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Exhibit No. 10-2
ACQUISITION AGREEMENT
PARADIGM HEALTH SERVICES, INC. ("Buyer") and MHM EXTENDED CARE SERVICES, INC.
("Seller") hereby agree as follows:
Buyer desires to purchase and Seller desires to sell to Buyer certain assets and
business related to Seller's delivery of mental health services to patients of
nursing homes within the States of Tennessee and Georgia, except those provided
under Seller's PASARR contract with the State of Georgia Department of Medical
Assistance (the "Operations"), all on the terms and subject to the conditions
set forth in this Agreement.
1. ACQUIRED ASSETS. The assets to be conveyed shall include, to the
extent assignable, all contracts with nursing homes in the States of Tennessee
and Georgia (the "States") for provision of mental health services, all customer
lists of the Operations, all employment and independent contracts with
clinicians in the States providing such services, all rights under covenants not
to compete or similar agreements relating to the Operations, all Management
Agreements and other contractual rights Seller may have with professional
corporations in the States and related to the Operations, and all other
intangibles related to the Operations (collectively, the Acquired Assets").
Seller will transfer to Buyer at time of purchase all billing information and
other files (paper or software) having to do with the Company's Operations,
including correspondence and communications with regulatory agencies, except as
to billing records needed to collect accounts receivable retained by Seller (to
which records each party shall have full access). Subject to the terms and
conditions of this Agreement, Buyer agrees to purchase and Seller agrees to
sell, assign and deliver to Buyer as of Closing, as defined in Section 10.1 of
this Agreement, all of Seller's right, title and interest in, to and under the
Acquired Assets, free and clear of any mortgage, pledge, hypothecation, claim,
security interest, encumbrance, right or interest of others, lease, license,
easement, encroachment, covenant, title defect, lien, option or right of first
refusal (collectively, "Liens"). The Acquired Assets shall not include, and
Seller shall retain, all cash, cash equivalents, and accounts receivable arising
from the provision of services in the States prior to the Closing Date, all
assets of business operations similar to the Operations conducted by Seller in
States other than the States of Tennessee and Georgia, and all business
operations and assets related thereto, conducted by Seller under the Georgia
PASARR contract.
2. CONSIDERATION.
2.1 Consideration. The consideration for the Acquired Assets will be
payment to Seller by Buyer of the sum of ten dollars ($10.00) (the "Purchase
Price"). At Closing, Buyer will pay the Purchase Price to Seller in cash.
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2.2 Commissions and Finders Fees. Buyer and Seller warrant and
represent to each other that no broker or finder has acted for it in connection
with this transaction and that no brokerage, commissions or similar fees will be
due to any person at Closing.
3. ASSUMPTION OF LIABILITIES. At closing Buyer will not assume or become
responsible for any liabilities and obligations (including without limitation
any obligations to Apogee, Inc.) of Seller relating to the Operations prior to
Closing except: (a) Buyer will assume the Employment Agreement dated as of March
1, 1997, as amended between Seller, Psychiatric Specialty Group, P.C. and
Xxxxxxx Xxxx, M.D., and thereafter will be responsible for all liabilities
thereunder; (b) all obligations arising after Closing under those contracts with
nursing homes being assumed by Buyer, provided, however, that nothing herein
shall be construed as an assumption by Buyer of any liabilities as to post
payment reviews, malpractice claims, payroll, personnel expenses, or earn-outs
arising from or related to services provided prior to closing.
4. SUBLEASE. As of Closing, Buyer shall sublease from Seller on a
month-to-month basis one-half of the office space being leased by Seller at 0000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000. Rent under said sublease
shall be payable monthly in advance in an amount equal to one-half the rent paid
by Seller to its landlord, plus one-half the utility bills paid by Seller for
the space.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Except as expressly set forth
to the contrary in a Schedule hereto, Seller represents and warrants to Buyer
as follows:
5.1 Corporate Action. As of Closing, Seller and its Board of Directors
will have taken all action required by its Articles of incorporation, Bylaws,
and otherwise to authorize the execution and consummation of this Agreement.
This Agreement will constitute the valid and legally binding obligation of
Seller, enforceable in accordance with its terms, except that enforceability
may be limited by applicable equitable principles or bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally, or
hospital licensing requirements.
5.2 No Conflict With Other Agreements or Laws. The execution and
consummation by Seller of this Agreement, and the other agreements and documents
contemplated hereby, will not (a) violate the terms of Seller's Articles of
Incorporation, Bylaws or any instrument, agreement, mortgage, judgment, decree,
commitment or understanding, written or oral, to which Seller is a party, or by
which Seller or any of its property is bound, (b) conflict with, result in a
breach of, constitute (with giving of notice or lapse of time or both) a default
under or give any person any right to terminate, modify, accelerate or otherwise
change the existing obligations of Seller under any such instrument, agreement,
mortgage, judgment, decree, commitment or
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understanding, (c) result in the creation or imposition of any Lien upon Seller
or its property or assets, or (d) violate any applicable law.
5.3 Organization and Qualification. Seller is organized, validly
existing and in good standing under the laws of Delaware. Seller has full power
and authority to carry on its business as it is now being conducted, to own and
lease the properties and assets which it now owns or leases and to consummate
the Seller's Agreements. Seller is not in violation of any of the provisions of
their Partnership Agreements.
5.4 Taxes.
(a) With respect to all amounts in respect of taxes relating to
the Operations and imposed on the Seller for which the Seller is or could be
liable, whether to taxing authorities (as, for example, under tax allocation
agreements) or other persons or agencies, with respect to all taxable periods
or other portions of periods ending on or before the Closing Date (defined
below), all applicable tax laws and agreements have been or by Closing will
have been fully complied with, and all such amounts required to be paid by the
Seller to taxing authorities or others on or before the date hereof have been
or by Closing will have been paid.
5.5 Personal Property. Schedule 5.5 hereto sets forth a true and
correct list of any items of furniture, fixtures, equipment and other personal
property included among the Acquired Assets, all of which are conveyed "as is"
with no warranties, express or implied, as to the condition of such assets.
5.6 Title to Properties; Encumbrances. At Closing Seller will have
good and marketable title to all of the Acquired Assets, free and clear of any
Liens.
5.7 Consents and Approvals. At Closing, no waiver, consent or
approval from or filing with any person or agency (governmental or otherwise)
will be required for Seller to consummate this Agreement, and the other
agreements contemplated hereby, without creating a default or liability.
5.8 Disclosure. No representation or warranty by Sellers contained in
this Agreement, and no statement contained in any certificate, exhibit, list or
other instrument furnished by the Sellers to Buyer pursuant to the provisions
hereof contains or will contain any untrue statement of material fact or omits
or will omit to state a material fact necessary in order to make the statement
contained herein or therein not misleading.
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SCHEDULE 5.5
2-DESKS
2-SMALL UTILITY TABLES
1-PRINTER CART
1-BOOKCASE
6-TALL FILE CABINETS
2-SHORT FILE CABINETS
2-END TABLES
1-EXECUTIVE CHAIR
2-LARGE CHAIRS
2-DESK CHAIRS
2-LAMPS
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6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to Sellers as follows:
6.1 Corporate Action. Buyer has taken all action required to authorize
the execution and consummation of this Agreement. This Agreement constitutes
the valid and legally binding obligations of Buyer enforceable in accordance
with its terms, except that enforceability may be limited by applicable
equitable principles or bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors rights generally.
6.2 No Conflict With Other Agreements or Laws. The execution and
consummation by Buyer of this Agreement, and the other agreements and documents
contemplated hereby, will not (a) violate the terms of any instrument,
agreement, judgment or decree to which Buyer is a party, or by which Buyer or
any of its properties is bound, (b) be in conflict with, result in a breach of
or constitute (with giving of notice or lapse of time or both) a default under
any such instrument, agreement, judgment or decree, (c) result in the creation
or imposition of any Lien upon Buyer or its properties or assets, or (d)
violate any applicable federal, state, local or foreign law, regulation or
order.
6.3 Organization and Qualification. Buyer is duly organized, validly
existing and in good standing. Buyer has full power and authority to execute
and consummate the Agreements.
6.4 Financial Standing. Buyer has the financial resources to
consummate the transaction contemplated in this Agreement.
7. PRE-CLOSING COVENANTS. The parties covenant and agree as follows:
7.1 Condition of Assets Prior to Closing. Until the Closing, and
unless Buyer otherwise consents in writing, Seller will operate the Acquired
Assets and the Operations substantially in their current condition.
7.2 Notification of Material Adverse Changes. Sellers will promptly
notify Buyer in writing of the occurrence of any material adverse change to the
Acquired Assets or Operations occurring on or after the date of this Agreement
and on or prior to the Closing Date.
7.3 Other Transactions. During the term of this Agreement, the parties
will deal exclusively and in good faith with each other regarding a sale of all
or a material portion of the Acquired Assets. Seller will not, and will direct
Sellers' officers, directors, financial advisors, accountants, agents and
counsel not to: (i) solicit submission of offers from any person relating to a
the Acquired Assets, (ii) participate in any
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discussions or negotiations regarding, or furnish any nonpublic information to
any person regarding purchase of the Acquired Assets by any person other than
Buyer, or (iii) enter into any agreement or understanding, whether oral or
written, that would have the effect of preventing consummation of this
Agreement.
7.4 Consents, Waivers and Approvals. Prior to Closing, Seller will
obtain all consents, waivers, approvals, and releases necessary for Seller to
effect the transactions contemplated herein, free and clear of any and all
liens. All such consents, waivers, releases and approvals will be in writing
and in form and substance satisfactory to Buyer in its discretion as reasonably
exercised by Buyer.
7.5 Supplemental Disclosure. Seller will have the continuing
obligation up to and including the Closing Date to supplement promptly or amend
the Schedules hereto with respect to any matter subsequently arising or
discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or listed in the Schedules.
7.6 Conditions Precedent. The parties will use their best efforts in
good faith to satisfy the conditions set forth in Sections 8 and 9 hereof.
7.7 Consents, Regulatory Approvals and Licenses. Buyer acknowledges
that certain of Seller's contracts with nursing homes or clinicians may not be
assignable, may be terminable upon no or minimal notice, or may consist of
arrangements not embodied in binding contractual relationships. Buyer further
acknowledges that Seller makes no warranties or representations as to the
existence or availability of any assignments, consents, approvals, regulatory
licenses, or certifications, including as to nursing home contracts, as may be
necessary for any use of the Acquired Assets as Buyer may intend. Seller agrees
that it shall make such inquiry as to such matters during the Due Diligence
Period as it believes appropriate, and that thereafter consummation of the
transaction contemplated hereby shall not be contingent in any way upon the
existence of or Buyer obtaining any such assignments, consents or regulatory
approvals, licenses, or certifications.
7.8 Unless approved in advance by the other party, neither Buyer nor
Seller shall not issue any press release or written statement for general or
public circulation relating to the transactions contemplated hereby, except as
required by law in the reasonable opinion of Buyer's counsel. Each party agrees
to use good faith efforts to
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obtain the other's approval of the text of any public report, statement or
release prepared.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligation
of Buyer to consummate this Agreement will be subject to the satisfaction, on or
before the Closing Date, or such other date as may be specified, of the
following conditions, any of which may be waived by Buyer in writing.
8.1 Representations. The representations and warranties made by Seller
in Section 5 hereof will be true and correct on the Closing Date as though such
representations and warranties had been made on such date and Seller will
deliver to Buyer a certificate dated as of the Closing Date to the foregoing
effect.
8.2 Covenants. Seller will have duly performed all of the covenants,
acts and undertakings to be performed by it on or prior to the Closing Date,
and Sellers will deliver to Buyer a certificate dated as of the Closing Date to
the foregoing effect.
8.3 No Injunction, Etc. No proceeding, investigation, or legislation
will have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, or prohibit, or to obtain
substantial damages in respect of this Agreement, or which materially affects
title to, or the existence or priority of liens on, the Acquired Assets.
8.4 Incumbency. Seller will have delivered a certificate of incumbency
executed by the president and secretary of Seller listing each officer and
director of Seller and the persons authorized to execute this Agreement and the
other documents contemplated hereby.
8.5 Material Adverse Change. No material adverse change to the
Acquired Assets shall have occurred on or after the date of this Agreement and
on or prior to the Closing Date.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligation
of Seller to consummate this Agreement will be subject to the satisfaction, on
or before the Closing Date, of the following conditions, any of which may be
waived by Sellers in writing.
9.1 Representations. The representations and warranties made by Buyer
in Section 6 hereof will be true and correct in all material respects on the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of such date and Buyer will deliver to
Seller a certificate dated as of the Closing Date to the foregoing effect for
Buyer.
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9.2 Covenants. Buyer will have duly performed all of the covenants,
acts or undertakings to be performed by it on or before the Closing Date, and
Buyer will deliver to Seller certificates dated as of the Closing Date to the
foregoing effect.
9.3 Certified Resolutions. Buyer will have delivered to Sellers
certificates executed by duly authorized officers and containing true and
correct copy of resolutions duly adopted by Buyer's Board of Directors
approving and authorizing this Agreement and its consummation. Such officers
will also certify that such resolutions have not been revoked or modified and
remain in full force and effect.
9.4 No Injunction, Etc. No proceeding, investigation or legislation
will have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, or prohibit, or to obtain substantial
damages in respect of this Agreement.
9.5 Incumbency. Buyer will have delivered a certificate of incumbency
executed by its president or a vice president and the secretary or an assistant
secretary listing the persons authorized to execute this Agreement, and the
other documents contemplated hereby.
10. MUTUAL COVENANTS. Each of the parties hereto will refrain from taking
any action which would render any representation or warranty contained in
Sections 5 or 6 of this Agreement inaccurate as of the Closing Date. Each party
will promptly notify the other of any action or proceeding that is instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement. Each party will take
such further action as may reasonably be requested by another party to evidence
the consummation of this Agreement.
11. CLOSING.
11.1 Time and Place. The closing ("Closing") will be held at the offices
of seller at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx on December 16, 1998.
11.2 Transactions at the Closing. At Closing, each of the following
transactions will occur subject to paragraph 11.3:
(a) Sellers will deliver to Buyer the following:
(i) such bills of sale, endorsements, assignments and
other instruments of transfer as are necessary to vest in Buyer all of Sellers'
right, title and interest in, to and under the Acquired Assets, free and clear
of all Liens other than Permitted Encumbrances;
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(ii) all such certificates, dated as of the Closing Date, as
Buyer may reasonably request to evidence the fulfillment by Seller, or other
satisfaction as of the Closing Date, of the terms and conditions of this
Agreement; and
(iii) an opinion of Seller's counsel, in form and substance
reasonably satisfactory to Buyer, that Seller is duly organized, validly
existing, and in good standing under the laws of the State of Delaware, that
Seller has full power and authority to own and convey the Acquired Assets, and
this Agreement constitutes the valid and binding obligation of Seller,
enforceable in accordance with its terms, except that enforceability may be
limited by applicable equitable principles of bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
(b) Buyer will deliver to Seller the following:
(i) the Purchase Price required under Section 2;
(ii) a certificate of good standing of Buyer from the
Secretary of State of its state of incorporation as of the most recent
practicable date;
(iii) all such certificates, dated as of the Closing Date,
as Seller may reasonably request to evidence the fulfillment by Buyer, or other
satisfaction as of the Closing Date, of the terms and conditions of this
Agreement; and
(iv) an opinion of Buyer's counsel in form and substance
reasonably satisfactory to Seller, that Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of its State of Florida;
that Buyer has full power and authority to purchase and own the Acquired
Assets, that all action has been taken as required to authorize the execution
and consummation of this Agreement by Buyer, and this Agreement constitutes the
valid and binding obligation of Buyer, enforceable in accordance with its
terms, except that enforceability may be limited by applicable equitable
principles of bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally.
11.3 Optional Effective Date. It is acknowledged that it may take some
period of time for Buyer to obtain on behalf of the Operations new
certifications and provider numbers for participation in the Medicare ad
Medicaid programs. At the option of Buyer, the effective date of transfer to
Buyer of the Acquired Assets may be postponed after Closing to the earlier to
occur either of Buyer obtaining such certifications and provider numbers,
Buyer's cancellation of the Management Agreement described below, or six months
from the date of closing (hereafter the "Effective Date." At Closing Buyer shall
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deliver the purchase price in full to Seller, the parties will execute the
Management Agreement attached hereto as Exhibit __ which shall appoint Buyer as
manager of the Operations on behalf of Seller on the terms and conditions set
forth and until the Effective Date, and Seller will deliver to the Escrow Agent
such documents transferring and conveying the Acquired Assets to Buyer as
otherwise would have been delivered to Buyer at Closing. Seller shall instruct
the Escrow Agent to deliver said documents to Buyer on the Effective Date.
Notwithstanding an election by Buyer of the Optional Effective Date provided in
this paragraph, Closing shall occur at the time and place otherwise provided,
and neither Closing nor the Effective Date shall in any way be postponed or
contingent for any reason, including obtaining certifications or provider
numbers.
12. COVENANT NOT TO COMPETE. For a period of one year after Closing, without
the prior written consent of Buyer, Seller and its affiliates, and officers or
directors of Seller or its affiliates shall not: (a) engage in the
establishment or operation of any business for the delivery of mental health
services to patients at nursing homes within the States, other than pursuant to
the PASARR contract, (b) hire or solicit for hire any employee of the
Operations, or recommend, directly or indirectly to any such employee that he
or she obtain employment elsewhere. Without in any way limiting the foregoing,
it is acknowledged that this covenant does not extend to the provision of
mental health services at prisons, jails, or other correctional facilities or
under the Georgia PASARR contract. Buyer expressly acknowledges that Seller may
be continuing to provide services under the PASARR contracts to patients at
nursing homes at which Buyer will be providing services after Closing.
13. ACCOUNTS RECEIVABLE AND PROVIDER NUMBERS. In order to assure collection
by Seller of accounts receivable arising from services provided prior to the
date of Closing (which accounts receivable are excluded from the Acquired
Assets (the "Excluded Receivables")), Buyer shall xxxx for services provided by
it after Closing under its own provider numbers or other appropriate billing
information, of Buyer. Seller shall retain the sole right to xxxx for and
collect the Excluded Receivables together with the sole right, subject to the
Interim Management Agreement, if any, to utilize the provider numbers and other
billing identification which Seller has utilized in connection with the
Operations. In the event proceeds of accounts receivable are collected by
either party which include proceeds of accounts due the other party, the party
collecting such receivables shall deliver to the other party within three (3)
days of receipt those proceeds to which such party is entitled together with a
copy of the Explanation of Benefits ("EOBs") to which such proceeds relate.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements contained in
this Agreement, and the documents contemplated hereby, will be deemed
representations and warranties hereunder by Seller or Buyer, as the case may
be. All
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representations and warranties made by Seller or Buyer in this Agreement will
survive until the second (2nd) anniversary of the Closing Date. No claims for
breach of a representation or warranty (including an Indemnification Claim as
defined in Section 16) may be brought by any person unless written notice of
such claim will have been given on or prior to the end of such survival period
(in which event each representation and warranty with respect to any asserted
claim will survive until such claim is finally resolved and all obligations with
respect thereto are fully satisfied).
15. TERMINATION. This Agreement may be terminated, and the transactions
contemplated herein abandoned: (a) by the mutual written consent of Seller and
Buyer; (b) by either Seller or Buyer upon the failure of the other to comply
substantially with its or their conditions precedent to Closing and other
obligations set forth herein on or before the Closing Date; (c) upon Seller's
failure to cure (or waiver of the opportunity to cure), any condition or defect
in the Acquired Assets disclosed to Buyer during the Due Diligence Period and
reasonably unacceptable to Buyer. Such cure or waiver thereof shall take place
within thirty (30) days of receipt by Seller of written notice of such condition
or defect from Buyer (such notice to be delivered prior to expiration of the Due
Diligence Period). Termination pursuant to this Section will relieve the parties
of their obligations hereunder with each party responsible for its own fees,
costs and expenses; provided, however, that if the Agreement is terminated
pursuant to (b) above because one party fails to use its reasonable best efforts
to fulfill its obligations hereunder, such party will remain liable to the other
party for all rights as to deposits, losses, costs, expenses (including
attorney's fees) and liabilities incurred by such other party as a result of
such failure.
16. INDEMNIFICATION.
16.1 Losses. For purposes of this Section 16, "Losses" will mean all
damages, losses, costs, expenses (including legal, accounting and other fees
and expenses), interest, penalties, charges and liabilities.
16.2 Indemnification by Seller. Seller agrees to indemnify, defend and
hold harmless Buyer from and against any Loss incurred by Buyer related to or
arising out of (a) the breach of any of the warranties, representations,
covenants or agreements of Seller in this Agreement (a "Breach"), (b) any
liability arising from the ownership of use of the Acquired Assets by Seller
prior to the Closing Date, other than (i) Assumed Liabilities, and (ii) any
costs which may be associated with environmental liabilities relating to the
real property, or the condition of such real property on the Closing Date.
16.3 Indemnification by Buyer. Buyer agrees to indemnify, defend and
hold harmless Sellers from and against any Loss incurred by Sellers related to
or arising out of (a) the breach of any of the warranties, representations or
agreements of Buyer in the Buyer's Agreements, (b) any Assumed Liability, or
(c) any liability associated with
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Buyer's ownership or use of the Acquired Assets or conduct of the Operation on
or after the Closing Date.
16.4 Procedures for Indemnification.
(a) An Indemnification Claim will be made by the Indemnitee by
delivery of a written declaration to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing such other
relevant information as Indemnitee may have concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim
the procedures set forth in Section 16.5 hereof will be observed by the
Indemnitee and Indemnitor.
(c) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Indemnitor will have ten (10) days to object to such
Indemnification Claim by delivery of a written notice of such objection to
Indemnitee specifying to the extent reasonable given the information available
to Indemnitor the basis for such objection. Failure to timely so object will
constitute acceptance of the Indemnification Claim by the Indemnitor and the
Indemnification Claim will be paid in accordance with Section 16.4(d). If any
objection is timely interposed by the Indemnitor and the dispute is not
resolved within fifteen (15) days from the date Indemnitee receives such
objection, such dispute will be resolved by litigation, arbitration or
mediation, at the preference of the parties.
(d) Upon determination of the amount of an Indemnification Claim
(including a Third Party Claim), whether by agreement between Indemnitor and
Indemnitee, by an arbitration award or otherwise, Indemnitor will pay the
amount of such Indemnification Claim within ten (10) days of the date such
amount is determined.
16.5 Defense of Third Party Claims.
(a) Should any Third Party Claim be made the obligations and
liabilities of the parties with respect to such Third Party Claim will be
subject to this Section 16.5.
(b) Within a reasonable time (i.e., such time as will not
prejudice the contest, defense, litigation, or settlement of a Third Party
Claim) following the receipt of notice of a Third Party Claim, the party
receiving the notice of the Third Party Claim will (i) notify the other party
of its existence setting forth in writing and with reasonable specificity the
facts and circumstances of which such party has received notice, and (ii) if
the party giving such notice is an Indemnitee, specify in writing the basis
hereunder
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upon which the Indemnitee's claim for indemnification is asserted and tendering
defense of the Third Party Claim to Indemnitor.
(c) If the defense of a Third Party Claim is so tendered and
within ten (10) day thereafter such tender is accepted without qualification by
the Indemnitor as evidenced by written notice to Indemnitee, then, except as
provided below, the Indemnitee will not, and the Indemnitor will, have the
right to contest, defend, litigate and settle such Third Party Claim. The
Indemnitee will have the right to be represented by counsel of its own choice
and at Indemnitee's expense to participate in any contest, defense, litigation
or settlement conducted by the Indemnitor; provided that the Indemnitee will be
entitled to reimbursement therefor if the Indemnitor loses is right to contest,
defend, litigation and settle the Third Party Claim as provided below.
Notwithstanding the preceding provisions of this Section 16.5, if the Third
Party Claim is asserted against both of Indemnitor and Indemnitee and
representation of both of them by the same counsel would be inappropriate due
to actual or potentially differing interests between them, Indemnitee shall be
entitled to retain the right to contest, defend or litigate such Third Party
Claim as it relates to Indemnitee and will have the exclusive right, in its
discretion exercised in good faith, and with the advice of counsel, to settle
any such matter as it related to Indemnitee, either before or after the
initiation of litigation, at such time and upon such terms as it deems fair
and reasonable, provided that at least ten (10) days prior to any such
settlement, written notice of its intention to settle will be given to the
Indemnitee. If, pursuant to the preceding sentence, the Indemnitee so contests,
defends, litigates or settles a Third Party Claim, the Indemnitee will be
reimbursed by the Indemnitor for the reasonable attorneys' fees and other
expenses of defending, contesting, litigating and/or settling the Third Party
Claim which are incurred from time to time, promptly following the presentation
to the Indemnitor of itemized bills for such attorneys' fees and other
expenses.
(d) The Indemnitor will lose its right to contest, defend,
litigate and settle the Third Party Claim if it fails to diligently contest the
Third Party Claim (except in connection with a settlement thereof in accordance
with the terms hereof). So long as the Indemnitor has not lost its right to
defend, contest, litigate and settle as herein provided, the Indemnitor will
have the exclusive right to contest, defend and litigate the Third Party Claim
and will have the exclusive right, in its discretion exercised in good faith,
and with the advice of counsel, to settle any such matter, either before or
after the initiation of litigation, at such time and upon such terms as it
deems fair and reasonable, provided that at least ten (10) days prior to any
such settlement, written notice of its intention to settle will be given to the
Indemnitee.
(e) All expenses (including without limitation attorneys' fees
and expenses) incurred by the Indemnitor in connection with the foregoing will
be paid by the Indemnitor.
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(f) No failure by an Indemnitor to acknowledge in writing its
indemnification obligations under this Section 16 will relieve it of such
obligations to the extent they exist. If an Indemnitee is entitled to
indemnification against a Third Party Claim, and the Indemnitor fails to accept
or assume the defense of a Third Party Claim pursuant to Section 16.5(c), or
if, in accordance with the foregoing, the Indemnitor loses its right to
contest, defend, litigate and settle such a Third Party Claim, the Indemnitee
will have the right, without prejudice to its right of indemnification
hereunder, in its discretion exercised in good faith, and upon the advice of
counsel, to contest, defend and litigate such Third Party Claim, and may, in
its discretion exercised in good faith, and with the advice of counsel, settle
such Third Party Claim, either before or after the initiation of litigation, at
such time and upon such terms as it deems fair and reasonable, provided that at
least ten (10) days prior to any such settlement, written notice of its
intention to settle is given to the Indemnitor. If, pursuant to this Section
16.5(f), the Indemnitor so contests, defends, litigates or settles a Third
Party Claim for which it is entitled to indemnification hereunder, the
Indemnitee will be reimbursed by the Indemnitor for the reasonable attorneys'
fees and other expenses of defending, contesting, litigating and/or settling
the Third Party Claim which are incurred from time to time, promptly following
the presentation to the Indemnitor of itemized bills for such attorneys' fees
and other expenses.
16.6 Limitations.
(a) All notices of Loss must be delivered to the Indemnitor
prior to expiration of the two year period for the warranties and
representations as set forth in Section 14 hereof.
(b) The remedies provided in this Section 16 are in addition to,
and not in derogation of, any statutory, equitable, or common law remedy any
party may have for breach of any representation, warranty, covenant or
agreement set forth in this Agreement.
(c) Notwithstanding anything else to the contrary, Seller shall
be liable as an Indemnitee only if the aggregate Losses exceed $30,000.
17. TRANSACTION EXPENSES.
17.1 Except as provided in Section 17.2, all expenses incurred by the
parties in connection with or related to the authorization, preparation,
negotiation and consummation of this Agreement and the agreements, documents or
instruments contemplated hereby will be borne solely by the party which has
incurred the same.
17.2 Buyer shall be responsible for any and all recordation charges,
transfer taxes, or other fees required for transfer of the Acquired Assets.
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18. MISCELLANEOUS.
18.1 Notice. All notices, requests, demands and other communications
hereunder will be in writing and will be deemed given and received (a) on the
date of delivery when delivered by and or when transmitted by confirmed
simultaneous telecopy, (b) on the following business day when sent by receipted
overnight courier, or (c) five (5) business days after deposit in the United
States Mail when mailed by registered or certified mail, return receipt
requested, first class postage prepaid, when addressed as set forth below:
Buyer: Paradigm Health Services, Inc.
00000 00xx Xx. X., Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Sellers: MHM Extended Care Services, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Any party may change the address to which notices are to be sent to it by giving
written notice of such change of address to the other party in the manner above
provided for giving notice.
18.2 Assignment; Binding Effect. This Agreement may not be assigned by
any of the parties hereto without the prior written consent of the other
parties hereto, provided that Buyer may assign its rights hereunder to any
entity majority ownership of which is held by Buyer or the owners of Buyer, so
long as Buyer remains obligated for performance of Buyer's obligations
hereunder. This Agreement will be binding upon the parties hereto and their
respective heirs, successors and permitted assigns.
18.3 Headings; Exhibits and Schedules. The Section, Subsection and
other headings in this Agreement are inserted solely as a matter of convenience
and for reference, and are not a part of this Agreement. The Exhibits and
Schedules attached hereto are a material part of this Agreement and are
incorporated herein by this reference.
18.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
18.5 Integration of Agreement. This Agreement supersedes all prior
agreements, oral and written, between the parties hereto with respect to the
subject
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matter hereunder. Neither this Agreement, nor any provision hereof, may be
changed, waived, discharged, supplemented or terminated orally, but only by an
agreement in writing signed by the party against which the enforcement of such
change, waiver, discharge or termination is sought.
18.6 Time of Essence. Time is of the essence in this Agreement.
18.7 Governing Law. This Agreement will be governed by and construed
and enforced in accordance with the laws of the State of Tennessee as applied to
contracts executed and performed wholly within that State.
18.8 Partial Illegality or Unenforceability. Wherever possible, each
provision hereof will be interpreted in such manner as to be effective under
applicable law, but in case any one or more of the provisions contained herein
will, for any reason, be held to be illegal or unenforceable in any respect,
such illegality or Unenforceability will not affect any other provisions of this
Agreement, and this Agreement will be construed as if such illegal or
unenforceable provision or provisions had never been contained herein unless the
deletion or such provision or provisions would result in such a material change
as to cause completion of the transactions contemplated hereby to be
unreasonable.
18.9 Singular or Plural. All defined terms used herein will have the
same meaning, whether used in the singular or plural form, unless the context
clearly requires otherwise.
18.10 "Person". The term "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
18.11 "Best Efforts". The use of the term "best efforts" herein will in
no event require any party to (a) expend funds which are not commercially
reasonably in relation to the transactions contemplated hereby or (b) take, or
cause to be taken, any action which would have a material adverse effect with
respect to it.
18.12 "Including". Whenever the term "including" is used in this
Agreement, it will mean "including, without limitation," (whether or not such
language is specifically set forth) and will not be deemed to limit the range of
possibilities of those items specifically enumerated.
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18.13 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person other than the parties and their respective
heirs, successors and permitted assigns.
The parties have executed this Agreement as of this 3 day of December, 1998.
BUYER:
Paradigm Health Services, Inc.
By: [SIGNATURE]
---------------------
Title: President
--------------------
SELLER:
MHM Extended Care Services, Inc.
By: [SIGNATURE]
-------------------
Title: Executive Vice President
--------------------------
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