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EXHIBIT 10.33
ASSET PURCHASE AGREEMENT
AMONG
TRANSWORLD ACQUISITION CORP.,
AS BUYER,
TRANSWORLD HOME HEALTHCARE, INC.,
THE SOLE STOCKHOLDER OF BUYER,
U.S. HOMECARE INFUSION THERAPY SERVICES
CORPORATION OF NEW JERSEY,
AS SELLER,
AND
U.S. HOMECARE CORPORATION
THE SOLE STOCKHOLDER OF SELLER
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DATED AS OF OCTOBER 31, 1996
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS................................................................................ 1
SECTION 1.1 Definitions................................................................................. 1
SECTION 1.2 Interpretation.............................................................................. 6
ARTICLE II PURCHASE AND SALE; CLOSING................................................................. 6
SECTION 2.1 Purchase and Sale of Purchased Assets....................................................... 6
SECTION 2.2 Transfer, Assignment and Conveyance of Purchased Assets..................................... 8
SECTION 2.3 Excluded Assets............................................................................. 9
SECTION 2.4 Purchase Price.............................................................................. 9
SECTION 2.5 Assumption of Liabilities................................................................... 9
SECTION 2.6 Closing..................................................................................... 10
SECTION 2.7 Purchase of Additional Assets............................................................... 10
SECTION 2.8 Collection of Existing A/R.................................................................. 10
SECTION 2.9 Certain Employees; Use of Facilities........................................................ 11
SECTION 2.10 Certain Nursing Services................................................................... 12
SECTION 2.11 Effective Date............................................................................. 13
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE STOCKHOLDER............................................................ 14
SECTION 3.1 Authority Relative to this Agreement........................................................ 14
SECTION 3.2 No Conflicts; Consents...................................................................... 15
SECTION 3.3 Corporate Existence and Power............................................................... 15
SECTION 3.4 Subsidiaries................................................................................ 15
SECTION 3.5 Charter Documents and Corporate Records..................................................... 16
SECTION 3.6 Financial Statements........................................................................ 16
SECTION 3.7 Absence of Certain Changes.................................................................. 17
SECTION 3.8 Properties.................................................................................. 19
SECTION 3.9 Contracts................................................................................... 19
SECTION 3.10 Intangible Property........................................................................ 22
SECTION 3.11 Claims and Proceedings..................................................................... 23
SECTION 3.12 Restrictions on Business Activities........................................................ 23
SECTION 3.13 Taxes...................................................................................... 23
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SECTION 3.14 Employee Benefits Plans.................................................................... 24
SECTION 3.15 Officers, Directors and Key Employees...................................................... 26
SECTION 3.16 Employment Related Matters................................................................. 26
SECTION 3.17 Potential Conflicts of Interest............................................................ 27
SECTION 3.18 Insurance.................................................................................. 27
SECTION 3.19 Suppliers, Customers and Contractors....................................................... 28
SECTION 3.20 Compliance with Laws....................................................................... 28
SECTION 3.21 Permits.................................................................................... 29
SECTION 3.22 Finders; Fees.............................................................................. 29
SECTION 3.23 Depositaries............................................................................... 29
SECTION 3.24 Disclosure................................................................................. 29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.................................................... 30
SECTION 4.1 Corporate Existence and Power............................................................... 30
SECTION 4.2 Authority Relative to This Agreement........................................................ 30
SECTION 4.3 No Conflicts; Consents...................................................................... 30
SECTION 4.4 Litigation.................................................................................. 31
SECTION 4.5 Finders; Fees............................................................................... 31
SECTION 4.6 Disclosure.................................................................................. 31
ARTICLE V COVENANTS AND AGREEMENTS................................................................... 31
SECTION 5.1 Conduct of Business......................................................................... 31
SECTION 5.2 Corporate Examinations and Investigations................................................... 33
SECTION 5.3 Additional Financial Statements............................................................. 33
SECTION 5.4 Filings and Authorizations.................................................................. 34
SECTION 5.5 Efforts to Consummate....................................................................... 34
SECTION 5.6 Negotiations With Others.................................................................... 35
SECTION 5.7 Notices of Certain Events................................................................... 35
SECTION 5.8 Public Announcements........................................................................ 36
SECTION 5.9 Confidentiality............................................................................. 36
SECTION 5.10 Bulk Sales................................................................................. 37
SECTION 5.11 Use of Name................................................................................ 37
SECTION 5.12 Certain Expenses........................................................................... 37
SECTION 5.13 Tax Matters................................................................................ 37
ARTICLE VI CONDITIONS TO CLOSING...................................................................... 38
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SECTION 6.1 Conditions to the Obligations of Seller and Buyer........................................... 38
SECTION 6.2 Conditions to the Obligations of Seller..................................................... 39
SECTION 6.3 Conditions to the Obligations of Buyer...................................................... 40
ARTICLE VII INDEMNIFICATION............................................................................ 41
SECTION 7.1 Survival of Representations and Warranties.................................................. 41
SECTION 7.2 Obligation of Seller to Indemnify........................................................... 42
SECTION 7.3 Obligation of Buyer to Indemnify............................................................ 42
SECTION 7.4 Notice and Opportunity to Defend Third Party Claims......................................... 43
SECTION 7.5 Limits on Indemnification................................................................... 43
ARTICLE VIII TERMINATION................................................................................ 44
SECTION 8.1 Termination................................................................................. 44
SECTION 8.2 Effect of Termination; Right to Proceed..................................................... 44
ARTICLE IX LIQUIDATED DAMAGES......................................................................... 45
ARTICLE X MISCELLANEOUS.............................................................................. 45
SECTION 10.1 Notices.................................................................................... 45
SECTION 10.2 Entire Agreement........................................................................... 46
SECTION 10.3 Waivers and Amendments; NonContractual Remedies; Preservation
of Remedies................................................................................ 46
SECTION 10.4 Governing Law.............................................................................. 47
SECTION 10.5 Consent to Jurisdiction and Service of Process............................................. 47
SECTION 10.6 Designated Buyer........................................................................... 47
SECTION 10.7 Binding Effect; No Assignment.............................................................. 47
SECTION 10.8 Severability............................................................................... 48
SECTION 10.9 Counterparts .............................................................................. 48
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SCHEDULES
Schedule 2 Xxxx of Sale
Schedule 2.3 Excluded Assets
Schedule 2.4(b) Allocation of Purchase Price
Schedule 2.5 Assumption Agreement
Schedule 2.5(a) Assumed Liabilities
Schedule 2.9(a) Retained Employees
Schedule 2.9(d) Exceptions to Transition Costs
Schedule 2.11 October Expenses
Schedule 3.2 Required Consents
Schedule 3.5 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(e) Multiemployer Plans
Schedule 3.15 Officers, Directors and Key Employees
Schedule 3.16 Employment-Related Matters
Schedule 3.17 Potential Conflicts of Interest
Schedule 3.18 Insurance Policies, Fidelity, and Surety Bonds
Schedule 3.19 Suppliers and Customers
Schedule 3.20 Cost Reports
Schedule 3.21 Permits
Schedule 3.22 Finders Fees
Schedule 3.23 Depositories
Schedule 4.3 Buyer's Consents
Schedule 6.2(d)(iv) Form of Buyer's Opinion
Schedule 6.3(e)(iv) Form of Sellers' Opinion
Schedule 6.3(f) Form of Covenant Not to Compete
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of October 31, 1996 among Transworld
Acquisition Corp., a Delaware corporation ("Buyer"), Transworld Home HealthCare,
Inc., a New York corporation ("Transworld"), U.S. HomeCare Infusion Therapy
Services Corporation of New Jersey, a New Jersey corporation ("Seller,") and
U.S. HomeCare Corporation, a New York corporation, the sole security holder of
Seller (the "Stockholder").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of providing infusion
therapy products and related skilled nursing and other related services to
patients in the home (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 I. 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
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and Exhibits hereto, as the same from time to time may be amended.
"Assumption Agreement" shall mean the Assumption Agreement in the form
of Schedule 2.5 between Seller and Buyer.
"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 consistently applied for the purpose of
expressing an opinion thereon.
"Balance Sheet" shall mean the balance sheet of Seller included in
their unaudited financial statements as at and for the year ended December 31,
1995.
"Balance Sheet Date" shall mean December 31, 1995.
"Xxxx of Sale" shall mean the Xxxx of Sale 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 Borough of
Manhattan, the City of New York, are authorized or obligated by law or executive
order to close.
"Business Employees" shall mean the employees of Seller.
"Buyer's Accountants" shall mean Coopers & Xxxxxxx 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., New York
time, on such date; provided, however, that if such date is not a Business Day,
"Close of Business" shall mean 5:00 p.m., New York 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.
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"Escrow Agent" shall mean Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP and each
successor Escrow Agent appointed in accordance with the provisions of the Escrow
Agreement.
"Escrow Agreement" shall mean the Escrow Agreement dated October 9,
1996 hereto among Transworld, Seller, Stockholder, Escrow Agent and Xxxxxxx
Xxxxxx Xxxxx Inc.
"Existing A/R" shall mean the accounts receivable of Seller pertaining
to goods sold and services performed on or prior to the Closing Date, whether or
not an invoice has been submitted for such goods and services as of the Closing
Date.
"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 Financial Accounting
Standards Board or as may be generally accepted by the accounting profession of
the United States.
"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.
"October Net Revenues" shall mean the gross revenues generated by the
Business (net of normal and other contractual allowances determined on a basis
consistent with prior periods) and exclusive of extraordinary items and charges
or credits relating to other periods during the period from October 1, 1996
through Closing.
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"October Expenses" shall mean the sum of (i) the direct cost of goods
sold and related direct packaging costs incurred in generating the October Net
Revenue on a basis consistent with prior periods exclusive of extraordinary
items and charges or credits relating to other periods, net of the applicable
portion of the product discount related to Humatrope (which discount is equal to
4% of the cost of Humatrope and any other applicable discounts or credits, and
(ii) those specific identifiable costs which would have been incurred by Buyer
had it operated the Business during such period on a fully integrated basis, all
as more fully described on Schedule 2.11 hereto.
The term "person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
"Seller's Accountants" shall mean Deloitte & Touche, independent
certified public accountants, or such other accounting firm selected by Seller
that is acceptable to Buyer.
"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.
"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 Sellers 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
Escrow Agreement, the Non-Compete Agreements, the Assumption Agreement, 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.
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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
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Asserted Liability 7.4(a)
Assumed Liabilities 2.5(a)
Business
Recital
Claims 3.11
Claims Notice 7.4(a)
Closing 2.6
Closing Date 2.6
Condition of the Business 3.3
Contemplated Transactions 3.1
Contracts 3.2
Debt 3.6(d)
Deposit 2.4
Effective Date 2.11
Environmental Laws 3.21(a)
Environmental Matters 3.21(a)
Environmental Permits 3.21(e)
ERISA 3.14(a)
Excluded Assets 2.3
Excluded Obligations 2.5(b)
Existing Accounts 2.1(f)
Financial Statements 3.6(a)
Governmental Bodies 3.20
Group 3.14(a)
Group Plans 3.14(a)
Hazardous Materials 3.21(a)
Indemnifying Party 7.4(a)
Indemnitee 7.4(a)
Intellectual Property Rights 3.10
Laws 3.20
Liabilities
Definitions
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Term Section
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Losses 7.2
Marketed Accounts 2.10
Orders 3.20
Permits 3.22
Plan 3.14(b)
Products 3.11
Proposed Contracts 3.9(a)(xxi)
Purchased Assets 2.1
Real Property Leases 3.8
Receivables 3.6(c)
Representatives 5.2
Required Consents 3.2
Retained Employees 2.9
Returns 3.13(a)
Selected Employees 2.9
Settlement Account 2.11(b)
Tangible Property 3.8(b)
Transition Expenses 2.9
Transition Period 2.9
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SECTION I.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 II.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. 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) Those fixed assets, and certain inventory which are
purchased pursuant to Section 2.7 hereof which if, and only if, so purchased
shall be deemed to be a Purchased Asset;
(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 and product credits and product
replacements from any supplier earned through the Effective Date;
(c) All trademarks, trade names, service marks, logos
(excluding the
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U.S. HomeCare Corporation logo), designs and other intangible property
(including all Federal, state and foreign registrations and applications for
registration of such trademarks, trade names, service marks, logos or designs)
owned by Seller or used in the Business;
(d) All rights, titles and interests of Seller in, to and
under all Contracts (other than Real Property Leases and 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 patient and customer lists, copies of files and
computer system files and data files relating to existing patients and any
inactive patient, (i.e. a patient not currently on service, but who is expected
to or could resume service in the future) (collectively, the "Existing
Accounts"), credit policies and credit information with respect to all patients
and customers 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, 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 Sellers 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.
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SECTION II.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,
Assumption Agreement, 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 or desirable to put Buyer in possession or
control of all the Purchased Assets. At the Closing, Buyer will deliver to
Seller the Assumption Agreement 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.
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(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 at its expense
for copying at reasonable times, upon reasonable notice.
SECTION II.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 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 II.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, subject to adjustment as provided in Sections
2.7 and 2.11 hereof, equal the sum of $2,000,000 plus interest from October 1,
1996 to the Closing Date at the per annum rate equal to Transworld's effective
borrowing rate as of the Closing Date, which Purchase Price includes the sum of
$350,000 (the "Deposit"), which sum has been placed in escrow with the Escrow
Agent and which shall be released as provided in the Escrow Agreement. The
balance of the Purchase Price, as adjusted, shall be payable by wire transfer to
Seller at Closing.
(b) The Purchase Price shall be allocated among the Purchased
Assets in the manner set forth on Schedule 2.4(b). Seller and Buyer agree that
such allocations shall be utilized by the parties for all purposes.
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SECTION II.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. 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),
including but not limited to all accounts and trade payables incurred prior to
Closing and all amounts owed to Seller's Humatrope supplier. 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 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 II.6 Closing. The closing (the "Closing") of the purchase and
sale of the Purchased Assets hereunder shall take place at the offices of Xxxx
Marks & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m., local
time, on October 31, 1996, provided that all applicable conditions to Closing
specified in Article VI have been satisfied, 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 II.7 Purchase of Additional Assets. (a) At Closing, Buyer shall
have the right to purchase those fixed assets of Seller (other than Excluded
Assets) as it shall have notified Seller of at or prior to Closing, at a
purchase price equal to 40% of the Net Book Value of such assets.
(b) At Closing, Buyer shall purchase Seller's usable inventory
(as reasonably determined by Buyer) on hand as of the Closing Date at the lesser
of Seller's acquisition cost or, if a material difference exists, the cost that
such inventory is customarily acquired at by Transworld and Seller's inventory
of usable pumps (as reasonably determined by Buyer) on hand as of the Closing
Date at the fair market value thereof as determined by one or more third party
vendors mutually acceptable to Buyer and Seller. The Buyer and
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Seller shall make a mutual good faith estimate of the purchase price of the
inventory and pumps so purchased which amount shall also be paid at Closing. The
calculation of the final purchase price for the inventory and pumps shall be
made by Buyer and Seller or the third party vendors, respectively, within the
ninety (90) day period following Closing and any adjustment shall, subject to
Section 2.11, be paid to Seller or Buyer, as the case may be, by certified check
or wire transfer within five (5) Business Days thereafter.
SECTION II.8 Collection of Existing A/R. (a) Following the Closing,
Seller will continue to collect the Existing A/R. Commencing on the ninety-first
day following the Closing Date and for a period of 180 days thereafter, to the
extent requested by Seller, Buyer will use commercially reasonable efforts
(which, it being specifically understood and agreed, shall not include the
institution of litigation or other extraordinary actions) to assist Seller in
the collection of the Existing A/R. In consideration thereof, Seller shall
reimburse Buyer for all of its actual costs of personnel who are involved in the
collection of such Existing A/R and all other costs directly related to the
collection by Buyer of the Existing A/R (such as telephone and postage) but not
including overhead costs, which reimbursable costs and time records Buyer will
document for Seller in reasonable detail. Such reimbursement shall be made
within five (5) Business Days following receipt of Buyer's records. Proceeds of
collection of the Existing A/R shall continue to be deposited into Seller's
lender lockbox without any right of offset by Buyer. Seller and Stockholder
jointly and severally agree to remit to Buyer weekly, any funds that have been
received in the lockbox which pertain to goods sold or services performed after
the Closing Date. Following the expiration of the 180 day period, the parties
will re-evaluate any further collection arrangements with respect to collection
of Existing A/R. The parties acknowledge and agree that Buyer does not guarantee
the collection or collectibility of any Existing A/R either during or after the
expiration of any collection period.
(b) The parties shall each have the right to review the
collection status of all accounts monthly and Seller shall have the right to
continue to actively seek collection of the Existing A/R. Clinical and
reimbursement documentation with respect to Existing A/R will remain the
property of Seller; provided however, that if Seller elects to have Buyer assist
in its collection efforts, it shall deliver to Buyer, at the time of such
request, copies of all records necessary to enable Buyer to provide such
assistance; and provided further, that Buyer will retain such documentation with
respect to the Existing A/R as shall be necessary to manage its ongoing
operations, and will give Seller reasonable access to such documentation during
any collection period.
SECTION II.9 Certain Employees; Use of Facilities. (a) Buyer shall have
the right to designate at Closing and through the period ending December 1, 1996
(or such later date, which shall not be more than 60 days following Closing, as
Buyer shall advise Seller of by
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November 25, 1996, such period being referred to as the "Transition Period") by
notice to Seller, those employees of Seller (other than the employees listed on
Schedule 2.9, 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 and Transworld
agree not to solicit the Retained Employees for employment by either of them or
any of their 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 end of the Transition Period. Commencing on the
date immediately following the end of the Transition Period, Buyer shall be
responsible for all salary, taxes, benefits and other costs of the Selected
Employees.
(c) Consistent with pharmacy and homecare licensing and
regulatory requirements, Seller and Stockholder agree that Buyer and Transworld
shall have the right to use, without cost to Buyer or Transworld, Seller's
existing facilities during the Transition Period, in order to ensure an orderly
transition of the Purchased Assets to Buyer. Buyer acknowledges that Seller will
also be using such facilities for its ongoing operations and shall cooperate
with Seller in seeking to minimize any interference with such operations. In
order to ensure an orderly transition of care for those patients for whom Seller
has provided home infusion therapy products or services prior to the Closing,
Seller and Stockholder agree that during the Transition Period, Seller shall
dispense on behalf of Buyer and Transworld such pharmaceutical products for such
patients as Buyer or Transworld requests. Seller shall deliver such
pharmaceutical products in the manner and to the locations as Buyer or
Transworld shall from time to time direct. For any such pharmaceutical products
sold by Seller, Buyer shall pay Seller or Stockholder an amount equal to
Seller's or Stockholder's direct costs (which shall mean the cost of drugs,
direct labor costs, packaging and delivery) for such pharmaceutical products.
Seller and Stockholder agree that Seller shall maintain all necessary licenses
and permits to permit them to perform their obligations hereunder. Seller,
Stockholder, Buyer and Transworld shall cooperate with each other as necessary
to facilitate the proper billing by Buyer and reimbursement from third party
payors for such pharmaceutical products.
(d) During the Transition Period, in order to assist in the
transition of the Business to Buyer, Buyer shall have the right to request that
Seller use its reasonable best efforts to retain its existing employees and
existing business functions of the Business, and
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Buyer shall be responsible for paying all costs incurred by Seller directly
related to such employees and business functions, other than as set forth on
Schedule 2.9(d), (the "Transition Costs"). All Transition Costs shall be settled
from the Settlement Account pursuant to Section 2.11 hereof.
SECTION II.10 Certain Nursing Services. (a) In order to assist in
providing continuity of care to patients who are included within the Existing
Accounts and any accounts which are referred to Transworld or an Affiliate by
Seller or Stockholder (the "Marketed Accounts") during the ninety (90) day
period after the Closing, Buyer will utilize Stockholder's skilled nurses at a
rate of $90 per visit in cases where skilled nursing services are required in
connection with infusion therapy services or products. With respect to visits
which are longer than two (2) hours, Seller and Stockholder will xxxx Buyer at
the rate of $45 per hour for each additional hour, in addition to the base rate
of $90 per visit; provided however, that where a CHHA will reimburse Buyer in
connection with nursing services related to the provision of gamma globulin,
Seller and Stockholder will xxxx Buyer the same amount as Buyer will be
reimbursed by the CHHA. Buyer and Transworld agree that, during such 90-day
period, neither they nor their Affiliates will solicit such nurses for
employment, except to the extent that such nurses are included within the
Selected Employees. Seller, Stockholder and Transworld's Steri-Pharm, Inc.
subsidiary will enter into such nursing services agreements as Buyer, Transworld
and Seller may request, which agreements shall contain terms consistent with the
foregoing and such other terms as are normal, customary and appropriate for
nursing services agreements. If after such 90 day period, Buyer requests Seller
or Stockholder to continue to provide such skilled nursing services, Seller and
Stockholder shall continue to provide such skilled nursing services and Buyer or
Transworld shall reimburse Seller or Stockholder at the greater of (i) the rates
set forth above or (ii) Seller's or Stockholder's direct costs incurred in
providing such skilled nursing services.
(b) Transworld agrees that after the Closing, and until the
second anniversary thereof, Stockholder shall be given a preferential
opportunity to provide skilled nursing services to Transworld at service rates
no higher than can be obtained by Transworld from other sources, in those
markets where Stockholder now or hereafter provides such skilled nursing
services, except that Stockholder shall not be entitled to any such preference
in any markets where (i) Transworld or any Affiliate thereof now or hereafter
provides such skilled nursing services, (ii) Transworld or any Affiliate thereof
is committed to utilize nursing services from another provider, or (iii)
Transworld or any Affiliate thereof has been directed by a referral source to
use a particular provider (which may include Transworld or its Affiliates).
(c) The parties acknowledge and agree that in furtherance of
the provisions of Section 2.9 hereof, and in order to provide continuity of
care, the parties contemplate that
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(and Seller and Stockholder shall use their reasonable best efforts to cause) as
of and after Closing (i) the two (2) CHHA nurses of Seller based in Queens, New
York will remain employees of Stockholder or its subsidiaries and will be
cross-charged to Buyer under a nursing services agreement which will provide for
their full salary, benefits and on-call expenses and (ii) the two (2) CHHA
nurses of Stockholder or its subsidiaries based in Scarsdale, New York will
become employees of Transworld's Steri-Pharm, Inc. subsidiary.
SECTION II.11 Effective Date. (a) To the extent permitted by applicable
law and, in the manner provided in this Section 2.11, 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 October 1, 1996 (the "Effective Date").
(b) The parties acknowledge and agree that the October Net
Revenues, subject to the October Expenses, shall be for the benefit of the
Buyer. As of the Closing Date the parties shall jointly prepare a good faith
estimate of the October Net Revenues and the October Expenses. At Closing, an
amount equal to 20% of the October Net Revenues (as so estimated) shall be paid
to Buyer in cash, and an amount equal to the October Net Revenues less the
October Expenses less such 20% payment shall be recorded on the books and
records of the Seller as an account payable to Buyer (the "Settlement Account").
Within the sixty (60) day period following Closing, Buyer and Seller shall
endeavor to finalize the October Net Revenues and Expenses, and on the ninetieth
day following Closing, Seller shall pay to Buyer the Settlement Account as
adjusted for any post-Closing adjustments to be made pursuant to Section 2.7
hereof and any amounts due to Seller pursuant to Section 2.9(d); provided,
however that Seller may retain an amount equal to 3% of October Net Revenues
from the payment of the Settlement Account as an offset against actual bad debt
in excess of 7% of October Net Revenues, with any unused portion of said 3% to
be paid to Buyer on the 180th day following Closing. In the event that the
parties are unable to agree as to such amounts, they shall, within fifteen (15)
days following the expiration of the sixty (60) day period jointly appoint an
independent public accounting firm who shall, within fifteen (15) days after
such appointment, issue its calculation of the amount of the final Settlement
Account amounts, which calculation, absent manifest error, shall be binding upon
the parties. The cost of any independent accounting firm so appointed shall be
shared equally between Buyer and Seller. In furtherance of Section 3.7 and 5.1,
Seller represents and warrants to Buyer that it has and will operate the
Business only in the ordinary course between October 1, 1996 and Closing.
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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 III.1 Authority Relative to this Agreement. Seller and the
Stockholder have full power, capacity and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party and to
consummate the transactions contemplated hereby (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 party enforceable against such party 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).
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SECTION III.2 No Conflicts; Consents. The execution, delivery and
performance by Seller and the Stockholder of this Agreement and each other
Transaction Document to which it is a party and the consummation of the
Contemplated Transactions will not (i) violate any provision of the Certificate
of Incorporation or By-laws (or comparable instruments) of Seller; (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, agreement, indenture, note, bond, loan, instrument, lease,
conditional sale 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; (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; (v) if the Required Consents are obtained, violate any Law of any
Governmental Body, or (vi) if the Required Consents are obtained, violate or
result in the revocation or suspension of any Permit.
SECTION III.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 material
adverse effect on the business, properties, financial condition or the results
of operations of Seller and its Affiliates, individually or taken as a whole
(the "Condition of the Business"). Seller is not qualified to do business as a
foreign corporation in any other jurisdiction.
SECTION III.4 Subsidiaries. Seller does not own, directly or
indirectly, any equity or other interest in any other person and has no
Subsidiaries.
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SECTION III.5 Charter Documents and Corporate Records. (a) Seller has
heretofore delivered to Buyer true and complete copies of the Certificate of
Incorporation (certified by the Secretaries of State or other appropriate
official of its jurisdictions of incorporation) and By-laws (certified by
Seller's secretary or an assistant secretary), or comparable instruments, 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 III.6 Financial Statements. (a) Seller has delivered to Buyer
unaudited financial statements of Seller consisting of a statement of net assets
being sold and statement of income as at and for the six-month period ended June
30, 1996, and unaudited financial statements of Seller consisting of statement
of net assets being sold and statement of income as at and for Seller's fiscal
year ended December 31, 1995. 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.
(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 December 31, 1995 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 patients
who have been on service since June 1, 1996 (the "Receivables") (except such
Receivables as have been collected since such date) constitute bona fide
Receivables resulting from the sale of goods and services in the ordinary course
of business in conformity with applicable purchase
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orders and agreements. Except as otherwise disclosed by Seller to Buyer, 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 collectibility 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 III.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 (other than those events affecting the infusion
therapy industry generally) that has had or would reasonably be expected to have
a material adverse effect on the operations of Seller, individually or in the
aggregate;
(b) Any amendment to the Certificate 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; or (iii)
warehousemen's, mechanics', carriers', landlords', repairmen's or other similar
liens arising in the ordinary course of business;
(e) Insofar as it relates to or affects the Purchased Assets,
any making or
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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 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, including
pricing, purchasing, production, personnel, sales or product acquisition/return
policies;
(n) Except in the ordinary course of business, any payment,
directly or
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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 III.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 machinery, 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 have 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 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);
(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; or
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(iv) Warehousemen's, mechanics', carriers', landlords',
repairmen's or other similar Liens arising in the ordinary course of business.
SECTION III.9 Contracts. (a) Except for (i) purchase orders with
suppliers or sales orders from patients 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 $10,000, 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 $10,000 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 cancelled without
liability, premium or penalty;
(ix) Contracts that can be cancelled only on 60 days' or
more notice;
(x) Any special financial arrangements with the largest
(in terms of sales volume) 25 customers, referral sources or third party payors
of Seller that is outside of Seller's published policies including, but not
limited to, any arrangements relating to chargebacks, allowances and payment
terms;
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(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
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").
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(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
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 U.S. HomeCare Corporation 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 III.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 have 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 III.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 other than Orders affecting the home health care industry
generally. 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 $25,000 or more; (ii) relate to employment, regardless of amount; (iii)
involve a claim from any prior or present patient, 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 controlled
substances laws) or the Medicare or Medicaid programs; or (iv) individually or
in the aggregate, would have a material adverse effect upon the Contemplated
Transactions or upon the Condition of the Business other than Claims affecting
the home health care industry generally. 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 III.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.
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SECTION III.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 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) have 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 years 1995,
1994 and 1993 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.
(d) Seller does not hold and has not held a permit,
registration, certificate or like instrument as a "dealer" or other collecting
agent from a state Taxing Authority under which it collects sales tax from their
business operations and remits such tax to such Taxing Authority.
SECTION III.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
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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
Business Employees, 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
Business Employees. (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, summary annual reports, summary plan descriptions
and a summary of material modifications with respect to each Group Plan for the
preceding three years.
(b) Except for Seller's 401(k) Plan (the "Plan") and the U.S.
HomeCare Corporation Employee Stock Ownership Plan (the "ESOP"), 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 multiemployer plans
as defined in Section 3(37) of ERISA.
(c) The IRS has issued a favorable determination letter to the
effect that the 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 Plan) or is expected
to occur that would adversely affect the qualified status of the Plan or any
related trust subsequent to the issuance of such determination letter.
(d) Except for the ESOP each member of the Group is in
material compliance with the requirements prescribed by any and all statutes,
orders, governmental rules or regulations applicable to the Group Plans and all
reports and disclosures relating to the Group Plans required to be filed with or
furnished to governmental agencies, participants or beneficiaries prior to the
Closing Date have been or will be filed or furnished in a timely manner and in
accordance with applicable law.
(e) Except as provided in Schedule 3.14(e), no member of the
Group
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currently has any obligation to contribute to any multiemployer plan as defined
in Section 3(37) of ERISA. With respect to each such multiemployer plan listed
on Scheduled 3.14(e), the Group has not incurred withdrawal liability within the
meaning of the Multiemployer Pension Plan Amendments Act of 1980.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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 Sellers' 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.
(k) 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 Sellers.
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SECTION III.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 31, 1995, (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 are
terminable at will.
SECTION III.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 their employees or employment practices relating
to the employees; (i) Seller is in compliance in all material respects with all
applicable laws, policies, procedures, agreements and contracts, relating to
employment, 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 III.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:
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(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 their 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 III.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
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 III.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 September 30, 1996, the 15 largest suppliers and the 25 largest
customers, referral sources and third party payors of Seller. Except as
otherwise disclosed to Buyer in Schedule 3.7 hereof with respect to the gamma
globulin and growth hormone components of the Business, during the last six
months (i) no supplier to the Business has refused to ship products or supplies
to the Seller; and (ii) the Seller has not suffered the loss of any significant
referral source or patient group.
SECTION III.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 material adverse effect on the Condition of the
Business, including any environmental law, rule or regulation. 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
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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.
(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. ' 1001), The Criminal False Claims Statute (18 U.S.C. ' 287),
The Civil False Claims Act (31 U.S.C. " 3729), The Medicare and Medicaid Civil
Monetary Penalties Act (42 U.S.C. " 1320a-7a), The Medicare and Medicaid
Criminal Penalties Act (42 U.S.C. ' 1320a-7b), The Xxxxx Law (42 U.S.C. '
1395nn), The Medicare and Medicaid Anti-Kickback law (42 U.S.C. ' 1320a-7b(b))
and all similar state statutes in all of the states in which Seller operates or
provides services.
(c) Schedule 3.20 hereto lists the 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, and the last year
for which such cost report or other submissions or filings or payments to Seller
have been audited by any Governmental Body or other third party payor (and all
disallowances and retroactive rate adjustments thereon settled, paid or
otherwise recouped). All such cost reports and other submissions and filings
were complete and accurate in all material respects, and were prepared in
accordance with the requirements of the Medicaid program, the Medicare program
or the other third party payors, as applicable.
(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 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 January 1, 1995, 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).
(f) Neither Seller nor Stockholder has any actual knowledge
that any referring physician, chiropractor, podiatrist, dentist, nurse or other
licensed health professional currently has, or has had at any time after January
1, 1995, an ownership interest in or otherwise have or had a financial
relationship with Seller.
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SECTION III.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 materially adverse
effect on the Condition of the Business. 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 III.22 Finders; Fees. Except for Xxxxxxx Xxxxxx Xxxxx Inc.,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Seller or the Stockholder
who might be entitled to any fee or commission upon consummation of the
Contemplated Transactions, and Seller and Stockholder agree to satisfy any
obligations to them at Closing.
SECTION III.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.
SECTION III.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
Condition of 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 AND TRANSWORLD
Buyer and Transworld represent and warrant to Seller that:
SECTION IV.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.
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SECTION IV.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 IV.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 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 IV.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
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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 IV.5 Finders; Fees. 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.
SECTION IV.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 V.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.
(ii) To maintain in the ordinary course of business
consistent with past practice all their 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,
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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 products, 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 to):
(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 Schedule 3.14 or 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.
(iv) Not to authorize or make any capital
expenditures involving the payment or liability of $25,000 or more in the
aggregate.
(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
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continue to be true and correct on and as of the Closing Date as if made on and
as of the Closing Date.
SECTION V.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 V.3 Additional Financial Statements. (a) Prior to Closing, if
requested by Buyer, Seller shall provide Buyer with daily summaries of net
revenues and cost of goods sold, in such form as Buyer may reasonably request.
Within ten (10) Business Days after Closing, Seller shall furnish Buyer with a
statement of net assets being sold and statement of income for the nine (9)
month period ended September 30, 1996 on a basis consistent with those financial
statements delivered pursuant to Section 3.6(a). If requested by Buyer, as soon
as available and in any event within twenty (20) Business Days after the end of
each monthly accounting period of Seller after September 30, 1996, Seller shall
furnish Buyer unaudited financial statements for such period in such detail as
such financial statements have been prepared consistent with past practice.
(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 twenty (20) days after such request (or such later
date as the Buyer and Seller shall agree upon) in the case of calendar years
1995, 1994 and 1993, Seller and the Stockholder shall cause the Seller's
Accountants to conduct and complete an audit of the financial
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statements of the Seller and to issue certified financial statements with
respect thereto for the year ended December 31, 1995, 1994 and 1993 (the
"Subsequent Audited Financial Statements"). An accounting firm selected by Buyer
shall have the right to review the work of the Seller'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.
SECTION V.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 Contemplated Transactions 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
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 and during the Transition Period, 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 V.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
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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 V.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.
SECTION V.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
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(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 V.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 V.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 Contemplated Transactions, and Buyer and the
Stockholder and Seller shall not 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 (b) 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 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 V.10 Bulk Sales. Seller and Buyer each waives any requirement
for
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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 V.11 Use of Name. From and after the Closing, Seller shall, and
the Stockholder shall cause Seller to, cease any use of the tradename "U.S.
HomeCare Infusion Therapy Services," other than in connection with Seller's
billing and collection activities with respect to the Existing A/R. 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 tradename "U.S. HomeCare Infusion Therapy Services" or
any derivation thereof. During the six (6) month period following the Closing
Date, Buyer shall have the right to use, for transition purposes, the name U.S.
HomeCare Infusion Therapy Services. Thereafter, Buyer shall have the right to
use such name to the extent necessary to conduct joint marketing activities with
Seller or Stockholder or in connection with any referrals made to Buyer by
Seller or Stockholder. As of and after the Closing Date, the Seller and
Stockholder shall promptly forward any inquiry or referral for infusion therapy
services to Buyer indicating to such referrer or inquiring party that Buyer has
purchased the Business and is providing service with respect thereto.
SECTION V.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.
(c) Whether or not the Contemplated Transaction is
consummated, Buyer shall reimburse Seller, upon presentation of appropriate
invoices therefor, for its reasonable auditing expenses incurred with respect to
each year for which audited financial statements are required under Section 5.3
of this Agreement to be delivered by Seller to Buyer in connection with the
Contemplated Transactions.
SECTION V.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
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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 December 31, 1996, 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.
(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 ended December 31, 1996.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION VI.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
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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.
SECTION VI.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 (less the Deposit) 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
Assumption Agreement 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
President or a Vice-President of Buyer and Transworld 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 and Transworld 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
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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.
(iv) A signed opinion of Buyer's counsel, dated
the Closing Date and addressed to Seller, substantially in the form of opinion
annexed as Schedule 6.2(d)(iv) hereto.
(e) Lender's Consent. The Seller's senior secured lenders
shall have consented to the execution, delivery and performance of this
Agreement and the Contemplated Transactions.
SECTION VI.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:
(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 in the Condition of the Business; (ii) any damage to the Purchased Assets
by fire, flood, casualty, act of God or other cause, which has a 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 material adverse effect on the Condition of the
Business.
(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.
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(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) A signed opinion(s) of Seller's counsel,
dated the Closing Date, addressed to Buyer, substantially in the form of opinion
annexed as Schedule 6.3(e)(iv) hereto.
(v) Releases of all Liens on the Purchased
Assets, 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.
(e) Lender's Consent. The Buyer's lenders shall have
consented to the execution, delivery and performance of this Agreement and the
Contemplated Transactions.
(f) Covenants Not to Compete. The Seller and the
Stockholder shall have executed and delivered a Covenant Not to Compete in the
form of Schedule 6.3(f) annexed hereto.
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ARTICLE VII
INDEMNIFICATION
SECTION VII.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 VII.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) 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) 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;
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(c) any and all Losses resulting from any adjustment to
any accounts receivable or prior xxxxxxxx of Seller for the period from October
1, 1996 through Closing, other than those contained in allowances for doubtful
accounts as set forth in the books and records of Seller as of the date hereof;
and
(d) 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.
SECTION VII.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 Sellers and the Stockholder 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.
SECTION VII.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
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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.
SECTION VII.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 Buyers
shall be entitled to be indemnified by such parties for all of its Losses
commencing at $1.00.
ARTICLE VIII
TERMINATION
SECTION VIII.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 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;
(c) 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
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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;
(d) By Seller and the Stockholder on the one hand, or
Buyer on the other, if the Closing shall not have occurred on or before October
31, 1996; 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 VIII.2 Effect of Termination; Right to Proceed. 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: (i) in the case of Buyer, to the extent
provided in Article IX; (ii) (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. 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.
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ARTICLE IX
LIQUIDATED DAMAGES
Notwithstanding anything to the contrary contained in this Agreement,
if the Contemplated Transactions are not consummated because of a material
default by Buyer of its obligations hereunder and provided Seller and
Stockholder are not in material default of their obligations hereunder and
Seller and Stockholder have terminated this Agreement pursuant to Section
8.1(b), then the Deposit shall be paid to Seller and Stockholder as liquidated
damages and as Seller's and Stockholder's sole and exclusive remedy, it being
agreed that the Deposit shall constitute full payment for any and all damages
suffered by Seller and Stockholder by reason of Buyer's failure to close this
Agreement. Buyer, Seller and Stockholder agree in advance that the Deposit is a
fair and equitable amount to reimburse Seller and Stockholder for damages
sustained due to Buyer's failure to consummate this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION X.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:
(i) if to Buyer, one copy to:
Xx. Xxxxxxx X. Xxxxxx
Executive Vice President and Chief
Administrative Officer
Transworld Home HealthCare, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
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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. Xxxxxx X. Xxxxxxxx, Xx.
U.S. HomeCare Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 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 X.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 the subject matter hereof and
related transactions and supersede all prior agreements, written or oral, with
respect thereto.
SECTION X.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, cancelled,
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
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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 X.4 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof.
SECTION X.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 New
York or the courts of the United States located in New York County, New York,
(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 X.6 Designated Buyer. It is understood and agreed between the
parties that Buyer may cause one or more Affiliates, direct or indirect
Subsidiaries or other entities designated by it (the "Designated Buyer") to
carry out all or part of the Contemplated Transactions to be carried out by
Buyer.
SECTION X.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 10.6, 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
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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. Accordingly, no party that has
not executed this Agreement shall have any right to enforce any of the
provisions of this Agreement.
SECTION X.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 X.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.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
U.S. HomeCare Infusion Therapy
Services Corporation of New Jersey
By:____________________________________
Name:
Title:
U.S. HomeCare Corporation
By:____________________________________
Name:
Title:
Transworld Acquisition Corp.
By:____________________________________
Name:
Title:
Transworld Home HealthCare, Inc.
By:____________________________________
Name:
Title:
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Schedule 4.3
Buyer's Consents
1. Consent of Transworld's senior lenders
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