EXHIBIT 2.2
FIRST AMENDMENT
TO
ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement dated and effective June
30, 2004 (this "AMENDMENT"), amends that certain Asset Purchase Agreement dated
June 22, 2004 (the "ORIGINAL AGREEMENT"), by and among DEGC ENTERPRISES (U.S.),
INC., a Florida corporation ("DEGC"), MATRIA HEALTHCARE, INC., a Delaware
corporation ("PARENT"), DIABETES SELF CARE, INC., a Virginia corporation
("DSC"), and DIABETES MANAGEMENT SOLUTIONS, INC., a Delaware corporation ("DMS"
and together with DSC, the "SELLER"). Capitalized terms used herein and not
otherwise defined herein have the respective meanings set forth in the Original
Agreement.
RECITALS
A. In the Original Agreement, Seller agreed to sell and transfer
to DEGC, and DEGC agreed to purchase and acquire from Seller, certain assets and
liabilities related to the Business, on the terms and conditions set forth in
the Original Agreement;
B. Seller and DEGC desire to amend the Original Agreement and the
Disclosure Schedules as provided herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto hereby agree as follows:
1. The Disclosure Schedules are hereby amended and restated in their
entirety by the attached copy of the Disclosure Schedules.
2. Section 1(c) of the Original Agreement is hereby amended and
restated as follows:
"(c) Liabilities Assumed by DEGC. Upon the terms and subject to the
conditions of this Agreement, and in reliance on the
representations, warranties, covenants and agreements made by Seller
herein, effective from and after the Closing, DEGC shall assume and
be obligated pursuant to this Agreement to pay when due, perform, or
discharge only (i) accrued vacation and sick pay obligations of
Transferred Employees (with the meaning of Section 7.4 (the "ASSUMED
VACATION PAY"), plus (ii) liabilities and obligations arising
pursuant to the Purchase Orders and the Purchased Contracts,
excluding, however, any liability arising out of a breach or default
(including, without limitation, a payment default) by Seller
occurring prior to the Closing with respect to any such Purchased
Contract (collectively, the items set forth in Section 1(c)(i) and
(ii) shall be referred to as the "ASSUMED LIABILITIES")."
3. Section 1(d) of the Original Agreement is hereby amended and
restated as follows:
"(d) Excluded Liabilities. Except as set forth in Section 1(c), DEGC
shall not assume or otherwise become obligated pursuant to this
Agreement to pay when due, perform or discharge any debts, claims,
liabilities, obligations, damages or expenses of Seller (whether
known or unknown, contingent or absolute, or arising before, on or
after the Closing), including, without limitation, liability for (i)
Government Payments accruing for periods preceding the Closing, (ii)
defaults under contracts resulting from events or occurrences
arising prior to the Closing, (iii) Indebtedness, (iv) any
litigation or claims by a Governmental Entity or any other person or
entity, including without limitation any litigation disclosed on
SCHEDULE 4.17 and SCHEDULE 4.24, (v) obligations under contracts or
agreements of Seller not consisting of Purchase Orders or Purchased
Contracts (vi) Seller's expenses arising from or relating to the
transactions contemplated by this Agreement, including without
limitation attorneys' fees, accounting fees and investment banking
fees, (vii) obligations with respect to employees, other than
Assumed Vacation Pay, or with respect to the Benefit Plans, (viii)
accounts payable and accrued liabilities (other than Assumed
Liabilities), and (ix) any severance payments owed to any employees
of Seller or Parent as a result of any severance plan or agreement
between such employees and Seller or Parent (collectively, the
"EXCLUDED LIABILITIES"). "INDEBTEDNESS" means, with respect to any
Person, (a) all indebtedness for borrowed money; (b) notes payable
and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money; (c) any indebtedness or
other amounts owing to Seller or any of its Affiliates; (d)
guaranties, securing indebtedness for borrowed money; and (e) all
indebtedness secured by any lien, security interest, charge or
encumbrance of any kind (a "LIEN") on any property or asset owned or
held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to
the credit of that Person. "AFFILIATE" shall mean any other Person
directly or indirectly controlling or controlled by or under common
control with such specified Person. For purposes of this definition,
"control" means the power to direct the management and policies of
another Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise. A "PERSON"
shall mean an individual, corporation, partnership, joint venture,
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trust or unincorporated organization or association or other form of
business enterprise or a Governmental Entity.
4. Section 2.1(a) of the Original Agreement is hereby amended and
restated in its entirety by the following:
"(a) The aggregate purchase price for the Assets is One Hundred Two
Million Two Hundred Fifty Thousand Dollars ($102,250,000) as
adjusted pursuant to Sections 2.1(c) and 2.1(d) below (the "PURCHASE
PRICE")."
5. In Section 2.1(c) of the Original Agreement, the definition of
"PRE-CLOSING DATE NET INVENTORY" is hereby amended to mean the net inventory of
Seller located at (i) 0000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx, and (ii) 0000 Xxxx
Xxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx, determined pursuant to this Section 2.1(c)
in accordance with GAAP consistently applied, as of the day immediately prior to
the Closing Date. For avoidance of doubt, inventory of Seller that is not
located at the Seller's warehouses listed above shall not be included within the
calculation of Pre-Closing Date Net Inventory.
6. In Section 2.1(c) of the Original Agreement, the definition of "BASE
NET INVENTORY" is hereby amended to mean $2,802,000.
7. Section 2.1(d) of the Original Agreement is hereby amended and
restated in its entirety by the following:
"(d) The Purchase Price shall be adjusted as follows:
(i) At the Closing, the Purchase Price shall be reduced by
the amount of 50% of the Assumed Vacation Pay and all of the amounts under
capital leases which are among the Purchased Contracts that would under
GAAP be reflected as accrued liabilities on the balance sheet of Seller on
the end of the day immediately prior to the Closing Date (e.g., capital
lease obligations);
(ii) Within seven business days after the Closing, the
Purchase price shall be increased by the amount of 50% of the accrued
vacation and sick pay obligations to Employees who did not become
Transferred Employees pursuant to Section 7.4; and
(iii) For seven business days following the Closing, Parent
shall have an option to repurchase from DEGC the BizTalk Server set forth
as shared asset number 78676 on SCHEDULE 1(a)(viii), plus related BizTalk
software, in consideration of a reduction of the Purchase Price in the
amount of $62,147 (the Closing Date book value of the BizTalk server and
related BizTalk software, excluding customization costs previously
incurred by Parent or Seller). Such
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option must be exercised by Parent and the Purchase Price adjustment
settled not later than the end of the seventh business day following the
Closing."
8. Section 2.2 of the Original Agreement is hereby amended and restated
in its entirety as follows:
"2.2 Possession. The assignment to DEGC of Seller's rights in the
Purchased Contracts, Intellectual Property Rights, Permits, Furniture,
Fixtures and Equipment and Inventory, and all other assets of Seller that
are included among the Assets, and the transfer of the Assumed Liabilities
to DEGC, will be effective as between Seller and DEGC as of the Closing."
9. Section 2.4 of the Original Agreement is hereby amended and restated
as follows:
"2.4 Allocation of Purchase Price and Adjustments. The final Purchase
Price shall be allocated in relation to the Assets in a manner to be
agreed upon by the parties within seven (7) days following the Closing.
Each party agrees that it will not, in its Government Returns or
elsewhere, take a position inconsistent with the allocations provided for
in this Section."
10. Section 3 of the Original Agreement is hereby amended and restated
as follows:
"3. Closing. Subject to the fulfillment or waiver of the conditions
precedent specified in Sections 8.1, 8.2 and 8.3, the purchase and sale of
the Assets shall be consummated at a closing (the "CLOSING") to be held at
10:00 a.m. Eastern Standard Time on June 30, 2004; provided, however, that
the effective time of the transfer of legal title to the Assets and
assumption of the Assumed Liabilities shall not be deemed to have occurred
until 11:59 p.m. on June 30, 2004. June 30, 2004 shall be referred to
herein as the "CLOSING DATE.""
11. Section 7.2 of the Original Agreement is hereby amended and restated
in its entirety by the following:
"7.2 DEGC's Access to Information.
(a) During the period commencing on the date hereof and continuing
through the Closing Date, Seller shall (i) afford to DEGC and
current and prospective DEGC lenders and their respective officers,
directors, employees, accountants, counsel and other representatives
reasonable access to all of Seller's properties, books, contracts,
commitments, records and personnel, and (ii) furnish promptly to
DEGC all information concerning Seller's business, properties,
books, contracts, commitments, records and personnel as DEGC may
reasonably request. The foregoing
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shall include direct access to Seller's Payors and suppliers, with
the consent of Seller which shall not be unreasonably withheld, and
so long as Seller is given an opportunity to be included in such
communications with Payors or suppliers if requested.
(b) Promptly following the Closing DEGC will audit the financial
statements of Seller for (i) the nine months ended September 30,
2002, (ii) the twelve months ended September 30, 2003 and (iii) the
twelve months ended September 30, 2004. Such audit shall be
conducted by KPMG LLP or Ernst & Young LLP, as recommended by DEGC
and as reasonably acceptable to Seller and Parent. Seller and Parent
agree to provide access to all working papers and all other
necessary support for such audit, including without limitation the
execution of accountant's letters. DEGC agrees to indemnify and hold
harmless Seller and Parent from and against any claims made against
Seller or Parent in connection with the use of such audited
financial statements in any financing, sale of securities or filing
by DEGC or its affiliates with the Securities and Exchange
Commission."
12. The satisfaction of following conditions to the Closing are hereby
irrevocably waived:
Section 8.2(o) (receipt by DEGC of the Cash Control Agreement).
Section 8.2(p) (agreement on the Purchase Price allocations
referenced in Section 2.4)
Section 8.3(j) (receipt by Seller of the Cash Control Agreement).
Section 8.3(n) (agreement on the Purchase Price allocations
referenced in Section 2.4).
13. Except as expressly modified by this Amendment, the Original
Agreement shall remain in full force and effect in accordance with its terms.
14. This Amendment shall be governed by and construed in accordance with
the internal laws (and not the law of conflicts) of the State of Delaware. The
provisions of Section 12 of the Original Agreement shall apply to this Amendment
as if fully set forth herein, mutatis mutandis. References to the "Agreement"
contained in the Original Agreement shall hereafter be construed as references
to the Original Agreement as modified hereby.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Amendment, or has caused this Amendment to be executed on its behalf by a
representative duly authorized, all as of the date first above set forth.
"PARENT" "DEGC"
MATRIA HEALTHCARE, INC. DEGC ENTERPRISES (U.S.), INC.,
a Delaware corporation a Florida corporation
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------- --------------------------------
Its: Chairman and Chief Executive Officer Its: Chief Executive Officer
------------------------------------- -------------------------------
"SELLER"
DIABETES SELF CARE, INC.
a Virginia corporation
By: /s/ Xxxxxx X. Xxxxxxxx
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Its: Treasurer
---------------------------------
DIABETES MANAGEMENT SOLUTIONS, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Its: Treasurer
---------------------------------
