Exhibit 10.11
ASSET PURCHASE AGREEMENT
This is an Asset Purchase Agreement dated as of November 12, 2005 (the
"Agreement"), between (i) Caretenders Visiting Services of St. Augustine, LLC
(the "Buyer"), and (ii) Flagler Hospital, Inc., a Florida corporation (the
"Seller").
Recitals
A. Seller owns and operates a healthcare system in the St. Augustine,
Florida area, including but not limited to a general acute care hospital.
B. As part of Seller's healthcare operations, Seller is engaged in the
business of operating a home health agency, including Medicare-Certified and
non-certified or "private duty" operations (collectively, the "Business") in St.
Augustine, Florida (the "Territory").
C. The Seller is the holder of one or more licenses issued by the
Agency for Health Care Administration of the State of Florida, Medicare provider
agreements issued by the U.S. Department of Health and Human Services, and
Medicaid provider agreements issued by the Agency for Health Care Administration
of the State of Florida, all of which authorize the Seller to provide Medicare
and Medicaid certified home health care services in the Territory (collectively,
the "License").
D. The Seller desires to sell and the Buyer desires to purchase the
assets used by Seller solely in the operation of the Business.
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
Article 1 - Purchase and Sale of Assets
1.1 Purchased Assets.
(a) The Seller hereby agrees to sell, assign, transfer and
convey to the Buyer, and the Buyer hereby agrees to purchase from the Seller,
all of the assets of the Seller used solely in the Business (the "Purchased
Asset""), wherever located, including without limitation, the following assets
and properties:
(i) All furniture, fixtures, machinery, equipment,
leasehold improvements, computers, software,
vehicles, medical equipment, prepaid expenses, and other tangible personal
property as specifically described on Schedule 1.1 as Purchased Assets, together
with all manufacturers' warranties pertaining to the same, to the extent that
such warranties may exist and be assignable;
(ii) All of the Seller's goodwill relating to the
Business; all customer and patient lists and files
(related solely to home health care services), referrer lists, records and
similar sales and marketing information in the Seller's possession relating to
the Business; referrer lists; members service agreements; medical records of the
patients serviced solely by the Business and in the Seller's possession;
personnel records; and the Seller's right and interest in the trade names,
trademarks, trade secrets, licenses, know-how, specifications, literature, and
all other intangible property which relate specifically to the Business,
including without limitation all rights to the "Community Home Health" trade
name and trade dress in Florida; and all other intangible assets related to the
Business, whether located at the Business, or any other location;
(iii) All transferable Licenses, permits, licenses,
certificates, authorizations, accreditations,
orders, ratings and approvals of all federal, state, or local governmental or
regulatory authorities which relate solely to the Business and which are held by
the Seller, but only to the extent the same are transferable, including without
limitation any provider agreements relating to the Seller's right to participate
in the Medicare and Medicaid Programs, and all rights of the Seller to
reimbursement or other payments from HCFA for the period prior to the Closing
Date;
(iv) Any and all rights of the Seller which by their
terms are transferable and which arise under or
pursuant to warranties, representations and guarantees made by suppliers in
connection with the Purchased Assets;
(v) All accounts receivable arising out of the
operation of the Business unbilled or outstanding on or
after the Closing Date (the "Purchased Accounts Receivable"). The Seller agrees
to reasonably cooperate with the Buyer, at the Buyer's expense, in connection
with the Buyer's efforts to collect the Purchased Accounts Receivable. The
Seller agree to immediately remit to the Buyer any payments received after the
Closing by the Seller that constitute Purchased Accounts Receivable. The Seller
hereby appoint the Buyer Seller's attorney-in-fact for purposes of endorsing any
checks and otherwise executing any instruments or documents necessary for the
collection of the Purchased Accounts Receivable; and
(vi) All raw materials, supplies, packaging
materials, purchased products, finished goods and all other
goods, merchandise and materials owned by the Seller and related solely to the
Business; but excluding the Excluded Assets.
(b) "Excluded Assets" shall mean
(i) cash on hand;
(ii) any real property owned by Seller;
(iii) those assets and contracts identified on
Schedule 1.1 as being excluded assets;
(iv) any assets of the Seller not used solely in the
operation of the Business, including without
limitation, contracts, agreements (including managed care, Medicare and Medicaid
agreements), provider numbers, licenses, permits, and equipment associated with
Seller's ownership and operation of an acute care hospitals and other ancillary
programs, clinics and facilities as part of a healthcare delivery system in the
St. Augustine, Florida market; and
(v) accounts receivable arising out of the operation
of an acute care hospitals and other ancillary programs, clinics and facilities
as a part of a healthcare delivery system in the St. Augustine, Florida
market, other than the Purchased Accounts Receivable.
1.2 No Assumed Liabilities. The Seller and Buyer acknowledge and agree
that the Seller shall retain all liabilities, whether known or unknown, arising
out of or relating to the operation of the Business through the Closing Date or
arising out of or with respect to the Purchased Assets through the Closing Date,
and that the Buyer is not assuming any liabilities of Seller of any nature.
However, Buyer shall be responsible for all liabilities arising out of or
relating to the operation of the Business after the Closing Date or arising out
of or with respect to the Purchased Assets after the Closing Date.
1.3 Assumed Contracts; Real Property Leases. The Buyer will assume (i)
the Seller's obligations arising after the Closing Date pursuant to the Licenses
and Permits transferred to Seller hereunder, and for those services provided to
the Seller's patients associated with the Business, and (ii) the Seller's
obligations arising after the Closing Date under the contracts described on
Schedule 1.3, and the real property lease (the "Real Property Lease") described
on Schedule 1.3 (collectively, the "Assumed Contract").
1.4 Employees.
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(a) The Seller acknowledges that the Buyer is not purchasing,
recognizing, assuming or otherwise acquiring any rights, obligations, assets or
liabilities under, arising from or resulting from any employment agreement or
arrangement in existence between the Seller and any employee, or any person
employed to consult with or perform services for the Seller. The Seller
acknowledges that it will satisfy in full all accrued payroll obligations of the
Business through the Closing Date. Schedule 1.4 sets forth a list of all
employees of the Business. With respect to all such employees who accept
employment by Buyer, Buyer shall assume Seller's obligation for their accrued
personal leave through the Closing Date, and shall receive a credit against the
Purchase Price equal to the aggregate amount of the accrued personal leave it
assumes.
1.5 Confidentiality, Nonsolicitation and Noncompetition Agreement. The
Seller acknowledges that the Buyer's obligation to close shall be conditioned
upon the Seller entering into a Confidentiality, Nonsolicitation and
Noncompetition Agreement at the Closing, in the form of the Confidentiality,
Nonsolicitation and Noncompetition Agreement attached as Annex A (the
"Noncompetition Agreement").
1.6 Disclaimer of Implied Warranties. Except for the express warranties
contained in Article 4 and elsewhere in this Agreement, the Assets are being
sold "AS IS," with no implied warranties of any kind. THERE ARE NO IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
1.7 Shared Services Agreement. The parties are entering into a Shared
Services Agreement, in the form of the agreement attached as Annex D, as of the
Closing.
Article 2 - Purchase Price and Payment
2.1 Purchase Price.
(a) In consideration of the transfer of the Purchased Assets
and the Business, the Buyer agrees to pay $800,000.00 (the "Purchase Price"),
payable as provided in paragraphs 2.1(i) and (ii), and subject to the
adjustments set forth in paragraph 2.1(b).
(i) $600,000.00 of the Purchase Price shall be
payable in cash at the Closing; and
(ii) $200,000.00 of the Purchase Price payable in
the form of a promissory note (the "Promissory Note") delivered at the Closing,
with such promissory note bearing interest at 6% per annum. The principal amount
of the Promissory Note and all accrued interest shall be payable in full 36
months from the Closing Date. The form of the Promissory Note is attached as
Annex B.
(b) The Purchase Price shall be reduced by the amount, if any,
of liabilities with respect to the Real Property Lease relating to late or
non-payment of rents, operating expenses, personal leave or other amount
otherwise due prior to Closing which are assumed by the Buyer.
2.2 Allocation of Purchase Price. The Purchase Price will be allocated
among the Purchased Assets as set forth on Schedule 2.2. The Seller and the
Buyer agree that all tax and information returns will be prepared on a basis
consistent with such allocation of the Purchase Price.
Article 3 - The Closing
3.1 Time and Place. The parties anticipate that the closing ("Closing")
will take place on November 12, 2005, or such other date mutually agreed upon by
the parties, and upon satisfaction or waiver of each of the conditions to the
parties' obligations to close (the "Closing Date").
3.2 Execution and Delivery of Documents by the Seller and the Buyer
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(a) At the Closing, the Seller will execute and deliver to the
Buyer such conveyances, bills of sale, certificates of title, assignments,
assurances and other instruments and documents as the Buyer may reasonably
request in order to effect the sale, conveyance, and transfer of the Purchased
Assets and the Business from the Seller to the Buyer. Such instruments and
documents must be sufficient to convey to the Buyer good title to the Purchased
Assets and the Business. Also at the Closing, the parties will cause the
Noncompetition Agreement and the Promissory Note to be executed and delivered.
(b) The Seller agrees that it shall, from time to time after
the Closing Date, take such additional action and execute and deliver such
further documents as the Buyer may reasonably request in order to effectively
sell, transfer and convey the Purchased Assets and the Business to the Buyer and
to place the Buyer in position to operate and control all of the Purchased
Assets and the Business.
(c) At the Closing, the Buyer will execute and deliver to the
Seller and to other appropriate parties such assignments, assumptions,
undertakings and other instruments and documents as are necessary to effect the
Buyer's assumption of the Assumed Contracts.
Article 4 - Representations and Warranties of the Seller
As a material inducement to the Buyer to enter into and perform this
Agreement, the Seller represents and warrants to the Buyer as follows:
4.1 Authority as to Execution.
(a) The Seller has full legal power, authority and capacity to
execute and deliver this Agreement, and the Noncompetition Agreement, and to
perform the Seller's obligations under this Agreement, and the Noncompetition
Agreement. This Agreement and the Noncompetition Agreement constitute valid and
legally binding obligations of the Seller, enforceable in accordance with their
terms. The execution and delivery of this Agreement and the agreements and
instruments called for by this Agreement by or on behalf of the Seller and the
consummation of the transactions contemplated hereunder and thereunder, subject
to the terms of this Agreement, have each been duly authorized by all necessary
corporate action, including Board of Director approval.
(b) Except as disclosed on Schedule 4.1 (which schedule shall
include a list of any required consents or notifications) the execution and
delivery of this Agreement and the Noncompetition Agreement, the consummation of
the transactions contemplated hereby and thereby, and the performance and
fulfillment of their respective obligations and undertakings hereunder and
thereunder by the Seller will not, (i) violate any provision of, or result in
the breach of or accelerate or permit the acceleration of any performance
required by the terms of: any contract, agreement, arrangement or undertaking to
which the Seller is a party or by which it may be bound; (ii) violate the
Seller's Articles of Incorporation or Bylaws; (iii) violate any judgment,
decree, writ, injunction, order or award of any arbitration panel, court or
governmental authority against the Seller; (iv) result in the creation of any
claim, lien, charge or encumbrance upon any of the properties or assets (whether
real or personal, tangible or intangible) of the Seller; (v) to the extent a
valid assignment and consent has occurred, terminate or cancel, or result in the
termination or cancellation of, any agreement or undertaking to which a Seller
is a party; or (vi) in any way affect or violate the terms or conditions of, or
result in the cancellation, modification, revocation or suspension of, any of
the Seller's permits or licenses.
(c) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida, with full
power and authority to execute, deliver and perform its obligations under this
Agreement.
4.2 Licenses, Permits and Payment Programs. Except as set forth on
Schedule 4.2, the Seller has obtained and hold all material licenses, permits,
certificates, and authorizations necessary for the Seller to operate the
Business as conducted by Seller prior to the Closing. A copy of each of the
foregoing is attached to Schedule 4.2. The Business is certified for
participation in, and is a party to valid provider agreements for payment by,
Medicare, Medicaid and other state, local or federal health care programs listed
on Schedule 4.2 (the "Programs"). The Seller has not received any notice of any
pending, or to the best of Seller's knowledge, any threatened investigations by,
or loss of participation in, the Programs related to the Business.
4.3 Environmental Standards. Except as set forth on Schedule 4.3, the
Seller has operated the Business in substantial compliance, in all material
respects ,with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
or required under the common law or any federal, state, local or foreign law,
regulations, ordinances, permits, licenses, consent decrees, orders and
clearances relating to pollution, the environment, or the use, storage,
transportation or disposal of pollutants, dangerous substances, toxic
substances, hazardous wastes, medical wastes, infectious wastes or hazardous
substances (collectively, the "Environmental Laws").
4.4 Taxes. Except as set forth on Schedule 4.4, the Seller has timely
filed all federal, state, local and other tax returns required to be filed by it
prior to the date of this Agreement with respect to the Business, and has paid
for or accrued for all taxes shown as due on such returns the failure of which
returns to be filed or the failure of which taxes to be paid could result in a
lien upon any of the Purchased Assets or with respect to which the Buyer could
have successor liability under applicable laws. Present taxes which the Seller
is required by law to withhold or collect with respect to the Business have been
withheld or collected and have been paid over to the proper governmental
authorities or are properly held by the Seller for such payment. No deficiency
for any taxes or claim for additional tax assessment by any taxing authority,
which if unsatisfied could result in a lien upon any of the Purchased Assets or
could result in the Buyer incurring successor liability under applicable laws,
has been, to the best of the Seller's knowledge, proposed, asserted, or assessed
against the Seller, nor has the Seller granted any extension or waiver of any
limitation period applicable to any tax claims relating to the Business which
has not been closed (except for any extension that may have been granted by the
Seller's parent company with respect to the Federal consolidated tax return to
be filed by the Seller's parent).
4.5 Title. Except as described on Schedule 4.5, the Seller has and will
transfer to the Buyer at the Closing good title to all of the assets included
among the Purchased Assets, free and clear of any mortgages, security interests,
pledges, liens, claims or encumbrances. Except as identified on Schedule 1.1,
none of the Purchased Assets are leased.
4.6 Property, Equipment and Operations.
(a) The Purchased Assets are, to the best of the Seller's
knowledge, all of the assets which are reasonably necessary for the operation of
the Business as operated prior to the Closing by the Seller.
(b) The Seller has not, to the best of the Seller's knowledge,
caused or permitted any hazardous substance, as that term is now defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss. 9601, et seq.), medical wastes or petroleum substances to be disposed
on, under or at the premises of the Business, or any part thereof, and, to the
best of the Seller's knowledge, no part thereof has ever been used by the Seller
as a permanent storage or disposal site for any such hazardous substances,
medical wastes, or petroleum substances.
4.7 Insurance. The Seller has provided the Buyer with a true and
correct list of all policies of insurance which insure the Purchased Assets or
the Business, setting forth the types and amounts of coverage. The parties
acknowledge that upon the Closing, the policies of the Seller will terminate
with respect to all claims that relate to activities or events that occur or
arise after the Closing Date Schedule 4.7 is a true and correct list of all
claims against such insurance policies during the past two years.
4.8 Disclosure. To the best of Seller's knowledge, no representation or
warranty made by the Seller in this Agreement and no statement made in or any
amount set forth on any schedule called for by and incorporated into this
Agreement is false or misleading in any material respect or omits to state any
fact necessary to make any such representation or statements not misleading in
any material respect.
4.9 Governmental Approvals & Licenses. All material licenses, permits,
and accreditations maintained by the Seller with respect to the Business are set
forth on Schedule 4.9. Except as described on Schedule 4.9, the Licenses are in
full force and effect and, to the best of the Seller's knowledge, except as
described on Schedule 4.9, (i) no default or violation exists under any of the
Licenses, (ii) no suspension, notice of deficiency, or cancellation of any of
the Licenses has been received or is threatened, and (iii) there is no reason to
believe that but for the transaction contemplated by this Agreement on
expiration the Licenses would not be renewed.
4.10 Compliance with Healthcare Regulatory Compliance.
(a) Except as disclosed on Schedule 4.10, the Seller has
timely filed all requisite cost reports, claims and other reports required to be
filed in connection with all Programs due on or before the date hereof, all of
which to the best of the Seller's knowledge, are complete and correct. True and
correct copies of all such reports for the most recent fiscal years of the
Seller have been furnished to Buyer on or before the date hereof. Except as
specifically described on Schedule 4.10, there are no claims, actions, appeals,
reviews or audits pending before any federal or state commission, board or
agency (including, without limitation, any intermediary or carrier, the Provider
Reimbursement Review Board or the Administrator of the Health Care Financing
Administration) with respect to the Seller's participation in any Program
related to the Business, or any pending disallowances by any commission, board
or agency in connection with the Seller's participation in any Program, which
could adversely or materially affect the Business or any of the Purchased
Assets, the operation or the utility thereof, or the consummation of the
transactions contemplated hereby, and the Seller has made available to the Buyer
true and correct copies of any such claims, actions or appeals.
(b) The structure and operations of Business by and the
activities of the respective officers, directors and managing employees of the
Seller are, and at all times have been, in compliance in all material respects
with all relevant federal and state laws regulating health services or payment
including, but not limited to, the federal Anti-kickback Statute, Social
Security Act ("SSA") ss. 1128B(b), the Stark Anti-Self-Referral Law, SSA ss.ss.
1877 and 1903(s), the Anti-Inducement Law, SSA ss. 1128A(a)(5), the Civil False
Claims Act, 31 U.S.C. ss.ss. 3729 et. Seq., the Administrative False Claims Law,
SSA ss. 1128B(a), the administrative simplification provisions of the Health
Insurance Portability and Accountability Act of 1996, SSA ss.ss. 1171-1179, the
exclusion laws, SSA ss. 1128, the anti-misleading statements provision, SSA ss.
1129, and any other state or federal law, regulation, guidance document, manual
provision, program memorandum or OIG or CMS opinion letter, or other issuance
which regulates kickbacks, patient or program charges, recordkeeping, referrals,
the hiring of employees or acquisition of services or supplies from those who
have been excluded from federal health care programs, quality, safety, privacy,
security, accreditation or any other aspect of providing health care.
(c) The Seller has not entered into any contract, agreement or
arrangement creating a "financial relationship" as defined in 42 U.S.C. ss.
1395nn, with a physician, if that physician refers patients to the Seller for
designated health services, as defined in 42 U.S.C. ss. 1395nn, except in
compliance with the law.
(d) All material reports, documents, claims and notices
required to be filed, maintained or furnished to any governmental or health care
authority by the Seller has been so filed, maintained or furnished. All such
reports, documents, claims and notices were materially complete and correct on
the date filed (or where corrected in or supplemented by a subsequent filing).
4.11 Contracts and Commitments. Except for the Assumed Contracts, and
as described on Schedule 4.11, the Seller is not a party to any contract or
commitment relating to the Business, and neither the Business nor the Purchased
Assets are the subject of any contract or commitment. Each of the Assumed
Contracts is valid and binding agreements of the parties to such contracts in
accordance with its terms, and, to the best of the Seller's knowledge, no party
to the Assumed Contracts is in default under such contracts.
4.12 No Violation of Law. Except as disclosed on Schedule 4.12, the
conduct of the Business by Seller does not in any material manner violate any
statute, ordinance, regulation, order, writ, injunction or decree of any court
or governmental agencies. Seller has not received a notice of default or
violation of, and have no actual knowledge of any fact or event which with the
lapse of time or giving of notice would constitute a default or violation of any
statute, ordinance, regulation, order, writ, injunction or decree of any court
or governmental agency or authority applicable to the Business or the Purchased
Assets.
4.13 Litigation. Except as disclosed on Schedule 4.13, there are no
actions, suits or proceedings, pending, or, to the best of the Seller's
knowledge,, threatened before any court, commission, agency or other
administrative authority against, or affecting the Business or the Purchased
Assets and, except as disclosed on Schedule 4.13, the Seller is not the subject
of any order or decree relating to or affecting the Business or the Purchased
Assets other than those of general application.
4.14 Labor. There is no collective bargaining or other union contract
relating to the Business to which the Seller is a party. To the Seller's
knowledge, after due inquiry, there is not pending or threatened against the
Seller any grievance, labor dispute, organizational activity, union trouble,
strike or work stoppage which materially affects or which may materially disrupt
the Buyer or the Business. The Seller has complied in all material respects with
all applicable laws, rules and regulations pertaining to the employment of
labor, including those relating to wages, hours, collective bargaining and the
payment of or withholding of taxes. The Seller has withheld all amounts required
by law or agreement to be withheld from the wages or salaries of the Business's
employees and they are not liable for any arrears of wages or any tax or
penalties for failure to comply with any of the foregoing.
4.15 Employment Contracts. There are no written or oral contracts
for employment of any personnel of the Business.
4.16 Employee Benefit and Retirement Plans. Except as disclosed on
Schedule 4.16, the Seller does not now maintain any "employee pension benefit
plan" or any "employee welfare benefit plan" (as defined respectively in Section
3(2) and 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") on behalf of the Business's employees, and, except as disclosed on
Schedule 4.16, the Seller does not maintain any retirement plans, bonus
arrangements, life insurance or medical insurance programs or any other fringe
benefit arrangements for any employees whether written or unwritten. The Seller
acknowledges and agrees (i) that the Buyer shall not be treated as a successor
employer within the meaning of Treasury Regulation ss. 54-4980B-9 (COBRA), and
(ii) to retain all obligations under COBRA for all employees of the Business,
whether or not hired by Buyer.
4.17 Employees and Independent Contractors. The Seller has provided the
Buyer prior to the Closing Date with a true and correct list including the name,
salary or compensation (including without limitation all commission, override or
bonus arrangements), vacation and sick leave policies or other benefits, job
description and original employment or contract date of all current employees
and independent contractors of the Business based upon the most recently
processed information, and the accrued and/or earned vacation time of all
employees and, to the best of the Seller's knowledge, the dates and information
concerning any previous salary or compensation change or adjustment and the
reasons therefore for each such current employee.
4.18 Worker's Compensation. Except as disclosed on Schedule 4.18, the
Seller is in compliance with all worker's compensation laws with respect to the
Business and have worker's compensation insurance coverage in full force and
effect with respect to the Business, except where any such non-compliance or
lack of coverage would not have a material adverse effect on the Buyer's
ownership, possession or use of the Business or the Purchased Assets, or on the
consummation of the transactions contemplated under this Agreement.
4.19 Adverse Actions. Except as described on Schedule 4.13 and Schedule
4.19, the Seller has not received any written notice of any judicial or
administrative action against the Business or the Purchased Assets.
4.20 Consents. Except as described on Schedule 4.20, no consents,
approvals or authorizations of, any third parties is required in connection with
the execution and delivery of this Agreement by the Seller and consummation by
the Seller of the transactions contemplated hereby.
4.21 Commissions. The Seller has not authorized any person to act in
such a manner as to give rise to any valid claim against the Buyer for a
brokerage commission, finder's fee, or similar payment as a result of the
transactions contemplated under this Agreement.
4.22 Financial Statements; Absence of Liabilities. The Seller has
provided Buyer with true and correct copies of Departmental Income Statements
for its Caretenders and Community Home Health Departments for the fiscal years
ending September 30, 2004 and 2005, described on Schedule 4.22. Such Income
Statements were prepared in the ordinary course of business and, to the best of
the Seller's knowledge, accurately reflect departmental gross revenues and
certain direct staff and supply expenses for the periods covered. However, such
statements were not prepared in accordance with GAAP, and do not reflect all the
expenses of the Business, including without limitation employee benefits, rent,
utilities and overhead, and may not reflect all contractual adjustments. To be
best of Seller's knowledge, the Purchased Assets are not subject to, any
liabilities, whether known, unknown contingent or otherwise, that would have a
material adverse affect on the Business.
Article 5 - Representations and Warranties of the Buyer
As a material inducement to the Seller to enter into this Agreement,
the Buyer hereby represents and warrants to the Seller as follows:
5.1 Authority as to Execution. The execution and delivery of this
Agreement and the instruments called for by this Agreement by or on behalf of
the Buyer and the consummation of the transactions contemplated hereunder and
thereunder, shall have been duly authorized by all necessary limited liability
company actions on or prior to the Closing Date. This Agreement and each of the
instruments called for by this Agreement will be a valid and binding obligations
of the Buyer, each enforceable against the Buyer in accordance with their
respective terms.
5.2 Organization and Entity Authority. The Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
the Commonwealth of Kentucky, and qualified as a foreign corporation to do
business in the State of Florida, with full legal power and authority to
execute, deliver and perform its obligations under this Agreement and the
instruments called for by this Agreement.
5.3 No Violation of Law; Other Agreements. Neither the execution and
delivery of this Agreement or the instruments called for by this Agreement, nor
consummation of the transaction herein or therein contemplated, nor compliance
with the terms, conditions and provisions hereof or thereof, will conflict with
or violate any provision of law or of the Articles of Organization or the
Operating Agreement of the Buyer, or result in a violation or default in any
provision or any regulation, order, writ, injunction or decree of any court or
governmental agency or authority, or of any agreement or instrument to which the
Buyer is a party or by which the Buyer is bound or subject.
5.4 Commissions. Except for the obligation of the Buyer to Stoneridge
Partners, the Buyer has not authorized any person to act in such a manner as to
give rise to any valid claim against the Seller for a brokerage commission,
finder's fee, or similar payment as a result of the transactions contemplated
under this Agreement. The Buyer acknowledges and agrees that it shall be solely
responsible for fees and commissions due to Stoneridge Partners.
5.5 Consents. To the best of the Buyer's knowledge, the consents listed
on Schedule 5.5 constitute all of the consents required for the Buyer to close
the transactions contemplated by this Agreement.
Article 6 - Covenants of the Seller
6.1 Conduct of Business. From the date of this Agreement until the
Closing Date, the Seller agrees to operate the Business and otherwise carry on
the Business in substantially the same manner heretofore conducted and not make
other than in the ordinary course of business, any material change in its
personnel, operations, finances, accounting policies, or personal property,
without the prior written consent of Buyer. Between the date hereof and the
Closing Date, the Seller agrees to use its reasonable efforts to retain its
present employees and preserve the goodwill and business of their customers,
suppliers, and others having business relations with them, and agree to conduct
the financial operations of the Business in accordance with its existing
business practices. From the date of this Agreement to the Closing Date, the
Seller agrees to not do any of the following in connection with its ownership
and operation the Business and the Purchased Assets without the Buyer's prior
written consent:
(a) cancel or permit any insurance, bond, surety instrument or
letter of credit to lapse or terminate, except in the ordinary course of
business or unless renewed or replaced by like coverage;
(b) default in any respect under any loan, material contract,
agreement, lease or commitment;
(c) enter into any contract, agreement, lease or other
commitment, except in the ordinary course of business;
(d) sell or agree to sell the Business or any of the Purchased
Assets;
(e) hire any employees, increase any compensation to
employees, enter into any employment arrangement, agreement or undertaking, or
pay or promise to pay any fringe benefit, bonus or special compensation to
employees, except in the ordinary course of business;
(f) impede the Buyer, its counsel, accountants and other
representatives from reasonable access, during normal business hours and upon
reasonable advance notice, to the Business and the Purchased Assets so that the
Buyer may have the opportunity to conduct a reasonable investigation of the
Business;
(g) encumber any of the Purchased Assets or incur any
liabilities with respect to the Business, except in the ordinary course of
business; or
(h) permit any employees of the Business to be "hired" or
otherwise used by the Seller other than in connection with the operation of the
Business (the intention of the parties being that as of the Closing, the Buyer
will have the opportunity, but not the obligation, to hire all of the Seller's
employees utilized in the operation of the Business as of the date of this
Agreement and that none of such employees will have any preexisting arrangement
to remain employed by the Seller after the Closing Date).
6.2 Sales, Etc. The Seller agrees to not sell, lease, remove or
otherwise dispose of any of the Purchased Assets, which are located or used in
the Business (except for retirements and replacements in the ordinary course of
business, provided that all items which are retired or replaced are
contemporaneously replaced by items of substantially equivalent value), or
liquidate or dissolve.
6.3 Insurance. Through the Closing Date, the Seller agrees to
maintain the insurance described in Article 4.
6.4 Notice. From the date hereof to the Closing Date, the Seller agrees
to promptly advise the Buyer of the occurrence of any governmental inspections,
investigations, citations with respect to the Business or the Purchased Assets,
and of which the Seller has received written or oral notification.
6.5 Access to Personnel and Records. From the date of this Agreement
until the Closing Date, the Seller agrees to give the Buyer, and the Buyer's
counsel, accountants, consultants and other agents and representatives,
reasonable access, during normal business hours and upon reasonable request, to
its properties, books, contracts, commitments and records relating to the
Purchased Assets and the operations of the Business.
6.6 Financial Information. The Seller agrees to provide the Buyer with
such financial information available to the Seller relating to the operations of
the Business as the Buyer may reasonably request.
6.7 Collection Practices. The Seller agrees to not deviate from its
current lawful practices with respect to the collection of accounts receivable
from the Business's patients to the extent that any such change in collection
practices would impair or adversely affect the Business's ability to continue
its relationships with those patients after Closing.
6.8 Cooperation. From the date hereof to the Closing Date, the Seller
agrees to cooperate in good faith with the Buyer in order to obtain all
governmental, regulatory and other third party consents and approvals which are
necessary or desirable to consummate the transactions contemplated under this
Agreement. The Seller agrees to cooperate fully with Buyer with respect to the
Buyer's due diligence investigation of the Business, the Licenses and the
Purchased Assets. The Seller agrees to use its good faith efforts to cause each
of the conditions to the Buyer's obligation to close the transactions
contemplated by this Agreement set forth in Article 8 to be satisfied on or
prior to the Closing Date.
6.9 Approval of Transfer. From the date hereof to the Closing Date, the
Seller agrees to use its good faith efforts, at the Buyer's expense, including
the filing and submission of all necessary and appropriate applications and
documents, to obtain the approvals and consents of all applicable governmental
and regulatory authorities, and any other third party identified as necessary in
order to transfer the Business, the Purchased Assets, the Assumed Contracts and
the Licenses to the Buyer.
6.10 Consents. The Seller agrees to use its good faith efforts to
procure the consents of any third parties necessary for the assignment to the
Buyer of the Assumed Contracts and Licenses (to the extent the obtaining of such
consents can occur pre-Closing).
6.11 No-Shop Clause. From and after the date of the execution and
delivery of this Agreement until the termination of this Agreement (unless the
Closing Date is extended beyond such date by the parties), the Seller agrees to
not, without the prior written consent of the Buyer: (i) offer for sale any
material portion of the Business or Purchased Assets; (ii) solicit offers to buy
all or any material portion of the Business or Purchased Assets; (iii) hold
discussions with any party (other than the Buyer) looking toward such an offer
or solicitation or looking toward a merger or consolidation with the Seller; or
(iv) enter into any agreement with any party (other than the Buyer) with respect
to the sale or other disposition of any material portion of the Business or
Purchased Assets.
Article 7 - Covenants of the Buyer
7.1 Access to Records. For a period extending to the greatest of five
years from and after the Closing Date, any longer period required by law, or the
date of final settlement of cost reports for any period prior to the Closing
Date, the Buyer agrees to retain the patient and medical records of the patients
serviced by the Business on and prior to the Closing Date, and will give the
Seller, and the Seller's counsel, accountants, consultants and other agents and
representatives, full and complete access, during reasonable business hours and
upon reasonable request.
7.2 Cooperation. From the date hereof until the Closing Date, the Buyer
agrees to cooperate in good faith with the Seller in order to obtain all
governmental, regulatory and other third party consents and approvals which are
necessary or desirable to consummate the transactions contemplated under this
Agreement.
7.3 Approval of Transfer. From the date hereof until the Closing Date,
the Buyer agrees to use its best efforts, including the filing and submission of
all necessary and appropriate applications and documents, to obtain the
approvals and consents of all applicable governmental and regulatory authorities
and other third parties required or necessary in order to transfer the Business,
the Licenses, the Assumed Contracts and the Purchased Assets to the Buyer.
7.4 Acceptance of Medicaid and Indigent Patients Discharged from
Seller. Buyer shall accept Medicaid and indigent patients discharged from Seller
in a manner and at levels consistent with the practices of the Business in 2004.
Seller has represented the following levels of Medicaid and Indigent Services in
2004:
(a) Medicaid. Approximately 38 patients were accepted and
1,400 visits related to those patients were billed to the Florida Medicaid
program. Buyer may, but shall not be required to, accept Medicaid patients past
this historical level.
(b) Indigent Visits. Approximately 250 visits related indigent
patients with limited or no reimbursement. Buyer may, but shall not be required
to, accept indigent services past this historical level.
(c) Indigent Supplies. Approximately $30,000.00 of supplies
(at charges, not cost) were provided by the Business to indigent patients to
facilitate their discharge from Seller. Buyer and Seller agree to participate on
an equal basis in the provision of such supplies. Buyer may, but shall not be
required to, provide indigent supplies of more than $15,000.00 annually.
(d) Duration. This covenant shall be part of the Shared
Services Agreement to be executed by the parties at Closing, and shall run
coterminously with the term of such agreement.
Article 8 - Conditions Precedent to the Buyer's Obligations
The Buyer's obligation to close is subject to the satisfaction of the
following conditions before or at Closing, unless waived by the Buyer:
8.1 Representations and Warranties True at Closing. The
representations, warranties and covenants made by the Seller in this Agreement
must be true in all material respects at and as of Closing as if made on and as
of Closing, provided that the Seller shall have the opportunity to update and
modify the disclosures set forth on the Schedules attached hereto, through the
Closing Date, subject to the approval and acceptance by the Buyer if such
updates and modifications materially change the scope and nature of the
disclosures set forth on the Schedules and the right of Buyer to terminate this
Agreement and Buyer's obligations hereunder if Buyer determines in its sole
discretion that such update may adversely affect the Business or the Assets..
8.2 Compliance with Agreement. The Seller must have performed and
complied with all of its covenants and obligations under this Agreement in all
material respects which are to be performed or complied with by them before or
at Closing.
8.3 The Seller's Certificate. The Seller must have delivered to Buyer a
certificate stating that (i) the representations, warranties and covenants made
by the Seller in the Agreement are true in all material respects at and as of
Closing as if made on and as of Closing, and (ii) the Seller has performed and
complied with all of its covenants and obligations under this Agreement in all
material respects which are to be performed or complied with by it before or at
Closing.
8.4 Adverse Proceedings. As of the Closing Date, no suit, action, claim
or governmental proceeding is pending or threatened against, and no order,
decree or judgment of any court, agency or other governmental authority has been
rendered against the parties or any party hereto which would render it unlawful,
as of the Closing Date, to effect the transactions contemplated by this
Agreement in accordance with its terms or otherwise have a material adverse
effect on the Buyer's ownership, use or enjoyment of the Business, the Licenses,
the Assumed Contracts or the Purchased Assets.
8.5 Approvals. All necessary material federal, state and local
governmental and regulatory and other third party consents, waivers, and other
approvals or determinations required to be obtained with respect to the sale
and/or transfer of the Licenses, the Assumed Contracts and the Purchased Assets
to the Buyer, and Buyer's operation of the Business thereafter, must have been
obtained, with the form and substance of such consents, etc. satisfactory to the
Buyer in its sole discretion. In addition, the consummation of the transactions
contemplated by this Agreement shall have been approved by the Boards of
Directors of the Buyer and Almost Family, Inc, and the senior lender for Almost
Family, Inc.
8.6 Closing Documents. The documents required to be delivered by the
Seller to the Buyer pursuant to this Agreement must be executed in a form
reasonably acceptable to the Buyer.
8.7 Due Diligence Investigation. The Buyer shall have completed its due
diligence investigation of the Seller, the Business and the Purchased Assets,
with the results of such investigation satisfactory to the Buyer in its sole
discretion.
8.8 Delivery of Satisfactory Opinion. The Seller's counsel shall have
delivered an opinion satisfactory to the Buyer with respect to the matters set
forth on Annex C.
Article 9 - Conditions Precedent to the Seller's Obligations
The Seller's obligation to close is subject to the satisfaction of the
following conditions prior to or at Closing, unless waived by the Seller:
9.1 Representations and Warranties True at Closing. The representations
and warranties made by the Buyer in this Agreement must be true in all material
respects at and as of Closing with the same effect as though such
representations and warranties had been made or given on and as of Closing.
9.2 Compliance with Agreement. The Buyer must have performed and
complied with all its covenants and obligations under this Agreement in all
material respects which are to be performed or complied with by it before or at
the Closing.
9.3 Buyer's Certificate. The Buyer must have delivered to the Seller a
certificate stating that (i) the representations, warranties and covenants made
by the Buyer in the Agreement are true at and as of Closing as if made on and as
of the Closing, and (ii) the Buyer has performed and complied with all of its
covenants and obligations under this Agreement in all material respects which
are to be performed or complied with by it before or at Closing.
9.4 Adverse Proceedings. As of the Closing Date, no suit, action, claim
or governmental proceeding is pending against, and no order, decree or judgment
of any court, agency or other governmental authority has been rendered against
the parties or any party hereto which would render it unlawful, as of the
Closing Date, to effect the transactions contemplated by this Agreement in
accordance with its terms.
9.5 Approvals. All necessary federal, state and local governmental and
regulatory and other third party consents, waivers, and other approvals and
determinations required to be obtained with respect to the sale and/or transfer
of the Licenses and the Purchased Assets to the Buyer must have been obtained.
In addition, the consummation of the transactions contemplated by this Agreement
shall have been approved by the Board of Directors of the Seller.
9.6 Closing Documents. The documents required to be delivered by the
Buyer to the Seller pursuant to this Agreement must be executed and delivered in
a form reasonably acceptable to the Seller.
9.7 Purchase Price. Seller's receipt of $600,000.00 via wire
transfer, representing the portion of the purchase price payable in cash at
Closing.
Article 10 - Termination of Agreement
10.1 Termination.
(a) This Agreement and the transactions contemplated hereby
may be terminated or abandoned at any time before the Closing Date:
(i) by mutual consent of the Seller and the Buyer;
(ii) by the Buyer, if there has been a material
misrepresentation in this Agreement by the Seller, or
a material breach by the Seller of any of its warranties or covenants set forth
in this Agreement, or an uncured failure of any condition to which the
obligations of the Buyer are subject; or
(iii) by the Seller, if there has been a material
misrepresentation in this Agreement by the Buyer, or
a material breach by the Buyer of any of its warranties or covenants set forth
in this Agreement, or an uncured failure of any condition to which the
obligations of the Seller are subject.
(b) This Agreement will be terminated if Closing does not
occur on or before November 12, 2005, unless extended by mutual agreement of the
parties.
Article 11 - Indemnification
11.1 Survival of Representations and Warranties. All of the
representations, and warranties made by the Seller and the Buyer under this
Agreement will survive the closing of the transactions contemplated by this
Agreement.
11.2 Indemnification of the Buyer Indemnified Parties
(a) General. The Seller agrees to indemnify, defend and hold
the Buyer and Almost Family, Inc., and their respective officers, directors,
shareholders, agents and attorneys (collectively, "Buyer Indemnified Parties")
harmless from and against, and reimburse the Buyer Indemnified Parties on demand
for, any damage, loss, cost or expense (including reasonable attorneys' fees)
incurred by an Buyer Indemnified Party resulting from, or in any way related to,
any of the following: (i) any breach of the Seller's representations, warranties
or covenants in this Agreement, or from any misrepresentation in, or omission by
the Seller under this Agreement; (ii) any brokerage or similar fee due to any
agent of the Seller; (iii) any federal, state or local tax liability or
obligation arising with respect to the Seller or the operation of the Business
prior to the Closing; and (iv) any liability of the Seller or liability with
respect to which the Purchased Assets are subject to, or obligation under the
Assumed Contracts accruing prior to the Closing.
(b) Audits, Investigations, Refund Obligations and Other
Pre-Closing Liabilities. The Seller agrees to indemnify, defend and hold the
Buyer Indemnified Parties harmless from and against, and reimburse the Buyer
Indemnified Parties on demand for, any actual damage, loss, cost, refund
obligation, or expense (including reasonable attorneys' fees incurred in
defending any claim for such damage, loss, cost or expense) resulting from, or
in any way related to, any of the following: (i) any audit or investigation by
Medicaid or federal Medicare authorities or third party payors concerning the
operation of the Business before the Closing or any amounts paid with respect to
the operation of the Business before Closing; (ii) any assessment, adjustments,
suspensions or offsets made against a Buyer Indemnified Party or the Purchased
Assets as a result of such an audit or investigation; (iii) any costs of defense
of, and any judgment against a Buyer Indemnified Party with respect to, any
litigation relating to the operation of the Business before Closing; (iv) any
mortgage, security interest, lease, obligation, claim, liability, debt, lien,
charge or encumbrance relating to matters prior to Closing asserted against the
Purchased Assets; and (v) any other personal liability, property damage,
personal injury, cost, claim, expense or assessment asserted against a Buyer
Indemnified Party or the Purchased Assets as a result of, or with respect to,
the operation of the Business or the ownership of the Purchased Assets before
the Closing, excluding obligations arising after the Closing under the Assumed
Contracts.
11.3 Indemnification of the Seller Indemnified Parties.
(a) General. The Buyer agrees to indemnify, defend and hold
the Seller and its officers, directors, partners, shareholders, agents and
attorneys (collectively, "Seller Indemnified Parties") harmless from and
against, and reimburse the Seller Indemnified Parties on demand for, any damage,
loss, cost or expense (including reasonable attorneys' fees) incurred by a
Seller Indemnified Party resulting from, or in any way related to, any of the
following: (i) any breach of the Buyer's representations, warranties or
covenants in this Agreement, or from any misrepresentation in, or omission by
the Buyer under this Agreement; (ii) any brokerage or similar fee due to any
agent of the Buyer; (iii) any federal, state or local tax liability or
obligation arising with respect to the Buyer or the operation of the Business
after the Closing; (iv) any liability of the Buyer or liability with respect to
which the Purchased Assets are subject to, or obligation under the Assumed
Contracts accruing after the Closing.
(b) Audits, Investigations, Refund Obligations and Other
Post-Closing Liabilities. The Buyer agrees to indemnify, defend and hold the
Seller Indemnified Parties harmless from and against, and reimburse each Seller
Indemnified Party on demand for, any actual damage, loss, cost, refund
obligation, or expense (including reasonable attorneys' fees incurred in
defending any claim for such damage, loss, cost or expense) resulting from, or
in any way related to, any of the following: (i) any audit or investigation by
Medicaid or federal Medicare authorities or third party payors concerning the
operation of the Business after the Closing or any amounts paid with respect to
the operation of the Business after Closing; (ii) any assessment, adjustments,
suspensions or offsets made against a Seller Indemnified Party or the Purchased
Assets as a result of such an audit or investigation; (iii) any costs of defense
of, and any judgment against a Seller Indemnified Party with respect to, any
litigation relating to the operation of the Business after Closing; (iv) any
mortgage, security interest, lease, obligation, claim, liability, debt, lien,
charge or encumbrance relating to matters after Closing asserted against the
Purchased Assets; and (v) any other personal liability, property damage,
personal injury, cost, claim, expense or assessment asserted against a Seller
Indemnified Party or the Purchased Assets as a result of, or with respect to,
the operation of the Business after the Closing, excluding obligations arising
before the Closing under the Assumed Contracts.
11.4 Procedure for Indemnification. The following procedure shall apply
with respect to any claims or proceedings covered by the indemnification
obligations in this Article 11:
(a) The party who is seeking indemnification (the "Claimant")
shall give written notice to the party from whom indemnification is sought (the
"Indemnitor") promptly, but in no event greater than ten (10) business days,
after the Claimant learns of the claim or proceeding; provided that the failure
to give such notice shall not relieve the Indemnitor of its obligations
hereunder if the Claimant uses its best efforts to mitigate Claimant's damages,
except to the extent it is actually damaged thereby. Notwithstanding anything to
the contrary contained herein, in the event that a Claimant gives notice to the
Indemnitor within such ten (10) business day time period set forth above, the
Claimant shall have no obligation to mitigate Claimant's damages under this
paragraph 11.4(a).
(b) With respect to any third-party claims or proceedings as
to which the Claimant is entitled to indemnification, the Indemnitor shall have
the right to select and employ counsel of its own choosing to defend against any
such claim or proceeding, to assume control of the defense of such claim or
proceeding, and to compromise, settle or otherwise dispose of the same, if the
Indemnitor deems it advisable to do so, all at the expense of the Indemnitor;
provided, however that the Claimant may employ counsel, of its own choosing, at
its sole expense. The parties will fully cooperate in any such action, and shall
make available to each other any books or records useful for the defense of any
such claim or proceeding. The Claimant may elect to participate in the defense
of any such third party claim, and may, at its sole expense, retain separate
counsel in connection therewith. Subject to the foregoing the Claimant shall not
settle or compromise any such third party claim without the prior consent of the
Indemnitor, which consent shall not be unreasonably withheld.
Article 12 - Other Provisions
12.1 Further Assurances. The parties agree to execute and
deliver any and all papers and documents which may be reasonably necessary to
carry out the terms of this Agreement.
12.2 Entire Agreement; Amendment. All schedules to this Agreement are
deemed to be incorporated into and made part of this Agreement. This Agreement
together with the schedules contains the entire agreement between the parties
and there are no agreements, representations, or warranties which are not set
forth herein. This Agreement may not be amended or revised except by a writing
signed by both parties hereto.
12.3 Binding Effect; Assignment. This Agreement is binding upon and
inures to the benefit of the parties and their respective successors and
assigns; provided, however, that other than an assignment by the Buyer of its
rights under this Agreement to an affiliate of the Buyer which does not relieve
the Buyer of its obligations under this Agreement, neither this Agreement nor
any rights hereunder are assignable nor transferable without the prior written
consent of the other party. This Agreement is not intended and must not be
construed to create any rights in any parties other than the Buyer and the
Seller and no person may assert any rights as a third party beneficiary.
12.4 Separate Counterparts. This Agreement may be executed in several
identical counterparts, all of which when taken together constitutes but one
instrument, and it will not be necessary in any court of law to introduce more
than one executed counterpart in proving this Agreement. This Agreement may be
executed and delivered by fax counterpart signatures, and upon exchange of fax
counterpart signatures, this Agreement will be binding upon the parties.
12.5 Transaction Costs. Each party to this Agreement agrees to be
responsible for its own costs for any legal, accounting and other services, if
any, attendant to the transactions contemplated by this Agreement. The Buyer
will bear the cost of transfer of the Licenses and any regulatory approvals
necessary to complete the transaction. The Buyer acknowledges and agrees that it
shall be solely responsible for any brokerage fees or sales commissions that may
be due and payable to Stoneridge Partners as a result of the transactions
contemplated by this Agreement.
12.6 Notices. Any notice, request, instruction or documents required or
permitted hereunder must be in writing and will be deemed given if delivered
personally or by certified mail, U.S. mail, national recognized overnight
courier service or sent by telex, telecopy or other telecommunication device
capable of creating a written record (and promptly confirmed by hard copy
delivery) to a party at the address set forth below:
(i) If to the Seller:
Flagler Hospital, Inc.
400 Health Park Boulevard
St. Augustine, Florida 32086
Fax: (904) 819-4472
Attn: Chief Financial Officer
With a copy to:
Upchurch, Bailey and Upchurch, P.A.
Post Office Drawer 3007
St. Augustine, Florida 32085-3007
Fax: (904) 825-4862
Attn: Frank D. Upchurch III
(ii) If to the Buyer:
Caretenders Visiting Services of St. Augustine, LLC
9510 Ormsby Station Road, Suite 300
Louisville, Kentucky 40223
Fax: (502) 891-8067
Attn: President
With a copy to:
Frost Brown Todd LLC
400 West Market Street, 32nd Floor
Louisville, Kentucky 40202-3363
Fax: (502) 581-1087
Attn: Scott W. Dolson
unless and until notice of another or different address is given as provided
herein.
12.7 Severability. The provisions of this Agreement are
severable, and the invalidity of any provision will not affect the validity of
any other provision.
12.8 Captions. The captions herein have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision of this Agreement.
12.9 Gender. All pronouns used herein will include both the
masculine and feminine gender as the context requires.
12.10 Governing Law; Joint Preparation. The execution, interpretation,
and performance of this Agreement will be governed by the laws of the State of
Florida, without regard to or application of its conflicts of law principles.
This Agreement is deemed to have been prepared jointly by the parties. Any
ambiguity in this Agreement will not be interpreted against either party and
will be interpreted as if each of the parties hereto had prepared this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
CARETENDERS VISITING SERVICES OF ST. AUGUSTINE, LLC
By /s/ Todd Lyles
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Print Name: Todd Lyles
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Title: Sr. Vice President
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FLAGLER HOSPITAL, INC.
By /s/ Joseph Gordy
---------------------------------------------------
Print Name: Joseph Gordy
------------------------------------------
Title: CEO
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LIST OF ANNEXES AND SCHEDULES
TO FLAGLER HOSPITAL ASSET PURCHASE AGREEMENT
Annex A Noncompetition Agreement
Annex B Promissory Note
Annex C Opinion Letter
Annex D Shared Services Agreement
Schedule 1.1 List of Equipment, Etc.; Leased Assets
Schedule 1.3 Assumed Contracts
Schedule 2.2 Allocation of Purchase Price
Schedule 4.1 Authority
Schedule 4.2 Licenses, Permits and Payment Programs
Schedule 4.5 Title & Liens
Schedule 4.7 Insurance
Schedule 4.9 Governmental Approvals & Licenses
Schedule 4.10 Healthcare Regulatory Compliance
Schedule 4.11 Contracts
Schedule 4.12 Violations of Law
Schedule 4.13 Litigation
Schedule 4.16 ERISA Matters
Schedule 4.18 Worker's Compensation Compliance
Schedule 4.19 Adverse Actions
Schedule 4.20 Consents
Schedule 4.22 Financial Statements
Schedule 5.5 Buyer Consents
Exhibit A
CONFIDENTIALITY NONSOLICITATION AND
NONCOMPETITION AGREEMENT
This is a Confidentiality Nonsolicitation and Noncompetition
Agreement dated as of November 12, 2005, among (i) Almost Family, Inc.
and Caretenders Visiting Services of St. Augustine, LLC (collectively, the
"Protected Parties"), and (ii) Flagler Hospital, Inc. (the "Seller").
Recitals
A. Pursuant to an Asset Purchase Agreement dated as of November 12,
2005 (the "Purchase Agreement"), the Buyer is purchasing certain assets used in
the operation of a home health agency operating in the St. Augustine market in
Florida. The agreement by the Seller to the terms of this Agreement was material
to the decision of the Buyer to enter into the transactions described in the
Purchase Agreement. Capitalized terms not otherwise defined in this Agreement
shall have the meanings given to them in the Purchase Agreement.
B. For purposes of this Agreement, "Proprietary Information" means as
it relates to the Business, patient lists, referral sources, business
relationships, business records and financial records, all of which have been
acquired by Caretenders Visiting Services of St. Augustine, LLC in connection
with the purchase of the Business. The Protected Parties have expressly or
impliedly protected such information from unrestricted use by persons not
associated with the Protected Parties.
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
1. Confidential Information.
(a) The Seller agrees that it shall (i) maintain the strict
confidence of, undertake all commercially reasonable steps to avoid divulging or
disclosing, and preserve and protect the Proprietary Information from disclosure
to, or access or use by, any person or entity, including any competitor or
potential competitor of the Business except as required by law, and (ii) during
the Restricted Period, not use the Proprietary Information to compete, directly
or indirectly, with the Business. The Seller acknowledge that the Proprietary
Information constitute valuable, special and unique property of the Business
being acquired by Caretenders Visiting Services of St. Augustine, LLC.
(b) The Seller represents and warrants to the Protected
Parties that it has delivered to Caretenders Visiting Services of St. Augustine,
LLC any and all papers, books, records, documents, memoranda and manuals,
whether hard or digital copies, that constitute Proprietary Information.
(c) The Seller agrees that, if at any time after the date of
this Agreement, the Seller determines that it has any Proprietary Information in
its possession or control, the Seller shall immediately deliver all such
Proprietary Information to Caretenders Visiting Services of St. Augustine, LLC.
2. Employee Solicitation. Each of Protected Parties on the one hand and
the Seller on the other hand agrees that, during the 12 month period after the
date of this Agreement, such party shall not hire any current or former
employees of the other party, except (i) with the prior written consent of the
other party, (ii) for the hiring by Caretenders Visiting Services of St.
Augustine, LLC of current or former employees of Seller who were employed in the
Business, and (iii) former employees of the Business to whom Buyer did not offer
employment on or before the Closing Date.
3. Noncompetition Covenant. The Seller agrees that it shall not, during
the five year period after the date of this Agreement, directly or indirectly,
individually, or through any person, partnership, joint venture, corporation or
other entity in which Seller has any interest, including, without limitation, as
a shareholder, owner, member, partner, investor, director, officer, employee or
consultant or otherwise, own, operate, manage, develop or provide consulting
services to, any entity providing home health services as its business in
Florida Health District #4.
4. Consideration. The Seller acknowledges that the consideration for
the covenants in this Agreement is the Purchase Price.
5. Specific Enforcement. In the event of a breach of any party's
covenants in this Agreement, it is agreed that damages will be difficult to
ascertain and affected party may petition a court of law or equity for, and be
granted, injunctive relief in addition to any other relief which the affected
party may have under the law, including reasonable attorney's fees.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to or
application of its conflicts of laws principles. Each of the parties has
participated in the preparation of this Agreement and agree that in construing
the provisions of this Agreement, the general rule that provisions shall be
construed most strongly against the party that drafted such provisions shall
have no application.
7. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
and other understandings with respect to the subject matter hereof. No change,
modification, addition or amendment of this Agreement shall be enforceable
unless in writing and signed by the party against whom enforcement is sought.
8. Construction. The parties agree that the restrictions set forth
herein are reasonable and necessary to preserve the business of the parties and
that the maximum protection available under the law shall be provided to the
parties by this Agreement to protect each party's interests in its business and
confidential information and that, if the restrictions imposed hereby are held
by any court to be invalid, illegal or unenforceable as to time, territory,
scope or otherwise, this Agreement shall be construed to impose restrictions
which are valid, legal and enforceable as to time, territory, scope or
otherwise, as the case may be, to the maximum extent permitted under applicable
law.
9. Headings. The headings contained in this Agreement are included for
ease of reference only and shall not be considered in the interpretation or
enforcement of this Agreement.
10. Provisions Severable. To the extent that any one or more of the
provisions of this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11. Notices. All notices required to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if mailed by
certified mail, return receipt requested, postage prepaid to the addresses set
forth in the Purchase Agreement, or to such other addresses which a party has
given the other parties written notice.
12. Benefit. This Agreement shall be binding upon and shall inure to
the benefit of the parties to this Agreement and, as applicable, their
respective heirs, executors, administrators, personal representatives,
successors and assigns.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the preamble above.
ALMOST FAMILY, INC.
By: /s/ Todd Lyles
-----------------------------------------
P. Todd Lyles
Its Senior Vice President
CARETENDERS VISITING SERVICES OF ST.
AUGUSTINE, LLC
By: /s/ Todd Lyles
-----------------------------------------
P. Todd Lyles
Its Senior Vice President
FLAGLER HOSPITAL, L.P.
By: /s/ Joseph Gordy
-----------------------------------------
Print Name: Joseph Gordy
-------------------------------
Title: CEO
--------------------------------------
Exhibit B
PROMISSORY NOTE
$200,000.00 November 12, 2005
Louisville, Kentucky
For value received, Caretenders Visiting Services of St. Augustine,
LLC, a Kentucky limited liability company (the "Maker"), promises to pay to the
order of Flagler Hospital, Inc., a Florida corporation (the "Lender"), at 400
Health Park Boulevard, St. Augustine, Florida 32086 or such other address as the
holder hereof may direct, the principal sum of Two Hundred Thousand Dollars
($200,000.00).
This note is delivered pursuant to paragraph 2.1(a)(ii) of the Asset
Purchase Agreement dated November 12, 2005, among Maker and Lender.
Commencing as of the date of this note, the outstanding principal
balance of this note from time to time shall bear interest at the annual rate
equal to six percent (6%). The principal amount and all accrued and unpaid
interest on this note shall be paid in full on November 12, 2008.
All or any part of the outstanding principal amount of this note may be
prepaid at any time without penalty.
Failure of the holder of this note to exercise any of its rights and
remedies shall not constitute a waiver of any provision of this note, or of any
of such holder's rights and remedies, nor shall it prevent the holder from
exercising any rights or remedies with respect to the subsequent happening of
the same or similar occurrences. All remedies of the holder hereof shall be
cumulative to the greatest extent permitted by law.
The following shall constitute a default under this note: (i) the
failure to make any payment when due under this note within five (5) days after
such payment is due; or (ii) the Maker or any guarantor shall file a petition in
bankruptcy or for reorganization or for an arrangement pursuant to any present
or future state or federal bankruptcy act or under any similar federal or state
law, or shall be adjudicated a bankrupt or insolvent, or shall make a general
assignment for the benefit of its creditors, or shall be unable to pay its debts
generally as they become due; or if a petition or answer proposing the
adjudication of the Maker or any guarantor as a bankrupt or its reorganization
under any present or future state or federal bankruptcy act or any similar
federal or state law shall be filed in any court and such petition or answer
shall not be discharged or denied within sixty (60) days after the filing
thereof; or if a receiver, trustee or liquidator of the Maker or any guarantor,
or of all or substantially all of the assets of the Maker or any guarantor,
shall be appointed in any proceeding brought against the Maker or any guarantor
and shall not be discharged within sixty (60) days of such appointment; or if
the Maker or any guarantor shall consent to or acquiesce in such appointment; or
if any property of the Maker or any guarantor shall be levied upon or attached
in any proceeding.
After maturity or default, this note shall bear interest at the highest
rate permitted under the then applicable law (hereinafter the "Default Rate"),
provided, however, in the event there is then no such highest rate applicable,
or in the event said highest rate is otherwise indeterminable, the parties agree
that the applicable Default Rate shall be eighteen (18%) percent per annum.
The Maker and any endorsers, sureties, guarantors, and all others who
are or who may become liable for the payment hereof, severally, irrevocably and
unconditionally (a) agree that any suit, action or other legal proceeding
arising out of or relating to this note may be brought, at the option of the
holder, in a court of record of the State of Florida, located in St. Johns
County, Florida, (b) consent to the jurisdiction of such court in any such suit,
action or proceeding, and (c) waive any objection which it or they may have to
the laying of venue of any such suit, action or proceeding in such court.
Notwithstanding any provision herein or in any instrument now or
hereafter securing this note, the total liability for payments in the nature of
interest shall not exceed the limits now imposed by the usury laws of Florida,
and any amount paid in excess thereof shall be applied to the unpaid principal
balance. Such application shall be made to future installments of principal in
the inverse order of their maturity and shall not change or modify the payments
next due but shall accelerate the final maturity date. In the event of the
acceleration of this note, the total charges for interest and in the nature of
interest shall not exceed the maximum amount allowed by law, and any excess
portion of such charges that may have been prepaid shall be refunded to the
Maker hereof at the time of acceleration. Such refund may be made by application
of the amount involved against the sums due hereunder, but such crediting shall
not cure or waive the default occasioning acceleration.
If any provision or portion of this note is declared or found by a
court of competent jurisdiction to be unenforceable or null and void, such
provision or portion thereof shall be deemed stricken and severed from this note
and the remaining provisions and portions thereof shall continue in full force
and effect.
If there is any default under this note, and this note is placed in
the hands of an attorney for collection, or is collected through any court,
including any bankruptcy court, the Maker and each guarantor promise to pay to
the order of the holder hereof such holder's reasonable attorneys' fees and
court costs incurred in collecting or attempting to collect or securing or
attempting to secure this note or enforcing the holder's rights with respect to
any collateral securing this note, to the extent allowed by the laws of the
State of Florida or any state in which any collateral for this note is situated.
This note has been delivered in, and shall be governed by and construed
in accordance with, the laws of the State of Florida, without regard to or
application of its conflicts of law principles.
All parties to this instrument, whether makers, sureties, guarantors,
endorsers, accommodation parties or otherwise, shall be jointly and severally
bound, and jointly and severally waive presentment, demand, notice of dishonor,
protest, notice of protest, notice of nonpayment or nonacceptance and any other
notice and all due diligence or promptness that may otherwise be required by
law, and all exemptions to which they may now or hereafter be entitled under the
laws of the State of Florida, or of the United States of America or any state
thereof. The holder of this instrument may whether one or more times, with or
without notice to any party, and without affecting the obligations of any maker,
surety, guarantor, endorser, accommodation party or any other party to this note
(1) extend the time for payment of either principal or interest from time to
time, (2) release or discharge any one or more parties liable on this note, (3)
suspend the right to enforce this note with respect to any persons, (4) change,
exchange or release any property in which the holder has any interest securing
this note, (5) justifiably or otherwise, impair any collateral securing this
note or suspend the right to enforce against any such collateral, and (6) at any
time it deems it necessary or proper, call for and should it be made available,
accept, as additional security, the signature or signatures of additional
parties or a security interest in property of any kind or description or both.
THE MAKER AND EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IF ANY SUIT BE BROUGHT TO ENFORCE
OR CHALLENGE THE VALIDITY OR ENFORCEMENT OF THIS NOTE OR ANY OTHER SECURITY
INSTRUMENTS EXECUTED TO FURTHER SECURE THE INDEBTEDNESS. MAKER AND EACH
GUARANTOR HEREBY AGREE AND CONSENT TO THE RELIEF OF THE HOLDER OF THIS NOTE FROM
ANY STAY ORDER WHICH MIGHT BE ENTERED BY ANY COURT AGAINST THE HOLDER OF THIS
NOTE AND TO ASSIST THE HOLDER OF THIS NOTE IN OBTAINING SUCH RELIEF, AND, WITH
REGARD TO THE FILING OF ANY BANKRUPTCY PROCEEDINGS UNDER CHAPTER 11, 13 OR
OTHERWISE, TO NOT MODIFY ANY OF THE TERMS OF THIS NOTE, INCLUDING, WITHOUT
LIMITATION, THE INTEREST RATE OR PAYMENT AMOUNTS. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO MAKE THE LOAN EVIDENCED BY THIS NOTE.
CARETENDERS VISITING SERVICES OF
ST. AUGUSTINE, LLC
By /s/ Todd Lyles
---------------------------
P. Todd Lyles, Senior Vice President
Guaranty
In consideration of Lender's execution and delivery of this note and
its agreement to perform the transactions contemplated hereby, and as a material
inducement of such execution, delivery and performance, the undersigned hereby
guarantees the full, complete and timely performance of and compliance with all
of the covenants, agreements, obligations and other liabilities of Maker as set
forth in this note. The obligation and liability of the undersigned is absolute
and unconditional, irrespective of any circumstance, which might otherwise
constitute a legal or equitable discharge of a surety or guarantor. Lender may
at its option proceed in the first instance against the undersigned to collect
any liability of Maker hereunder without first proceeding against Maker.
ALMOST FAMILY, INC.
By /s/ Todd Lyles
---------------------
P. Todd Lyles, Senior Vice President
Exhibit C
UPCHURCH, BAILEY AND UPCHURCH, P.A.
Attorneys at Law
Established 1925
780 North Ponce de Leon Boulevard
St. Augustine, Florida 32084
Telephone (904) 829-9066
Facsimile (904) 825-4862
Please reply to:
Post Office Drawer 3007
St. Augustine, Florida 32085-3007
OF COUNSEL:
FRANK D. UPCHURCH, SR.
November 12, 2005
Caretenders Visiting Services of St. Augustine, LLC
Almost Family, Inc.
9510 Ormsby Station Road, Suite 300
Louisville, Kentucky 40223
Re: Sale of Flagler Hospital, Inc. Home Health Agency Assets
Gentlemen:
We have acted as counsel to Flagler Hospital, Inc. (the "Seller") in
connection with the sale of certain home health agency assets of the Seller
pursuant to an Asset Purchase Agreement dated as of November 12, 2005, between
the Seller and Caretenders Visiting Services of St. Augustine, LLC (the
"Agreement"). The terms used in this opinion and not defined herein shall have
the respective meanings given to them in the Agreement.
We have acted as counsel for the Seller in connection with the
transactions contemplated by the Agreement. As such counsel, we have examined
the Transaction Documents described below, and such additional documents,
certificates and records, and have made such investigations of law, as we have
deemed necessary and relevant as a basis for this opinion.
In connection with the delivery of this opinion, we have examined the
following documents (collectively, the "Transaction Documents"):
1. The Agreement;
2. The Noncompetition Agreement;
3. The Promissory Note; and
4. The Bill of Sale and Assignment.
Based upon the foregoing, it is our opinion that:
Caretenders Visiting Services of St. Augustine, LLC
Almost Family, Inc.
November 12, 2005
Page 2
1. The Seller is a corporation, duly organized, validly existing, and
in good standing in the State of Florida. The Seller has the corporate power and
authority to own and operate its properties, and carry on its business as
currently conducted.
2. The execution and delivery of the Transaction Documents by the
Seller and the consummation of the transactions contemplated by the Transaction
Documents have been duly and validly authorized by all necessary actions on the
part of the Seller. The Transaction Documents constitute valid and legally
binding agreements of the Seller, enforceable against the Seller in accordance
with their terms.
3. The officers executing the Transaction Documents on behalf of the
Seller have been duly authorized to do so, and the execution, delivery and
performance by the Seller of the Transaction Documents have been duly authorized
by the Seller by all necessary corporate actions.
4. To the best of our knowledge, all representations and warranties of
the Seller contained in the Transaction Documents are true and complete.
5. To the best of our knowledge (a) there are no actions, suits,
proceedings or investigations pending or threatened against or affecting the
Seller or any of the Purchased Assets, at law, equity or before or by any
federal, state or local governmental department, commission, board, agency or
instrumentality, which would prevent consummation of the transactions
contemplated in the Agreement or which might result, either individually or in
the aggregate, in any material adverse change in the condition, financial or
otherwise, of the Purchased Assets or Business, and (b) the Seller is not
subject to any continuing order, writ, injunction, ruling or decree of any
federal, state or local court, or any other governmental department, commission,
board, agency or instrumentality which would prevent consummation of the
transactions contemplated in the Agreement.
6. The execution and delivery of the Transaction Agreement, the
consummation of the transactions contemplated thereby, and the performance and
fulfillment of the respective obligations and the undertakings of the Seller
thereunder will not (with or without the giving of notice, the lapse of time or
both) (a) conflict with the Articles of Incorporation or Bylaws of the Seller,
or (b) to the best of our knowledge conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license or permit known to us after due inquiry to which
the Seller is a party or by which the Seller may be bound.
Caretenders Visiting Services of St. Augustine, LLC
Almost Family, Inc.
November 12, 2005
Page 3
7. To the best of our knowledge, the Purchased Assets are subject to no
recorded liens or encumbrances in those state and federal locations where liens
would be filed on the Purchased Assets (based on the physical location of such
assets and the registered agent and principal office of Seller) and we are aware
of no other lien, encumbrance or claim on the Purchased Assets.
8. To the best of our knowledge, the Seller is not a party to any
litigation in bankruptcy, federal or state court in those courts where a lawsuit
would be filed based on the Seller's principal business office, the location of
its registered agent, the location of the Purchased Assets, and those places
where the Seller is engaged in business activities.
Very truly yours,
/S/ Frank D. Upchurch III
---------------------
Frank D. Upchurch III
FDUIII/jsd
Exhibit D
SHARED SERVICE AGREEMENT
THIS SHARED SERVICE AGREEMENT, made and entered into this 12th day of
November, 2005, between Flagler Hospital, Inc. hereinafter referred to as
"Hospital," and Caretenders Visiting Services of St. Augustine, LLC, hereinafter
referred to as "HHA."
W I T N E S S E T H :
WHEREAS, the Hospital and HHA entered into an Asset Purchase Agreement
for Community Home Health Care effective as of the 12th day of November, 2005,
and
WHEREAS, the Hospital and Community Home Health Care worked closely for
the safety and welfare of patients being discharged from the Hospital, and
WHEREAS, the Hospital and HHA desire to continue the working
relationship that existed between the Hospital and Community Home Health Care
prior to the entering of the Asset Purchase Agreement and have each other
continue to provide services on a similar and consistent basis,
ATTN: NOW THEREFORE, the Parties agree as follows:
1. SERVICES FROM HOSPITAL
A. The Hospital will provide services to HHA consistent with the
level of services provided to Community Home Health Care prior
to November 12, 2005.
B. The following services will be provided to HHA in exchange
o On Call Answering Service at a cost of $75 per month
o Support from the Hospital Information Service Department for
the operation of the telephone system, pagers, copiers and
computers at a charge of $75 per hour through February 12,
2006 ("Transition Period").
o Laboratory testing services with printing of results at the HHA
office.
o Supplies, both general and medicals will be provided to HHA
based on hospital charge rates to other departments during the
Transition Period.
2. SERVICE FROM HHA
A. The HHA will provide services to Hospital consistent with the
level of services provided prior to November 12, 2005.
Specifically, HHA agrees to accept Medicaid and indigent
patients discharged from Flagler Hospital in a manner and at
levels consistent with the practice of the business in 2004.
B. The following services will be provided to Hospital, and
Hospital agrees to pay on a monthly basis after billing by HHA
as specified herein.
o Case Management Services - HHA will provide nurses and social
workers to the hospital during the business week to perform
case management and discharge planning consultation to the
Case Management Department. HHA Employees will spend at least
1.5 hours per week attending meetings in the Case Management
Department, and reviewing clinical information on patients to
determine appropriate care. The cost for this service will be
$210.00 per month.
o Discharge Planning Access - Hospital in consideration of
patient safety and convenience will continue to allow HHA
personnel access to Hospital patients referred to the agency
for services. HHA will staff a Home Care Representative on
site in the hospital.
3. ADDITIONAL SERVICES
A. The Hospital and HHA agree that additional services from the
Hospital may be identified during the transition of the
Community Home Health Agency. Hospital and HHA agree before
new items are added to the monthly bill the parties will agree
the service and billing methodology.
4. ON CAMPUS OFFICE SPACE
A. The Hospital agrees to use best efforts to offer appropriate
rental office space for lease in or on the campus of the
Hospital as space becomes available to lease to third parties.
Hospital may utilize space for services of the hospital or
lease to physician groups without regard to this covenant.
5. TERM
A. The term of this Agreement shall be five (5) years, beginning
November 12, 2005.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seal(s) as of the day and year first above written.
HOSPITAL HHA
Flagler Hospital, Inc. Caretenders Visiting Services of
St. Augustine, LLC
/s/ Joseph Gordy /s/ Todd Lyles 11/11/05
-------------------------- -------------------------
Signature Date Signature Date
Name: Joseph Gordy Name: P. Todd Lyles
------------------------- ------------------------
Title: CEO Title: Sr. Vice President
Witness:______________________ Witness: /s/ Linda Smith
-----------------