EXHIBIT 10.7
FACILITIES AND SERVICES AGREEMENT
THIS AGREEMENT is made and entered into on August 6, 1998, by and between
Xxxxxx Healthcare, Inc., a Texas corporation (the "Seller") and Rehabilicare
Inc., a Minnesota corporation ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller and Buyer have entered into an Asset Purchase Agreement,
dated August 6, 1998 ("Purchase Agreement"), with respect to the sale of certain
assets related to the Homecare business of Seller (the "Business");
WHEREAS, in order to facilitate the orderly transfer of the Business to,
and conduct of the Business by, Buyer, Seller and Buyer desire that the Business
continue to be conducted at the offices of Seller at (i) 000 Xxxx Xxxxxx, Xxxxx,
Xxxx (the "Ohio Facility"), and particularly within the floor space of such
offices described on Exhibit I to this Agreement (such space being hereafter
described as the " Ohio Offices") and at (ii) 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx
Xxxx, Xxxxx 00000 (the "Texas Offices" and together with the Ohio Offices, the
"Offices"); and
WHEREAS, Seller is the Lessee of the Ohio Offices and the owner of the
Texas Offices and will obtain benefits through the sale of the Business.
NOW, THEREFORE, in consideration of the premises, the respective
covenants and commitments of Seller and Buyer set forth in the Purchase
Agreement and the covenants of Seller and Buyer set forth herein, and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller and Buyer agree as follows:
1. USE OF FACILITIES. (a) For so long as Seller's lease of the Ohio Offices
remains in effect (the "Ohio Use Term"), Seller hereby grants Buyer and
Buyer's employees the right to use the Ohio Offices for the conduct of the
Business. Buyer shall pay to Seller a monthly use fee, on the same dates as
Seller is obligated to pay rental to the landlord of such premises, equal to
the ratio of the number of square feet represented by the Offices divided by
the total number of square feet under lease to Seller at such facility,
multiplied by the sum of the rental plus CAM charge paid by Seller for such
facility. Within five days of the date of this Agreement, Seller and Buyer
shall calculate the monthly use fee for the first month of this Agreement on
the basis of the foregoing formula. Thereafter, Buyer may, upon 15 days
notice, reduce the amount of space utilized by Buyer at the Ohio Offices, but
not below 25% of the total leasable area within the Ohio Facility, and the
use fees shall be proportionately reduced. Seller shall promptly notify Buyer
of any default under the lease for the Ohio Offices and of any termination of
such Lease.
(b) For so long as is necessary for Buyer to effect a transition of its
billing, collecting and sales activities from Texas to Buyers' offices in St.
Xxxx, Minnesota or Tampa, Florida, which shall not, in any event, exceed six
months (the "Texas Use Term"), Seller hereby grants Buyer and Buyer's
employees the right to use such portion of the Texas Offices for the conduct
of the Business as is reasonably requested by Buyer. The Texas Use Term (and
the use of any related services) may be terminated by Buyer at any time upon
five days written notice. Seller shall retain as an Employee at the Texas
Offices and make available for services to Buyer when needed, Xxxxxxx
"). Buyer shall pay to Seller a monthly use fee equal to $3,000 for use of the
Texas Offices, for the use of the data and computer system in accordance with
paragraph 2 in Texas, and for the services of Xxxxxxx Xxxxx.
2. ACCESS TO DATA BASE. Seller shall allow Buyer access, during the longer of
the Ohio Use Term or the Texas Use Term, to such portion of Seller's data
base and computer system as relates to the Business, including, without
limitation, that portion of the data base which contains the list of
receivables referenced in section 1.01(h) of the Purchase Agreement, at such
times during normal business hours as Buyer shall request.
3. OTHER SERVICES AND EQUIPMENT. Seller shall make the following services and
equipment available to Buyer at the Offices during the Use Term applicable to
each respective Officer for the charges specified.
(a) TELEPHONE SERVICES. Seller shall make available to Buyer during the
respective Use Term the telephone lines formerly used by Seller's
employees to conduct the Business, and the telephones and equipment, that
are located in the respective Offices. Buyer shall pay Seller for all
long distance costs and charges incurred in connection with the
use of such telephone lines and equipment, plus, in the case of the Ohio
Offices only, a pro rata share (based on the proportion of office space)
of the Seller's monthly line charges for each telephone used by Buyer.
(b) PERSONNEL AND RELATED SERVICES. Seller shall retain as an Employee at the
Ohio Offices and make available for services to Buyer when needed, Xxx X.
Xxxx ("Xxxx"). Xxxx shall initially devote substantially all of his time
to providing services to Buyer. Both Wood and Woody shall remain
employees of Seller, and Seller shall be responsible for all compensation
and benefits, including withholding taxes, FICA and unemployment taxes,
of such employees. For the services of Wood, Buyer shall pay a charge
based on percentage of the time of Wood that Buyer estimates it will
require for services to Buyer multiplied by the monthly salary plus
benefits paid by Seller for Wood and the portion of the month for which
services are utilized (e.g. 23/30 of a month for the first month). Buyer
and Seller shall estimate the approximate amount of time of Wood that
shall be devoted to services for Rehabilicare for the first 23 days of
this agreement within 5 days of the date hereof. Thereafter, Buyer may
reduce or increase such percentage by providing notice to Seller within 5
days preceding the beginning of any month.
(c) Seller shall maintain in the Offices the desks and associated office
equipment currently used to service the Business together with at least
one photocopy machine, one facsimile machine, and certain other
miscellaneous office equipment and supplies (the "Equipment and
Supplies").
4. TERM AND TERMINATION. The term of this Agreement will commence at 12:01 a.m.
on August 7, 1998 ("Effective Date") and end with respect to the Ohio Offices
with the termination of the Ohio Use Term and with respect to the Texas
Offices with the termination of the Texas Use Term. Following expiration of
the Use Terms, all unpaid fees and charges pursuant to Section 2 hereof shall
be due and payable upon receipt of invoice from Seller. Buyer's use of and
access to the facilities and services of Seller shall cease upon expiration
or earlier termination by Buyer, and it shall be the sole responsibility of
Buyer to obtain the facilities and services required or desirable for the
conduct of the Business after such termination.
5. VERIFICATION OF FEES AND CHARGES. Seller will provide such documentation and
information as may reasonably be requested by Buyer for the purpose of
verifying the accuracy of the fees and charges described in Paragraphs 1 and
3 hereof.
6. SECURITY, REGULATORY AND MANAGEMENT REQUIREMENTS. Buyer acknowledges that the
Offices are part of buildings used as business offices for Seller and that
security and confidentiality are essential to their operations. Buyer agrees
to adhere to and comply with the reasonable policies, procedures and
directives of Seller in using the Offices to the extent that such adherence
and compliance is necessary for compliance with management, regulatory and
security requirements.
7. FACILITY MAINTENANCE.
(a) Subject to the obligations of Seller in Section 8, Buyer will keep the
Offices in an orderly, clean and sanitary condition as required by
Seller, will neither do nor permit to be done anything which is in
violation of the terms of insurance policies with respect to the Offices
or property thereon; will neither do nor permit to be done anything in
violation of laws or ordinances applicable thereto; and will neither
commit nor suffer waste of the Offices.
(b) Buyer will make no alterations or modifications of, or with respect to,
the Offices without the written consent of Seller.
8. ADDITIONAL SERVICES AND ASSURANCES. Seller will furnish heat, air
conditioning, elevator service, janitorial and cleaning services, and access
to the Offices as shall be reasonably necessary for the comfortable use and
occupancy of the Offices of Buyer.
9. NON-ASSIGNABILITY. Buyer shall not assign or transfer its rights or
entitlements hereunder without the written consent of Seller.
10.FURTHER DOCUMENTS AND ASSURANCES. At any time from and after the date hereof,
each party shall, upon the request of the other party, execute, acknowledge
and deliver all such further assurances and documents, and will take such
action consistent with the terms of this Agreement and the Purchase
Agreement, as may be reasonably necessary to carry out the transactions
contemplated thereby and to permit each party to enjoy the rights and
benefits under such Agreements.
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11.INDEMNIFICATION.
(a) INDEMNIFICATION BY SELLER. Seller agrees to indemnify Buyer with respect
to, and hold Buyer harmless from, any loss, claim, liability, or expense
(including, but not limited to, reasonable legal fees and expenses) which
Buyer may incur or suffer by reason of, or which results from, arises out
of, or is based upon (a) the failure of Seller to comply with or perform
any of their obligations or agreements in this Agreement; and (b) any
liability relating to or arising out of the occupation of the Offices by
Seller prior to the Effective Date.
(b) INDEMNIFICATION BY BUYER. Buyer agrees to indemnify Seller with respect
to, and hold Seller harmless from, any loss, claim, liability, or expense
(including, but not limited to, reasonable legal fees and expenses) which
Seller may incur or suffer by reason of, or which results from, arises
out of, or is based upon (a) the failure of Buyer to comply with or
perform any of its obligations or agreements in this Agreement; and (b)
any liability relating to or arising out of the occupation of the Offices
by Buyer subsequent to the Effective Date.
(b) LIMITATION ON INDEMNIFICATION. Seller's obligation to indemnify Buyer
pursuant to Section 12(a), and Buyer's obligation to indemnify Seller
pursuant to Section 12(b), shall, in each case, become operative only
after and to the extent that the aggregate amount of all claims for
indemnification made by the other party exceeds $1,000.
(c) LEGAL PROCEEDINGS. In the event Buyer or Seller becomes a party to any
legal, governmental, or administrative proceeding which may result in
indemnification claims hereunder, such party shall promptly notify the
other party in writing of the commencement and nature of such proceeding.
The other party may, at its option and expense, defend any such
proceeding if the proceeding could give rise to an indemnification
obligation hereunder. If such other party elects to defend any
proceeding, it shall have full control over the conduct of such
proceedings, although the party being indemnified shall have the right to
retain legal counsel at its own expense and shall have the right to
approve any settlement of any dispute giving rise to such proceeding,
provided that such approval may not be withheld unreasonably by the party
being indemnified. The party being indemnified shall reasonably cooperate
with the indemnifying party in such proceeding.
12.BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit
of and be enforceable against the parties hereto and their respective
successors and assigns.
13.GOVERNING LAW. This Agreement shall in all respects be governed by, and
enforced and interpreted in accordance with, the laws of the State of
Minnesota, except with respect to its rules relating to conflicts of laws.
14.NOTICES. All notices, consents, requests, demands, instructions or other
communications provided for herein shall be in writing and shall be deemed
validly given, made and served when received if delivered personally or by
telephonically confirmed fax or when deposited in the U.S. mails for delivery
by certified or registered mail, postage prepaid, addressed to the
appropriate party.
15.ENTIRE AGREEMENT; AMENDMENT AND WAIVER COUNTERPARTS. Except for the Purchase
Agreement, this Agreement constitutes the entire agreement between Seller and
Buyer relating to the subject hereof in all respects any and all prior oral
or written agreements or understandings between them relating to such
transaction. This Agreement may be amended or modified, and the provisions
hereof may be waived, only by written instrument signed by both Seller and
Buyer (in the case of amendments or modifications) or by the party to be
charged thereby (in the case of waivers). Any waiver shall be limited in the
written waiver document and shall not be deemed a waiver of any other term of
this Agreement or of the same circumstance or event upon any recurrence
thereof. This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which, taken together, shall constitute one
agreement.
16.HEADINGS. Article and section headings used in this Agreement have no legal
significance and are used solely for convenience of reference.
17.SEVERABILITY. Each and every provision of this Agreement shall be deemed
valid, legal, and enforceable in all jurisdictions to the fullest extent
possible. Any provision of this Agreement that is determined to be invalid,
illegal, or unenforceable in any jurisdiction shall, as to that jurisdiction,
be adjusted and reformed rather than voided if possible, in
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order to achieve the intent of the parties. Any provision of this Agreement
that is determined to be invalid, illegal, or unenforceable in any
jurisdiction which cannot be adjusted and reformed shall, for the purposes of
that jurisdiction, be voided. Any adjustment, reformation, or voidance of any
provision of this Agreement shall only be effective in the jurisdiction
requiring such adjustment, reformation, or voidance, without affecting in any
way the remaining provisions of this Agreement in such jurisdiction or
adjusting, reforming, or voiding that provision or any other provision of
this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement by
their respective duly authorized representatives.
XXXXXX HEALTHCARE, INC.
By /s/ XXX X. XXXXXXX
Its EXECUTIVE VP, CFO AND SECRETARY
REHABILICARE INC.
By /s/ XXXXX X. XXXXXX
Its PRESIDENT AND COO
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