EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
PREFERRED EMPLOYERS ACQUISITION CORP.,
AS BUYER,
HSSI TRAVEL NURSE OPERATIONS, INC.,
AS SELLER,
AND
HOSPITAL STAFFING SERVICES, INC.
THE SOLE STOCKHOLDER OF SELLER
__________________________________
DATED AS OF JANUARY 21, 1998
__________________________________
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE II PURCHASE AND SALE; CLOSING; OTHER MATTERS . . . . . . . . . . .6
SECTION 2.1 Purchase and Sale of Purchased Assets. . . . . . . . . . . .6
SECTION 2.2 Transfer, Assignment and Conveyance of Purchased Assets. . .7
SECTION 2.3 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . .8
SECTION 2.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . .9
SECTION 2.4A Working Capital Realization.. . . . . . . . . . . . . . . .9
SECTION 2.5 Assumption of Liabilities. . . . . . . . . . . . . . . . . 10
SECTION 2.6 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.7 Certain Employees; Use of Facilities . . . . . . . . . . . 11
SECTION 2.8 Effective Date . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE STOCKHOLDER . . . . . . . . . . . . . . . . 12
SECTION 3.1 Authority Relative to this Agreement . . . . . . . . . . . 12
SECTION 3.2 No Conflicts; Consents . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 Corporate Existence and Power. . . . . . . . . . . . . . . 13
SECTION 3.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Charter Documents and Corporate Records. . . . . . . . . . 13
SECTION 3.6 Financial Statements . . . . . . . . . . . . . . . . . . . 13
SECTION 3.7 Absence of Certain Changes . . . . . . . . . . . . . . . . 14
SECTION 3.8 Properties . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.9 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.10 Intangible Property . . . . . . . . . . . . . . . . . . . 19
SECTION 3.11 Claims and Proceedings. . . . . . . . . . . . . . . . . . 20
SECTION 3.12 Restrictions on Business Activities . . . . . . . . . . . 20
SECTION 3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.14 Employee Benefits Plans . . . . . . . . . . . . . . . . . 21
SECTION 3.15 Officers, Directors and Key Employees . . . . . . . . . . 23
SECTION 3.16 Employment Related Matters. . . . . . . . . . . . . . . . 23
SECTION 3.17 Potential Conflicts of Interest . . . . . . . . . . . . . 24
SECTION 3.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.19 Suppliers, Customers and Contractors. . . . . . . . . . . 24
SECTION 3.20 Compliance with Laws. . . . . . . . . . . . . . . . . . . 24
SECTION 3.21 Permits . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.22 Finders; Fees . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.23 Depositaries. . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.24 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 26
SECTION 4.1 Corporate Existence and Power. . . . . . . . . . . . . . . 26
SECTION 4.2 Authority Relative to This Agreement . . . . . . . . . . . 26
SECTION 4.3 No Conflicts; Consents . . . . . . . . . . . . . . . . . . 26
SECTION 4.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.5 Finders; Fees. . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.6 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.1 Conduct of Business. . . . . . . . . . . . . . . . . . . . 27
SECTION 5.2 Corporate Examinations and Investigations. . . . . . . . . 29
SECTION 5.2A Disclosure Schedule. . . . . . . . . . . . . . . . . . . . 29
SECTION 5.3 Additional Financial Statements. . . . . . . . . . . . . . 30
SECTION 5.4 Filings and Authorizations . . . . . . . . . . . . . . . . 30
SECTION 5.5 Efforts to Consummate. . . . . . . . . . . . . . . . . . . 31
SECTION 5.6 Negotiations With Others . . . . . . . . . . . . . . . . . 31
SECTION 5.7 Notices of Certain Events. . . . . . . . . . . . . . . . . 32
SECTION 5.8 Public Announcements . . . . . . . . . . . . . . . . . . . 32
SECTION 5.9 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.10 Bulk Sales. . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.11 Use of Name . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.12 Certain Expenses. . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VI CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.1 Conditions to the Obligations of Seller and Buyer. . . . . 34
SECTION 6.2 Conditions to the Obligations of Seller. . . . . . . . . . 34
SECTION 6.3 Conditions to the Obligations of Buyer . . . . . . . . . . 35
ARTICLE VII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.1 Survival of Representations and Warranties . . . . . . . . 38
SECTION 7.2 Obligation of Seller to Indemnify. . . . . . . . . . . . . 38
SECTION 7.3 Obligation of Buyer to Indemnify . . . . . . . . . . . . . 39
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SECTION 7.4 Notice and Opportunity to Defend Third Party Claims. . . . 39
SECTION 7.5 Limits on Indemnification. . . . . . . . . . . . . . . . . 40
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.2 Effect of Termination; Right to Proceed. . . . . . . . . . 41
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.3 Waivers and Amendments; NonContractual Remedies;
Preservation of Remedies . . . . . . . . . . . . . . . . 43
SECTION 9.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.5 Consent to Jurisdiction and Service of Process . . . . . . 43
SECTION 9.6 Designated Buyer . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.7 Binding Effect; No Assignment. . . . . . . . . . . . . . . 43
SECTION 9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.10 Stock Purchase Agreement. . . . . . . . . . . . . . . . . 44
SECTION 9.11 Effective Date. . . . . . . . . . . . . . . . . . . . . . 44
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SCHEDULES
Schedule 2 Xxxx of Sale
55Schedule 2.3 Excluded Assets
Schedule 2.4(b) Allocation of Purchase Price
Schedule 2.4A Cash / A/R / A/P
Schedule 2.5(a) Assumed Liabilities
Schedule 2.7(a) Retained Employees
Schedule 3.2 Required Consents
Schedule 3.5(b) Exception to Records
Schedule 3.6(b) Other Liabilities
Schedule 3.6(d) Debt
Schedule 3.7 Recent Developments
Schedule 3.8(a) Real Property
Schedule 3.8(b) Tangible Property
Schedule 3.8(c) Other Personal Property
Schedule 3.9 Contracts
Schedule 3.10 Intangible Property
Schedule 3.11 Claims and Proceedings
Schedule 3.13 Tax Matters
Schedule 3.14(a) Employee Benefit Plans
Schedule 3.14(b) Employee Pension Benefit Plans
Schedule 3.14(d) Multi-Employer Plans
Schedule 3.15 Officers, Directors and Key Employees
Schedule 3.16 Employment-Related Matters
Schedule 3.18 Insurance Policies, Fidelity, and Surety Bonds
Schedule 3.19 Suppliers and Customers
Schedule 3.20(c) Cost Reports
Schedule 3.20(e) Referrals
Schedule 3.21 Permits
Schedule 3.23 Depositories
Schedule 4.3 Buyer's Consents
Schedule 6.3(f) Form of Covenant Not to Compete
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of January 21, 1998, and effective as set
forth in Section 9.11 hereof, among Preferred Employers Acquisition Corp., a
Delaware corporation ("BUYER"), HSSI Travel Nurse Operations, Inc., a Florida
corporation ("SELLER"), and Hospital Staffing Service, Inc., a Florida
corporation, the sole security holder of Seller (the "STOCKHOLDER").
W I T N E S S E T H:
WHEREAS, Seller is engaged primarily in the business of providing interim
staffing of nurses and other medical personnel primarily to hospitals (the
"BUSINESS"); and
WHEREAS, Buyer wishes to purchase from Seller and Seller wishes to sell to
Buyer, in accordance with the terms and subject to the conditions of this
Agreement, certain of the assets, properties and rights belonging to Seller that
are used in or pertain to the Business.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
other agreements contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.(a) The following terms, as used herein, have the
following meanings:
"ACQUISITION PROPOSAL" shall mean any proposal for the acquisition of, or
merger or other business combination involving, Seller or the sale of any equity
interest in, or a substantial portion of the assets of, Seller other than the
transactions by Buyer as contemplated by this Agreement.
"AFFILIATE" of any person means any other person directly or indirectly
through one or more intermediary persons, controlling, controlled by or under
common control with such person.
"AGREEMENT" or "THIS AGREEMENT" shall mean, and the words "HEREIN",
"HEREOF" and "HEREUNDER" and words of similar import shall refer to, this
agreement, and the Schedules and Exhibits hereto, as the same from time to time
may be amended.
"AUDIT" or "AUDITED" when used in regard to financial statements shall mean
an examination of the financial statements by a firm of independent public
accountants in accordance with GAAP or GAAS consistently applied for the purpose
of expressing an opinion thereon.
"BALANCE SHEET" shall mean the balance sheet of Seller included in its
unaudited financial statements as at and for the year ended November 30, 1997.
"BALANCE SHEET DATE" shall mean November 30, 1997.
"XXXX OF SALE" shall mean the Xxxx of Sale and Assumption Agreement in the
form of SCHEDULE 2 hereto.
"BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of Miami,
State of Florida, are authorized or obligated by law or executive order to
close.
"BUYER'S ACCOUNTANTS" shall mean KPMG Peat Marwick LLP or such other firm
of independent auditors selected by Buyer.
"CERTIFICATE OF INCORPORATION" shall mean the certificate of incorporation,
articles of incorporation or charter of a corporation howsoever denominated
under the laws of the jurisdiction of its organization.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., Miami time, on
such date; PROVIDED, HOWEVER, that if such date is not a Business Day, "CLOSE OF
BUSINESS" shall mean 5:00 p.m., Miami time, on the next succeeding Business Day.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
The term "CONTROL", with respect to any person, shall mean the power to
direct the management and policies of such person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock ownership, agency or otherwise; and the
terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative to the
foregoing.
"GAAP" shall mean generally accepted accounting principles in effect on the
date hereof as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the
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Financial Accounting Standards Board or as may be generally accepted by the
accounting profession of the United States.
"GAAS" shall mean generally accepted auditing standards in effect on the
date hereof.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"IRS" shall mean the Internal Revenue Service.
"LIABILITY" shall mean any direct or indirect indebtedness, liability,
claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed,
xxxxxx or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise.
"LIEN" shall mean any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended, and
all rules and regulations promulgated thereunder.
"1933 ACT" shall mean the Securities Act of 1933, as amended, and all rules
and regulations promulgated thereunder.
"NET BOOK VALUE" shall mean with respect to any asset, the depreciated book
value of such asset as of the Effective Date, determined in accordance with
GAAP.
The term "PERSON" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"SELLER'S ACCOUNTANTS" shall mean Xxxxxx Xxxxxxxx LLP, independent
certified public accountants, or such other accounting firm selected by Seller
that is acceptable to Buyer.
"SELLER MATERIAL ADVERSE EFFECT" shall mean any event, change or effect
that has, or is reasonably likely to have, a material adverse effect (a) on the
condition (financial or otherwise), business, assets, liabilities, results of
operations or cash flows of Seller, taken as a whole, or (b) on the ability of
the Seller to perform its obligations under this Agreement or to consummate the
transactions contemplated by this Agreement.
"SUBSIDIARY" as to any person shall mean any entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are owned
directly or indirectly through one or more intermediaries, or both, by such
person.
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"TAX" (including, with correlative meaning, the terms "TAXES" and
"TAXABLE") shall mean: (i) any net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property or windfall
profits tax, alternative or add-on minimum tax, customs duty or other tax, fee,
assessment or charge of any kind whatsoever, together with any interest and any
penalty, addition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such tax
(a "TAXING AUTHORITY"), with respect to Seller; (ii) any liability for the
payment of any amount of the type described in the immediately preceding clause
(i) as a result of Seller being a member of an affiliated or combined group with
any other corporation at any time on or prior to the Closing Date; and (iii) any
liability of Seller for the payment of any amounts of the type described in the
immediately preceding clause (i) as a result of a contractual obligation to
indemnify any other person (other than Buyer).
"TAXABLE YEAR" shall mean, with respect to any Tax of Seller, the calendar
or fiscal year, or shorter period, for which the Tax is computed and the Return
for such Tax is made.
"TRANSACTION DOCUMENTS" shall mean, collectively, this Agreement, the
Non-Compete Agreements, the Xxxx of Sale and each of the other agreements and
instruments to be executed and delivered by all or some of the parties hereto in
connection with the consummation of the transactions contemplated hereby.
The term "VOTING POWER" when used with reference to the capital stock of,
or units of equity interests in, any person shall mean the power under ordinary
circumstances (and not merely upon the happening of a contingency) to vote in
the election of directors of such person (if such person is a corporation) or to
participate in the management and control of such person (if such person is not
a corporation).
(b) The following terms are defined in the following sections of this
Agreement:
TERM SECTION
A/P . . . . . . . . . . . . . . 2.4A(a)
A/R . . . . . . . . . . . . . . 2.4A(a)
Applications. . . . . . . . . . 5.4(c)
Asserted Liability. . . . . . . 7.4(a)
Assumed Liabilities . . . . . . 2.5(a)
Business . . . . . . . . . . . Recital
Capital . . . . . . . . . . . . 2.4A(c)
Cash. . . . . . . . . . . . . . 2.4A(a)
Claims. . . . . . . . . . . . . 3.11
Claims Notice . . . . . . . . . 7.4(a)
Closing . . . . . . . . . . . . 2.6
Closing Cash. . . . . . . . . . 2.4(e)
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TERM SECTION
Closing Cash Date . . . . . . . 2.4A(e)
Closing Date. . . . . . . . . . 2.6
Contemplated Transactions . . . 3.1
Contracts . . . . . . . . . . . 3.2
Debt. . . . . . . . . . . . . . 3.6(d)
Designated Buyer. . . . . . . . 9.6
Disclosure Schedule . . . . . . 5.2A(a)
Effective Date. . . . . . . . . 2.8
ERISA . . . . . . . . . . . . . 3.14(a)
Excluded Assets . . . . . . . . 2.3
Excluded Obligation . . . . . . 2.5(b)
Final Disclosure Schedule Date. 5.2A(a)
Financial Statements. . . . . . 3.6(a)
Governmental Bodies . . . . . . 3.20
Group . . . . . . . . . . . . . 3.14(a)
Group Plans . . . . . . . . . . 3.14(a)
Indemnifying Party. . . . . . . 7.4(a)
Indemnitee. . . . . . . . . . . 7.4(a)
Intellectual Property Rights. . 3.10(a)
Laws. . . . . . . . . . . . . . 3.20(a)
Loan Agreement. . . . . . . . . 6.3(e)(ii)
Losses. . . . . . . . . . . . . 7.2
Orders. . . . . . . . . . . . . 3.20(a)
Permits . . . . . . . . . . . . 3.21
Permitted Liens . . . . . . . . 3.7(d)
Products. . . . . . . . . . . . 3.11
Proposed Contracts. . . . . . . 3.9(a)(xxi)
Purchase Price. . . . . . . . . 2.4(a)
Purchased Assets. . . . . . . . 2.1
Real Property Leases. . . . . . 3.8(a)
Receivables . . . . . . . . . . 3.6(c)
Representatives . . . . . . . . 5.2
Required Consents . . . . . . . 3.2
Retained Employees. . . . . . . 2.7(a)
Returns . . . . . . . . . . . . 3.13(a)
Selected Employees. . . . . . . 2.7(a)
Stipulated Amount . . . . . . . 7.5
Subsequent Audited Financial
Statements. . . . . . . . . . . 5.3(b)
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TERM SECTION
Tangible Property . . . . . . . 3.8(b)
Welfare Plan. . . . . . . . . . 3.14(i)
SECTION 1.2 INTERPRETATION. Unless the context otherwise requires, the
terms defined in Section 1.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in this Article
I, and those accounting terms used in this Agreement not defined in Section 1.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. Except as otherwise
expressly provided herein, all terms used in conjunction with a description of
securities shall have the meanings given to those terms under the 1934 Act.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"INCLUDE", "INCLUDES" or "INCLUDING" are used in this Agreement, they shall be
deemed to be followed by the words "WITHOUT LIMITATION". The use of the neuter
gender herein shall be deemed to include the masculine and feminine genders
wherever necessary or appropriate, the use of the masculine gender shall be
deemed to include the neuter and feminine genders and the use of the feminine
gender shall be deemed to include the neuter and masculine genders wherever
necessary or appropriate.
ARTICLE II
PURCHASE AND SALE; CLOSING; OTHER MATTERS
SECTION 2.1 PURCHASE AND SALE OF PURCHASED ASSETS. Except as otherwise
provided in Section 2.3, at the Closing, Seller shall sell, assign, transfer,
convey and deliver to Buyer, and Buyer shall acquire and purchase from Seller,
all the Purchased Assets, free and clear of all Liens other than Permitted
Liens. As used in this Agreement, the term "PURCHASED ASSETS" shall mean all of
the properties, rights, goodwill, franchises, interests and assets of every
kind, real, personal or mixed, tangible or intangible, and wheresoever situated,
belonging to Seller whether or not reflected on the books and records of Seller,
other than the Excluded Assets, including, but not limited to:
(a) All fixed assets of Seller;
(b) All claims, rights and choses in action of Seller against third
parties, including but not limited to those in respect of unliquidated rights,
under manufacturers' and vendors' warranties, guarantees or similar obligations,
other than existing A/R;
(c) All trademarks, trade names, service marks, logos, designs,
computer software and other intangible property (including all Federal, state
and foreign registrations and
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applications for registration of such trademarks, trade names, service marks,
logos or designs) owned by Seller or used in the Business, excluding the name
"Hospital Staffing Services, Inc.", but including a perpetual, irrevocable and
royalty free license to use the name "Hospital Staffing" and any related
trademarks, trade names, service marks, logos and designs;
(d) All rights, titles and interests of Seller in, to and under all
Contracts (other than any contract included within the Excluded Assets);
(e) All prepaid expenses, claims and other prepayments, including
prepaid supplies, and deferred charges attributable to the Contracts of Seller
that are to be assigned to Buyer under this Agreement;
(f) All client lists, copies of files and computer system files and
data files relating to existing clients (including hospital or institutions not
currently on service which are expected or could resume service in the future
collectively), credit policies and credit information with respect to all
clients of, and all cost and pricing data for, the Business;
(g) All supplier lists, product specifications, bills of materials
and all other production information;
(h) All employee records of the Business with respect to Selected
Employees;
(i) All existing business plans, advertising and promotional plans,
product development plans, forecasts, market research reports and competitor
information;
(j) All existing formulae, technology, trade secrets, computer
software, and know-how used by Seller in connection with the Business, and other
similar data;
(k) All rights under permits, licenses, franchises and similar
authorizations of Seller (including all rights of Seller to obtain renewals and
extensions thereof), to the extent transferable;
(l) All patents, patent applications, copyrights and copyright
applications of Seller (including all rights of Seller to obtain renewals and
extensions thereof); and
(m) All existing referral sources to and of the Business.
SECTION 2.2 TRANSFER, ASSIGNMENT AND CONVEYANCE OF PURCHASED ASSETS.
(a) INSTRUMENTS OF TRANSFER, ASSIGNMENT, CONVEYANCE AND ASSUMPTION,
ETC. At the Closing, Seller will deliver to Buyer the Xxxx of Sale, instruments
of transfer of Intellectual Property Rights, and any other instruments of
transfer, conveyance and assignment deemed necessary or desirable by Buyer to
transfer all the Purchased Assets, all as provided in Section 2.1.
Simultaneously therewith, Seller shall take all steps as may be reasonably
necessary
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or desirable to put Buyer in possession or control of all the Purchased Assets.
At the Closing, Buyer will deliver to Seller the Xxxx of Sale and any other
instruments of assumption necessary to evidence the assumption by Buyer of the
Assumed Liabilities, all as provided in Section 2.5.
(b) POWER OF ATTORNEY; RIGHT OF ENDORSEMENT. Effective upon the
Closing Date, Seller hereby constitutes and appoints Buyer, and any successors
and assigns, as the true and lawful attorney of Seller with full power of
substitution, in the name of Buyer, or the name of Seller, on behalf of and for
the benefit of Buyer, to (i) institute and prosecute, in the name of Seller or
otherwise, all proceedings which Buyer may deem proper in order to assert or
enforce any right or title of any kind in or to the Purchased Assets to be
transferred, conveyed and assigned as provided herein, (ii) with notice to
Seller as provided herein, defend and compromise any and all actions, suits or
proceedings in respect of any of the Purchased Assets, and (iii) do all such
acts and things in relation thereto as Buyer may deem advisable. Seller agrees
that the foregoing powers are coupled with an interest and shall not be
revocable by the dissolution of Seller or in any other manner or for any reason.
(c) FURTHER ASSURANCES. At any time and from time to time after the
Closing Date, upon the request of Buyer, Seller and the Stockholder, without
further consideration, will do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged or delivered, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney or assurances (including
obtaining any Required Consent not delivered at Closing with the approval of
Buyer) as may be reasonably required for the better transferring, assigning,
conveying, granting, assuring and confirming to Buyer, or for aiding and
assisting in the collection of or reducing to possession by Buyer, any of the
Purchased Assets to be transferred, conveyed and assigned hereunder or to vest
in Buyer all of Seller's right, title and interest in and to the Purchased
Assets being conveyed hereunder.
(d) ACCESS BY BUYER AND SELLER. Those books and records, the
possession of which is not being transferred to Buyer pursuant to this
Agreement, which relate to the Purchased Assets shall be preserved and
maintained by Seller for seven years from the Closing Date. Seller and
Stockholder shall give to Buyer and its authorized Representatives, during
normal business hours, such access to such books and records retained by Seller
and Stockholder as may be reasonably required by Buyer. Buyer shall be
entitled, at its own expense, to make extracts and copies thereof and Seller and
Stockholder shall cooperate with Buyer in connection with accomplishing the
same. Seller and Stockholder shall deliver to Buyer at Closing (and thereafter
as the case may be) the originals of all documents, records, instruments and
files as Buyer shall require or request to operate the Business as of and after
the Closing or to satisfy any obligation to Seller hereunder. Those books and
records relating to the Purchased Assets being transferred to Buyer shall be
preserved and maintained by Buyer for seven years from the Closing Date and
shall be made available to Seller and Stockholder at their expense for copying
at reasonable times, upon reasonable notice.
SECTION 2.3 EXCLUDED ASSETS. Anything in Section 2.1 to the contrary
notwithstanding, there shall be excluded from the assets, properties, rights and
businesses to be
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transferred to Buyer hereunder those items listed on SCHEDULE 2.3 attached
hereto. Such assets, properties and rights not being purchased by Buyer as
aforesaid are hereinafter collectively called the "EXCLUDED ASSETS".
SECTION 2.4 PURCHASE PRICE. Subject to the terms and conditions of this
Agreement:
(a) The purchase price (the "PURCHASE PRICE") payable by Buyer for
the Purchased Assets, shall equal the sum of $5,000,000. The Purchase Price
shall be payable by wire transfer to Seller at Closing of the sum of $3,500,000
together with (i) delivery of all of the shares of Seller owned by Buyer, which
shall be valued at $250,000, and (ii) cancellation of the Loan under that
certain Loan and Security Agreement of even date herewith, among Seller and
Buyer (the "LOAN AND SECURITY AGREEMENT"), which shall be valued at $1,250,000.
(b) The Purchase Price shall be allocated among the Purchased Assets
in the manner set forth on SCHEDULE 2.4(B).
(c) Seller and Buyer agree that such allocations shall be utilized by
the parties for all purposes.
SECTION 2.4A WORKING CAPITAL REALIZATION.
(a) On the Closing Date, Seller shall deliver to Buyer SCHEDULE 2.4A,
which Schedule shall set forth complete and accurate financial information
relating to: (i) all of the cash on hand and bank deposits of Seller as of the
Closing Date ("CASH"); (ii) all of the accounts receivable balances of Seller as
of the Closing Date ("A/R"), including for each A/R the debtor, the dollar
amount due, the invoice number and the date of invoice; (iii) all of the
accounts payable balances of Seller as of the Closing Date ("A/P"), including
for each A/P the payee, the dollar amount due, the invoice number and the date
of invoice; and (iv) details relating to the intercompany loans which are
reflected on the Seller's Balance Sheet.
(b) From the Closing Date until the Closing Cash Date, as hereinafter
defined, Buyer shall pay the A/P of Seller solely from the Cash and collected
A/R of Seller and only to the extent such funds are available therefor. Without
the prior written consent of Buyer, except as otherwise provided in this
Section, Seller may not accept payment of or collect any accounts receivable, or
institute any action or enter into any negotiations with respect to the payment
or collection of accounts receivable. Seller hereby appoints Buyer as exclusive
agent to accept payment of and collect the accounts receivable on behalf of
Seller. Buyer agrees to consult with Seller with respect to collection efforts
for each A/R.
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(c) From the Closing Date until the Closing Cash Date, as hereinafter
defined, Buyer will promptly notify Seller's Representative if Buyer receives
written notice that any A/R is being contested and will promptly take such
action as shall be requested of it by Seller or Capital HealthCare Financing, a
division of Capital Factors, Inc. ("CAPITAL") with respect to the assignment of
such A/R without recourse.
(d) On or prior to the fifth (5th) business day following each month
from the date hereof until the Closing Cash Date, as hereinafter defined, Buyer
will provide Seller with a schedule setting forth: (i) all of the A/R collected
through the end of such month, listing for each A/R the debtor, the dollar
amount received by Buyer, the invoice number paid and the date of payment; (ii)
all of the A/P paid by Buyer through the end of such month, listing for each A/P
the payee, the dollar amount paid, the invoice number paid and the date of
payment; and (iii) Buyer's cash balance representing the difference between the
Cash as increased by the A/R collected through the end of such month and
decreased by the A/P paid by Buyer through the end of such month.
(e) 180 days following the date of Closing (the "CLOSING CASH DATE"),
Buyer's appointment as Seller's agent for purposes of collection of such A/R
shall terminate with respect to A/R which were unpaid as of such date, and Buyer
shall pay Seller, by certified check or in immediately available funds, that
amount which represents the Cash as increased by the A/R collected up to 180
days from the date of Closing and decreased by the A/P paid by Buyer through 180
days from the date of Closing (the "CLOSING CASH").
(f) Buyer and Seller agree and acknowledge that Buyer shall have no
rights or interest in the A/R or A/P except as expressly set forth herein (which
rights of Buyer shall be solely as agent of Seller to process the payment and
collection of such A/P and A/R, respectively, as herein specified), and Buyer's
collection of A/R and payment of A/P (on behalf of Seller) shall be done in
conjunction with and subject to procedures established by Capital.
SECTION 2.5 ASSUMPTION OF LIABILITIES.
(a) LIABILITIES ASSUMED BY BUYER. In addition to payment of the
Purchase Price, except for the Excluded Obligations (as defined below), Buyer
shall assume, as of the Closing Date, the Liabilities of Seller relating to the
Business listed on SCHEDULE 2.5(A) attached hereto. These shall not include
accounts and trade payables incurred prior to Closing and amounts owed to
Stockholder. Such obligations and liabilities to be assumed by Buyer pursuant
to this Agreement are sometimes collectively referred to herein as the "ASSUMED
LIABILITIES."
(b) LIABILITIES NOT ASSUMED BY BUYER. Anything in this Agreement to
the contrary notwithstanding, Buyer shall not assume, or in any way be liable or
responsible for any liability or obligation of Seller or any other person
relating to the Business which is not listed on SCHEDULE 2.5(A). Such
obligations and liabilities of Seller not being assumed by Buyer are referred to
herein collectively, as "EXCLUDED OBLIGATIONS". Seller and the Stockholder
shall take any and all action which may be necessary to prevent any person from
having recourse against
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any of the Purchased Assets or against Buyer as transferee thereof with respect
to any Excluded Obligations and shall indemnify Buyer and hold it harmless
therefrom.
SECTION 2.6 CLOSING. The closing (the "CLOSING") of the purchase and sale
shall take place at the offices of Buyer, 00000 Xxxxxxxx Xxxxxxxxx - 00xx Xxxxx,
Xxxxx, Xxxxxxx, 00000 at 10:00 a.m., local time, on January 30, 1998 or on such
later date as may be designated by Buyer which shall be no later than ten (10)
business days thereafter, provided that all applicable conditions to Closing
specified in Article VI have been either satisfied or waived, or at such other
time and place upon which Seller and Buyer may agree (the time and date of the
Closing being hereinafter called the "CLOSING DATE"). All transactions
consummated at the Closing shall be deemed to have taken place simultaneously
and shall be deemed to be effective as of the Close of Business of Seller on the
Closing Date.
SECTION 2.7 CERTAIN EMPLOYEES; USE OF FACILITIES. (a) Buyer shall have
the right to designate at Closing by notice to Seller, those employees of Seller
(other than the employees to be listed on SCHEDULE 2.7(A) to be delivered by
Seller at least five (5) business days prior to Closing, who shall remain
employees of Seller (the "RETAINED EMPLOYEES")) it desires to employ and Seller
and Stockholder shall use their respective best efforts to assist Buyer in the
hiring of and retention of such employees (herein, the "SELECTED EMPLOYEES"),
and Buyer shall be responsible for all costs after Closing associated with such
Selected Employees. Buyer shall have no obligation, however, to offer
employment to any of Seller's or Stockholder's employees and shall have no
obligation or liability with respect to any employees, except as expressly
provided in this Agreement. Buyer agrees not to solicit the Retained Employees
for employment by Buyer or any of its Affiliates for a period of one (1) year
from the Closing Date to the extent that they remain employees of Seller or
Stockholder during such period.
(b) Seller and Stockholder shall pay all accrued salary, taxes,
benefits and other costs for its existing employees including the Selected
Employees through the date of Closing. Commencing on the date immediately
following the date of Closing, Buyer shall be responsible for all salary, taxes,
benefits and other costs of the Selected Employees.
(c) Consistent with regulatory requirements, Seller and Stockholder
agree that Buyer shall have the right to use, without cost to Buyer,
Stockholder's existing facilities at 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000 for a period not to exceed 90 days, at no rental, in
order to ensure an orderly transition of the Purchased Assets to Buyer. Buyer
acknowledges that Seller and Stockholder will also be using such facilities for
its ongoing operations and shall cooperate with Seller and Stockholder in
seeking to minimize any interference with such operations. Seller and
Stockholder agree that Seller shall maintain all necessary licenses and permits
to permit them to perform their obligations hereunder. Seller, Stockholder and
Buyer shall cooperate with each other as necessary to facilitate the proper
billing by Buyer and reimbursement from third party payors for such services.
(d) Buyer shall assume obligations under the lease at 0000 Xxxxx
Xxxxxxx Xxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 as of the date of Closing.
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SECTION 2.8 EFFECTIVE DATE. To the extent permitted by applicable law and
provided that the Closing has occurred, the parties intend that all of the
Purchased Assets shall be deemed vested in and with the Buyer, effective as of
the commencement of business on January 30, 1998, (the "EFFECTIVE DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE STOCKHOLDER
Seller and the Stockholder hereby jointly and severally represent and
warrant to Buyer that:
SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller and the
Stockholder each have full corporate power, capacity and authority to execute
and deliver this Agreement and each other Transaction Document to which each is
a party and to consummate the transactions contemplated hereby and thereby (the
"CONTEMPLATED TRANSACTIONS"). The execution and delivery of this Agreement and
the consummation of the Contemplated Transactions have been duly and validly
authorized by Seller and the Stockholder and no other proceedings on the part of
Seller or the Stockholder (or any other person) is necessary to authorize the
execution and delivery by Seller and the Stockholder of this Agreement or the
consummation of the Contemplated Transactions. The consideration to be received
by Seller represents the fair value of the Purchased Assets to be transferred to
Buyer. This Agreement has been duly and validly executed and delivered by
Seller and the Stockholder, and (assuming the valid execution and delivery of
this Agreement by the other parties hereto) constitutes the legal, valid and
binding agreement of such parties enforceable against such parties in accordance
with its terms except as such obligations and their enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought (whether at law or in equity).
SECTION 3.2 NO CONFLICTS; CONSENTS. The execution, delivery and
performance by Seller and the Stockholder of this Agreement and each other
Transaction Document to which each is a party and the consummation of the
Contemplated Transactions will not (i) violate any provision of the Articles of
Incorporation or By-Laws (or comparable instruments) of Seller or Stockholder;
(ii) require Seller or the Stockholder to obtain any consent, approval or action
of, or make any filing with or give any notice to, any Governmental Body or any
other person, except as set forth on SCHEDULE 3.2 (the "REQUIRED CONSENTS");
(iii) if the Required Consents are obtained, violate, conflict with or result in
the breach of any of the terms of, result in a modification of the effect of, or
otherwise cause the termination of or give any other contracting party to a
contract the right to terminate, or constitute (or with notice or lapse of time
or both constitute) a default (by way of substitution, novation or otherwise)
under any contract,
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agreement, indenture, note, bond, loan, instrument, lease, conditional sales
contract, purchase order, sales order, agreement with customer, agreement with
supplier, union contract, collective bargaining agreement, mortgage, license,
permit, franchise, commitment or other binding arrangement, whether written,
oral, express or implied, (the "CONTRACTS") to which Seller is a party or by or
to which Seller or any of its properties may be bound or subject, or result in
the creation of any Lien upon the Purchased Assets or upon the properties of
Seller pursuant to the terms of any such Contract, other than any such
violation, conflict or breach which would not, individually or in the aggregate
have a Seller Material Adverse Effect; (iv) if the Required Consents are
obtained, violate any Order of any Governmental Body against, or binding upon,
Seller or upon its respective securities, properties or business, other than any
such violation which would not, individually or in the aggregate, have a Seller
Material Adverse Effect; (v) if the Required Consents are obtained, violate any
Law of any Governmental Body, other than any such violation which would not,
individually or in the aggregate, have a Seller Material Adverse Effect or (vi)
if the Required Consents are obtained, violate or result in the revocation or
suspension of any Permit, other than any such violation, revocation or
suspension which would not, individually or in the aggregate, have a Seller
Material Adverse Effect.
SECTION 3.3 CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has all requisite powers and all governmental licenses,
authorizations, consents and approvals required to carry on its Business as now
conducted. Seller is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Seller Material Adverse
Effect.
SECTION 3.4 SUBSIDIARIES. Seller does not own, directly or indirectly,
any equity or other interest in any other person and has no Subsidiaries.
SECTION 3.5 CHARTER DOCUMENTS AND CORPORATE RECORDS. (a) Seller has
heretofore delivered to Buyer true and complete copies of the Articles of
Incorporation (certified by the Secretary of State of its jurisdiction of
incorporation) and By-Laws (certified by Seller's secretary or an assistant
secretary), of Seller as in effect on the date hereof. The stock books of
Seller which have been made available to Buyer for its inspection are true and
complete. The Stockholder is the sole record and beneficial owner of all of the
outstanding capital stock of Seller and there are no options, warrants or other
agreements of any kind outstanding or proposed to be issued with respect to the
capital stock of Seller.
(b) All financial, business and accounting books, ledgers, accounts
and other records relating to Seller have been properly and accurately kept and
completed in all material respects except as set forth on SCHEDULE 3.5(B)
hereto.
SECTION 3.6 FINANCIAL STATEMENTS. (a) Seller has delivered to Buyer
unaudited financial statements of Seller consisting of a statement of net assets
and statement of income as
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and for the fiscal year ended November 30, 1997 and unaudited financial
statements of Seller consisting of a statement of net assets and statement of
income as at and for Seller's fiscal year ended November 30, 1996. Such
financial statements (collectively, the "FINANCIAL STATEMENTS") present fairly
the financial position of Seller and the results of its operations and changes
in financial position as of the dates and for the periods indicated, in
conformity with GAAP consistently applied during each of such periods, except
that the Financial Statements may not contain all footnotes required by GAAP.
(b) Except as set forth on SCHEDULE 3.6(B): (i) As at the Balance
Sheet Date, Seller did not have any Liabilities that were not fully and
adequately reflected or reserved against on the balance sheet contained in, or
in the notes to, the November 30, 1997 Financial Statements; (ii) Seller has
not, except in the ordinary course of business consistent with past practice and
except for customary expenses incurred in connection with the Contemplated
Transactions, incurred any Liabilities since the Balance Sheet Date; and
(iii) neither Seller nor the Stockholder has any knowledge of any circumstance,
condition, event or arrangement that they reasonably anticipate would hereafter
give rise to any Liabilities of Seller or any successor to its businesses except
Liabilities arising in the ordinary course of business consistent with past
practice and customary expenses incurred in connection with the Contemplated
Transactions. Seller and Stockholder represent and warrant that they know of no
reason why the Financial Statements cannot be audited in accordance with the
requirements of Section 5.3 hereof.
(c) The accounts receivable of Seller with respect to clients who
have been on service since December 1, 1996 (the "RECEIVABLES") (except such
Receivables as have been collected since such date), to Seller's knowledge,
constitute bona fide Receivables resulting from the sale of services in the
ordinary course of business in conformity with applicable agreements. Except as
otherwise disclosed by Seller to Buyer, to Seller's knowledge, such Receivables
are subject to no valid defense, offsets, returns, allowances or credits of any
kind other than defenses, offsets, returns, allowances and credits arising in
the ordinary course of business, it being understood that nothing herein shall
be interpreted as a guarantee of the collectability of such Receivables.
(d) Insofar as it relates to or affects the Purchased Assets,
SCHEDULE 3.6(D) sets forth a brief description of all Liabilities of Seller in
respect of (i) money borrowed from and owed to any bank, financial institution
or other person and (ii) any indebtedness or potential indebtedness under any
guaranty, letter of credit or performance credit (collectively, "DEBT"). Except
as set forth on SCHEDULE 3.6(D), all Debt may be repaid or prepaid upon no more
than 30 days' notice without premium or penalty.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date,
except as contemplated by this Agreement or disclosed in SCHEDULE 3.7, Seller
has conducted its business in the ordinary course consistent with past practices
and there has not been:
(a) Any event constituting a Seller Material Adverse Effect;
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(b) Any amendment to the Articles of Incorporation or By-Laws of
Seller or any amendment to any term of any outstanding security of Seller;
(c) Insofar as it relates to or affects the Purchased Assets, any
(i) incurrence, assumption or guarantee by Seller of any debt other than in the
ordinary course of business in amounts and on terms consistent with past
practices, (ii) issuance or sale of any securities convertible into or
exchangeable for debt securities of Seller, or (iii) issuance or sale of options
or other rights to acquire from Seller, directly or indirectly, debt securities
of Seller or any securities convertible into or exchangeable for any such debt
securities;
(d) Insofar as it relates to or affects the Purchased Assets, any
creation, incurrence or assumption by Seller of any lien on any asset other than
(i) liens for Taxes not yet due or being contested in good faith (and for which
adequate reserves have been established); (ii) liens which do not materially
detract from the value of such asset as now used, or materially interfere with
any present or intended use of such asset; (iii) warehousemen's, mechanics',
carriers', landlords', repairmen's or other similar liens arising in the
ordinary course of business; or (iv) the liens under the Loan and Security
Agreement (collectively, the "PERMITTED LIENS");
(e) Insofar as it relates to or affects the Purchased Assets, any
making or forgiving of any loan, advance or capital contribution to or
investment in any person other than loans, advances or capital contributions to
or investments in wholly-owned subsidiaries made in the ordinary course of
business consistent with past practices;
(f) Any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Seller which,
individually or in the aggregate, has had or will reasonably be expected to have
a material adverse effect on its operations;
(g) Except in the ordinary course of business, any transaction or
commitment made, or any Contract entered into, by Seller relating to its assets
or Business (including the acquisition or disposition of any substantial assets)
or any relinquishment by Seller or other party of any Contract or other right;
(h) Any change in any method of accounting or accounting practice by
Seller or its marketing practices;
(i) Any assumption or guarantee of the obligations of any person;
(j) Insofar as it may affect or relate to any Selected Employee, any
grant of any severance or termination pay to any employee of Seller, any
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any employee of
Seller or any increase in benefits payable under any existing severance or
termination pay policies or employment agreements, or any increase in
compensation, bonus or other benefits payable to any employee of Seller, other
than routine
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increases for employees in the ordinary course of business or disclosed to Buyer
in writing prior to the date hereof or on any Schedule;
(k) Any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of Seller, which employees were not subject to a
collective bargaining agreement at the Balance Sheet Date, or any lockouts,
strikes, slowdowns, work stoppages or, to the knowledge of Seller, threats
thereof by or with respect to such employees;
(l) Any intentional waiver of any material right under any Contract
of the type required to be set forth on any Schedule;
(m) Except for any changes made in the ordinary course of business,
any material change in any business policies of Seller;
(n) Except in the ordinary course of business, any payment, directly
or indirectly, of any Liability before the same became due in accordance with
its terms;
(o) Any termination or failure to renew, or the receipt of any
written threat (that was not subsequently withdrawn) to terminate or fail to
renew, any Contract that is or was material to the operation; or
(p) Any agreement or arrangement made by Seller to take any action
which, if taken prior to the date hereof, would have made any representation or
warranty in this Section untrue or incorrect in any material respect.
SECTION 3.8 PROPERTIES. (a) SCHEDULE 3.8(A) sets forth a brief
description (including the address) of all real property leased by Seller ("REAL
PROPERTY LEASES"); the date of the lease and any amendments thereto, the term
thereof, the term of any renewal options and the aggregate monthly rental
payable thereunder. Seller owns no real property.
(b) SCHEDULE 3.8(B) sets forth a complete and correct list and
description of all tangible property (the "TANGIBLE PROPERTY"), owned or used by
Seller, or which Seller holds an option to acquire, having a book value
individually of $5,000 or more, or $10,000 or more in the aggregate, in case of
any group of similar items of Tangible Property, including, without limitation,
all equipment, furniture, furnishings, leasehold improvements, fixtures,
vehicles and structures. All Tangible Property selected by Buyer pursuant to
Section 2.7 shall be in a state of working order except for a nonmaterial
portion of such Tangible Property that may be undergoing repairs or maintenance
in the ordinary course.
(c) Except as set out in SCHEDULE 3.8(C) and insofar as it may affect
or relate to the Purchased Assets, Seller has good title to, or in the case of
leased property has valid leasehold interests in, all properties and assets
(whether real, personal, tangible or intangible) reflected on the Balance Sheet
or acquired after the Balance Sheet Date except for properties and
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assets sold or disposed of since the Balance Sheet Date in the ordinary course
of business consistent with past practice. Except as set forth on
SCHEDULE 3.8(C), none of such properties or assets is subject to any Liens,
except:
(i) Liens disclosed on the Balance Sheet or the notes
thereto;
(ii) Liens for taxes not yet due or being contested in good
faith (and for which adequate reserves have been established on the Balance
Sheet); or
(iii) Liens which do not materially detract from the value of
such property or assets as now used, or materially interfere with any present or
intended use of such property or assets.
SECTION 3.9 CONTRACTS. (a) Except for (i) sales orders from clients or
customers arising in the ordinary course of business and (ii) Contracts pursuant
to the terms of which Seller is to make or receive payments not in excess of
$25,000, in the aggregate, throughout the term thereof, SCHEDULE 3.9 sets forth
as of the date hereof a complete and accurate list and description of all
Contracts to which Seller is a party or by or to which it or its assets or
properties are bound or subject, including, without limitation:
(i) Contracts with any current or former shareholder,
officer, director, employee, independent contractor, consultant, agent or other
representative or with any Affiliate of any of the foregoing;
(ii) Contracts with any labor union or association
representing any employee;
(iii) Contracts for the purchase of materials, supplies,
equipment, merchandise or services in excess of $5,000 for any one individual
item;
(iv) Other than in the ordinary course of business:
(A) Contracts for the sale of any of its assets or properties or business or
(B) Contracts for the grant to any person of any preferential rights to purchase
any of its assets or properties;
(v) Partnership or joint venture Contracts;
(vi) Contracts under which Seller agrees to indemnify any
party;
(vii) Contracts under which Seller agrees to share Tax
liability of or with any party;
(viii) Contracts that cannot be canceled without liability,
premium or penalty;
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(ix) Contracts that can be canceled only on 60 days' or more
notice;
(x) Any special financial arrangements with the largest (in
terms of sales volume) 25 clients, referral sources or third party payors of
Seller that are outside of Seller's published policies including, but not
limited to, any arrangements relating to payment terms;
(xi) Contracts with any person to advertise or market
Seller's products or services other than in the ordinary course of business;
(xii) Contracts containing covenants not to compete in any
line of business or with any person in any geographical area (or not to solicit
or accept any business) or covenants of any other person not to compete in any
line of business or in any geographical area (or not to solicit or accept any
business);
(xiii) Contracts relating to the acquisition of any operating
business or the capital shares of any other person;
(xiv) Options for the purchase or sale of any asset, tangible
or intangible;
(xv) Contracts requiring the payment to any person of an
override or similar commission or fee;
(xvi) Contracts relating to all Debt, insofar as it affects
or relates to the Purchased Assets;
(xvii) Contracts with customers, referral sources, third party
payors, independent suppliers, contractors and manufacturers other than in the
ordinary course of business;
(xviii)Sales agency, licensing, representative, provider,
managed care or distributorship Contracts;
(xix) Contracts for the payment of fees or other
consideration to any officer or director of Seller or to any other entity in
which any of the foregoing has an interest;
(xx) management Contracts and other similar agreements with
any person;
(xxi) Any other Contracts not made in the ordinary course of
business or pursuant to the terms of which there is either a current or future
obligation or right of Seller to make payments or receive payments in excess
(individually or, in the case of any group of similar items, in the aggregate)
of $10,000 throughout the term thereof. SCHEDULE 3.9 also lists and describes
the status of all Contracts currently in negotiation or proposed by Seller as to
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which there exists a draft agreement, letter of intent or similar instrument and
which is of a type which if entered into by Seller would be required to be
listed on SCHEDULE 3.9 or on any other Schedule (the "PROPOSED CONTRACTS").
(b) There are no Contracts, other than those set forth on SCHEDULE
3.9, and on any other Schedule hereto, that are required to be disclosed
hereunder. Except as set forth on SCHEDULE 3.9, all such Contracts and all
Contracts reflected on any other Schedule hereto are valid, subsisting, in full
force and effect and binding upon Seller, and, to the best knowledge of Seller,
on the other parties thereto in accordance with their terms, and the Seller has
paid in all respects or accrued all amounts due thereunder and has satisfied in
all respects or provided for all of its liabilities and obligations thereunder
to be satisfied or provided for through the date hereof, and is not in default
under any of them in any material respect, nor, to the best knowledge of Seller,
is any other party to any such Contract in default thereunder in any material
respect, nor, to the best knowledge of Seller, does any condition exist that
with notice or lapse of time or both would constitute a default thereunder.
Seller and Stockholder further represent and warrant that notwithstanding that
any Contract may be in the name of another Stockholder entity, no such entity
other than Seller has an interest in any such Contracts, and at Closing and
thereafter as provided herein, Seller and Stockholder shall take any further
corrective action to ensure the transfer of such Contract to Buyer (subject to
any Required Consents) as is reasonably requested by Buyer. Except as
separately identified on SCHEDULE 3.9 hereto or on any other Schedule, no
approval or consent of any person is needed in order that the Contracts set
forth on SCHEDULE 3.9 or on any other Schedule continue in full force and effect
following the consummation of the Contemplated Transactions.
(c) There have been delivered to Buyer, true and complete copies of
(i) all of the Contracts required to be set forth on SCHEDULE 3.9 or on any
other Schedule and (ii) the most recent draft, letter of intent or term sheet of
all of the Proposed Contracts required by the provisions of Section 3.9(a)(xxi)
to be set forth on SCHEDULE 3.9.
SECTION 3.10 INTANGIBLE PROPERTY. (a) SCHEDULE 3.10 sets forth all
patents, trademarks, copyrights, service marks and trade names owned or used by
Seller relating to the Business, all applications for any of the foregoing, and
all permits, grants and licenses or other rights running to or from Seller
relating to any of the foregoing (the "INTELLECTUAL PROPERTY RIGHTS"), and there
are no other patents, trademarks, copyrights, service marks and trade names that
are material to the Business. To the best of Seller's knowledge: (i) with
respect to trademarks material to the Business as presently conducted (and only
in such jurisdictions where such trademarks are material to the Business as
presently conducted), all renewals of the registrations set forth in
SCHEDULE 3.10 for such trademarks have been appropriately filed; (ii) Seller has
exercised its best efforts to ensure compliance with all registration
requirements, and has paid all necessary government fees; and (iii) the
trademark registrations material to the Business as presently conducted are
valid with respect to Products that are covered by the registrations. The
trademarks of Seller that are material to the Business are identified on
SCHEDULE 3.10 by means of an asterisk.
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(b) Except as set forth on SCHEDULE 3.10, no Intellectual Property
Rights or any other such right is subject to any security interest or
outstanding order, judgment, decree, stipulation or agreement restricting the
use or licensing thereof. Except as set forth on SCHEDULE 3.10, (i) Seller,
during the three years preceding the date hereof, has not been sued or charged
in writing with or been a defendant in any claim, suit, action or proceeding
relating to the Business which has not been terminated prior to the date hereof
and which involves a claim of infringement of any Intellectual Property Rights;
and (ii) the Stockholder and Seller have no knowledge of any such charge or
claim of any infringement during the three years preceding the date hereof by
any other person of any Intellectual Property Rights.
SECTION 3.11 CLAIMS AND PROCEEDINGS. Except as set forth on SCHEDULE
3.11, there are no outstanding Orders of any Governmental Body against or
involving Seller. Except as set forth on SCHEDULE 3.11, there are no actions,
suits, claims or counterclaims or legal, administrative or arbitral proceedings
or investigations (collectively, "CLAIMS") (whether or not the defense thereof
or liabilities in respect thereof are covered by insurance), pending or
threatened in writing, against or involving Seller, the Business, the Purchased
Assets or Seller's properties which (i) involve a claim for the payment of money
damages of $10,000 or more; (ii) relate to employment, regardless of amount;
(iii) involve a claim from any prior or present client, payor or referral source
or involve any alleged violation of laws relating to health regulation
(including state certificate of need and licensure laws and federal and state
laws) or the Medicare or Medicaid programs; or (iv) individually or in the
aggregate, would have a Seller Material Adverse Effect. Except as set forth on
SCHEDULE 3.11, to the best knowledge of Seller, there is no fact, event or
circumstances that would give rise to any Claim that would be required to be set
forth on SCHEDULE 3.11 if currently pending or threatened. All notices required
to have been given to any insurance company listed as insuring against any Claim
set forth on SCHEDULE 3.11 have been timely and duly given and, except as set
forth on SCHEDULE 3.11, no insurance company has asserted in writing that such
Claim is not covered by the applicable policy relating to such Claim. Except as
set forth on SCHEDULE 3.11 there are no product liability Claims against or
involving Seller or, to the best knowledge of Seller, any product marketed or
distributed by Seller ("PRODUCTS").
SECTION 3.12 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order, decree or other instrument binding upon Seller
which has or would reasonably be expected to have the effect of prohibiting
(i) competition by Seller, (ii) any business practice of Seller, (iii) any
acquisition of property by Seller, or (iv) to the knowledge of Seller or the
Stockholder, the conduct of the Business.
SECTION 3.13 TAXES. (a) Except as set forth on SCHEDULE 3.13, (i) all Tax
returns, statements, reports and forms required to be filed with any Taxing
Authority by or on behalf of Seller (collectively, the "RETURNS") have been
timely filed through the date hereof or will be filed when due (taking into
account any extension granted by the appropriate Taxing Authority), in
accordance with all applicable Laws; (ii) as of the time of filing, the Returns
correctly reflected (and, as to any Returns not filed as of the date hereof,
will correctly reflect) the income and expenses of Seller and any other
information required to be shown therein; (iii) Seller has timely
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paid (or is contesting in good faith and has reserved adequate amounts therefor)
all Taxes that have been shown as due and payable on the Returns that have been
filed; (iv) Seller is not delinquent in the payment of any Tax and has not
requested any extension of time within which to file or send any Return, which
Return has not since been filed or sent; (v) no deficiency for any Tax or claim
for additional Taxes by any Taxing Authority has been proposed, asserted or
assessed in writing against Seller (or any member of any affiliated or combined
group of which Seller is or have been a member); (vi) Seller (or any member of
any affiliated or combined group of which Seller is or has been a member) has
not granted any extension or waiver of the limitation period applicable to any
Returns; (vii) Seller has not filed any consent or election under the Code,
other than such consents and elections, if any, reflected in the Returns;
(viii) there is no claim, audit, action, suit, proceeding or investigation now
pending against or with respect to Seller in respect of any Tax or assessment;
(ix) there are no Liens for Taxes upon the assets of Seller; (x) Seller has not
been a member of an affiliated group other than one of which Stockholder was the
common parent, or filed or been included in a combined, consolidated or unitary
Return together other than one filed by Stockholder; (xi) Seller has complied
with all Laws relating to Tax withholding; and (xii) Seller is not currently
under any contractual obligation to indemnify any other person with respect to
Taxes.
(b) True and correct copies of the Returns for the fiscal years 1996
and 1995 have been delivered to Buyer.
(c) Neither Buyer nor Seller shall be required to pay any amount to
anyone else pursuant to any tax-sharing or tax allocation agreement to which
Seller is a party.
SECTION 3.14 EMPLOYEE BENEFITS PLANS. (a) SCHEDULE 3.14(A) contains a
true and complete list of (i) all employee benefit plans described in
Section 3(3) of ERISA of Seller, and of any other companies or entities which
constitute a "CONTROLLED GROUP" with Seller (within the meaning of Sections
4001(a)(14) and (b) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and/or Sections 414(b)-(o) of the Code (hereinafter referred
to collectively as the "GROUP"), which are presently in effect or which may give
rise to liability, and are for the benefit of the Employees of Seller, and (ii)
any other pension, profit sharing, retirement, deferred compensation, stock
purchase, stock option, incentive, bonus, sabbatical leave, vacation, severance
(including, without limitation, arrangements providing for benefits in the event
of a change of ownership in whole or in part of Seller), disability,
hospitalization, medical insurance, relocation, child care, educational
assistance or other employee benefit plan or program which any member of the
Group maintains or to which any member of the Group has any present or future
obligation to contribute for the benefit of the Employees of Seller. (The plans
or programs described in clauses (i) and (ii) are herein collectively referred
to as the "GROUP PLANS".) Seller has delivered or made available to Buyer true
and complete copies of all documents (including plan documents and related trust
agreements), as they may have been amended to the date of delivery or
availability, embodying the Group Plans. Since such date of delivery or
availability, the Group Plans have not been amended to materially change the
terms thereof. Seller has also delivered to Buyer true and complete copies of
all annual reports,
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summary annual reports, summary plan descriptions and a summary of material
modifications with respect to each Group Plan for the preceding three years.
(b) The Group maintains no tax qualified "EMPLOYEE PENSION BENEFIT
PLAN" as defined in Section 401 of the Code or Section 3(2) of ERISA for the
benefit of employees of the Seller, nor has the Group ever maintained any other
employee pension benefit plan for the benefit of employees of the Seller, except
for those plans set forth on SCHEDULE 3.14(B) attached hereto.
(c) If applicable, the IRS has issued a favorable determination
letter to the effect that the Group Plan qualifies under Section 401(a) of the
Code and that the related trust is exempt from taxation under Section 501(a) of
the Code and such determination letter remains in effect and has not been
revoked. To Seller's best knowledge, nothing has occurred (or, if occurred, has
not been corrected in a manner acceptable to the IRS as expressly applied to the
Group Plan) or is expected to occur that would adversely affect the qualified
status of the Group Plan or any related trust subsequent to the issuance of such
determination letter.
(d) Except as provided in SCHEDULE 3.14(D), no member of the Group
currently has any obligation to contribute to any multi-employer plan as defined
in Section 3(37) of ERISA. With respect to each such multi-employer plan listed
on SCHEDULE 3.14(D), the Group has not incurred withdrawal liability within the
meaning of the Multi-employer Pension Plan Amendments Act of 1980.
(e) To Seller's best knowledge, no member of the Group nor any other
"DISQUALIFIED PERSON" or "PARTY IN INTEREST" (as defined in Section 4975 of the
Code and Section 3 of ERISA, respectively) has engaged in any "PROHIBITED
TRANSACTION," as such term is defined in Section 4975 of the Code or Section 406
of ERISA with respect to a Group Plan, which could subject any of the Group
Plans (or their related trusts), any officer, director or employee of any entity
within the Group or any trustee, administrator or any other fiduciary of any of
the Group Plans to a material tax or penalty imposed under Section 4975 of the
Code or Section 502(i) of ERISA.
(f) There are no actions, audits, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of Seller, threatened against
any of the Group Plans or any fiduciary of any of the Group Plans or against the
assets of any of the Group Plans.
(g) The consummation of the Contemplated Transactions will not
accelerate any liability under any of the Group Plans because of an acceleration
of any rights or benefits to which employees may be entitled thereunder.
(h) The consummation of the Contemplated Transactions will not
provide a basis for a participant in any Group Plan to claim an involuntary
termination of his employment with any member of the Group and become entitled
thereby to payments under such Group Plan.
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(i) With respect to any Group Plan that is an employee welfare
benefit plan within the meaning of Section 3(1) of ERISA (a "WELFARE PLAN"), (i)
each such Welfare Plan, the contributions to which are claimed as a deduction
under any provision of the Code, is in substantial compliance with all
applicable requirements pertaining to such deduction, (ii) to Seller's best
knowledge, any Welfare Plan which is a group health plan within the meaning of
Section 5000(b) of the Code satisfies in all material respects all of the
requirements of Section 4980B of the Code, and (iii) all employer contributions
due have been fully and timely paid or accrued on the books of Seller.
(j) Other than as required by law, Seller has no obligation to or on
behalf of any retired or former employee with regard to any disability (long or
short term), hospitalization, medical, dental or life insurance plans (whether
insured or self-insured) or other Welfare Plan as defined in Section 3(1) of
ERISA maintained by Seller.
SECTION 3.15 OFFICERS, DIRECTORS AND KEY EMPLOYEES. SCHEDULE 3.15 sets
forth (a) the name and total direct compensation of each employee, consultant,
agent or other representative of Seller whose current or committed annual rate
of compensation (including bonuses and commissions) exceeds $25,000, (b) all
wage and salary increases, bonuses and increases in any other direct
compensation received by or accrued to such persons since December 1, 1996,
(c) any payments or commitments to pay any severance or termination pay to any
such persons or to any other person, and (d) any accrual for, or any commitment
or agreement by Seller to pay, such increases, bonuses or pay. Except as set
forth on SCHEDULE 3.15, the employment of all persons presently employed by
Seller is terminable at will.
SECTION 3.16 EMPLOYMENT-RELATED MATTERS. Except as set forth in
SCHEDULE 3.16, (a) Seller is not a party to any contract or agreement with any
labor organization or other representative of its employees; (b) there is no
unfair labor practice charge or complaint pending or, to Seller's best
knowledge, threatened against Seller; (c) there is no labor strike, slowdown,
work stoppage or other labor controversy in effect or, to Seller's best
knowledge, threatened against or otherwise affecting Seller; (d) Seller has not
experienced any labor strike, slowdown, work stoppage or similar labor
controversy within the past three years; (e) no representation question has been
raised respecting any employees of Seller working within the past three years,
nor, to the best knowledge of Seller, are there any campaigns being conducted to
solicit authorization from any employees of Seller to be represented by any
labor organization; (f) no collective bargaining agreement relating to any
employees of Seller is being negotiated other than extensions or renewals of
existing agreements set forth in SCHEDULE 3.16; (g) no action, suit, complaint,
charge, arbitration, inquiry, proceeding or investigation by or before any
court, governmental agency, administrative agency or commission brought by or on
behalf of any employee, prospective employee, former employee, retiree, labor
organization or other representative of Seller's employees, is pending or, to
Seller's best knowledge, threatened against Seller; (h) Seller is not a party
to, or otherwise bound by, any consent decree with, citation or order by, any
Governmental Body relating to its employees or employment practices relating to
Seller's employees; (i) Seller is in compliance in all material respects with
all applicable laws, policies, procedures, agreements and contracts, relating to
employment,
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employment practices, wages, hours, and terms and conditions of employment;
(j) Seller has paid in full to all of its employees all wages, salaries,
commissions, bonuses, benefits and other compensation due and payable to such
employees on or prior to the date hereof.
SECTION 3.17 POTENTIAL CONFLICTS OF INTEREST. Except for the Excluded
Assets, neither the Stockholder nor any officer, director or Affiliate of
Seller, or any spouse of any such officer, director or Affiliate, and no entity
controlled by one or more of the foregoing:
(a) owns, directly or indirectly, any interest in (excepting less
than 1% stock holdings for investment purposes in securities of publicly held
and traded companies), or is an officer, director, employee or consultant of,
any person which is, or is engaged in business as, a competitor, lessor, lessee,
supplier, distributor, sales agent or customer of Seller;
(b) owns, directly or indirectly, in whole or in part, any material
property that Seller uses in the conduct of its business; or
(c) has any material cause of action or other claim whatsoever
against, or owes any amount to, Seller, except for claims in the ordinary course
of business such as for accrued vacation pay and accrued benefits under employee
benefit plans.
SECTION 3.18 INSURANCE. Seller has provided to Buyer a list of all
insurance policies and fidelity and surety bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors of Seller
which list is annexed hereto as SCHEDULE 3.18, and true and complete copies of
all such policies and bonds have been made available to Buyer and such policies
and bonds are in full force and effect.
SECTION 3.19 SUPPLIERS, CUSTOMERS AND CONTRACTORS. SCHEDULE 3.19 lists,
by dollar volume paid or revenues generated, as the case may be, for the month
ended November 30, 1997, the 15 largest clients, referral sources and third
party payors of Seller. During the last six months, the Seller has not suffered
the loss of any significant referral source or client.
SECTION 3.20 COMPLIANCE WITH LAWS. (a) Seller is not in violation of any
applicable order, judgment, injunction, award, decree or writ (collectively,
"ORDERS"), or any applicable law, statute, code, ordinance, rule, regulation or
other requirement (collectively, "LAWS"), of any government or political
subdivision thereof, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any court or
arbitrator (collectively, "GOVERNMENTAL BODIES") affecting its property, affairs
or business, where the effect of any such violation, individually or in the
aggregate, would have a Seller Material Adverse Effect. Seller has not made any
illegal payment to officers or employees of any Governmental Body, or made any
illegal payment to customers for the sharing of fees or to customers or
suppliers for rebating of charges, or engaged in any other illegal reciprocal
practice, or made any illegal payment or given any other illegal consideration
to purchasing agents or other representatives of customers in respect of sales
made or to be made by Seller.
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(b) Without limiting the generality of the foregoing, Seller has been
and is in compliance in all material respects with The False Statement Statute
(18 U.S.C. Section 1001), The Criminal False Claims Statute (18 U.S.C. Section
287), The Civil False Claims Act (31 U.S.C. Sections 3729), The Medicare and
Medicaid Civil Monetary Penalties Act (42 U.S.C. Sections 1320a-7a), The
Medicare and Medicaid Criminal Penalties Act (42 U.S.C. Section 1320a-7b), The
Xxxxx Law (42 U.S.C. Section 1395nn), The Medicare and Medicaid Anti-Kickback
law (42 U.S.C. Section 1320a-7b(b)) and all similar state statutes in all of
the states in which Seller operates or provides services.
(c) There are no required cost reports and other submissions and
filings (other than claims for payments) with respect to Medicaid and Medicare
or other third party payments to Seller.
(d) No third-party payor (including, without limitation, Medicare or
Medicaid) has asserted any liability against Seller in respect of any period
through the date hereof which has not been settled or paid; to the best
knowledge of the Seller and Stockholder, there is no pending audit or any
pending or threatened audit assessment or retroactive rate adjustment against
Seller, for any period through the date hereof; and, if any such audit
assessment or retroactive rate adjustment is so asserted, it will be promptly
paid or otherwise satisfied by Seller and will have no material effect upon any
of its rates, operations or financial performance.
(e) SCHEDULE 3.20(E) hereto also contains a complete and correct list
of all agreements, arrangements and other relationships of Seller currently in
effect, or in effect at any time since December 1, 1996, with individuals and
entities who refer or have referred to or otherwise generate or have generated
business for Seller (including, without limitation, sales representatives and
referring health care providers).
SECTION 3.21 PERMITS. Seller has all licenses, permits, orders or
approvals of, and has made all required registrations with, any Governmental
Body that are necessary to the conduct of the Business and participation in the
Medicare or Medicaid programs (collectively, "PERMITS"), except for such Permits
which, if not in the possession of Seller, would not have a Seller Material
Adverse Effect. All Permits are listed on SCHEDULE 3.21 and are in full force
and effect; no material violations are or have been recorded in respect of any
Permit; and no proceeding is pending or threatened to revoke or limit any
Permit.
SECTION 3.22 FINDERS; FEES. Except for Gruntal & Co., there are no
investment bankers, brokers, finders or other intermediaries which have been
retained by or are authorized to act on behalf of Seller or the Stockholder
which might be entitled to any fee or commission from Seller upon consummation
of the Contemplated Transactions, and Seller and Stockholder agree to satisfy
any obligations to Gruntal & Co.
SECTION 3.23 DEPOSITARIES. SCHEDULE 3.23 sets forth the name of each bank
or similar entity in which Seller has an account, lock box or safe deposit box
and the names of all persons authorized to draw thereon or to have access
thereto.
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SECTION 3.24 DISCLOSURE. Neither this Agreement, the Schedules hereto,
the Financial Statements nor any other audited or unaudited financial
statements, documents or certificates furnished or to be furnished to Buyer by
or on behalf of Seller or the Stockholder pursuant to this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There are no facts which would materially adversely affect the
Business which have not been set forth herein, or in any Schedule hereto, or in
any certificate or statement furnished or to be furnished to Buyer by Seller or
the Stockholder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has full
corporate power and authority to execute and deliver this Agreement and each
other Transaction Document to which it is a party and to consummate the
Contemplated Transactions. The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions have been duly and validly
authorized and approved by the Board of Directors of Buyer and no other
corporate proceedings on the part of Buyer (or any other person) are necessary
to authorize the execution and delivery by Buyer of this Agreement or the
Contemplated Transactions. This Agreement has been duly and validly executed
and delivered by Buyer and (assuming the valid execution and delivery of this
Agreement by the other parties hereto) constitutes the legal, valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
except as such obligations and their enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought (whether in law
or at equity).
SECTION 4.3 NO CONFLICTS; CONSENTS. The execution, delivery and
performance by Buyer of this Agreement and each other Transaction Document to
which it is a party and the consummation by Buyer of the Contemplated
Transactions will not (i) violate any provision of the Certificate of
Incorporation or By-Laws of Buyer; (ii) require Buyer to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
Governmental Body or any other person, except for obtaining the consents listed
on SCHEDULE 3.9 and SCHEDULE 4.3; (iii) violate, conflict with or result in the
breach of any of the terms of, result in a material
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modification of the effect of, or otherwise cause the termination of or give any
other contracting party to a contract the right to terminate, or constitute (or
with notice or lapse of time or both constitute) a default (by way of
substitution, novation or otherwise) under any Contract to which Buyer is a
party or by or to which it or any of its properties may be bound or subject, or
result in the creation of any Lien upon the properties of Buyer; (iv) subject to
obtaining the consents listed on SCHEDULE 3.9 AND 4.3, violate any Order of any
Governmental Body against, or binding upon, Buyer or upon Buyer's securities,
properties or business; (v) subject to obtaining the consents listed on SCHEDULE
3.9 AND 4.3, violate any Law of any Governmental Body; or (vi) violate or result
in the revocation or suspension of any Permit.
SECTION 4.4 LITIGATION. There are no Claims (whether or not the defense
thereof or liability in respect thereof are covered by insurance) pending or
threatened in writing against or involving Buyer which individually or in the
aggregate would have a material adverse effect upon the business, properties,
financial condition or results of operations of Buyer taken as a whole. No
suit, action or proceeding before any court or any Governmental Body has been
commenced or is pending or, to the knowledge of Buyer, threatened against Buyer,
which suit, action or proceeding seeks to restrain, prevent, change or delay in
any material respect the Contemplated Transactions.
SECTION 4.5 FINDERS; FEES. Except for Strategica Capital Corp., there is
no investment banker, broker, finder or other intermediary retained by or
authorized to act on behalf of Buyer who might be entitled to any fee or
commission from Buyer upon consummation of the Contemplated Transactions, other
than Strategica Capital Corp., and Buyer agrees to satisfy any obligation to
Strategica Capital Corp.
SECTION 4.6 DISCLOSURE. Neither this Agreement, the Schedules hereto, nor
any other audited or unaudited financial statements, documents or certificates
furnished or to be furnished to Seller by or on behalf of Buyer pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.
ARTICLE V
COVENANTS AND AGREEMENTS
SECTION 5.1 CONDUCT OF BUSINESS. (a) From the date hereof through the
Closing Date, Seller agrees (and the Stockholder will cause Seller):
(i) To conduct its operations according to its ordinary and
usual course of business consistent with past practice, to use reasonable
efforts to preserve intact its present business operations and organization, to
use reasonable efforts to keep available the services of its present officers
and employees, and to use reasonable efforts to preserve its relationships with
customers, suppliers, contractors and others having business dealings with it.
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(ii) To maintain in the ordinary course of business consistent
with past practice all its material structures, equipment and other Tangible
Property in its present repair, order and condition, except for depletion,
depreciation and ordinary wear and tear.
(iii) To keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it.
(iv) To perform all of its obligations under the Contracts.
(v) To maintain its books of account and records in the
usual, regular and ordinary manner.
(vi) To comply in all material respects with all Laws
applicable to it.
(vii) To use its best good faith efforts, upon the request of
Buyer, to assist Buyer in obtaining the continued services of the Selected
Employees.
(viii) To take all reasonable steps to keep all material
Contracts in full force and effect.
(ix) To conduct its marketing, promotional, billing and
collection practices consistent with past practices.
(x) To not cause any increase or decrease in rates charged
for services, or in its purchasing practices, unless previously agreed to by
Buyer in writing, and Seller shall give Buyer prompt written notice of any
changes in any Medicare or Medicaid reimbursement rates.
(b) From the date hereof through the Closing Date, except with the
prior written consent of Buyer, Seller agrees (and the Stockholder will cause
Seller):
(i) Except with respect to transactions with customers and
suppliers in the ordinary course of business, not to incur any material
Liability nor to enter into any Contract with a value in excess of $5,000.
(ii) Not to undertake (nor permit to be undertaken) any of the
actions specified in Section 3.7 which are within the control of Seller.
(iii) With respect to all employees, except as provided or
disclosed in SCHEDULES 3.14(A),(B),(D) or SCHEDULE 3.15, not to: (A) make,
institute, agree to or change any bonus, profit sharing, pension, retirement,
severance, termination, "parachute" or other similar arrangement or plan for
employees; and (B) otherwise than in accordance with past practices: (1)
increase the compensation payable or to become payable to any employee, and (2)
accrue any bonus, percentage of compensation or other like benefit to or for the
credit of any employee.
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(iv) Not to authorize or make any capital expenditures
involving the payment or liability of $25,000 or more in the aggregate.
(v) Not to make any payment in excess of $5,000 without the
prior written approval of Buyer.
(c) From the date hereof through the Closing Date, the Stockholder
agrees to use reasonable best efforts to cause the affairs of Seller to be
conducted in such a manner so that the representations and warranties of the
Stockholder and Seller contained herein shall continue to be true and correct on
and as of the Closing Date as if made on and as of the Closing Date.
SECTION 5.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the
Closing Date, Seller and Stockholder agree that Buyer shall be entitled, through
its directors, officers, employees, attorneys, accountants, representatives,
consultants and other agents (collectively, "REPRESENTATIVES"), to make such
investigation of the properties, businesses and operations of Seller and
Stockholder, and such examination of the books, records and financial condition
of Seller and Stockholder, as Buyer reasonably deems necessary. Any such
investigation and examination shall be conducted at reasonable times, under
reasonable circumstances and upon reasonable notice, and the Stockholder shall,
and shall cause Seller to, cooperate fully therein. No investigation by Buyer
shall diminish or obviate any of the representations, warranties, covenants or
agreements of Seller or the Stockholder contained in this Agreement. In order
that Buyer may have full opportunity to make such physical, business, accounting
and legal review, examination or investigation as it may reasonably deem
necessary of the affairs of Seller, Seller shall make available and the
Stockholder shall cause Seller to make available to the Representatives of Buyer
during such period, without however causing any unreasonable interruption in the
operations of Seller, all such information and copies of such documents and
records concerning the affairs of Seller as such Representatives may reasonably
request, shall permit the Representatives of Buyer access to the properties of
Seller and all parts thereof and to their respective customers, suppliers,
contractors and others, and shall cause Seller and the Seller's Representatives
to cooperate fully in connection with such review and examination.
SECTION 5.2A DISCLOSURE SCHEDULE. (a) Buyer and Seller agree that Seller
may update the Schedules to be delivered by Seller in connection herewith (the
"DISCLOSURE SCHEDULE") from time to time through a date which is not more than
five business days prior to the Closing Date (the "FINAL DISCLOSURE SCHEDULE
DATE"). On the Final Disclosure Schedule Date, Seller shall deliver to Buyer a
revised Disclosure Schedule which will be true, correct and complete as if the
representations and warranties to which such Disclosure Schedule refers were
made on such Final Disclosure Schedule Date. Any such revisions shall be deemed
to amend the Disclosure Schedule; provided, however, that in the case of a
material revision involving expenditures in excess of $50,000, Buyer may notify
Seller in writing that Buyer does not accept such revision, and Seller shall
either delete such revision or Buyer may terminate this Agreement.
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(b) The parties hereto agree to execute this Agreement
notwithstanding that certain of the Schedules provided for herein are not
annexed hereto; provided, however, that Buyer does not waive its right to
require that the Schedules not annexed hereto upon execution of this Agreement
shall, when delivered, be in form and substance acceptable to Buyer in its
absolute and sole discretion. The Schedules not annexed hereto upon execution
of this Agreement, when delivered, shall become effective when Buyer shall
provide Seller with written notice that such Schedules are acceptable. Buyer
may notify Seller in writing that such Schedules are acceptable or Buyer may
terminate this Agreement.
SECTION 5.3 ADDITIONAL FINANCIAL STATEMENTS. (a) Prior to Closing, if
requested by Buyer, Seller shall provide Buyer with daily summaries of net
revenues, in such form as Buyer may reasonably request.
(b) If requested by Buyer in order to comply with its reporting
requirements under the 1934 Act, as promptly as practicable (and in any event by
no later than sixty (60) days after such request or such later date as the Buyer
and Seller shall agree upon) in the case of fiscal years 1997, 1996 and 1995,
Seller and the Stockholder shall cause the Buyer's Accountants to conduct and
complete an audit of the financial statements of the Seller and to issue
certified financial statements with respect thereto for the fiscal years ended
November 30, 1997, 1996 and 1995 (the "SUBSEQUENT AUDITED FINANCIAL
STATEMENTS"); provided, however, that the fees charged by Buyer's Accountants
for the provision of the above listed services shall be no greater than the fees
which Seller's Accountants would have charged to provide the same services. The
cost of such audits shall be born 50% by Stockholder and 50% by Buyer. In the
event that the fees charged by Buyer's Accountants are greater than the fees
which Seller's Accountants would have charged to provide the same services, such
additional cost shall be born 100% by Buyer. An accounting firm selected by
Seller shall have the right to review the work of the Buyer's Accountants and to
comment thereon. The Subsequent Audited Financial Statements shall be prepared
in accordance with (i) GAAP and present fairly the financial position and
results of operations of Seller as at and for the periods then ended; and
(ii) Regulation S-X under the 1933 Act. The Subsequent Audited Financial
Statements shall not vary in any material respect from the applicable unaudited
Financial Statements delivered to Buyer pursuant to Section 3.6(a) hereof,
except for the inclusion of applicable required notes.
SECTION 5.4 FILINGS AND AUTHORIZATIONS. (a) Concurrent with the execution
of this Agreement, Seller shall file all required applications with all relevant
Governmental Bodies and other parties in connection with the Required Consents
and Seller shall thereafter prosecute such applications with all reasonable
diligence in order to obtain the approval of such applications as expeditiously
as practicable.
(b) The consummation of the purchase and sale hereunder is expressly
conditioned upon (i) the grant of Governmental Bodies' and other parties'
consent in connection with the Required Consents, and (ii) the Governmental
Bodies' and other parties' consents having become final orders or approvals, as
the case may be, without any condition which would have a material adverse
effect upon Buyer's ability to continue to operate the Business in the
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normal course, which grants and consents are no longer subject to
administrative, judicial or other review.
(c) With respect to each Permit which may expire prior to the Closing
Date, Seller shall (i) timely file with the appropriate Governmental Bodies
applications for renewal of each such Permit (the "APPLICATIONS"), (ii) deliver
to Buyer true and complete copies of such Applications, (iii) diligently
prosecute such Applications to conclusion, and (iv) cooperate fully with all
Governmental Bodies in the processing of such Applications.
SECTION 5.5 EFFORTS TO CONSUMMATE. (a) Subject to the terms and
conditions herein provided, each party hereto without payment or further
consideration shall use its reasonable, good faith efforts to take or cause to
be taken all action and to do or cause to be done all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the Contemplated Transactions,
including, but not limited to, obtaining all consents, authorizations, orders
and approvals of any third party, whether private or governmental, required in
connection with such party's performance of such transactions and each party
hereto shall cooperate with the other in all of the foregoing. Notwithstanding
anything to the contrary contained in this Agreement, Buyer shall not be
required to undertake any measures which in the reasonable opinion of Buyer are
extraordinary to obtain any such approvals or consents, including, without
limitation, under no circumstances shall Buyer be required to (a) make any
payments to any person or party from whom such consents or approvals are sought,
as consideration therefor; or (b) except as Buyer may otherwise agree in writing
(and Buyer shall have no obligation to so agree), accept any changes in the
terms of the document or instrument for which a consent, approval or waiver is
sought or (c) alter or modify its capital or debt structure or any term or
provision contained in any agreement relating thereto.
(b) Whenever this Agreement requires Seller to take any action (or to
use any effort to take such action) or refrain from taking any action, such
requirement shall be deemed to include an undertaking on the part of the
Stockholder to cause Seller to take or refrain from taking such action.
SECTION 5.6 NEGOTIATIONS WITH OTHERS. From and after the date hereof
unless and until this Agreement shall have terminated in accordance with its
terms, the Stockholder will not, and will not permit Seller or any officer,
director, employee or other Representative of Seller to, directly or indirectly
(a) solicit, engage in discussions or engage in negotiations with any person
(other than Buyer or any of its Affiliates) with respect to an Acquisition
Proposal; (b) provide information to any person (other than Buyer or any of its
Affiliates) in connection with an Acquisition Proposal; or (c) enter into any
transaction with any person (other than Buyer or any of its Affiliates) with
respect to an Acquisition Proposal. If the Stockholder, Seller or
Representative receives any offer or proposal to enter into discussions or
negotiations relating to any of the above, Seller or the Stockholder will
immediately notify Buyer in writing as to the identity of the offeror or the
party making any such proposal and the specific terms of such offer or proposal.
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SECTION 5.7 NOTICES OF CERTAIN EVENTS. Seller shall advise Buyer within
three (3) Business Days (or one (1) Business Day in the case of any Selected
Employee) of learning, after the date hereof, of any employee of Seller who
intends to cancel or otherwise terminate his or her relationship with Seller.
In addition, Seller and Buyer shall promptly notify the other of:
(a) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
Contemplated Transactions;
(b) any notice or other communication from any Governmental Body in
connection with the Contemplated Transactions; and
(c) any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
any representation or warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
SECTION 5.8 PUBLIC ANNOUNCEMENTS. Neither Seller, Stockholder nor Buyer
shall make or issue, or cause to be made or issued, any announcement or
statement (whether written or oral) concerning this Agreement or the
transactions contemplated hereby for dissemination to the general public without
the prior written consent of the other party. This provision shall not apply,
however, to any announcement or statement required in the reasonable opinion of
Buyer, Stockholder or Seller, to be made by law or the regulations of any
federal or state governmental agency or any stock exchange.
SECTION 5.9 CONFIDENTIALITY. (a) Buyer, on the one hand, and the
Stockholder and Seller, on the other hand, each shall hold in strict confidence,
and shall use its best efforts to cause all its Representatives to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process, or by other requirements of law, all information concerning the
Stockholder and Seller (in the case of Buyer) and Buyer (in the case of the
Stockholder and Seller) which is created or obtained prior to, on or after the
dates hereof in connection with the purchase and sale hereunder, and Buyer and
the Stockholder and Seller shall not, unless compelled to by judicial or
administrative process, or by other requirements of law, use or disclose to
others, or permit the use of or disclosure of, any such information created or
obtained except to the extent that such information can be shown to have been
(i) previously known by Buyer or the Stockholder or Seller as the case may be
(ii) in the public domain through no fault of Buyer or the Stockholder or
Seller, as the case may be, or any of their respective Representatives, and will
not release or disclose such information to any other person, except its
officers, directors, employees, Representatives, investors and lending
institutions who need to know such information in connection with this
Agreement.
(b) If the Contemplated Transactions are not consummated, such
confidence shall be maintained for five (5) years except (i) as required by law
or (ii) to the extent such information comes into the public domain through no
fault of Buyer or Seller or the Stockholder, as the case may be, or any of their
respective Representatives. If the Contemplated Transactions
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are not consummated and if requested by Seller or Buyer, as the case may be,
Buyer shall return to Seller all tangible evidence of such information regarding
Seller and Seller shall return to Buyer all tangible evidence of such
information regarding Buyer.
SECTION 5.10 BULK SALES. Seller and Buyer each waives any requirement for
compliance with the procedures of any applicable "bulk sales law", including,
without limitation, the bulk transfer provisions of any applicable Uniform
Commercial Code; PROVIDED, HOWEVER, that Seller and the Stockholder shall
jointly and severally indemnify Buyer from any liability arising therefrom.
SECTION 5.11 USE OF NAME. From and after the Closing, Seller shall, and
the Stockholder shall cause Seller to, cease any use of the trade names being
sold hereunder. From and after the Closing Date, Seller shall discontinue
using and dispose of any assets in its possession including, without limitation,
stationery, business cards and literature, bearing the trade names being sold
hereunder.
SECTION 5.12 CERTAIN EXPENSES.
(a) Any and all sales, use, transfer and documentary taxes and
recording and filing fees applicable to the transfer of the Purchased Assets to
Buyer shall be borne equally by Buyer and Seller.
(b) Except as otherwise specifically provided herein, Buyer and
Seller shall bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the Contemplated
Transactions, including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants.
SECTION 5.13 TAX MATTERS. (a) After the Closing, Buyer and Seller will
provide each other such assistance as may be reasonably requested by either of
them in connection with the preparation of any Return, any audit or other
examination by any Taxing Authority, or any judicial or administrative
proceedings relating to liability for Taxes, and each will retain and provide
the other with, at all reasonable times, any work papers, records or other
information which may be relevant to such return, audit or tax examination
proceedings or determinations.
(b) Seller shall provide Buyer with a clearance certificate or
similar document(s) that may be required by the taxing authority of any
jurisdiction in order to relieve Buyer of any obligation to withhold or escrow
any portion of the Purchase Price.
(c) Prior to Seller's filing of any Return for its Taxable Year ended
November 30, 1997, Seller shall provide Buyer with a copy of such Return at
least ten business days prior to the date on which Seller gives notice to Buyer
that Seller will file such Return. Seller will prepare such Returns and compute
the amount of their income and the Tax liability owed, if any, in accordance and
consistent with the past custom and practice of Seller in filing its Returns.
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(d) Seller shall timely pay all Taxes (including payments of
estimated Taxes) that are shown as due and payable on Returns that are due
(taking into account any valid extensions of time to file or any amounts
contested in good faith for which adequate amounts have been reserved) in
connection with the period ending with the Closing.
Section 5.14 SERVICES AGREEMENT. Seller and Stockholder each agree to
cause both Providence and Homecare to use the services of Buyer in accordance
with Seller's past practices, for a period of three (3) years ending on January
___, 2001, on a primary vendor status. This agreement shall be in form and
substance reasonably acceptable to Providence, Homecare and Buyer, with Buyer
having the option to furnish personnel and if such personnel are not furnished
within one week of any given request, Providence and Homecare shall have the
right to obtain such personnel from other sources.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS TO THE OBLIGATIONS OF SELLER AND BUYER. The
obligations of Buyer and Seller to consummate the Contemplated Transactions by
this Agreement are subject to the satisfaction of the following conditions:
(a) NO INJUNCTION. No provision of any applicable Law and no
judgment, injunction, order or decree of any Governmental Body shall prohibit
the consummation of the Contemplated Transactions including any provisions of
the HSR Act.
(b) NO PROCEEDING OR LITIGATION. No suit, action or proceeding
before any Governmental Body instituted by any person shall have been commenced
or be pending or threatened against Seller, Buyer or the Stockholder or any of
their respective Affiliates, associates, officers or directors, which suit,
action or proceeding shall have a reasonable likelihood of success and which
suit, action or proceeding seeks to restrain, prevent, change or delay in any
material respect the Contemplated Transactions or seeks to challenge any of the
terms or provisions of this Agreement or seeks material damages in connection
with any of such transactions or seeks to restrain or prevent the ownership and
operations by Buyer after the Closing Date of the assets and business of Seller.
(c) CONSENTS. All Required Consents shall have been obtained in form
and substance consistent with the provisions of this Agreement or as otherwise
agreed to in writing by Buyer and shall have become effective, no longer subject
to any statutory, administrative or judicial waiting, appeal, reconsideration or
appeal periods, without any condition which is adverse to Buyer.
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SECTION 6.2 CONDITIONS TO THE OBLIGATIONS OF SELLER. All obligations of
Seller hereunder are subject, at the option of Seller, to the fulfillment prior
to or at the Closing of each of the following further conditions:
(a) PERFORMANCE. Buyer shall have performed in all material respects
with all of its agreements, obligations and covenants hereunder required to be
performed by it at or prior to the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement and in any certificate or other
writing delivered by Buyer pursuant hereto shall be true in all material
respects at and as of the Closing Date as if made at and as of such time.
(c) PURCHASE PRICE. Buyer shall have paid to Seller the Purchase
Price by wire transfer of immediately available funds.
(d) DOCUMENTATION. There shall have been delivered to Seller the
following:
(i) One or more duly executed originals of the Xxxx of Sale
signed by Buyer, and such other instruments of assumption as are reasonably
necessary or desirable to effect the assumption by Buyer of the Assumed
Liabilities.
(ii) A certificate, dated the Closing Date, of the Chief
Executive Officer or a Vice-President of Buyer confirming the matters set forth
in Section 6.2(a) and (b) hereof.
(iii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of Buyer certifying, among other things, that attached or
appended to such certificate (A) is a true and correct copy of its Certificate
of Incorporation and all amendments if any thereto as of the date thereof; (B)
is a true and correct copy of its By-Laws; (C) is a true copy of all corporate
resolutions of its board of directors authorizing the execution, delivery and
performance of this Agreement, and each other document to be delivered by Buyer
pursuant hereto; and (D) are the names and signatures of its duly elected or
appointed officers who are authorized to execute and deliver this Agreement and
any certificate, document or other instrument in connection herewith.
(e) LENDER'S CONSENT. The consents of Capital to the execution,
delivery and performance of this Agreement (the "CAPITAL CONSENTS") shall have
been obtained and shall have become effective and final.
SECTION 6.3 CONDITIONS TO THE OBLIGATIONS OF BUYER. All obligations of
Buyer hereunder are subject, at its option, to the fulfillment prior to or at
the Closing of each of the following further conditions:
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(a) PERFORMANCE. Seller and the Stockholder shall have performed and
complied in all material respects with all agreements, obligations and covenants
required by this Agreement to be performed or complied with by them at or prior
to the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller and the Stockholder contained in this Agreement and in any
certificate or other writing delivered by the Stockholder or Seller pursuant
hereto shall be true in all material respects at and as of the Closing Date as
if made at and as of such time.
(c) NO ADVERSE CHANGE. During the period from the date hereof to the
Closing Date, there shall not have been (i) any material adverse change to the
Business; (ii) any damage to the Purchased Assets by fire, flood, casualty, act
of God or other cause, which has a Seller Material Adverse Effect on the
Purchased Assets or the Business; or (iii) any lawsuits, claims or proceedings
filed, or to the knowledge of Seller or the Stockholder threatened, against or
affecting Seller which, if adversely determined, is reasonably likely to have a
Seller Material Adverse Effect.
(d) DOCUMENTATION. There shall have been delivered to Buyer the
following:
(i) one or more duly executed originals of the Xxxx of Sale
and such other instruments as are necessary or desirable to effect the
transfers, conveyances and assignments to Buyer of the Purchased Assets, and to
perform Seller's and Stockholder's obligations hereunder.
(ii) A certificate dated the Closing Date, of the President of
Seller and Stockholder, confirming the matters set forth in Section 6.3(a) and
(b) hereof.
(iii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of Seller and Stockholder certifying, among other things,
that attached or appended to such certificate (A) is a true and correct copy of
the Certificate of Incorporation and By-Laws (or comparable instruments) of
Seller and Stockholder, and all amendments if any thereto as of the date
thereof; (B) is a true copy of all corporate actions taken by it, including
resolutions of its board of directors, authorizing the execution, delivery and
performance of this Agreement, and each other document to be delivered by Seller
and Stockholder pursuant hereto; and (C) are the names and signatures of its
duly elected or appointed officers who are authorized to execute and deliver
this Agreement and any certificate, document or other instrument in connection
herewith.
(iv) Releases of all Liens on the Purchased Assets (other than
Permitted Liens), together with copies of UCC, tax and judgment searches with
respect to Seller and the appropriate tax certificates evidencing the payment of
all taxes owed by Seller, each dated as of a date within five (5) Business Days
of the Closing Date.
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(v) A signed opinion of counsel for Seller, dated the Closing
Date, addressed to Buyer, substantially in the form of opinion annexed hereto as
EXHIBIT 6.2.
(e) LENDER'S CONSENT.
(i) The Capital Consents shall have been obtained and shall
have become effective and final without any condition which is materially
adverse to Buyer.
(ii) Stockholder and Seller shall have caused Capital to
extinguish any and all of Capital's liens or encumbrances against the Purchased
Assets, guarantees, assumptions of debt or other obligations of Seller of, and
under, (i) that certain Provider Revolving Loan Agreement, dated as of February
7, 1996, by and between Capital and each of the entities listed on Annex I
thereto (the "LOAN AGREEMENT") and (ii) all of the Loan Documents (as such term
is defined in the Loan Agreement), in form and substance acceptable to Buyer.
(f) COVENANTS NOT TO COMPETE. The Seller and the Stockholder shall
have executed and delivered a Covenant Not to Compete with the terms and
conditions set forth in SCHEDULE 6.3(F) annexed hereto.
(g) DUE DILIGENCE. Buyer, in its absolute discretion, shall be
satisfied with the results of its Due Diligence findings.
(h) BOARD OF DIRECTORS APPROVAL. The Buyer's Board of Directors
shall have consented to this Agreement.
(i) ACQUISITION OF STOCK. The Buyer shall have acquired Convertible
Preferred Stock in the Seller with voting rights sufficient to cause it to elect
a majority of the Board of Directors of Seller at such time as therein provided
and the By-Laws of Seller shall have been amended to provide that no action
which requires approval of the holder of the Convertible Preferred Stock under
the Certificate of Designation (including the filing of a bankruptcy petition)
may be taken without the approval of the holder of the Convertible Preferred
Stock.
(j) DISCLOSURE SCHEDULE. The Schedules not annexed hereto upon
execution of this Agreement shall be in substance acceptable to Buyer in its
absolute and sole discretion.
(k) NAME CHANGE. Parent shall use its best efforts, as soon as
practicable, to change the corporate name of Parent from "Hospital Staffing
Services, Inc." to such other name as Parent may designate which does not
contain any name similar to or containing the words "Hospital Staffing".
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ARTICLE VII
INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
any right of Buyer or Seller fully to investigate the affairs of Buyer or
Seller, and notwithstanding any knowledge of facts determined or determinable by
Buyer or Seller pursuant to such investigation or right of investigation, Buyer
and Seller have the right to rely fully upon the representations, warranties,
covenants and agreements of Seller, the Stockholder and Buyer contained in this
Agreement, or listed or disclosed on any Schedule hereto or in any instrument or
document delivered in connection with or pursuant to any of the foregoing. All
such representations, warranties, covenants and agreements shall survive the
execution and delivery of this Agreement and the Closing hereunder for a period
of two (2) years after the Closing Date, except that (a) any representation,
warranty, covenant or agreement contained in Sections 3.1 and 4.2 hereof shall
survive the execution and delivery of this Agreement and the Closing hereunder
without limitation, (b) any representation, warranty, covenant or agreement
related to Taxes shall survive the execution and delivery of this Agreement and
the Closing hereunder until the expiration of the applicable statute of
limitations, (c) any non-compete agreement delivered pursuant hereto shall
survive the Closing until the expiration of the duration of such covenant not to
compete, and (d) any representation, warranty, covenant or agreement contained
herein and any Liabilities of Seller with respect thereto relating to Medicare,
Medicaid or third party payors shall survive until the later of the third
anniversary of the Closing Date or the conclusion of any audit or review
commenced within such three-year period.
SECTION 7.2 OBLIGATION OF SELLER TO INDEMNIFY. The Stockholder and
Seller, jointly and severally, agree to indemnify, defend and hold harmless
Buyer (and its directors, officers, employees, Affiliates, successors and
assigns and Representatives) from and against all claims, losses, liabilities,
damages, deficiencies, judgments, settlements, costs of investigation or other
expenses (including interest, penalties and reasonable attorneys' fees and
disbursements (collectively, the "LOSSES")) based upon, arising out of or
otherwise in respect of:
(a) subject to Section 7.1, any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Seller or the Stockholder
contained in this Agreement or in any Schedules, instrument or documents
delivered pursuant to this Agreement;
(b) except with respect to Assumed Liabilities, any obligation or
liability arising in connection with the Business from or in respect of any
event or circumstance occurring prior to the Closing Date;
(c) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
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SECTION 7.3 OBLIGATION OF BUYER TO INDEMNIFY. Buyer agrees to perform and
discharge all of the Assumed Liabilities and agrees to indemnify, defend and
hold harmless Seller and the Stockholder (and their respective directors,
officers, employees, Affiliates, successors, assigns and Representatives) from
and against any Losses based upon Buyer's failure to do so or arising out of or
otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant or agreement of Buyer contained in this Agreement or in any
instrument or document delivered pursuant to this Agreement and any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs and
expenses, including without limitation, reasonable legal fees and expenses,
incident to any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity. Buyer also agrees to indemnify, defend and hold harmless Seller and
Stockholder (and their respective directors, officers, employees Affiliates,
successors and assigns and Representatives) from and against all Losses based
upon, arising out of or otherwise in respect of any obligation or liability
arising in connections with the Business from or in respect of any event or
circumstance occurring on or after the Closing Date.
SECTION 7.4 NOTICE AND OPPORTUNITY TO DEFEND THIRD PARTY CLAIMS. (a)
Promptly after receipt by any party hereto (the "INDEMNITEE") of notice of any
demand, claim or circumstance which would or might give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "ASSERTED LIABILITY") that may result in a Loss, the
Indemnitee shall give written notice thereof (the "CLAIMS NOTICE") to the party
obligated to provide indemnification pursuant to Section 7.2 or 7.3 hereof (the
"INDEMNIFYING PARTY"). The Claims Notice shall describe the Asserted Liability
in reasonable detail and shall indicate the amount (estimated, if necessary, and
to the extent feasible) of the Loss that has been or may be suffered by the
Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend, at its
own expense and by its own counsel, any Asserted Liability. If the Indemnifying
Party elects to compromise or defend such Asserted Liability, it shall within
thirty days (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee in writing of its intent to do so, and the Indemnitee
shall cooperate, at the expense of the Indemnifying Party, in the compromise of,
or defense against, such Asserted Liability. If the Indemnifying Party elects
not to compromise or defend the Asserted Liability, fails to notify the
Indemnitee of its election as herein provided or contests its obligation to
indemnify under this Agreement, the Indemnitee may pay, compromise or defend
such Asserted Liability. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle or compromise any claim over
the objection of the other; PROVIDED, HOWEVER, that consent to settlement or
compromise shall not be unreasonably withheld or delayed. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense or compromise of such Asserted Liability. If the Indemnifying
Party chooses to defend any claim, the Indemnitee shall cooperate with and make
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
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SECTION 7.5 LIMITS ON INDEMNIFICATION. Notwithstanding anything contained
in this Article VII to the contrary, Seller and the Stockholder shall not have
an obligation to indemnify Buyer pursuant to Section 7.2 hereof with respect to
any Losses unless and until Buyer shall have incurred Losses in an aggregate in
excess of $50,000 (the "STIPULATED AMOUNT"), in which event Buyer shall be
entitled to and be indemnified for the amount of Losses, commencing with the
first dollar; provided, however, that in no event shall Seller and the
Stockholder have any obligation to indemnify Buyer pursuant to Section 7.2
hereof with respect to any Losses in excess of the Purchase Price.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of Seller and the Stockholder, on the
one hand, and Buyer on the other;
(b) By Seller or Buyer if Capital shall not have delivered to Seller,
prior to January 20, 1998 at 5 p.m. Eastern Standard Time, the Capital Consents
in a form satisfactory to Buyer;
(c) By Seller and the Stockholder, if (i) there has been a material
misrepresentation or breach of warranty on the part of Buyer in the
representations and warranties contained herein or in any Schedule, document or
instrument delivered in connection with or pursuant hereto and such material
misrepresentation or breach of warranty, if curable, is not cured within 15 days
of written notice thereof from Seller; (ii) Buyer has committed a material
breach of any covenant or agreement imposed upon it hereunder and fails to cure
such breach within 15 days of written notice thereof from Seller; or (iii) any
condition to Seller's or the Stockholder's obligations hereunder becomes
incapable of fulfillment through no fault of such parties and is not waived by
such parties;
(d) By Buyer, if (i) there has been a material misrepresentation or
breach of warranty on the part of Seller or the Stockholder in the
representations and warranties contained herein or in any Schedule, document or
instrument delivered in connection with or pursuant hereto and such material
misrepresentation or breach of warranty, if curable, is not cured within 15 days
of written notice thereof from Buyer to Seller; (ii) Seller or the Stockholder
has committed a material breach of any covenant imposed upon it hereunder and
fails to cure such breach within 15 days of written notice thereof from Buyer to
Seller; or (iii) any condition to Buyer's obligations hereunder becomes
incapable of fulfillment through no fault of Buyer and is not waived by Buyer or
Buyer is not satisfied, in its sole determination, with the results of its due
diligence investigation;
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(e) By Seller and the Stockholder on the one hand, or Buyer on the
other, if the Closing shall not have occurred on or before February 28, 1998;
provided that if the Closing has not occurred by such date because a Required
Consent has not been obtained, such date shall be extended until the second
Business Day following the date such Consent(s) have been obtained or denied;
and provided further that no party may terminate this Agreement pursuant to this
clause if such party's failure to fulfill any of its obligations under this
Agreement is the reason that the Closing shall not have occurred on or before
said date.
SECTION 8.2 EFFECT OF TERMINATION; RIGHT TO PROCEED. (a) In the event that
this Agreement shall be terminated pursuant to Section 8.1, all further
obligations of the parties under the Agreement shall terminate without further
liability of any party hereunder except: (A) to the extent that Seller and/or
Stockholder has made a material misrepresentation hereunder or committed a
material breach of the covenants and agreements imposed upon it hereunder; or
(B) to the extent that any condition to Buyer's obligations hereunder became
incapable of fulfillment because of the breach by Seller and/or Stockholder of
its obligations hereunder, in either of such event, Buyer shall have all of its
rights and remedies at law or in equity (including the right to seek specific
performance); or (C) to the extent that Buyer has made a material
misrepresentation hereunder or committed a material breach of the covenants and
agreements imposed upon it hereunder or (D) to the extent that any condition to
Seller's obligations hereunder become incapable of fulfillment because of the
breach by Buyer of its obligations hereunder, in either of such event, Seller
shall have all of its rights and remedies in law or equity. Notwithstanding the
foregoing, the agreements contained in Sections 5.8 and 5.9 shall survive the
termination hereof. In the event that a condition precedent to its obligation
is not met, nothing contained herein shall be deemed to require any party to
terminate this Agreement, rather than to waive such condition precedent and
proceed with the Contemplated Transactions.
(b) If all of the conditions to Closing under this Agreement have been
satisfied or waived, and Buyer shall have tendered to Seller the Purchase Price
which shall have been rejected by Seller for any reason, then in addition to any
rights and remedies Buyer may have at law or in equity (including the right to
seek specific performance), Buyer shall have the right to buy all of the assets
or capital stock of Seller for a price which is to be one million dollars
($1,000,000) less than the Purchase Price set forth in this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NOTICES. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand, telecopied or mailed (by overnight courier or registered or certified
mail, postage prepaid) as follows:
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(i) if to Buyer, one copy to:
Mr. Xxx Xxxxxx, Chairman and CEO
Preferred Employers Holdings, Inc.
00000 Xxxxxxxx Xxxxxxxxx - 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
(ii) if to Seller or the Stockholder, one copy to:
Xx. Xxxxx X. Xxxxxxx
Hospital Staffing Services, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx #000
Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxx X. Xxxx, Esq.
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier: (000)000-0000
(b) Each such notice or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in Section 9.1(a) (with confirmation of transmission) or (ii) if given
by any other means, when delivered at the address specified in Section 9.1(a).
Any party by notice given in accordance with this Section 9.1 to the other party
may designate another address (or telecopier number) or person for receipt of
notices hereunder.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) and the other Transaction Documents executed in connection with
the consummation of the Contemplated Transactions contain the entire agreement
between the parties with respect to
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the subject matter hereof and related transactions and supersede all prior
agreements, written or oral, with respect thereto.
SECTION 9.3 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION
OF REMEDIES. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties hereto or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
Except as otherwise provided herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any inaccuracy in or breach of
any representation, warranty, covenant or agreement contained in, this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach.
SECTION 9.4 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida applicable to agreements
made and to be performed entirely within such State, without regard to the
conflict of laws rules thereof.
SECTION 9.5 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The parties
hereto irrevocably: (a) agree that any suit, action or other legal proceeding
arising out of this Agreement may be brought in the courts of the State of
Florida or the courts of the United States located in Dade County, Florida,
(b) consent to the jurisdiction of each court in any such suit, action or
proceeding, (c) waive any objection which they, or any of them, may have to the
laying of venue of any such suit, action or proceeding in any of such courts,
and (d) waive the right to a trial by jury in any such suit, action or other
legal proceeding.
SECTION 9.6 DESIGNATED BUYER. It is understood and agreed between the
parties that Buyer may cause one or more Affiliates or direct or indirect
Subsidiaries (the "DESIGNATED BUYER") to carry out all or part of the
Contemplated Transactions to be carried out by Buyer.
SECTION 9.7 BINDING EFFECT; NO ASSIGNMENT. This Agreement and all of its
provisions, rights and obligations shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs and legal
representatives. Except as otherwise provided in Section 9.6, this Agreement
may not be assigned by a party without the express written consent of the others
and any purported assignment, unless so consented to, shall be void and without
effect. Nothing herein express or implied is intended or shall be construed to
confer upon or to give anyone other than the parties hereto and their respective
heirs, legal representatives and successors any rights or benefits under or by
reason of this Agreement.
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Accordingly, no party that has not executed this Agreement shall have any right
to enforce any of the provisions of this Agreement.
SECTION 9.8 SEVERABILITY. If any provisions of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such illegal, invalid or unenforceable provision had never
been included herein.
SECTION 9.9 COUNTERPARTS. The Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the signatories.
SECTION 9.10 STOCK PURCHASE AGREEMENT. Upon 10 days prior written notice
from Buyer to Stockholder and Seller given before the Closing, Buyer shall have
the right to require that, on the Closing Date, Stockholder deliver to Buyer
100% of the stock of Seller owned by Stockholder and, upon such delivery, all of
the representations, conditions, covenants and warranties contained herein by
Seller shall be deemed to be the representations, conditions and covenants and
warranties of Stockholder, together with such additional representations and
warranties as shall be contained in a certain Preferred Stock Investment
Agreement attached hereto as EXHIBIT 9.10, and Seller's obligations hereunder
shall terminate and be of no further force or effect.
SECTION 9.11 EFFECTIVE DATE. This Agreement shall become effective upon
the execution and delivery of the Capital Consent.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
HSSI Travel Nurse Operations, Inc.
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Hospital Staffing Services, Inc.
By:/s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Preferred Employers Acquisition Corp.
By:/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President and CFO
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