EXHIBIT 2.4
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
AND RESTRICTIVE COVENANTS
THIS AGREEMENT is made as of 9/1, 1998, by and among PINNACLE HEALTH
CARE, INC. a Florida corporation, having its principal place of business at 3121
West Hallandale Beach Boulevard, Suite 110, Hallandale, Florida 33009 (the
"SELLER" or the "CORPORATION"), BRAD LEVINE, RICHARD R. RIZZO, HAROLD WINTERS,
AND DOUG SHIRLEY, all the shareholders of Seller (the "SHAREHOLDERS"), and
ROTECH OXYGEN AND MEDICAL EQUIPMENT, INC., a Florida corporation (the "BUYER").
W I T N E S S E T H :
WHEREAS, Seller operates a home respiratory care and durable medical
equipment business in the State of Florida (the "BUSINESS"); and
WHEREAS, Shareholders are the shareholders of the Seller; and
WHEREAS, Seller wishes to sell, and Buyer desires to purchase from
Seller, substantially all of the assets of the Business; and Buyer also desires
to acquire from Seller and Shareholders, and each of Seller and Shareholders
desire to grant to Buyer, covenants not to compete and other restrictive
covenants as described in paragraph 15 hereof (the "RESTRICTIVE COVENANTS"); and
WHEREAS, the consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby has been obtained,
including without limitation, all approvals of governmental authorities and
parties to any contracts to be assigned to Buyer in connection herewith.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. Sale of Assets and Restrictive Covenants.
(a) The Assets. As of the Effective Date referred to below in
paragraph 7, Seller shall be deemed to have sold, transferred, conveyed and
assigned, free and clear of all liens, claims, security interests, pledges,
restrictions on transfer or use and other encumbrances of any kind or nature
whatsoever ("LIENS"), all of Seller' rights, title and interest in, to or under:
(i) Inventory; Fixed Assets. All inventory and fixed assets of
the Business, including, without limitation, all of the same set forth
on the Schedule of Inventory and Fixed Assets attached hereto as
Schedule 1(a)(i); and
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(ii) THIS SPACE INTENTIONALLY LEFT BLANK; and
(iii) Other Assets. All other assets of any kind, tangible or
intangible, real, personal or mixed, owned and used or held for use by
Seller in connection with the Business, including, without limitation,
all of the following: (A) the Patients' List of the Business, as
described in Schedule 1(a)(iii)(A); (B) any and all rights Seller has
in the telephone numbers listed on the Schedule of Telephone Numbers
and Licenses attached hereto as Schedule 1(a)(iii)(B); (C) all personal
property, machinery and equipment, except for trucks and other vehicles
leased by the Seller and more fully set forth on Schedule 1(b); (D)
THIS SPACE INTENTIONALLY LEFT BLANK; (E) rights under contracts,
agreements, including, without limitation, franchise agreements, and
instruments; (F) any leased Assets used in the operation of the
Business, but not owned by the Seller prior to the Closing but which
will be paid off and owned by Seller immediately prior to Closing as
set forth on Schedule 1(a)(iii)(F); and (G) all intangible rights of
Seller of every kind and description used in, or held for use in
connection with, the operation of the Business, including, without
limitation, all intangible assets, and to the extent permitted by
applicable law, all licenses, permits and authorizations.
(b) Excluded Assets.
(i) Notwithstanding the foregoing, the Assets shall not
include, and Seller shall not be deemed to have sold, transferred,
conveyed or assigned the following assets to Buyer: Seller's lease for
the Premises, cash, accounts receivable, Certificate of Incorporation,
qualification to do business in any jurisdiction, taxpayer
identification number, minute books, stock transfer records and other
documents related specifically to Seller's corporate organization and
maintenance and the items set forth on Schedule 1(b) attached hereto
(collectively, "EXCLUDED ASSETS").
(ii) The Buyer hereby acknowledges that all accounts receivable
up until the Closing Date shall be the property of Seller who shall
have sole responsibility for collecting same. At Closing, Seller shall
provide Buyer with a list of accounts receivable and the amounts owing
Seller. However, should any accounts receivable be paid to Buyer after
the departure of Seller, Buyer shall, within thirty (30) business days
of receipt of payment, promptly pay over to the Paying Agent, on behalf
of the Seller the amount for accounts receivable incurred prior to the
Closing Date along with a copy of the invoice or other documentation
which Buyer shall have or receive with respect to the payment being
made. Any default or failure by Buyer to promptly pay over accounts
receivable belonging to Seller, shall constitute a default under the
terms of this Agreement, and shall entitle Seller to all the remedies
set forth herein, including the indemnification provisions set forth in
paragraph 16. This paragraph shall survive the execution, delivery and
closing of this Agreement.
(c) Restrictive Covenants. Pursuant to paragraph 15 hereof,
the Seller and each Shareholder is granting to Buyer the Restrictive Covenants.
2. Purchase Price; Method of Payment.
(a) Purchase Price. The aggregate "PURCHASE PRICE" for the Assets
and the Restrictive Covenants shall be Two Hundred Twenty Three Thousand Dollars
($223,000). The Purchase Price shall be allocated among the Assets and the
Restrictive Covenants in the manner set forth on the Allocation Schedule
attached hereto as Schedule 2(a), and the parties hereto expressly consent to
the allocation stated therein.
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(b) Method of Payment. At the Closing (as defined in paragraph 7),
Buyer shall pay, disburse, and deliver the Purchase Price as follows:
(i) Twenty-Two Thousand Dollars ($22,000) thereof (the "GENERAL
ESCROW AMOUNT" or "ESCROW FUND") (the General Escrow Amount, and all
accrued interest thereon shall be referred to as the "ESCROW FUND")
shall be paid and delivered to Crestar Bank as escrow agent ("ESCROW
AGENT"), to be held by Escrow Agent during the Escrow Period (as
defined in paragraph 5(d), below) pursuant to the terms of an Escrow
Agreement, in the form attached hereto as Exhibit 2(b)(i) (the "ESCROW
AGREEMENT"). The entire Escrow Fund shall be subject to the provisions
of paragraphs 5 and 16 hereof.
(ii) One Hundred and Four Thousand Dollars ($104,000) in cash,
the approximate amount necessary to payoff all the creditors and
liabilities of Seller set forth on Schedule 4(a), shall be delivered by
wired funds to Neimark & Nadel, P.A. Trust Account, at the account
number as set forth on the Schedule of Wire Instructions attached
hereto as Schedule 2(b)(iii), to be held and administered by Neimark &
Nadel, P.A. (hereinafter referred to as the "PAYING AGENT"), pursuant
to the "PAYMENT ESCROW AGREEMENT" attached hereto as Exhibit 2(b)(ii)
with any remaining balance to be distributed by the Paying Agent to the
Shareholders; and
(iii) Ninety-Seven Thousand Dollars ($97,000) in cash (the
balance of the Purchase Price) shall be delivered to Neimark & Nadel,
P.A. Trust Account by wired funds to Neimark & Nadel, P.A. account
number as set forth on the Schedule of Wire Instructions attached
hereto as Schedule 2(b)(iii).
3. Indemnity Against Creditors Claims; No Assumption of Liabilities.
Seller has requested that Buyer waive the requirements of the bulk sales and
transfer laws of the State of Florida. Seller and Shareholders agree to
indemnify Buyer and save and hold Buyer harmless against all Damages (as defined
in paragraph 16(c)) arising out of any claims made by creditors (including,
without limitation, any Federal, state or local taxing authority) of Seller that
relate to the Business, or that arise out of the failure to comply with any of
such laws.
4. Closing Date Liabilities.
(a) Seller and Shareholders represent and warrant that, to the best
of Seller's and Shareholders' knowledge and belief after diligent inquiry, all
of Seller's liabilities, as of the Closing Date are listed on the Schedule of
Liabilities attached hereto as Schedule 4(a) the "LISTED LIABILITIES"). For
purposes of this Agreement "LIABILITIES" shall mean and include all claims,
lawsuits, liabilities, obligations or debts of any kind or nature whatsoever,
whether absolute, accrued, due, direct or indirect, contingent or liquidated,
matured or unmatured, joint or several, whether or not for a sum certain,
whether for the payment of money or for the performance or observance of any
obligation or condition, whether or not asserted as of the date hereof, and
whether or not of a type which would be reflected as a liability on a balance
sheet (including, without limitation, federal, state and local taxes of any
nature) in accordance with generally accepted accounting principles,
consistently applied ("GAAP"), including without limitation, any liabilities
relating to any Excluded Assets, malpractice or other tort claims, claims for
breach of contract, any claims of any kind asserted by patients, former
patients, employees and former employees of Seller or any other party that are
based on acts or omissions by Seller occurring on or before the Closing Date,
amounts due or that may become due in connection with the participation of
Seller in the Medicare or Medicaid programs or due to any other health care
reimbursement or
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payment intermediary, or that may be due by Seller to any other third party
payor, accounts payable, notes payable, trade payables, lease obligations,
indebtedness for borrowed money, accrued interest, and contractual obligations.
Seller and Shareholders acknowledge that the Purchase Price for the Assets is
based on the accuracy of Seller's and Shareholders' representations and
warranties contained in this Agreement, including, but not limited to, Seller's
and Shareholders' representations and warranties contained in this paragraph
4(a). Without limiting the generality of the foregoing, Buyer will not assume
any, and Seller shall remain liable for each, liability of Seller arising out of
any facts, circumstances, matters or occurrences existing on or prior to the
Closing Date (whether or not known) ("CLOSING DATE LIABILITIES").
(b) Without limiting the generality of the provisions of
subparagraph (a) above, Buyer shall not assume the Contracts (as hereinafter
defined in paragraph 12(b)), if any, set forth on Schedule 4(b), or any
liabilities with respect thereto, and shall not, in any case, assume any
liabilities under any Contracts (whether or not such Contracts are assumed by
Buyer) to the extent such liabilities arise out of facts or circumstances in
existence, or obligations to be satisfied, on or prior to the Closing Date.
5. Right of Offset Against the Escrow Fund.
(a) Event of Deficiency. If:
(i) Buyer pays for any Closing Date Liabilities, Buyer shall be
entitled to be indemnified for any Damages pursuant to the terms of
this Agreement from the Escrow Fund ("INDEMNIFICATION CLAIMS", and
together with any Liabilities Deficiencies (as defined below),
collectively "CLAIMS" and each, a "CLAIM"); and
(ii) In the event Buyer is not indemnified pursuant to the
terms of this Agreement from the Escrow Fund, the Seller and
Shareholders (other than Harold Winters) shall jointly and severally
reimburse Buyer for such payment (a "LIABILITIES DEFICIENCY").
As a prerequisite to either of the events set forth in paragraph
5(a)(i) or (ii) occurring, Buyer shall be required to provide written notice to
Seller and each of the Shareholders (except Harold Winters) of the Claim within
ten (10) business days of receipt of the Claim, along with any and all
information which Buyer has with respect to the Claim, in which case Buyer shall
be entitled to recover the amount of such Claim in accordance with the following
procedure.
(b) Procedure if Seller Fails to Pay. If Seller fails to pay any
Claim in full to Buyer or to claimant, as applicable, within ten (10) days from
the receipt of such written notice from Buyer (said ten (10) day period
hereinafter referred to as the "NOTICE PERIOD"), Buyer shall have the right to
make offset against the Escrow Fund, in accordance with the terms and conditions
of the Escrow Agreement, in amounts from time to time equal to the amount of
such Claim (subject, however, in the case of a "DISPUTE", to the provisions of
paragraph 16 hereof applicable thereto), and Seller agrees to any such offset.
Buyer shall be required to initially proceed against the Escrow Fund, but in the
event the Escrow Fund is insufficient to pay the Claim in full, Buyer shall be
entitled to pursue any other rights or remedies that it may have under this
Agreement, in law, equity or otherwise.
(c) Escrow Costs. The fees of the Escrow Agent shall be borne fifty
percent (50%) by Buyer and fifty (50%) by Seller.
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(d) Escrow Period.
(i) The "ESCROW PERIOD" shall terminate three hundred
sixty-five (365) days following the Closing Date.
(ii) The balance, if any, of the Escrow Fund, including any
interest earned thereon, remaining at the close of business on the last day of
the Escrow Period, shall be disbursed to the Paying Agent on behalf of the
Seller pursuant to the provisions of paragraph 2(b)(iii) within fifteen (15)
days after the last day of the Escrow Period.
(iii) Notwithstanding anything to the contrary contained in
this subparagraph (d), if any Claim made by Buyer is in dispute at the time that
any amounts are otherwise to be disbursed to Seller, then there shall be
withheld from such amount to be disbursed and there shall be retained in the
Escrow Fund, an amount such that there will be remaining in the Escrow Fund at
least 1.5 times the amount of the Claim asserted by Buyer until the final
settlement of such Claim or Claims.
(iv) Any interest accruing on any portion of the Escrow Fund
shall be paid to the party receiving such portion of the Escrow Fund.
6. Employees. It is expressly understood and agreed that Buyer's
purchase of the Assets does not involve any undertaking on the part of Buyer to
retain any of the employees of the Seller, although Buyer shall have the right
to offer employment to any such employees. Seller shall remain fully responsible
for any severance, benefits, costs or liabilities arising out of the termination
by Seller of any of its employees, all of which liabilities shall constitute
Closing Date Liabilities. Seller shall also remain fully responsible for any
benefits, costs or liabilities incurred or accrued prior to Closing with respect
to each employee retained by Buyer.
7. Closing Date. The consummation of the transactions contemplated by
this Agreement is sometimes referred to as the "CLOSING", and the date on which
such consummation occurs, including, without limitation, the execution and
delivery of this Agreement by each of the parties hereto, is sometimes referred
to as the "CLOSING DATE". The closing date (the "CLOSING DATE") for the
transaction contemplated under this Agreement will be 9/1, 1998.
8. Asset Condition and Quality. Seller and Shareholders, jointly and
severally, represent, warrant and covenant that, as of the Closing Date, to the
best of their knowledge, all physical Assets of Seller being sold to the Buyer
are free of defects and are in good working order, condition and repair, except
for ordinary wear and tear, and conform in all material respects with all
applicable ordinances, regulations, zoning and other laws. Notwithstanding the
aforementioned, Buyer hereby acknowledges that Buyer is acquiring all of the
Seller's physical Assets in "As Is" condition with no warranties of
merchantability of fitness for any particular purpose.
9. Instruments of Conveyance and Transfer. At the Closing:
(a) Seller will deliver to Buyer such bills of sale, assignments,
and other good and sufficient instruments of conveyance and transfer in form
sufficient to sell, assign and transfer the Assets to Buyer as of the Closing
Date, with such documents containing full warranties of title, and which
documents shall be effective to vest in Buyer good, absolute, and marketable
title to the Assets of the Business being transferred to Buyer by Seller, free
and clear of all Liens.
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(b) Simultaneously with such delivery, Seller will take all steps
as may be requisite to put Buyer in actual possession, operation and control of
the Assets to be transferred hereunder.
(c) Seller will deliver to Buyer an opinion, dated the Closing
Date, of its counsel, in substantially the form attached hereto as Exhibit 9(c).
(d) Seller will deliver a certificate of its Secretary or other
officer certifying as of the Closing Date a copy of resolutions of its board of
directors and, if applicable, its stockholders, authorizing the execution,
delivery and full performance of this Agreement and the Transaction Documents
(as defined in paragraph 12(a) below), and the incumbency of its officers.
10. Sales and Transfer Taxes; Fees. All applicable sales, transfer,
use, filing and other taxes and fees that may be due or payable as a result of
the conveyance, assignment, transfer or delivery of the Assets of the Business
to be conveyed and transferred as provided herein, whether levied on Seller or
Buyer, shall be borne by Seller.
11. Restrictions on Operations of Seller. Seller and Shareholders,
jointly and severally, represent, warrant and covenant that, except as expressly
disclosed on Schedules hereto, since the most recent Financial Statement Date
referred to in paragraph 12(o) below, through the Closing Date, there has been
no material adverse change in the condition (financial or otherwise) of the
Seller or the Business, and Seller has not:
(i) sold, assigned or transferred any Assets, except in the
ordinary course of business, consistent with past practice;
(ii) subjected any Assets to any Liens;
(iii) entered into any contract or transaction binding the
Business other than contracts or transactions entered into in the ordinary
course of business, consistent with past practice;
(iv) incurred any liabilities or indebtedness other than in the
ordinary course of business, consistent with past practice;
(v) except in the ordinary course of business, consistent with
past practice, or otherwise to comply with any applicable minimum wage law, paid
any bonuses, increased the salaries or other compensation of any of its
employees, or made any increase in, or any additions to, other benefits to which
any of such employees may be entitled;
(vi) discharged or satisfied any Lien or encumbrance, or
satisfied, paid or prepaid any material liabilities, other than in the ordinary
course of business consistent with past practice, or failed to pay or discharge
when due any liabilities, the failure to pay or discharge of which has caused or
may cause any actual damage or risk of loss to the Corporation or the Assets;
(vii) failed to collect any accounts receivable in the ordinary
course of business, consistent with past practice;
(viii) changed any of the accounting principles followed by it or
the methods of applying such principles;
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(ix) canceled, modified or waived any debts or claims held by it,
other than in the ordinary course of business, consistent with past practice, or
waived any rights of substantial value, whether or not in the ordinary course of
business; or
(x) issued any capital stock, or declared or paid or set aside or
reserved any amounts for payment of any dividend or other distribution in
respect of any equity interest or other securities, or redeemed or repurchased
any of its capital stock or other securities, or made any payment to any of its
affiliates except for payments of compensation in the ordinary course of
business, consistent with past practice and disclosed to Buyer as such;
(xi) instituted, settled or agreed to settle any litigation,
action or proceeding before any Governmental Authority (as such term in defined
in paragraph 12(d) below) relating to it or its property or received any threat
thereof; or
(xii) entered into any material transaction other than in the
ordinary course of business, consistent with past practice.
12. Representations and Warranties by Seller and Shareholders. As a
material inducement to Buyer to execute and perform its obligations under this
Agreement, Seller and Shareholders hereby, jointly and severally, represent and
warrant to Buyer (it being understood that for purposes of this paragraph 12,
Harold Winters only represents and warrants to Buyer to the best of his
knowledge) as follows as of the Closing Date:
(a) Organization of Seller; Enforceability.
(i) Seller is a corporation, organized, and in good standing in
the State of Florida, and has requisite corporate power and authority to carry
on its Business as presently being conducted, to enter into this Agreement, and
to carry out and perform the terms and provisions of this Agreement. Each of
this Agreement and each agreement, instrument, certificate and document in
connection with this Agreement or the transactions contemplated hereby
("TRANSACTION DOCUMENTS") constitutes the legal, valid and binding obligations
of Seller, enforceable against it in accordance with its respective terms.
Seller does not have any subsidiaries.
(ii) This Agreement and each Transaction Document to which each
Shareholder is a party constitutes the legal, valid and binding obligations of
such Shareholder, enforceable against such Shareholder in accordance with its
terms.
(b) Consents. No authorization, consent, approval, license,
exemption by, filing or registration with any Governmental Authority or of any
party to any contract, agreement, instrument, commitment, lease, indenture or
understanding (written, oral or implied) by which Seller or any of the Assets is
bound ("CONTRACTS") or by which any Shareholder or any Shareholder's assets is
bound ("SHAREHOLDER CONTRACTS") is necessary in connection with the execution,
delivery and performance of this Agreement or any of the Transaction Documents
by Seller or any Shareholder.
(c) Litigation. Except as set forth on Schedule 12(c), to the best
of Seller's knowledge, there are no actions, suits or proceedings affecting
Seller or any of the Assets which are pending or threatened against Seller or
affecting any of its properties or rights, at law or in equity, or before any
Governmental Authority (as hereinafter defined), nor is Seller or any of its
respective officers or directors or any Shareholder
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aware of any facts which to them or their knowledge might reasonably be expected
to result in any such action, suit or proceeding.
(d) Compliance with Laws and Contracts. Seller is not in violation
of, or in default under: any term or provision of its Articles of Incorporation
or By-Laws; or any judgment, order, writ, injunction, decree, statute, law,
rule, regulation, directive, mandate, ordinance or guideline ("GOVERNMENTAL
REQUIREMENTS") of any Federal, state, local or other governmental or
quasi-governmental agency, bureau, board, council, administrator, court,
arbitrator, commission, department, instrumentality ("GOVERNMENTAL
AUTHORITIES"); or of any Contract. The execution and delivery by Seller and
Shareholders of, and the performance and compliance by each of them with this
Agreement, and the Transaction Documents and the transactions contemplated
hereby and thereby, does not and will not result in the violation of or conflict
with or constitute a default under any such term or provision or result in the
creation of any Lien on any of the properties or assets of Seller or any
Shareholder pursuant to any such term or provision or any term or provision of
any Governmental Requirement by which any Shareholder is bound or of any
Shareholder Contract.
(e) Corporate Acts and Proceedings. The execution, delivery and
performance of this Agreement and each of the Transaction Documents, and the
transactions contemplated hereby and thereby, including the sale and transfer of
the Assets by Seller as provided for in this Agreement, have been approved and
consented to by the Board of Directors of Seller and, if applicable, by the
requisite number of holders of its outstanding capital stock, and all action
required by any applicable Governmental Requirement by the stockholders of
Seller with regard thereto have been appropriately authorized and accomplished.
(f) Title to Assets. Seller has good and indefeasible title to all
of the Assets, free and clear of all Liens.
(g) Contracts. Set forth on Schedule 12(g) hereto is a list of all
material Contracts of Seller including, without limitation, each:
(i) contract, agreement or commitment for the employment or
retention of, or collective bargaining, severance or termination of or with, any
director, officer, employee, consultant, sales representative, or agent or group
of employees, or any non-competition, non-solicitation, confidentiality or
similar agreement with any such person or persons;
(ii) contract, agreement or arrangement for the acquisition or
disposition of any assets, property or rights outside the ordinary course of
business or requiring the consent of any party to the transfer and assignment of
any such assets, property or rights (by purchase or sale of assets, purchase or
sale of stock, merger or otherwise), that is executory or that was entered into
during the three (3) year period ending on the date hereof;
(iii) contract, agreement or commitment which contains any
provisions requiring the Seller or the Business to indemnify or act for any
other person or entity or to guaranty or act as surety for any other person or
entity;
(iv) contract, agreement or commitment restricting the Seller
or the Business from, or in favor of either of the Seller or the Business and
restricting any other person or entity from, conducting business anywhere in the
world for any period of time or restricting the use or disclosure of any
confidential or proprietary information or prohibiting the solicitation of
business or of employees, agents or others;
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(v) partnership, joint venture or management contract or
similar arrangement, or agreement which involves a right to share profits or
future payments with respect to the Business or any portion thereof or the
business of any other person or entity;
(vi) licensing, distributor, dealer, franchise, sales or
manufacturer's representative, agency or other similar contract, arrangement or
commitment;
(vii) contract, agreement or arrangement granting a leasehold
or other interest in real property, including without limitation, subleases,
licenses and sublicenses (the "LEASES");
(viii) profit sharing, thrift, bonus, incentive, deferred
compensation, stock option, stock purchase, severance pay, pension, retirement,
hospitalization, insurance or other similar plan, agreement or arrangement
applicable to any employee, consultant or agent of the Seller or the Business
not covered by clause (i) above;
(ix) agreement, consent order, plea bargain, settlement or
stipulation or similar arrangement with any Governmental Authority;
(x) agreement with respect to the settlement of any litigation
or other proceeding with any third person or entity;
(xi) agreement relating to the ownership, transfer, voting or
exercise of other rights with respect to any equity in the Seller, or any other
entity, including without limitation, registration rights agreements, voting
trust agreements and shareholder and proxy agreements;
(xii) contract, agreement or commitment to provide services or
products, or
(xiii) agreement not made in the ordinary and normal course of
business and consistent with past practice, or involving consideration in excess
of $25,000 in each case, that is not set forth in subsections (i) through (xii)
above.
To the best of Seller's and Shareholders' knowledge, no party to any
Contract other than Seller is in default under any Contract. Seller has
delivered to Buyer true and complete copies of each written Contract (or a
description of each oral Contract) requested by Buyer.
(h) Brokers. No broker or finder has acted for Seller in connection
with the transactions contemplated by this Agreement, and no broker or finder is
entitled to any broker's or finder's fee or other commission in respect thereof
based in any way on agreements, understandings or arrangements with Seller.
(i) Employment Contracts; Employees. There are no Contracts of
employment between Seller and any officer or other employee of the Business,
except as set forth on Schedule 12(g)(i) above. The name, position, current rate
of compensation and any vacation or holiday pay, sick pay, personal leave,
severance and any other compensation arrangements or fringe benefits, of each
current employee, sales representative, consultant and agent of the Seller,
contained on the Schedule of Personnel Payrates and Advances attached hereto as
Schedule 12(i) is accurate and complete. No employee, consultant or agent of the
Seller has any vested or unvested retirement benefits or other termination
benefits, except as described on Schedule 12(i). Since the date that is two (2)
years prior to the Closing Date, there has been no material adverse change in
the relationship between the Seller and its employees, nor any strike or labor
disturbance by any of such employees affecting the Business and there is no
indication that such a change, strike or labor disturbance is likely. No
employees of the Seller are represented by any labor union or similar
organization in connection with their employment by or
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relationship with, Seller, and to the knowledge of the Seller and Shareholder,
there are no pending or threatened activities the purpose of which is to achieve
such representation of all or some of such employees, and there are no threats
of strikes, work stoppages or pending grievances by any such employees. Seller
is not party to any collective bargaining or other labor contracts.
(j) Employee Benefit Plans. Seller has no pension, bonus,
profit-sharing, or retirement plans for officers or employees of the Business,
nor is Seller required to contribute to any such plan. Without limiting the
generality of the foregoing, Seller does not maintain or make contributions to
and has not at any time in the past maintained or made contributions to any
employee benefit plan which is subject to the minimum funding standards of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or to any
multi-employer plan subject to the terms of the Multi-Employer Pension Plan
Amendment Act of 1980 (the "MULTI-EMPLOYER ACT").
(k) Insurance. All inventories, buildings and fixed assets
owned or leased by the Seller are and will be adequately insured against fire
and other casualty through the Closing Date. The information contained on the
Schedule of Insurance Policies, attached hereto as Schedule 12(k), is accurate
and complete. Schedule 12(k) also sets forth any claims made under any of the
insurance policies referred to above or increases in premiums therefore during
the past two years. True and complete copies of all policies of fire, liability
and other forms of insurance held or owned by the Seller or otherwise in force
and providing coverage for the Business or any of the Assets (including but not
limited to medical malpractice insurance, and any state sponsored plan or
program for worker's compensation) have been delivered to Buyer. Such policies
are owned by and payable solely to the Seller, and said policies or renewals or
replacements thereof will be outstanding and duly in force at the Closing Date,
and all premiums due on or before the Closing Date in respect thereof have been
paid. Seller purchased title insurance as set forth on Schedule 12(k).
(l) Disclosure. No representation or warranty by Seller or any
Shareholder in this Agreement or in any Transaction Document, contains any
untrue statement of material fact or omits to state any material fact, of which
any Shareholder or Seller or any of its officers, directors or stockholders has
knowledge or notice, required to make the statements herein or therein contained
not misleading.
(m) Officers, Directors and Shareholders of Seller. As of the
Closing Date, the Shareholders are the sole shareholders of Seller and the
following individuals are all of the officers and directors of Seller:
Name Office/Position
---- ---------------
Doug Shirley President, Secretary
(n) Inventory and Fixed Assets. The information contained on
the Schedule of Inventory and Fixed Assets as of the most recent Financial
Statement Date, attached hereto as Schedule 1(a)(i), is accurate and complete.
(o) Tax Returns and Financial Statements. Seller has furnished
Buyer with its tax returns (the "TAX RETURNS") for the periods ended December
31, 1996 and December 31, 1997, and has furnished Buyer with its financial
statements (the "FINANCIAL STATEMENTS") for the periods ended December 31, 1996,
December 31, 1997 and the interim period ending April 30, 1998 (the "FINANCIAL
STATEMENT DATES"), copies of which are attached hereto as Schedule 12(o). The
Financial Statements: (i) are in accordance with the books and records of the
Seller; (ii) fairly present the financial condition of the Seller at such date
and the results of its operations
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for the periods specified; (iii) were prepared in accordance with GAAP applied
on a basis consistent with prior accounting periods; (iv) with respect to all
Contracts of the Seller, reflect adequate reserves for all reasonably
anticipated losses and costs in excess of anticipated income; and (v) with
respect to any balance sheets, disclose all of the liabilities of the Seller at
the Financial Statement Dates and include the appropriate reserves for all taxes
and other accrued liabilities, except that certain contingent liabilities, if
not disclosed on such balance sheets, shall be considered to be disclosed
pursuant to this subparagraph, if expressly disclosed on an Schedule to this
Agreement. The income statements included in the Financial Statements do not
contain any items of special or nonrecurring income or expense or any other
income not earned or expense not incurred in the ordinary course of business,
consistent with past practice, except as expressly specified therein, and such
Financial Statements include all adjustments, which consist only of normal
recurring accruals, necessary for such fair presentation.
(p) Supplemental Tax Information. Seller has furnished Buyer
with its most recent (i) tax registration certificates, and (ii) tax returns
required of it by the federal government and each state or other locality in
which it conducts business, which tax returns in all instances where applicable
include, but shall not be limited to franchise taxes, federal, state and local
tangible personal property tax returns, and federal, state and local sales tax
returns, which registration certificates and tax returns are set forth,
collectively, on the Schedule of Supplemental Tax Information, attached hereto
as Schedule 12(p).
(q) Adverse Business Developments. No notice has been received
by Seller or any Shareholder of any new or substantially expanded firm or
individual engaged in a business directly competitive to Seller in its primary
service area within six (6) months before the date hereof. Neither Seller nor
any Shareholder has received, either orally or in writing, any notice specific
to it of pending or threatened adverse action with respect to any Medicare,
Medicaid, private insurance or third party payor reimbursement method, practice
or allowance as to any business activity engaged in by Seller, nor has Seller or
any Shareholder received, or been threatened with, any claim for refund specific
to it in excess of $500.00 by a Medicare or Medicaid carrier, except as
disclosed in the Schedule of Proceedings attached hereto as Schedule 12(q).
(r) Relationships. Except as disclosed on Schedule 12(r),
neither Seller, its officers, directors and employees, nor any Shareholder and
no member of any of their respective immediate families, and no person or entity
which is controlled by, under common control with, or controlling any of them
(each, an "AFFILIATE") has, or at any time within the last two (2) years has
had, a material ownership interest in any business, corporate or otherwise, that
is a party to, or in any property that is the subject of, business relationships
or arrangements of any kind relating to the operation of the Business. No
Affiliate of Seller or any Shareholder is guaranteeing any obligations of the
Seller.
(s) Assets Comprising the Business. The Assets are all of the
tangible and intangible properties (real, personal and mixed), including,
without limitation, all licenses, intellectual property, permits and
authorizations, and contracts that are necessary or material to the operation of
the Business as now operated. The quantities of inventory and supply items
included in the Assets are reasonable in light of the present and anticipated
volume of the Business of the Seller in the ordinary course of the business of
the Seller, consistent with past practice, as determined by the Seller in good
faith and consistent with past practice.
(t) Questionable Payments. Seller has not, and to the knowledge
of the Seller and Shareholders, none of their Affiliates or employees have
offered, made or received any illegal or unlawful payment, bribe, kickback,
political contribution or other similar questionable payment for any referrals
or otherwise in connection with the ownership or operation of the Business,
including, without limitation, any of the same that would constitute a violation
of the Foreign Corrupt Practices Act of 1977, as amended.
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(u) Reimbursement Matters. Seller, to the extent necessary to
conduct its business in a manner consistent with past practice, is qualified for
participation in the Medicare and Medicaid programs. Except as disclosed on
Schedule 12(u), (i) Seller and Shareholders have not received any notice of
denial or recoupment from the Medicare or Medicaid programs, or any other third
party reimbursement source (inclusive of managed care organizations) with
respect to products or services provided by it, (ii) to Seller's and
Shareholders' knowledge, there is no basis for the assertion after the Closing
Date of any such denial or recoupment claim, and (iii) Seller and Shareholders
have not received notice from any Medicare or Medicaid program or any other
third party reimbursement source (inclusive of managed care organizations) of
any pending or threatened investigations or surveys with respect to, or arising
out of, products or services provided by Seller or otherwise, and to the
knowledge of Seller and Shareholders, no such investigation or survey is
pending, threatened or imminent.
(v) THIS PARAGRAPH INTENTIONALLY LEFT BLANK.
(w) Questionnaires. The healthcare law questionnaire heretofore
delivered to the Seller by Buyer attached hereto as Exhibit 12(w) (the
"QUESTIONNAIRE") has been fully and accurately completed and does not contain
any material misstatement of any fact and does not omit any fact that would have
to be stated in order not to render any response to such questionnaire
materially misleading.
13. Representations and Warranties of Buyer. Buyer represents
and warrants to Seller and Shareholders that:
(a) Due Organization. Buyer is a duly organized, valid
corporation under the laws of the State of Florida.
(b) Due Authority. Buyer is duly authorized by law and
corporate policy and approval to: (i) enter into this Agreement and each
Transaction Document; (ii) make all warranties and representations made by Buyer
herein; and (iii) deliver all consideration provided for under the terms hereof.
(c) Binding Authority. All signatories and agents designated as
agents/officers for Buyer for signing purposes have the authority to bind Buyer
to the terms of this Agreement.
(d) Cash Payment Authority. Buyer has the authority to cause
the cash payment of the Purchase Price to be delivered in accordance with the
terms of this Agreement.
(e) Brokers. No broker or finder has acted for the Buyer in
connection with the transactions contemplated by this Agreement, and no broker
or finder is entitled to any broker's or finder's fee or other commission in
respect thereof based in any way on agreements, understandings or arrangements
with the Buyer.
14. Survival of Representations and Warranties. The representations
and warranties of Seller, Shareholders, and Buyer contained in or made pursuant
to this Agreement shall survive the execution of this Agreement.
15. Restrictive Covenants.
(a) Non-Compete. Seller and Shareholders hereby agree that
until the fifth (5th) anniversary of the Closing Date (the "RESTRICTED PERIOD"),
it or he will not, directly or indirectly, own, manage,
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operate, join, control or participate, or have a proprietary interest in, the
ownership, management, operation or control, of or be connected with, in any
manner, any home health care business that provides services or products within
fifty (50) miles of any location set forth on the Schedule of Locations attached
hereto as Schedule 15(a).
(b) Confidential Information. Certain confidential and
proprietary information is included within the Assets ("TRADE SECRETS"),
including, without limitation, with respect to some or all of the following
categories of information: (i) financial information, including but not limited
to information relating to earnings, assets, debts, prices, pricing structure,
reimbursement matters, volume of purchases or sales or other financial data
related to Seller; (ii) supply and service information, including but not
limited to information relating to goods and services, suppliers' names or
addresses, terms of supply or service contracts or of particular transactions,
or related information about potential suppliers to the extent that such
information is not generally known to the public, and to the extent that the
combination of suppliers or use of a particular supplier, though generally known
or available, may yield advantages to the Buyer, details of which are not
generally known; (ii) marketing information, including but not limited to
information relating to details about ongoing or proposed marketing programs or
agreements by or on behalf of the Seller, sales forecasts, advertising formats
and methods or results of marketing efforts or information about impending
transactions; (iv) personnel information, including but not limited to
information relating to employees' personal or medical histories, compensation
or other terms of employment, actual or proposed promotions, hirings,
resignations, disciplinary actions, terminations or reasons therefor, training
methods, performance, or other employee information; (v) customer and patient
information, including but not limited to information relating to names,
addresses or backgrounds of past, existing or prospective clients, customers,
payors, referral sources, and patients, records of agreements and prices,
proposals or agreements between any of them and Seller, status of accounts or
credit, patients' medical histories or related information as well as customer
lists, to the extent not generally known to the public; and (vi) inventions and
technological information, including but not limited to information related to
proprietary technology, trade secrets, research and development data, processes,
formulae, data and know-how, improvements, inventions, techniques, and
information that has been created, discovered or developed, or has otherwise
become known to Seller or Shareholders, and/or in which property rights have
been assigned or otherwise conveyed to Seller, which information has commercial
value in the business in which the Seller is engaged. Seller and Shareholders
shall hold all Trade Secrets in confidence and will not discuss, communicate or
transmit to others, or make any unauthorized copy of or use any of the Trade
Secrets; and will take all reasonable actions that Buyer deems reasonably
necessary or appropriate, to prevent unauthorized use or disclosure of or to
protect the Buyer's interest in the Trade Secrets. The foregoing does not apply
to information that by means other than deliberate or inadvertent disclosure by
Seller, Shareholders or any of their respective Affiliates, becomes or is well
known to the public; or disclosure compelled by judicial or administrative
proceedings after they diligently try to avoid each disclosure and afford Buyer
the opportunity to obtain assurance that compelled disclosures will receive
confidential treatment.
(c) Non-Solicitation and Non-Pirating. Each of Seller and each
Shareholder hereby agree that, during the Restricted Period it or he will not,
directly or indirectly, for itself or himself or on behalf of any other person,
firm, entity or other enterprise: (i) solicit or in any way divert or take away
any person or entity that, prior to the Closing Date, was a patient, client,
customer, payor, referral source, facility or patient of the Seller; or (ii)
hire, entice away or in any other manner persuade any person who was an
employee, consultant, representative or agent of the Seller prior to the Closing
Date, to alter, modify or terminate their relationship with the Buyer.
(d) Necessary Restrictions. Each of Seller and each Shareholder
acknowledge that the restrictions contained in this Agreement are reasonable and
necessary to protect the legitimate business interests of the Buyer and that any
violation thereof by any of them would result in irreparable harm to the Buyer,
and that damages in the event of any such breach of this Agreement will be
difficult, if not impossible, to ascertain. Accordingly, each of the Seller and
each Shareholder agree that upon the violation of any of the restrictions
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contained in this Agreement, the Buyer shall be entitled to obtain from any
court of competent jurisdiction a preliminary and permanent injunction as well
as any other relief provided at law, equity, under this Agreement or otherwise,
without the necessity of posting any bond or other security whatsoever. In the
event any of the foregoing restrictions are adjudged unreasonable in any
proceeding, then the parties agree that the period of time or the scope of such
restrictions (or both) shall be adjusted to such a manner or for such a time (or
both) as is adjudged to be reasonable.
(e) Remedies For Breach. Each of the Seller and each
Shareholder acknowledge that the covenants contained in this Agreement are
independent covenants and that any failure by the Buyer to perform its
obligations under this Agreement or any other agreement shall not be a defense
to enforcement of the covenants contained in this Agreement, including but not
limited to a temporary or permanent injunction.
16. Indemnification; Remedies.
(a) Indemnification by Seller and Shareholders (other than
Harold Winters). Seller and Shareholders (other than Harold Winters) shall,
jointly and severally, indemnify and hold harmless at all times Buyer and its
stockholders, directors, officers, employees, agents and assigns, from and
against any Damages (as hereinafter defined) arising out of: (i) any inaccurate
representation made by Seller or Shareholders in, pursuant to or under this
Agreement or any Transaction Document; (ii) any breach of any warranty made by
Seller or Shareholders in, pursuant to or under this Agreement or any
Transaction Document; (iii) any breach or default in the performance by Seller
or Shareholders of any of the covenants to be performed by Seller or
Shareholders hereunder or in any Transaction Document; and (iv) any Closing Date
Liabilities. Notwithstanding the aforementioned, in the event Harold Winters
breaches the provisions of paragraph 15, Harold Winters shall be liable for any
Damages (as hereinafter defined) incurred by the Buyer and its stockholders,
directors, officers, employees, agents and assigns, as a result of Harold
Winters' breach of the provisions of paragraph 15 and Harold Winters shall be
subject to the provisions of this paragraph 16.
(b) Indemnification by Buyer. Buyer shall indemnify and hold
harmless at all times Seller or Shareholders from and against any Damages
arising out of: (i) any inaccurate representation made by Buyer in, pursuant to
or under this Agreement; (ii) any breach of any warranty made by Buyer in,
pursuant to or under this Agreement; (iii) any breach or default in the
performance by Buyer of any of the covenants to be performed by Buyer hereunder
based upon or arising out of any event, transaction, default, act or omission
which occurred or was committed by the Buyer on or after the Closing Date; and
(iv) the failure of Buyer to comply with the provisions of paragraph 1(b)(ii).
(c) Definition of Damages. The term "DAMAGES" as used herein
shall include any judgments, claims, actions, deficiencies, losses,
delinquencies, defaults, assessments, fees, costs, taxes, expenses, debts,
liabilities, obligations, settlements, penalties, and damages, including,
without limitation, reasonable counsel fees incurred in investigating or in
attempting to avoid or oppose the imposition thereof. The term "Damages" shall
include, but shall not be limited to, any Liabilities Deficiency, as defined in
paragraph 5 hereof.
(d) Remedies.
(i) Buyer's Remedies. If Buyer makes written request to
Seller or Shareholders for the payment of Damages, then Seller or
Shareholders, as the case may be, shall pay to Buyer the amount of
Damages requested by no later than the last day of the Notice Period as
provided in paragraph 5(b) above.
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(ii) Seller's Remedies. If Seller or any Shareholder makes
written request to Buyer for the payment of Damages, then Buyer shall
pay to Seller or such Shareholder the amount of Damages requested by no
later than the last day of the Notice Period as provided in paragraph
5(b), above.
(iii) Notice of Dispute. Notwithstanding the foregoing
provisions of this subparagraphs (d)(i) and (ii), if a party (the
"DEMANDING PARTY") serves a request for payment on the other party (the
"OBLIGATED PARTY"), the Obligated Party shall have the option to
provide written notice to the Demanding Party (the "NOTICE OF DISPUTE")
within the applicable Notice Period that the Obligated Party disputes,
in good faith, the validity or amount of the Damages set out in the
request for payment of Damages, and if the affected parties cannot
agree on the validity or amount of such Damages within ten (10) days
following the Notice Period, the dispute as to the validity or amount
of such claim or liability (the "DISPUTE") shall be settled as set
forth in subparagraph (e) of this paragraph 16, with the non-prevailing
party bearing the prevailing party's fees and costs of arbitration if
such Dispute is resolved by arbitration.
(iv) Arbitration. If arbitration is required pursuant to
this paragraph 16, Buyer, on the one hand, and the affected Seller and
Shareholders, on the other hand, each shall select an arbitrator within
ten (10) business days after the Notice of Dispute is delivered; those
two arbitrators will then select a third arbitrator; and the three
arbitrators so chosen will determine the validity of the claim for
Damages. If Seller or Buyer delays in appointing an arbitrator when
required, and ten (10) days or more has elapsed, the arbitrator
appointed by the other party shall arbitrate the dispute. If the Seller
and the Shareholders shall be subject to a Dispute with Buyer, they
shall, unless Buyer elects otherwise in its sole and absolute
discretion or unless the Dispute concerns the actions of a Shareholder
under paragraph 15, be required to act as a group with respect to any
and all rights and obligations with respect to the resolutions of the
Dispute as provided in this paragraph 16.
(e) Settlement of Disputes.
(i) Disputes Not Involving Third Parties. If a Dispute
involves claims not involving any third party, Buyer and Seller or
Shareholders shall settle the Dispute by submitting the same to binding
arbitration.
(ii) Disputes Involving Claims Made by Third Parties. If a
Dispute involves claims made by one or more third parties (a "THIRD
PARTY CLAIM"), the party asserting its right to indemnification for
such Third Party Claim shall give written notice to the other party
along with any and all information such party has with respect to the
Third Party Claim, by no later than the last day of the Notice Period
as provided in paragraph 5(b), and the failure to provide such to
timely give such notice shall affect such party's right to
indemnification to the extent the party to receive the notice is
damaged by such delay. Upon such notice to Seller or Shareholders,
Buyer and Seller and/or Shareholders shall submit the Dispute to
arbitration, and the following procedures shall apply:
(A) Solely for purposes of determining the party
responsible for defending the Third Party Claim, the
arbitrators shall deem such Third Party Claim to be valid
(although such consideration shall not be an admission by any
party as to any liability to any party). The arbitrators then
shall decide which party shall be liable for the Third Party
Claim if it is successfully prosecuted by such third party or
parties, and the decision of such arbitrators with respect to
such liability shall be final and binding
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as among the parties. (Such party determined to be liable for
such claim sometimes shall be referred to herein as the
"RESPONSIBLE PARTY".)
(B) If the Responsible Party refuses to settle (and
pay the settlement amount of) the Third Party Claim
immediately, then the Responsible Party immediately shall
select one of the following two options:
Option One: The Responsible Party, at the Responsible
Party's sole expense and risk, can assume the defense of
the Third Party Claim, provided the Responsible Party
first places in escrow, in favor of the other party,
adequate collateral (as determined by the arbitrators on
consideration of all relevant facts) to protect the other
party from all Damages with respect to such Third Party
Claim (in which case the other party immediately shall be
reimbursed by the Responsible Party for any amount the
other party is thereafter required to pay the third party
with respect to such Third Party Claim; or
Option Two: The Responsible Party, at the Responsible
Party's expense and risk, can co-defend the Third Party
Claim with the other party, with the Responsible Party
also responsible for paying all costs incurred by the
other Party in connection with such defense, including,
without limitation, the reasonable legal fees and
expenses of the other party's counsel for its reasonable
involvement in such defense. If the other party is found
to be liable for any portion of such Third Party Claim,
the Responsible Party immediately shall reimburse the
other party for any amount required to be paid by the
other party with respect thereto; provided, however, if
the Responsible Party selects this option, the
Responsible Party shall attempt diligently to have the
other party removed as a party to any legal action
involving the Third Party Claim (and, upon such removal,
the involvement of the other party's counsel shall cease
unless requested by the Responsible Party or the
Responsible Party's counsel); and
(C) No party may settle any Third Party Claim without
the prior consent of the other parties hereto unless the
settlement will not have a material adverse effect on the
other party hereto or a full release of liability from the
Third Party Claim is provided to all the parties affected by
the Third Party Claim. The parties will resolve any Dispute
with respect to any such proposed settlement in accordance
with this paragraph 16.
(D) Any party responsible for defending a Third Party
Claim shall proceed with diligence and in good faith with
respect thereto.
(E) Nothing contained in this paragraph 16(e)(ii)
shall prevent any party from assuming control of the defense
and/or settling any Third Party Claim against it for which
indemnification is not sought under this Agreement.
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17. Use of Corporate and Fictitious Names. Seller and Shareholders,
jointly and severally, agree to take all actions necessary to assist Buyer in
obtaining the rights to use the corporate name and any fictitious names used in
its conduct of any of the Business, including but not limited to the execution
of any assignments and consents to use such name. If Buyer attempts to use such
name, Seller shall consent to Buyer's use of such name if such consent is
required by any state, county or local governmental authority.
18. Prepaid Items; Deposits; Etc. All prepaid insurance premiums, rent
and utility deposits, and similar items paid by or owing to the Seller by any
person, shall not be considered to be part of the Assets being purchased by
Buyer and, on consummation of the transactions contemplated by this Agreement,
shall be the property of Seller.
19. Post-Closing Requirements of Seller.
(a) Payment Escrow. At Closing, Buyer shall pay over and deliver to
or on behalf of Seller (and shall be credited, dollar-for-dollar, as partial
payment of the Purchase Price) to the Paying Agent, in escrow (the "PAYMENT
ESCROW"), an amount equal to the Closing Date Liabilities as specified in
paragraph 2(b)(ii), to be held by the Paying Agent subject to the terms,
conditions, and provisions of the Payment Escrow Agreement. The Paying Agent
shall be an attorney at law authorized to practice law in the state of Florida
or a trust company or bank having trust powers in such State, which Paying Agent
has been selected by Seller and approved by Buyer.
(i) Seller shall pay all costs and expenses of the
Payment Escrow, including without limitation, any fees or costs of the
Paying Agent.
(ii) Seller shall be obligated to see that the Paying Agent
timely and properly pays all Listed Liabilities, including without
limitation the costs for the Yellow Page advertisements, and that the
Paying Agent obtains and delivers to Buyer the "Final Release" referred
to in the Payment Escrow Agreement, or canceled checks referred to in
the Payment Escrow Agreement.
(iii) The existence of the Payment Escrow shall not affect the
obligations of the Seller and the Shareholders to hold Buyer harmless
against any Closing Date Liabilities as provided in paragraph (16)(a).
(b) Final Financial Information. Not later than forty-five (45)
days following Closing, Seller, at Seller's sole cost and expense, shall deliver
to Buyer (to the attention of Gayle Lamson) "FINAL FINANCIAL INFORMATION", which
shall include:
(i) a balance sheet of Seller as of the Effective Date prepared
in accordance with GAAP;
(ii) an income statement of Seller for the period commencing on
the date succeeding the last day of the most recent Financial Statement
Date and ending on the Effective Date which agrees with the balance
sheet submitted at Closing;
(iii) an inventory of fixed assets of Seller as of the
Effective Date which agrees with the balance sheet submitted at
Closing; and
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(iv) a listing of resale inventory of Seller as of the
Effective Date which agrees with the balance sheet submitted at
Closing.
(v) a cash settlement summary of Seller in a form provided by
Buyer.
(c) Liabilities Deficiency. If all such Final Financial Information
or if any document, instrument or agreement required to be delivered in
accordance with paragraph 9(a), is not delivered to Buyer within forty-five (45)
days following Closing, Seller and Shareholder shall be liable to Buyer in an
amount equal to $500.00 for each day after such forty-five (45) day period until
all such Final Financial Information and such documents, instruments and
agreements are delivered to Buyer, and such liability shall constitute a
Liabilities Deficiency under the provisions of paragraph 5, above.
20. Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, is intended to confer on any person, other than the parties hereto, and
their successors, any rights or remedies under or by reason of this Agreement
other the affiliates entitled to indemnification pursuant to paragraph 16.
21. Expenses. Except as otherwise stated herein, each of the parties
shall bear all expenses incurred by them in connection with this Agreement and
in consummation of the transactions contemplated hereby in preparation thereof.
22. Notices. All notices, consents, waivers and other communications
required or permitted hereunder shall be in writing and shall be deemed to be
properly given when personally delivered to the party or parties entitled to
receive the notice or three (3) business days after sent by certified or
registered mail, postage prepaid, or on the business day after sent by
nationally recognized overnight courier, in each case, properly addressed to the
party or parties entitled to receive such notice at the address stated below:
to Seller: Pinnacle Health Care, Inc.
3121 West Hallandale Beach Boulevard
Suite 110
Hallandale, FL 33009
to Representative: Howard B. Nadel, Esq.
Neimark & Nadel, P.A.
800 Corporate Drive
Suite 420
Ft. Lauderdale, FL 33334
with a copy to: Howard B. Nadel, Esq.
Neimark & Nadel, P.A.
800 Corporate Drive
Suite 420
Ft. Lauderdale, FL 33334
to Buyer: c/o RoTech Medical Corporation
4506 L.B. McLeod Road, Suite F
Orlando, FL 32811
Attention: Stephen P. Griggs
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with copies to: Integrated Health Services, Inc.
10065 Red Run Boulevard
Owings Mills, MD 21117
Attn: Marshall Elkins
and
Blass & Driggs
461 Fifth Avenue
New York, NY 10017
Attn: Andrew S. Bogen
23. Choice of Law. The laws of the State of Florida applicable to
contracts executed, delivered and to be fully performed in such State govern the
validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
24. Sections and Other Headings. Section, paragraph, and other headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
25. Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute but one instrument.
26. Gender. All gender employed in this Agreement shall include all
genders, and the singular shall include the plural and the plural shall include
the singular whenever and as often as may be appropriate.
27. Parties in Interest. This Agreement shall be binding on and shall
inure to the benefit of, and be enforceable by, Seller, Shareholders and Buyer
and their respective successors and assigns. Buyer shall be entitled to assign
its rights under this Agreement and the Transaction Documents after the Closing.
Seller and the Shareholders may not assign this Agreement or any of their rights
hereunder without the prior consent of Buyer.
28. Entire Agreement. This Agreement including all Schedules and
Exhibits hereto, and all Transaction Documents constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and there
are no agreements, understandings, restrictions, warranties, or representations
between the parties with respect to the subject matter hereof other than as set
forth herein or as herein provided.
29. Performance. In the event of a breach by Seller or any Shareholder
of any of their respective obligations hereunder, the Buyer shall have the
right, in addition to any other remedies which may be available, to obtain
specific performance of the terms of this Agreement, and the Seller and each
Shareholder hereby waives the defense that there may be an adequate remedy at
law.
30. Waiver, Discharge, Etc. This Agreement and the Transaction
Documents and the obligations hereunder and thereunder shall not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by or on behalf of each of the parties hereto by
their duly authorized officer or representative. The failure of any party to
enforce at any time any of the provisions of this Agreement or any Transaction
Document shall in no way be construed to be a waiver of any such provision, nor
in any way
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to affect the validity of this Agreement or such Transaction Document, as the
case may be, or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement or any
Transaction Document shall be held to be a waiver of any other or subsequent
breach.
31. Cooperation Further Assistance. From time to time, as and when
reasonably requested by any party hereto after the Closing, the other parties
will (at the expense of the requesting party) execute and deliver, or cause to
be executed or delivered, all such documents, instruments and consents and will
use reasonable efforts to take all such action as may be reasonably requested or
necessary to carry out the intent and purpose of this Agreement, and to vest in
Buyer good title to, possession of and control of all the Assets.
32. Joint and Several. Seller and the Shareholders shall be jointly and
severally liable for all representations, warranties and obligations, including,
without limitation, indemnification obligations, and covenants made by any of
them pursuant to this Agreement, including, without limitation, any made
pursuant to any Transaction Document, unless such joint and several liability
has been expressly excluded under the terms of this Agreement. For all purposes
of this Agreement, any representation or warranty that is qualified to be "to
the knowledge of Seller" or by a requirement that Seller shall have received
"notice" of any matter, or any similar qualification shall be deemed to include
the knowledge of the Shareholders or notices to the Shareholders, as the case
may be.
33. Independent Legal Counsel. Seller and Shareholders represent and
warrant that each party has had the opportunity to seek the advice of
independent legal counsel prior to signing this Agreement, and that the Buyer
has recommended to Seller and Shareholders that such party obtain legal counsel.
34. Representative. Notwithstanding anything contained herein to the
contrary, each of Seller and each Shareholder hereby designates Howard B. Nadel
of the law firm of Neimark & Nadel, P.A. and each of Seller and each Shareholder
hereby accepts the designation of Howard B. Nadel of the law firm of Neimark &
Nadel, P.A. as the representative of the Seller and Shareholders (the
"REPRESENTATIVE") to act for and on behalf of the Seller and Shareholders as
provided in this Agreement. Each of Seller and each Shareholder shall be bound
by all actions taken or omitted by the Representative on behalf of any Seller or
Shareholder as provided in this Agreement, and each of Seller and each
Shareholder shall be deemed to have received notice deemed given or payment made
to the Representative in accordance with the notice provisions of this Agreement
on the date deemed given or the date paid to the Representative, and Buyer shall
be entitled to rely on all notices and consent given, and all settlements
entered into on behalf of Seller or any Shareholder to the extent authorized
pursuant to the terms of this Agreement notwithstanding any objections made by
any Seller or Shareholder prior to, concurrently with or subsequent to the
giving of any such notice or consent or the settlement of any such matter. The
Representative may be replaced only if and when Seller and all of the
Shareholders shall notify Buyer that a new individual person (named in such
notice) has been unanimously selected by them to be to be the new
Representative, in which case such new person shall thereafter be the
Representative.
[SIGNATURES ON THE FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first stated above.
BUYER:
ROTECH OXYGEN AND MEDICAL
EQUIPMENT, INC.
By: /s/ Stephen P. Griggs
----------------------
Name: Stephen P. Griggs
Title: President
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me by, Stephen P.
Griggs, as President of RoTech Oxygen and Medical Equipment, Inc., a Florida
corporation, and who is personally known to me; or has produced ________________
as identification.
9/3/98 /s/ Elizabeth S. Brown
- --------------------- --------------------------
Date Notary Signature
NOTARY PUBLIC
STATE OF FLORIDA -------------------------
[SEAL] Notary Name Printed
ELIZABETH S. BROWN My Commission Expires:
MY COMMISSION #CC 733172
EXPIRES: JUNE 25, 2002 SELLER:
Bonded Thru Notary Public Underwriters
PINNACLE HEALTH CARE, INC.
By: /s/ Doug Shirley
-----------------------
Name: Doug Shirley
Title: President
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STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me by, Doug Shirley,
as President of Pinnacle Health Care, Inc., a Florida corporation, and who is
personally known to me; or has produced LICENSE as identification.
8/31/98 /s/ Howard B. Nadel
- --------------------- -----------------------
Date Notary Signature
[SEAL] -----------------------
HOWARD B. NADEL Notary Name Printed
Notary Public, State of Florida My Commission Expires:
My Comm. Expires April 22, 2000
No. CC 522201
Bonded Thru Official Notary Service
1-(800) 723-0121
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SHAREHOLDERS:
/s/ Brad Levine
-------------------------
Brad Levine
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me by Brad Levine, as
a shareholder of Pinnacle Health Care, Inc., a Florida corporation, and who is
personally known to me; or has produced LICENSE as identification.
8/31/98 /s/ Howard B. Nadel
- --------------------- -------------------------
Date Notary Signature
[SEAL] -------------------------
HOWARD B. NADEL Notary Name Printed
Notary Public, State of Florida My Commission Expires:
My Comm. Expires April 22, 2000
No. CC 522201 /s/ Richard R. Rizzo
Bonded Thru Official Notary Service -------------------------
1-(800) 723-0121 Richard R. Rizzo
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me by Richard R.
Rizzo, as a shareholder of Pinnacle Health Care, Inc., a Florida corporation,
and who is personally known to me; or has produced LICENSE as identification.
8/31/98 /s/ Howard B. Nadel
- ------------------- -------------------------
Date Notary Signature
[SEAL]
HOWARD B. NADEL -------------------------
Notary Public, State of Florida Notary Name Printed
My Comm. Expires April 22, 2000 My Commission Expires:
No. CC 522201
Bonded Thru Official Notary Service
1-(800) 723-0121
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/s/ Harold Winters
-------------------------
Harold Winters
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me by Harold Winters,
as a shareholder of Pinnacle Health Care, Inc., a Florida corporation, and who
is personally known to me; or has produced LICENSE as identification.
8/31/98 /s/ Howard B. Nadel
- --------------------- -------------------------
Date Notary Signature
[SEAL]
HOWARD B. NADEL -------------------------
Notary Public, State of Florida Notary Name Printed
My Comm. Expires April 22, 2000 My Commission Expires:
No. CC 522201
Bonded Thru Official Notary Service /s/ Doug Shirley
1-(800) 723-0121 -------------------------
Doug Shirley
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me by Doug Shirley as
a shareholder of Pinnacle Health Care, Inc., a Florida corporation, and who is
personally known to me; or has produced LICENSE as identification.
8/31/98 /s/ Howard B. Nadel
- --------------------- -------------------------
Date Notary Signature
[SEAL]
HOWARD B. NADEL -------------------------
Notary Public, State of Florida Notary Name Printed
My Comm. Expires April 22, 2000 My Commission Expires:
No. CC 522201
Bonded Thru Official Notary Service
1-(800) 723-0121
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SCHEDULES AND EXHIBITS
Schedule 1(a)(i) - Inventory; Fixed Assets
Schedule 1(a)(iii)(B) - Patients' List
Schedule 1(a)(iii)(C) - Telephone Numbers
Schedule 1(a)(iii)(F) - Paid Off Assets
Schedule 1(b) - Excluded Assets
Schedule 2(a) - Allocation of Purchase Price
Schedule 2(b)(iii) - Wire Instructions
Schedule 4(a) - Closing Date Liabilities
Schedule 4(b) - Unassumed Contracts
Schedule 12(c) - Litigation
Schedule 12(g) - Contracts
Schedule 12(i) - Personnel Payrates; Employee Benefits
Schedule 12(k) - Insurance
Schedule 12(o) - Tax Returns and Financial Statements
Schedule 12(p) - Supplemental Tax Information
Schedule 12(q) - Adverse Business Developments
Schedule 12(r) - Relationships
Schedule 12(u) - Reimbursement Matters
Schedule 15(a) - Locations
Exhibit 2(b)(i) - Escrow Agreement
Exhibit 2(b)(ii) - Payment Escrow Agreement
Exhibit 9(c) - Seller's Opinion
Exhibit 12(w) - Healthcare Questionnaire
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