Exhibit 10.2
ASSET PURCHASE AGREEMENT
This is an Asset Purchase Agreement dated as of November 15, 2006
(the "Agreement"), among (i) Almost Family, Inc., a Delaware corporation,
Caretenders Visiting Services of Ocala, LLC, a Florida limited liability
company, Caretenders Visiting Services of Southwest Florida, Inc., a Florida
corporation, Caretenders Visiting Services of Orlando, LLC, a Florida limited
liability company, Caretenders Visiting Services of District 7, LLC, a Florida
limited liability company, Pro-Care Home Health of Broward, Inc., a Florida
corporation, Caretenders Visiting Services of Southeast Florida, Inc., a Florida
corporation, Caretenders Visiting Services of Hernando County, LLC, a Florida
limited liability company, Caretenders Visiting Services of District 6, LLC, a
Florida limited liability company, Caretenders Visiting Services of Pinellas
County, LLC, a Florida limited liability company, Caretenders Visiting Services
of Cook County, LLC, an Illinois limited liability company, and National
Health Industries, Inc., a Kentucky corporation (collectively, the "Buyer"),
(ii) Mederi, Inc., a Florida corporation, Mederi of Collier County, Inc., a
Florida corporation, Mederi of Manatee County, Inc., a Florida corporation,
Mederi of Pinellas County, Inc., a Florida corporation, Mederi of Alachua
County, Inc., a Florida corporation, Mederi of Palm Beach County, Inc., a
Florida corporation, Mederi of Orange County, Inc., a Florida corporation d/b/a
Mederi of Brevard County, Inc., and United Home Health Services, Inc. d/b/a
Mederi of Illinois, an Illinois corporation (each a "Seller" and collectively,
the "Sellers"), and (iii) David Nesslein and Sandra Vazquez (each a
"Shareholder" and collectively, the "Shareholders"). The Seller and the
Shareholders shall be referred to collectively as the "Selling Parties").
Recitals
A. The Seller owns and operates home health agencies located in the
States of Florida, Illinois and Missouri (the "Territory"), including
Medicare-Certified, Medicaid/Waiver, county contracts, HMO and other significant
non-certified or "private duty" operations (collectively, the "Business").
B. The Seller is the holder of one or more licenses issued by the
Agency for Health Care Administration of the States of Florida, the Illinois
Department of Public Health and the Missouri Department of Health and Senior
Services, and Medicare provider agreements issued by the U.S. Department of
Health and Human Services, all of which authorize the Seller to provide Medicare
and Medicaid certified home health care services in the Territory (collectively,
the "Licenses").
C. The Seller desires to sell and the Buyer desires to purchase, the
assets used by Seller 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 Sellers hereby agree to sell, assign, transfer and
convey to the Buyer, and the Buyer hereby agrees to purchase from the Sellers,
all of the assets of the Sellers used in the Business (the "Purchased Assets"),
and located within the Territory, including without limitation, the following
assets and properties:
(i) All leases of real property ("Assumed Leases")
security deposits, any pre-paid rent, furniture, fixtures, machinery, equipment,
leasehold improvements, computers, software, vehicles, medical equipment,
prepaid expenses, and other tangible personal property used in the Business,
including those assets specifically described on Schedule 1.1(a) as being
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 Sellers' goodwill relating to the
Business; all customer and
patient lists and files, referrer lists, provider lists, records and similar
sales and marketing information in the Sellers' possession relating to the
Business; member service agreements relating to the Business; medical records of
the patients serviced by the Business and in the Sellers' possession; personnel
records relating to those employees hired by the Buyer; and the Sellers' right
and interest in the trade names (including Mederi and variations thereof used in
connection with the Business), trademarks, trade secrets, licenses, know-how,
specifications, literature, and all other intangible property which relate
specifically to the Business, 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 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 CMS for the period prior to
the Closing Date;
(iv) Any and all rights of the Sellers 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 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; and
(vi) All accounts receivable and unbilled work in
process.
(b) "Excluded Assets" shall mean cash and cash-like items,
including all letters of credit used to guarantee any leases of the Seller and
any and all proceeds from current pending litigation with the Provider
Reimbursement Review Board for disallowances from years prior to Closing, and
those additional assets identified on Schedule 1.1(b) as being Excluded Assets.
(c) The Sellers agree to cooperate with the Buyer in
connection with the collection of the Buyer's accounts receivable relating to
the Business and to pay over to the Buyer as soon as reasonably possible any of
the Buyer's accounts receivable collected by the Sellers.
1.2 No Assumed Liabilities. The Sellers acknowledge and agree that they
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, including the ownership or
leasing thereof, through the Closing Date, and that the Buyer is not assuming
any liabilities of the Sellers of any nature, except for (i) obligations
accruing after Closing under the Assumed Contracts and Assumed Leases, (ii) any
lease expenses offsetting the Purchase Price pursuant to paragraph 1.3, (iii)
any accrued personal leave assumed pursuant to paragraph 1.4, and (iv) any
additional liabilities or accrued expenses mutually agreed upon by the Sellers
and the Buyer and offsetting the Purchase Price pursuant to paragraph 2.1(b)
below.
1.3 Assumed Contracts; Real Property Leases.
(a) The Buyer agrees to assume the Sellers' obligations
arising after the Closing Date with respect to those contracts listed on
Schedule 1.3(a) (the "Assumed Contracts"), which Schedule 1.3(a) shall set forth
those Assumed Contracts to be assumed by Buyer.
(b) The Buyer agrees to assume the Sellers' obligations with
respect to the real estate leases listed on Schedule 1.3(b) (the "Assumed
Leases"), provided that any accrued rent, fees, taxes, expenses or other amounts
payable as of the Closing Date and/or relating to the period through the Closing
Date (collectively, "Lease Liabilities") shall be offset against the Purchase
Price. At the Closing, the Sellers shall deliver to the Buyer landlord consent
and estoppel certificates for each Assumed Lease, each in a form reasonably
satisfactory to the Buyer confirming the landlord's consent to assignment and
further confirming among other customary matters that the Assumed Lease is not
in default and that there are no accrued and unpaid amounts due the landlord for
the period through Closing. The Buyer shall have the right to require as a
condition to the Buyer's obligation to close a renegotiation of the terms of any
related party lease so that so that said lease reflects current fair market
value. The Buyer acknowledges that Sellers' letters of credit held by landlords
are Excluded Assets.
(c) The Sellers acknowledge and agree that the Buyer is not
assuming and that the Sellers remain responsible for all obligations under the
following real property leases:
(i) Pt. Charlotte (expires 12/31/06)
(ii) Sarasota (expires 5/31/09)
(iii) Ocala (expires 12/31/07)
(iv) Fruitland Park (expires 5/31/2010)
(v) Orlando (expires 2/11/07)
(vi) Melbourne (monthly)
(vii) Pt. St. Lucie (expires 3/31/09)
(viii) Delray (expires 9/30/07)
(ix) West Palm (monthly)
(x) Miami (expires 5/31/07)
(d) The Sellers and the Buyer agree that with respect to the
leases listed in paragraph 1.3(c) above which shall be retained by the Sellers,
the Buyer shall reimburse the Sellers for the cost of occupancy through January
31, 2007, and the Buyer agrees to vacate each premises by January 31, 2007. The
Sellers agree to refrain from the taking of any action that would necessitate
the Buyer vacating any of such premises earlier that otherwise necessary or
desirable for an orderly transition of operations.
1.4 Employees. The Sellers acknowledge 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
Sellers. The Sellers acknowledge that they will satisfy in full all accrued
payroll and withholding obligations of the Business through the Closing Date,
except for accrued salary remaining unpaid in the normal course of business for
employees who accept employment with the Buyer for which the Buyer agrees to
assume liability therefore at closing. The Buyer shall have the right, but not
the obligation, to make offers of employment to employees of the Business. With
respect to any employees of the Business who accept employment with the Buyer,
the Buyer shall assume the paid days off including vacation ("PDO") liability at
Closing.
1.5 Noncompetition Agreement. The Selling Parties acknowledge that the
Buyer's obligation to close is conditioned upon each Selling Party entering into
a Confidentiality, Nonsolicitation and Noncompetition Agreement at the Closing,
in the form of the agreement attached as Attachment A (the "Noncompetition
Agreement").
1.6 Health Insurance Matters. The Sellers shall pay their health
insurance premiums for December, 2006 to United prior to December 1, 2006. The
Buyer shall reimburse the Sellers for the usual and customary amount of such
premiums on the Closing Statement. The Buyer agrees that all employees of the
Business hired by the Buyer will be entitled to participate in the Buyer's
health insurance plans, subject to any applicable qualification or other plan
requirements, from and after January 1, 2007.
1.7 Transitional Issues.
(a) The Buyer agrees to employ the Seller's Miami home office
employees on a transitional basis according to the terms described on Schedule
1.7.
(b) The Buyer agrees to assume the Seller's liability for
contract labor for direct care services provided to the Sellers' patients in the
last full regular bi-weekly pay period (and any fractional pay period)
immediately prior to Closing, with the amount of the Buyer's responsibility not
to exceed $75,000.00 in the aggregate. Such amounts payable by the Buyer shall
be set forth on the Closing Statement.
(c) The Buyer agrees to take over ownership and control of all
record archives relating to the employees and patients of the Business. The
Buyer agrees to give the Sellers reasonable access to such records on an
as-needed basis after the Closing. The Buyer further agrees to assume the
Sellers' storage facility lease agreements (to be included on Schedule 1.3(b)).
(d) The Sellers acknowledge and agree that they shall assume
all responsibility for any sign-on bonuses necessary to secure the employment
and retention of the employees of the Business in an attempt to achieve the
transition and employment benchmarks set forth on Schedule 2.1(a)(iv)
(Contingent Consideration). Notwithstanding the preceding, the Buyer shall be
responsible for any bonus amounts paid to the Miami home office employees who
are employed by the Buyer on a transitional basis pursuant to paragraph 1.7(a)
above; provided, however, that the Buyer shall approve the payment of such bonus
amounts in advance.
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 for the Purchased Assets (the
"Purchase Price"), $7,500,000.00 in cash by wire transfer of immediately
available funds at Closing;
(i) As additional consideration, the Sellers shall be
entitled to an amount equal to 75% of any the contingent consideration described
on Schedule 2.1(a)(iv) ("Contingent Consideration");
(ii) The cash portion of the Purchase Price payable
at Closing shall be reduced for
any Lease Liabilities as set forth in paragraph 1.3(b) above;
(iii) The cash portion of the Purchase Price payable
at Closing shall be reduced by
an amount equal to any amounts remaining due on Sellers' Medicare cost report
repayment obligations and as required to payoff CIT, the Seller's primary
lender, as of the Closing Date, with such amounts being paid directly out of the
Purchase Price proceeds at Closing; and
(iv) The cash portion of the Purchase Price shall be
increased or decreased, as applicable, to account for any pro-ration of expense
items relating to the Business.
(b) The parties agree to enter into a closing statement at
Closing setting forth the determination of the cash portion of the Purchase
Price payable at Closing.
2.2 Allocation of Purchase Price. The Purchase Price will be allocated
among the Purchased Assets as set forth on Schedule 2.2. The Sellers 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 at 10:00 a.m., December 3, 2006 in the offices of Frost Brown
Todd LLC, Louisville Kentucky, 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.
(a) At the Closing, the Sellers 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 Sellers to the Buyer. Such instruments and
documents must be sufficient to convey to the Buyer good title to the Purchased
Assets and the Business. The parties will also cause the Purchase Note, the
Noncompetition Agreement, the Stock Pledge Agreement and the Registration Rights
Agreement (collectively, the "Ancillary Agreements") to be executed and
delivered at Closing. The parties acknowledge that Purchased Assets, the Assumed
Contracts and the Assumed Leases will be acquired through separate bills of sale
and assignment instruments into several Almost Family, Inc. subsidiaries
included among the Buyer in the preamble above, with such division of assets to
be geographically based.
(b) The Sellers agree that they 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
Sellers 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 and Assumed Leases.
Article 4 - Representations and Warranties of the Sellers
As a material inducement to the Buyer to enter into and perform this
Agreement, the Sellers represent and warrant to the Buyer as follows:
4.1 Authority as to Execution.
(a) Each Seller has full legal power, authority and capacity
to execute and deliver this Agreement and the Ancillary Agreements, and to
perform each Seller's obligations under this Agreement and the Ancillary
Agreements. This Agreement and the Ancillary Agreements constitute valid and
legally binding obligations of each Seller, enforceable in accordance with their
terms. The execution and delivery of this Agreement, the Ancillary Agreements
and the agreements and instruments called for by this Agreement by or on behalf
of each 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.
(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 Ancillary Agreements, the consummation of the
transactions contemplated hereby and thereby, and the performance and
fulfillment of its obligations and undertakings hereunder and thereunder by the
Sellers 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 any Seller is a
party or by which it may be bound; (ii) violate any 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
any 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 any 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 any 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 Seller's permits or
licenses.
(c) Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation, 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 holds all material licenses, permits,
certificates, and authorizations necessary for the Seller to operate the
Business as conducted by the 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 the Seller's knowledge, any threatened investigations
by, or loss of participation in, the Programs related to the Business.
4.3 Environmental Standards. Each Seller has operated the Business
except where such non-compliance would not have any material adverse effect on
the Business, in compliance 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"). To the Sellers' knowledge,
there has been no disposal of waste arising out of the operation of the Business
that does not comply with all Environmental Laws.
4.4 Taxes. Each Seller has 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 Sellers have 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 Sellers 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 Sellers' knowledge,
proposed, asserted, or assessed against the Sellers, nor has any Seller granted
any extension or waiver of any limitation period applicable to any tax claims
relating to the Business which has not been closed.
4.5 Title. The Sellers have and will transfer to the Buyer at the
Closing good (legal and beneficial) title to all of the assets included among
the Purchased Assets, free and clear of any mortgage, security interest, pledge,
lien, claim, encumbrance, sublease, license, or other adverse or intervening
interest. Except for the Assumed Leases and as identified on Schedule 1.1(a),
none of the Purchased Assets are leased. The Assumed Leases listed on Schedule
1.3(b), in the form provided to Buyer are true, correct and complete, are
currently valid and binding conveyances of leasehold title to the real property
described therein, and are not currently subject to the default (or anything
that would constitute default after passage of time or giving of notice) of any
party thereto. To the knowledge of Sellers, there are no pending or threatened
condemnation or other proceedings that could adversely affect the current use,
occupancy, or value of the Assumed Leases or the leased premises subject
thereto. The real property subject to the Assumed Leases is in good condition,
free from material defects, and comprises all of the real property used by
Seller in the operation of its business in the Territory. The Sellers' occupancy
and operation of the Business in each leased premises is in compliance with law
except where such non-compliance would not have any material adverse effect on
the Business .
4.6 Property, Equipment and Operations.
(a) The Purchased Assets are all of the assets used in the
operation of the Business as operated prior to the Closing.
(b) The Sellers have not 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 Sellers'
knowledge, no part thereof has ever been used by any Seller as a permanent
storage or disposal site for any such hazardous substances, medical wastes, or
petroleum substances.
4.7 Insurance. The Sellers have 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 Sellers 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. No representation or warranty made by the Sellers 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 Sellers 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, 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, each 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 are complete and correct. True and correct copies of all such reports for
the three most recent fiscal years of each Seller have been furnished to the
Buyer. 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 any Seller's participation
in any Program related to the Business, or any pending disallowances by any
commission, board or agency in connection with any 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 each 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
Sellers 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) No Seller has 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 Sellers 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, none of the Sellers are 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 Sellers'
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 the Seller does not in any material manner violate
any statute, ordinance, regulation, order, writ, injunction or decree of any
court or governmental agencies. The 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 and including the
litigation with the Provider Reimbursement Review Board, there are no actions,
suits or proceedings, pending, or, to the best of the Sellers' 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, no Seller is the subject of any order or decree
relating to or affecting the Business or the Purchased Assets other than those
of general application. Seller agrees retain all right and liabilities to the
pending litigation with the Provider Reimbursement Review Board for past
disallowances and will pay for the cost of said litigation; Buyer agrees that
any payment obtained from the Review Board for disallowances prior to closing
will belong to the Seller.
4.14 Labor. There is no collective bargaining or other union contract
relating to the Business to which any Seller is a party. To the Sellers'
knowledge, after due inquiry, there is not pending or threatened against any
Seller any grievance, labor dispute, organizational activity, union trouble,
strike or work stoppage which materially affects or which may materially disrupt
the Business. Each 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. Each 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. Except as disclosed on Schedule 4.15, there
are no written or oral contracts for employment of any personnel of the
Business, other than at-will employment relationships.
4.16 Employee Benefit and Retirement Plans. Except as disclosed on
Schedule 4.16, no Seller maintains 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, no Seller maintains any retirement plans, bonus arrangements,
life insurance or medical insurance programs or any other fringe benefit
arrangements for any employees whether written or unwritten.
4.17 Employees and Independent Contractors. The Sellers have 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 Sellers' 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
Sellers are in full 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.
4.19 Adverse Actions. Except as described on Schedule 4.13 and Schedule
4.19, the Sellers have 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 Sellers and consummation by
the Sellers of the transactions contemplated hereby.
4.21 Commissions. Except as described on Schedule 4.21, the Sellers
have 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. The Sellers have delivered to the Buyer
financial statements for periods ended June 30, 2006 (the "Financial
Statements"). The Financial Statements fairly present the financial condition
and the results of operations, changes in shareholders' equity and cash flows of
the Sellers as of the respective dates of and for the periods referred to in
such Financial Statements, all in accordance with generally accepted accounting
principles for financial reporting in the United States ("GAAP"). The Financial
Statements reflect the consistent application of such accounting principles
throughout the periods involved. The Financial Statements have been prepared in
accordance with the accounting records of the Sellers. There are no (i)
liabilities (whether known, unknown, contingent or otherwise) of the Sellers
other than liabilities reflected on the Financial Statements, and (ii)
liabilities incurred since June 30, 2006 in the ordinary course of business
without violation of this Agreement.
4.23 Internal Control. The Sellers have implemented and maintain a
system of internal control over the financial reporting sufficient to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
GAAP, including, without limitation, that (i) transactions are executed in
accordance with management's general or specific authorizations and records are
maintained in reasonable detail to accurately and fairly reflect the
transactions and dispositions of the Setters' assets, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted, and receipts and expenditures are being made, only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences, and steps are otherwise taken with respect to the prevention or
timely detection of unauthorized acquisition, use or disposition of the Sellers'
assets.
Article 5 - Representations and Warranties of the Buyer
As a material inducement to the Sellers to enter into this Agreement,
the Buyer hereby represents and warrants to the Sellers 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 Buyer in accordance with their respective
terms.
5.2 Organization and Entity Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each affiliate assigned purchase rights under this Agreement by the
Buyer is a limited liability company duly organized, validly existing and in
good standing under the laws the state in which is will operate the Business,
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
Buyer is a party or by which Buyer is bound or subject.
5.4 Commissions. 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.
5.5 Disclosure. No representation or warranty made by the Buyer in 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.
Article 6 - Covenants of the Sellers
6.1 Conduct of Business. From the date of this Agreement until the
Closing Date, each 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 the Buyer. Between the date hereof and the
Closing Date, each 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, each
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, except as to (i) CIT, the Sellers primary
lender, with whom the Buyer hereby acknowledge that the Sellers are already in
default, and (ii) Medicare, with respect to amounts due on Sellers' Medicare
cost report repayment obligations (in each case the Sellers shall obtain payoff
letters within a reasonable time prior to the Closing);
(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 other than in the ordinary course,
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,
except as otherwise contemplated in this Agreement;
(f) impede 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
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 No Sale of Purchased Assets. 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, full
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. The review of any such Business
records shall be conducted subject to the site and business hours limitations
requested by the Seller to the extent reasonably possible and shall designed so
as to minimize any disruption to the Seller's 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' 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 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, the
Assumed Leases 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 Sellers agree 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 Sellers; 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.
6.12 Preparation of Financials. The current management of the Sellers
shall cause the Sellers to prepare such financial information, and to cooperate
with the Buyer in connection with the preparation of consolidated financial
information including the Business, as may be requested by the Buyer.
6.13 Sellers' Post-Closing Insurance Coverage. The Sellers
agree to purchase tail insurance continuing its professional liability
coverage, with dollar limits acceptable to the Buyer, for a two year
period after the Closing Date.
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 Medicare Change of Ownership Filings. The Buyer and the Seller
agree, as soon as reasonably possible after the execution of this Agreement, to
make their Medicare Form 855 change in control filings.
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 (excluding any materiality qualifier in such representations and
warranties).
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, including but not limited to the obtaining of consent and estoppel
certificates from the landlords under each Assumed Lease as set forth herein.
8.3 The Sellers' Certificate. The Sellers must have delivered to Buyer
a certificate stating that (i) the representations, warranties and covenants
made by the Sellers in the Agreement are true in all material respects at and as
of Closing as if made on and as of Closing (excluding for this purpose any
materiality qualifier in such representations and warranties), and (ii) the
Sellers have performed and complied with all of their 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, the Assumed Leases 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, the Assumed Leases and
the Purchased Assets to the Buyer, and the 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.
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 Opinion of Counsel. The Sellers shall have caused there to be
delivered at Closing an opinion of counsel in a form satisfactory to Buyer with
respect to certain matters, including authorization of this Agreement and the
Ancillary Agreements, no conflict with the Sellers' organizational documents and
contracts and other customary matters.
8.8 Audited Financial Statements. The Sellers shall provide the Buyer
with such audited financial statements for the Sellers and/or the Business for
each of the three fiscal years ended June 30, 2006 and unaudited financial
statements for the interim period ended September 30, 2006, as necessary for the
Buyer to satisfy the requirements of Item 9.01 of the Exchange Act Current
Report on Form 8-K.
8.9 Employee Agreements. The entering into by substantially all of the
Sellers' employees listed on Schedule 8.9 of restrictive covenant agreements in
a form satisfactory to the Buyer is a condition both to the Buyer entering into
of this Agreement and the Buyer's obligation to close the transactions
contemplated by this Agreement. For purposes of this paragraph 8.9,
"substantially all" shall mean all but two of the applicable employees.
8.10 Control Agreement. The Sellers and their banks shall have entered
into a control agreement with the Buyer, giving the Buyer the right to control
accounts receivable payments made to the Seller's bank accounts, all in a form
satisfactory to the Buyer.
8.11 Indemnification Agreement. The parties enter into an
Indemnification Agreement, in the form attached as Attachment B.
8.12 Other Transactions. The closing of the transactions
contemplated in the Asset Purchase Agreement dated as of the date hereof of
among certain Buyers and Health Management Consultants, Inc., United
Home Health Services, Inc. d/b/a Mederi of Illinois, United Home Health Services
of Cook County, Inc. d/b/a Mederi of Cook County, and United Home Health Service
of St. Louis, Inc. d/b/a Mederi.
Article 9 - Conditions Precedent to the Sellers' Obligations
The Sellers' 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.
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 the Purchase Price
payable pursuant to paragraph 2.1(a)(i) via wire transfer.
9.8 Medicare Change in Control. The Buyer and the Seller shall
have made their Medicare Form 855 change of ownership filings.
9.9 Opinion of Counsel. The Buyer shall have caused there to be
delivered at Closing an opinion of counsel in a form satisfactory to Seller with
respect to certain matters, including authorization of this Agreement and the
Ancillary Agreements, no conflict with the Buyer's organizational documents and
contracts and other customary matters.
Article 10 - Termination of Agreement
10.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated or abandoned at any time before the Closing Date: (a)
by mutual consent of the Seller and the Buyer; (b) 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; (c) 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; or (d) by the Seller or the Buyer if the Closing has not occurred prior
to December 15, 2006.
Article 11 - Survival of Representations and Warranties
11.1 Survival of Representations and Warranties. All of the
representations, and warranties made by the Sellers and the Buyer under this
Agreement will survive the Closing of the transactions contemplated by this
Agreement for a period of 36 months after the Closing Date, except that the
representation and warranty with respect to (i) taxes in paragraphs 4.4 and
4.16, (ii) healthcare matters in paragraph 4.10 shall survive after the Closing
Date for the greater of 36 months or the applicable statute of limitations, and
(iii) title in paragraph 4.5 shall survive after the Closing Date without any
time limitation.
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 attachments (each of which is incorporated into this Agreement
in its entirety through this reference), schedules and recitals 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. The Selling Parties shall be responsible for any
filing fees or stamp tax associated with the Purchase Note.
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 any Selling Party:
c/o Mr. David Nesslein
3948 Little Ave.
Coconut Grove, Florida 33131
With a copy to:
John B. Gallagher, Esq.
2128 NE 63rd Street
Fort Lauderdale, Florida 33308
(ii) If to the Buyer:
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.
12.11 Confidentiality and Announcements. Except as and to the extent
required by Law, without the prior written consent of the other party, neither
Buyer nor the Selling Parties shall, and each will direct its respective
representatives not to make, directly or indirectly, any public comment,
statement or communication with respect to, or otherwise disclose or to permit
the disclosure of, the terms of the transaction contemplated by this Agreement.
If any party, in the opinion of outside legal counsel to such party, is required
by Law or the rules of any exchange or the listing rules of the Nasdaq Capital
Market or any other applicable market, to make any such disclosure, such party
must first provide the other party the content of the proposed disclosure, the
reasons that such disclosure is required by Law and the time and place that the
disclosure will be made. The parties agree to consult with each other to prepare
a mutually acceptable press release to be issued immediately following the
Closing.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ALMOST FAMILY, INC.
CARETENDERS VISITING SERVICES OF OCALA, LLC
CARETENDERS VISITING SERVICES OF SOUTHWEST
FLORIDA, INC.
CARETENDERS VISITING SERVICES OF ORLANDO, LLC
CARETENDERS VISITING SERVICES OF DISTRICT 7, LLC
PRO-CARE HOME HEALTH OF BROWARD, INC.
CARETENDERS VISITING SERVICES OF SOUTHEAST
FLORIDA, INC.
CARETENDERS VISITING SERVICES OF HERNANDO
COUNTY, LLC
CARETENDERS VISITING SERVICES OF DISTRICT 6, LLC
CARETENDERS VISITING SERVICES OF PINELLAS
COUNTY, LLC
CARETENDERS VISITING SERVICES OF COOK
COUNTY, LLC
CARETENDERS VISITING SERVICES OF SOUTHERN
ILLINOIS, LLC
CARETENDERS VISITING SERVICES OF ST. LOUIS, LLC
NATIONAL HEALTH INDUSTRIES, INC.
By /s/ William B. Yarmuth
----------------------------------------
William B. Yarmuth, Chief Executive Officer
MEDERI, INC.
By: /s/ David Nesslein
----------------------------------------
David Nesslein
Title: Secretary/Treasurer
-------------------------------------
MEDERI OF COLLIER COUNTY, INC.
By: /s/ David Nesslein
-------------------------------------------
David Nesslein
Title: Secretary/Treasurer
---------------------------------------
MEDERI OF MANATEE COUNTY, INC.
By: /s/ David Nesslein
-------------------------------------------
David Nesslein
Title: Secretary/Treasurer
---------------------------------------
MEDERI OF PINELLAS COUNTY, INC.
By: /s/ David Nesslein
-------------------------------------------
David Nesslein
Title: Secretary/Treasurer
---------------------------------------
MEDERI OF ALACHUA COUNTY, INC.
By: /s/ David Nesslein
------------------------------------------
David Nesslein
Title: Secretary/Treasurer
----------------------------------------
MEDERI OF PALM BEACH COUNTY, INC.
By: /s/ David Nesslein
------------------------------------------
David Nesslein
Title: Secretary/Treasurer
---------------------------------------
MEDERI OF ORANGE COUNTY, INC.
By: /s/ David Nesslein
-------------------------------------------
David Nesslein
Title: Secretary/Treasurer
----------------------------------------
UNITED HOME HEALTH SERVICES, INC.
d/b/a MEDERI OF ILLINOIS
By: /s/ David Nesslein
------------------------------------------
David Nesslein
Title: Secretary/Treasurer
--------------------------------------
/s/ David Nesslein
---------------------------------------------
David Nesslein
/s/ Sandra Vazques
---------------------------------------------
Sandra Vazquez
LIST OF ATTACHMENTS AND SCHEDULES
TO
MEDERI/ALMOST FAMILY
ASSET PURCHASE AGREEMENT
Attachment A Noncompetition Agreement
Attachment B Indemnification Agreement
Attachment C Additional Transition Matters
Schedule 1.1(a) Purchased Assets
Schedule 1.1(b) Excluded Assets
Schedule 1.3(a) Assumed Contracts
Schedule 1.3(b) Assumed Leases
Schedule 1.7 Miami Home Office Employees - Terms of
Transitional Employment
Schedule 2.1(a)(iv) Contingent Consideration
Schedule 2.2 Allocation of Purchase Price
Schedule 4.1 Authority
Schedule 4.2 Licenses, Permits and Payment Programs
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 4.15 Employment Contracts
Schedule 4.16 ERISA Matters
Schedule 4.18 Worker's Compensation Compliance
Schedule 4.19 Adverse Actions
Schedule 4.20 Consents
Schedule 4.21 Commissions
Schedule 8.9 List of Employees
ATTACHMENT A
to
MEDERI/ALMOST FAMILY
ASSET PURCHASE AGREEMENT
CONFIDENTIALITY, NONSOLICITATION AND
NONCOMPETITION AGREEMENT
This is a Confidentiality, Nonsolicitation and Noncompetition Agreement
dated as of December 3, 2006, among (i) Almost Family, Inc. and Caretenders
Visitings Services of Ocala, LLC, a Florida limited liability company,
Caretenders Visiting Services of Southwest Florida, Inc., a Florida corporation,
Caretenders Visiting Services of Orlando, LLC, a Florida limited liability
company, Caretenders Visiting Services of District 7, LLC, a Florida limited
liability company, Pro-Care Home Health of Broward, Inc., a Florida
corporation, Caretenders Visiting Services of Southeast Florida, Inc., a Florida
corporation, Caretenders Visiting Services of Hernando County, LLC, a Florida
limited liability company, Cartenders Visiting Services of District 6, LLC, a
Florida limited liability company, Caretenders Visiting Services of Pinellas
County, LLC, a Florida limited liability company, Caretenders Visiting Services
of Cook County, LLC, an Illinois limited liability company, Caretenders Visiting
Services of Southern Illinois, LLC, an Illinois limited liability company,
Caretenders Visiting Services of St. Louis, LLC, a Missouri limited liability
company, National Health Industries, Inc., a Kentucky corporation
(collectively, the "Buyer") (collectively, the "Protected Parties"), and (ii)
Mederi, Inc., Health Management Consultants, Inc., Mederi of Collier County,
Inc., Mederi of Manatee County, Inc., Mederi of Pinellas County, Inc., Mederi of
Alachua County, Inc., Mederi of Palm Beach County, Inc., Mederi of Orange
County, Inc., Mederi of Brevard County, Inc., United Home Health Service of St.
Louis, United Home Health Services, Inc. d/b/a Mederi of Illinois, United Home
Health Services of Cook County, Inc. d/b/a Mederi of Cook County and (iv) David
Nesslein and Sandra Vazquez (each a "Selling Party" and collectively, the
"Selling Parties").
Recitals
A. Pursuant to Asset Purchase Agreements dated as of November 15, 2006
(the "Purchase Agreements") among (i) Almost Family, Inc., a Delaware
corporation, Caretenders Visiting Services of Ocala, LLC, a Florida limited
liability company, Caretenders Visiting Services of Southwest Florida, Inc., a
Florida corporation, Caretenders Visiting Services of Orlando, LLC, a Florida
limited liability company, Caretenders Visiting Services of District 7, LLC, a
Florida limited liability company, Pro-Care Home Health of Broward, Inc., a
Florida corporation, Caretenders Visiting Services of Southeast Florida, Inc., a
Florida corporation, Caretenders Visiting Services of Hernando County, LLC, a
Florida limited liability company, Caretenders Visiting Services of District 6,
LLC, a Florida limited liability company, Caretenders Visiting Services of
Pinellas County, LLC, a Florida limited liability company, Caretenders Visiting
Services of Cook County, LLC, an Illinois limited liability company, and
National Health Industries, Inc., a Kentucky corporation, Mederi, Inc., a
Florida corporation, Mederi of Collier County, Inc., a Florida corporation,
Mederi of Manatee County, Inc., a Florida corporation, Mederi of Pinellas
County, Inc., a Florida corporation, Mederi of Alachua County, Inc., a Florida
corporation, Mederi of Palm Beach County, Inc., a Florida corporation, Mederi of
Orange County, Inc., a Florida corporation d/b/a Mederi of Brevard County, Inc.,
and United Home Health Services, Inc. d/b/a Mederi of Illinois, an Illinois
corporation, David Nesslein and Sandra Vazquez (the "First APA") and (ii) Almost
Family, Inc., a Delaware corporation, Caretenders Visiting Services of Cook
County, LLC, an Illinois limited liability company, Caretenders Visiting
Services of Southern Illinois, LLC, an Illinois limited liability company,
Caretenders Visiting Services of St. Louis, LLC, a Missouri limited liability
company, and National Health Industries, Inc., a Kentucky corporation, Health
Management Consultants, Inc., a Delaware corporation, United Home Health
Services of Cook County, Inc. d/b/a Mederi of Cook County, an Illinois
corporation, and United Home Health Service of St. Louis, Inc. d/b/a Mederi, a
Missouri corporation, David Nesslein and Sandra Vazquez (the "Second APA"), the
Protected Parties are purchasing certain assets used in the operation of a home
health agencies in Florida, Illinois and Missouri (the "Territory"). The
agreement by the Selling Parties to the terms of this Agreement was material to
the decision of the Buyer to enter into the transactions described in the
Purchase Agreements. Capitalized terms not otherwise defined in this Agreement
shall have the meanings given to them in the Purchase Agreements.
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 the Protected Parties 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.
C. For purposes of this Agreement, "Restriction Period" mean the period
commencing on the date of this Agreement, and terminating on the fifth
anniversary date of this Agreement.
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
1. Confidential Information.
(a) Each Selling Party agrees that it shall (i) maintain the
strict confidence of, undertake all necessary steps to avoid divulging or
disclosing, and preserve and protect the Proprietary Information, trade secrets,
customer lists, business records, and financial records of the Business
(collectively, the "Trade Secrets") from disclosure to, or access or use by, any
person or entity, including any competitor or potential competitor of the
Business, and (ii) not use the Trade Secrets to compete, directly or indirectly,
with the Business, nor attempt to otherwise take commercial advantage of the
Trade Secrets. Each Selling Party acknowledges that the Trade Secrets constitute
valuable, special and unique property of the Business being acquired by the
Protected Parties.
(b) Each Selling Party represents and warrants to the
Protected Parties that it has returned and delivered to the Protected Parties
any and all papers, books, records, documents, memoranda and manuals, including
all copies thereof, whether hard or digital copies, belonging or relating to the
Business, or containing any Proprietary Information or Trade Secrets.
(c) Each Selling Party agrees that, if at any time after the
date of this Agreement, the Selling Party determines that it has any Proprietary
Information or Trade Secrets in its possession or control, the Selling Party
shall immediately return all such Proprietary Information or Trade Secrets to
the Protected Parties, including all copies or portions thereof.
2. Employee Solicitation. Each Selling Party agrees that it shall not,
during the Restriction Period, directly or indirectly, induce, encourage or
solicit any employee of the Business to leave the employ of the Protected
Parties or become employed by the Selling Parties, or, directly or indirectly,
hire any former employees of the Business, except with the prior written consent
of the Protected Parties.
3. Noncompetition Covenant.
(a) Each Selling Party agrees that it shall not, during the
Restriction Period, directly or indirectly, individually, or through any person,
partnership, joint venture, corporation or other entity in which any Selling
Party has any interest, including, without limitation, as a shareholder, owner,
member, partner, investor, director, officer, employee or consultant, or
otherwise, (i) engage in the home health business in the States of Florida,
Illinois or Missouri, or (ii) solicit the past, present or future patients or
referral sources of the Business.
(b) All of the restrictive covenants in this Agreement shall
be construed as an agreement independent of any provision of the Purchase
Agreement, and the existence of any claim or cause of action of a Selling Party
against a Protected Party shall not constitute a defense to the enforcement by
the Protected Party of such restrictive covenants. It is specifically agreed
that the periods during which the covenants of the Selling Parties shall be
effective shall be computed by excluding from such computation any time during
which the Selling Parties are in violation of any provision of this Agreement.
4. Consideration. The Selling Parties acknowledge that the
consideration for the covenants in this Agreement is the Purchase Price
consideration paid at the Closing and $200,000.00 payable at Closing to each of
David Nesslein and Sandra Vazquez.
5. Cooperation. Each Selling Party agrees to cooperate in connection
with the Protected Parties with respect to maintaining the goodwill and
reputation of the Business.
6. Specific Enforcement. In the event of a breach of the Selling
Parties' covenants in this Agreement, it is agreed that damages will be
difficult to ascertain and the Protected Parties may petition a court of law or
equity for, and be granted, injunctive relief in addition to any other relief
which the Protected Parties may have under the law, including reasonable
attorney's fees.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky, 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.
8. 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.
9. Construction. The parties agree that the restrictions set forth
herein are reasonable and necessary to preserve the business of the Protected
Parties and that the maximum protection available under the law shall be
provided to the Protected Parties by this Agreement to protect the Protected
Parties' 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.
10. 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.
11. 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.
12. 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.
13. 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ALMOST FAMILY, INC. CARETENDERS
VISITING SERVICES OF OCALA, LLC
CARETENDERS VISITING SERVICES OF
SOUTHWEST FLORIDA, INC. CARETENDERS
VISITING SERVICES OF ORLANDO, LLC
CARETENDERS VISITING SERVICES OF
DISTRICT 7, LLC PRO-CARE HOME HEALTH
OF BROWARD, INC. CARETENDERS
VISITING SERVICES OF SOUTHEAST
FLORIDA, INC. CARETENDERS VISITING
SERVICES OF HERNANDO COUNTY, LLC
CARTENDERS VISITING SERVICES OF
DISTRICT 6, LLC CARETENDERS VISITING
SERVICES OF PINELLAS COUNTY, LLC
CARETENDERS VISITING SERVICES OF
COOK COUNTY, LLC CARETENDERS
VISITING SERVICES OF SOUTHERN
ILLINOIS, LLC CARETENDERS VISITING
SERVICES OF ST. LOUIS, LLC NATIONAL
HEALTH INDUSTRIES, INC.
By /s/ William B. Yarmuth
-------------------------------------
William B.Yarmuth, Chief Executive Officer
MEDERI, INC.
HEALTH MANAGEMENT CONSULTANTS, INC.
MEDERI OF COLLIER COUNTY, INC.
MEDERI OF MANATEE COUNTY, INC.
MEDERI OF PINELLAS COUNTY, INC.
MEDERI OF ALACHUA COUNTY, INC.
MEDERI OF PALM BEACH COUNTY, INC.
MEDERI OF ORANGE COUNTY, INC.
MEDERI OF BREVARD COUNTY, INC.
UNITED HOME HEALTH SERVICES, INC.
d/b/a MEDERI OF ILLINOIS
UNITED HOME HEALTH SERVICES OF COOK
COUNTY, INC. d/b/a MEDERI
UNITED HOME HEALTH SERVICE OF
ST. LOUIS, INC.
By: /s/ David Nesslein
--------------------------------------
David Nesslein, President
/s/ David Nesslein
---------------------------------------------
David Nesslein
/s/ Sandra Vazquez
---------------------------------------------
Sandra Vazquez
ATTACHMENT B
To
MEDERI/ALMOST FAMILY
ASSET PURCHASE AGREEMENT
INDEMNIFICATION AGREEMENT
This is an Indemnification Agreement dated as of December 3, 2006
(the "Agreement"), among (i) Almost Family, Inc., a Delaware corporation,
Caretenders Visiting Services of Ocala, LLC, a Florida limited liability
company, Caretenders Visiting Services of Southwest Florida, Inc., a Florida
corporation, Caretenders Visiting Services of Orlando, LLC, a Florida limited
liability company, Caretenders Visiting Services of District 7, LLC, a Florida
limited liability company, Pro-Care Home Health of Broward, Inc., a Florida
corporation, Caretenders Visiting Services of Southeast Florida, Inc., a Florida
corporation, Caretenders Visiting Services of Hernando County, LLC, a Florida
limited liability company, Cartenders Visiting Services of District 6, LLC, a
Florida limited liability company, Caretenders Visiting Services of Pinellas
County, LLC, a Florida limited liability company, Caretenders Visiting Services
of Cook County, LLC, an Illinois limited liability company, Caretenders
Visiting Services of Southern Illinois, LLC, an Illinois limited liability
company, Caretenders Visiting Services of St. Louis, LLC, a Missouri limited
liability company, National Health Industries, Inc., a Kentucky corporation
(collectively, the "Buyer"), (ii) Mederi, Inc., a Florida corporation, Health
Management Consultants, Inc., a Delaware corporation, Mederi of Collier County,
Inc., a Florida corporation, Mederi of Manatee County, Inc., a Florida
corporation, Mederi of Pinellas County, Inc., a Florida corporation, Mederi of
Alachua County, Inc., a Florida corporation, Mederi of Palm Beach County, Inc.,
a Florida corporation, Mederi of Orange County, Inc., a Florida corporation
d/b/a Mederi of Brevard County, Inc., United Home Health Services, Inc. d/b/a
Mederi of Illinois, an Illinois corporation, United Home Health Services of Cook
County, Inc. d/b/a Mederi of Cook County, an Illinois corporation, and United
Home Health Service of St. Louis, Inc. d/b/a Mederi, a Missouri corporation
(each a "Seller" and collectively, the "Sellers"), and (iii) David Nesslein and
Sandra Vazquez (each a "Shareholder" and collectively, the "Shareholders").
The Seller and the Shareholders shall be referred to collectively as the
"Selling Parties").
Recitals
A. The Sellers own and operate home health agencies located in the
States of Florida, Illinois and Missouri (the "Territory"), including
Medicare-Certified, Medicaid/Waiver, county contracts, HMO and other significant
non-certified or "private duty" operations (collectively, the "Business").
B. The Sellers desire to sell and the Buyer desires to purchase, the
assets used by Sellers in the operation of the Business, pursuant to the terms
of (i) the Asset Purchase Agreement dated as of November 15, 2006 among Almost
Family, Inc., a Delaware corporation, Caretenders Visiting Services of Ocala,
LLC, a Florida limited liability company, Caretenders Visiting Services of
Southwest Florida, Inc., a Florida corporation, Caretenders Visiting Services of
Orlando, LLC, a Florida limited liability company, Caretenders Visiting Services
of District 7, LLC, a Florida limited liability company, Pro-Care Home Health of
Broward, Inc., a Florida corporation, Caretenders Visiting Services of Southeast
Florida, Inc., a Florida corporation, Caretenders Visiting Services of Hernando
County, LLC, a Florida limited liability company, Caretenders Visiting Services
of District 6, LLC, a Florida limited liability company, Caretenders Visiting
Services of Pinellas County, LLC, a Florida limited liability company,
Caretenders Visiting Services of Cook County, LLC, an Illinois limited liability
company, and National Health Industries, Inc., a Kentucky corporation, Mederi,
Inc., a Florida corporation, Mederi of Collier County, Inc., a Florida
corporation, Mederi of Manatee County, Inc., a Florida corporation, Mederi of
Pinellas County, Inc., a Florida corporation, Mederi of Alachua County, Inc., a
Florida corporation, Mederi of Palm Beach County, Inc., a Florida corporation,
Mederi of Orange County, Inc., a Florida corporation d/b/a Mederi of Brevard
County, Inc., and United Home Health Services, Inc. d/b/a Mederi of Illinois, an
Illinois corporation, David Nesslein and Sandra Vazquez (the "First APA") and
(ii) the Asset Purchase Agreement dated as of November 15, 2006 among Almost
Family, Inc., a Delaware corporation, Caretenders Visiting Services of Cook
County, LLC, an Illinois limited liability company, Caretenders Visiting
Services of Southern Illinois, LLC, an Illinois limited liability company,
Caretenders Visiting Services of St. Louis, LLC, a Missouri limited liability
company, and National Health Industries, Inc., a Kentucky corporation, Health
Management Consultants, Inc., a Delaware corporation, United Home Health
Services of Cook County, Inc. d/b/a Mederi of Cook County, an Illinois
corporation, and United Home Health Service of St. Louis, Inc. d/b/a Mederi, a
Missouri corporation, David Nesslein and Sandra Vazquez (the "Second APA"). The
First APA and the Second APA shall be referred to collectively as the "Purchase
Agreements").
C. Terms not defined in this Agreement shall have the meanings assigned
to them in the Purchase Agreements.
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
Article 1 - Indemnification
1.1 Indemnification of the Buyer Indemnified Parties
(a) General. The Selling Parties, jointly and severally, agree
to indemnify, defend and hold the Buyer and any affiliated entity assigned
purchase rights under this Agreement, 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 Sellers' representations,
warranties or covenants in the Purchase Agreement, or from any misrepresentation
in, or omission by the Sellers under the Purchase Agreement;
(ii) any brokerage or similar fee due to any agent of
any Selling Party; and
(iii) any liability of the Sellers or liability with
respect to which the Purchased
Assets are subject to, or obligation under the Assumed Contracts or Assumed
Leases (except for any liabilities that result in a Purchase Price adjustment)
accruing prior to the Closing.
(b) Audits, Investigations, Refund Obligations and Other
Pre-Closing Liabilities; Taxes. Subject to the limitations described within this
paragraph 1.1 and its subparts, the Selling Parties, jointly and severally,
agree to indemnify, defend and hold Buyer Indemnified Parties harmless from and
against, and reimburse 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) medical malpractice claims or 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 the Business,
a Buyer Indemnified Party or the Purchased Assets as a result of such an audit
or investigation regarding the operation of the Business before Closing;
(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;
(v) any other personal liability, property damage,
personal injury, cost, claim,
expense or assessment asserted against the Business, 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 and Assumed
Leases;
(vi) any federal, state or local tax liability or
obligation arising with respect
to the Sellers or the operation of the Business prior to the Closing; and
(vii) the Sellers' pending litigation with the
Provider Reimbursement Review Board.
(c) Limitations on Indemnification Obligations.
(i) The Selling Parties' indemnification obligations
shall be limited in the aggregate to the aggregate of the Purchase Price in the
Purchase Agreements and shall survive for a period of 36 months after the
Closing Date, except for claims brought prior to such date, and except that the
Selling Parties' indemnification obligation with respect to a breach of
paragraphs 4.4 and 4.16 (taxes) of the Purchase Agreements and paragraph 4.10
(healthcare) of the Purchase Agreements shall survive for the greater of 36
months or the statute of limitations applicable to such claims, and the Selling
parties' indemnification obligation with respect to a breach of paragraph 4.5
(title) of the Purchase Agreements shall survive the Closing Date without any
time limitation.
(ii) The Selling Parties' indemnification obligations
in paragraph 1.1(b) above shall survive the Closing for the greater of 36
months or the statute of limitations for the making of such claims against the
Seller, except for claims brought by the Buyer prior to such date, and such
indemnification obligation shall not be capped or otherwise limited as to
amount.
(iii) Subject to paragraph 1.1(c)(i), the Selling
Parties shall not be required to make any indemnification payment with respect
to any breach of the Selling Parties' representations and warranties in
paragraph 1.1(a)(i) until such time as the total amount of all damages have
been directly or indirectly suffered or incurred by any one or more of the Buyer
Indemnified Parties, or to which any one or more of the Buyer Indemnified
Parties has or have otherwise become subject, exceeds one hundred thousand
dollars ($100,000.00). If the total amount of such damages exceeds $100,000.00,
the Buyer Indemnified Parties shall be entitled to be indemnified against and
compensated and reimbursed for the amount of such damages, exceeding
$100,000.00. However, this paragraph 1.1(c)(iii) will not apply to any breach of
any of the Selling Parties' representations and warranties of which any Selling
Party had knowledge at any time prior to the date on which such representation
and warranty is made or any intentional breach by any Selling Party of any
covenant or obligation, and the Selling Parties will be jointly and severally
liable for all damages with respect to such breaches.
(iv) The right to indemnification based on the
representations and warranties will not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after execution and delivery of this
Agreement or the Closing Date, with respect to the accuracy or inaccuracy of
such representation and warranty, except that the Buyer will be charged with
knowledge of any information disclosed on the Financial Statements or in the
schedules delivered upon execution of the Purchase Agreements.
1.2 Indemnification of the Seller Indemnified Parties. The Buyer and
Almost Family, jointly and severally, agree to indemnify, defend and hold the
Selling Parties 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 or Assumed Leases in each case accruing after the Closing; and (v)
Buyer's operation of the Business after the Closing. The indemnification
obligations of the Seller Indemnified Parties shall be limited to the Purchase
Price and shall survive for a 36 month period after Closing, except for claims
brought prior to such date.
1.3 Procedure for Indemnification. The following procedure shall apply
with respect to any claims or proceedings covered by the indemnification
obligations in this Article 1.
(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 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 10 business day time period set forth above, the Claimant shall have
no obligation to mitigate Claimant's damages under this paragraph 1.3(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.
1.4 Right of Setoff.
(a) Upon notice to the Sellers specifying in reasonable detail
the basis therefor, the Buyer may set off any amount to which it may be entitled
under this Article 1 against amounts otherwise payable under the Purchase Note
and against the shares of Almost Family, Inc. stock pledged pursuant to the
Pledge Agreement between the Sellers and the Buyer, a copy of which is attached
as Attachment A (the "Pledge Agreement"). The exercise of such right of setoff
by the Buyer in good faith, whether or not ultimately determined to be
justified, will not constitute an event of default under the Purchase Note.
Health Management Consultants, Inc., Almost Family, Inc. and John B. Gallagher,
Esq. shall enter into an Escrow Agreement at the Closing, a copy of which is
attached as Attachment B (the "Escrow Agreement").
(b) Neither the exercise of nor the failure to exercise such
right of setoff will constitute an election of remedies or limit the Buyer in
any manner in the enforcement of any other remedies that may be available to it.
(c) In the event a set off is appropriate, the Buyer shall set
off against accrued and payable amounts of Contingent Consideration, the
Purchase Note and the AFAM Shares in order of priority based on the amounts next
payable to the Sellers.
Article 2 - Other Provisions
2.1 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.
2.2 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 attachments (each of which is incorporated into this Agreement
in its entirety through this reference), the Purchase Agreements and recitals
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.
2.3 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.
2.4 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.
2.5 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 any Selling Party:
c/o Mr. David Nesslein
3948 Little Ave.
Coconut Grove, Florida 33131
With a copy to:
John B. Gallagher, Esq.
2128 NE 63rd Street
Fort Lauderdale, Florida 33308
(ii) If to the Buyer:
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.
2.6 Severability. The provisions of this Agreement are severable,
and the invalidity of any provision will not affect the validity of any other
provision.
2.7 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.
2.8 Gender. All pronouns used herein will include both the masculine
and feminine gender as the context requires.
2.9 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.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ALMOST FAMILY, INC. CARETENDERS
VISITING SERVICES OF OCALA, LLC
CARETENDERS VISITING SERVICES OF
SOUTHWEST FLORIDA, INC. CARETENDERS
VISITING SERVICES OF ORLANDO, LLC
CARETENDERS VISITING SERVICES OF
DISTRICT 7, LLC PRO-CARE HOME HEALTH
OF BROWARD, INC. CARETENDERS
VISITING SERVICES OF SOUTHEAST
FLORIDA, INC. CARETENDERS VISITING
SERVICES OF HERNANDO COUNTY, LLC
CARTENDERS VISITING SERVICES OF
DISTRICT 6, LLC CARETENDERS VISITING
SERVICES OF PINELLAS COUNTY, LLC
CARETENDERS VISITING SERVICES OF
COOK COUNTY, LLC CARETENDERS
VISITING SERVICES OF SOUTHERN
ILLINOIS, LLC CARETENDERS VISITING
SERVICES OF ST. LOUIS, LLC NATIONAL
HEALTH INDUSTRIES, INC.
By /s/ William B. Yarmuth
-------------------------------------
William B. Yarmuth, Chief Executive Officer
MEDERI, INC.
HEALTH MANAGEMENT CONSULTANTS, INC.
MEDERI OF COLLIER COUNTY, INC.
MEDERI OF MANATEE COUNTY, INC.
MEDERI OF PINELLAS COUNTY, INC.
MEDERI OF ALACHUA COUNTY, INC.
MEDERI OF PALM BEACH COUNTY, INC.
MEDERI OF ORANGE COUNTY, INC.
UNITED HOME HEALTH SERVICES, INC.
d/b/a MEDERI OF ILLINOIS
UNITED HOME HEALTH SERVICES OF COOK
COUNTY, INC. d/b/a MEDERI
UNITED HOME HEALTH SERVICE OF
ST. LOUIS, INC.
By /s/ David Nesslein
------------------------------------
David Nesslein, President
/s/ David Nesslein
---------------------------------------------
David Nesslein
/s/ Sandra Vazquez
---------------------------------------------
Sandra Vazquez
LIST OF ATTACHMENTS AND SCHEDULES
TO
MEDERI/ALMOST FAMILY
INDEMNIFICATION AGREEMENT
Attachment A Pledge Agreement
Attachment B Escrow Agreement
ATTACHMENT A
to
MEDERI/ALMOST FAMILY
INDEMNIFICATION AGREEMENT
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement is entered into and made effective as of
this 3rd day of December, 2006, between (i) Almost Family, Inc. ("Secured Party"
or "AFAM"), a Delaware corporation; and (ii) Health Management Consultants, Inc.
(the "Pledgor"), a Delaware corporation The Secured Party and the Pledgor may
hereinafter be referred to individually as a "Party" and collectively, as the
"Parties."
Recitals
The Pledgor desires to enter into this Agreement in order to secure the
payment and performance of the Selling Parties indemnification obligations that
are set forth in an Indemnification Agreement (the "Indemnification Agreement")
dated as of December 3, 2006, among (i) Almost Family, Inc., a Delaware
corporation, Caretenders Visiting Services of Ocala, LLC, a Florida limited
liability company, Caretenders Visiting Services of Southwest Florida, Inc., a
Florida corporation, Caretenders Visiting Services of Orlando, LLC, a Florida
limited liability company, Caretenders Visiting Services of District 7, LLC, a
Florida limited liability company, Pro-Care Home Health of Broward, Inc., a
Florida corporation, Caretenders Visiting Services of Southeast Florida, Inc., a
Florida corporation, Caretenders Visiting Services of Hernando County, LLC, a
Florida limited liability company, Cartenders Visiting Services of District 6,
LLC, a Florida limited liability company, Caretenders Visiting Services of
Pinellas County, LLC, a Florida limited liability company, Caretenders Visiting
Services of Cook County, LLC, an Illinois limited liability company, Caretenders
Visiting Services of Southern Illinois, LLC, an Illinois limited liability
company, Caretenders Visiting Services of St. Louis, LLC, a Missouri limited
liability company, National Health Industries, Inc., a Kentucky corporation, and
(ii) Mederi, Inc., a Florida corporation, Health Management Consultants, Inc.,
a Delaware corporation, Mederi of Collier County, Inc., a Florida corporation,
Mederi of Manatee County, Inc., a Florida corporation, Mederi of Pinellas
County, Inc., a Florida corporation, Mederi of Alachua County, Inc., a Florida
corporation, Mederi of Palm Beach County, Inc., a Florida corporation, Mederi of
Orange County, Inc., a Florida corporation d/b/a Mederi of Brevard County, Inc.,
United Home Health Services, Inc. d/b/a Mederi of Illinois, an Illinois
corporation, United Home Health Services of Cook County, Inc. d/b/a Mederi of
Cook County, an Illinois corporation, and United Home Health Service of St.
Louis, Inc. d/b/a Mederi, a Missouri corporation, David Nesslein and Sandra
Vazquez (collectively, the "Selling Parties").
THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:
1. Grant of Security Interest.
(a) As security for the faithful performance of the terms of
this Agreement and to ensure the availability for delivery of the Pledged Shares
(as defined below) upon exercise of the right to possession of the Pledged
Shares upon an Event of Default as herein defined, Pledgor agrees to deliver to
and deposit with John B. Gallagher, Esq., attorney for the Selling Parties, as
escrow agent in this transaction ("Escrow Agent"), a stock assignment duly
endorsed (with date and number of Shares left blank) in the form attached hereto
as Attachment A, together with the certificate or certificates evidencing the
Pledged Shares. Said documents are to be held by the Escrow Agent and delivered
by the Escrow Agent only as directed and agreed in the Escrow Agreement attached
hereto as Attachment B and which is hereby incorporated into this Agreement by
reference (the "Escrow Agreement").
(b) The Pledgor hereby grants to the Secured Party a security
interest in all of their right, title and interest in and to 100,000 shares of
the common stock of Almost Family, Inc. (the "Pledged Shares"). The Pledgor
further grants to the Secured Party a security interest in any stock rights,
rights to subscribe, liquidating dividends, dividends paid in stock, new
securities, or any other property to which the Pledgor is or may hereafter
become entitled to receive on account of the Pledged Shares. If the Pledgor
receives additional property of such nature, they shall immediately deliver such
property to the Escrow Agent to be held by the Escrow Agent pursuant to the
terms of this Agreement.
(c) The Pledgor grants a further security interest to the
Secured Party in the proceeds or products of any sale or other disposition of
the Pledged Shares.
2. Obligations Secured. The security interest created hereby secures
payment and performance of the indemnification obligations of the Seller and
Shareholders that are set for forth in the Indemnification Agreement (the
"Secured Obligations").
3. Representations and Warranties. To induce the Secured Party to
enter into this Agreement, the Pledgor represents and warrants as follows:
(a) The Pledgor has full power and authority to enter into
and perform this Agreement and this Agreement has been duly entered into and
delivered and constitutes a legal, valid and binding obligation of the Pledgor
enforceable in accordance with its terms.
(b) The Pledgor has good title to the Pledged Shares, and the
Pledged Shares are not subject to any lien, charge, pledge, encumbrance, claim
or security interest.
(c) The Pledgor has not entered into any stock restriction or
purchase agreement with respect to the Pledged Shares which would in any way
restrict the sale, pledge or other transfer of the Pledged Shares or of any
interest in or to the Pledged Shares.
4. Duration of Security Interest. The Secured Party, and its successors
and assigns, shall hold the security interest created hereby pursuant to the
terms of this Agreement, and this security interest shall continue until
December 3, 2008, unless the Secured Party provides a written notice of Default
prior to that date, whereby the security interest shall continue in only in a
commercially reasonable number of the Pledged Shares as are necessary to satisfy
said noticed Default and the secured interest shall terminate as to the balance
of the Pledged Shares, if any. Notwithstanding the preceding sentence, subject
to the terms of the Escrow Agreement, including without limitation, notification
of the Secured Party of the existence of a pending sale transaction, after
December 3, 2007, the Seller may sell Pledged Shares not subject to an
indemnification claim free from the pledge established pursuant to this
Agreement.
5. Maintaining Freedom from Liens. The Pledgor shall keep the Pledged
Shares free and clear of liens and shall pay all amounts, including taxes,
assessments or charges, which might result in a lien against the Pledged Shares
if left unpaid, unless the Pledgor at its own expense are contesting such amount
in good faith by an appropriate proceeding timely instituted which shall operate
to prevent the collection or satisfaction of the lien or amount so contested. If
the Pledgor fails to pay such amounts and are not contesting the validity or
amount thereof in accordance with the immediately preceding sentence, the
Secured Party may, but are not obligated to, pay such amounts, and such payment
shall be conclusive evidence of the legality or validity thereof. The Pledgor
shall promptly reimburse the Secured Party for any such payments, and until
reimbursement, such payments shall be a part of the Secured Obligations.
6. Certain Rights Respecting Pledged Shares.
(a) The Pledgor shall continue to be the owners of the
Pledged Shares so long as no Event of Default (as defined below) under the
Secured Obligations or this Agreement has occurred and is continuing and may
collect and retain all distributions now or hereafter payable on or on account
of the Pledged Shares, and, so long as no Event of Default has occurred may
exercise their voting rights with respect to the Pledged Shares.
(b) The Pledgor shall not sell, transfer or encumber, or
attempt to sell, transfer or encumber, the Pledged Shares, or any part thereof
or interest therein, without the prior express written consent of the Secured
Party. Any such consent of theirs shall not constitute the release by the
Secured Party of its interest in the Pledged Interest, and any such sale,
transfer or encumbrance consented to shall be so sold, transferred, or
encumbered subject to the security interest of the Secured Party.
(c) The Secured Party at its option upon the occurrence of
any Event of Default and so long as such Event of Default exists may exercise
all voting rights and privileges whatsoever with respect to the Pledged Shares,
including, without limitation, the right to receive distributions. To that end,
the Pledgor hereby grants the Secured Party a proxy and appoint the Secured
Party as its attorney-in-fact for all purposes of voting the Pledged Shares at
any annual regular or special meeting of the Company and this appointment shall
be deemed coupled with an interest and is and shall be irrevocable until all of
the Secured Obligations have been fully paid and terminated, and all persons
whatsoever shall be conclusively entitled to rely upon oral or written
certification of the Secured Party that it is entitled to vote the Pledged
Shares hereunder. The Pledgor shall execute and deliver to the Secured Party any
additional proxies and powers of attorney that the Secured Party may desire in
its own names. The Secured Party acknowledges that it will not exercise any
rights granted pursuant to this paragraph 6(c) unless an Event of Default has
occurred and only so long as the Event of Default continues to exist.
7. Events of Default. At the option of the Secured Party, the
happening of any of the following events shall constitute a default under this
Agreement (each an "Event of Default"):
(a) Failure of the Pledgor to pay any indemnity due the
Secured Party pursuant to the Indemnification Agreement, which failure has not
been fully corrected within thirty (30) days from the date of written notice
given to the Pledgor of such failure; or
(b) The creation of any lien in the Pledged Shares, without
the prior written consent of the Secured Party; or
(c) The sale or transfer of the Pledged Shares, or any part thereof or interest
therein, without the prior written consent of the Secured Party.
8. Remedies.
(a) Upon the occurrence of any Event of Default, the Secured
Party may at its option declare that part of the Pledged Shares, as is necessary
to remedy the Default, to be immediately due and payable, and, in addition to
exercising all other rights or remedies, proceed to exercise with respect to the
Pledged Shares all rights, options and remedies of a secured party upon default
as provided for under the Uniform Commercial Code as then adopted in the State
of Florida.
(b) The rights of the Secured Party upon the occurrence of an
Event of Default shall include, without limitation, the following:
(i) The right to request possession of Pledged Shares
not then in the possession of the Secured Party, from the Escrow Agent, by the
provisions set forth in the Escrow Agreement; and
(ii) The right, after it obtains procession of the
Pledged Shares under the Escrow
Agreement, to sell the Pledged Shares at public or private sale in one or more
lots. The Secured Party shall be entitled to apply the proceeds of any such sale
to the satisfaction of the Secured Obligations and to expenses incurred in
realizing upon the Pledged Shares in accordance with the Uniform Commercial
Code; and
(iii) The right to recover the reasonable expenses of
preparing for sale and selling the Pledged Shares and other like expenses,
together with court costs and reasonable attorneys, fees incurred; and
(iv) The right to proceed by appropriate legal
process at law or in equity to
enforce any provision of this Agreement or in aid of the execution of any power
of sale, or for foreclosure of the security interest of the Secured Party, or
for the sale of the Pledged Shares under the judgment or decree of any court;
and
(v) The right, after it obtains procession of the
Pledged Shares under the Escrow Agreement, to transfer the Pledged Interest
into the name of the Secured Party to facilitate its exercise of other rights or
remedies with respect to
them.
9. Exercise of Remedies. The rights and remedies of the Secured Party
shall be deemed to be cumulative, and any exercise of any right or remedy shall
not be deemed to be an election of that right or remedy to the exclusion of any
other right or remedy. Notwithstanding the foregoing, the Secured Party shall be
entitled to recover by the cumulative exercise of all remedies no more than the
sum of (a) the Secured Obligations remaining outstanding at the time of the
exercise of remedies, plus (b) the costs, fees and expenses that Secured Party
are otherwise entitled to recover.
10. Return of Collateral. The Escrow Agent shall deliver the Pledged
Shares, or any part thereof, to the Pledgor when and as provided in the Escrow
Agreement
11. Further Assurances. The Pledgor shall sign such other documents or
instruments, and take such other actions, as Secured Party may request to more
fully create and maintain, or to verify, ratify or perfect the security interest
intended to be created in this Agreement.
12. Miscellaneous.
(a) Waiver. Failure by the Secured Party to exercise any
right shall not be deemed a waiver of that right, and any single or partial
exercise of any right shall not preclude the further exercise of that right.
Every right of the Secured Party shall continue in full force and effect until
such right is specifically waived in writing signed by the Secured Party.
(b) Severability. If any part, term or provision of this
Agreement is held by any court to be prohibited by any law applicable to this
Agreement, the rights and obligations of the parties shall be construed and
enforced to the greatest extent allowed by law, or if such part, term or
provision is totally unenforceable, as if this Agreement did not contain that
particular part, term or provision.
(c) Headings. The headings in this Agreement have been
included for ease of reference only, and shall not be considered in the
construction or interpretation of this Agreement.
(d) Benefit. This Agreement shall inure to the benefit of the
Secured Party and the Pledgor and their successors and assigns.
(e) Governing Law. To the extent allowed under the Uniform
Commercial Code, this Agreement shall in all respects 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 rules.
(f) Entire Agreement. This Agreement along with the Escrow
Agreement, the Asset Purchase Agreement and other documentation relating to the
Secured Obligations constitute the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior understandings with
respect to the subject matter hereof, whether written or oral. No change,
modification, addition or termination of this Agreement shall be enforceable
unless in writing and signed by the party against whom enforcement is sought.
(g) Assignment. The Secured Party may assign its rights under
this Agreement to its affiliated companies. The Pledgor may assign its rights
under this Agreement to the Shareholders or to the Seller's affiliated companies
, however it may not assign its rights hereunder to third parties without the
Secured Party's prior written consent.
IN WITNESS WHEREOF, the Pledgor and the Secured Party have signed this
Agreement as of the date first above written.
PLEDGOR:
HEALTH MANAGEMENT CONSULTANTS, INC.
By /s/ David Nesslein
-------------------------------
David Nesslein, President
SECURED PARTY:
ALMOST FAMILY, INC.
By /s/ William B. Yarmuth
----------------------------------
William B. Yarmuth, Chief Executive Officer
ATTACHMENT A
TO
STOCK PLEDGE AGREEMENT
Assignment Separate from the Certificate
For Value Received, I hereby sell, assign and transfer unto
_____________________________(_______________) Shares of the
Capital Stock of _______________________________________________
standing in my name on the books of said corporation
______________________ represented by Certificate No.__________________ herewith
and do hereby irrevocably appoint _________________________________
____________________ attorney to transfer the said stock on the books of the
within named Company with full power of substitution in the premises.
Dated November 15, 2006
-----------------------
/s/ David Nesslein
------------------------------
David Nesslein
ATTACHMENT B
to
MEDERI/ALMOST FAMILY
INDEMNIFICATION AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into
effective the 3rd day of December, 2006, by and among HEALTH MANAGEMENT
CONSULTANTS, INC., and/or its assigns (the "Pledgor") and ALMOST FAMILY,
INC. and/or its assigns (the "Secured Party"), and JOHN B. GALLAGHER, ESQ.
(the "Escrow Agent").
Preliminary Statements
WHEREAS, the Pledgor and the Secured Party and others have entered into
a certain Asset Purchase Agreement dated November 15, 2006 (the "Asset Purchase
Agreement"), pursuant to which the Secured Party purchased from the Pledgor, and
others, substantially all of the assets of those Sellers; and
WHEREAS, the purchase price described in the Asset Purchase Agreement
is payable in part by One Hundred Thousand shares of the common stock of the
Secured Party (the "Pledged Shares"); and
WHEREAS, as a condition precedent and as an inducement for the Secured
Party to enter into and execute the Asset Purchase Agreement and as additional
consideration therefore, the Secured Party requires a continuing security
interest in those Pledged Shares; and
WHEREAS, in order to secure the indemnity obligations of the Pledgor
and the other Sellers under the Asset Purchase Agreement, the Pledgor and the
Secured Party have entered into that certain Stock Pledge Agreement dated of
even date herewith (the "Pledge Agreement") in which Pledgor has granted the
Secured Party a security interest in the Pledged Shares; and
WHEREAS, to further perfect the Secured Party's security interest under
the Pledge Agreement, the parties to the Asset Purchase Agreement have agreed
that the Pledged Shares, together with appropriately executed assignment(s) (the
"Assignment") would be delivered to the Escrow Agent in order to further secure
the Pledgor's obligations under the Asset Purchase Agreement (the Pledged
Shares, the Assignment, and the Pledge Agreement are collectively hereinafter
referred to as the "Security Documents"); and
WHEREAS, the parties hereto are desirous of having Escrow Agent hold
the Assignment and the Pledged Shares, and the Escrow Agent has consented to act
as escrow agent pursuant to the terms and conditions of this Agreement and to
receive and hold the Assignment upon the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby and the premises, representations, warranties, covenants and agreements
herein contained, the receipt and adequacy of which are hereby conclusively
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
Terms and Conditions
1. The foregoing recitals are true and correct and are incorporated
herein by reference.
2. Escrow Agent hereby acknowledges receipt from Pledgor of the
Assignment and the Pledged Shares.
3. Escrow Agent shall disburse the Assignment and the Pledged Shares
escrowed hereunder in accordance with the terms of this Agreement. Escrow Agent
shall continue to hold the Assignment and the Pledged Shares in escrow until the
earlier of (i) written agreement by Pledgor and the Secured Party directing the
release of the Assignment and Pledged Shares; (ii) entry of a Final Judgment by
a court of competent jurisdiction directing the release of the Assignment and
the Pledged Shares; or (iii) release of the Assignment and the Pledged Shares in
accordance with the terms of this Escrow Agreement. In the event of a dispute,
Escrow Agent may deposit the Assignment and the Pledged Shares with an
appropriate court and, after giving written notice of such action to the
parties, Escrow Agent shall have no further obligations with respect to the
Assignment and/or the Pledged Shares.
4. Escrow Agent shall release the Assignment and the Pledged Shares as
follows:
4.1 To Pledgor, within three (3) business days after receipt
by Escrow Agent of written notice purportedly signed by the President of the
Secured Party and the President of the Pledgor that all obligations under the
Security Documents have been satisfied.
4.2 To Pledgor, after receipt by Escrow Agent of (i) written
notice purportedly signed by the President of the Pledgor subsequent to November
15, 2008 that there is no pending and/or unsatisfied Event of Default as defined
in the Pledge Agreement, and (ii) evidence that Secured Party received a copy of
such notice prior to or simultaneously with receipt thereof by Escrow Agent,
unless the Secured Party, on or before ten (10) days after receipt of such
letter, delivers to Escrow Agent a written notice contesting the issue of
whether there exists a pending and/or unsatisfied Event of Default.
4.3 To the transfer agent for Almost Family, Inc., after
receipt by Escrow Agent of (i) written notice purportedly signed by the
President of the Pledgor subsequent to November 15, 2007 that there is no
pending and/or unsatisfied Event of Default as defined in the Pledge Agreement
and that Pledgor has transferred some or all of his Pledged Shares, and (ii)
evidence that Secured Party received a copy of such notice prior to or
simultaneously with receipt thereof by Escrow Agent, unless the Secured Party,
on or before ten (10) days after receipt of such letter, delivers to Escrow
Agent a written notice contesting the issue of whether there exists a pending
and/or unsatisfied Event of Default.
4.4 To the Secured Party, within three (3) business days after
receipt by Escrow Agent of written notice signed by the President of the Secured
Party and the President of the Pledgor that an Event of Default under the
Security Documents has occurred and that it remains pending and/or unsatisfied.
4.5 To the Secured Party, after receipt by Escrow Agent of (i)
written notice purportedly from the President of the Secured Party that an Event
of Default has occurred and remains pending and/or unsatisfied, and (ii)
evidence that the Pledgor received a copy of such notice prior to or
simultaneously with receipt thereof by Escrow Agent, unless the Pledgor, on or
before ten (10) days after receipt of such letter, delivers to Escrow Agent a
written notice contesting the existence of a pending and/or unsatisfied Event of
Default.
4.6 If an objection is received by the Escrow Agent pursuant
to Sections 4.3 or 4.5, then to the Secured Party or Pledgor only in accordance
with (i) joint written instructions of Secured Party and Pledgor or (ii) a final
non appealable order of a court of competent jurisdiction. Any court order shall
be accompanied by a legal opinion by counsel for the presenting party
satisfactory to Escrow Agent to the effect that the order is final and non
appealable. Escrow Agent shall act on such court order and legal opinion without
further question.
5. The Escrow Agent may act in reliance upon any writing or instrument
or signature which it, in good faith, believes to be genuine, may assume the
validity and accuracy of any statements or assertion contained in such writing
or instrument; and may assume that any person purporting to give any writing,
notice, advice or instruction in connection with the provisions hereof has been
duly authorized to do so. The duties of the Escrow Agent shall be limited to the
safekeeping of the Assignment and the Pledged Shares and to disbursements of
same in accordance with this Agreement. The Escrow Agent undertakes to perform
only such duties as are expressly set forth herein, and no implied duties or
obligations shall be read into this Agreement against the Escrow Agent. Escrow
Agent may assume that any person purporting to give any notice on behalf of any
party in accordance with the provisions hereof has been duly authorized to do
so. Furthermore, the parties agree that Escrow Agent shall not be liable to any
party or person whomsoever:
(i) for the sufficiency, correctness, genuineness or validity
of any instrument deposited with it, or any notice or demand given to it, or for
the form of execution of such instrument, notice or demand, or for the
identification, authority or rights of any person so executing, depositing or
giving the same, or for the terms and conditions of any such instrument pursuant
to which the parties thereto may act;
(ii) in acting upon any signature, notice, demand, request,
waiver, consent, receipt or other paper or document believed by Escrow Agent to
be genuine; or
(iii) in otherwise acting or failing to act under this
paragraph, except in the case of Escrow Agent's gross negligence or willful
misconduct.
6. This Agreement shall be in effect until all obligations of the
Pledgor under the Security Documents have been paid in full, unless earlier
terminated by the Stock Pledge Agreement or a written agreement between the
Pledgor and the Secured Party.
7. The Escrow Agent may consult with counsel of its own choice and
shall have full and complete authorization and protection for any action taken
or suffered by it hereunder in good faith and in accordance with the opinion of
such counsel. The Escrow Agent shall otherwise not be liable for any mistakes of
fact or error of judgment, or for any acts or omissions of any kind unless
caused by its willful misconduct or gross negligence, and the Pledgor and the
Secured Party jointly and severally agree to indemnify and hold the Escrow Agent
harmless from any claims, demands, any action against it, together with any
reasonable attorney's fees and costs incurred therewith, in connection with the
Escrow Agent's undertaking pursuant to the terms and conditions of this
Agreement, unless such act or omission is a result of the willful misconduct or
gross negligence of the Escrow Agent.
8. In the event of disagreement about the interpretation of this
Agreement, or about the rights and obligations or the propriety of any action
contemplated by the Escrow Agent hereunder, Escrow Agent may, at its sole
discretion, file an action in interpleader to resolve the said disagreement.
Escrow Agent shall be indemnified by the Pledgor and the Secured Party for all
costs, including but not limited to, reasonable attorney's fees, in connection
with the aforesaid interpleader action.
9. In the event the Escrow Agent is joined as a party to a lawsuit by
virtue of the fact that it is holding the Assignment and/ or the Pledged Shares,
Escrow Agent shall at its option, either tender the Assignment and the Pledged
Shares to the registry of the court or disburse same in accordance with the
court's ultimate disposition of the cause and Escrow Agent shall be entitled to
its reasonable attorney's fees and court costs from the non-prevailing party.
10. The Escrow Agent may resign at any time upon the giving of thirty
(30) days written notice to the Pledgor and the Secured Party. Thereupon, the
Assignment and Pledged Shares may be transferred from the Escrow Agent to the
successor Escrow Agent as provided in joint written instructions from the
Pledgor and the Secured Party. If a successor Escrow Agent is not appointed by
the Pledgor and the Secured Party within thirty (30) days after notice of
resignation, the Escrow Agent may petition any court of competent jurisdiction
to name a successor Escrow Agent; and the Escrow Agent herein shall be fully
relieved of all liability under this Agreement to any and all parties upon the
transfer of and due accounting for the Assignment and Pledged Shares to the
successor Escrow Agent either designated by the parties or appointed by the
court.
11. The Escrow Agent shall have the right to serve as attorney for the
Pledgor, the Sellers, and the Shareholders in connection with any matter arising
from or out of the Asset Purchase Agreement, any Security Document or any other
document related thereto, including, but not limited to, any dispute concerning
the disposition of the Assignment and/ or the Pledged Shares. The Secured Party
and Pledgor hereby waive any claim of conflict of interest.
12. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given: (a) upon receipt if it is
sent by facsimile, (b) the next business day if sent by reputable overnight
courier, or (c) three (3) days after mailing if by certified mail return receipt
requested, postage prepaid, and addressed or otherwise sent to the intended
recipient as set forth below:
If to the Pledgor: Mr. David Nesslein
3948 Little Ave.
Coconut Grove, Florida 33133
If to the Secured Party: 9510 Ormsby Station Road, Suite 300
Louisville, Kentucky 40223
With copy to: Frost Brown Todd LLC
Attn: Scott W. Dolson
400 West Market St, 32nd Floor
Louisville, Kentucky 40202-3363
If to the Escrow Agent: Mr. John B. Gallagher, Esq.
2128 N.E. 63rd Street
Fort Lauderdale, Florida 33308
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address or facsimile
number set forth above using any other means (including personal delivery,
messenger service, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address or facsimile number to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other parties notice in the manner herein set forth.
13. This Agreement represents the entire agreement between the parties
with respect to the subject matter hereof and shall be binding upon the parties,
their respective successors and assigns.
14. This Agreement and all transactions contemplated by this Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of Florida without regard to principles of conflicts of laws.
The parties acknowledge that a substantial portion of negotiation and
anticipated performance of this Agreement occurred or shall occur in Dade
County, Florida, and that, therefore each of the parties irrevocably and
unconditionally (i) agrees that any suit, action or other legal proceeding
arising out of or relating to this Agreement must be brought in a court of
competent jurisdiction physically located in Dade County; (ii) consents to the
jurisdiction of such court in any such suit, action or proceeding; and (iii)
waives any objection which it may have to the laying of venue of any such suit,
action or proceeding in such court.
15. This Agreement may not be amended, supplemented or discharged, and
no provisions hereof may be modified or waived except expressly by an instrument
in writing signed by each party. No waiver of any provision hereof by any party
hereto shall be deemed a waiver by the other parties nor shall any such waiver
by any party be deemed a continuing waiver of any matter by such parties. No
failure by any party to take any action with respect to a breach by another
party of this Agreement or a default by another party hereunder shall constitute
a waiver of the former party's right to enforce any provision of this Agreement
or to take action with respect to such breach or default or any subsequent
breach or default. Waiver by a party of any breach or failure to comply with any
provision of this Agreement by another party shall not be construed as, or
constitute, a continuing waiver of such provisions, or a waiver of any other
breach of or failure to comply with any other provisions of this Agreement. The
Secured Party and Pledgor shall pay all fees of the Escrow Agent in connection
with its duties hereunder, except as otherwise specifically provided herein.
Each party shall be responsible for its own costs and expenses with respect to
matters involving this Agreement, except as otherwise provided herein.
17. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.
18. Nothing contained in this Agreement shall limit or impair, or be
construed to limit or impair, any right or remedy to which any party hereto may
become entitled by virtue of any breach by any party under the terms and
provisions of the Asset Purchase Agreement and/or the Security Documents and/or
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
ESCROW AGENT:
JOHN B. GALLAGHER, ESQ.
By: /s/ John B. Gallagher
-------------------------------------
John B. Gallagher
SECURED PARTY:
ALMOST FAMILY, INC.
By: /s/ William B. Yarmuth
--------------------------------------
William B. Yarmuth, Chief Executive Officer
PLEDGOR:
HEALTH MANAGEMENT CONSULTANTS, INC.
By: /s/ David Nesslein
---------------------------------------
David Nesslein, President
ATTACHMENT C
To
MEDERI/ALMOST FAMILY
ASSET PURCHASE AGREEMENT
Additional Transition Matters