SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
OR
_
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission file number 0-12927
NATIONAL HOME HEALTH CARE CORP.
------------------------------------------------------------
(Exact name of Registrant as Specified in Its Charter)
Delaware 22-2981141
-------------------------- ------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
700 White Plains Road, Scarsdale, New York 10583
------------------------------------------------
(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number Including Area Code: 914-722-9000
- - --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,if Changed Since Last Report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required by Section 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes _____ No____
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock outstanding as of March 14, 1997 was
5,095,321
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NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED JANUARY 31, 1997
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of January 31, 1997
and July 31, 1996 (unaudited) 3-4
Consolidated Statements of Operations for the three
months ended January 31, 1997 and January 31, 1996
and six months ended January 31, 1997 and January
31, 1996 (unaudited) 5
Consolidated Statements of Cash Flows for the six months
ended January 31, 1997 and January 31, 1996 (unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11-12
SIGNATURES 13
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
January 31, 1997 July 31, 1996
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ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 9,616,000 $ 8,929,000
Investments 518,000 528,000
Accounts receivable-less allowance for doubtful
accounts of $372,000 at January 31, 1997 and
$414,000 at July 31, 1996 8,234,000 8,499,000
Income taxes receivable 317,000 203,000
Prepaid expenses and other assets 297,000 218,000
Deferred taxes 248,000 304,000
------------ ------------
Total current assets 19,230,000 18,681,000
Furniture, equipment and leasehold improvements, net 352,000 319,000
Excess of cost over fair value of net assets of
businesses acquired, net 2,494,000 2,557,000
Other intangible assets, net 97,000 132,000
Deposits and other assets 110,000 110,000
Investment in unconsolidated investee 2,444,000 2,622,000
---------- ----------
TOTAL $24,727,000 $24,421,000
========== ==========
(Continued)
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
January 31, 1997 July 31, 1996
---------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,003,000 $ 1,315,000
Estimated third-party payor settlements 725,000 1,078,000
----------- -----------
Total current liabilities 1,728,000 2,393,000
Deferred tax liability 464,000 524,000
----------- -----------
Total liabilities 2,192,000 2,917,000
Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 6,050,321 shares 6,000 6,000
Additional paid-in capital 17,660,000 17,660,000
Retained earnings 5,820,000 4,789,000
----------- -----------
23,486,000 22,455,000
Less treasury stock (955,000 shares) at cost (951,000) (951,000)
------------ -----------
Total stockholders' equity 22,535,000 21,504,000
---------- ----------
TOTAL $24,727,000 $24,421,000
========== ==========
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
For the three months ended For the six months ended
January 31, January 31,
------------- ------------
1997 1996 1997 1996
---- ---- ---- ----
Net patient revenue $ 8,692,000 $ 9,965,000 $17,378,000 $20,039,000
----------- ----------- ----------- -----------
Operating expenses:
Cost of revenue 5,633,000 6,162,000 11,324,000 12,709,000
General and administrative 2,119,000 2,963,000 4,188,000 5,655,000
Amortization of intangibles 49,000 73,000 97,000 146,000
------------ ------------ ------------ ------------
Total operating expenses 7,801,000 9,198,000 15,609,000 18,510,000
---------- ---------- ---------- ----------
Income from operations 891,000 767,000 1,769,000 1,529,000
Other income:
Interest income 103,000 99,000 208,000 203,000
(Loss) from equity investee (148,000) (178,000)
----------- ------------- ----------
Income before taxes 846,000 866,000 1,799,000 1,732,000
Provision for income taxes 353,000 395,000 768,000 809,000
----------- ----------- ----------- -----------
NET INCOME $ 493,000 $ 471,000 $ 1,031,000 $ 923,000
----------- =========== ========== ===========
Net income per share of
common stock $ 0.10 $ 0.09 $ 0.20 $ 0.18
============== ============== ============== ==============
5,095,321 5,002,256 5,095,321 5,001,708
Weighted average
shares outstanding
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS AND CASH FLOWS
UNAUDITED
For the six months ended
January 31,
------------------------------------
1997 1996
---- ----
Cash flows from operating activities:
Net income $1,031,000 $ 923,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 151,000 247,000
Loss from equity investee 178,000 ----
Deferred tax (4,000) ----
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 265,000 (147,000)
(Increase) decrease in income taxes receivable (114,000) 287,000
(Increase) in prepaid expenses and other assets (79,000) (115,000)
(Decrease) in accounts payable and accrued expenses (312,000) (517,000)
(Decrease) increase in estimated third party payor
settlements (353,000) (971,000)
--------- ---------
Net cash provided by (used in) operating activities 763,000 (293,000)
--------- ---------
Cash flows from investing activities:
Proceeds of investments 10,000 260,000
Purchase of property, plant and equipment (86,000) (54,000)
Purchase of Nurse Care, Inc., net of cash acquired ---- (2,595,000)
-------------- ----------
Net cash (used in) investing activities (76,000) (2,389,000)
------- ----------
Cash flows from financing activities:
Decrease in notes receivable ---- 179,000
Principal payments under capital lease obligations ---- (14,000)
Proceeds from exercise of stock options ---- 15,000
-------------- ------------
Net cash provided by financing activities ---- 180,000
-------------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 687,000 (2,502,000)
Cash and cash equivalents-beginning of period 8,929,000 9,237,000
--------- ---------
CASH AND CASH EQUIVALENTS-END OF PERIOD $9,616,000 $6,735,000
========= =========
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Taxes $ 957,000 $ 985,000
Interest 1,000 11,000
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles of interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended
January 31, 1997 are not necessarily indicative of the results that may be
expected for the year ended July 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended July 31, 1996.
NOTE 2 - INITIAL PUBLIC OFFERING OF SUNSTAR HEALTHCARE, INC.
On May 21, 1996, the initial public offering of common stock of SunStar
Healthcare, Inc. ("SunStar") was consummated. Prior to the offering, SunStar had
been a wholly-owned subsidiary of the Company, consisting of its Florida
outpatient medical center operations. As a result of the offering, the Company
currently owns 900,000 shares, or approximately 37.6% of SunStar. The Company is
accounting for its investment in SunStar using the equity method of accounting.
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<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations and Effects of Inflation
- - ----------------------------------------------
For the three months ended January 31, 1997, net patient revenue was
$8,692,000 as compared to $9,965,000 for the three months ended January 31,
1996. This decrease is primarily attributable to the absence of revenue from
outpatient medical services during the recent period (as a result of the public
offering by SunStar in May 1996 and its resulting accounting treatment using the
equity method) as compared with such revenue of $1,264,000 during the earlier
period. Revenue from home health care services decreased slightly to $8,692,000
for the three months ended January 31, 1997 from $8,701,000 for the three months
ended January 31, 1996. Revenue from Health Acquisition Corp., the subsidiary
providing home health care services in the New York metropolitan area, decreased
$294,000 or 6% as a result of increased competition and price pressures from the
certified home health care agencies with which it contracts. Revenue from New
England Home Care, Inc. and Nurse Care, Inc., the subsidiaries providing home
health care services in Fairfield and New Haven Counties, Connecticut increased
$285,000 or 8% as a result of additional market share penetration.
Cost of revenue as a percentage of net patient revenue increased to 65% for
the three months ended January 31, 1997 from 62% for the three months ended
January 31, 1996. Cost of revenue attributable to home health care operations
for the three months ended January 31, 1996 was 64%. The increase in cost of
revenue is attributable to lower reimbursement rates in the New York
metropolitan area.
General and administrative expenses as a percentage of revenue decreased to
24% for the three months ended January 31, 1997 from 30% for the three months
ended January 31, 1996. This decrease is attributable to improved efficiencies
implemented in the operations of New England Home Care, Inc. and Nurse Care,
Inc., as well as the elimination of all general and administrative expenses
relating to outpatient medical services as a result of the SunStar public
offering.
Amortization of intangibles decreased to $49,000 for the three months ended
January 31, 1997 from $73,000 for the three months ended January 31, 1996 as a
result of certain intangible assets from prior acquisitions being fully
amortized.
The Company recorded a loss from equity investee of $148,000 representing
its share of the SunStar net loss for the three months ended January 31, 1997.
The Company's effective tax rate decreased to approximately 42% for the
three months ended January 31, 1997 from 46% for the three months ended January
31, 1996. This decrease is attributable to the Company changing to combined
filing for state tax purposes and the availability of Work Opportunity Tax
Credits in the current fiscal year.
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<PAGE>
As a result of the foregoing, net income for the three months ended January
31, 1997 was $493,000, or $.10 per share, as compared to a net income of
$471,000, or $.09 per share, for the three months ended January 31, 1996.
For the six months ended January 31, 1997, net patient revenue was
$17,378,000 as compared to $20,039,000 for the six months ended January 31,
1996. This decrease is primarily attributable to the absence of revenue from
outpatient medical services during the six months ended January 31, 1997 as
compared with such revenues of $2,503,000 during the six months ended January
31,1 996. Revenue from home health care services decreased to $17,378,000 for
the six months ended January 31, 1997 from $17,536,000 for the six months ended
January 31, 1996. This decrease of $158,000 or 1% is explained in the above
three month discussion.
Cost of revenue as a percentage of net patient revenue increased to 65% for
the six months ended January 31, 1997 from 63% for the six months ended January
31, 1996. Cost of revenue attributable to home health care operations was 66%
for the six months ended January 31, 1996. This improvement is primarily
attributable to efficiencies achieved in the operations of New England Home
Care, Inc. and Nurse Care, Inc. as compared with the comparable period of 1996.
These two subsidiaries of the Company were acquired in August 1995.
General and administrative expenses as a percentage of revenue decreased to
24% for the six months ended January 31, 1997 from 28% for the six months ended
January 31, 1996. General and administrative expenses relating to home health
care operations decreased $332,000 or 8% from the previous six month period.
This decrease is attributable to improved efficiencies implemented in home
health care operations in both Connecticut and New York.
Amortization of intangibles decreased to $97,000 for the six months ended
January 31, 1997 from $146,000 for the six months ended January 31, 1996 as a
result of certain intangible assets from prior acquisitions being fully
amortized.
The Company recorded a loss from equity investee of $178,000, representing
its share of the SunStar net loss for the six months ended January 31, 1997.
The Company's effective tax rate decreased to approximately 43% for the six
months ended January 31, 1997 from 47% for the six months ended January 31,
1996. This decrease is explained in the above three month discussion.
As a result of the foregoing, net income for the six months ended January
31, 1997 was $1,031,000 or $.20 per share as compared to $923,000 or $.18 per
share for the six months ended January 31, 1996
The rate of inflation had no material effect on operations for the six
months ended January 31, 1997.
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<PAGE>
Financial Condition and Capital Resources
- - -----------------------------------------
Current assets increased to approximately $19,230,000 and current
liabilities decreased to $1,728,000, respectively, at January 31, 1997. These
results increased working capital by $1,214,000 from $16,288,000 at July 31,
1996 to $17,502,000 at January 31, 1997 and the current ratio increased from
7.8x at July 31, 1996 to 11.1x at January 31, 1997. Cash and cash equivalents at
January 31, 1997 was $9,616,000 as compared with $8,929,000 at July 31, 1996.
The Company provided net cash from operating activities of $763,000 for the
six months ended January 31, 1997 as compared to net cash used in operating
activities of $293,000 for the six months ended January 31, 1996. This increase
is attributable to a smaller decrease in estimated third-party payor settlements
at January 31, 1997 as compared to January 31, 1996 as a result of overpayments
received from Medicare in 1996. In addition, the Company had a decrease in
accounts receivable at January 31, 1997 as compared to an increase at January
31, 1996. This result is due to a greater amount of revenue being derived from
governmental payors such as Medicare and Medicaid Programs that reimburse for
home health care services on a more timely basis than other revenue sources.
Historically, the Company has financed its working capital requirement through
cash flow from operating activities. Net cash used in investing activities for
the six months ended January 31, 1997 reflects the purchase of equipment, offset
by proceeds of investments. For the six months ended January 31, 1996, net cash
used in investing activities consisted of the purchase of Nurse Care, Inc. and
the purchase of equipment, offset by proceeds of investments. For the six months
ended January 31, 1997, the Company had no financing cash flow activities. For
the six months ended January 31, 1996, the Company realized cash from financing
activities from payments received on notes receivable and proceeds from the
exercise of stock options, offset by payments under capital lease obligations.
The Company believes that it has sufficient cash to fund its operations for
at least the ensuing twelve month period. The Company also has available a
$2,000,000 secured offering line of credit with the Bank of New York. In
addition, New England Home Care, Inc. has a secured advised line of credit with
the Bank of New York, the maximum amount of which shall not exceed the lesser of
eligible accounts receivable or $2,000,000. Both facilities are at the alternate
base commercial lending rate of the Bank and expire January 30, 1998. As of
January 31, 1997, there were no outstanding balances under either line of
credit. The Company also believes that its current cash balances and available
credit will also allow it to continue to make acquisitions in the home health
care field without affecting its liquidity needs.
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<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders of the Company (the "Meeting") was held
on December 9, 1996. Proxies for the Meeting were solicited pursuant to Rule 14A
of the Securities Exchange Act of 1934, as amended, and there was no
solicitation in opposition.
At the Meeting, Frederick H. Fialkow, Bernard Levine, M.D., Steven Fialkow,
Ira Greifer, M.D. and Robert C. Pordy, M.D. were elected as directors of the
Company to serve until the Company's next annual meeting of shareholders and
until their respective successors are elected and qualified. The votes for each
director is as follows:
For Withheld
Frederick H. Fialkow 3,941,828 100
Bernard Levine, M.D. 3,941,828 100
Steven Fialkow 3,941,828 100
Ira Greifer, M.D. 3,941,828 100
Robert C. Pordy, M.D. 3,941,828 100
Item 5. Other Information - Acquisitions
On December 26, 1996, the Company entered into an agreement, subject to
regulatory approval, to purchase certain assets of C.J. Home Care Inc., d/b/a
Garden City Home Care, a New York State licensed home health care agency engaged
in providing home heath aide services in Nassau County, New York. Garden City
Home Care has annual revenue of approximately $2,000,000. The closing of this
transaction is expected to occur by the beginning of April of 1997.
On February 19, 1997, the Company entered into an agreement to acquire
certain assets of two New York licensed home health care agencies that provide
home health aide services in the New York metropolitan area. The consummation of
the proposed acquisition is subject to regulatory and other approvals and
conditions. The two companies have combined annual revenues of approximately
$3,400,000. The acquisition is expected to be completed by July of 1997.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
10.1 Letter Agreement dated February 20, 1997 providing a Secured
Advised Line of Credit from The Bank of New York to National Home
Health Care Corp.
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<PAGE>
10.2 Letter Agreement dated February 20, 1997 providing a Secured
Advised Line of Credit from The Bank of New York to New England
Home Care, Inc.
10.3 Asset Purchase Agreement dated December 26, 1996 by and between
Health Acquisition Corp. and C.J. Home Care Inc., d/b/a
Garden City Home Care.
*10.4 Asset Purchase Agreement dated February , 1997.
27 Financial Data Schedule.
(b) Reports on Form 8-K
None
*Confidential treatment has been requested for a portion of this Exhibit.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
National Home Health Care Corp.
Date: March 14, 1997 /s/ Robert P. Heller
--------------------
Robert P. Heller
Vice President of Finance,
Chief Financial and Accounting Officer
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Commission File No. 0-12927
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED JANUARY 31, 1997
NATIONAL HOME HEALTH CARE CORP.
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<PAGE>
Exhibit
Number Document Page Number
- - ------ -------- -----------
10.1 Letter Agreement dated February 20, 1997
providing a Secured Advised Line of Credit from
The Bank of New York to National Home Health
Care Corp.
10.2 Letter Agreement dated February 20, 1997
providing a Secured Advised Line of Credit from
The Bank of New York to New England Home
Care, Inc.
10.3 Asset Purchase Agreement dated December 26,
1996 by and between Health Acquisition Corp. and
C.J. Home Care Inc., d/b/a Garden City
Home Care.
*10.4 Asset Purchase Agreement dated February ,
1997.
.
27 Financial Data Schedule.
* Confidential treatment has been requested for a portion of this Exhibit.
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<PAGE>
Exhibit 10.1
<PAGE>
THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON
8 EAST PARKWAY, SCARSDALE, NEW YORK 10583
February 20, 1997
Mr. Robert E. Heller, Vice President &
Chief Financial officer
National Home Health Care Corp.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
Dear Bob:
This letter confirms that The Bank of New York (the "Bank") holds available a
$2,000,000 secured advised line of credit to National Home Health Care Corp.
Advances under the line of credit shall be payable on demand and bear interest
at a rate per annum equal to the alternate base commercial lending rate of the
Bank as publicly announced to be in effect from time to time (the "Alternate
Base Rate"), such rate to change on the effective date of any change in the
Alternate Base Rate.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (i) the Prime Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
For purposes of this definition:
"Prime Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published
for such day (or if such day is not a business day, for the next
preceding business day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank.
All advances and all principal payments hereunder shall be endorsed by the Bank
on the sheet attached to the Promissory Grid Note and shall be secured by all
assets of the borrower pursuant to a security agreement. The borrower authorizes
the Bank to accept telephonic instructions from a duly authorized representative
of the borrower, as indicated by the latest Corporate Resolution on file with
the Bank, to make an advance or receive a repayment hereunder and to endorse the
sheet
<PAGE>
attached to this Promissory Grid Note accordingly. All advances made hereunder
shall be credited to the Borrower's deposit account referred to above, which
credits shall be confirmed to the borrower by standard advice of credit. The
borrower agrees that the actual crediting of the sum of money so borrowed to the
borrower's deposit account shall constitute conclusive evidence that the advance
was made, and the failure of the Bank to endorse the amount of any advance on
the sheet attached to this note or to forward to the borrower an advice of
credit shall not affect the obligation of the borrower to repay such advance.
In addition, all advances under the line of credit shall be jointly and
severally guaranteed by Health Acquisition Corp., New England Home Care, Inc.
and Nurse Care, Inc. Each guarantee shall be secured by all assets of the
respective guarantors pursuant to a security agreement. The form of note,
security agreement and guarantee to be furnished to the Bank shall be in form
and substance acceptable to the Bank and its counsel.
Advances under the line of credit are subject to the Bank's satisfaction with
(i) the specific purpose and expected time and source of repayment of each
advance, and (ii) the Borrower's and the guarantors' financial condition,
business prospects and operations at the time of each advance. As you know,
lines of credit may be cancelled by either party at any time, however, unless
cancelled earlier, the line of credit shall be held available until January 30,
1998.
Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30 consecutive days during each twelve (12) month
calendar period in which the line of credit is held available.
Very truly yours,
THE BANK OF NEW YORK
/s/ Richard J. Kolosky
Richard J. Kolosky
Vice President
<PAGE>
Exhibit 10.2
<PAGE>
THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON
8 EAST PARKWAY, SCARSDALE, NEW YORK 10583
February 20, 1997
Mr. Robert E. Heller, Vice President &
Chief Financial officer
New England Home Care, Inc.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
Dear Bob:
This letter confirms that The Bank of New York (the "Bank") holds available a
$2,000,000 secured advised line of credit to New England Home Care, Inc.
Advances under the line of credit shall be payable on demand and bear interest
at a rate per annum equal to the alternate base commercial lending rate of the
Bank as publicly announced to be in effect from time to time (the "Alternate
Base Rate"), such rate to change on the effective date of any change in the
Alternate Base Rate.
"Alternate Base Rate" shall mean, for any day, a rate per annum
equal to the higher of (i) the Prime Rate in effect on such day
and (ii) the Federal Funds Rate in effect on such day plus 1/2 of
1%.
For purposes of this definition:
"Prime Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or if such day is not a business day, for
the next preceding business day, the average of quotations for
such day on such transactions received by the Bank from three
Federal funds brokers of recognized standing selected by the
Bank.
All advances and all principal payments hereunder shall be endorsed by the Bank
on the sheet attached to the Promissory Grid Note and shall be secured by all
assets of the borrower pursuant to a security agreement. The borrower authorizes
the Bank to accept telephonic instructions from a
<PAGE>
Page 2
Robert E. Heller
NEHCI
duly authorized representative of the borrower, as indicated by the latest
Corporate Resolution on file with the Bank, to make an advance or receive a
repayment hereunder and to endorse the sheet attached to this Promissory Grid
Note accordingly. All advances made hereunder shall be credited to the
Borrower's deposit account referred to above, which credits shall be confirmed
to the borrower by standard advice of credit. The borrower agrees that the
actual crediting of the sum of money so borrowed to the borrower's deposit
account shall constitute conclusive evidence that the advance was made, and the
failure of the Bank to endorse the amount of any advance on the sheet attached
to this note or to forward to the borrower an advice of credit shall not affect
the obligation of the borrower to repay such advance.
In addition, all advances under the line of credit shall be jointly and
severally guaranteed by National Home Health Care, Inc., Nurse Care, Inc., and
Health Acquisition Corp. Each guarantee shall be secured by all assets of the
respective guarantors pursuant to a security agreement. The form of note,
security agreement and guarantee to be furnished to the Bank shall be in form
and substance acceptable to the Bank and its counsel.
Advances under the line of credit are subject to the Bank's satisfaction with
(i) the specific purpose and expected time and source of repayment of each
advance, and (ii) the Borrower's and the guarantors' financial condition,
business prospects and operations at the time of each advance. As you know,
lines of credit may be cancelled by either party at any time, however, unless
cancelled earlier, the line of credit shall be held available until January 30,
1998.
Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30 consecutive days during each twelve (12) month
calendar period in which the line of credit is held available.
Very truly yours,
THE BANK OF NEW YORK
/s/ Richard J. Kolosky
Richard J. Kolosky
Vice President
Exhibit 10.3
AGREEMENT
AGREEMENT, dated this 24th day of December, 1996 among C. J. Home Care,
Inc., d/b/a Garden City Home Care, a business corporation organized under the
laws of the State of New York, having its principal place of business at 246
Mineola Blvd., Mineola, New York 11501 ("Seller"); Health Acquisition Corp.,
d/b/a/ Allen Health Care, a business corporation organized under the laws of the
State of New York, having its principal place of business at 175- 20 Hillside
Avenue, Jamaica, New York 11432 ("Buyer"); Janet Reichler, residing at 18-56A
Corporal Kennedy Street, Bayside, New York 11360 ("Reichler"); and Christina
Calleja, residing at 7 Oak Point Drive West, Bayville, New York 11709
("Calleja").
WHEREAS, the Seller is engaged in the business of providing home health
care in the State of New York; and
WHEREAS, Seller wishes to sell to Buyer and Buyer wishes to purchase from
Seller certain designated assets of the Seller, not comprising all or
substantially all of the assets of Seller, upon the conditions and terms set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein set forth, the parties hereto agree as follows:
ARTICLE I
1. Sale and Purchase of Included Assets.
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1.1. Included Assets Transferred. Subject to the terms and conditions
hereof, Seller shall sell, convey, transfer and deliver to Buyer, and Buyer
shall purchase from Seller at the Closing, hereinafter defined, all of
Seller's right, title and interest in and to the following assets
(collectively "Included Assets"): (a) the fixed, tangible assets set forth
on Schedule 1.1 (a) annexed hereto; (b) Seller's personnel files, addresses
and telephone num bers; (c) patient files of such patients of Seller
("Patients") as elect to be transferred to Buyer on or about the Closing
Date pursuant to the Discharge Plan annexed hereto as Exhibit 3.8;
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(d) all trademarks, trade names, excluding the name "Garden City
Home Care" and all derivatives thereof, and all similar property rights relating
in any way to the Seller's business; and
(e) all trade secrets, inventions, processes, procedures, market
surveys and marketing know-how wherever located relating to the Seller's
business.
1.2. Assets Excluded and Retained by Seller. All of
the remaining assets of the Seller (collectively, the "Excluded Assets") are not
included within the Included Assets and shall remain the property of the Seller
on and after the Closing Date, including the following:
(a) all machinery, equipment, furniture, fixtures,
furnishings, tools and similar property owned by the Seller,
including those set forth on Schedule 1.2;
(b) all supplies owned by Seller, including those set
forth on Schedule 1.2;
(c) Other than as provided in Section 1.1, all books, records,
manuals and other materials relating to the Seller's business; including,
without limitation, advertising matter, correspondence, sales materials and
research and accounting records;
(d) Seller's cash, accounts receivable on invoices for
sales and services prior to the Closing Date,and notes receiv
able;
(e) Other than as provided in Section 1.1, Seller's
financial records, cancelled checks, bank statements and tax re
turns;
(f) any claims, refunds, rights, choses in actions and litigation
and the proceeds thereof by or against the Seller ir respective of the date on
which any such claims and obligations may arise or accrue;
(g) Seller's corporate minute books and records,tax record
s, and general ledger or other books of original entry;
(h) the rights of Seller under this agreement;
(i) Seller's trade name, "Garden City Home Care," and all
derivatives thereof;
(j) leases of real property and personal property;
(k) Insurance policies, prepaid expenses and security
deposits;
(l) Seller's Federal Tax Identification Number, Seller's
Department of Health License Number, and Seller's Medicaid
Provider Number.
1.3. Retained Liabilities. Buyer shall not be deemed
to be a successor to Seller and shall not assume or be bound by or become
obligated to pay any of the following liabilities or obligations of Seller (the
"Retained Liabilities"):
(a) liabilities for personal injuries, or property damage;
(b) liabilities for claims brought by any employee of
Seller, or for any compensation, vacation pay, sick pay, bonus or any payments
due or accrued or contingently owed to any employee or former employee of Seller
up to the time of Closing;
(c) liabilities for claims alleging violation of applicable
environmental laws to the extent such violations occurred prior to the Closing
Date;
(d) liabilities for payment of any applicable federal,
state or local taxes, if any (including any interest or penalties
thereon);
(e) liabilities for any claim for reimbursement or recoup ment of
funds previously paid to Seller by any payor, including without limitation,
Medicare, Medicaid, insurance companies, HMO's or other parties.
(f) any liability or obligation arising out of a breach or default
by Seller under any contract or governmental permit or license, attributable to
the period prior to the Closing Date;
(g) any claims, liabilities and obligations of any kind arising out
of, or resulting from the ownership or use of the Included Assets or the
operation of the business of Seller, to the extent same are attributable to the
period prior to the Closing Date;
(h) any liability or obligation in respect of the Excluded
Assets.
1.4. Exhaustive List of Included Assets. The parties
acknowledge that the Included Assets set forth in Section 1.1 and on Schedule
1.1 are intended to represent the only assets to be purchased hereunder and that
no other assets owned by Seller on the date hereof or at Closing are intended to
be nor shall they be deemed to be transferred hereunder.
1.5. No Construal. Neither this Agreement nor the
transactions contemplated hereby shall be construed to (i) create any interest
in this Agreement on the part of any creditor of the Seller, or (ii) confer any
third party beneficiary status on any person or entity whatsoever. Seller
represents that Buyer shall not be liable in any respect to any third party,
whether a creditor, employee or patient of the Seller, or to any other third
party in connection with this Agreement or the transactions contemplated hereby.
ARTICLE II
THE CLOSING
2.1. Place and Date. The Closing of the sale and pur chase of the
Included Assets (the "Closing") shall take place at the offices of Seller's
attorneys: Halpern & Pasternack, P.C., 100 Ring Road West, Garden City, New
York 11530, at 10:00 a.m., no later than thirty (30) days after the last
required consent is obtained pursuant to Sections 6.1.4 and 6.1.5 hereof,
or at such other time or place as agreed to by the parties. The date of the
closing is herein referred to as the "Closing Date".
2.2. Transfer of Included Assets. At the Closing, Seller shall deliver
to Buyer bills of sale, assignments, en dorsements and other instruments as
may be necessary in the reasonable opinion of Buyer to convey and vest in
Buyer all right, title and interest in and to all of the Included Assets,
free and clear of all liens and encumbrances.
2.3. Purchase Price and Payment of Purchase Price. The Purchase Price
for the Included Assets shall be Four Hundred Fifty Thousand ($450,000.)
Dollars, payable by Buyer as follows: $ 50,000. upon the signing of this
Agreement payable to "Halpern & Pasternack, as attorneys", to be held in
escrow pursuant to ARTICLE VIII hereof (the "Escrow Deposit"), $400,000.
payable to Seller by certified or bank teller's check at the Closing.
2.4. Allocation. The Purchase Price shall be allocated in accordance
with Schedule 2.4 annexed hereto and made a part hereof. The Buyer and
Seller agree that such allocation shall be conclusive and binding for all
purposes, and the parties each agree to file all income or other tax
returns in a manner consistent with such allocation.
2.5. Additional Payments by Buyer. In addition to the Purchase Price,
Buyer shall pay the sum of $100,000. to Janet Reichler and the sum of
$100,000. to Christina Calleja payable at the Closing, and conditioned on
the occurrence of the Closing, by certified or bank teller's checks to
their order, as consideration for the restrictive covenants to be delivered
by them to Buyer pursuant to Section 6.1.6 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1. Organization and Good Standing. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York with full corporate power and authority to own and use
its properties and to transact its business as same is now being conducted.
3.2. Authority; Binding Effect. Seller has the
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. Such execution, delivery, performance and consummation have been duly
authorized by all necessary action on the part of the Seller. This Agreement has
been duly executed and delivered by the Seller and constitutes
the valid and legally binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization and other similar laws relating to or affecting the
rights of creditors generally, as well as limitations imposed by general
principles of equity. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in any violation of or default under any provision of the Certificate of
Incorporation of the Seller, or to Seller's knowledge, any mortgage, indenture,
lease or other agreement or instrument, statute, law, ordinance, rule,
regulation, judgment, order, decree, permit, concession, grant, franchise or
license.
3.3. Tax Returns. Seller has timely filed with the
appropriate federal, state and local agencies, all tax returns and tax reports
required by law to be filed by Seller, (which returns and reports were true,
correct and complete in all material respects at the time of filing thereof and
were prepared in accordance with applicable laws and regulations) and all taxes
due have been fully paid, or adequate reserves have been set up for the same and
are reflected on its financial statements (or such taxes shall be paid by Seller
if hereafter determined to be due and payable), there are no unpaid taxes which
are or will become a lien or charge on any of the Included Assets and there are
no known or proposed deficiency assessments in respect of any federal, state or
local tax return filed by Seller which might adversely affect the Included
Assets.
3.4. Title to the Included Assets. Seller has good
and marketable title to the Included Assets free and clear of any liens,
mortgages, pledges, encumbrances, claims, and charges of any kind. No asset is
subject to any mortgage, pledge, lien, charge, security, interest, encumbrance,
restriction, lease, license, easement, liability or adverse claim of any nature
whatsoever. The officers, directors and employees of Seller have no rights of
ownership, use, or any other rights with respect to any of the Included Assets.
3.5. Litigation. There is no suit, claim, action or
proceeding now pending or, to the best knowledge of Seller, threatened before
any court, administrative or regulatory body, or any governmental agency or any
grounds therefor which may re sult in any judgment, order, decree, liability or
other determi nation which will, or could, have a material adverse effect upon
the Included Assets or the consummation of the transactions con templated
hereby. Seller is not subject to any judgment, order or decree which has, or
reasonably could be expected to have, such effect.
3.6. Bulk Sales. The sale by the Seller of the In
cluded Assets in accordance with this Agreement does not consti tute a bulk sale
as such term is defined in the applicable bulk sales law and no compliance is
required under Article 6 of the New York Uniform Commercial Code.
3.7. Personnel. None of the Seller's administrative
health care personnel has notified the Seller of his or her in
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tention to terminate his or her relationship with the Seller and commence any
such relationship with another entity; provided that Seller shall have no
liability whatsoever to any such personnel solely by reason of Buyer failing to
hire or retain such personnel. Seller further represents that Seller is
(a) not a party to any union, collective bargaining or any
similar agreement;
(b) not providing or obligated to provide any profit-
sharing, deferred compensation, bonus, savings, pension, retain
er, retirement, welfare or incentive plan or agreement; and
(c) not a party to any employment agreement.
3.8. Cessation of Operations. Seller is a home care
services agency, duly licensed under Article 36 of the New York State Public
Health Law. The Seller shall suspend all of its operations, lay off all of its
field personnel, cease providing any and all services to its patients, and
surrender its home care license under Article 36 of the New York State Public
Health Law at or prior to the Closing Date, pursuant to the Discharge Plan
annexed hereto as Schedule 3.8.
3.9. Compliance with Laws. Seller possesses and is in
material compliance with all permits, licenses and governmental approvals
required to operate its business as presently operated and to own the Included
Assets.
3.10. Financial Information and Hours. The financial
information and hours information set forth in the second para graph of Section
6.1.3 is true and accurate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
4.1. Organization and Good Standing. Buyer is a cor
poration duly organized, validly existing and in good standing under the laws of
the State of New York.
4.2. Buyer is a duly licensed home care services agen
cy pursuant to Article 36 of the New York State Public Health
Law.
4.3. Execution, Delivery and Performance of Agreement;
and Authority. The execution, delivery and the performance by the Buyer of this
Agreement and the consummation of the transac tions contemplated hereby have
been authorized by all necessary corporate action.
ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of Business. From the date hereof to the
Closing Date, except as otherwise consented to by Buyer in writing, Seller shall
conduct its business as presently conducted and in the ordinary course of
business consistent with past practice; maintain all tangible Included Assets in
good operating condition and repair; perform in all material respects all of its
obligations under agreements, contracts and instruments relating to or affecting
the Included Assets; comply in all material respects with all statutes, laws,
ordinances, rules, regulations,
judgments, orders, decrees, permits, and governmental approvals applicable to
the Included Assets; use its best efforts to keep the Included Assets intact;
and promptly advise Buyer in writing of any material adverse change in the
Included Assets.
5.2. Access and Information. Seller will permit Buy
er, and Buyer's representatives or designees reasonable access to such records,
including but not limited to personnel records, of Seller at such times as may
be agreed by the parties and as may be necessary or useful with regard to
matters which may affect the Included Assets subsequent to the Closing.
5.3. Removal of Included Assets. All expenses of re
moval of the Included Assets from the Seller's premises following the Closing
shall be borne by the Buyer; provided that the Seller shall use reasonable
efforts to accommodate Buyer in the removal process.
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Conditions to Obligations of Buyer. The obliga
tions of Buyer to pay the Purchase Price to Seller and to satisfy its other
obligations hereunder shall be subject to the fulfill ment (or waiver by Buyer)
at or prior to Closing, of the following conditions, which Seller agrees to use
its best efforts to cause to be fulfilled:
6.1.1 All representations and warranties of Seller
contained herein and in any schedules annexed hereto or document
delivered at the time of the execution and delivery hereof shall
be true and correct when made and at and as of the Closing Date and Seller shall
have surrendered its home care license under Article 36 of the New York State
Public Health Law.
6.1.2 All covenants, agreements and obligations re
quired by the terms of this Agreement to be performed by Seller at or before the
Closing shall have been duly and properly per formed.
6.1.3 Since the date of this Agreement, there shall
not have occurred any material change in any of the Included As sets. Seller
shall operate the business to be operated in a man ner consistent with prior
practice and shall use its best efforts to maintain the good will of all
patients, employees and other persons with whom it has commercial dealings.
It is understood and agreed that the Buyer has relied upon certain
financial data contained in Seller's accountants' compilation report of income
and earnings for the year 1995, to wit: that the revenues received were
$1,999,548 and that the total cost of services provided was $1,457,683. In
addition, Buyer has relied upon Seller's representation that the total hours of
service provided to Medicaid patients in the year 1995 was approximately
109,000, and the total hours of service provided to non-Medicaid patients for
that period was approximately 33,500 and that the billings reflect those hours.
It is further understood that Buyer is relying on the fact that the service
hours to Medicaid and non-Medicaid patients as well as receipts, expenses and
billings for the current year to the date of closing will be proportionately
comparable to 1995. Seller shall permit Buyer to verify the foregoing prior to
Closing. In the event the service hours and revenues for 1996 are more than 5%
lower, Buyer shall have the option to terminate this contract, or to consummate
the transaction at such lower price as the parties may agree.
6.1.4 The New York State Public Health Council and the
New York State Department of Health shall approve of the transaction
contemplated herein.
6.1.5 The Nassau County Department of Social Services
shall approve of the transfer of its Medical Assistance patients from the Seller
to the Buyer, if required.
6.1.6 Seller and Seller's principals, Janet Reichler
and Christina Calleja, shall have delivered restrictive covenants to the Buyer
agreeing not to engage in the home care business for a period of five (5) years
in an area comprising Nassau and Suf folk Counties and the greater New York City
metropolitan area, including New York, New Jersey and Connecticut; agreeing to
maintain as confidential in all respects all information relating to the
Included Assets and the transactions contemplated hereby, and agreeing not to
solicit any patients or employees of Buyer, all of the foregoing agreements to
be in form reasonably satisfactory to Buyer.
6.2 Conditions to Obligations of Seller. The obliga
tion of the Seller to deliver the bills of sale, assignments, en
dorsements and other instruments of transfer relating to the
Included Assets shall be subject to the fulfillment on or prior to the Closing
Date (or waiver by Seller), of the following con ditions which Buyer agrees to
use its best efforts to cause it to be fulfilled:
6.2.1 All representations and warranties of Buyer con
tained herein shall be true and correct when made and at and as
of the Closing Date.
6.2.2 All covenants, agreements and obligations re
quired by the terms of this Agreement to be performed by Buyer at or before the
Closing shall have been duly and properly per formed.
6.2.3 Seller shall have paid or tendered the full
purchase price pursuant to Section 2.3 hereof.
ARTICLE VII
INDEMNIFICATION
7.1. Indemnity.
7.1.1 Seller hereby agrees to indemnify, defend and
hold harmless Buyer and its parent corporation from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including with out limitation, interest, penalties and
reasonable attorneys' fees and expenses (collectively, "Damages"), resulting to,
imposed upon or incurred by the Buyer by reason of or resulting from
(a) any breach of any of the representations and warranties
of the Seller set forth in this Agreement;
(b) any failure of the Seller to perform or observe any
covenant set forth in this Agreement;
(c) any operations or business conducted, commitment made, service rendered
or condition existing or any action taken or omitted by or on behalf of Seller
prior to Closing; and
(d) any debts, obligations or taxes payable of the Seller.
7.1.2 Buyer hereby agrees to indemnify, defend and
hold harmless Seller from and against all damages resulting to, imposed upon or
incurred by Seller, by reason of or resulting from:
(a) any breach of the representations and warranties of the
Buyer set forth in this Agreement;
(b) any failure of the Buyer to perform or observe any
covenant set forth in this Agreement;
(c) any debts, obligations or taxes payable of the Buyer;
and
(d) any operations or business conducted, commitment made, service
rendered or condition existing or any action taken or omitted by or on behalf of
Buyer after the Closing;
7.1.3 The parties agree that the indemnification pro
vided for in Sections 7.1 shall be limited to an aggregate amount of Fifty
Thousand ($50,000) and such indemnification shall only apply to claims asserted
within 12 months of the Closing Date. The parties further agree that no claim
shall be made for indemnification until the aggregate amount exceeds Two
Thousand Five Hundred ($2,500) Dollars.
7.2. Remedies Cumulative. Except as herein expressly
provided, the remedies provided herein shall be cumulative and shall not
preclude assertion by any party hereto of any other rights or the seeking of any
other remedies, including without limitation breach of contract remedies,
against any other party hereto, provided such remedies are consistent with this
Agreement.
7.3. Conditions of Indemnification with Respect to
Third Party Claims. The obligations and liabilities of the par
ties under this Article shall be subject to the following terms
and conditions:
7.3.1 Whenever a claim shall arise for indemnification
under this Article VII, the party entitled to indemnification (the "Indemnified
Party") shall give 15 days notice of any such claim to the party from whom
indemnification is sought ("the In demnifying Party"), and the Indemnifying
Party may undertake the defense thereof by representatives chosen by it and
reasonably acceptable to the Indemnified Party. This Indemnified Party may, at
its own expense, participate in any such proceeding with the counsel of its
choice, and so long as the Indemnifying Party is in good faith defending such
claim or proceeding, the Indemnified Party shall not compromise or settle such
claim without the prior
written consent of the Indemnifying Party.
7.3.2 If the Indemnifying Party, within a reasonable
time after notice of any such claim, fails to defend, the Indem
nified Party may (upon further notice to the Indemnifying Party) undertake the
defense, compromise or settlement of such claims on behalf of and for the
account and risk of the Indemnifying Party, in such manner as the Indemnified
Party may deem appropriate, including, but not limited to, settling such claim
or litigation (after giving notice of the same to the Indemnifying Party) on
such terms as the Indemnified Party may deem appropriate, subject to the right
of the Indemnifying Party to assume, at its expense, the defense of such claim
at any time prior to settlement, compromise or final determination. The
Indemnifying Party shall pay the Indemnified Party not more than 10 days after
demand, in accordance with the provisions of this Section 7.3.
7.3.3 Anything in this section 7.3 to the contrary
notwithstanding,
(a) if in the written opinion of counsel for the Indem nified Party
delivered to the Indemnifying Party there is a rea sonable possibility that a
claim will materially and adversely affect the Indemnified Party other than as a
result of money dam ages or other money payments, the Indemnified Party shall
have the right, at its own cost and expense, to defend, but not com promise or
settle the claim without the consent of the Indemnifying Party, which shall not
be withheld unreasonably; and
(b) the Indemnifying Party shall not, without the written consent of
the Indemnified Party, which shall not be unreasonably withheld, settle or
compromise any claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indem
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nified Party a release from all liability by the Indemnified Party and the
Indemnifying Party, in respect of such claim.
7.3.4 In any suit or proceeding which either party may
institute pursuant to this Article, the other party hereby agrees, at the
expense of the Indemnifying Party (except as to those expenses to be borne by
the Indemnified Party pursuant to Section 7.3.3) to cooperate in all reasonable
respects and to testify or have its employees testify when reasonably requested
and to make available relevant records, papers, information, samples, specimens
and the like.
ARTICLE VIII
ESCROW FOR INDEMNITY
8.1. The Escrow Deposit of $50,000 deposited pursuant
to Section 2.3 hereof shall be held in escrow by Seller's attorneys ("Escrow
Agent"), pursuant to the terms and conditions of this ARTICLE VIII.
8.1.1. The Buyer shall make payment of the Escrow
Deposit to the Escrow Agent, who agrees to hold the same in escrow pursuant to
the terms hereof. The Escrow Deposit shall be deposited by the Escrow Agent in
an interest-bearing bank account. Interest shall be added to the Escrow Deposit.
8.1.2. Buyer shall be entitled to the return of the
Escrow Deposit in the event that the conditions set forth in Section 6.1 are not
satisfied, or in the event the conditions set forth in Section 6.2 are
satisfied, and Buyer is ready, willing
and able to close and Seller fails to close. Seller shall be entitled to the
delivery of the Escrow Deposit in the event that the conditions set forth in
Section 6.2 are not satisfied, or in the event the conditions set forth in
Section 6.1 are satisfied and Seller is ready, willing and able to close but
Buyer fails to close. If the Seller shall be entitled to the Escrow Deposit, or
any part thereof, the Escrow Agent shall pay over the Escrow Deposit or the
appropriate part thereof, to the Seller. If a claim is asserted by Buyer against
Seller under the indemnification set forth in Section 7.1, and if Buyer has
served a demand upon Escrow Agent for payment of such claim from the Escrow
Deposit, Escrow Agent shall release such portion of the Escrow Deposit as is
sufficient to satisfy such claim unless Escrow Agent receives a Notice of
Objection as set forth in Section 8.1.4. If the Buyer shall be entitled to the
return of the Escrow Deposit, or any part thereof, and serves a demand therefor
on the Escrow Agent, the Escrow Agent shall pay over such sum to the Buyer,
unless Escrow Agent receives a Notice of Objection. Nothing contained herein
shall preclude Seller or Escrow Agent from satisfying a claim for a lesser
amount than the sum demanded.
8.1.3. Upon the occurrence of the Closing, the Escrow
Agent shall continue to hold the $50,000 Down Payment in escrow for the period
of one year after the Closing to fund the indemni fications pursuant to Section
7.1.1 hereof.
8.1.4. Prior to effectuating any delivery of any part
of the Escrow Deposit, the Escrow Agent shall give notice of such proposed
delivery to both the Buyer and the Seller and to Buyer's attorney, and no such
delivery shall be made if, within a period of ten days following the date upon
which notice is effective (as set forth in Paragraph 8.1.10 hereof), the Escrow
Agent shall have received a Notice of Objection from the Seller or the Buyer, as
the case may be, setting forth an objection to such delivery. The Escrow Agent
shall promptly deliver a copy of such Notice of Objection to the other party.
8.1.5. If the Escrow Agent shall have received a
Notice of Objection as set forth in Section 8.1.4 hereof, or if any disagreement
or dispute shall arise between the parties re sulting in adverse claims and
demands with respect to the Escrow Deposit, then the Escrow Agent shall continue
to hold the Escrow Deposit until the Escrow Agent shall have received (i) a
written instrument signed by both the Seller and the Buyer setting forth the
joint direction of such parties with respect to the Escrow Deposit, or (ii) a
certified copy of a final and non-appealable judgment of a court of competent
jurisdiction directing the disbursement of the Escrow Deposit. The Escrow Agent
shall also be entitled to deposit the Escrow Deposit with the clerk of the court
in which any litigation between the parties is pending, or with the clerk of any
appropriate court in Nassau County, New York.
8.1.6. The Escrow Agent shall not be liable in any way
or to any person for its refusal to comply with adverse claims
and demands being made upon it, and shall not be responsible for any act or
failure to act on its part, nor shall it have any lia bility under this Escrow
Agreement, except in the case of willful malfeasance or gross negligence. This
Escrow Agreement shall terminate and the Escrow Agent shall be automatically
released from all responsibility and liability upon the Escrow Agent's delivery
or deposit of the Escrow Deposit to the parties or to the clerk of a court in
accordance with the provisions of this ARTICLE VIII.
8.1.7. The Escrow Agent or any member of its firm
shall be permitted to act as counsel for the Seller in any dispute or question
as to any matter arising out of this Agreement or the Escrow Deposit.
8.1.8. The Escrow Agent may resign at any time and, in
such event, shall deliver the Escrow Deposit pursuant to the joint written
instructions of the Seller and the Buyer or, in the absence of such
instructions, shall deposit the Escrow Deposit with the clerk of an appropriate
court in Nassau County, New York.
8.1.9. The Escrow Agent shall be indemnified by the
Buyer and the Seller against any liabilities, damages, losses, costs or expenses
incurred by, or claims or charges made against, the Escrow Agent (including
reasonable counsel fees, disbursements and court costs) by reason of its acting
or failing to act in connection with any of the matter contemplated by, or in
carrying out the terms of, this ARTICLE VIII, except as a
result of its willful malfeasance or gross negligence. In addition, in the event
the Escrow Agent is required to take any action or perform services beyond those
required by Sections 8.1.3 and 8.1.4 hereof, the Escrow Agent may charge a
reasonable fee for such services, which fee shall be paid equally by the Buyer
and the Seller.
8.1.10. Any notice, demand or other communication
pursuant to this ARTICLE VIII shall be in writing and delivered in accordance
with the provisions of the Agreement, addressed to the Seller and the Buyer at
the addresses set forth above, and to the Escrow Agent at 100 Ring Road West,
Suite 105, Garden City, New York 11530. Notice shall be deemed effective as
provided in Section 10.10 hereof.
8.1.11. On the first anniversary of the Closing, the
Escrow Agent shall release the balance of the escrow funds to the Seller. In the
event there is any unresolved claim against the Escrow Deposit on the first
anniversary of the Closing, the Escrow Agent shall continue to hold funds in the
full amount of such claim(s) until such claim is resolved. Upon such reso
lution, the Escrow Agent shall distribute the balance of the Escrow Deposit in
accordance with such resolution.
ARTICLE IX
ADDITIONAL COVENANTS
9.1. Further Assurances and Assertions. The Seller
shall, from time to time, at the request of the Buyer execute and
deliver such further instruments of transfer and assignment and
take such other action as the Buyer may reasonably request and as may be
reasonably necessary in order to vest in the Buyer title to all of the Included
Assets purchased. Buyer shall pay any filing fees, recording charges, transfer
taxes, etc. relating to such instruments.
ARTICLE X
MISCELLANEOUS
10.1. Taxes. Any federal, state or local sales or
other taxes, levies or assessments, including any bulk sales taxes, incurred in
connection with this Agreement or resulting from the consummation of the
transactions contemplated hereby shall be the liability and responsibility of,
and shall be paid by Seller; provided, that Buyer shall at the Closing pay to
Seller, in addition to the Purchase Price, the New York State and local sales
tax, if any, on the portion of the Purchase Price allocated to the Included
Assets set forth on Schedule 1.1 (a) annexed hereto.
10.2. Termination. This Agreement may be terminated
by Seller or Buyer, as applicable, by delivering written notice to the other at
any time prior to the Closing Date upon the occurrence of any of the following
events:
(a) by mutual written consent of all the parties hereto; or
(b) by the Seller if any of the conditions provided in
Section 6.2 hereof have not been met by the time required and have not been
waived by Seller; provided that Seller shall have notified the Buyer in writing
of such failure and Buyer shall not have cured such failure within seven days of
such notice; or
(c) by the Buyer if any of the conditions provided in Sec tion 6.1.
hereof have not been met by the time required and have not been waived by Buyer;
provided that Buyer shall have notified the Seller in writing of such failure
and Seller shall not have cured such failure within seven days of such notice.
10.3. Liabilities. In the event this Agreement is
terminated pursuant to Section 10.2 above, the Escrow Deposit shall be returned
to Buyer, and no party hereto shall have any liability to any other party hereto
for costs, expenses, damages, loss of anticipated profits or otherwise;
provided, that if termination occurs because of any misrepresentation or breach
of warranty by a party hereto, such termination shall not preclude any rights
which the other party hereto may have against such party for costs, expenses or
damages on account of such party's misrepresentation or breach.
10.4. Waivers and Amendments.
10.4.1 This Agreement may be amended, modified or sup
plemented only by a written instrument executed by the parties hereto. The
provisions of this Agreement may be waived only by an instrument in writing
executed by the party granting the waiver. No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other or subsequent breach.
10.4.2 No failure on the part of any party to exer
cise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.
10.5. Survival of Certain Provisions. The provisions
of Article VII, Article VIII and the representations, warranties and covenants
contained in this Agreement shall survive Closing without limitation.
10.6. Payment of Fees and Expenses. Each party shall
pay and be responsible for all of its own fees and expenses of its counsel, and
all other expenses incurred by it incident to the negotiations, preparation and
execution of this Agreement and the consummation of the transactions
contemplated herein.
10.7. Entire Agreement. This Agreement, and all
exhibits and schedules referenced herein constitute the entire agreement of the
parties as to the subject matter hereof, and supersede all prior discussions,
negotiations and agreements,
whether written or oral, between the parties with respect to the
subject matter of this Agreement, including but not limited to
the Letter of Intent dated April 30, 1996. All disclosures in any schedules to
this Agreement are incorporated by reference herein and in each of the other
schedules.
10.8. Non-Assignability. This Agreement and any
rights pursuant hereto shall not be assignable by the Buyer herein, without the
written consent of Seller, and any purported assignment by Buyer without said
consent, shall be null and void, and without force and effect.
10.9. Severability. A determination by any Court that
any portion of this Agreement is unenforceable or invalid shall not affect the
enforceability or validity of any of the remaining portions of the Agreement or
of this Agreement as a whole.
10.10. Notices. All notices, requests, demands and
other communications which are required or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given or made: if by
hand, immediately upon delivery; if by telex, facsimile transmission,
telecopier, telegram or sim ilar electronic device, immediately upon sending,
providing it is sent on a business day, but if not, then immediately upon the
beginning of the first business day after being sent; if by Fed eral Express, or
any other overnight delivery service, on the first business day after dispatch;
and if by certified or regis tered mail, return receipt requested, three (3)
business days after delivery or immediately upon the return of the notice to the
sender marked "refused," or "unclaimed." All notices, requests and demands are
to be given or made to the parties at
the addresses hereinbefore set forth or such other address specified in a notice
given pursuant hereto, and in addition to the attorneys for the respective
parties as follows:
To the Seller:
Winifred Pasternack, Esq.
Halpern & Pasternack, P.C.
100 Ring Road West
Garden City, NY 11530
To the Buyer:
Gary Simon, Esq.
Parker, Chapin, Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, NY 10036
Any party or the Escrow Agent may change its address by no tice
given pursuant to this Section 10.10.
10.11. Public Announcements. The parties agree that
the terms of this Agreement are confidential only, unless other wise provided,
until this Agreement is executed. The parties shall jointly prepare a press
release to be used for the first public announcement of the transaction.
Thereafter each is enti tled to release to the public any and all information
regarding the terms of this Agreement, including Buyer's filing of forms 8- K
and related public announcements required by applicable securities laws and
regulations.
10.12. Binding Effect. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, their
successors and permitted assigns.
10.13. Governing Law. This Agreement and the legal
relations between the parties hereto shall be construed, inter
preted and enforced, both as to substance and remedies, in accordance with the
laws of the State of New York, applicable to contracts made and to be enforced
in such State.
10.14. Broker. Buyer and Seller each represents and
warrants to the other that it has not dealt with any broker in connection with
this sale other than Lindenstadt Company of Newport Beach, California ("Broker")
and Seller shall pay Broker any commission earned by said Broker. The provisions
of this paragraph shall survive the Closing and shall not be subject to the
indemnification limitation set forth in Section 7.1.3 hereof.
10.15. No Further Negotiation. Seller agrees that it
shall not enter into any negotiation with any third party for the sale of its
assets from the date hereof unless this Agreement is terminated pursuant to its
terms.
10.16. Paragraph Headings. The parties agree that the
paragraph and article headings are inserted only for ease of reference, shall
not be construed as part of this Agreement, and shall have no effect upon the
construction or interpretation of any part hereof. The parties further agree
that this Agreement has been jointly drafted and shall not be construed against
either party.
10.17. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties by and through their
duly authorized representatives have duly executed this agree ment, as of the
first above written.
C.J. HOME CARE, INC., Seller
By:
Christina Calleja, President
Tax I.D. No. 11-2635994
ATTEST:
Janet Reichler, Secretary
HEALTH ACQUISITION CORP., Buyer
By:
Richard Garofalo, President
Tax I.D. No. 11-2311754
AGREED TO AS TO ss.6.1.6
Christina Calleja
AGREED TO AS TO ss.6.1.6
Janet Reichler
AGREED TO AS TO ARTICLE VIII
HALPERN & PASTERNACK, P.C.,
Escrow Agent
By:
Winifred Pasternack
bus.sal\garden.agm
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SCHEDULE 1.1
INCLUDED FIXED, TANGIBLE ASSETS
7 Four-drawer file cabinets 1 large four-drawer file cabinet 4 desks 2 large
directors chairs 6 miscellaneous chairs 1 large table 2 computer tables 1 table
on rollers 1 upstanding file cabinet with rollers 1 computer holder with rollers
18 video tapes for in-service training large clothes cabinet
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SCHEDULE 1.2
ASSETS EXCLUDED
1 Photocopier with table 1 fax machine Computers with printers 4 artificial
plants radio with speakers clock microwave Television/video machine
Postage meter and postage entered thereon
Poland Spring Water cooler
Assorted office supplies
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SCHEDULE 2.4
ALLOCATION OF PURCHASE PRICE
EQUIPMENT INVENTORY SET FORTH ON SCHEDULE 1.1 $ 10,000.00
EMPLOYEE FILES $100,000.00
CHARTS AND FILES OF PATIENTS $ 50,000.00
GOOD WILL $290,000.00
TOTAL $450,000.00
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SCHEDULE 3.8
DISCHARGE PLAN
C. J. HOME CARE, INC.
D/B/A GARDEN CITY HOME CARE
A letter will be sent to patients of Garden City Home Care
informing them that the agency will be ceasing its operations. The patients will
be told that arrangements have been made to continue their care with Health
Acquisition Corp.
Patients will be informed that in the event they wish to make other
arrangements, they may do so. A list of other licensed or certified home care
agencies who are providers in Nassau County will accompany the letter.
1. The records of Patients who elect Health Acquisition
Corp. will be transferred to Health Acquisition Corp.
a) Health Acquisition Corp. will commence service of
Patients, with the same personnel, if possible.
2. For those patients who elect other providers, the Nurse will
complete a discharge summary and the patient, or a member of the patient's
family, will be asked to sign it.
a) Garden City will send a copy of the discharge sum
mary to the patient's physician.
b) Garden City's Nurse will ascertain which agency the
patient is choosing.
c) Garden City will notify the new provider and send a
copy of the discharge summary to the provider chosen by the pa
tient.
d) Garden City will transfer the patient's records to
the new agency.
Dated:
C. J. HOME CARE, INC.
d/b/a Garden City Home Care
BY:
Christina Calleja, President
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Exhibit 10.4
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated this day of February, 1997, by and between
HOME HEALTH AIDES, INC., a New York corporation, with offices at 50 Clinton
Street, Hempstead, New York 11550 ("Home Health") and H.H.A. AIDES, INC., a New
York corporation, with offices located at 1787 Veterans Highway, Islandia, New
York 11779 ("HHA") (Home Health and HHA are sometimes referred to individually
as "Seller" and collectively as "Sellers"); and
HEALTH ACQUISITION CORP. D/B/A ALLEN HEALTH CARE SERVICES, a New York
corporation, with offices at 175-20 Hillside Avenue, Jamaica, New York 11432
("Buyer").
RECITALS
A. Sellers are engaged in the business of providing home health care in
Nassau and Suffolk Counties in the State of New York.
B. Sellers desire to sell and transfer to Buyer, and Buyer desires to
acquire from Sellers, certain of the assets of the Sellers' business, subject to
and upon the conditions and terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
representations, warranties, covenants and agreements herein set forth, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby
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acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Definitions: For all purposes of this Agreement, except as otherwise
expressly provided, (i) the terms defined in this Agreement include the plural
as well as the singular,
(ii) all accounting terms not otherwise defined herein have the meanings
assigned under generally accepted accounting principles,
(iii) all references in this Agreement to designated "Articles,"
"Sections," "Subsections" and other subdivisions are to the designated Articles,
Sections, Subsections and other subdivisions of the body of this Agreement,
(iv) all references in this Agreement to "Exhibits" or "Schedules" are to
the Exhibits and Schedules attached to this Agreement,
(v) pronouns of either gender or neuter shall include, as appropriate, the
other pronoun forms, and
(vi) unless the context requires otherwise, the words "herein," "hereof"
and "hereunder," and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section, Subsection or other
subdivision. As used in this Agreement and the Exhibits, the following
definitions shall apply:
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"Agreement" means this Asset Purchase Agreement by and between Buyer and
Sellers, as the same may be amended or supplemented in a writing signed by duly
authorized representatives of both parties, together with the Exhibits hereto.
"Assumed Liabilities" mean the liabilities or obligations of Seller
relating to the Business that are specifically assumed by Buyer pursuant to
Section 2.3.
"Business" means the business of providing home health care in the Counties
of Nassau and Suffolk, State of New York and the incidents of such business,
including income, cash flow, operations, condition (financial or other),
anticipated revenues and prospects.
"Buyer's Escrow Agent" means Robinson Brog Leinwand Greene Genovese &
Gluck, P.C.
"Claim" means a claim of a Loss arising in connection with any of the
matters set forth in Section 10.2 or 10.3.
"Closing" means the consummation of the purchase and sale transaction
contemplated by this Agreement and shall be deemed to have occurred effective as
of 12:01 a.m. on the Closing Date.
"Closing Date" means the day on which the Closing actually occurs.
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"Closing Escrow Agreement" means the escrow agreement among Buyer, Sellers
and Buyer's Escrow Agent in the form annexed hereto as Exhibit 3.1(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract Escrow Agreement" means the escrow agreement among Buyer, Sellers
and Sellers' Escrow Agent in the form annexed hereto as Exhibit 3.1(a).
"Contracts" means the contracts to which either Seller is a party or by
which it is bound as set forth on Schedule 2.1(a).
"Deposit" means the payment made by Buyer pursuant to Section 3.1(a).
"Discharge Plan" means the plan to be submitted by Sellers to the New York
State Department of Health for the surrender of their licenses and the discharge
of their patients.
"Encumbrance" means in respect of any property or right, any claim, charge,
covenant, easement, encumbrance, security interest, lien (tax or otherwise),
option, pledge, right of another, servitude, or restriction (whether on sale,
transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means those assets of Seller referred to in Section 2.2.
"Fixed Assets" means the fixed, tangible assets listed on Schedule 2.1(c).
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"Guaranty" means the Guaranty of * and * annexed hereto
as Exhibit 4.2(e).
"Hours Measuring Period" means the four week period commencing on April 28,
1997 and ending on May 25, 1997, provided the conditions to the obligations of
Buyer have been satisfied and Sellers have notified Buyer they are ready to
close on or before June 6, 1997, but if such conditions have not been satisfied
or Sellers are not ready to close, the Hours Measuring Period shall be the four
weeks immediately prior to the Closing Date.
"Indemnifiable Claim" means any Loss for or against which any party is
entitled to indemnification under this Agreement; "Indemnified Party" means the
party entitled to indemnity hereunder; and "Indemnifying Party" means the party
obligated to provide indemnification hereunder.
"Leases" means the lease agreements covering the leasehold interests at * ,
together with all amendments, modifications, alterations and other changes
thereto (each, individually referred to as a "Lease").
"Loss" means any action, cost, damage, disbursement, expense, liability,
loss, deficiency, obligation, penalty, fine, assessment or settlement of any
kind or nature, whether foreseeable or unforeseeable, including but not limited
to, interest or other carrying costs, penalties, legal, accounting or other
professional fees or expenses incurred
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in the investigation, collection, prosecution or defense of claims, inquiries,
hearings or other legal or administrative proceedings, and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified person.
"Order" means any decree, injunction, preliminary injunction, temporary
restraining order, judgment, order, ruling, assessment or writ except for (i)
Permits issued to Sellers or statutes and regulations applicable to the parties
in the ordinary course of business and (ii) the assignment of cases and
directions and orders relating thereto from Nassau or Suffolk County officials
in the ordinary course of Sellers' business.
"Past Practice" means a lawful practice followed or observed by Seller in
its operation of the Business during the twelve-month period ended December 31,
1996.
"Permit" means any license, permit, franchise, certificate of authority, or
order, or any waiver of the foregoing, required to be issued by any governmental
entity in connection with, and necessary to the operation of, the Business.
"Plan" means any "employee welfare benefit plan" (as defined in Section
3(1) of ERISA) or any "employee pension benefit plan" (as defined in Section
3(2) of ERISA and not exempted under Section 4(b) or 201 of ERISA), including
any "multi-employer pension plan" (as defined in Section 3(37) of ERISA).
"Purchased Assets" means the assets of Seller described in Section 2.1.
"Purchase Price" has the meaning set forth in Section 3.1.
"Rate" means a uniform statewide PCA Level II Medicaid rate for home health
care services applicable for the year 1997, if any, or if in lieu of such
uniform
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statewide rate there are two separate (but uniform within each region) rates
established statewide, one for the so-called "upstate" and the other for the
"downstate" region, the uniform rate that is applicable to the "downstate"
region. Any rate for 1997 for home health care services other than the Rate
shall for purposes of this Agreement be defined as a "Nonuniform Rate".
"Required Consents" means the consents, waivers, approvals, licenses and
authorizations listed on Schedule 5.2.
"Sellers' Escrow Agent" means Hoffinger Friedland Dobrish Bernfeld & Stern,
P.C.
"Tax" means any foreign, federal, state, county or local income, sales and
use, excise, franchise, real and personal property, transfer, gross receipt,
capital stock, production, business and occupation, disability, employment,
payroll, severance or withholding tax or charge imposed by any governmental
entity, any interest and penalties (civil or criminal) related thereto or to the
nonpayment thereof, and any Loss in connection with the determination,
settlement or litigation of any Tax liability.
ARTICLE II
SALE OF ASSETS
2.1 Purchased Assets: Subject to this Agreement, Sellers shall, at the
Closing, sell, assign, transfer and convey to Buyer, and Buyer shall then
purchase and acquire from Sellers, all of Sellers' right, title and interest in
and to:
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(a) the Contracts and all Sellers' rights and interests arising
thereunder;
(b) the Leases;
(c) the Fixed Assets;
(d) subject to regulatory approval(s), if required, patient lists and
patient files of such patients as elect to be transferred to Buyer on or
about the Closing Date pursuant to the Discharge Plan; and
(e) employee lists and files, including names, addresses and telephone
numbers.
2.2 Excluded Assets: The Excluded Assets shall be all of Sellers' assets
except for those included within the Purchased Assets, including, without
limitation, the following Excluded Assets:
(a) cash, accounts receivable on invoices for sales and services prior to
the Closing Date whether invoiced before or after the Closing Date, and prepaid
expenses of Sellers;
(b) rights of Sellers under this Agreement;
(c) Sellers' cancelled checks, bank statements and tax returns;
(d) claims, refunds, rights, choses in action and litigation and the
proceeds thereof received or to be received by Sellers, irrespective of the date
on which any such claim, refund, or right may arise or accrue;
(e) Sellers' corporate minute books and stock records, tax records, general
ledger and other books of original entry, and original payroll records;
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(f) all books, records, manuals and other materials relating to Sellers'
business, including, without limitation, advertising matter, correspondence,
sales materials and research and accounting records;
(g) Sellers' Federal Tax Identification Numbers, Sellers' Department of
Health License Number(s) and Sellers' Medicaid Provider Number(s);
(h) Sellers' trade names "H.H.A.", "Home Health" and all derivatives
thereof; and
(i) the items of personal property listed on Schedule 2.2(i).
2.3 Assumption of Certain Liabilities; Excluded Liabilities: Buyer shall,
at the Closing, assume only those liabilities of Sellers that are expressly set
forth on Schedule 2.3, provided that with respect to all leases, contracts,
commitments, licenses, agreements and arrangements assumed by Buyer pursuant to
this Section 2.3, all obligations of Sellers arising thereunder and to be
performed prior to the Closing Date shall not be assumed by Buyer. Assumed
Liabilities shall not include any other liabilities of Sellers of any kind or
nature, whether absolute, contingent, accrued, known or unknown, which shall
remain the liabilities of Sellers. Buyer shall not be obligated to engage any of
Sellers' employees after the Closing. Sellers shall at or before Closing pay its
employees all salary, bonus, vacation and sick pay, and other similar benefits
that may have accrued to such employees as of the Closing Date, no part of which
shall be assumed by Buyer; and in the event Buyer shall engage any of Sellers'
employees after the Closing, Sellers shall have no responsibility for any
salary, bonus, vacation and sick
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pay, and other similar benefit Buyer may agree to pay such employees after the
Closing (even if it purports to relate to a period prior to the Closing Date).
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price: The price for the Purchased Assets shall be One Million
One Hundred Fifty Thousand ($1,150,000) Dollars (the "Purchase Price"). The
Purchase Price shall be payable to Sellers as follows:
(a) $50,000, to Sellers' Escrow Agent, by the delivery to Sellers' Escrow
Agent concurrent with the execution hereof of a check, subject to collection,
payable to Sellers' Escrow Agent in such amount, to be held by Sellers' Escrow
Agent in accordance with the terms of the Contract Escrow Agreement;
(b) $50,000, to Buyer's Escrow Agent, by the delivery to Buyer's Escrow
Agent at Closing of a certified or bank cashier's check, drawn on a New York
clearing house member, payable to Buyer's Escrow Agent in such amount, to be
held by Buyer's Escrow Agent until the first anniversary of the Closing Date as
security for the obligations of Sellers pursuant to Section 10.2 hereof in
accordance with the terms of the Closing Escrow Agreement; and
(c) the balance, subject to the provisions of Section 3.3(a)(i), by
delivery by Buyer to Sellers at Closing of a certified or bank cashier's check,
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drawn on a New York clearing house member, or, at the option of Buyer, by wire
transfer in such amount to an account designated by Sellers. As additional
consideration, Buyer shall assume the Assumed Liabilities.
3.2 Prorations: At the Closing, the parties shall apportion any rents or
other charges paid or payable under the Leases for the periods prior to and
subsequent to the Closing Date and Buyer shall reimburse Sellers for any
security deposits, utility deposits, etc. assigned by Sellers to Buyer in
connection with the Leases or other Purchased Assets.
3.3 Adjustments: The Purchase Price shall be subject to either or both of
the following adjustments:
(a) If a Rate shall have been fixed and at an amount less than $11.82 per
hour, the Purchase Price shall be reduced by One Thousand Five Hundred
Thirty-One and 25/100 ($1,531.25) Dollars for each one ($.01) cent the Rate is
fixed below $11.82 per hour. For purposes of example only, if the Rate is fixed
at $11.02, the Purchase Price shall be reduced by One Hundred Twenty-Two
Thousand Five Hundred ($122,500) Dollars. In the event no Nonuniform Rate and no
Rate has been fixed prior to the Closing Date, and all of the other conditions
to Closing have been satisfied or waived by the party entitled to waive such
conditions, the parties shall nevertheless close pursuant to the terms of this
Agreement, as follows:
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(i) Buyer shall pay to Buyer's Escrow Agent the sum of $50,000 pursuant to
Section 3.1(b) and shall pay to Sellers' Escrow Agent the balance of the
Purchase Price (less (x) any credit for the Deposit [which shall continue to be
held by Sellers' Escrow Agent], (y) the sum of $250,000, which shall be paid to
Sellers in the manner provided in Section 3.1(c), without reference to this
subparagraph, and (z) any reduction resulting from the application of Section
3.3(b) following), to be held by Sellers' Escrow Agent in accordance with the
terms of the Contract Escrow Agreement until a Nonuniform Rate or a Rate has
been fixed or as hereinafter provided.
(ii) If (x) a Nonuniform Rate is fixed, or a Rate is fixed at $11.82 per
hour or higher, the entire amount in escrow, together with the Deposit, shall be
paid to Sellers free of escrow, or (y) a Rate (if any) is fixed at less than
$11.82 per hour, Sellers' Escrow Agent shall pay to Buyer an amount equal to the
reduction in the Purchase Price calculated in accordance with the formula set
forth above and shall pay to Sellers the balance of the amount in escrow,
together with the Deposit.
(iii) Notwithstanding the foregoing, if no Nonuniform Rate or no Rate has
been fixed prior to December 31, 1997, Seller's Escrow Agent shall, in
accordance with the terms of the Contract Escrow Agreement, pay to Sellers out
of the funds held in escrow an amount that,
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when added to subparagraph (i)(y), will cause Sellers to have received payments
on account of the Purchase Price to which Sellers would be entitled were the
Rate to be fixed at $10.22 per hour, less the $50,000 which has been paid to
Buyer's Escrow Agent pursuant to Section 3.1(b). Further, if no Nonuniform Rate
or no Rate has been fixed prior to March 31, 1998, Seller's Escrow Agent shall,
in accordance with the terms of the Contract Escrow Agreement, pay to Sellers on
account of the Purchase Price the balance of the funds it is then holding in
escrow.
(iv) In the event that by virtue of the payments set forth in subparagraphs
(i) or (iii) of this Section 3.3(a), Sellers shall receive a greater portion of
the Purchase Price than they are found to be entitled to once the Rate has been
fixed, Sellers shall promptly upon demand from Buyer pay to Buyer the amount of
any excess Purchase Price received by them. To secure such prompt payment, Paul
Manson and Cora Baliff, the principals of Sellers, shall at Closing execute and
deliver to Buyer the Guaranty.
(b) If for the Hours Measuring Period, Sellers shall have averaged 4,795 or
more hours serviced per week in their combined operations, calculated in a
manner consistent with Sellers' usual practice, but fewer than 5,100 hours, the
Purchase Price shall be reduced by Two Hundred Ninety-Four and 12/100 ($294.12)
Dollars for each hour the average serviced hours are below 5,100. For
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purposes of example only, if the average serviced hours during the Hours
Measuring Period is 4,962, the Purchase Price shall be reduced by Forty Thousand
Five Hundred Eighty-Eight and 56/100 ($40,588.56) Dollars. For purposes of
calculating serviced hours hereunder, there shall be included (x) any hours
serviced during the Hours Measuring Period by aides and field personnel employed
by Buyer who were on the date of this Agreement employed by either of the
Sellers and (y) any hours serviced during the Hours Measuring Period (except for
hours already credited pursuant to clause (x) hereof) by any employee of Buyer
with respect to cases that were on the date of this Agreement cases of either of
the Sellers, except that no credit shall be given for cases of Sellers that were
removed from Sellers during the Hours Measuring Period by the Nassau or Suffolk
Department of Social Services at the patient's request or otherwise and
subsequently offered to Buyer in the ordinary rotation of cases by such
departments. In the event of a dispute between Buyer and Sellers as to the
average serviced hours in the Hours Measuring Period, such dispute shall be
submitted to Manzi Pino, P.C., or such other accounting firm as may be mutually
agreeable to the parties, for resolution, the decision of which firm being final
and binding on the parties.
3.4 Allocation of Purchase Price: The Purchase Price shall be allocated by
the Buyer among the Purchased Assets in accordance with Schedule 3.4 annexed
hereto and made a part hereof. Such allocation shall be conclusive and binding
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for all purposes and the parties shall file all income or other tax returns in a
manner consistent with such allocation.
ARTICLE IV
CLOSING
4.1 Closing Date: The Closing under this Agreement shall take place at the
offices of Robinson Brog Leinwand Greene Genovese & Gluck, P.C., 1345 Avenue of
the Americas, New York, New York 10105, at 10:00 A.M. not later than ten (10)
days after all Required Consents have been obtained in writing (or at such other
time or place as Buyer and Seller may mutually agree). At the Closing, Sellers
shall sell, assign and transfer the Purchased Assets to Buyer, and Buyer shall
pay the Purchase Price in accordance with Section 3.1 and assume the Assumed
Liabilities.
4.2 Sellers Closing Documents: At the Closing, Sellers shall execute and
deliver or cause to be executed and delivered to Buyer, at Sellers' cost and
expense, the following:
(a) such bills of sale, assignments and other instruments of transfer as
shall be necessary or required to sell, assign and transfer to Buyer all its
right, title and interest in and to the Purchased Assets;
(b) a certificate of each Seller's Secretary, reasonably satisfactory to
Buyer, including a certificate of incumbency of all officers of each Seller
executing any
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documents pursuant hereto and certifying the resolutions adopted by each
Seller's directors and shareholders approving the sale of the Business and the
Purchased Assets pursuant hereto;
(c) the certificate referred to in Section 9.1(c);
(d) the Escrow Agreement;
(e) the Guaranty;
(f) Assignment to Buyer of all right, title and interest of Sellers in
and to all Leases included in the Purchased Assets (subject to the receipt
of the Required Consents of the landlords), assignment of security deposits
made by Sellers pursuant to any of the Leases, and assignment to Buyer of
Sellers' rights to all damages in respect of exercise of the powers of
eminent domain or similar power whether received before or after the
Closing;
(g) New York State sales tax filings, if required;
(h) Certificate of good standing of each Seller from Secretary of
State of the State of New York; and
(i) Such other instruments of transfer, agreements, certificates and
other documents as Buyer shall reasonably request.
4.3 Buyer Closing Documents: At the Closing, Buyer shall execute and
deliver to Seller or effect the following:
(a) the checks or wire transfer as provided in Section 3.1 hereof;
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(b) A certificate of Buyer's Secretary, reasonably satisfactory to
Sellers, including a certificate of incumbency of all officers of Buyer
executing any documents pursuant hereto and certifying the resolutions
adopted by Buyer's directors and share holders approving the purchase of
the Purchased Assets pursuant hereto;
(c) the Escrow Agreement;
(d) the certificate referred to in Section 9.2(c);
(e) certificate of good standing for Buyer from the Secretary of State of
the State of New York;
(f) A check, subject to collection, payable to the New York State Sales Tax
Bureau in the amount of the state and/or local sales tax on the portion, if any,
of the Purchase Price allocated to Purchased Assets that are subject to sales
tax; and
(g) such other agreements, certificates and documents as Sellers shall
reasonably request.
4.4 Proceedings: All proceedings taken and all documents executed and
delivered by the parties on the Closing Date shall be deemed to have been taken
and executed simultaneously, and no proceeding shall be deemed taken nor any
document executed or delivered until all have been taken, executed and
delivered.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, represent and warrant to Buyer, with the
understanding that Buyer is relying on these representations and warranties in
entering into this Agreement, as follows:
5.1 Organization, Good Standing, Capitalization and Ownership: Each of the
Sellers is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York and has all requisite corporate power
and authority to own, operate and lease its properties and the Purchased Assets
and to carry on the Business as the same is now being conducted. Each of the
Sellers only conducts its Business within the State of New York.
5.2 Authority Relative to Agreements, etc.: Each of the Sellers has the
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and each agreement, document, certificate or
instrument contemplated hereby. The execution, delivery and performance by each
Seller of this Agreement and each such agreement, document, certificate or
instrument, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary action on the part of the
Board of Directors and shareholders of each Seller and except for the Required
Consents, (i) do not require the consent, waiver, approval, license or
authorization of any person, entity, or public authority, (ii)
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do not violate, with or without the giving of notice and/or the passage of time,
any law, rule, or regulation, and (iii) subject to Schedule 5.2, will not
conflict with or result in a breach or termination of any provision of, or
constitute a default or give rise to a right of termination or acceleration
under, or pursuant to any corporate charter, by-law, mortgage, deed of trust,
indenture, written or oral, or agreement, written or oral, or instrument, or any
Order, law, rule, regulation or any other restriction of any kind or character,
to which each Seller is a party or by which it, the Business or any of the
Purchased Assets may be bound, or result in the creation of any lien, charge or
encumbrance upon any of the Purchased Assets or the Business in favor of any
third party.
5.3 Effect of Agreement: This Agreement has been duly executed and
delivered by each Seller and constitutes, and each other agreement, document,
certificate or instrument contemplated by this Agreement when executed and
delivered hereunder shall constitute, a legal, valid and binding obligation of
that Seller, enforceable against that Seller in accordance with its terms.
5.4 Title to Assets: Subject to the Required Consents, each of the Sellers
has good, valid and marketable title to its properties and assets, real,
personal and mixed, that would be included in the Purchased Assets if the
Closing took place on the date hereof, free and clear of all mortgages, liens,
pledges, security interests, charges, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever.
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5.5 Contracts: Except for the Contracts and Leases, neither Seller is a
party to or bound by any written or oral contracts, leases, licenses,
agreements, permits, plans, commitments or binding arrangements relating to or
affecting the Business or the Purchased Assets which would be binding upon
Buyer. Subject to the Required Consents, each of the Contracts is in full force
and effect and has not been assigned by Sellers, modified, supplemented or
amended, and neither Sellers nor, to Sellers' knowledge, the other party to the
Contracts, are in default under any of the Contracts.
5.6 No Material Adverse Change: Except as set forth in Schedule 5.6, since
November 30, 1996, there has been no change in the business, operations, assets
or condition, financial or otherwise, of the Business from that in existence on
such date other than changes occurring in the ordinary course of business, which
changes have not, in the aggregate, materially adversely affected, and are not
expected to materially adversely affect, the Business, and no employee or group
of employees have terminated or noticed termination of their employment,
voluntarily or involuntarily, which termination(s) would, except to the extent
such employees have been engaged as employees by Buyer, materially reduce
Sellers' workforce or result in the loss of a material part of Sellers'
Business.
5.7 No Outstanding Decrees: There are no Orders of any federal, state,
county, municipal, foreign or other government or of any court, department,
commission, board, bureau, agency or other instrumentality thereof outstanding
against, or relating or
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applicable to either Seller or to any of its assets, properties or businesses
including the Purchased Assets and the Business.
5.8 Compliance with Law; Permits: Sellers have not received notice of any
violation, nor to the best knowledge of Sellers are Sellers in violation of, any
law, statute, ordinance, rule, regulation, order, judgment, writ, injunction,
decree, registration or permit of any foreign, federal, state, county, municipal
or other government or of any court, department, commission, board, bureau,
agency or other instrumentality thereof, in each case limited to and relating to
or in connection with the Purchased Assets or the Business.
5.9 Litigation and Claims: Except as set forth on Schedule 5.9, there is no
action, suit, legal or administrative proceeding, arbitration, investigation or
other proceeding or claim pending or, to the knowledge of Sellers, threatened
against, or affecting Sellers or any part of the Business or the Purchased
Assets that, if adversely determined, might reasonably be expected to have a
material adverse effect on the Business, the Purchased Assets (or the use,
operation or value thereof), or either Seller's ability to perform this
Agreement or any aspect of the transactions contemplated by this Agreement .
5.10 Labor Matters:
(a) Except as set forth on Schedule 5.10, there are no unfair labor
practice, equal employment opportunity or wage and hour complaints against
either Seller
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pending or threatened in writing before any court, arbitrator or the National
Labor Relations Board or any other governmental or regulatory board or agency
performing functions relating to employee rights or benefits. There is no labor
strike, walkout, dispute, slowdown, disturbance or stoppage pending or
threatened against or involving either Seller. There is no pending or, to the
knowledge of Sellers, threatened representation question or organizational
activities concerning the employees of either Seller.
(b) There is no collective bargaining agreement affecting Sellers and there
is no union representing the interests of any of the employees of either Seller.
Except as set forth on Schedule 5.10, there are no pending suits, actions,
administrative proceedings, arbitration or other proceedings between Sellers and
any of their employees. To the best of their knowledge, except as set forth in
Schedule 5.10, Sellers have complied in all material respects with all laws
relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining and the payment of social security and
similar taxes, and Sellers are not liable for any arrears of wages or any taxes
or penalties for failure to comply with any of the foregoing. 5.11 Compliance
with ERISA; Pension and Benefit Plans: Neither Seller maintains, or makes
contributions to, or has in the past maintained or made contribution to, any
Plan.
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5.12 Taxes: Each Seller has duly and timely (after giving effect to all
appropriate extensions) filed or caused to be filed all federal, state, county,
municipal, foreign and other income, franchise, excise, sales, use, withholding,
unemployment and other tax returns and reports required to be filed by it. There
are no unpaid Taxes and there are no known or proposed deficiency assessments in
respect of any federal, state, county, municipal or other tax return filed by
Sellers that might adversely affect the Purchased Assets or the Business. All
monies required to be withheld by Sellers from employees for income taxes,
social security and unemployment insurance taxes have been collected or
withheld, and either paid to the respective governmental agencies or set aside
in accounts for such purpose, or accrued, reserved against, and entered upon the
books of Sellers in the ordinary course of the Business in accordance with Past
Practice.
5.13 Insurance: Set forth on Schedule 5.13 is a list of all policies of
liability, fire, workers' compensation, and other forms of insurance
(including self-insurance) owned or held by, or relating to, Sellers. There are
no pending material liability or casualty claims by or against Sellers, the
Purchased Assets or the Business not covered under any such policy. To the best
of Sellers' knowledge, they are not in default with respect to any provision
contained in any insurance policy, nor have Sellers failed to give any notice
regarding or present any pending or threatened claim under any insurance policy
in due and timely fashion.
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5.14 No Third Party Options: There are no existing options or rights held
by or in favor of any person or entity to acquire any of the Purchased Assets or
the Business or any interest therein.
5.15 Books of Account: The books, records and accounts of Sellers
maintained with respect to the Business, accurately and fairly reflect the
transactions, assets and liabilities of each Seller with respect to the Business
in all material respects.
5.16 Condition of Tangible Assets: The Fixed Assets are in operating
condition and repair, subject to normal wear, tear and maintenance, are usable
in the regular and ordinary course of business and conform to all applicable
laws, rules and regulations relating to their construction, use and operation.
5.17 Real Property:
(a) All real property and improvements located on the premises leased to
Sellers and included in the Leases are set forth on Schedule 2.1(a). With
respect to each rental property leased to or occupied by Sellers and identified
on Schedule 2.1(a):
(i) Sellers have, prior to execution of this Agreement, delivered to Buyer
a true and complete copy of every Lease with respect to which either Seller is a
tenant, sublessor or subtenant; and
(ii) each Lease is in full force and effect and has not been assigned by
the Seller/Tenant, modified, supplemented or amended, and neither Seller/Tenant
nor the landlord under any such lease is in default
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under any of the Leases, and no circumstances or state of facts exists that,
with the giving of notice or passage of time, or both, would permit the landlord
under any Lease to terminate the Lease. (b) The water, electric, gas and sewer
utility services currently available to Sellers under the Leases are adequate
for the present use of the Leases by Sellers in conducting the Business.
(c) Neither Seller has received a notice, oral or written, from any
insurance carrier of such Seller of fire hazards with respect to the premises
covered by the Leases.
(d) Neither Seller has received a notice, oral or written, that any
governmental body has commenced or intends to exercise the power of eminent
domain or a similar power with respect to all or any part of the property leased
to Sellers included in the Purchased Assets.
(e) To the best of Sellers' knowledge, the Leases and the present uses
thereof comply with the regulations of governmental bodies having jurisdiction
over the relevant property, and neither Seller has received a notice, oral or
written, from any governmental body that the Leases or any improvements erected
or situate on the leased property, or the uses conducted thereon or therein,
violate any regulations of any governmental body having jurisdiction over the
Leases.
(f) The improvements located on the premises subject to the Leases are in
good condition and Sellers have no knowledge that such premises are not
structurally
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sound or that the mechanical and other systems located therein are not in
operating condition or that any condition exists requiring material repairs,
alterations or corrections.
5.18 Employees: There are, and at Closing there will be, no liabilities,
claims or obligations to or by former or current employees of Sellers, including
without limitation any severance obligations and liabilities of Sellers in
connection with any retirement or pension program, any other employee benefit
plans or collective bargaining, labor or employment agreement or other similar
arrangement or obligations in respect of employee or retiree health benefits or
health care plans and insurance that will become liabilities or obligations of
Buyer after Closing; or any liability arising out of employment actions taken or
not taken by Sellers prior to Closing, including but not limited to offers of
employment, liability under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, any state fair employment statute, any
unemployment or workers' compensation statute, or any statutory or common law
theory of liability for alleged wrongful termination, failure to hire, promote,
transfer, or provide any other incident of employment.
5.19 Regulatory Audits: Since January 1, 1992, neither Seller has been
compliance audited or examined by any federal, state, local or private payor
representatives, except for those examinations the reports of which Sellers have
previously delivered to Buyer for review.
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5.20 Disclosure: To the best knowledge of Sellers, neither this Agreement,
nor any certificate, exhibit, schedule, list or other document or data furnished
or to be furnished to Buyer by or on behalf of Sellers pursuant to or in
connection with the negotiation, execution and delivery of this Agreement and
transactions contemplated by this Agreement contains or will contain any untrue
statement of any material fact, or omits or will omit to state a material fact
(i) necessary to make the statements herein or therein not misleading, or (ii)
necessary in order to provide Buyer with materially accurate and substantially
complete information with respect to the matters covered thereby.
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
6.1 Organization and Good Standing: Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
has all requisite corporate power to own, operate and lease its properties and
carry on its business as the same is now being conducted.
6.2 Corporate Authority: Buyer has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement,
and each
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agreement, document or instrument required to be delivered hereby. The
execution, delivery and the performance by Buyer of this Agreement, and each
such agreement, document or instrument, and the consummation of the transactions
contemplated hereby and thereby, have been authorized by all necessary action
and except for the Required Consents, (i) do not require the consent, waiver,
approval, license or authorization of any person, entity, or public authority,
(ii) do not violate, with or without the giving of notice and/or the passage of
time, any provision of law, and (iii) will not conflict with or result in a
breach or termination of any provision of, or constitute a default or give rise
to a right of termination or acceleration under, any corporate charter, by-law,
mortgage, deed of trust, indenture or other agreement or instrument or any
order, judgment, decree, statute, regulation or any other restriction of any
kind or character, to which Buyer is a party or by which any of its assets or
properties may be bound, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of Buyer.
6.3 Effect of Agreement, etc.: This Agreement has been duly executed and
delivered by Buyer and constitutes, and each other document contemplated by this
Agreement when executed and delivered in accordance with the provisions hereof
shall constitute, a legal, valid and binding obligation of Buyer, enforceable
against it in accordance with its terms.
6.4 No Outstanding Decrees: There are no Orders of any federal, state,
county, municipal, foreign or other government or of any court, department,
commission,
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board, bureau, agency or other instrumentality thereof outstanding against, or
relating or applicable to Buyer or to any of its assets, properties or business.
6.5 Compliance with Law; Permits: Buyer has not received notice of any
violation, nor to the best knowledge of Buyer is Buyer in violation of, any law,
statute, ordinance, rule, regulation, order, judgment, writ, injunction, decree,
registration or permit of any foreign, federal, state, county, municipal or
other government or of any court, department, commission, board, bureau, agency
or other instrumentality thereof, in each case limited to and relating to or in
connection with its assets, properties or business.
6.6 Litigation and Claims: There is no action, suit, legal or
administrative proceeding, arbitration, investigation or other proceeding or
claim pending or, to the knowledge of Buyer, threatened against, or affecting
Buyer that, if adversely determined, might reasonably be expected to have a
material adverse effect on Buyer's ability to perform this Agreement or any
aspect of the transactions contemplated by this Agreement. 6.7 Disclosure: To
the best knowledge of Buyer, neither this Agreement, nor any certificate,
exhibit, schedule, list or other document or data furnished or to be furnished
to Sellers by or on behalf of Buyer pursuant to or in connection with the
negotiation, execution and delivery of this Agreement and transactions
contemplated by this Agreement contains or will contain any untrue statement of
any material fact, or omits or will omit to state a material fact (i) necessary
to make the statements herein or
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therein not misleading, or (ii) necessary in order to provide Sellers with
materially accurate and substantially complete information with respect to the
matters covered thereby.
ARTICLE VII
COVENANTS OF SELLER
Seller covenants and agrees as follows:
7.1 Actions Pending the Closing: With respect to the operation of the
Business and the ownership of the Purchased Assets between the signing of this
Agreement and until the Closing:
(a) Each Seller shall keep its corporate franchise and all other franchises
and rights in full force and effect and shall not acquire any stock or business
or assets of any other person, corporation or entity;
(b) Each Seller shall use its best efforts to keep the Business intact and
to preserve and maintain the Purchased Assets and preserve the goodwill of its
patients, suppliers, referral sources and third party payors;
(c) Each Seller shall conduct the Business and use the Purchased Assets
only in the ordinary and usual course and in a manner consistent with Past
Practice;
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(d) Except to the extent consistent with prior practice, neither Seller
shall increase the compensation or rate of compensation payable to any field
personnel nor shall any bonus or other extraordinary compensation be paid to any
such person;
(e) Sellers shall not enter into, create or assume any indebtedness for
borrowed money or create any lien, encumbrance, mortgage or security interest in
any of their properties or assets, or assume, guaranty, endorse or otherwise
become liable with respect to the obligations of any other person or entity;
(f) Sellers shall continue to maintain in full force and effect all
policies of insurance described on Schedule 5.13 or comparable replacement
insurance;
(g) Sellers shall not amend or enter into any contract, agreement, lease,
plan or other instrument or commitment to which either Seller is a party which
would be binding on Buyer except in the ordinary course of the Business, and
Sellers shall not enter into any long-term commitment to purchase or lease any
capital assets which would be binding on Buyer;
(h) Neither Seller shall enter into any transaction or take any other
action that, if effected or taken prior to the date hereof, would constitute a
breach of the representations, warranties or agreements set forth herein; and
(i) If Sellers become aware of same, Sellers shall promptly notify Buyer of
the existence of any condition or event that would constitute a breach of the
representations and warranties hereunder.
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7.2 Compliance with Conditions: Sellers shall use their reasonable efforts
in good faith to cause the Closing to be consummated and to cause the execution
and delivery of the documents referred to in Section 4.2 hereof and to bring
about the satisfaction of the conditions to the obligations of Buyer set forth
in Section 9.1, provided that Sellers shall not be required to incur any
significant or extraordinary expense or commence any litigation in order to
satisfy such conditions, it being specifically understood that Sellers shall not
be required to make any payments to any landlord to obtain said landlord's
consent to an assignment of lease.
7.3 Access: Buyer acknowledges that each Seller has caused its officers,
directors, employees and agents to give to Buyer and its officers, employees and
counsel reasonable access to the facilities, assets, properties, books of
account, leases, agreements, records and personnel of the Business, and to
furnish to Buyer or its representatives certain information concerning the
Business as Buyer has requested in connection with its due diligence. Pending
the Closing and thereafter, Sellers shall continue to provide Buyer with such
information and data in Sellers' possession as Buyer may reasonably request.
7.4 Cessation of Operations: Commencing on the Closing Date, Sellers shall
suspend all of their business operations and shall diligently proceed to lay off
all of their field personnel, cease providing any and all services to their
patients, and surrender
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their home care licenses under Article 36 of the New York State Public Health
Law pursuant to the Discharge Plan.
ARTICLE VIII
COVENANTS OF BUYER
Buyer covenants and agrees as follows:
8.1 Compliance with Conditions: Buyer shall use its reasonable efforts in
good faith to cause the Closing to be consummated and to cause the execution and
delivery of the documents referred to in Section 4.3 hereof and to bring about
the satisfaction of the conditions of the obligations of Sellers set forth in
Section 9.2, provided that Buyer shall not be required to incur any significant
or extraordinary expense or commence any litigation in order to satisfy such
conditions, it being specifically understood that Buyer shall not be required to
make any payments to any landlord to obtain said landlord's consent to an
assignment of lease.
8.2 No Solicitation: During the period between the date hereof and the
Closing, Buyer shall not initiate or seek contact with any of Sellers' home
health care aides, Sellers' other employees or any patients (or their family
members) serviced by Sellers; nor shall Buyer (i) directly solicit for
employment any of either Seller's officers, directors, employees or agents,
including Sellers' field personnel or (ii) seek to obtain any of the patients
serviced by Sellers or their cases, in whole or in part. Notwithstanding the
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foregoing, Buyer may during such period engage any personnel who are on the date
hereof employees of Sellers who may respond to Buyer's newspaper advertisements
or who may voluntarily seek employment with Buyer and may accept patient cases
offered to it by the Department of Social Services or otherwise coming available
through the voluntary actions of the subject patient.
8.3 Post-Closing Access: After the Closing, for a period of seven (7) years
from the Closing Date, Buyer (and any successors or assigns) shall retain and
make available to Sellers for any lawful purpose, upon reasonable notice and at
reasonable times, those books and records of the Business delivered by Sellers
to Buyer as provided herein with respect to periods prior to the Closing and to
actions and events after the Closing to the extent they relate to periods prior
to the Closing, provided that such seven year period shall be extended for as
long as is reasonably necessary to enable Sellers or their representatives to
conduct or maintain any actions or suits accruing on or before the Closing Date,
with respect to the specific categories of documents that Sellers notified Buyer
are germane to such actions or suits.
8.4 Maintenance of Records: Buyer (and any successors or assigns) shall
maintain in their current condition all patient records delivered by Sellers to
Buyer for a period commencing on the Closing Date and continuing until the later
to occur of (i) seven (7) years after the date of the last entry in the medical
record or (ii) one (1) year after any patient or former patient who was a minor
on the Closing Date reaches his or
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her majority, or (iii) any time period required by applicable law, or Federal,
state or local agency regulation, provided that any such period shall be
extended for as long as is reasonably necessary to enable Sellers or their
representatives to conduct or maintain any actions or suits accruing on or
before the Closing Date. If Buyer ceases to conduct operations prior to the end
of such seven year period, Buyer shall give Sellers sixty (60) days' prior
written notice and an opportunity to accept from Buyer a transfer of such
patient records from Buyer, and if Sellers elect not to accept such patient
records, Buyer's obligations under this Section 8.3 shall cease. This covenant
shall be contained in any subsequent sale or transfer of the Business by Buyer.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
9.1 Conditions to the Obligations of Buyer: The obligations of Buyer
hereunder shall be subject, to the extent not waived by Buyer, to the following
conditions:
(a) The representations and warranties of Sellers set forth herein shall be
true and correct in all material respects as of the date when made and shall be
deemed to be made again at and as of the time of the Closing and shall then be
true and correct, provided, however, that for purposes of this condition, any
representation or warranty that is by its terms limited to the knowledge of
Sellers shall not be deemed so limited.
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(b) Each Seller shall have performed and complied with all covenants
required by this Agreement to be performed or complied with by it prior to or at
the Closing.
(c) Each Seller shall deliver to Buyer a certificate, dated as of the
Closing Date, signed by the Chief Executive Officer of such Seller, certifying
to the fulfillment as to such Seller of the conditions specified in
subparagraphs (a) and (b) hereof.
(d) All corporate action required to be taken by Sellers in connection with
the transactions contemplated by this Agreement shall have been taken, all
documents incident thereto shall be reasonably satisfactory in substance and
form to Buyer, and Buyer shall have received such originals or copies of such
documents as it may reasonably request.
(e) No order of any court or governmental agency shall be in effect that
restrains or prohibits the consummation of the transactions contemplated by this
Agreement, or that would limit or adversely affect the ability of Buyer to own
or control the Purchased Assets or to operate the Business, nor shall there be
pending or threatened in writing any action or proceeding by or before any such
court or governmental agency seeking to prohibit or delay or challenging the
validity of this Agreement or the transactions contemplated by this Agreement.
(f) No suit, action, investigation, inquiry or proceeding by any person or
entity or by any governmental body or other legal or administrative proceedings
shall
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have been instituted that questions the validity or legality of this Agreement,
the consummation of the transactions contemplated hereby, the sale of the
Business and the Purchased Assets by the Seller, or the operation of the
Business by Buyer.
(g) There shall have been no material adverse change in the nature of
Sellers' Business or in the workforce of home health aides between the date
hereof and the Closing Date. Specifically, but not by way of limitation of this
provision, it shall be deemed a material change in Sellers' business if for the
four weeks immediately prior to the Closing Date, Sellers have averaged fewer
than 4,795 serviced hours in their combined operations, calculated in a manner
consistent with Sellers' usual practice.
(h) Buyer shall have received the consent of the landlord to the assignment
to Buyer of the Lease for the space located at * together with the landlord's
estoppel letter concerning Home Health, or Sellers shall have waived Buyer's
obligations to assume the Lease (in which event Buyer shall not have the right
to occupy such premises).
(i) Buyer shall have received the consent of the landlord to the assignment
to Buyer of the Lease for the space located at 1787 Veterans Highway, Islandia,
New York together with the landlord's estoppel letter concerning HHA, or Sellers
shall have waived Buyer's obligations to assume the Lease (in which event Buyer
shall not have the right to occupy such premises).
(j) Sellers' Closing documents described in Section 4.2 hereof in a form
reasonably satisfactory to Buyer shall have been executed and delivered.
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<PAGE>
(k) Buyer shall have received all the Required Consents necessary to be
received by Buyer and Sellers shall concurrent with the Closing surrender their
home care licenses under Article 36 of the New York State Public Health Law. All
parties hereto represent each knows of no reason why the Required Consents
should not be issued and all parties shall diligently pursue the Required
Consents. Each party agrees to assist the other from time to time in complying
with reasonable requests for such information as may be required to obtain the
Required Consents.
9.2 Conditions to the Obligations of Sellers: All the obligations of
Sellers hereunder shall be subject, to the extent not waived by Sellers, to the
following conditions:
(a) All representations and warranties of Buyer contained in this Agreement
shall be true and accurate in all material respects as of the date when made and
shall be deemed to be made again at and as of the Closing and shall then be true
and accurate in all material respects.
(b) Buyer shall have performed and complied with all covenants required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
(c) Buyer shall deliver to Sellers a certificate, dated as of the Closing
Date, signed by the Chief Executive Officer of Buyer, certifying to the
fulfillment of the conditions specified in subparagraphs (a) and (b) hereof.
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<PAGE>
(d) All corporate action required to be taken by Buyer in connection with
the transactions contemplated by this Agreement shall have been taken, all
documents incident thereto shall be reasonably satisfactory in substance and
form to Sellers, and Sellers shall have received such originals or copies of
such documents as they may reasonably request.
(e) No order of any court or governmental agency shall be in effect that
restrains or prohibits the consummation of the transactions contemplated by this
Agreement, or that would limit or adversely affect the ability of Buyer to own
or control the Purchased Assets or to operate the Business, nor shall there be
pending or threatened in writing any action or proceeding by or before any such
court or governmental agency seeking to prohibit or delay or challenging the
validity of this Agreement or the transactions contemplated by this Agreement.
(f) Buyer's Closing documents described in Section 4.3 hereof in a form
reasonably satisfactory to Sellers shall have been executed and delivered.
(g) No suit, action, investigation, inquiry or proceeding by any person or
entity or by any governmental body or other legal or administrative proceedings
shall have been instituted that questions the validity or legality of this
Agreement, the consummation of the transactions contemplated hereby, or the
operation of the Business by Buyer.
(h) Sellers shall have received all the Required Consents necessary to be
received by Sellers.
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<PAGE>
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; DAMAGES; INDEMNIFICATION
10.1 General Survival: Notwithstanding any investigation or audit conducted
before or after the Closing Date, each party shall be entitled to rely upon the
representations and warranties in this Agreement to the extent hereinafter set
forth. The parties hereto agree that the representations and warranties of the
parties contained in this Agreement shall survive for the period of time
represented by three months following the expiration of applicable statute of
limitations to claims asserted by a party concerning such matters.
10.2 Indemnification by Sellers:
(a) Sellers hereby, jointly and severally, covenant and agree with
Buyer that they shall indemnify Buyer and its directors and officers and
each of their successors and assigns, and the directors and officers of any
such successors and assigns, and hold them harmless from, against and in
respect of any Indemnifiable Claims incurred by any of them arising out of:
(i) the operation of the Business prior to the Closing Date and
the liabilities of Sellers, whether accrued, absolute, contingent or
otherwise, to the extent not included in the Assumed Liabilities;
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<PAGE>
(ii) any breach of any of the representations and warranties of
Sellers that survive Closing pursuant to Section 10.1 to the extent
and for the period of such survival, provided, however, that for
purposes of this indemnity, any representation or warranty that is by
its terms limited to the knowledge of Sellers shall not be deemed so
limited and provided further, that Buyer shall be entitled to
indemnity under this Section 10.2(a)(ii) only if and to the extent
that Sellers' breach of any representation or warranty results in
monetary damage to Buyer;
(iii) Buyer's waiver of Sellers' compliance with any applicable
Bulk Sales Law; and
(iv) any action, suit, proceeding, compromise, settlement,
assessment or judgment relating to any Indemnifiable Claim.
(b) If, by reason of the assertion of an Indemnifiable Claim by any third
party, a lien, attachment, garnishment or execution is placed upon any of the
property or assets of an Indemnified Party, Sellers shall furnish an indemnity
bond so as to obtain the prompt release of such lien, attachment, garnishment or
execution. Buyer shall notify Sellers of any Indemnifiable Claims, promptly
after Buyer becomes aware of any such Claims. If any Claims are litigated,
arbitrated, settled or reduced to final judgment and Buyer is reimbursed by a
third party for any costs advanced by Seller pursuant to this Section 10.2,
Buyer shall return such sums to Sellers together with interest to the extent
Buyer received interest on such sums.
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<PAGE>
10.3 Indemnification by Buyer.
(a) Buyer hereby covenants and agrees with Sellers that it shall indemnify
Sellers and their respective directors and officers and each of their successors
and assigns and the directors and officers of any such successors and assigns,
and hold them harmless from, against and in respect of any Indemnifiable Claim
arising out of:
(i) the operation of the Business on and following the Closing Date and the
liabilities of Buyer, whether accrued, absolute, contingent or otherwise;
(ii) any breach of any of the representations and warranties of Buyer that
survive Closing pursuant to Section 10.1 to the extent and for the period of
such survival, provided that a Seller shall be entitled to indemnity under this
Section 10.3(a)(ii) only if and to the extent that Buyer's breach of any
representation or warranty results in monetary damage to that Seller;
(iii) the breach or cancellation of any Contract or the payment, settlement
or other disposition of any of the Assumed Liabilities; and
(iv) any action, suit, proceeding, compromise, settlement, assessment or
judgment relating to any Indemnifiable Claim.
(b) If, by reason of the assertion of an Indemnifiable Claim by any third
party, a lien, attachment, garnishment or execution is placed upon any of the
property or assets of an Indemnified Party, Buyer shall furnish an indemnity
bond so as to obtain the prompt release of such lien, attachment, garnishment or
execution. Sellers shall notify
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<PAGE>
Buyer of any Indemnifiable Claims, promptly after Sellers become aware of any
such Claims, which could be made pursuant to this Section 10.3. If any Claims
are litigated, arbitrated, settled or reduced to final judgment and either
Seller is reimbursed by a third party for any costs advanced by Buyer pursuant
to this Section 10.3, such Seller shall return such sums to Buyer together with
interest to the extent such Seller received interest on such sums.
10.4 Right to Defend, Etc. If the facts giving rise to an Indemnifiable
Claim pursuant to Section 10.2 or 10.3 involve any actual Claim or demand by any
third party against an Indemnified Party, the Indemnifying Party shall be
entitled to notice of and be entitled (without prejudice to the right of any
Indemnified Party to participate at its expense through counsel of its own
choosing) to defend or prosecute such Claim at its expense and through counsel
of its own choosing, which counsel shall be reasonably satisfactory to the
Indemnified Party, if it gives written notice of its intention to do so to the
Indemnified Party; provided that if the defendants in any action shall include
both an Indemnified Party and an Indemnifying Party and the Indemnified Party
shall have reasonably concluded, after consultation with the Indemnifying Party,
that counsel selected by the Indemnifying Party has a conflict of interest
because of the availability of different or additional legal defenses to the
Indemnified Party, the Indemnified Party shall have the right to select separate
counsel to participate in the defense of such action on its behalf, at the
expense of the Indemnifying Party. All notices under this Section 10.4 shall be
given prior to the time by which the interests of the party or parties to be
notified will
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<PAGE>
be materially prejudiced as a result of the failure to have received such
notice. Such Indemnified Party shall cooperate fully in the defense of such
Claim and shall make available to the Indemnifying Party, as the case may be,
all pertinent information under its control relating thereto, but shall be
entitled to be reimbursed, as provided in Section 10.2 or 10.3, for all costs
and expenses incurred by it in connection therewith.
10.5 Non-Waiver: Failure of an Indemnified Party to give reasonably prompt
notice of any Claim or Claims shall not release, waive or otherwise affect an
Indemnifying Party's obligations with respect thereto except to the extent that
the Indemnifying Party can demonstrate actual loss and prejudice as a result of
such failure or that the failure to give notice by the Indemnified Party was
intentional.
10.6 Payment of Claim: Upon the determination of the liability of Sellers
or Buyer under Section 10.2 or 10.3, as the case may be, after payment by the
Indemnified Party of, or upon entry of final judgment or reaching of a
settlement in respect of, an Indemnifiable Claim, or determination of the Loss
of Indemnified Party of the Loss occasioned by the breach of a representation
and warranty by the Indemnifying Party, and notice thereof to the Indemnifying
Party, the Indemnifying Party shall within thirty (30) days after receipt of
such notice pay to the Indemnified Party the amount of the payment, judgment,
settlement or Loss, as the case may be, or, if the Indemnified Party has not yet
paid the Indemnifiable Claim to any third party giving rise thereto, pay the
amount of the Indemnifiable Claim thus determined directly to such third party.
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<PAGE>
10.7 Other Rights and Remedies Not Affected: The indemnification rights of
the parties under this Article X are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including without limitation
the right to seek specific performance, rescission or restitution, none of which
rights or remedies shall be affected or diminished hereby; and the Deposit is
not intended to be the full measure of any damages to which Sellers may be
entitled in the event of a default by Buyer, provided that in the event Buyer
shall be held liable to Sellers for damages, Buyer shall receive a credit
against such damages in the event the Deposit is paid to Sellers.
ARTICLE XI
POST-CLOSING OBLIGATIONS
11.1 Further Assurances: If, at any time after the Closing, either party
shall consider or be advised that any further assignments, conveyances,
certificates, filings, instruments or documents or any other things are
necessary or desirable to vest, perfect or confirm in Buyer title to the
Purchased Assets, or to consummate any of the transactions contemplated by this
Agreement, the other party shall, upon request and at the requesting party's
expense, promptly execute and deliver all such proper deeds, assignments,
certificates, filings, instruments and documents and do all things reasonably
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<PAGE>
necessary and proper to vest, perfect or confirm title in Buyer and to otherwise
carry out the purposes of this Agreement.
11.2 Transfer of Funds: Buyer shall promptly transfer to Home Health or
HHA, as appropriate, any sums received by Buyer after Closing (whether the
result of inadvertent or erroneous collections of accounts receivable,
retroactive increases in rates payable to Sellers prior to Closing, or
otherwise) that are properly payable to the Sellers.
11.3 Restrictive Covenant: In further consideration of the Purchase Price,
after the Closing, * and *, the principals of Sellers, shall not
(a) for five (5) years after the Closing Date, directly or indirectly, as
principal, agent, partner or consultant or in any other capacity, or through any
affiliated entity over which they have control or with which they are associated
in any way, engage, within the New York State counties of New York, Bronx,
Kings, Queens, Staten Island, Nassau, Suffolk, Westchester, Rockland, Duchess,
Putnam, Sullivan, Ulster and Orange, in any business or venture that offers home
health care services. For purposes of this paragraph, direct or indirect
ownership by * and * of securities in the aggregate not in
excess of 2% of any class of securities of a public company shall not be
considered competition with Buyer;
(b) solicit for themselves or any person other than Buyer the business of
any person that is a referral source, customer, patient or client of Sellers, or
was Sellers' referral source, customer, patient or client within two years prior
to the Closing Date;
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<PAGE>
(c) persuade or attempt to persuade any employee of either Seller or any
individual who was Sellers' employee during the two years prior to the Closing
Date, to leave the employ of Buyer; or
(d) recognizing that Sellers' information regarding the property and
business of Sellers' past and present clients, patients, customers and
contracting parties ("Confidential Information") are valuable, special and
unique assets of Sellers, use for their own benefit or for the benefit of any
other employer or other person or disclose to any business, firm, corporation,
association, venture or other entity or person for any reason or purpose
whatsoever Sellers' Confidential Information or any part thereof.
(e) * and * acknowledge and agree that the covenants and undertakings
contained in this Agreement relate to matters that are of a special, unique and
extraordinary character and that a violation of any of the terms of this Section
11.2 will cause irreparable injury to Buyer and that the amount of such injury
will be difficult, if not impossible, to estimate or determine and cannot be
adequately compensated by monetary damages. Therefore, they agree that Buyer
shall be entitled, in addition to all other rights and remedies available under
this Agreement and applicable law, as a matter of course, to an injunction,
restraining order or other equitable relief from any court of competent
jurisdiction, restraining any violation or threatened violation of any of such
terms by Paul Manson and Cora Baliff and by such other persons as the court
shall order.
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<PAGE>
ARTICLE XII
MISCELLANEOUS
12.1 Termination of Agreement: This Agreement may be terminated by Sellers
(but only acting jointly) or Buyer by delivering written notice to the other at
any time prior to the Closing Date:
(a) by the mutual written consent of all the parties hereto; or
(b) by Sellers if there has been a material breach by Buyer of any
representation, warranty, covenant or agreement contained herein or if any
condition contained in this Agreement that must be met by Buyer becomes
impossible to fulfill; or
(c) by Buyer if there has been a material breach by Sellers of any
representation, warranty or agreement or if any condition contained in this
Agreement that must be met by Sellers becomes impossible to fulfill;
(d) by either party if with respect to items 1 through 4 of Schedule 5.2,
any of the applicable governmental agencies has formally rejected Buyer's
application for a Required Consent; or
(e) by either party if the Required Consents have not been received on or
before July 1, 1998.
12.2 Termination Liabilities: In the event this Agreement is terminated
pursuant to Section 12.1 above, no party hereto shall have any liability to any
other party hereto for costs, expenses, damages, loss of anticipated profits or
otherwise; provided,
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<PAGE>
that if termination occurs because of any misrepresentation or breach of
warranty herein by a party hereto, such termination shall not preclude any
rights that the other party hereto may have against such party for costs,
expenses, damages, loss of anticipated profits or otherwise on account of such
party's misrepresentation or breach.
12.3 Bulk Transfer Law: Buyer hereby waives compliance by Sellers with the
provisions of any so-called bulk transfer law of any jurisdiction in connection
with the sale of the Purchased Assets to Buyer hereunder. Nothing herein
contained shall be deemed to imply that any of the parties hereto asserts that
any so-called bulk transfer law in fact applies to the within transaction.
12.4 Waivers and Amendments:
(a) This Agreement may be amended, modified or supplemented only by a
written instrument executed by the parties hereto. The provisions of this
Agreement may be waived only by an instrument in writing executed by the party
granting the waiver. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach.
(b) No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
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<PAGE>
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
12.5 Fees and Expenses: Except as otherwise expressly provided in this
Agreement, Buyer shall be responsible for all its fees and expenses incurred in
connection with this transaction, and Seller shall be responsible for all its
fees and expenses incurred in connection with this transaction. Buyer shall at
the Closing pay to Sellers, in addition to the Purchase Price, the New York
State and applicable local sales tax, if any, on the portion of the Purchase
Price allocated to the Fixed Assets.
12.6 Attorneys' Fees: In the event of any litigation concerning any
controversy, claim or dispute between the parties hereto arising out of or in
relation to this Agreement, or the breach hereof, or the interpretation hereof,
the prevailing party shall be entitled to recover from the losing party
reasonable attorneys' fees, and costs and expenses incurred therein or in the
enforcement or collection of any judgment or award rendered therein. The
"prevailing party" means the party determined by the court or arbitration panel
to have most nearly prevailed, even if such party did not prevail in all
matters, and not necessarily the one in whose favor a judgment is rendered.
12.7 Notices: All notices, requests, demands and other communications
required or which may be given under this Agreement shall be in writing and
shall be deemed to have been duly given or made: if by hand, immediately upon
delivery; if by telecopier immediately upon sending, provided it is sent during
business hours on a
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<PAGE>
business day, but if not, then immediately upon the beginning of the first
business day after being sent; if by Federal Express, Express Mail or any other
overnight delivery service, on the first business day after timely dispatch; and
if mailed by certified mail, return receipt requested, two (2) days after
receipt or the return of the notice to sender marked "unclaimed". All notices,
requests and demands are to be given or made to the parties at the following
addresses (or to such other address as either party may designate by notice in
accordance with the provisions of this paragraph):
If to *
If to *
If to Buyer: 175-20 Hillside Avenue
Jamaica, New York 11432
Attention: Richard Garofalo, President
Telephone: (718) 657-2966
Telecopier: (718) 291-5987
With a copy to: Robinson Brog Leinwand Greene Genovese & Gluck, P.C.
- - --------------
1345 Avenue of the Americas
New York, New York 10105
Attention: Marshall J. Gluck, Esq.
Telephone: (212) 586-4050
Telecopier: (212) 956-2164
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<PAGE>
12.8 Entire Agreement: This Agreement and the schedules and exhibits hereto
set forth the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede any prior negotiations,
agreements, letters of intent, understandings or arrangements between the
parties hereto with respect to the subject matter hereof.
12.9 Schedules: Any information or data disclosed on any schedule to this
Agreement that is also relevant to any other schedule to this Agreement shall be
deemed to be included in such other schedule as if set forth therein in full.
12.10 Binding Effect; Benefits: This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto, or their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
12.11 Non-Assignability: This Agreement and any rights and obligations
pursuant hereto shall not be assignable by any party hereto without the prior
written consent of the other party.
12.12 Brokers. The parties hereby represent to each other that no person or
entity has acted as investment banker, broker or finder hereunder except for
Stewart Kramer or his business entity, for whose fees Sellers shall be
responsible and except for Robert Chestman, for whose fee Buyer shall be
responsible. Sellers agree to
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<PAGE>
indemnify and hold Buyer harmless from and against any and all liability to
which Buyer may be subjected by reason of the fees for Stewart Kramer or his
business entity, and by reason of any other investment banker's, broker's,
finder's or similar fee with respect to the transactions contemplated by this
Agreement to the extent such fee is attributed to any action undertaken by or on
behalf of Sellers. Buyer agrees to indemnify and hold harmless Sellers from and
against any and all liability to which Sellers may be subjected by reason of the
fee of Robert Chestman and by reason of any other investment banker's, broker's,
finder's or similar fee with respect to the transactions contemplated by this
Agreement to the extent such fee is attributable to any action undertaken by or
on behalf of Buyer or any of its subsidiaries or affiliates.
12.13 Applicable Law; Venue; Jurisdiction: This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York, applicable to contracts made
and to be enforced in such state. Sellers and Buyer each hereby consent to the
personal jurisdiction of the courts of the State of New York and the federal
courts situated therein over any judicial proceeding under or that may otherwise
arise out of this Agreement and agree not to contest venue for any such
proceeding commenced in the courts of the State of New York in New York County
or in the United States District Court for the Southern District of New York.
Buyer hereby irrevocably appoints Robinson Brog Leinwand Greene Genovese & Gluck
P.C. as agents for service of process for any such proceeding and each agree
process for any such proceeding may be served by personally delivering a
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<PAGE>
copy of the process to Robinson Brog Leinwand Greene Genovese & Gluck P.C., 1345
Avenue of the Americas, New York, New York 10105, Attention: Marshall J. Gluck,
Esq. Sellers hereby irrevocably appoint Hoffinger Friedland Dobrish Bernfeld &
Stern, P.C. as agent for service of process for any such proceeding and agrees
process for any such proceeding may be served by personally delivering a copy of
the process to Hoffinger Friedland Dobrish Bernfeld & Stern, P.C., 110 East 59th
Street, New York, New York 10022, Attention: David B. Bernfeld, Esq.
12.14 Public Announcements: The parties agree that public announce ments of
this transaction shall be made on the following schedule:
(a) Concurrent with the execution hereof, Buyer may issue a press
release containing the text set forth in Exhibit 12.14(a) annexed hereto
and made a part hereof.
(b) On April 17, 1997, provided Buyer has obtained the applicable
approval of the New York State Hospital Review and Planning Council, or as
soon thereafter as such approval has been obtained by Buyer, Buyer may
issue a press release containing the text set forth in Exhibit 12.14(b)
annexed hereto and made a part hereof.
Thereafter, each party is entitled to release to the public any and all
information regarding the terms of this Agreement, including Buyer's filing of
forms 8-K and related public announcements pursuant to applicable securities
laws and regulations.
12.15 No Further Negotiation. Sellers agree that they shall not enter into
any negotiation with any third party for the sale of the Purchased Assets from
the date hereof unless this Agreement is terminated pursuant to its terms.
12.16 No Benefit to Others: The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto, and their successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
12.17 Section and Other Headings: The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
12.18 Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written. HOME HEALTH AIDES, INC.
By:___________________________
Name:
Office: President
H.H.A. AIDES, INC.
By:_____________________________
Name:
Office: Vice President
HEALTH ACQUISITION CORP.
D/B/A ALLEN HEALTH CARE SERVICES
By:___________________________
Name: Richard Garofalo
Office: President
WITH RESPECT TO
SECTIONS 3.3(a)(iv) AND 4.2(e) ONLY:
PAUL MANSON
CORA BALIFF
- 56 -
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-START> aug-01-1996
<PERIOD-END> jan-31-1997
<EXCHANGE-RATE> 0
<CASH> 9,616
<SECURITIES> 518
<RECEIVABLES> 8,606
<ALLOWANCES> 372
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<CURRENT-ASSETS> 19,230
<PP&E> 830
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