeal is taken under which the execution of the judgment or
satisfaction of the Lien is stayed. If and when a final judgment
is rendered in any such Action, the Indemnitors shall forthwith
pay such judgment or discharge such Lien before any of
Indemnitees is compelled to do so.
8.6 NO CONTRIBUTION.
Seller, HTHF and Parent shall not have any right of
contribution against Companies for any Indemnified Losses.
8.7 LIMITATIONS ON LIABILITY.
(a) Notwithstanding anything in this Agreement to the
contrary, no Indemnitor(s) shall have any liability under this
Agreement until such time as the aggregate amount of Indemnified
Losses for which such Indemnitor(s) has or have responsibility
under and pursuant to this Agreement and the Acquisition
Agreement, on a combined basis, exceed $500,000; provided, that,
once such aggregate amount of Indemnified Losses exceeds
$500,000, Indemnitees shall be entitled to recover from the
Indemnitors the aggregate amount of all Indemnified Losses.
(b) Notwithstanding anything in this Agreement to the
contrary, in no event shall the maximum amount of liability of
Seller or HTHF exceed $1,242,000 or Parent exceed $9,508,000.
(c) The limitations set forth in this PARAGRAPH 8.7
shall be inapplicable to any breach of the covenants and
agreements contained in any of PARAGRAPHS 4.4, 4.5, 4.6, 4.12,
4.13 and 4.14, except that in the case of clause (b) of PARAGRAPH
4.14, the limitation in PARAGRAPH 8.7(b) shall be applicable.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the parties
contained in this Agreement or in any writing delivered pursuant
to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by any other party or
its Representatives and the consummation of the transactions
contemplated herein and shall continue in full force and effect
for the periods specified below (the "SURVIVAL PERIOD"):
(a) representations and warranties relating to the
reporting, payment or liability for Taxes or any obligations or
liabilities related to Indemnified Losses arising from
environmental liabilities or product liabilities shall survive
until expiration of any applicable statute or period of
limitations, and any extensions thereof;
(b) all other representations and warranties hereunder
shall be of no further force and effect after the expiration of
two years from and after the Closing Date.
Anything to the contrary notwithstanding, the Survival
Period shall be extended automatically to include any time period
necessary to resolve a claim for indemnification which was made
before expiration of the Survival Period but not resolved prior
to its expiration. Such extension shall apply only to the claim
for which such extension was necessary.
10. TERMINATION
10.1 TERMINATION FOR CERTAIN CAUSES.
This Agreement may be terminated at any time prior to
or on the Closing Date by Seller, on the one hand, or by
Purchaser, on the other hand, upon written notice to the other as
follows:
(a) By Purchaser, if the terms, covenants or
conditions of this Agreement to be complied with or performed by
Seller, HTHF, Parent or Companies at or before the Closing Date
shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been waived by
Purchaser.
(b) By Purchaser, if there is any fact or condition
with respect to Companies' businesses, assets, properties,
financial condition or actual or anticipated results of
operations of Companies or their businesses which materially and
adversely affects such businesses, properties, financial
condition, results of operations, assets, or the value or
continuance of Companies' businesses.
(c) By Seller, if the terms, covenants or conditions
of this Agreement to be complied with or performed by Purchaser
at or before the Closing Date shall not have been complied with
or performed and such noncompliance or nonperformance shall not
have been waived by Seller.
(d) By Purchaser or Seller, if any Action shall have
been instituted or threatened against any party to this Agreement
to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the consummation of the
transactions contemplated herein, which, in the reasonable and
good faith opinion of any party, makes consummation of the
transactions herein contemplated inadvisable.
10.2 PROCEDURE ON AND EFFECT OF TERMINATION.
Pursuant to PARAGRAPH 10.1 hereof, written notice
thereof shall be given to all other parties by the party electing
to terminate, and this Agreement shall terminate upon the giving
of such notice, without further action by any of the parties
hereto, with the consequence and effect set forth in this
PARAGRAPH 10.2. If for any reason on the Closing Date there has
been nonfulfillment of an undertaking by or condition precedent
for Purchaser, on the one hand, or Seller, on the other hand, not
waived in writing by or on behalf of the party in whose favor
such undertaking or condition or undertaking runs, the party in
whose favor such undertaking or condition runs, in addition to
any other right or remedy available to it, may refuse to
consummate the transactions contemplated by this Agreement
without liability or obligation on its part whatsoever.
Notwithstanding the foregoing, the obligations of the parties
pursuant to PARAGRAPHS 4.2 (CONFIDENTIALITY), 4.5 (EXPENSES), 4.6
(BROKERS) AND 4.8 (PUBLICITY) shall survive any such termination.
11. MISCELLANEOUS
11.1 NOTICES.
(a) All notices, demands or other communications
required or permitted to be given or made hereunder shall be in
writing and (a) delivered personally, or (b) sent by pre-paid,
first class, certified or registered air mail, return receipt
requested, or (c) by an express courier service, or (d) by
facsimile transmission to the intended recipient thereof, at its
address or facsimile number set out below. Any such notice,
demand or communication shall be deemed to have been duly given
immediately (if given or made by confirmed facsimile), or three
days after mailing or the second day after delivery to an express
courier service, and in proving same it shall be sufficient to
show that the envelope containing the same was duly addressed,
stamped and posted (or that the envelope was delivered to the
express courier service), or that receipt of a facsimile was
confirmed by the recipient. The addresses and facsimile numbers
of the parties for purposes of this Agreement are:
(i) If to Purchaser: HFI Acquisition Corp.
c/o Housecall Medical
Resources, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxx 000, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Chief Financial
Officer
With a copy to: Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: 404-815-6555
Attention: W. Xxxxx Xxxxx
(ii) If to HTHF or
Seller: HF Holdings, Inc.
000 Xxxxxxxxxx Xxxx, XX
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: 000-000-0000
Attention: R. Xxxxxx Xxxxxxxx
With a copy to: Xxxxxx & XxXxxxxx Co. LPA
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxx 00000
Facsimile No.: 216-253-8601
Attention: Xxxxx X. Xxxxx, Esq.
(iii) If to Parent: Home Technology Healthcare, Inc.
0000 Xxxx Xxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
With a copy to: Boult, Cummings, Xxxxxxx & Xxxxx, PLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Any party may change the address to which notices, requests,
demands or other communications to such parties shall be
delivered or mailed by giving notice thereof to the other parties
hereto in the manner provided herein.
11.2 COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument.
11.3 ENTIRE AGREEMENT.
This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter
hereof, and this Agreement, including its Exhibits and Schedules,
and with acknowledgment of the relationship and contemplation of
the transactions contemplated by the Acquisition Agreement,
contains the sole and entire agreement among the parties with
respect to the matters covered hereby. This Agreement shall not
be altered or amended except by an instrument in writing signed
by or on behalf of the party entitled to the benefit of the
provision against whom enforcement is sought.
11.4 GOVERNING LAW.
The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the
laws of the State of Georgia, without regard to conflicts of laws
principles.
11.5 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns. No
party may assign its rights or obligations under this Agreement,
by operation of law or otherwise, without the prior written
consent of all other parties.
11.6 PARTIAL INVALIDITY AND SEVERABILITY.
All rights and restrictions contained herein may be
exercised and shall be applicable and binding only to the extent
that they do not violate any applicable Laws and are intended to
be limited to the extent necessary to render this Agreement
legal, valid and enforceable. If any term of this Agreement, or
part thereof, not essential to the commercial purpose of this
Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof, shall
constitute their agreement with respect to the subject matter
hereof, and all such remaining terms, or parts thereof, shall
remain in full force and effect. To the extent legally
permissible, any illegal, invalid or unenforceable provision of
this Agreement shall be replaced by a valid provision which will
implement the commercial purpose of the illegal, invalid or
unenforceable provision.
11.7 WAIVER.
Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit
thereof, but only if such waiver is evidenced by a writing signed
by such party. No failure on the part of any party hereto to
exercise, and no delay in exercising, any right, power or remedy
created hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or remedy by
any such party preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. No waiver by
any party hereto of any breach of or default in any term or
condition of this Agreement shall constitute a waiver of or
assent to any succeeding breach of or default in the same or any
other term or condition hereof.
11.8 HEADINGS.
The headings of particular provisions of this Agreement
are inserted for convenience only and shall not be construed as a
part of this Agreement or serve as a limitation or expansion on
the scope of any term or provision of this Agreement.
11.9 NUMBER AND GENDER.
Where the context requires, the use of the singular
form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any
and all genders.
11.10 CONSENTED ASSIGNMENT.
Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement
to assign any claim, right, contract, license, lease, commitment,
sales order or purchase order if an attempted assignment thereof
without the consent of another party thereto would constitute a
breach thereof or in any material way affect the rights of Seller
thereunder, unless such consent is obtained. If such consent is
not obtained, or if an attempted assignment would be ineffective
or would materially affect Seller's rights thereunder so that
Purchaser would not in fact receive all such rights, Sellers
shall upon the request of Purchaser cooperate in any reasonable
arrangement designed to provide for Purchaser the benefits under
any such claim, right, contract, license, lease, commitment,
sales order or purchase order, including, without limitation,
enforcement of any and all rights of Seller against the other
party or parties thereto arising out of the breach or
cancellation by such other party or otherwise.
11.11 GUARANTY.
Housecall hereby unconditionally and absolutely
guarantees the performance of any and all obligations of
Purchaser under this Agreement.
11.12 ACKNOWLEDGMENT AND CONSENT.
Each of Seller, HTHF and Parent acknowledge that the
Purchase Price to be paid hereunder is being financed by a
syndicate of banks and other financial institutions lead by
Toronto Dominion (Texas), Inc. as agent, and each of them further
acknowledges that under the terms of the financing being so
provided to Housecall and Purchaser that Housecall and Purchaser
have been requested, and have agreed, to collaterally assign all
of its right, title and interest in and to its rights and
remedies hereunder to Toronto Dominion (Texas), Inc. Each of
Seller, HTHF and Parent hereby expressly acknowledge and consent
to such collateral assignment.
11.13 SATISFACTION OF CONDITIONS.
By their execution and delivery of this Agreement, the
parties acknowledge and agree that the transactions contemplated
hereby have been consummated simultaneously with the execution
and delivery hereof, and they further acknowledge and agree that
each of the conditions precedent to be complied with and
satisfied by them prior to the Closing have been satisfied.
12. CERTAIN DEFINITIONS; INDEX OF DEFINITIONS
12.1 CERTAIN DEFINITIONS.
For purposes of this Agreement, the following
capitalized terms shall have the meanings specified with respect
thereto below (all terms used in this Agreement which are not
defined in this Article 12, but are defined elsewhere in this
Agreement, shall have for purposes of this Agreement the meanings
set forth elsewhere in this Agreement):
"ACTION" shall mean any action, suit, complaint, claim,
counter-claim, petition, set-off, inquiry, investigation,
administrative proceeding, arbitration, or private dispute
resolution proceeding, whether at law, in equity, by contract or
agreement, or otherwise, and whether conducted by or before any
Government, any Forum, or other Person.
"ACQUISITION AGREEMENT" shall mean that certain
Acquisition Agreement of even date herewith by and among
Housecall, Purchaser and the other signatories thereto.
"AFFILIATE" of any Person shall mean any other Person
directly or indirectly controlling, controlled by, or under
direct or indirect common control with the former Person. A
Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract
or otherwise.
"AFFILIATED GROUP" shall mean any affiliated group
within the meaning of Code section 1504(a) or any similar group
defined under a similar provision of state, local or foreign law.
"BUSINESS DAY" shall mean any day other than a
Saturday, a Sunday or a day on which commercial banks in Atlanta,
Georgia, are required or authorized to be closed.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ENVIRONMENTAL LAWS" shall mean all federal, state,
local and foreign laws, including but not limited to all
statutes, ordinances, rules, regulations, and common law,
relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment
(including without limitation ambient air, surface water, ground
water or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes, and any and
all regulations, codes, plans, orders, decrees, judgments,
injunctions, consent agreements, stipulations, provisions and
conditions of permits, licenses and other operating
authorizations, notices or demand letters issued, entered,
promulgated or approved thereunder.
"FORUM" shall mean any federal, state, local, municipal
or foreign court, governmental agency, administrative body or
agency, tribunal, private alternative dispute resolution system,
or arbitration panel.
"GAAP" shall mean generally accepted accounting
principles as applicable in the United States, consistently
applied.
"GOVERNMENT" shall mean any federal, state, local,
municipal, or foreign government or any department, commission,
board, bureau, agency, instrumentality, unit, or taxing authority
thereof.
"HEREOF," "HEREIN," "HEREUNDER" and words of similar
import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement,
and "ARTICLE", "PARAGRAPH", "SCHEDULE", "EXHIBIT" and like
references are to this Agreement unless otherwise specified.
"KNOWN," "TO THE KNOWLEDGE OF," "TO THE BEST KNOWLEDGE
OF," "AWARE" or words of similar import employed in this
Agreement with reference to any individual or entity shall be
conclusively presumed to mean the actual knowledge of such person
or entity or such knowledge as such person or entity would have
through reasonable inquiries of such person's or entity's
directors, officers or employees.
"LAW" shall mean all federal, state, local, municipal
or foreign constitutions, statutes, rules, regulations,
ordinances, acts, codes, legislation, treaties, conventions and
similar laws and legal requirements, as in effect from time to
time.
"LIABILITY" shall mean any liability or obligation
whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated and
whether due or to become due, including any liability for Taxes.
"LIEN" shall mean any mortgage, pledge, hypothecation,
security interest, encumbrance, lien or charge of any kind, or
any rights of others, however evidenced or created (including any
agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction).
"MANAGEMENT CONTRACT" means any contract or agreement
for the provision of home health care management billing and data
processing, information systems or consulting services related to
the foregoing.
"ORDERS" shall mean all applicable orders, writs,
judgments, decrees, rulings and awards of any Forum.
"PARENT AFFILIATED GROUP" shall mean the affiliated
group (as defined in Code section 1504(a)) of corporations
including Parent, HTHF and Companies that file a consolidated
federal income Tax Return pursuant to Code section 1502 and the
Treasury Regulations pursuant thereto.
"PERSON" shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated association or organization,
and a Government.
"REPRESENTATIVE" of a party shall mean such party's
directors, officers, employees, agents, accountants, lenders,
lawyers, investment bankers, and other financial or professional
advisors or consultants.
"SUBSIDIARY" shall mean any corporation with respect to
which a specified Person (or a Subsidiary thereof) owns a
majority of the common stock or has the power to vote or direct
the voting of sufficient securities to elect a majority of the
directors.
"TAXES" shall mean all federal, state, local, or
foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code section 59A), customs
duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"TAX RETURN" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
12.2 INDEX OF DEFINITIONS.
The definitions for the following defined terms used in
this Agreement can be found as follows:
Defined Term Paragraph or Article
------------- --------------------
Business Recital
Closing
Employee Company Pension Benefit Plans 2.20(e)
Closing Date 1.2
CMK Recitals
Companies Recitals
Contracts 2.13
Disclosed Liabilities 2.7
ERISA Parent Plan 2.20(a)
ERISA Plan 2.20(a)
Housecall Preamble
HCR Recitals
HFI Recitals
HTHF Preamble
Indemnified Losses 8.3
Indemnitees 8.3
Indemnitors 8.3
Information 4.2(a)
Interim Statements 4.9
Leased Real Property 2.11(e)
Parent Plan or Plans 2.20(a)
Plan or Plans 2.20
Purchase Price 1.1
Purchaser Preamble
Purchaser Indemnified Losses 8.1
Purchaser Indemnitees 8.1
Purchaser Indemnitors 8.1
Real Property 2.11(a)
Real Property Documents 2.11(b)
Real Property Improvements 2.11(e)
Reference Date 2.7
Related Parties 2.24
Seller Preamble
Seller Indemnified Losses 8.2
Seller Indemnitees 8.2
Service Areas 4.4(a)
Shares Recitals
Significant Customers 2.15
Subsidiary Shares Recitals
Survival Period 9
Unaudited Balance Sheet 2.20
Unaudited Financial Statements 2.6
Unaudited Interim Financial Statements 2.6
Unaudited Year-end Financial Statements 2.6
[Signatures appear on following page]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
HFI ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Vice President
HF HOLDINGS, INC.
By: /s/ X.X. Xxxxxxxx
Name: X.X. Xxxxxxxx
Title: President
HTHF, INC.
By: /s/ X.X. Xxxxxxxx
Name: X.X. Xxxxxxxx
Title: President
HOME TECHNOLOGY HEALTHCARE, INC.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President
HOUSECALL MEDICAL RESOURCES, INC.
(As Guarantor)
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
